UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of event requiring this shell company report
For the transition period from to
Commission file number 001-38159

British American Tobacco p.l.c.

(Exact name of Registrant as specified in its charter)

(Translation of Registrant’s name into English)

England and Wales
(Jurisdiction of incorporation or organization)
Globe House, 4 Temple Place, London WC2R 2PG, United Kingdom
(Address of principal executive offices)
Caroline Ferland, Company Secretary Tel: +44 (0)20 7845 1000
Fax: +44 (0)20 7240 0555
Globe House, 4 Temple Place, London WC2R 2PG, United Kingdom
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
 Title of each class Trading symbol(s) Name of each exchange on which registered

American Depositary Shares (evidenced by American Depositary Receipts) BTI New York Stock Exchange
each representing one ordinary share

Ordinary shares, nominal value 25 pence per share BTI New York Stock Exchange
5.931% Notes due 2029 BTI29A New York Stock Exchange
6.343% Notes due 2030 BTI30A New York Stock Exchange
6.421% Notes due 2033 BTI33 New York Stock Exchange
7.079% Notes due 2043 BTI43 New York Stock Exchange
7.081% Notes due 2053 BTI53 New York Stock Exchange
7.750% Notes due 2032 BTI32A New York Stock Exchange
4.742% Notes due 2032 BTI32 New York Stock Exchange
5.650% Notes due 2052 BTI52 New York Stock Exchange
4.448% Notes due 2028 BTI28A New York Stock Exchange
2.259% Notes due 2028 BTI28 New York Stock Exchange
2.726% Notes due 2031 BTI31 New York Stock Exchange
3.734% Notes due 2040 BTI40 New York Stock Exchange
3.984% Notes due 2050 BTI50A New York Stock Exchange
1.668% Notes due 2026 BTI26A New York Stock Exchange
4.700% Notes due 2027 BTI27A New York Stock Exchange
4.906% Notes due 2030 BTI30 New York Stock Exchange
5.282% Notes due 2050 BTI50 New York Stock Exchange
2.789% Notes due 2024 BTI24 New York Stock Exchange
3.215% Notes due 2026 BTI26 New York Stock Exchange
3.462% Notes due 2029 BTI29 New York Stock Exchange
4.758% Notes due 2049 BTI49 New York Stock Exchange
3.222% Notes due 2024 BTI24A New York Stock Exchange
3.557% Notes due 2027 BTI27 New York Stock Exchange
4.390% Notes due 2037 BTI37 New York Stock Exchange
4.540% Notes due 2047 BTI47 New York Stock Exchange

* Listed, not for trading, but only in connection with the listing of the applicable Registrant’s American Depositary Shares issued in respect thereof.
 Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report.
2,456,867,420 ordinary shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. ☐ Yes ☒ No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations
under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of
“large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with US GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards
Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP International Financial Reporting Standards as issued by the Other ☐

☐ International Accounting Standards Board ☒

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐
Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Name of the auditor’s firm KPMG LLP

Auditors’ firm ID/ PCAOB issued Audit Firm Identifier 1118
Auditors’ Location – City, State/Province, Country 15 Canada Square, London, E14 5GL

This Annual Report and Accounts on Form 20-F contains forward-looking non-GAAP measures used by management to monitor the
Group’s performance. For the non-GAAP information contained in this Annual Report and Accounts on Form 20-F, no comparable GAAP
or IFRS information is available on a forward-looking basis and our forward-looking revenue and other components of the Group’s results,
including the revenue generated from combustibles, cannot be estimated with reasonable certainty due to, among other things, the
impact of foreign exchange, pricing and volume, which could be significant, are highly variable. As such, no reconciliations for this
forward-looking non-GAAP information are available.
1
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Inside This Report

British American Tobacco p.l.c. (No. 3407696)

Annual Report 2023
This document constitutes the Annual Report and Accounts of
Strategic Report Governance
British American Tobacco p.l.c. (the Company) and the British
American Tobacco Group prepared in accordance with UK
Overview Directors’ Report
requirements and the Annual Report on Form 20-F prepared in Our Global Business ........................................….. 2 Chair’s Introduction
accordance with the U.S. Securities Exchange Act of 1934 (the
Exchange Act) and the rules promulgated thereunder for the year Our Multi-Category Portfolio ........................… 4 on Governance .................................................... 130
ended 31 December 2023, except that certain phrases, Chair’s Introduction .................................…........... 6 Board of Directors ............................................. 132
paragraphs or similar sections denoted with a ‘@’ symbol do not
form part of the Annual Report on Form 20-F as filed with the U.S. Chief Executive’s Review ..............................…. 8 Management Board ......................................… 136
Securities and Exchange Commission (the SEC) and certain
phrases, paragraphs or similar sections denoted with a ‘»’ symbol
Our Year in Numbers .......................................…. 10 Governance Framework .............................… 138
do not form part of the Annual Report and Accounts. In addition, Our ESG Roadmap ...........................................…. 11 Board Leadership.............................................… 139
the Report of Independent Registered Public Accounting Firm on
pages 206 and 207 will only be included in the Annual Report on Interim Finance Director’s Overview .......... 12 Values and Culture .........................................… 140
Form 20-F. Moreover, the information in this document may be
Our Strategy Board Activities in 2023 .................................. 142
updated or supplemented only for purposes of the Annual Report
on Form 20-F at the time of filing with the SEC or later amended Our Strategic Navigator .................................. 14 Board Engagement
if necessary. Any such updates, supplements or amendments will
Strategy Summary .........................................…. 16 with Stakeholders .............................................. 144
also be denoted with a ‘»’ symbol. Insofar as this document
constitutes the Annual Report and Accounts, it has been Our Business Model ........................................…. 18 Principal Decisions Made
prepared and is presented in accordance with, and reliance upon,
Non-Financial and Sustainability by the Board .......................................................... 149
applicable English company law and the liabilities of the Directors
in connection with this report shall be subject to the limitations Information Statement ..................................... 20 Division of Responsibilities ........................… 150
and restrictions provided by such law.
Engaging with Our Stakeholders .............…. 22 Board Effectiveness ......................................... 152
This document is made up of the Strategic Report, the
Governance Report, the Financial Statements and Notes, and Investment Case ...............................................…. 24 Nominations Committee .............................. 154
certain other information. Our Strategic Report, pages 4 to 129, Our Markets and Megatrends ..................…. 26 Audit Committee ............................................… 159
includes our purpose and strategy, global market overview,
business model, global performance, as well as our financial Quality Growth Remuneration Report
performance and principal Group risks. The Strategic Report has
been approved by the Board of Directors and signed on its behalf Strategic Pillar Overview ..........................…..... 28 Annual Statement on Remuneration ...... 170
by Caroline Ferland, Company Secretary. Our Governance Report
on pages 130 to 192 contains detailed corporate governance
Our Vapour Products ..................................….... 30
Our Heated Products ......................................... 32
Financial Statements
information, our Committee reports. The Directors’ Report on
pages 130 to 160 (the Governance pages) and pages 330 to 402
(the Additional Disclosure and Shareholder Information pages) Our Modern Oral Products .........................…. 34
has been approved by the Board of Directors and signed on its Our Traditional Oral Products .................….. 36 Group Financial Statements
behalf by Caroline Ferland, Company Secretary. Our Financial
Statements and Notes are on pages 194 to 329. The Other Our Combustible Products ........................…. 37 Report of Independent Registered
Information section commences on page 330. Beyond Nicotine ..............................................…. 39 Public Accounting Firm>> ............................. 206
This document provides alternative performance measures
(APMs) which are not defined or specified under the Dynamic Business Group Companies and Undertakings ..... 312
requirements of International Financial Reporting Standards
(IFRS). We believe these APMs provide readers with important
Strategic Pillar Overview ................................ 40
Capital Efficiency ..............…............................... 42
Other Information
additional information on our business. We have included a Non-
GAAP measures section on pages 335 to 349 which provides a
comprehensive list of the APMs that we use, an explanation of
U.S. ...........................................…................................ 44
how they are calculated, why we use them and a reconciliation AME .........................................…................................ 46
to the most directly comparable IFRS measure where relevant. Additional Disclosures .................................... 330
APMEA ...................................…................................ 48
British American Tobacco p.l.c. has shares listed on the London Shareholder Information ........................….... 387
Stock Exchange (BATS), the Johannesburg Stock Exchange (BTI), Financial Performance Summary ........…... 50
and, as American Depositary Shares, on the New York Stock
Exchange (BTI).
Treasury and Cash Flow .............................….. 56
The Annual Report is published on bat.com. A printed copy
Other .....................................................................….. 58
is mailed to shareholders on the UK main register who have
elected to receive it. Otherwise, shareholders are notified that
Sustainable Future
the Annual Report is available on the website and will, at the Strategic Pillar Overview .............................…. 60
time of that notification, receive a short Performance Summary
(which sets out an overview of the Group’s performance, Advancing Sustainability
headline facts and figures and key dates in the Company’s for A Better Tomorrow™ .............................….. 64
financial calendar) and Proxy Form. Specific local mailing
and/or notification requirements will apply to shareholders Leading in Sustainability
on the South Africa branch register. and Integrity ........................................................…. 66
References in this publication to ‘British American Tobacco’, Sustainability Highlights ................................... 68
‘BAT’, ‘Group’, ‘we’, ‘us’ and ‘our’ when denoting opinion refer
to British American Tobacco p.l.c. and when denoting business Sustainability Policies,
activity refer to British American Tobacco p.l.c. and its Procedures and Standards .........................…. 72
subsidiaries, collectively or individually as the case may be, as
well as in some circumstances those who work for them. When Double Materiality Assessment ..............….. 74
denoting business activity these collective expressions are used
for ease of reference only and do not imply any other Our Material Sustainability Topics:
relationship between British American Tobacco p.l.c. and its
subsidiaries. The companies in which British American Tobacco
Harm Reduction ................…................................. 78
p.l.c. directly and indirectly has an interest are separate and Climate Change .................…................................ 80
distinct legal entities.
Circular Economy .............…................................. 82
The material in this Annual Report and Form 20-F is provided
for the purpose of giving information about the Company to Biodiversity and Ecosystems ........................ 84
investors only and is not intended for general consumers. The Water ......................................…................................. 86
Company, its Directors, employees, agents or advisers do not
accept or assume responsibility to any other person to whom Employees, Diversity and Culture............…. 88
this material is shown or into whose hands it may come and any
such responsibility or liability is expressly disclaimed. The
Human Rights ......................…............................... 92
material in this Annual Report is not provided for product Farmer Livelihoods and Communities ..... 94
advertising, promotional or marketing purposes. This material
does not constitute and should not be construed as constituting Marketing and Communications ................ 96
an offer to sell, or a solicitation of an offer to buy, any of our Ethics and Integrity ............................................. 98
products. Our products are sold only in compliance with the
laws of the particular jurisdictions in which they are sold. Supplier Engagement ....…............................... 100
References in this document to information on websites,
including the web address of BAT, have been included as
TCFD Reporting ..............................................….. 102
inactive textual references only. These websites and the Our approach to TNFD disclosures ........... 117
information contained therein or connected thereto are not
intended to be incorporated into or to form part of the Group Principal Risks ......................................... 121
Annual Report and Form 20-F.
Cautionary statement
This document contains forward-looking statements.
For our full cautionary statement, please see page 386.

1
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Overview

Our Global Business

Our regional profile maximises opportunities for quality growth in our sector.
Each of our markets is accountable for its own performance and driving growth.

Our in-depth marketplace analysis delivers insights on consumer trends and segmentation, which facilitates our
geographic brand prioritisation across our regions and markets.
Consumer preferences and technology are evolving rapidly, and we are staying ahead of the curve with our digital
hubs and innovation centres. We are also leveraging the expertise of our external partners and are looking forward
to exciting results from our venturing initiative, Btomorrow Ventures.

+ Read more about our Markets

and Megatrends on page 26

Revenue by Region Our Three Complementary Regions

Map is accurate as at 31 December 2023 and is representative of general geographic
regions and does not suggest that the Group operates in each country of every region.

£27,283m
Total revenue

U.S. £11,994m

AME £9,791m

APMEA £5,498m

+ For more key detail on our Regional

Performance, see pages 44 to 49

2
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our business is divided into three complementary regions, with a balanced

presence in both high-growth emerging markets and highly profitable
developed markets.

3
regions
5
major product categories
135
employee nationalities
46,000+
employees

United States of America (U.S.)

Key Markets:
U.S.

Americas and Europe (AME)

Key Markets:
Belgium, Brazil, Canada, Chile, Colombia, the Czech
Republic, Denmark, France, Germany, Greece,
Hungary, Italy, Mexico, Netherlands, Poland,
Romania, Spain, Switzerland, Ukraine, the UK.

Asia-Pacific, Middle East and Africa

(APMEA)
Key Markets:
Australia, Bangladesh, Japan, Kazakhstan,
Malaysia, New Zealand, Pakistan, Saudi Arabia,
South Africa, South Korea, Taiwan, Vietnam.

+ Read more on pages 44 to 49

Associates and joint ventures

Key Markets:
India

3
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Strategic Management

Our Multi-Category Portfolio

BAT is a consumer-focused business operating internationally. Our multi-category

approach means we are well placed to provide adult consumers with products
designed for every mood and moment. Our portfolio reflects our commitment to
meeting the evolving and varied needs of today’s adult consumers.

Category
Revenue by Product Category
Vapour Vapour products are battery-powered devices that heat
e-liquids to produce an inhalable aerosol, commonly known
as vapour. Although e-liquids usually contain nicotine, there
is no tobacco in Vapour products.

+ Read more
on page 30

Heated Products Heated Products (HPs) comprise two main functional

parts; an electronic handheld device that contains a
lithium-ion battery that powers a heating chamber: and
New Categories £3,347m 12.3% a specially designed consumable that is inserted into the
Traditional Oral £1,163m 4.2% device. Everything has been designed so that nicotine
and flavour are released through precision heating.
Combustibles £22,108m 81.0%
Our smokeless portfolio

Other £665m 2.5%

£27,283m
+ Read more
on page 32

Modern Oral Modern Oral products are pouches which contain high
Total revenue purity nicotine, water, and other high-quality ingredients.
Consumers place the disposable pouch between their gum
Strategic Portfolio and upper lip, typically for around 30 minutes, during which
time nicotine and flavours are released and the nicotine is
These are our key brands in both the
absorbed through the tissues lining the mouth.
combustible and Non-Combustible
categories. This ensures focus and
investment on the brands and
categories that will underpin the
Group’s future performance. + Read more
on page 34
The strategic portfolio is:
Traditional Oral Traditional Oral products include snus and snuff. Snus is
Non-Combustibles a moist form of oral tobacco originating from Sweden.
All brands within New Categories It is available in loose form or as pouches. The tobacco
and the strategic Traditional Oral is typically mixed with water, salt and aromas.
brands in moist and snus.
Combustibles
Dunhill, Kent, Lucky Strike, Pall Mall,
Rothmans, Newport (U.S.), Natural
American Spirit (U.S.), Camel (U.S.).
+ Read more
on page 36

Notes: Combustibles The Group sold 555 billion cigarette sticks and 15 billion
BAT’s New Category products are not smoking OTP (stick equivalents) in 2023. The Group operates
cessation devices and are not marketed for that internationally, with 38 fully integrated cigarette
purpose.
* Based on the weight of evidence and assuming
manufacturing facilities in 36 markets.
a complete switch from cigarette smoking.
These products are not risk free and are
addictive.
† Our Vapour product Vuse (including Alto, Solo,
Ciro and Vibe), and certain products, including
Velo, Grizzly, Kodiak, and Camel Snus, which are
sold in the U.S., are subject to FDA regulation
and no reduced-risk claims will be made as to + Read more
on page 37
these products without agency clearance.

4
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Global Drive Brands Market Footprint

63
markets where our Vapour products
are currently available

31
markets where our HPs
are currently available

34
markets where our Modern Oral
products are currently available

3
markets where our Traditional Oral
products are currently available

U.S. Specific

5
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Overview

Chair’s Introduction
Transformation in Action

Dear Fellow Shareholders, This is a commitment to migrate our

Our strategy and purpose were During 2023, the world continued to cigarette consumers actively, sustainably
*†
discussed extensively during experience a period of extensive and and responsibly to reduced risk ,
2023. The result of these prolonged uncertainty. smokeless alternatives. In so doing, BAT
discussions was the decision to will deliver for consumers, investors and
The global economy has entered an era of
society, while employees will benefit from
provide greater clarity on what we upheaval, as geopolitical tensions continue
a purpose-driven business that they can
mean by A Better Tomorrow™. to destabilise economies and societies.
feel excited about.
It means we are committed to Cost-of-living pressures are being
Built around the three pillars of Quality
Building a Smokeless World. compounded by inflation, and this
Growth, Sustainable Future and Dynamic
represents a significant challenge for
Business the Board believes this refined
Luc Jobin major economies. This has resulted in
strategy is right for the long-term success
re-adjustments in work habits and in
Chair of BAT. Tadeu discusses this in more detail
consumer behaviour.
on page 8 and further information on the
Ambiguity and uncertainty have long refined strategy can be found on page 14.
occupied discussions in boardrooms,
The refined strategy is a natural extension
but I cannot recall a time when this was
of the foundations that were laid in 2020
so pronounced.
and provides clarity on what BAT intends
As always, my colleagues around the world to focus on in the years to come.
have responded to the operating environment
The Board has been engaged in much
with resilience and resourcefulness. I would
discussion during the year about 'what'
like to thank them, on behalf of the Board,
the business should deliver in the future.
for their ongoing dedication and diligence.
It is, of course, important for shareholders
Leadership for the Future to understand 'how' we have delivered this
In May 2023, the Board announced a change year and how we think success should be
in the leadership of BAT, with Tadeu Marroco measured against the refined strategy
appointed as Chief Executive. going forward. Our Combined Annual and
With 30 years of experience across the Sustainability Report seeks to do that,
entire business, Tadeu was the outstanding while honing our non-financial disclosures
choice to lead BAT into the next chapter towards the reporting requirements of the
of its history. EU Corporate Sustainability Reporting
Directive (CSRD).
With his track record of delivering
transformation, building strong teams and Our Values and Culture
ensuring financial discipline, Tadeu is well A strategy is little without the right culture
placed to build on our A Better Tomorrow™ instilled across the organisation to deliver
strategy that was first articulated in 2020. it. A truly dynamic business is one where
Following his appointment, in June 2023 the people within it understand the
Tadeu reshaped his Management Board strategic aims and the expected
to support a greater focus on improved behaviours to achieve them.
execution and operational excellence. Values are an important facet of continuing
Having also appointed a new Chief People to be an exciting and winning company.
Officer and with a new Chief Financial It is why the Board was pleased to see a set
Officer due to join us from 1 May 2024, of rearticulated values being developed
the Board believes the management team in parallel with the refined strategy.
at BAT is well placed to execute on the Long-Term View of the Business
strategy of the business to deliver Despite an increasingly turbulent external
long-term value for stakeholders. environment, the fundamentals of the
Refining our Strategy and Purpose tobacco and nicotine sector remain
In the context of a rapidly changing world, attractive, and the Board believes BAT
it is important that shareholders have a is in a strong position to realise its potential.
holistic view of BAT and our place in it. The growth of adult smokers seeking
This is the second year that we have smokeless alternatives is a long-term,
embedded our sustainability data into sectoral trend. There remain more than one
our Annual Report. billion adult smokers in the world and there
Our Combined Annual and Sustainability are many jurisdictions which, with the right
Report again represents the fullest depiction regulatory approach, could see smoking
of BAT’s business strategy and performance. rates decline faster through greater
acceptance of smokeless products.
Our strategy and purpose were discussed
extensively during 2023. The result of these With our multi-category portfolio, BAT is
discussions was the decision to provide well placed to capitalise on this consumer
greater clarity on what we mean by shift to smokeless products while
A Better Tomorrow™. It means we are continuing to manage the combustible
committed to Building a Smokeless World. cigarette business in a responsible manner.

6
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

We believe that growth within the Serpil also brings experience in growing
smokeless category will be driven by consumer and enterprise product
sustained investment in our brands and companies, as well as managing global
targeted innovation to respond to evolving strategy, marketing, innovation and digital
consumer preferences and tastes. transformation.
Ambiguity and uncertainty have Combined with active portfolio management, I am looking forward to their respective
long occupied discussions in we believe that continuing to invest in our contributions as we accelerate our strategy
boardrooms, but I cannot recall a brands is fundamental to sustaining BAT's to build A Better Tomorrow™.
time when this was so pronounced. performance for the future.
Summary and Outlook
Dividends While sustained volatility and uncertainty
Reflecting the confidence in our business will continue to present challenges,
and its future prospects, the Board has we believe BAT remains well-positioned
As always, my colleagues around
declared a dividend of 235.52p per ordinary and resilient.
the world have responded to the share, payable in four equal instalments of
operating environment with 58.88p per ordinary share, to shareholders We are diversified by category, price point
resilience and resourcefulness. registered on the UK main register or the and geography. Our smokeless portfolio
South Africa branch register and to has been designed to take advantage of
American Depository Shares (ADS) holders, sectoral shifts. Our people are highly
each on the applicable record dates. engaged and have a track record of delivery
A truly dynamic business is during uncertain times.
The dividends receivable by ADS holders
one where the people within it in US dollars will be calculated based on Additionally, our continued investment
understand the strategic aims the exchange rate on the applicable in our brands and deep understanding of
and the expected behaviours payment dates. our consumers position us well to capture
opportunities in tobacco, nicotine and
to achieve them. Further information on dividends can beyond, markets we believe have very
be found on page 55 of the Financial attractive fundamentals.
Performance Summary and page 388
in the Shareholder Information section. BAT’s Board and leadership team remain
Despite an increasingly turbulent focused on securing long-term, sustainable
Board Changes value creation, by nurturing BAT’s culture,
external environment, the
I was very pleased to welcome Murray building our brands, and delivering A Better
fundamentals of the tobacco and Kessler and Serpil Timuray to our Board Tomorrow™.
nicotine sector remain attractive, this year.
and BAT is well placed to realise Both Murray and Serpil join the Board
its potential. as independent Non-Executive Directors
and members of the Nominations and
Remuneration Committees.
Notes:
The growth of adult smokers Murray possesses extensive leadership * Based on the weight of evidence and assuming
experience in growing consumer product a complete switch from cigarette smoking.
seeking smokeless alternatives
companies and managing regulated These products are not risk free and are addictive.
is a long-term, sectoral trend. businesses. † Our Vapour product Vuse (including Alto, Solo, Ciro and
Vibe), and certain products, including Velo, Grizzly,
Kodiak, and Camel Snus, which are sold in the U.S., are
subject to FDA regulation and no reduced-risk claims
will be made as to these products without
With our geographic footprint agency clearance.
and multi-category portfolio,
BAT is well placed to capitalise on
this consumer shift to smokeless
products, while managing the
combustible cigarette business
in a responsible manner.

BAT’s Board and leadership

team remain focused on securing
long-term, sustainable value
creation, by nurturing BAT’s
culture, building our brands, and
delivering A Better Tomorrow™.

From left to right, Group Chair, Luc Jobin, Non-Executive Director Kandy Anand and
Chief Executive, Tadeu Marroco

7
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Overview

Chief Executive’s Review

Building a Smokeless World

Dear Stakeholders, In the face of significant turbulence in our

For BAT, A Better Tomorrow™ I was very proud to be appointed Chief operating environment, I am assured by the
is very clear. We will work to Build Executive in May 2023. Having worked resilience demonstrated by the business.
a Smokeless World. The way at BAT for over three decades, it was an However, the prospect of ongoing volatility
we will do this is by switching honour to be given the opportunity to lead means that there is no room for complacency
the business. and this necessitates greater strategic clarity.
as many smokers as we can to
our smokeless products. Despite an increasingly difficult external A Refined Strategy
environment, I believe we are at a moment As I have said before, the direction of our
of enormous potential for BAT and the strategy that was laid out in 2020 remains
Tadeu Marroco
tobacco and nicotine sector as a whole. the right one. What is required now is a
Chief Executive clearer articulation of our vision and an
In order to realise that potential, we must
address a number of strategic choices. improved focus on sharper execution.
Fundamentally, BAT today is a business The ongoing success of our New
built to deliver resilient performance, even Categories business, combined with the
during uncertain times. underlying strengths of BAT, mean that
we are well placed to realise our potential.
Our geographical diversity and multi-
category product portfolio are underpinned Delivering long-term, multi-stakeholder
by long-term investments in our brands. value has long been our aim. What is now
required is a clearer picture of how that can
Combined with a culture that values create A Better Tomorrow™.
delivery today while pursuing future
opportunities, we are well positioned to As such, we have refined our strategy
continue delivering stakeholder value over to map out how we plan to deliver for
the years to come. stakeholders going forward. Underpinning
this is a revised set of values for our
Full-Year 2023 Performance employees. Further details on our strategy
During 2023, the underlying strengths of and values can be found on pages 14-17.
BAT were reflected in our performance,
For BAT, A Better Tomorrow™ is very clear.
despite a challenging environment. While
We will work toward Building a Smokeless
total Group revenue declined 1.3%, revenue
World. The way we will do this is by switching
at constant currency was up 1.6%, despite
as many smokers as we can to our
the negative impact due to the sale of Russia
smokeless products.
and Belarus partway through the year.
As a business, we are committed to becoming
I was pleased with the performances of
a predominantly smokeless business,
AME (with revenue up 5.4%) and APMEA,
targeting 50% of our revenue from
although APMEA was impacted by a
Non-Combustibles by 2035. With a refined
translational foreign exchange headwind
strategy, having refreshed my Management
which masked a good operating
Board and having a new set of Group-wide
performance as revenue declined 4.0%
1 values, I believe the business now clearly
(up 5.5% at constant rates ). As a result
understands the areas we need to focus on.
of a particularly difficult macro-economic
environment, the U.S. was down 5.1%. These areas fall under three pillars: Quality
Growth, Sustainable Future and Dynamic
There was another strong performance from
Business.
our New Categories which are now
profitable at the category contribution level Quality Growth
(two years ahead of our original plan), driven Quality Growth marks our transition from
by higher revenue (up 15.6%, or 17.8% on a the first stage of our transformation
constant currency basis). We currently have journey. Where our New Categories focus
24 million consumers of Non-Combustible was weighted toward revenue growth,
products and revenue from these products it will now pivot to a more balanced focus
now accounts for 16.5% of Group revenue. on top-line and bottom-line delivery.
2023 has brought some unique challenges Key to delivering this is a focus on brands
to the Group, including: and innovation, efficiency and margin
– Having concluded it was no longer delivery across our business. We will do this
sustainable in the current environment, while maintaining our competitive position,
I was pleased that we completed the sale and progressing our pilot launches for the
of our Russian and Belarusian businesses long-term into categories Beyond Nicotine.
in September 2023. As a result, we no A core part of this pillar will be stabilising
longer have a presence in Russia or the performance of our U.S. business.
Belarus and will receive no financial gain Despite recent challenges, the U.S. remains
from ongoing sales in these markets; and the most profitable tobacco and nicotine
– Reflecting the difficult trading market in the world and a core part of our
environment in the U.S., uncertainty future plans to Build a Smokeless World.
regarding the impact of the potential While the FDA and state level regulatory
menthol ban and continued drag on our proposals have driven some uncertainty in
legal Vapour business by illicit single-use the U.S. operating environment, our long
products, we have impaired certain U.S. track record of managing regulatory
assets (including goodwill and our change gives us confidence that we will
combustible trademarks), recognising be able to navigate these issues.
a non-cash charge of £27.3 billion.

8
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future Our new Chief People Officer, Dr Cora

The Sustainable Future pillar re- Koppe-Stahrenberg, and I will be working
emphasises our overarching goal of closely together, to foster the kind of
creating A Better Tomorrow™. human-centric, skills-enabled and
performance-driven organisation that is
Despite an increasingly difficult Science will continue to be a primary driver
essential to driving forward our strategic
external environment, I believe of our efforts. We will support the science
agenda.
behind smokeless products through more
we are at a moment of enormous Increasing our financial flexibility is another
active external engagement, including
potential for BAT and the tobacco with regulators. We will work to provide core part of the Dynamic Business pillar.
and nicotine sector as a whole. more consumers around the world with Continuing our disciplined approach to
access to smokeless products in a capital allocation and debt management
responsible manner. will be crucial. Having moved into the
middle of our leverage range, we have
We have rearticulated our Of course, further embedding sustainability
increasing flexibility to deliver long-term
and integrity into all of our activities will
purpose to clarify our intention value while taking into account macro-
continue to be a priority and you can read
to move our business beyond economic and regulatory developments.
more about our efforts there on page 60.
cigarettes. Facing the Future with Confidence
Dynamic Business
Looking to the future, it is clear to me that the
The Dynamic Business pillar highlights our
fundamentals of our strategy remain correct.
commitment to strengthening our already
As part of our refined strategy, winning organisation and ensuring we are We have rearticulated our purpose to
efficient and effective in all of our operations. clarify our intention to move our business
the areas we will focus on fall beyond cigarettes, and we will continue to
under three pillars: Quality By focusing here and being data-driven,
address the difficult decisions that this
Growth, Sustainable Future we believe we can create the financial
purpose entails.
flexibility to invest in our people, our
and Dynamic Business. We are sharpening our executional focus
products and provide returns to our
investors. to enable high quality, repeatable growth,
supported by science, stakeholder
Key to delivering on our refined strategy
engagement and with sustainability
Key to delivering on our are the thousands of people around the
and integrity at the core.
refined strategy are the people world who work at BAT and the culture
that they operate in. We are an organisation ready to deliver,
who underpin this business, with operational excellence and an ability
our employees, and the culture to flexibly manage our capital allocation
that they operate in. Notes: decisions for the benefit of all stakeholders.
1 Please refer to the Non-GAAP section from page 335 It is an exciting time to be part of BAT and
for the Non-GAAP measures definitions.
* Based on the weight of evidence and assuming a I look forward to working with colleagues
Science will continue to be a complete switch from cigarette smoking. These around the globe to Build a Smokeless
products are not risk free and are addictive. World and drive A Better Tomorrow™.
primary driver of our efforts. † Our Vapour product Vuse (including Alto, Solo, Ciro
and Vibe), and certain products, including Velo, Grizzly,
Kodiak, and Camel Snus, which are sold in the U.S., are
subject to FDA regulation and no reduced-risk claims will
be made as to these products without agency clearance.
We will work to enable more
consumers around the world
to have access to smokeless
products.

Further embedding sustainability

and integrity into all of our
activities will continue to be
a priority.

It is an exciting time to be part of

BAT and I look forward to working
with colleagues around the globe
to Build a Smokeless World and
drive A Better Tomorrow™.

From left to right, Johan Vandermeulen, COO, Tadeu Marroco, Chief Executive,
and Usman Zahur, Area Director Central Europe

9
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Overview

Our Year in Numbers

NON GAAP
IFRS GAAP
Our Performance Metrics

KPI
2023 % 2022 % 2021
Consumer
Number of Non-Combustible
1
Product Consumers 23.9m 20.7m 17.1m
Market Share
Cigarette and HP volume share growth (bps) -10 bps -10 bps +10 bps •
Cigarette and HP value share growth (bps) -50 bps flat +20 bps
Volume
Vapour (mn 10ml units/pods) 654 +7% 612 +14% 535
HP (bn sticks) 24 -1% 24 +26% 19
Modern Oral (mn pouches) 5,360 +34% 4,010 +22% 3,296
Traditional Oral (bn stick equivalents) 7 -10% 7 -8% 8
Cigarettes (bn sticks) 555 -8% 605 -5% 637
Other Tobacco Products (bn stick equivalents) 15 -11% 16 -10% 18
Financial
Revenue (£m) 27,283 -1.3% 27,655 +7.7% 25,684 •
2,3
Revenue at cc (%) +1.6% +2.3% • •
Revenue from New Categories (£m) 3,347 +15.6% 2,894 +40.9% 2,054 •
2
Revenue from New Categories at cc (%) +17.8% +37.0% • •
(Loss)/Profit from Operations (£m) -15,751 -250% 10,523 +2.8% 10,234 •
2,3
Adjusted Profit from Operations at cc (%) +3.1% +4.3% • •

Operating Margin (%) -57.7% 38.1% 39.8% •

3
Adjusted Operating Margin (%) 45.7% 44.9% 43.4% •
4
Diluted (Loss)/Earnings per Share (p) -646.6 -322% 291.9 -1.3% 295.6 •
3, 4
Adjusted Diluted Earnings per Share (p) 375.6 +1.1% 371.4 +12.9% 329.0 • •
2,3
Adjusted Diluted Earnings per Share at cc (%) +4.0% +5.8% • •
Dividends per Share (p) 235.5 +2.0% 230.9 +6.0% 217.8
Dividend Payout Ratio (%) 63% 62% 66%

Net Cash Generated from Operating Activities (£m) 10,714 +3.1% 10,394 +7.0% 9,717 •

Cash Conversion (%) -68% 99% 95% •

Borrowings, including Lease Liabilities (£m) 39,730 -7.9% 43,139 +8.8% 39,658 •

Total Shareholder Return (rank) 13 of 24 4 of 24 17 of 23 •

+ Find our key ESG goals, targets and metrics

in our ESG Roadmap on page 11

Please refer to the Non-GAAP section from page 335 for the Non-GAAP measures definitions. See the section ‘Non-Financial Measures’
on page 333 for more information on these non-financial KPIs.

Notes:
1. Excludes Russia and Belarus.
2. Where measures are presented ‘at constant rates’ or ‘at cc’, the measures are calculated based on a re-translation, at the prior year’s exchange rates, of the current year results of the
Group and, where applicable, its segments. See page 59 for the major foreign exchange rates used for Group reporting.
3. Where measures are presented as ‘adjusted’, they are presented before the impact of adjusting items. Adjusting items represent certain items of income and expense which the Group
considers distinctive based on their size, nature or incidence.
4. In 2023, the Group reported a loss for the year. Following the requirements of IAS 33, the impact of share options would be antidilutive and is therefore excluded, for 2023, from the
calculation of diluted earnings per share, calculated in accordance with IFRS, for that year. For remuneration purposes, and reflective of the Group's positive earnings on an adjusted
basis, management have included the dilutive effect of share options in calculating adjusted diluted earnings per share.

10
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our ESG Roadmap

Our ESG Roadmap contains some of our key sustainability ambitions and targets, metrics and performance tracking.

Key Achieved – Met target/ambition On track – Likely to meet Ongoing focus – Continued progress Not on track – Significant progress
ü on or ahead of time target/ambition on time towards target/ambition required required to meet target/ambition on time

Performance tracking
Topic Ambitions and targets Metrics 2023 2022 2021 Status

£5bn by 2025 New Category revenues (£bn) 3.3 2.9 2.1 n

in revenue from New Categories
Harm reduction 50m by 2030 No. of consumers (millions), 23.9 20.7 17.1 n
consumers of our Non-Combustible products excluding Russia and Belarus
Net Zero GHG emissions by 2050 Scope 1 and 2 (market-based) CO2e emissions 362 420 495 n
(thousand tonnes)
Climate change 50% reduction in Scope 1 and 2 GHG Scope 1 and 2 CO2e emissions intensity 13.3 15.2 19.3 n
emissions by 2030 (vs 2020 baseline)
1 (tonnes per £m revenue)
% Scope 1 and 2 CO2e emissions reduction vs 33.1 22.3 8.4 n
2020 baseline
2
50% reduction in Scope 3 GHG Scope 3 CO2e emissions (thousand tonnes) – 6,045 6,496 n
emissions by 2030 (vs 2020 baseline)
1 including biogenic emissions and removals

Circular 25% reduction in waste generated % reduction in waste generated 28.2 21.5 14.1 ü
economy in own operations by 2025 (vs 2017 baseline)
100% packaging % packaging reusable, recyclable or compostable 94 92 92 n
to be reusable, recyclable or compostable
by 2025
% markets selling Vuse and glo with Take-Back 100 100 100 ü
schemes
Biodiversity and Deforestation and Conversion Free % sources of wood used by our contracted 99.99 99.99 99.89 n
tobacco supply chain by 2025 farmers for curing fuels that are from
ecosystems sustainable sources
Deforestation Free pulp and paper % of pulp and paper materials sourced with low 69.3 N/A N/A n
supply chain by 2025 risk of deforestation

Forest Positive in our tobacco supply Hectares of forests planted for conservation 68.8 27.6 N/A n
chain by 2025 (vs 2021 baseline) and Forest Positive

Water 35% less water use by 2025 % reduction in water withdrawn vs 2017 baseline 39.2 32.6 27.6 ü
100% operations sites Alliance for % operations sites Alliance for Water 68.8 36.4 15.0 n
Water Stewardship certified by 2025 Stewardship (AWS) certified

Increase to 45% by 2025 % female representation in Management roles 42 41 39 n

proportion of women in Management roles
Employees, Increase to 40% by 2025 proportion % female representation on Senior Leadership 33 30 27 n
diversity and of women on Senior Leadership teams teams

culture Zero accidents Lost Time Incident Rate (LTIR) 0.17 0.19 0.20 n
aiming for zero accidents Group-wide
each year Number of serious injuries and fatalities 25 36 31 n
to employees and contractors
3
Human rights Zero child labour % farms with incidents of child labour identified 0.15 0.38 0.70 n
aiming for zero incidents in our
tobacco supply chain by 2025
% incidents of child labour identified and reported 100 100 100 ü
as resolved by the end of the growing season
3
Farmer Prosperous livelihoods we are % farmers in our Thrive Supply Chain reported 93.3 92.8 95.6 n
livelihoods and committed to working to enable prosperous to grow other crops for food or as additional
3 livelihoods for all farmers in our tobacco sources of income
communities supply chain
Full compliance Incidents of non-compliance with marketing
4
3 2 N/A n
aiming for full compliance with marketing regulations resulting in a fine or penalty
regulations
Marketing and
communications
5
Ethics and 100% SoBC compliance Number of established SoBC breaches 123 84 99 n
integrity aiming for full adherence to our Standards
of Business Conduct (SoBC) Number of disciplinary actions taken as a result 79 58 46 n
of established SoBC breaches that resulted in
people leaving BAT
Supplier 100% of product material and high-risk % product material and higher-risk indirect 58.8 36.6 22.0 n
indirect suppliers having at least one service suppliers having an independent labour
engagement audit within a three-year cycle
independent audit within a three-year cycle

Notes: Environmental and health and safety data is reported for the period 1 December 2022 to 30 November 2023. See page 115 for CO2e emissions reporting methodology. 1. Compared
to a 2020 baseline. Our near-term 2030 science-based targets comprise 50% reduction in Scope 1 and 2 and 50% reduction in Scope 3 GHG emissions. Scope 3 emissions target
includes purchased goods and services, upstream transportation and distribution, use of sold products and end-of-life treatment of sold products, which collectively comprised >90%
of Scope 3 emissions in 2020. 2. Due to the complexity of consolidating and assuring Scope 3 data from our suppliers and value chain, this is reported one year later. In 2022 we further
enhanced our Scope 3 calculation methodology leading to the reporting periods 2020 and 2021 being restated accordingly. 3. Our ambitions cover all tobacco we purchase for our
products ('tobacco supply chain'), which is used in our combustibles, Traditional Oral and Tobacco Heated Products. Our metrics, however, derive data from our annual Thrive assessment,
which includes our directly contracted farmers and those of our third-party suppliers, which represented over 94% of the tobacco we purchased by volume in 2023 ('Thrive Supply Chain').
4. In line with a reclassification of 'ongoing incidents' (which, from 2023 reporting will be included as an 'incident' when the final decision is issued), the 2022 number has been restated
(three previously reported for 2022). 5. Consistent with previous years' reporting, cases are not included if investigations were not resolved at year-end.

11
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Overview

Interim Finance Director’s Overview

2023 has been a challenging year Total Group revenue declined 1.3% to
Despite the U.S. impairment as we navigated a number of issues £27,283 million in 2023 (having grown
negatively impacting our in our performance. 7.7% in 2022 to £27,655 million).
reported results, the Group's Our New Categories business is already However, excluding foreign exchange
operational financial profitable (at the category contribution movements (which were a headwind of
performance demonstrates the level), two years earlier than our original 2.9% in 2023 and a tailwind of 5.4% in 2022)
resilience of the business. We plan, while our global footprint allows us on a constant currency basis, revenue was
are highly cash generative and to deliver on our financial priorities despite up 1.6% in 2023 and 2.3% in 2022.
a challenging U.S. environment. This was driven by:
remain committed to our capital
allocation framework. We remain highly cash generative, allowing – New Categories revenue, up 17.8%
us to balance investment in the future in 2023 and 37.0% in 2022; and
while rewarding shareholders with
Javed Iqbal a further increase in dividends (up 2.0% to – continued combustibles pricing,
Interim Finance Director 235.5p, being 25 years of annual dividend with Group price/mix of 7.5% in 2023
increases). (4.6% in 2022);
The sale of our businesses in Russia and and partly offset by:
Belarus was completed in September 2023, – the impact of the sale of the Russian
and due to the timing of the transaction and Belarusian businesses; and
partway through the year, this was a – lower combustibles volume (down 8.3%
headwind on our comparative performance in 2023) largely due to the difficult trading
as 2023 does not include a full year's in the U.S. where volume was 11.3% lower.
performance from those markets.
Combined with a lower underlying Profit from operations declined 250%
performance in Russia as we reduced to be a loss of £15,751 million, compared
investment and focus, the comparative to a profit of £10,523 million in 2022,
impact on revenue was £456 million. an increase of 2.8%.
During 2023, we have observed an The decline in 2023 was due to the
acceleration of the decline rates in impairment charges referred to earlier in
cigarette volume in the U.S., after a period respect of the U.S. (goodwill and brands).
of instability in market trends driven by the 2022 was negatively impacted by a number
COVID-19 pandemic. In response to these of other adjusting charges which did not
increased decline rates, we have revised repeat or were substantially lower in 2023.
our forecast performance for the U.S. These include the previously disclosed
market, reflecting the ongoing difficult charges in respect of:
macro-economic environment, uncertainty – The sale of the Russian (and Belarusian)
regarding the impact of the potential business (2023: £353 million, 2022:
menthol ban and continued drag on our £612 million);
legal Vapour business by the illicit – Restructuring and integration
single-use products. Accordingly, we have programmes, including Quantum, being
recognised a non-cash impairment charge a release in 2023 of £2 million from the
of £27.3 billion, of which £4.3 billion is in previously recognised provision, which
respect of goodwill. was a charge of £771 million in 2022;
The balance of £23.0 billion mainly relates – The agreement with the United States
to the acquired U.S. combustibles brands Department of Justice (DOJ) and the
of Newport, Camel, Natural American Spirit United States Department of the
and Pall Mall which are now considered to Treasury’s Office of Foreign Assets
have a useful economic life not exceeding Control (OFAC) to resolve historical
30 years, rather than into perpetuity, breaches of sanctions (2023: £75 million,
aligned with our strategy to Build a 2022: £450 million); and
Smokeless World.
– A charge in 2022 of £79 million related
We will, therefore, be commencing to the conclusion of the investigation into
amortisation of the U.S. cigarette brands alleged violations of the Nigerian
(previously recognised for accounting Competition and Consumer Protection
purposes as indefinite-lived) from 1 January Act and National Tobacco Control Act.
2024. This non-cash charge of £1.4 billion per
These charges were partly offset by a net
annum will be treated as an adjusting item.
credit of £167 million (2022: £460 million) in
Brazil as the Group revised the calculation
of VAT and excise on social contributions in
prior periods following updated guidance
and the conclusion of litigation.
Our operating margin was consequently
95.8 ppts lower at -57.7% in 2023 (2022:
down 170 bps to 38.1%).

12
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Excluding these significant adjusting items, This allowed for a net repayment
and a translational foreign exchange of borrowings in the year, with total
headwind of 2.6%, on an adjusted constant borrowings (including lease liabilities)
currency basis (which we believe reflects down from £43,139 million in 2022
the operational performance of the Group) to £39,730 million in 2023.
We aim to continue to reward profit from operations grew by 3.1% (2022: Consequently, our leverage ratio has
shareholders and our financial up 4.3%), due to the continued reduction improved towards the middle of our range.
performance allows us to further in losses from New Categories, which are
now profitable at a category contribution Our liquidity profile remains strong, with
increase our dividend by 2.0% -
level- two years ahead of our original plan. average debt maturity close to 10.5 years
marking 25 years of annual and maximum debt maturities in any one
dividend increases. Adjusted operating margin (at current calendar year of around £4 billion, with a
rates) increased 80 bps to 45.7% (2022: up current rating of Baa2 (positive outlook),
150 bps to 44.9%) driven by the reduction BBB+ (negative outlook), BBB (positive
in New Categories losses in both years, outlook) from Moody's, S&P and Fitch ,
*

Strong, sustainable, cash flow combined with the impact of the disposal of respectively.
generation underpins confidence the Group's businesses in Russia and Belarus,
as the margins of those businesses were In August 2023, the Group completed
in the future. a tender offer to repurchase sterling-
lower than the Group average.
equivalent £3,133 million of bonds, including
EPS Impacted by U.S. Impairment, £43 million of accrued interest, reducing
Offsetting Resilient Operating future refinancing risk. The Group has debt
Performance maturities of around £3.2 billion annually in
On a reported basis, basic EPS was down the next two years. Due to higher interest
320% at -646.6p (2022: down 1.2% at rates, net finance costs are expected to
293.3p) with diluted EPS 322% lower at increase as debts are refinanced.
-646.6p (2022: down 1.3% to 291.9p), as 25 Years of Consistent
2023 was impacted by the impairment Dividend Growth
charges recognised in respect of the U.S.
We are extremely proud of our long history
Excluding both the adjusting items of dividend growth.
(discussed on pages 52 and 53) and the
2023 marks the 25th consecutive year of
effect of foreign exchange on the Group’s
sterling dividend increases, with a further
Profit from operations was down results, adjusted diluted earnings per share,
increase of 2.0% to 235.52p (with a
-250% (2022: up 2.8%), impacted at constant rates, increased by 4.0% to
dividend payout ratio of 62.7%).
by the impairment charges 386.4p, building on the 5.8% growth in
2022. The performance in 2023 was also Facing the Future with
largely in respect of the U.S.
impacted by the timing of the sale of the Increasing Confidence
goodwill and brands.
Group's businesses in Russia and Belarus Our business is well placed for the future.
during the year, a negative headwind on With a diversified geographic and product
the performance of 1.2%. portfolio, and a track record of delivering
Strong cash generation has Active Capital Allocation Framework robust and consistent cash generation,
enabled us to return £5.1 billion Ensures Deleverage, Investment and we believe the Group is well positioned to
of cash to shareholders in 2023, Investor Returns continue to invest for future growth while
while still deleveraging. We remain committed to our active capital navigating the near-term macro-economic
allocation framework, which we expect will uncertainties and challenges.
deliver long-term value to our shareholders,
driven by our cash flow generation and
deleverage plans.
These include:
– Continuing to grow the dividend;
– Maintaining our target leverage corridor;
– Potential bolt-on M&A opportunities; and
– Share buy-backs to enhance shareholder
returns.
The Group remains highly cash generative,
realising £10.7 billion (2022: £10.4 billion)
of net cash generated from operating
activities.

Notes:
* A credit rating is not a recommendation to buy, sell
or hold securities. A credit rating may be subject to
withdrawal or revision at any time. Each rating should
be evaluated separately of any other rating.

13
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategy

Our Refined Strategy

To accelerate the next phase of our transformation,

we are committing to Building a Smokeless World.
This means we will deploy our global multi-category
portfolio to actively encourage smokers to switch
to smokeless products – in nicotine and beyond.

The tobacco and nicotine industry has At a business level, our aim is to become
undergone a seismic shift in recent years. a predominantly smokeless business, with
Increasing numbers of adult smokers are 50% of our revenue from Non-Combustibles
migrating to smokeless products like by 2035.
Vapour products, Heated Products and To deliver this, we have refined our For BAT, A Better Tomorrow™
Modern Oral nicotine pouches. Group strategy to ensure clear lines is very clear. We will work to Build
With an increasing amount of scientific of sight across the entire organisation. a Smokeless World. The way
research behind these products, they Built around the three pillars of Quality we will do this is by switching
represent an opportunity for Tobacco Growth, Sustainable Future and Dynamic
Harm Reduction on a global scale. as many smokers as we can
Business, our Strategic Navigator outlines to our smokeless products.
We have played a significant part in the the nine priority building blocks that
ongoing industry transformation towards support the achievement of our ambition
Tobacco Harm Reduction. Our multi- to Build a Smokeless World. Tadeu Marroco
category strategy continues to be the right Chief Executive
Through these priorities, we will deliver
one to meet the evolving preferences of the strategic outcomes against which
adult consumers around the world and our performance will be measured.
deliver business growth.
Quality Growth
We have built a portfolio of three powerful
Transitioning to a more balanced focus
smokeless product brands: Vuse, glo and
on top-line and bottom-line delivery,
Velo, which have delivered more than
focusing on our brands and innovation,
£3 billion of annual revenue in just a decade.
and continuing to seek long-term
After significant early-stage investments,
opportunities Beyond Nicotine.
we are encouraged that our New
Categories are profitable (at a category Sustainable Future
contribution level) two years ahead of our Seeking to actively migrate consumers
original target. Our focus on driving away from cigarettes and to smokeless
revenue growth and margin expansion alternatives sustainably, responsibly and
will continue. with integrity.
To accelerate the next phase of our Dynamic Business
transformation, we are committing to Building a future-fit, data-driven organisation
Building a Smokeless World. This means and ensuring we are efficient and effective
we will deploy our global multi-category in all of our operations. This will create
portfolio to actively encourage smokers to the greatest financial flexibility possible
switch to smokeless products – in nicotine to invest in our people, our products
and beyond. In essence, to encourage and provide returns to our investors.
smokers to ‘Switch to Better’. In turn, this
will realise the multi-stakeholder benefits
of A Better Tomorrow™.

14
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategic Navigator

15
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategy

Strategic Summary

Our Purpose: A Better Tomorrow™ — Building a Smokeless World

A Better Tomorrow™ To deliver on our vision of Building a Built around the three pillars of
Our Vision: Smokeless World, our aim is to become Quality Growth, Sustainable Future
Building a Smokeless World a predominantly smokeless business and Dynamic Business, our Strategic
Our Mission: – with 50% of our revenue in Navigator outlines the nine priority
To encourage smokers Non-Combustible products by 2035. building blocks that support the
to Switch to Better To enable this, we have refined our Group achievement of our ambition to Build
strategy to ensure clear lines of sight a Smokeless World. Through these
priorities, we will deliver the strategic
across the entire organisation.
outcomes against which our performance
will be measured.

16
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Transitioning to a more balanced focus Seeking to actively migrate consumers Building a future-fit, data-driven
on top-line and bottom-line delivery, away from cigarettes and to smokeless organisation and ensuring we are
focusing on our brands and innovation, alternatives sustainably, responsibly and efficient and effective in all of our
and continuing to seek long-term with integrity. operations.
opportunities Beyond Nicotine. There has been significant progress in the We believe we can create the financial
In the tobacco and nicotine industry, global Tobacco Harm Reduction (THR) flexibility to invest in our people, our
stable combustibles revenues and journey over the past decade. Today, there products and provide returns to our
accretive New Category growth underpin are three significant global smokeless investors.
continued revenue growth. tobacco and nicotine product categories: We are committed to building a company
Yet, only around 10% of the world’s one Vapour products, Heated Products and where people and performance come
billion smokers have made the Switch to Modern Oral nicotine products. together to create the extraordinary.
Better and replaced combustibles with Our ambition is to reduce the health That is why creating an Exciting, Winning
smokeless products. impact of our business via THR – Company is one of the building blocks
The long-term opportunity for growth, as migrating more smokers to smokeless under the Dynamic Business pillar.
we strive to accelerate this transformation, products and advocating for the right
regulatory environments for these Additionally, generating shareholder value,
remains vast. via sustainable returns, remains an integral
products to flourish. We must do this
Prioritising where and what products to responsibly and with integrity. part of our strategic ambition. Over the past
focus on, via our market archetype model, 25 years we have consistently grown the
will guide our human and financial resource We recognise and support the objective of dividend per ordinary share in absolute terms.
allocation decisions. governments to reduce smoking rates and
its associated health impact. Reducing debt is another core component
We will enhance our innovation ecosystem of the Dynamic Business pillar.
with a single-minded aim: developing an Combustible tobacco products pose
serious health risks. The only way to avoid Given current geopolitical and economic
outstanding pipeline of new, scientifically challenges, the Group aims to de-lever its
substantiated products. these risks is not to start or to quit smoking.
gross debt levels (c.£39.7 billion in 2023)
Our combustibles business remains For those adults who would otherwise and moderate the annual Net Financing
essential to funding our transformation continue to smoke or start smoking, we Cost levels (c.£1.9 billion in 2023) to better
and continuing to reward our shareholders. believe they should be able to make better support the overall strategy of the Group.
choices by opting for smokeless
In Beyond Nicotine, we will build a pathway alternatives instead of cigarettes.
to a new portfolio of non-nicotine-based
products that can enhance BAT's growth Science will be a primary driver of our
beyond 2025. efforts, supported by more active external
engagement with regulators and other
Within Beyond Nicotine there are two key stakeholders, while embedding
categories that BAT is exploring: Wellbeing sustainability across our organisation.
and Stimulation – functional consumable
products that help people manage their As we transition from cigarettes to
mood and wellbeing; and cannabis. smokeless products, our transformation
must be comprehensive – addressing not
only our products' public health impact but
also our other material sustainability topics.

Our commitments Our commitments Our commitments

under Quality Growth: under Sustainable Future: under Dynamic Business:
Progressing toward quality, margin- Building a Smokeless World Creating a diverse, inclusive and
accretive growth in smokeless products people-oriented place to work
Investing in the products, science
FMC volume decline but and engagement to make A Better Being data-driven and delivering
expecting continuing value delivery Tomorrow™ a reality operational excellence/cost management
Sensibly investing for the future Conducting our business sustainably Focused on investors returns
Beyond Nicotine and with integrity
+ For more details on the Dynamic Business
pillar of our refined strategy,see page 40
+ For more details on the Quality Growth pillar
of our refined strategy,see page 28
+ For more details on the Sustainable Future
pillar of our refined strategy see page 60

17
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategy

Our Business Model

As a global business, we strive to understand our diverse consumers,

develop products to satisfy their preferences and ultimately distribute
them to markets around the world. Taking into account feedback from
stakeholders also enables us to refine our strategy, deliver sustainable value
and build A Better Tomorrow™.

Our eight-step business model

Our business model begins and ends with the consumer. Following the responsible sourcing of raw materials and
The insights we gather from adult consumers, underpinned components, we utilise our global footprint to manufacture
by robust science, unlock value by ensuring we offer the right at speed and scale. We use our global distribution capabilities
product choices to meet their preferences. Our product portfolio to ensure our products are where they need to be, when they
is constantly being enhanced through innovations designed to are needed, based on our market archetype model. Through
better serve adult consumers and build A Better Tomorrow™. our responsible marketing practices and powerful portfolio,
we market and sell our products which, in turn, generate
+ Read more about our
stakeholders on page 20 further insights.

18
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Seeing over Tobacco Harm Reduction Staying ahead Sourcing materials

the horizon Acceptance of the curve responsibly
As one of the most long-standing World-class science is required to As consumer preferences and The majority of our tobacco is sourced
and established tobacco and nicotine substantiate the quality, product technology rapidly evolve, we rely by BAT Group's vertically integrated
businesses in the world, we have a safety and reduced-risk potential of on our growing global network of Leaf Operations through direct
unique view of the consumer across our New Category products. This is digital hubs, innovation hubs, contracts with c.91,000 farmers.
our product categories. This is crucial for building consumer and world-class R&D laboratories, Of the remainder, the majority is from
increasingly driven by powerful regulators' trust and encouraging external partnerships and our third-party suppliers that, in turn,
data and analytics. These insights adult smokers to completely switch corporate venturing initiative, contract with an estimated 155,000
*†
ensure that the development and to less risky alternatives . Btomorrow Ventures. farmers. The vast majority of tobacco
responsible marketing of our products We have an extensive scientific Driving sustainable growth is at farms in our supply chain are
are fit to satisfy consumer preferences. research programme in a broad the core of our innovation. We smallholder family farms.
Powered by our data-driven spectrum of scientific fields, including make significant investments in Beyond tobacco, we source product
consumer insight platform, we focus molecular biology, toxicology and research and development to materials like paper and filters for
on product categories and consumer chemistry. We are transparent deliver innovations that satisfy or cigarettes and, for our New Category
segments across our global business about our science and publish details anticipate consumer preferences products, we have a growing supply
that have the best potential for long- of our research programmes on and generate growth for the business. chain in consumer electronics and
term sustainable growth. our dedicated website, www.bat- Led by our strength in developing e-liquids. We also have a vast number
Link to Principal Risks science.com, and the results of our consumer insights, each innovation of suppliers of indirect goods and
Tobacco, New Categories and other studies in peer-reviewed journals. helps us on our journey to build services that are not related to our
regulation interrupts growth strategy; Link to Principal Risks A Better Tomorrow™ by reducing products, such as for IT services
Inability to develop, commercialise and Competition from illicit trade; Tobacco, the health impact of our business. and facilities management.
deliver the New Categories strategy; New Categories and other regulation Link to Principal Risks
Climate change and circular economy; interrupts growth strategy; Significant Link to Principal Risks
Geopolitical tensions; Supply chain
Cyber security increases or structural changes in Inability to develop, commercialise and
disruption; Inability to develop,
tobacco, nicotine and New Categories deliver the New Categories strategy;
commercialise and deliver the New
related taxes; Inability to develop, Climate change and circular economy;
Categories strategy; Injury, illness or death
commercialise and deliver the New Cyber security
in the workplace; Solvency and liquidity;
Categories strategy Foreign exchange rate exposures; Climate
change and circular economy; Cyber security
+ Read more about our science
on pages 30, 32, 34, 66 and 78
+ Read more about our supply
chain on page 41

Utilising our global Moving our products Marketing our Offering the
manufacturing footprint seamlessly everywhere products responsibly consumer choice
We manufacture high-quality By applying modern technologies, Tobacco and nicotine products We have a powerful brand portfolio
products in facilities all over the including AI and machine learning, we should be marketed responsibly that we are very proud of. This
world. We also ensure that these ensure our products are where they to adults only and not designed includes our combustibles portfolio
products and the tobacco leaf we are needed when they are needed. to appeal to the underage. and our portfolio of smokeless
purchase are optimised for Our products are sold around the Through a globally responsible product brands which will contribute
distribution and sale. world and distributed effectively and approach to marketing, we seek to to Building a Smokeless World.
Our New Category products are efficiently using a variety of distribution help raise standards and prevent Our global brands are well
manufactured in a mix of our own models suited to local circumstances under-age access, while growing positioned, with leading-edge
and third-party factories. We work and conditions. our market share by encouraging insights, science and innovation
to ensure that our costs are globally These distribution models include adult consumers to choose our behind our product pipeline.
competitive and that we use our retailers, supplied through our direct products over those of our competitors. We offer adult consumers a range
resources as effectively as possible. distribution capability or exclusive Our International Marketing of products, including combustible
Link to Principal Risks distributors, and our Direct-to- Principles (IMP) govern our products, Vapour, Modern Oral
Geopolitical tensions; Supply chain Consumer business – which has been marketing across all our tobacco, and Heated Products, in markets
disruption; Disputed taxes, interest and accelerated through the deployment nicotine and nicotine-free products around the world. Our range of
penalties; Injury, illness or death in the of owned e-commerce sites. and brands. They include strict high-quality products covers all
workplace; Solvency and liquidity; requirements to be responsible, segments, from value-for-money
Foreign exchange rate exposures; Link to Principal Risks
Geopolitical tensions; Tobacco, New accurate and targeted at adult to premium.
Climate change and circular economy
Categories and other regulation interrupts consumers only. Our IMP are Link to Principal Risks
growth strategy; Supply chain disruption; applied even when they are stricter Competition from illicit trade; Geopolitical
Inability to develop, commercialise and than local laws. tensions; Tobacco, New Categories and
deliver the New Categories strategy; other regulation interrupts growth
Link to Principal Risks
Foreign exchange rate exposures; Climate strategy; Supply Chain disruption;
Competition from illicit trade; Tobacco,
change and circular economy; Cyber Litigation; Significant increases or
New Categories and other regulation
security structural changes in tobacco, nicotine
interrupts growth strategy; Inability to
develop, commercialise and deliver the and New Categories related taxes;
New Categories strategy; Litigation; Inability to develop, commercialise and
Foreign exchange rate exposures deliver the New Categories strategy;
Disputed taxes, interest and penalties;
+ Read more about responsible
marketing on page 96
Foreign exchange rate exposures; Climate
change and circular economy

19
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategy

Our Business Model

Continued

™
A Better Tomorrow for: + Read more about these Stakeholders
pages 22 and 23

Consumers Society

Our consumers are at the core of everything we do and our We believe the greatest contribution we can make
success is underpinned by addressing their preferences, to society is Building a Smokeless World and reducing
offering them a choice of enjoyable, innovative and less the health impact of our business. We will do this by
*†
risky products . encouraging those smokers who would otherwise continue
to smoke to switch completely to smokeless alternatives.
Measured by Achieving this, while working to reduce our impact on the
– 63 countries where Vapour products are available environment, is central to delivering A Better Tomorrow™.
– 31 countries where Heated Products Measured by
are available
– 23.9m consumers of Non-Combustible products
– 34 countries where Modern Oral products are available
– 28% reduction of waste generated
Suppliers – 33.1% reduction in Scope 1 & 2 emissions from
our 2020 baseline
Across the BAT Group, we work with thousands of different
suppliers worldwide. Our suppliers are valued business partners
and we believe, by working together, we can raise standards,
drive sustainable practices, create shared value and build
A Better Tomorrow™ for all. Notes:
* Based on the weight of evidence and assuming a complete switch from cigarette
smoking. These products are not risk free and are addictive.
Customers † Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products,
including Velo, Grizzly, Kodiak, and Camel Snus, which are sold in the U.S., are subject
to FDA regulation and no reduced-risk claims will be made as to these products
Our customers include retailers, distributors and wholesalers without agency clearance.
who are essential for driving growth and embedding responsible ‡ Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions
marketing practices. at bat/reporting.com

Our People Shareholders & Investors

We employ 46,000+ people worldwide. Attracting We are committed to delivering sustainable and superior
and retaining an increasingly diverse workforce and returns to our shareholders and investors. It is essential
providing a welcoming, inclusive working environment that we maintain the support of our shareholders and
are key drivers in BAT’s transformation journey to build investors to enable access to capital. This allows us to
A Better Tomorrow™. Our focus is on providing a dynamic, implement our strategy and achieve our business objectives.
inspiring and purposeful place to work.

Measured by
– accredited as Global Top Employer by the Top Employers
Institute
– 80% Engagement Index score in our Your Voice employee
survey
– 0.17 Lost Time Incident Rate (LTIR) vs 0.19 in 2022
‡
– proportion of women in Management roles grew to 42%

Non-Financial and Sustainability Information Statement

Non-financial and sustainability information reporting Our reporting in the following areas includes information about the policies and principles that
required under the UK Companies Act is included in govern our approach, due diligence processes, outcomes and non-financial performance
the Strategic Report as referenced below: indicators:

+ Our business model is

set out on pages 18 to 20 + Environmental matters
pages 11, 72 and 80 to 87 + Employees
pages 11, 72 and 88 to 91

+ See pages 121 to 128

for Group Principal Risks + Social matters
pages 11, 72, 78 to 79 and 92 to 94 + Respect for human rights
pages 11, 72 and 92 to 94

+ See pages 10 and 11 for the Group's financial and non-

financial key performance indicators
+ Anti-bribery and anti-corruption matters
pages 11, 72 and 98 to 99

Our climate-related financial disclosures are set out on pages 102 to 116. Further details of our Group policies and principles can be found on pages 72 and 73
and at www.bat.com

20
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

21
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategy

Engaging with Our Stakeholders

We work with, take into account and respond to the views and concerns
of our stakeholders. This enables us to adapt to emerging risks and work
to meet the expectations placed upon us as a multinational business.

Consumers Shareholders & Investors Our People

Why this stakeholder As preferences and attitudes change It is essential that we maintain the The quality of our people is a major
in an evolving industry, understanding support of our shareholders and reason why our Group continues to
is important to us our consumers is essential to bondholders to maintain access to perform well. We understand the
both successful portfolio and capital. This allows us to implement value of listening and responding
business growth. our strategy and achieve our to feedback from our people to
business objectives. maintain a fulfilling, rewarding
and responsible work environment.

Examples of how we – Consumer panels, focus groups – Annual General Meeting – Director market and site visits
and interviews – Investor relations programme – Virtual forums
engaged in 2023 – Consumer care helplines and shareholder engagement – Employee town halls
– Responsible marketing and on our Directors’ Remuneration Policy – Global and regional webcasts
transparent communication – Institutional shareholder meetings – Your Voice employee survey
– Real-time digital platforms – Capital Markets Days – Works councils and European
– Investor roadshows Employee Council meetings
– Results announcements – Graduate and management
– Annual Report and Form 20-F trainee events
– Suite of focused ESG reports and – Individual performance reviews
wider disclosures – Speak Up channels
– Stock exchange announcements
– Shareholder information on website

What matters to – Health impact of our products – Business performance – Reward

and other social considerations – ESG agenda – Career development
our stakeholders – Product quality – Corporate governance – Diversity and inclusion
– Affordability and price – Strength of Group leadership – Corporate responsibility
– Ingredients/nicotine levels – Board succession planning – Health and safety
– Plastics/post-consumption – Business ethics
product waste

How we respond – Development of innovative products – Regular dialogue and communications – Extensive communications and
– Product stewardship, quality and with shareholders and investors engagement with our people
safety standards – Robust corporate governance worldwide during and following
– Clear and accurate product – Double Materiality Assessment
^ the pandemic
information and review of reporting landscape – Board review of and feedback
– International Marketing Principles – Continual improvement of our on workforce engagement
– Circular economy strategy Delivery with Integrity programme – Training and development
and initiatives – Our range of enjoyable and innovative programme
products – Diversity & Inclusion Strategy
– Product quality and safety standards – Delivery with Integrity programme
– International Marketing Principles

Principal risk impact – Competition from illicit trade – Competition from illicit trade – Geopolitical tensions
– Tobacco, New Categories and other – Geopolitical tensions – Supply chain disruption
regulation interrupts growth – Tobacco, New Categories and other – Injury, illness or death in
strategy regulation interrupts growth strategy the workplace
– Supply chain disruption – Litigation – Climate change and circular
– Significant increases or structural economy
– Significant increases or structural
changes in tobacco, nicotine and changes in tobacco, nicotine and New – Cyber security
New Categories related taxes Categories related taxes
– Inability to develop, commercialise
– Inability to develop, commercialise and deliver the New Categories strategy
and deliver the New Categories
– Disputed taxes, interest and penalties
strategy
– Solvency and liquidity
– Climate change and circular – Foreign exchange rate exposures
economy
– Climate change and circular economy
– Cyber security – Cyber security

22
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Listening to our stakeholders helps us better understand their

views and concerns, and enables us to respond to them appropriately.
It gives us valuable inputs to, and feedback on, our strategic approach,
as well as our policies, procedures and ways of working.

UK Companies Act:
Section 172(1) Statement
Suppliers Customers Government & Wider Society Our Directors have a duty,
individually and collectively
as the Board, to act as they
Effective relationships with farmers Our customers include retailers, global We seek to be part of the debate that consider most likely to promote
and suppliers of tobacco leaf, product and local key accounts, distributors shapes the regulatory environment the success of the Company for
materials and indirect services are and wholesalers that are essential for in which we operate, and to work the benefit of our members as
essential to an efficient, productive driving growth and embedding collaboratively to develop joint a whole.
and secure supply chain. responsible marketing practices. solutions to common challenges. As part of this duty, our Directors
must have regard for likely long-
term consequences of decisions
and the desirability of maintaining
a reputation for high standards of
– Extension Services farmer support – Ongoing dialogue and account – Meetings and ongoing dialogue business conduct. Our Directors
– Ongoing dialogue and relationship management – Submissions to government must also have regard for our
management – ‘Customer Voice’ survey and advisory committees employees’ interests, business
– ‘Supplier Voice’ survey, events – Audits/performance reviews – Multi-stakeholder partnerships relationships with our wider
and supplier summits – Sales calls and visits by trade and working groups, such as the stakeholders, the impact of our
– Strategic partnerships representatives Eliminating Child Labour in operations on the environment
– B2B programmes Tobacco-Growing Foundation and communities in which we
– Digital B2B eCommerce platforms – External Scientific & Regulatory operate and the need to act
Panel fairly between shareholders.
– Peer-reviewed research Consideration of these factors
– Biodiversity standards and and other relevant matters is
improvement programmes embedded into all Board
– Community investment decision-making, strategy
programmes and NGO partnerships development and risk
assessment throughout the year.
– Double Materiality Assessment
related engagements Our key stakeholders and primary
ways in which we engage with
– Productivity/quality/cost •
– Route-to-market planning Digital B2Bregulation
– Product eCommerce platforms them are set out in the table to
– Sustainable agriculture – Contingency planning – Tax/excise/illicit trade the left. Pages 138 to 141 and
– Farmer livelihoods – Cost, price and quality – Responsible marketing 144 to 149 provide further
explanation of our Board’s
– Human rights – Stock availability – Public health impacts
approach to understanding
– Health and Safety – Consumer buying behaviour – Human rights stakeholder interests to enable
– Climate change impacts – Underage access prevention – Climate change impacts relevant considerations to be
– Impact of conflict in Ukraine drawn on in Board discussion
and decision-making.
Where the Board delegates
authority for decision-making
– Supplier Code of Conduct – Customer loyalty programmes – Standards of Business Conduct to management, our Group
– Thrive sustainable agriculture and and incentives (SoBC) governance framework
farmer livelihoods programme – Global Underage Access Prevention – Delivery with Integrity programme discussed on pages 138 and
– Leaf operational standards for PPE (UAP) Guidelines and initiatives – Targeting 50% GHG emissions 139 mandates consideration
and child labour prevention reduction by 2030 and Net Zero of these factors and other
– Farmer Extension Services support by 2050 relevant matters as a critical
and training – Human rights and climate part of delegated authorities.
impact assessments Examples of some of the ways
– Community investment that these factors have shaped
programmes and Group strategy and initiatives
charitable donations during the year are referenced
in the table to the left. Examples
of how these factors have been
taken into account in Board
– Geopolitical tensions – Competition from illicit trade – Competition from illicit trade decision-making and strategy
– Supply chain disruption – Geopolitical tensions – Geopolitical tensions development during the year are
– Inability to develop, commercialise – Tobacco, New Categories and other – Tobacco, New Categories and other provided on page 149.
and deliver the New Categories regulation interrupts growth regulation interrupts growth strategy
strategy strategy – Litigation Note:
– Injury, illness or death – Supply chain disruption – Significant increases or structural ^ Although financial materiality has been
in the workplace considered in the development of our
– Significant increases or structural changes in tobacco, nicotine and
Double Materiality Assessment (DMA),
– Solvency and liquidity changes in tobacco, nicotine and New Categories related taxes our DMA and any conclusions in this
– Foreign exchange rate exposures New Categories related taxes – Inability to develop, commercialise document as to the materiality or
– Climate change and circular – Inability to develop, commercialise and deliver the New Categories significance of sustainability or ESG
economy and deliver the New Categories Strategy matters do not imply that all topics
– Cyber security strategy – Disputed taxes, interest and discussed therein are financially material
– Climate change and circular penalties to our business taken as a whole, and
economy such topics may not significantly
– Climate change and circular economy alter the total mix of information
– Cyber security – Cyber security available about our securities.

23
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategy

Investment Case

Transformation Driving Creating Sustainable Value

Sustainable Growth for our Stakeholders
Our New Category Transformation is Delivering Reducing our Health and Sustainability Impact
Profitable Growth and Reducing Harm As we transition from cigarettes to reduced-risk smokeless
Our corporate purpose is to build A Better Tomorrow™, products our transformation must address not only our
reducing the health impact of our business, by offering adult products' public health impact – but also continue to integrate
*†
consumers a greater choice of enjoyable and less risky and embed sustainability into our business.
products compared to cigarettes. To accelerate the next phase This requires us to address all our key sustainability topics such as
of our transformation journey we are now committed to Building climate change, circular economy, biodiversity and human rights.
a Smokeless World. We will deploy our global multi-category We also recognise the need to collaborate across our supply chain and
portfolio to actively encourage smokers to 'Switch to Better' work with our partners as we advance key sustainability initiatives.
nicotine products, and continue to seek long-term opportunities This approach will allow us to create a stronger BAT through:
Beyond Nicotine in Wellbeing and Stimulation, realising the
– Responsible Leadership in New Categories – we aim to set
multi-stakeholder benefits of A Better Tomorrow™.
industry standards for the development, manufacturing and
Our commitment is demonstrated by our new ambition to become marketing of New Category products;
a predominantly smokeless business, with 50% of our revenue from
– Create Positive Value in Agriculture – by leveraging our
Non-Combustibles by 2035. Revenue growth in the global nicotine
agricultural sourcing model we seek to deliver a positive impact
industry is accelerating through the development of New Categories,
*† in our agricultural supply chain, particularly with respect to social
which offer reduced-risk alternatives to combustible products.
and environmental issues;
With only 10% of the world’s 1 billion smokers currently using
– Deliver Net Zero GHG Emissions across our Value Chain –
New Category products, our well established global multi-category
through working towards decarbonising our own operations, and
strategy provides the greatest opportunity for long-term growth,
collaborating with suppliers and others across our value chain;
reduced harm and portfolio transformation.
– Trusted Organisation Operating with Integrity – working
We continue to make progress towards our targets to reach
to create and maintain a culture where our people are proud
£5 billion New Category revenue by 2025 and 50 million
of the role they play in our transformation and aim to always
consumers of our Non-Combustible products by 2030.
operate to the highest standards.
Prioritising where and what products to focus on, via our market
This builds on our ratings and recognition which include:
archetype model, will guide our resource allocation decisions.
We are now profitable with our New Categories business, on a – Our Science Based Targets initiative (SBTi) approved
o
category contribution basis, and we expect to be increasingly commitment to a near-term 1.5 C emissions reduction
profitable from 2024. trajectory, the most ambitious designation available;
We strive to continue to profitably and responsibly manage our – An A rating in 2023 in the latest MSCI ESG Rating assessment
transition away from combustibles, driving funds to further invest (upgraded from BBB)^; and
in our transformation and deliver sustainable profit growth and – Achieving A-, A- and A- in our 2023 CDP assessments for
cash flow over the long-term. Climate Change, Water Security and Forests^.
In order to achieve this, we have refined our Group strategy to By working to reduce the health and sustainability impact of our
ensure a clear line of sight across the entire organisation, and we business we will drive growth and create shared value, delivering
have set ambitious targets to be met through the delivery of our change as we work towards our objectives. Our commitments are
three strategic pillars. rooted in targets against which we will track and share the
progress as we our transform our business.

50mn
Non-Combustible product
50%
Group revenue from
50%
Reduction in Scope 1 & 2 GHG
50%
Reduction in Scope 3 GHG
consumers targeted by 2030 Non-Combustibles by 2035 emissions by 2030 (vs 2020 emissions by 2030 (vs 2020
baseline) baseline)

£5bn
New Category revenue
16.5%
Group revenue from
Forest Positive
in our tobacco supply chain
by 2025 (vs 2021 baseline)^^
MSCI A Rating
Upgraded in latest 2023
assessment^
by 2025 Non-Combustibles in 2023

Notes: ^ A rating is not a recommendation to buy, sell or hold securities. A rating may be subject
* Based on the weight of evidence and assuming a complete switch from cigarette to withdrawal or revision at any time. Each rating should be evaluated separately from
smoking. These products are not risk free and are addictive. any other rating. In addition, the criteria used in ratings may differ among ESG rating
† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, organisations. Companies may also supply different information to such organisations
including Velo, Grizzly, Kodiak, and Camel Snus, which are sold in the U.S., are subject to (or none at all) and this lack of consistency may impact rankings.
FDA regulation and no reduced-risk claims will be made as to these products without ^^ Our ambitions cover all tobacco we purchase for our products. Our metrics, however,
agency clearance. derive data from our Thrive assessment, covering over 94% of the tobacco purchased by
volume in 2023.

24
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business Making Active

Choices for the Future
Leveraging our Established Strengths and Expertise
While Continuing to Build New Capabilities to Deliver
on our Ambitions
Our multi-category portfolio of New Category brands benefits
from decades of consumer insights that have driven our No. 1
global revenue position in combustibles*.
In addition, leveraging the benefits of our world-class expertise in
science and R&D, our manufacturing, distribution, marketing and
brand building has enabled us to build three global brands, Vuse, glo
and Velo, delivering over £3 billion of revenue in less than a decade.
Our long-standing experience operating within complex
regulatory, legal and fiscal frameworks, provides BAT with a
compelling competitive advantage to drive portfolio growth and
transformation within the wider tobacco industry. With our new
Corporate and Regulatory Affairs function we will drive more
proactive, science led engagement with all stakeholders to further
our ambition to Build a Smokeless World.
We will continue to increase investment in new capabilities,
including enhancing our innovation pipeline, leading responsible
New Category development and further leveraging our broad
digital enablers. This gives us confidence that we can deliver
on our ambitions.
Sustainable success will also be accelerated by a culture of
inclusivity and collaboration. Our transformation is supported
by senior talent recruitment from a diverse range of industries.
Together with our new role of Chief People Officer, we are
focused on developing a skills-enabled and performance driven
organisation that is essential to driving forward our strategic agenda.
We continuously monitor and assess our capital allocation
framework to unlock shareholder value through; investing in the
right opportunities; optimising the return on our investments;
and maximising our cash generation; to reduce our leverage,
and generate sustainable cash returns for our shareholders.

23.9m
consumers of our
22m
consumers in our contactable
Non-Combustible products consumer database

>150
markets in which we operate
3,000
new capability hires
8%
adj. diluted EPS average
since 2019 growth (at cc) over 10 years

5%
dividend CAGR over 10 years
Progressive
dividend
Note:
* Excluding China.

25
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Strategy

Our Markets and Megatrends

As a global business, operating at scale within a rapidly evolving landscape,

our markets are shaped by long-term consumer, economic, cultural and
social trends. Along with regulatory developments, generational differences
and tastes are evolving, as health and wellness become ever more important.
We continue to respond to this changing environment by advancing our strategy
and long-term priorities.
Megatrends:
Technology and Innovation Climate Change and Circular Economy Geopolitical Instability

Artificial Intelligence Sustainable Transition Geopolitical Disruption

The rapid development of artificial The need to transition to a more There are some early signs that
intelligence – particularly generative AI environmentally sustainable way of elements of the cost-of-living crisis
and large language models – has the living continues to impact all aspects experienced in many countries, which
potential to create a whole new set of of our lives. has suppressed consumer demand,
opportunities for businesses, While there are mounting regulations may be abating.
governments, and individuals. on businesses to reduce their carbon Some of the stresses and bottlenecks
The world's understanding of this new and resource footprint, change is also which have negatively impacted global
technology is still developing, but being driven by consumers and other trade during the past three years
advances in AI have the potential to stakeholders, who are increasingly appear to be finally drawing to an end,
enable companies to increase demanding that consumer products with surveys indicating global
productivity and unleash exciting new and their packaging are more commerce is approaching pre-
levels of creativity if used appropriately. sustainable across their whole lifecycle. pandemic levels.
Understanding these opportunities and Companies — aligned with regulators, However, this recovery remains
managing the transition to a world in consumers and other stakeholders — vulnerable. The geopolitical disruption
which AI plays a greater role, from are proactively looking for ways to enable that began in 2022 with the conflict in
production to sales, is an increasing a transition to a more sustainable and Ukraine continues to be unresolved and
priority for businesses. circular economy. This might be through retains the potential to escalate further.
In our industry, the technology has the finding technological solutions to reduce Conflict in the Middle East also has the
potential to transform everything from emissions, ensuring better potential to cause further international
improving crop yields for traditional environmental standards in supply instability, while trade relations between
products to better understanding chains, or changing what happens to the U.S. and China remain unpredictable.
consumer behaviours and creating products after they have been used.
This instability may force some
more sustainable products. More broadly, investors and financial companies to shift investment and
In agriculture, AI can be used to monitor institutions are increasingly applying production to more stable markets and
crop health, ensure consistent crop methodologies that seek to ensure to look again at localising some production.
quality and efficiently manage water business models develop and
implement credible plans for the However, the intrinsically globalised
and fertilizer application, helping to nature of our modern economy means
reduce the environmental impact of transition to a low-carbon, climate-
resilient future. These efforts have that it is impossible to isolate supply
farming. In robotics, AI has already been chains from global events.
employed to help a robot clean up developed in tandem with regulations
cigarette butts from beaches and to which mandate climate-related
develop a robot that can test disclosures and due diligence
cigarettes, instead of using laboratory requirements.
animals. While the development of AI Please refer to the Notes on the
may disrupt many traditional ways of Accounts: note 12(b) for a discussion
working, it will also create new roles in on climate within our impairment
data analysis and system maintenance. assessment; and note 6(l) for disclosures
regarding our sustainability costs.

26
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Overview The European Union has set a target of New Categories regulations
The modern tobacco and nicotine market a 'Tobacco-free Generation' by 2040, for Globally, though these products are becoming
is continuing to evolve at a rapid rate. New example. A small number of countries have established in many markets, there remains
*†
and less risky nicotine products are being also examined stronger prohibitionist considerable divergence between countries
*†
developed and launched each year which, approaches to stop smoking among on how to regulate RRPs .
alongside traditional tobacco products, younger generations. The positive role they can play in reducing
meet the needs of more than a billion For example, the UK has begun examining the harms of smoking has been embraced
consumers worldwide. proposals to ban sales of cigarettes to by regulators in the UK, New Zealand and
Global Market for Combustibles anyone born after 2008. New Zealand passed Canada, which have sought to
and Non-Combustibles legislation last year (the first of its kind) to communicate to consumers that RRPs
*†
The most recent sales data for the legal implement such a proposal, however this are better alternatives to smoking and
global tobacco and nicotine market proposal is now likely to be discontinued have regulated these products accordingly,
indicated that it was worth approximately after the election of a new Government. while at the same time being mindful of
US$935 billion. The Malaysian Government had also the need to prevent usage by youth.
Combustible cigarettes remained the considered similar plans before concluding Other markets are yet to be convinced
largest product category within the market, they could be unconstitutional. Significantly, of the potential public health benefits of
*†
with a global value of US$779 billion (excl. in most cases, end-game measures have RRPs and have sought instead to limit
China), representing 84% of the total value focused on combustible tobacco, excluding access to them, for example Australia and
*†
of tobacco and nicotine product sales reduced-risk nicotine products. India, where sales of RRPs are effectively
worldwide. Roughly 2.8 trillion cigarettes Lastly, environmental concerns have led banned. Some markets have also
were sold in 2022. to an increased number of policy initiatives inadvertently confused nicotine consumers
aimed at combustibles. by regulating RRPs in a similar way to
The value of the global Non-Combustible combustibles. An example of this was the
products market continues to grow, The EU’s Single-Use Plastics legislation European Union’s recent extension of a ban
standing at US$68 billion. requires Member States to introduce on characterising flavours originally
Furthermore, despite combustibles being extended producer responsibility schemes intended for cigarettes to encompass
one of the most highly regulated products for, amongst other things, cigarette filters. Tobacco Heated Products.
in the world, roughly 17% of the world’s The United Nations is also examining a Concerns have been raised about youth
adult population (including China) potential world-first global Plastics Treaty, *†
use of certain RRPs in some countries;
continue to choose to smoke. This very which certain stakeholders are arguing should these can be addressed without denying
sizable group is likely to continue to smoke contain targets for Member States to them to potential quitters by using on-
unless they are offered suitable Non- eliminate waste from cigarettes (as well as device technology and better enforcement
Combustible alternatives. from single-use vapour product consumption). of existing measures to ensure the
The illicit market Global New Categories Market products are accessible only to adults. It is
The illicit tobacco market has continued to Technology and innovation continue to increasingly important that this debate is
increase in the years after the pandemic, revolutionise the nicotine market. better understood, particularly in influential
reaching just under 12% of total global Smokeless alternatives offer consumers international forums, so that large numbers
*†
volume in 2022 (excl. China), up from 11.4% less risky but satisfying alternatives to of smokers are not discouraged from
in 2021. Exacerbated by the recent cigarettes by delivering nicotine without switching to these products.
increased cost of living in many countries, the process of combusting tobacco. Beyond Nicotine
overall illicit volumes are expected to These products are increasingly popular The Wellbeing & Stimulation category,
approach an unprecedented 14% of all among smokers who do not want to give covering products for consumers that are
sales by 2027. up nicotine consumption but desire seeking products that help them manage
Illicit trade exists in all regions of the world, alternatives to smoking. This year, we have their daily wellbeing, is expected to grow
but its growth is forecast to worsen in the added herbal heated products to our to £495 billion by 2030, from around
Middle East and Africa, Australasia and offering, providing adult nicotine users and £296 billion today.
*†
Asia Pacific. smokers with another reduced-risk option The adult-use cannabis market has also
Global combustible regulation which is also tobacco-free. grown to an estimated US$21 billion.
Combustible tobacco products are among Cigarettes are projected to see a total Though this growth is predominantly
the most highly regulated consumer volume decline of 8% over the 2022-2027 concentrated in the U.S., the market is
products in the world. period. Alongside societal changes in expected to grow further internationally as
In recent decades, legislators have focused attitudes to smoking, this decrease is driven more countries, such as Germany and the
on demand-side measures, such as plain by consumer preferences shifting to reduced- Czech Republic, re-examine the merits of
*†
packaging, product-specific regulations, risk products (RRPs), which are forecast maintaining their current prohibitionist
tougher restrictions on smoking in public to make up an increasing percentage of stances on cannabis.
places, bans on shops displaying tobacco revenue for the nicotine market.
products at the point of sale and The most recent external estimates value
restrictions on flavourings in tobacco. the Vapour product market at US$19 billion,
More recently, countries have begun with THPs valued at US$32 billion. Closed-
committing to smoke-free targets and system vapour products have become
rapidly popular among consumers, owing Notes:
policies, setting a date by which they All data sources on this page are from Euromonitor
expect to reduce or contain the prevalence to their ease of use. Nicotine pouches, International research published in 2023 and based on 2022
of tobacco use to less than 5%. which are one of the newer innovations data (the latest full year available), unless otherwise stated.
*†
in RRPs , currently have a global value * Based on the weight of evidence and assuming a

+ See pages 121 to 128 to read more about our

Group Principal Risks
of US$8.4 billion in 2022 (led by the U.S.), complete switch from cigarette smoking. These
products are not risk free and are addictive.
which is projected to grow to just under † Our Vapour product Vuse (including Alto, Solo, Ciro
+ For further discussion regarding the regulation
of our business, please see pages 375 to 379
US$16 billion by 2027. and Vibe), and certain products including Velo, Grizzly,
Kodiak, and Camel Snus, which are sold in the U.S., are
subject to FDA regulation and no reduced-risk claims will
be made as to these products without agency clearance.

27
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Quality Growth

Strategic Pillar Overview

Inspiring New Category Modern Oral

Quality Growth Innovations & Brands Modern Oral products are different from
inhalable products like Vapour or Heated
We have established an important New
Categories ‘bridgehead’ which underpins Products. Modern Oral products come in
Delivering Quality Growth our transformation. We have built a fast- the form of tobacco-free nicotine pouches
emphasises the transition growing New Categories business of that are placed under the lip so that
smokeless products in a short period of nicotine can be effectively absorbed.
to a more balanced focus time with New Categories annual revenue There are exciting opportunities for these
on top-line and bottom- now exceeding £3.3 billion. products in markets with established oral
line delivery, centred Greater scale and related focus on cost of nicotine consumption and beyond,
including in emerging markets.
around our brands and goods sold (COGS) has enabled significant
reduction in New Categories losses in 2022 In 2023, Velo maintained its leadership
innovation, and continuing and 2023 and our New Categories are outside of the U.S. despite intensified
to seek long-term profitable (at a category contribution level) competition in the Nordics and delivered
two years ahead of our original target. Our total Group revenue growth of 35%.
opportunities Beyond focus on driving revenue growth and margin
Nicotine. expansion will continue. + For more information on our Modern Oral products
see page 34
Building on our deep cross-category
consumer insights, we will deliver an Driving progress
The key building blocks of enhanced innovation pipeline, by further To drive quality growth and transform
the Quality Growth pillar are: investing in our people, our science, faster, we will focus our resources on
Inspiring New Category our IP and our capabilities, driving an combining powerful innovations and
Innovations & Brands innovation-focused culture. world-leading brands. To deliver an
We will further leverage our centres of ‘innovation step change’, we will continue
Managed Combustibles Transition to utilise powerful consumer foresights and
excellence in Southampton, Trieste and
Beyond Nicotine Foundations Shenzhen to access wider internal and their application to leap-frog innovation
external strategic partnerships focused thinking to drive innovations that appeal to
on developing consumer-relevant adult consumers. We will further
Our commitments premium propositions. strengthen and differentiate our New
under Quality Growth: Categories brands to profitably accelerate
Three New Category product types underpin our New Categories business and achieve
Progressing toward quality, margin- our efforts to Build A Smokeless World: significant scale in order to help Build a
accretive growth in smokeless Vapour Smokeless World.
FMC volume decline but expecting Our global Vapour brand, Vuse, plays Global Patent Settlement with PMI
continued value delivery a major role in providing smokers with As previously announced, BAT has reached
the opportunity to Switch to Better. a global settlement with Philip Morris
Sensibly investing for the future
Beyond Nicotine In 2023, consumer acquisition was up International Inc. (PMI) that resolves all
1.5 million, reaching 11.5 million. ongoing patent infringement litigation
Vuse is the #1 brand in the Vapour category between the parties related to our HP and
and, in 2023, delivered £1.8 billion of Vapour products. For more information,
revenue. The successful launch of our please see page 380.
single-use Vapour product, Vuse Go, enabled Managed Combustibles Transition
Vuse to maintain leadership of the Vapour We are committed to becoming a
category and achieve 26.2% revenue predominantly smokeless business, with
growth in 2023. a target to reach 50% of our revenue from
Non-Combustibles by 2035.
+ For more information on our Vapour Products
see page 30
The best choice any adult smoker can
make will always be quitting combustible
Heated Products
tobacco products completely. Yet many
Our Heated Product brand, glo, saw do not. With only 10% of the world’s one
consumer acquisition increase by billion smokers currently using New
0.8 million. In 2023, reaching 8.0 million. Category products, the long-term
It has also been a contributor to New opportunity for growth as we deliver on
Categories revenue growth. our transformation is vast.
However, its growth momentum has been The continued performance of our
impacted by competitor innovation and combustibles business is key to delivering
intensified activity in the below-weighted Quality Growth and generating the funds
average price segment. necessary to invest in New Categories and
While glo's performance has not met our Build a Smokeless World. Our aim is for the
expectations, we are strengthening the glo combustibles business to deliver
innovation pipeline. sustainable revenue, gross margin and
Hyper Pro will enable a comprehensive category contribution growth. Sustainable
system upgrade and veo, our non-tobacco pricing, digital integration and Revenue
heated platform consumables, is ready for Growth Management play a key role in
a post-flavour ban environment in Europe. delivering revenue growth. A product
transformation programme is underway to
+ For more information on our Heated Products
see page 32 enable a simpler and rationalised product
portfolio to enable gross margin growth.

28
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Cannabis
In 2019, the global legal recreational market
was estimated to be worth £5.2 billion
in revenue. That figure is now put at
2 3
£11.1 billion (2022) , growing at 28% per
annum, with non-combustible formats
4
driving this, growing at 35% per annum.
We believe this is signalling a shift away
from traditional smokable formats into
other, potentially less harmful, more
progressive consumption methods.
We see cannabis as an exciting potential
category for the future. However, given
the complex regulatory environment and
the implications to BAT as a UK listed
company, we will continue to monitor
the changes in the regulatory environment
as it evolves across geographies.
As part of its strategic investment in 2021,
BAT established a joint-Product Development
Collaboration (PDC) Agreement and Centre of
Excellence with Organigram in Moncton,
Canada to lead Research & Development
activities with cannabis.
We are pleased with the progress that
has been made in 2023. The PDC is in
late-stage development of a suite of
emulsions, novel vapour formulations,
flavour innovations, and packaging solutions
which are soon to be commercialised by
Organigram in the Canadian market.

+ For more information on Beyond Nicotine,

see page 39
As part of this, we will be reducing the After over a century in nicotine, BAT
number of tobacco leaf grades, blends, has significant expertise in providing
cigarette formats and stock keeping units direct-to-mind stimulation through
(SKUs) in our portfolio. enjoyable solutions and strong
To deliver category contribution growth, route-to-market capabilities.
we will focus on marketing spend As a result, we are well-positioned
optimisation and on simplifying our to explore the development of a W&S
combustibles portfolio to enable the delivery business by leveraging existing
of a managed combustibles transition. capabilities and external partners.
As part of this exploration of W&S, we are
+ For more information on our combustible products,
see page 37 building a pipeline of products to ensure
sustained competitiveness to win in this
Beyond Nicotine Foundations exciting category. This includes internal
Wellbeing and Stimulation development of new products and also
Consumers are increasingly seeking working with Btomorrow Ventures (BTV)
healthier lifestyles and “better-for-you” to guide and support our investments or
products that help them manage their daily potentially larger scale M&A.
wellbeing. We call this category Wellbeing
& Stimulation (W&S) and expect the
category to grow to £495 billion by 2030,
1
from around £296 billion today.
Many of these products historically are
in common formats like pressed tablet
supplements and sugar-based sports and
energy drinks. Recently, however, there has
been a consumer shift towards products
that are less artificial, more enjoyable, have
greater functional efficacy, are easier to use
and understand, and that provide for a wider
range of functional benefits.

Notes:
1. IRI/Circana Consulting, Euromonitor.
2. Euromonitor 2022 Market Sizing Data | Global.
3. Euromonitor 2022 Market Sizing Data | Global.
4. Euromonitor 2022 Market Sizing Data | Global.

29
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Quality Growth

Our Vapour Products

Highlights The Scientific Evidence

*†
Vapour products are Vuse value share up 30 bps vs 2022 Evidence continues to emerge from the
to reach 36.1% share (in tracked channels) public health community and academia
battery-powered devices in our Top 5 markets. about the role of vapour products as a
that heat e-liquids to Vuse extended its value share leadership
*†
reduced-risk alternative to smoking.
produce an inhalable position in the U.S., increasing 470 bps In the UK, for example, Public Health
**
vs 2022 to 45.6%. England published a series of expert
aerosol (vapour). reviews of the existing evidence, drawing
Consumer acquisition up 1.5 million,
reaching 11.5 million. on peer-reviewed literature, surveys and
Our leading, global Vapour other reports, concluding: “the current best
Vapour volume up 7.0% in strong price estimate is that e-cigarettes are around
brand, Vuse, plays a major environment (+19.9%), delivering revenue 95% less harmful than smoking.”
1

role in providing smokers 27% higher at constant rates of exchange.

Moreover, the UK National Health Service
*†
with a reduced-risk Vuse Go (the Group's single-use vapour states that "Evidence shows that nicotine
alternative to cigarettes. offer) launched in 59 markets, including
the UK, France, Spain, Canada, Greece,
vapes are actually more effective than
nicotine replacement therapies, like
2
Germany and Ireland. patches or gum."
In 2021, we published a comprehensive
Overview review of the scientific evidence for vaping

63
Vapour is the largest smokeless product products, their potential health effects, and
category in terms of number of consumers, their role in tobacco harm reduction. This is
has the largest global footprint and is an a summary of more than 300 peer-reviewed
attractive proposition to convert smokers scientific papers and other evidence
Number of markets where the Group’s *†
to reduced risk smokeless products. published by around 50 institutions over
Vapour products are sold 3
*** Low barriers to entry and an absence of the past decade.
Vapour Top 5 markets consistent regulatory frameworks leads
the U.S., the UK, France, Germany According to adult population modelling
to a highly fragmented and competitive studies cited in the review, a significant
and Canada. landscape. reduction in premature deaths could be
Regulatory risks, illicit trade, the pace achieved if current smokers switched
of innovation and profitability are key exclusively to vaping rather than continuing
challenges for the Vapour category. to smoke cigarettes.
However, we believe that the category In 2023, results from our innovative cross-
can reach more than 20 million consumers 4
sectional clinical study showed that exclusive
across 100+ markets globally, profitably. Vuse users had significantly lower exposure
to tobacco toxicants, and favourable
results for indicators linked to smoking
related diseases, compared with smokers.
Also in 2023, we published a laboratory
4
study which showed flavoured e-liquid
toxicity was >95% reduced when
compared to cigarette smoke and
concluded that flavoured e-liquids do not
increase the risk profile of well stewarded
e-cigarettes.

Notes:
* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk
free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak,
and Camel Snus, which are sold in the U.S., are subject to FDA regulation and no reduced-risk claims will be made as
to these products without agency clearance.
** Public Health England (PHE) was replaced in Oct 2021 by the UK Health Security Agency and Office for Health
Improvement and Disparities.
*** Key Vapour markets are defined as the Top 5 markets by industry revenue, being the U.S., the UK, France, Germany
and Canada and accounting for c.75% (2022: 88%) of total industry Vapour revenue (rechargeables and single-use
products).
1. GOV.UK. (n.d.). E-cigarettes around 95% less harmful than tobacco estimates landmark review. Available at: https://
www.gov.uk/government/news/e-cigarettes-around-95-less-harmful-than-tobacco-estimates-landmark-review
2. NHS (2023). Vaping myths and the facts - Better Health. [online] nhs.uk. Available at: https://www.nhs.uk/better-health/
quit-smoking/vaping-to-quit-smoking/vaping-myths-and-the-facts/.
3. Camacho, O.M., Ebajemito, J.K., Coburn, S., Prasad, K., Costigan, S. and Murphy, J.J. (2021). Evidence From the Scientific
Assessment of Electronic Cigarettes and Their Role in Tobacco Harm Reduction. Contributions to Tobacco & Nicotine
Research, 30(2), pp.63–108. doi:https://doi.org/10.2478/cttr-2021-0007.
4. Haswell, L.E., Gale, N., Brown, E. et al. Biomarkers of exposure and potential harm in exclusive users of electronic
cigarettes and current, former, and never smokers. Intern Emerg Med 18, 1359–1371 (2023). https://doi.org/10.1007/
s11739-023-03294-9.
5. Bishop, E., East, N., F. Miazzi, Fiebelkorn, S., Breheny, D., Gaca, M. and Thorne, D. (2023). A contextualised e-cigarette
testing strategy shows flavourings do not impact lung toxicity in vitro. 380, pp.1–11. doi:https://doi.org/10.1016/
j.toxlet.2023.03.006.

30
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Regulation and PMTA We are disappointed by the FDA’s Proportion of Vapour revenue
The future of tobacco harm reduction has Marketing Denial Orders (MDOs) for Vuse by region in 2023
always depended on robust science and Alto’s Menthol* and Mixed Berry products. (£m)
ensuring that this science is accessible to We are challenging these denials in court
audiences outside the scientific and have obtained a permanent stay of
community is critical. This need is growing enforcement for Vuse Alto Menthol,
stronger than ever and consumers deserve allowing it to remain on the market.
to understand the relative risk profiles of We believe that public health officials,
these products. legislators, and regulators—especially
In addition, perceptions of nicotine the FDA—should be concerned about the
continue to evolve; however, many continued influx of illegal single-use vapour
consumers—and health care professionals products into the U.S. market.
—do not adequately understand the risks It is unacceptable that these products,
associated with nicotine generally. marketed in youth-appealing flavours
We strongly support a well-functioning such as Bubble Gum and Cotton Candy,
regulatory system within which continue to be sold. We call on the FDA,
regulatory oversight leads to accelerated in conjunction with state and local 2023 2022
reductions in underage tobacco use and authorities, to strongly enforce against £m £m
in tobacco-related harm. We are invested these products. U.S. 1,033 913
in that system and are fully committed to We continue to look for opportunities to
those goals. AME 686 465
innovate across our Vuse portfolio to meet
The tobacco category is undergoing the preferences of our adult consumers, APMEA 93 58
transformational change. Smokeless and we continue to approach the growing
Total 1,812 1,436
technologies like Vapour, Modern Oral and single-use product category in
Heated Products offer enormous potential a responsible way.
for moving more adult smokers to We continue to have strong value share
Performance Summary
potentially less harmful alternatives. positions in the rechargeable sub-category.
Vapour continued its strong momentum, Specifically, on a full-year basis in 2023:
And this change is underscored by the driven by Vuse. Total volume of
U.S. Food and Drug Administration’s consumables in 2023 was up 7.0% to – In the U.S., the world's largest Vapour
Premarket Tobacco Product Application 654 million units, having grown 14.3% to market, Vuse extended leadership in value
(PMTA) process. 612 million units in 2022. share (of total Vapour in tracked
PMTAs include, among other things, robust Combined with consumable pricing channels) by 470 bps to 45.6%,
science packages composed of analytical, (+19.9% in 2023, having been +29.5% maintaining the momentum of 2022
toxicological, pre-clinical, clinical, and in 2022), this drove revenue up 26% to which was, itself, up from 32.5% in 2021.
behavioural data to demonstrate that the £1,812 million, or 27% at constant rates In 2023, revenue was up 13.1%, or 13.8% on
marketing of a tobacco product is of exchange, with 2022 up 55% to a constant currency basis, driven by price
"appropriate for the protection of the public £1,436 million (or an increase of 43.8% at increases in both consumables and
health" and underpinned by science. 2021 rates of exchange). devices during the year, and by leveraging
Vuse Solo (Original flavour) and Vibe/Ciro our Revenue Growth Management tool as
Vuse maintained global Vapour value share a key enabler of value creation. Pricing
(tobacco flavours) have previously received leadership with a full year value share of
marketing authorisations from the FDA contributed to growth by 20.4% in 2023
36.1% (up 30 bps vs 2022) led by Vuse Alto. and 36.4% in 2022, more than offsetting
confirming that the marketing of these Single-use products continue to accelerate
products is appropriate for the protection lower consumables volume (down 6.6%
category growth with their convenient in 2023), driven by the growth of illicit
of public health. format, driving consumer trial and conversion. synthetic nicotine single-use products.
These applications were the culmination Vuse Go is now in 59 countries, with This followed a period of growth, as 2022
of years of scientific study and research. positive regulatory developments enabling was up 10.0% to 320 million units.
The Vuse Alto PMTA, which was submitted our entrance into a number of emerging **
nearly a year after Vuse Solo, shares the markets (Colombia, Paraguay, Peru). – In Canada, volume declined 23% yet
same foundational science. We are Vuse maintained its leadership position
We consolidated our position in all Top 5 with total value share at 92.5%
confident in the quality of our applications. markets, driven by industry-leading (up 210 bps) in 2023, having grown
consumer acquisition up 1.5 million to 890 bps in 2022.
11.5 million consumers.
– In the UK, total Vapour value share of
the category was 10.3% (2022: 14.7%);
– In France, Vapour value share was 38.8%
Vaping is not harmless. But there's in 2023, remaining flat (vs 2022);
overwhelming scientific agreement **
– In Germany , our value share of total Vapour
it's far less harmful than smoking. was 25.9%, up 500 bps (2022: 20.9%).
And that's what we need to compare
it with.

Dr Colin Mendelsohn
Associate Professor, University of New
South Wales, Chair, Australian Tobacco
Harm Reduction Association, 2022 Notes:
* Menthol variants accounted for approximately 65%
of total Vuse consumables in 2023.
** Following rebasing of third party databases, the 2022
value share for the Group was revised in Germany (from
21.4% to 21.1%) and in Canada (from 89.5% to 90.4%).

31
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Quality Growth

Our Heated Products (HPs)

Highlights The Scientific Evidence*

*
Heated Products (HPs) glo HP category volume share down In a cigarette, the tobacco is burned by
110 bps in Top 12 markets vs 2022 to combustion at temperatures over 900ºC,
use heat to generate a reach 18.2%. releasing a highly complex mixture of
nicotine-containing glo consumer acquisition up 0.8 million gases, particles and compounds and
aerosol, which the user reaching 8.0 million. leaving behind a grey ash. In contrast,
HPs heat tobacco or other herbal
inhales. This category glo consumable volume down 1.3%, ingredients, like rooibos, to much lower
includes Tobacco Heated with the industry volume up 13%, with temperatures (below 400ºC).
our performance impacted by the sale
Products (THP) and of our businesses in Russia and Belarus.
Due to the heating, as opposed to burning,
*
HPs are considered reduced-risk compared
Herbal Products for glo revenue declined by 6%. to continued smoking for those who switch
Heating (HPH). completely.
Overview ***
In 2018, Public Health England , while
Heated Products offer the most familiar
Within HP, because *
route for smokers to adopt a reduced-risk ,
highlighting the need for more research,
found that “compared with cigarettes,
the tobacco or herbal smokeless product.
heated tobacco products are likely to
substrate is heated instead To effectively compete in the Heated expose users and bystanders to lower
Product category, more work is required to levels of particulate matter, and potentially
of burned, the resulting build glo as a strong and consistent global harmful compounds.”
1

aerosol comprises mainly brand and we must transform our product

More long-term studies are needed
water, glycerol, nicotine portfolio through our robust innovation
on HPs, which is why we conducted our
pipeline.
and flavours – different year-long clinical study to evaluate the
reduced-risk potential of glo. The 12-month
to cigarette smoke. data was published in a peer-reviewed
2
journal in August 2022 .
This study showed that smokers who
In terms of risk reduction, [HPs] switched from cigarettes to the exclusive
use of glo significantly reduced their

31
avoid the intake of all those
exposure to certain toxicants and
compounds that are released with
indicators of potential harm related to
the combustion of classic cigarettes. several smoking-related diseases, in some
Number of markets where the Group’s
measures to a level found in participants
Heated Products are sold
Dr Piero Clavario who had stopped smoking entirely.
**
HP Top 12 markets Director of Anti-Smoking Centre and
Japan, South Korea, Italy, Greece, Cardiology Department at the Azienda
Hungary, Kazakhstan, Ukraine, Sanitaria Locale, Genoa, 2021
Poland, Switzerland, Romania,
Malaysia and the Czech Republic.

Notes:
* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk
free and are addictive.
** Key HP markets are defined as the Top 12 markets (excl Russia) by industry volume. They were adjusted in 2023, with
more established HP markets Kazakhstan, Romania, Switzerland and Malaysia introduced and Russia removed.
Accordingly, glo's category volume share for 2022 was rebased on the new definition from 19.4% to 19.2%. Top 12
markets by volume are Japan, South Korea, Italy, Greece, Hungary, Kazakhstan, Ukraine,
Poland, Switzerland, Romania, Malaysia and the Czech Republic. These markets account for c. 85% of global industry
HP volume in 2023.
*** Public Health England (PHE) was replaced in Oct 2021 by the UK Health Security Agency and Office for Health
Improvement and Disparities.
1. McNeill A, Brose LS, Calder R, Bauld L, Robson D. Evidence review of e-cigarettes and heated tobacco products 2018.
A report commissioned by Public Health England. London: Public Health England, 2018.
2. Gale, N., McEwan, M., Hardie, G., Proctor, C.J. and Murphy, J. (2022). Changes in biomarkers of exposure and biomarkers
of potential harm after 360 days in smokers who either continue to smoke, switch to a tobacco heating product or quit
smoking. Internal and Emergency Medicine. doi:https://doi.org/10.1007/s11739-022-03062-1.

32
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Designed with Purpose Performance Summary Proportion of HP revenue

Hyper pro is our newest and most Impacted by the sale of the Group's by region in 2023
premium version of Hyper, introduced to businesses in Russia and Belarus in 2023 (£m)
expand glo™ to address the needs of the (which negatively impacted performance
HP consumers. by 2.5 billion sticks, partly due to the timing
Hyper pro meets their needs for enhanced of the sale partway through the year and
sensory satisfaction and familiar ritual, with a lower underlying performance as we
a premium and exclusive device that reduced investment and focus on Russia),
projects their identity and status. total consumable volume declined 1.3% to
23.7 billion sticks in 2023 having grown
Featuring our new HeatBoost™ technology 26% (to 24.0 billion sticks) in 2022.
delivers superior taste satisfaction, a step
up on immediacy, more intense boost taste In 2023, glo HP category volume share
mode and longer session, compared to in the Top 12 markets, declined 110 bps
earlier Hyper devices. Paired with our new, to 18.2%. Growth in Poland and the Czech
upgraded blended tobacco stick range and Republic was more than offset by the
our veo tobacco-free herbal stick novel highly competitive markets of Japan,
flavour range with capsule, it delivers an South Korea and Italy. 2023 2022
enhanced experience compared to other Revenue declined 6.0% to £996 million £m £m
Hyper products. (2022: up 24.3% to £1,060 million), largely U.S. 0 0
Hyper pro is a smart and intelligent device due to the sale of the Group's businesses
in Russia and Belarus partway through AME 505 494
equipped with a progressive EasyView™
display for interactive and intuitive control the year and a lower underlying APMEA 491 566
of the experience through a simple screen performance as we reduced investment
and focus on Russia, which acted as a drag Total 996 1,060
interface displays the selected taste mode,
session progress and battery power. The on performance by £75 million. Excluding
device has better palm fit and convenience the impact of the relative movements in In APMEA, where the most mature HP
in use with a TasteSelect dial enabling one sterling, at constant rates of exchange markets are, our consumable volume grew
move to open the shutter and select the revenue declined 2.5% in 2023, compared 4.9%, having grown 12.3% in 2022. Revenue
taste mode. This is also combined with the to an increase of 26.7% in 2022. was down 13.2% (2022: up 1.1%) being a
convenience of a faster charge than other In AME, which has seen strong industry decline of 7.3% (2022: 7.0% higher) at
Hyper products. volume growth of 17% in 2023 (2022: 31%), constant exchange. 2023 was impacted
our consumable volume declined 7.5% to by the price repositioning in the highly
The Hyper pro launched in December 2023 competitive Japanese market, with both
in Italy and Poland, at premium pricing in a 11.1 billion sticks, having grown 43% in 2022.
The decrease in 2023 was largely due to 2023 and 2022 negatively affected by the
range of five stylish colours. final steps in the five-year excise
the sale of the Group's businesses in Russia
We continue to expand our geographic and Belarus which, along with lower harmonisation programme. Pricing was
footprint with glo now available in 31 markets. underlying performance in Russia, therefore a negative drag on the regional
veo is our latest innovation in offering a negatively affected volume by 2.5 billion HP performance by 12.2% in 2023, having
reduced-risk alternative* to adult smokers sticks, more than offsetting higher volume also negatively impacted 2022 by 5.3%.
in 11 markets, and we were the first major in Poland, Italy, Romania and the Czech glo's volume share in Japan started to
tobacco company to launch in the tobacco- Republic. stabilise in the second half of 2023, driven
free segment. by the activation of our commercial plans
Accordingly, in 2023, revenue increased and positive uptake post successful launch
by only 2.3%, or 3.0% at constant rates of of glo Hyper Air in the second half of the
exchange, having grown 69% (or 65% at year. 2022 growth was driven by higher
constant rates of exchange) in 2022. AME volume and consumable pricing.
now represents 47% of our global HP
volume. The timing of the sale of Russia In Japan, glo’s volume share of total HP
and Belarus was a £75 million negative and combustibles was 7.4%, flat on 2022
drag on the revenue performance in 2023, (2022: 7.4%), as consumers continue to
*
offsetting a good performance in the switch to reduced-risk alternatives to
remainder of the region supported by the cigarettes, with our HP category volume
portfolio laddering strategy and volume share at 18.3%, down 170 bps from 20.1%
share gains in key markets. in 2022.
glo Hyper Air (our lightest device to date),
is now in 23 markets, delivering positive
results. We continue to expand our
geographic footprint with glo now available
in 31 markets.

Note:
* Based on the weight of evidence and assuming
a complete switch from cigarette smoking. These
products are not risk free and are addictive.

33
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Quality Growth

Our Modern Oral Products

*
Highlights The Scientific Evidence
In recent years, a new Continued strong global volume growth Modern Oral nicotine pouches build upon
(up 33.6%), with consumer numbers up the extensive scientific evidence available
category of Modern Oral 0.7 million to 3.3 million. for snus, including long-term studies
1,2
*†
products has emerged. Category volume share in key Top 5 which demonstrate that snus use is
markets was 28.0%, down 240 bps, associated with less risk of many diseases
compared with cigarette smoking.
These come in the form driven by a decline in the highly
competitive U.S. market. Modern Oral products, however, are designed
of tobacco-free nicotine to offer adult consumers an improved,
Continued strong growth in Pakistan
pouches that are placed and Kenya, supporting future Emerging
*†
reduced-risk alternative, with many
Modern Oral products manufactured as
under the lip so that Market ambitions.
tobacco-free.
nicotine can be effectively Volume share leadership in Modern Oral
Laboratory chemical studies for our
in AME at 67.0%, with continued market
absorbed. leadership (through Velo) in 14 European Modern Oral products show they produce
markets. substantially lower levels of toxicants than
3
cigarette smoke and lower levels than
AME revenue up 41.5%, with volume 4
snus – a traditional oral tobacco product
up 36.5%. which is already regarded as a reduced-

34
*†
risk alternative to smoking.
Overview
Toxicology tests assessing the biological
The Modern Oral category has a clear effects of our Modern Oral products on
Number of markets where the Group’s runway for growth in markets with laboratory cells also show they have
Modern Oral Products are sold established oral nicotine consumption. reduced effects relative to cigarettes
** Markets like the U.S. and the Nordics are and snus .
5
Modern Oral Top 5 markets examples of this as consumers already have
the U.S., Sweden, Norway, Denmark the experience of Traditional Oral products. Published in 2022, results from our
and Switzerland. innovative cross-sectional clinical study
However, the key challenge in unlocking the showed that exclusive Velo users had
category's potential in new markets relates substantially lower exposure to tobacco
to how the oral nicotine product is used, toxicants, and significantly better results
which is different to how nicotine has for indicators linked to smoking-related
previously been consumed, namely through diseases, compared with smokers. In 2023,
inhalation. in a study where daily smokers were
Building a portfolio of strong brands and provided with Velo, the majority of
products/ranges to accelerate consumer participants significantly reduced their
adoption is fundamental to establishing daily cigarette use.
a leading, global Modern Oral business. On the basis of our evidence and informed
by the wealth of independent evidence
regarding snus, switching completely to
Modern Oral products can be expected to
reduce the risk of smoking related disease
*†
when compared to continued smoking.

Oral nicotine pouches, used as

recommended, as a replacement for
smoking, would be associated with
a reduction in overall risk of adverse
health effects.

UK Government
Committee on Toxicity 2023

Notes:
1. Ramström L, Borland R, Wikmans T. Patterns of Smoking and Snus Use in Sweden: Implications for Public Health. Int J
Environ Res Public Health. 2016 Nov 9;13(11):1110. doi: 10.3390/ijerph13111110. PMID: 27834883; PMCID: PMC5129320.
2. Sohlberg, T., Wennberg, P. Snus cessation patterns - a long-term follow-up of snus users in Sweden. Harm Reduct J 17,
62 (2020). https://doi.org/10.1186/s12954-020-00405-z
3. Gaca, Marianna, et al. "Bridging: accelerating regulatory acceptance of reduced-risk tobacco and nicotine
products." Nicotine and Tobacco Research 24.9 (2022): 1371-1378.
4. Azzopardi, David, Chuan Liu, and James Murphy. "Chemical characterization of tobacco-free 'modern' oral nicotine
pouches and their position on the toxicant and risk continuums." Drug and chemical toxicology 45.5 (2022): 2246-2254.
5. East, N., et al. "A screening approach for the evaluation of tobacco-free ‘modern oral’ nicotine products using Real Time Cell
Analysis." Toxicology Reports 8 (2021): 481-488, and Bishop, E., et al. "An approach for the extract generation and
toxicological assessment of tobacco-free ‘modern’oral nicotine pouches." Food and chemical toxicology 145 (2020): 111713.
** Key Modern Oral markets are defined as the Top 5 markets by industry revenue, being the U.S., Sweden, Norway,
Denmark and Switzerland and accounting for c.85% (2022: c.80%) of total industry revenue.

34
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Products Performance Summary Proportion of Modern Oral

Our Modern Oral products are white in 2023 maintained the momentum from revenue by region in 2023
colour and contain high-purity nicotine, 2022 with growth in volume and value. (£m)
water and other high-quality food-grade Volume was up 33.6% to 5.4 billion
ingredients, including plant-based fibres, pouches, having grown 21.7% to 4.0 billion
flavouring and sweeteners. pouches in 2022.
Originating in Scandinavia, Velo is now a Revenue increased 35% to £539 million
leading global brand of nicotine pouches. (2022: up 45% to £398 million). Excluding
These typically appeal to a broader the impact of foreign exchange, this was
audience than Traditional Oral tobacco an increase of 39% in 2023 and 46% in 2022,
because of their attractive price as price/mix was up 5.4%, after the increase
positioning. With comparatively lower of 23.9% in 2022.
excise rates (versus Traditional Oral and Volume share of the Modern Oral category
combustibles), Modern Oral generally has in our Top 5 markets was 28.0%, down
higher margins than Traditional Oral. 240 bps compared to 2022, driven by
Our Velo product range spans across the U.S. where we continue to await the
both mint and fruit flavours and are sold outcome of our PMTA submission for our 2023 2022
in various nicotine strengths, from 4mg successful European product, Velo 2.0. £m £m
to 17mg of nicotine per pouch. In the U.S., our volume share of Modern Oral U.S. 25 36
We are also delivering a step change in declined by 200 bps with volume down 1.3% AME 482 341
Modern Oral manufacturing. Truly living to 297 million pouches (2022: down 50% to
our ethos, our Modern Oral factory in 301 million pouches). We expanded our APMEA 32 21
Pécs, Hungary, put together a bold plan geographic coverage in the U.S. and Total 539 398
to implement food industry standards continued to innovate, including the launch
for Modern Oral manufacturing. of our fusion and sensations ranges,
tailored to meet the needs of local We have been engaging with governments
With a cross-functional team across and other regulatory agencies and we are
quality, production, engineering and EHS consumer tastes and preferences.
encouraged by the recently announced
teams delivering technical changes and Revenue declined in 2023 to £25 million, government regulatory proposals in
process improvements, Pécs became the as the Group reinvested in trade activation Hungary, Finland, Lithuania, Iceland and
first site in BAT’s history to obtain the plans leading to a decline in net pricing Serbia. These markets join an evolving
ISO 22000 certification for food safety (including trade incentives) of 30.5%. group of countries (including Sweden,
management systems. The Group had reduced such activity in Denmark, Estonia, Slovakia and the Czech
We have also built and recently 2022 with a resultant increase in revenue Republic) that have issued bespoke
commissioned a new facility in Trieste, Italy to £36 million in that year. regulation for the Modern Oral Category,
that will further enhance our capabilities The U.S. market remains highly competitive, that is aligned to our Tobacco Harm
and provide additional capacity (in Modern with current low moisture product Reduction strategy.
Oral and HP). formulations continuing to result in low For example, in APMEA our volume grew
In line with the Group's sustainability levels of adult consumer numbers and high 36.2% and our revenue grew 50.3% (being
ambitions, Velo plastic cans are being polyusage. 70.8% at constant rates), mainly driven by
upgraded to use single polymer plastics, We are encouraged by the strong results strong volume performances in Pakistan
with the use of bio-based materials also from our recent Velo pilot in New York, and Kenya. In Pakistan, through stronger
being trialled to achieve International including a more premium brand consumer acquisition, we have achieved
Sustainability and Carbon Certification. expression and design, with a national our highest active consumer base (as a %
roll-out to commence in 2024. of population) in Modern Oral globally. In
In our key markets outside the U.S., we Kenya, our accelerated national roll-out in
maintained clear Modern Oral category January 2023 has driven a near fourfold
volume share leadership, despite a decline increase in adult consumer numbers.
of 170 bps to 67.0% Together, our learnings from these two
In AME, we maintained volume share markets give us confidence in our ability to
leadership in 14 markets. Revenue increased unlock the Emerging Markets opportunity
by 41.5% (2022: up 29.9%) or 44.6% (2022: up for Modern Oral going forward.
31.6%) at constant rates of exchange. Price/ We continue to seek opportunities and
mix was positive in both years, at +8.1% in develop the category in other markets as
2023 and +1.1% in 2022. The higher revenue we believe that Modern Oral is an exciting
was driven by volume growth (up 36.5% in longer term opportunity to commercialise
*†
2023 and 30.5% in 2022) due to continued reduced risk products .
consumer acquisition.
As the Modern Oral category continues
to grow and becomes more established in
Europe, we continue to see strong growth
in adult consumer numbers. In Sweden,
Velo is the largest (by volume share) of any Notes:
snus or Modern Oral nicotine pouch * Based on the weight of evidence and assuming
** a complete switch from cigarette smoking. These
brand . products are not risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro
and Vibe), and certain products including Velo, Grizzly,
Kodiak, and Camel Snus, which are sold in the U.S., are
subject to FDA regulation and no reduced-risk claims will
be made as to these products without agency clearance.
** Source: Kantar New Category Tracker.

35
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Quality Growth

Our Traditional Oral Products

Our Products Proportion of Traditional Oral

The most common We also sell a range of Traditional Oral revenue by region in 2023
products, including Swedish-style snus (£m)
products in Traditional and American moist snuff, available in loose
Oral are largely moist oral tobacco form or as pre-packed pouches.
tobacco popular in the We have long sold snus in Sweden and
Norway through our Fiedler & Lundgren
U.S., with the main business, whose brands include Granit
brands being Grizzly and Mocca; and in the U.S. we market snus
under the Camel brand. Our American
and Kodiak. moist snuff products include our flagship
Grizzly brand, as well as the premium
These products are less moist snuff brand Kodiak.
finely ground than another During 2022, the decision was taken to
withdraw the Modified Risk Tobacco
Traditional Oral product Product (MRTP) applications for Camel
referred to as Swedish- Snus, as we have adjusted our near-term 2023 2022
style snus. Both of these priorities and are focusing on providing £m £m
a diverse portfolio of New Category
Traditional Oral products products in line with our global harm
U.S. 1,127 1,174

are available in loose form, reduction strategy. AME 36 35

as well as in pre-packed We remain committed to offering

*†
APMEA — —
potentially reduced-risk products that help
pouches. adult smokers migrate from combustible Total 1,163 1,209
cigarettes while meeting the evolving needs
of other adult nicotine consumers.
Performance Summary
Total revenue decreased 3.8% to
£1,163 million (2022: up 8.2% to
£1,209 million).
Translational foreign exchange impacted
both years, being a headwind in 2023 of
0.7% (compared to a tailwind of 10.5% in
2022) due to the relative movement of
sterling. On a constant rates basis, revenue
fell 3.1% in 2023 having declined 2.3%
in 2022. In 2023, volume was lower (down
10.3%) than the prior year (at 6.6 billion stick
equivalents), following a decline of 8.3% in
2022. While pricing remained strong in both
years (2023: +7.2%; 2022: +6.0%), this was
more than offset by the volume decline.
In the U.S., which accounts for 96.9% of
the Group’s revenue from Traditional Oral,
volume declined 10.9% in 2023 (2022: down
8.1%). The higher decline rate in 2023 was
in part due to the normalisation of
inventory levels (being a drag of 1.7%). Both
2023 and 2022 were negatively impacted
by strong macro-economic headwinds
leading to downtrading, accelerated cross-
category switching and reduced
consumption.
Value share of Traditional Oral was up
40 bps (2022: down 50 bps), while volume
share was down 20 bps (2022: down
70 bps).
Outside the U.S., being 3.1% of the Group's
revenue from the category, volume was
5.2% lower in 2023, driven by Sweden
where the Group’s volume share (as a
proportion of total oral) declined 50 bps
(2022: declined 10 bps). This decline was Notes:
due to the launch of the Lundgrens Modern * Based on the weight of evidence and assuming
a complete switch from cigarette smoking. These
Oral product and higher pricing of Granit products are not risk free and are addictive.
to drive value. † Our Vapour product Vuse (including Alto, Solo, Ciro
and Vibe), and certain products including Velo, Grizzly,
Kodiak, and Camel Snus, which are sold in the U.S., are
subject to FDA regulation and no reduced-risk claims will
be made as to these products without agency clearance.

36
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Combustible Products

Highlights Volume Performance

We are focused on Group value share was down 40 bps, In 2023, Group cigarette volume was down
driven by the U.S., down 60 bps, and 8.2%, at 555 billion sticks (2022: down 5.1%
driving value from our APMEA, down 60 bps, partially offset to 605 billion), with the total cigarette
strategic brands of by AME, which was flat versus 2022. market returning to a more normalised
Dunhill, Kent, Lucky Volume share flat versus 2022. decline of 11%, having been largely stable
in 2022.
Strike, Pall Mall, Strong price/mix +7.5%.
Volume declined in the U.S. in both 2023
Rothmans, Newport Value and Volume Share and 2022 (discussed below). Both years
(U.S.), Natural American Group cigarette value share was 40 bps were also impacted by disposals partway
through the year (or in the comparison
Spirit (U.S.) and Camel lower in 2023 (2022: flat), mainly driven by
year) as the Group disposed of its
the U.S. (down 60 bps). This combined with
(U.S.), which now lower cigarette value share in Japan, Brazil, businesses in Russia and Belarus in 2023
account for 66% of our South Korea, New Zealand, Australia and and Iran partway through 2021.
Canada, was partially offset by higher value In 2023, volume was also down in Pakistan,
combustible volume. share in Mexico, Italy, Bangladesh, driven by significant excise increases.
Germany, Spain and France. This was partly offset by volume growth
Our combustibles business Group cigarette volume share was in Bangladesh, Brazil and Türkiye.
is founded on understanding flat in 2023 (2022: down 20 bps). In 2023, In 2022, volume was down in Türkiye,
the Group grew volume share in Germany, Nigeria and Chile, largely due to
and meeting the preferences Bangladesh, Ukraine, Mexico, Italy, Spain, an increase in illicit trade and a return to
of adult smokers in all parts Pakistan, France, Colombia and Germany. more normalised market performance post
of the world. However, this was offset by Japan, Brazil, COVID-19. In addition, volume grew in both
South Korea, the U.S., Switzerland, years in Brazil (due to lower illicit trade)
Australia, the Czech Republic, Canada and and Bangladesh (due to the strength of
Romania. In 2022, this was a decrease of the local portfolio). Also in 2022, as travel
20 bps driven by lower volume share in restrictions started to relax, our Global
Brazil, Bangladesh, the U.S., South Korea, Travel Retail business began to recover,
Russia, Poland, Romania, Canada and having negatively impacted Group
Germany, more than offsetting growth in cigarette and HP volume by an estimated
Japan, Pakistan, Colombia, Spain and Saudi 1.0% compared to pre-pandemic levels.
Arabia. In the U.S., industry volume declined 7.5%,
having declined 10% in 2022, largely driven

38
by macro-economic pressures impacting
consumer behaviour. As a result of our
premium-skewed portfolio, combustibles
Number of cigarette volume was down 11.4% (2022: down 15.4%
factories in 36 countries to 59 billion), with downtrading driving a
greater proportional effect on the Group. In
addition, cigarette volume was negatively
impacted by the flavour ban in California
and the increase of solus-usage of
alternative nicotine products, driven by the
growth of illicit single-use Vapour products.
The movement in 2022 was partly impacted
by trade inventory movements (mainly
linked to the timing of price increases and
uncertainty about a potential excise
increase) in the final quarter of 2021, which
benefited 2021 by an estimated £200 million
and was partially unwound in 2022.

Change in cigarette value share Change in cigarette volume share

in key markets (bps) in key markets (bps)

-40bps flat
2023 -40 -40 2023 flat
2022 flat 2022 -20 -20

Definition: Annual change in cigarette value Definition: Annual change in cigarette volume
share – being the value of cigarettes bought by share – being the number of cigarettes bought
consumers of the Group’s brands in key markets as by consumers of the Group’s brands in key markets
a proportion of the total value of cigarettes bought as a proportion of the total cigarettes bought by
by consumers in those markets (see page 333). consumers in those markets (see page 333).

37
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Quality Growth

Our Combustible Products

Continued

Regulation Strategic Brand Performance Proportion of combustibles

On 29 April 2021, the FDA announced it In 2023, strategic cigarette brands' value revenue by region in 2023
was in the process of advancing a tobacco share was down 30 bps (2022: up 10 bps): (£m)
product standard banning menthol as a – Dunhill’s overall value share was flat
characterising flavour in cigarettes. (2022: flat) as growth in Brazil, Saudi
On 1 August 2022, our U.S. business Arabia and South Africa was offset by
submitted a detailed comment opposing declines in South Korea, Malaysia,
the proposed rule. Pakistan and Australia. Volume was 0.9%
On 15 June 2023, the Biden Administration higher (2022: up 7.3%), largely driven by
released its Spring Unified Agenda, which Brazil and Indonesia;
indicated a final rule would be published in – Kent’s value share was down 10 bps
August 2023. (2022: 10 bps down) as growth in Poland
On 13 October 2023, the FDA transferred and Chile was offset by lower value share
the final proposed rule to the Office of in Brazil, Japan, Romania, South Korea,
Management and Budget (OMB) for Netherlands, Malaysia and South Africa.
review. Volume was down 9.4% (2022: down 6.1%)
as growth in Türkiye and Poland was more 2023 2022
On 13 November 2023, our U.S. business than offset by lower volume in Brazil and £m £m
met with the OMB to address the rule’s Japan. 2023 was also impacted by the sale U.S. 9,744 10,470
significant flaws and to recommend that of the Russian and Belarusian businesses
the OMB return the rule to the FDA for (partway through the year) while 2022 AME 7,614 7,588
reconsideration given, among other things, was impacted by the sale of the Iranian APMEA 4,750 4,972
the expected growth of the illicit market business partway through 2021;
that would result from the proposed Total 22,108 23,030
menthol ban. – Lucky Strike’s value share grew 40 bps
(2022: up 60 bps), as growth in the U.S.,
On 6 December 2023, the Biden Chile, Bangladesh, Italy, Spain, France and Revenue
Administration released the Fall 2023 Colombia more than offset lower value In 2023, revenue from combustibles
Unified Agenda, which now indicates that share in Japan, Germany, Mexico and was down 4.0% at £22,108 million
the Administration expects to issue the Poland. Volume grew 16.7% (2022: £23,030 million, up 4.5%). Pricing
final rule in March 2024; however, the
.

(2022: up 14.5%) driven by Russia, the in both years was strong with price/mix in
Administration is not bound by this U.S., and Brazil, partially offset by Japan; 2023 at 7.5% and 4.6% in 2022. However,
timeline. The U.S. business will evaluate this was offset by the decrease in volume
any final rule, if, and when, it is issued. – Rothmans’ value share was flat
in both years as described earlier.
(2022: flat) as growth in Romania, Italy,
We have been clear that a ban on menthol the Czech Republic, Brazil, New Zealand, Revenue is affected by the relative movement
cigarettes would harm, not benefit, public Malaysia and Colombia was offset by of sterling against the Group's reporting
health. lower value share in Poland, Pakistan, currencies. In 2023, this was a translational
1
Published science indicates that: Australia, the UK and Saudi Arabia. foreign exchange headwind of 3.2%,
– menthol cigarettes do not present any Volume was 14.6% lower (2022: 5.1% compared to a tailwind of 5.1% in 2022.
greater risk of smoking-related disease down) as growth in Brazil, and Romania Also in 2023, revenue was impacted by
compared to non-menthol cigarettes; was more than offset by lower volume a combination of lower comparative
and in Russia, Yemen and Pakistan; and performance from Russia and the sale
– the weight of scientific evidence does not – Pall Mall’s value share was 30 bps lower of the Group's businesses in Russia and
indicate that menthol cigarettes adversely (2022: 40 bps down) as growth in Belarus partway through the year, which
affect initiation, dependence, or cessation. Pakistan, Canada, Mexico and the in aggregate acted as a negative drag on
Netherlands was more than offset performance by £380 million.
Additionally, evidence from other markets by lower value share in the U.S., Chile,
where similar bans have been imposed After adjusting for the currency headwinds,
Romania, Australia and Poland. Volume revenue from combustibles at constant
demonstrates no impact on overall was down 15.9% (2022: down 9.5%)
cigarette consumption because smokers rates of exchange was down 0.8% to
largely driven by Pakistan and the U.S.. £22,846 million, having declined by 0.6%
switch to non-menthol cigarettes, turn
to the illicit market, and resort to product The Group’s U.S. domestic strategic in 2022.
tampering. combustible portfolio was 60 bps down: Amortisation of the U.S.
A ban on menthol is contrary to the FDA’s – Newport value share decreased 50 bps Combustibles Brands
stated goal of reducing the health effects (2022: up 10 bps), while volume declined Following a review of the Group's
of tobacco use. Our U.S. business will 14.7% (2022: down 17.0%); performance expectations in the U.S.
continue to participate in consultation and – Natural American Spirit performed reflecting continuing macro-economic
will likely challenge this unsupported and well with value share up 30 bps headwinds, with effect from 1 January
counterproductive rule in court if, and (2022: up 10 bps). Volume was 3.5% 2024, the Group’s indefinite-lived
when, it is released. down (2022: down 9.2%); and combustible brands will be amortised
on a straight-line basis over periods not
In December 2022, the sale of all tobacco – Camel’s value share declined 50 bps in
exceeding 30 years.
products with characterising flavours the U.S. (2022: down 30 bps) with volume
(including menthol) other than tobacco 14.0% down (2022: 15.7% down), driven In 2024, and the immediate years following
was banned in the State of California. This by competitive pricing pressures. this change in accounting estimate, the
negatively impacted the Group's volume in expected impact is an increase in annual
Volume of other tobacco products (OTP)
in the U.S. in 2023 and the Group will amortisation expense of £1.4 billion.
declined 11.0% to 14.8 billion sticks equivalent
continue to monitor the impact in the (2022: 10.3% decline), being 3% of the
coming periods. Group's combustible portfolio (2022: 3%).
Note:
1. Scientific evidence available at www.regulations.gov/
comment/FDA-2021-N-1349-175111

38
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Beyond Nicotine

Highlights
As consumers increasingly seek products
offering wellbeing and stimulation
characteristics, our venturing unit,
Btomorrow Ventures (BTV), is working with
selected third parties to strengthen our
positioning for this market.
Our well-established market research has
given us a detailed understanding of
consumer needs, allowing us to invest in,
acquire and develop natural ingredients
and new delivery formats that satisfy
these needs.
We believe our supply chain strengths and
trade market capabilities mean that, when
ready, we can deliver associated products
to consumers at speed and scale.
BTV has completed 25 investments
(with three successful exits) since its
launch in 2020, and continues to invest
in innovative, consumer-led new sciences
and technologies, and sustainability to
support the Group’s transformational
strategy for A Better Tomorrow™.
Throughout 2023, BTV has continued to
support its portfolio of companies with a
number of follow-on investment rounds
and commercial partnerships with BAT,
including investments in a UK-based
bioplastics company, FlexSea, a U.S.-based
organ-on-a-chip technology company,
Hesperos Inc., and in a Brazilian
supplements company, Mais Mu.
Beyond The Group also entered into a joint
venture with Charlotte’s Web, a leading

Nicotine
U.S. producer of hemp extract wellness
products, contributing US$10 million to
this joint venture as an initial investor in
As well as offering less exchange for 20% of the equity in the
*† new entity (De Floria LLC).
risky nicotine-based
As discussed in note 27 in the Notes on
alternatives, we see a the Accounts on page 279, in November
new range of non-nicotine- 2023, the Group announced the signing
based products forming of an agreement for a further proposed
investment in Organigram of
an expanding part of CAD$125 million (approximately
our portfolio. £75 million), across three tranches, with
approvals received from the shareholders
of Organigram on 18 January 2024.
Based on Organigram’s current
outstanding share capital, this investment
will increase the Group’s equity position
from c.19% to c.45% (restricted to 30%
voting rights) once all three tranches have
been completed. On 24 January 2024,
BAT made the first tranche investment
of CAD$41.5 million (£24.1 million).
The Group has continued to explore
Beyond Nicotine through our subsidiary
The Water Street Collective Ltd, with
a series of pilot launches of our own
Notes:
functional shot brand, Ryde, offering a
* Based on the weight of evidence and assuming
a complete switch from cigarette smoking. These scientifically formulated range of Energy,
products are not risk free and are addictive. Focus and Relax products in two markets
† Our Vapour product Vuse (including Alto, Solo, – Australia and Canada.
Ciro and Vibe), and certain products, including Velo,
Grizzly, Kodiak, and Camel Snus, which are sold
in the U.S., are subject to FDA regulation and no + Find out more at
www.btomorrowv.com
reduced-risk claims will be made as to these
products without agency clearance.

39
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

Strategic Pillar Overview

An Exciting and Winning Company Capabilities and learning

Dynamic Business A Better Tomorrow™
Delivering our refined corporate strategy
Since 2020, we have seen significant
growth in learning across BAT.
requires a renewed people strategy, one that The average number of hours spent
The Dynamic Business is human-centric, enables high performance learning by each BAT manager has doubled
pillar envisages a future-fit, and accelerates the building of skills and and the amount invested in learning for all
capabilities for multi-category growth. our employees has increased by a third.
data-driven organisation;
Recognising that it is our people who will In parallel to this, we have continued to
ensuring we are efficient deliver our refined strategy, we took the refresh and grow our leadership and
and effective in all of our opportunity during 2023 to revise our functional L&D programmes, increasing
corporate values.
operations. the size of our portfolio by 25% since 2020.
Six 'values' now replace our ethos and will The focus of the next few years will be on:
be embedded across the Group to ensure – Defining the skills profile of the
This will ensure that we all our people understand what is expected organisation and analysing skills gaps,
deliver financial flexibility of them to help us Build a Smokeless to facilitate skills-oriented workforce
World. The six 'values' are: planning, including role based learning
to invest in our business, solutions;
– Truly inclusive
people and products to – Capability development in advanced
– Empowered through trust
win in a fast changing – Stronger together
multi-category skills & Transformational
environment and deliver – Love our consumer
leadership capabilities; and
superior returns to our – Passion to win
– Using technology such as AI and
enhancements in Learning Experience
investors. – Do the right thing Platforms and Learning Management
Systems to innovate our employee
Employer brand learning experience, delivery channels
The key building blocks of the Our focused efforts in the past years have and learning content.
Dynamic Business pillar are: helped us build a compelling talent brand,
Inclusion and diversity
attracting 1.5 million LinkedIn followers and
Exciting, Winning Company At BAT, we are proud to be a diverse global
being recognised for the sixth consecutive
Operational Excellence year as a Global Top Employer by the Top organisation that encourages our people to
Employers Institute. value their differences.
Capital Effectiveness
As a result, since 2019, we have onboarded In 2020, BAT set new global 2025 Diversity
around 3,000 hires with new capabilities & Inclusion ambitions focused on gender
Our commitments critical to delivering our business strategy. representation at both Senior Leadership
We will continue: and Management levels, diversity of
under Dynamic Business:
experiences and nationality representation
Creating a diverse, inclusive and – Building an exceptional talent brand that within the Senior Leadership teams.
people-oriented place to work attracts broad talent pools;
While we have made progress, we need
Being data-driven and delivering – Delivering desirable experience for hiring to embrace a wider focus on championing
operational excellence/cost managers, recruiters, and candidates, inclusion and achieving equity within our
management by accelerating our adoption of smarter workplace and beyond.
technology solutions;
Focused on investors returns A comprehensive and structured
– Improving hiring capabilities to fit an framework to further enhance inclusion,
ever-changing external talent landscape; diversity and equity will be put in place,
and focusing on four key areas:
– Ensuring data-driven decision making – Revised global ambition and KPIs moving
and expanding our external partnership towards a broader framework of equity
reach to meet our hiring needs. and inclusion with the aim of increasing
High performance and reward gender and ethnically diverse
Our reward agenda has been developed representation in our Management
to be globally aligned yet locally relevant teams as well as our Senior Leadership
across our business. populations;
This ensures there is a singular focus and – Policies, practices, and enablers which
line of sight between our executive team are best in class and holistic, addressing
and colleagues in all our End Markets. diverse life-stage and employee needs;
Looking ahead, we will also focus on: – Enhanced approach to building Inclusive
– Redefining our definition of employee Leadership focused on sponsorship, role
“Performance”, pivoting to recognise modelling and walking the talk; and
and reward both high impact results – Our holistic D&I agenda which goes
and leadership behaviours; beyond the workplace and into the
– The design of our variable pay communities we serve, and partners
programmes, ensuring they continue we work with.
to be contemporary and attractive and + For more information on our Employees, Diversity
enable the delivery of our refined and Culture, see page 88

strategy; and
– Further strengthening our employee
health and wellbeing propositions, in
support of our D&I and sustainability goals.

40
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

In 2023, the Group manufactured

cigarettes in 38 factories in 36 countries.
Our factory outputs and facilities vary
significantly in size and production
capacity. We also have manufacturing sites
for our range of smokeless products.
In line with our corporate commitment
to fight climate change, our factories have
in place decarbonisation, water usage and
waste optimisation programmes.
We work to ensure that our costs are
globally competitive and that we use our
resources as effectively as possible. Our
production facilities are designed to
meet the needs of an agile and flexible
supply chain.
We also use third-party manufacturers to
manufacture the components required,
including the devices, related to our
smokeless New Category products. Such
third-party manufacturers supplement our
own production facilities in the U.S., Poland
and Indonesia to produce the liquids used
in Vapour products.
By continuing to improve our productivity
in all areas of our supply chain, we can
increase our profitability and continue
to deliver sustainable returns to our
shareholders.
However, it is not just about today, it also
underpins our future. The more efficient
and effective we become, the more we are
able to generate funds to invest in the
Operational Excellence Driving productivity and growth things that will fuel future growth: our
Focus areas As part of our digital transformation, we products, our innovations and our people.
Delivering on our refined corporate are driving the increasing use of data to Working with farmers
strategy and Building a Smokeless World become a data-driven organisation. Our
While we do not own tobacco farms
will require greater focus on our global focus is on the effective and efficient
or directly employ farmers, we source
execution. This includes getting the U.S. delivery of our market-leading products
tobacco leaf directly from more than 91,000
back to growth, where and how we allocate and innovations to satisfy consumers, drive
contracted farmers and through third-
resources at a regional and market level, growth and create value and Build a
party suppliers mainly in emerging markets.
and driving greater productivity while Smokeless World.
reducing complexity. With our contracted farmers, we
To meet the challenges of the modern
continually strive to improve sustainability
Getting the U.S. back to growth world, we continue to invest in technology
and viability. We focus on improved quality,
In 2023, we completed a deep and to become a more efficient and effective
cascading more resistant hybrid seeds,
thorough review of our U.S. business. business, with AI-enabled, data-driven
tailored mechanisation to reduce costs
systems and ways of working to match.
Recognising its importance to our future of production, and increased yield.
growth, we will continue to invest there Three focus areas will be key to driving
We review our contracts on an annual
and focus on sharpening our portfolio progress under the Operational Excellence
basis considering Group requirements over
management, strengthening our route-to- pillar of our refined corporate strategy:
the medium-term to promote the stability
market, and further leveraging our broad, optimising our manufacturing operations;
of demand and supply on production volumes.
digitally enabled, revenue growth reducing complexity in our ways of working
management capabilities. and processes, including using of AI and We have similar expectations of our third-
data enabled technology; and our Global party suppliers in relation to their farmer
We are confident this will drive quality contracts.
Business Services (GBS) Centres of
growth over the longer-term and ensure
Excellence. As with any other global agricultural
greater resilience through economic cycles.
At-scale operations commodity, international tobacco prices
We have a global manufacturing footprint vary from year to year. This is driven by
designed to ensure an efficient supply changes in the cost of production, like
chain across both combustible and labour costs and agricultural inputs, local
smokeless products. inflationary pressures and economic,
political and market conditions, as well as
Manufacturing tobacco and nicotine climatic conditions that impact supply,
products is a large-scale operation and demand and quality of the tobacco grown.
we have state-of-the-art manufacturing
facilities all over the world.

41
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

Strategic Pillar Overview

Continued

Capital Effectiveness
Capital Effectiveness is a key focus of
delivering a Dynamic Business to Build
a Smokeless World.
The key objective is to unlock
shareholder value by optimising access,
utilisation and return of capital resources.
The key initiatives include:
– maximise our cash generation;
– invest in the right opportunities;
– optimise the return on our
investments;
– reduce our debts; and
– generate sustainable returns.
Our active capital allocation framework
considers the continued investment
in our transformation, the macro
environment, potential future litigation
and regulatory outcomes.
The Board continuously reviews our
capital allocation priorities including
both internal and external opportunities
and stakeholders while considering the
uncertain macro environment, foreign
exchange fluctuations and higher
interest rates.

Cash generation Maximising our investments

Maximising cash generation is an essential As we continue to build A Better
component in our capital allocation decisions. Tomorrow, the Group seeks to optimise
While the Group remains highly cash the return on our investments and seeks
generative, cash is a critical resource to to invest in the right opportunities.
ensure that we can invest in the right The Group invests around £550 million
opportunities in Building a Smokeless World. of gross capital expenditure (annually) to
Recent macro-economic trends including enhance our growth opportunities and
geopolitical instability, conflicts, inflation deliver operational efficiencies. This includes
and high interest rates have meant that purchases of property, plant and equipment
cash is an increasingly costly resource. and certain intangibles, and the investment
As such, internally generated cash and in the Group’s global operational
working capital are much more valuable infrastructure (including, but not limited to,
and they must be mobilised effectively the manufacturing network, trade
and optimised efficiently. marketing software and IT systems and the
This will be done by continuing to focus expansion of our New Categories portfolio).
on a high cash conversion rate as well as
We will continue to proactively assess the
rigorous focus on working capital.
performance of our assets to ensure value
is maximised through operational returns
or through disposal.
In addition, as part of our transformation
we invest in the Wellbeing and Stimulation
space and through our venturing unit,
Btomorrow Ventures, and in the cannabis
space, including a further investment in
Organigram.
Our commitment:
To continue to actively assess investments,
be it for acquisition or disposal, both
internally and externally, to maximise our
delivery and provide the right infrastructure
for the BAT of tomorrow.

42
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Reducing debt Generate sustainable returns

Total borrowings (which includes lease Generating shareholder value, via
liabilities) decreased to £39,730 million sustainable returns, is an integral part
in 2023 (2022: £43,139 million). of our strategic ambition.
Total borrowings include £700 million Over the past 25 years we have
(31 December 2022: £798 million) in respect consistently grown the dividend per
of purchase price adjustments related to ordinary share on absolute terms.
the acquisition of Reynolds American Inc. On 8 February 2024, the Company
As discussed on page 56, the Group announced that the Board had declared
remains confident about its ability to an interim dividend of 235.52p per ordinary
access the debt capital markets share of 25p, payable in four equal quarterly
successfully and reviews its options instalments of 58.88p per ordinary share in
on a continuing basis. May 2024, August 2024, November 2024
We have a debt rating of Baa2 (positive and February 2025.
outlook), BBB+ (negative outlook), BBB This represents an increase of 2.0% on
(positive outlook) by Moody's, S&P and Fitch. 2022 (2022: 230.90p per share, up 1.0%).
Given current geopolitical and economic In 2023, the Board prioritised
challenges, the Group aims to: strengthening the balance sheet to provide
– de-lever our gross debt levels (from greater business reliance during an
£39.7 billion in 2023); and uncertain macro-economic environment,
whilst aiming to reduce leverage more
– moderate the annual Net Financing Cost quickly.
levels (which were £1.9 billion in 2023) to
support the overall strategy of the Group. As such, there were no share buy-backs
in 2023.
This will deliver a resilient balance sheet,
able to withstand future uncertainties, However, we strongly believe that share
while providing increased flexibility for the buy-backs have an important role to play
Group to be able to invest in future growth within our capital allocation framework.
opportunities and, when our leverage Our commitment:
target is reached, sustainably return excess Progressive increase in dividend – in £
cash to shareholders. terms, by reference to the Group’s dividend
This will also de-risk the future solvency policy which is to pay dividends of 65% of
and liquidity risk as referred to on page 126, long-term sustainable earnings. Please
whereby the Group's ability to refinance refer to the dividend policy on page 388.
debt as it matures will be enhanced. Buy-back shares in a sustainable
Our commitment: programme, once the leverage ratio
To retire debt in a sustainable manner, reaches our target leverage range.
reducing our risk of refinancing and net Our record:
finance cost exposures. In the last three years, we have returned:
Our record: – £5.1 billion (2022: £4.9 billion;
Since the acquisition of Reynolds American 2021: £4.9 billion) via dividends; and
Inc. in 2017, we have consistently reduced – £2.0 billion via share buy-backs in 2022.
our borrowings from £49.1 billion to
£39.7 billion at 31 December 2023. Since 2019, we have returned a total of
£26.2 billion to shareholders.

43
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

U.S.
United States

2023 has been a challenging year Key markets

in the U.S., due to the continued Our products are available in all regions of the U.S.
macro-economic environment
impacting the premium sector
and the growth of illicit single-
use vapour products. We call on
the FDA and other authorities to
enforce against these products.

Volume
David Waterfield
President and CEO 2023 vs 2022 2022 vs 2021 2021
(Reynolds American Inc.) units % units % units
New Categories:
2023 revenue by category Vapour (10ml units / pods mn) 298 -6.6% 320 +10.0% 291
HP (sticks bn) — — — — —
Modern Oral (pouches mn) 297 -1.3% 301 -50.1% 602
Traditional Oral (stick eq bn) 6 -10.9% 7 -8.1% 7
Cigarettes (bn sticks) 52 -11.4% 59 -15.4% 70
Other (bn sticks eq)* — -5.6% — — —
Total Combustibles 52 -11.3% 59 -15.5% 70
Note:
* Other includes MYO/RYO.

Revenue
Revenue by category as % of total Region vs 2022 vs 2021
2023 vs 2022 (adj at cc) 2022 vs 2021 (adj at cc)
2023 2022 £m % % £m % %
New Categories 8.8 7.5 New Categories:
Traditional oral 9.4 9.3 Vapour 1,033 +13.1% +13.8% 913 +62.9% +46.4%
Combustibles 81.2 82.8 HP — — — — -69.1% -72.3%
Other 0.6 0.4 Modern Oral 25 -32.2% -31.8% 36 n/m n/m
Total New Categories 1,058 +11.3% +12.0% 949 +68.7% +51.6%
Traditional Oral 1,127 -4.0% -3.4% 1,174 +8.9% -2.1%
Combustibles 9,744 -6.9% -6.4% 10,470 +4.5% -6.1%
Other 65 +44.1% +45.2% 46 +27.9% +14.9%
Revenue 11,994 -5.1% -4.5% 12,639 +8.1% -2.8%

Profit from operations/operating margin

vs 2022 vs 2021
2023 vs 2022 (adj at cc) 2022 vs 2021 (adj at cc)
£m % % £m % %
(Loss)/Profit from
-20,781 -435% +0.4% 6,205 +11.5% +3.5%
operations
Operating margin (%) -173.3% -222 ppts +280 bps +49.1% +150 bps +330 bps

-60 bps +11%

Cigarette value share change Revenue growth
in New Categories

44
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Revenue and Profit from Operations increase of 13.8% (2022: increase of 46.4%) moderate in 2023 at +4.9% (2022: +9.4%)
In 2023, reported revenue declined 5.1% to at constant rates of exchange. This growth and was more than offset by a decline in
£11,994 million, with 2022 up 8.1% to was driven by pricing in both years (2023: volume of 11.3% to 52 billion sticks in 2023,
£12,639 million. Excluding the impact of +20.4%; 2022: +36.4%), more than offsetting having declined 15.5% (to 59 billion) in 2022.
translational foreign exchange, this was a a decrease in Vapour consumable volume Both years were negatively impacted by
decline of 4.5% in 2023 (2022: down 2.8%). of 6.6% in 2023 (2022: up 10%) which was the continued pressure of macro-economic
Continued growth in New Categories and driven by the growth of illicit single-use headwinds and, in 2023, the impact of the
pricing in combustibles in both years was nicotine products which we estimate to be flavour ban in California (which particularly
more than offset by lower combustibles more than 60% of the total Vapour market. impacted Newport and Camel) and growth
volume (down 11.3% in 2023 and 15.5% in The single-use nicotine Vapour category of illicit single-use vapour products as
2022). 2023 was negatively impacted by grew driven by the availability of flavours. consumers increased polyusage. Accordingly,
the continued pressure of macro-economic industry volume was down 7% (2022: down
These products, including synthetic single-
headwinds, squeezing consumer 10%), with the Group underperforming the
use nicotine Vapour products, are subject
affordability (which particularly impacted market due to the premium skewed
to the FDA's jurisdiction and are required
the Group's premium skewed portfolio) and portfolio and the higher exposure to the
to receive PMTA authorisation to remain
the impact of the flavour ban in California menthol category.
on the market. We welcome the recent
(which particularly impacted Newport and The performance in 2022 was impacted
actions from the FDA with regards to the
Camel) and growth in illicit single-use by the 2021 movements in trade inventory
illicit single-use Vapour products in the U.S.
vapour products. 2022 was negatively (mainly linked to the timing of price
and we continue to engage with
impacted by the unwind of trade inventory increases and uncertainty about a potential
stakeholders to facilitate the removal of
movements in 2021. excise increase), which benefited 2021 by
unauthorised products.
Reported profit from operations declined an estimated £200 million and was partially
We believe that public health officials, unwound in 2022.
435% to a loss of £20,781 million in 2023
legislators, and regulators — especially
(2022: up 11.5% to a profit of £6,205 million). Total volume share declined 10 bps
the FDA — should be concerned about the
The movement in 2023 was largely due to (2022: 30 bps decrease). Value share of
continued influx of illegal single-use vapour
the £4.3 billion impairment of goodwill and cigarettes declined 60 bps (2022: up 10 bps),
products, particularly into the U.S. market. It is
£23.0 billion impairment largely in respect largely due to the premium portfolio.
unacceptable that these products, marketed
of the carrying value of some of the Group's
in youth-appealing flavours such as Bubble In December 2022, the sale of all tobacco
acquired U.S. combustibles brands. 2022 was
Gum and Cotton Candy, continue to be sold. products with characterising flavours
negatively impacted by adjusting charges that
We call on the FDA, in conjunction with state (including menthol) other than tobacco
were largely in respect of our restructuring
and local authorities, to strongly enforce were banned in the State of California. We
programme (Quantum), including the factory
against these products. continue to monitor the proposed tobacco
rationalisation, which did not repeat in
We are disappointed by the FDA’s product standards regarding menthol in
2023. Translational foreign exchange was
Marketing Denial Orders (MDOs) for Vuse cigarettes.
a headwind of 0.6% in 2023 (2022: 12.9%
tailwind). Also in 2023, an extreme weather Alto’s Menthol** and Mixed Berry products. Please see page 38 for a discussion on the
event caused the destruction of a We are challenging these denials and have developments during 2023.
warehouse and stock of tobacco leaf, the obtained a permanent stay of enforcement Also, as stated on page 38, based upon the
impact of which was a charge of £9 million. allowing Vuse Alto Menthol to remain on the published science, we believe that a ban on
market. menthol cigarettes would negatively affect,
Excluding the adjusting items and the
impact of translational foreign exchange, We remain confident in our PMTA not benefit, public health. We believe a ban
adjusted profit from operations increased submission for Vuse Alto and we continue on menthol is contrary to the FDA’s stated
by 0.4% (2022: 3.5% increase) on a to innovate across our Vuse portfolio to goal of reducing the health effects of
constant currency basis. meet the needs of our adult consumers. tobacco use.
Following a review of the Group's In Modern Oral, volume decreased by 1.3% Traditional Oral
expectations from the U.S. combustibles (2022: down 50%) with volume share down Traditional Oral revenue declined 4.0%
market reflecting continuing macro- 200 bps in 2023, having declined 580 bps (2022: up 8.9%), being a decline of 3.4%
economic headwinds, from 1 January 2024, in 2022. Modern Oral revenue declined (2022: 2.1% lower) at constant rates of
the Group will commence amortising the to £25 million (2022: £36 million), as we exchange, as pricing in both years was more
remaining U.S. combustible brands reinvested in trade activation plans through than offset by the lower volume, down 10.9%
(Newport, Camel, Natural American Spirit trade investment (leading to a reduction in 2023 and 8.1% in 2022, with higher decline
and Pall Mall) over a period not exceeding in net pricing of 30.5% in 2023) while we in volume in 2023 due to the normalisation
30 years. The non-cash charge is estimated continue to await the outcome of our of inventory levels (being a drag of 1.7%).
to be £1.4 billion per year and will be treated PMTA submission for our successful Both 2023 and 2022 were negatively
as an adjusting item. Please refer to note 12 European product, Velo 2.0. impacted by strong macro-economic
in the notes on the accounts. We are encouraged by the strong results headwinds leading to downtrading,
New Categories from our recent Velo pilot in New York, accelerated cross-category switching and
including a more premium brand reduced consumption.
The U.S. is the world's largest Vapour market.
In 2023, Vuse continued to perform well, expression and design, with a national Value share of Traditional Oral was up
*
building on the momentum from 2022 roll-out to commence in 2024. 40 bps (2022: down 50 bps ), while volume
with a continued improvement in Combustibles share was down 20 bps (2022: down 70 bps).
financial performance. Combustibles revenue was 6.9% lower The decline in 2023 was driven by strong
in 2023 at £9,744 million (2022: up 4.5% macro-economic headwinds leading to
Having become the market leader by
to £10,470 million). Excluding a marginal consumer changing behaviour, impacting
Vapour value share in 2022, Vuse extended
translational foreign exchange headwind our premium skewed portfolio.
leadership in value share (of total Vapour
in tracked channels) by 470 bps to 45.6%, of 0.5% in 2023 (2022: 10.6% tailwind), this Notes:
* U.S. industry Traditional Oral growth was rebased in
(having increased 840 bps to 40.9 in 2022). was a decrease of 6.4% (2022: down 6.1%). 2023, leading to a revision to the growth previously
In response to the macro-economic reported for 2022, from +60 bps to +50 bps.
Revenue was up 13.1% to £1,033 million
pressures impacting consumer affordability, ** Menthol variants accounted for approximately 65%
(2022: up 62.9% to £913 million) being an
the positive impact from pricing was more of total Vuse consumables in 2023.

45
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

AME
Americas and Europe

Across AME, we are Key markets

demonstrating how a truly Belgium, Brazil, Canada, Chile, Colombia, the Czech Republic, Denmark, France, Germany,
multi-category portfolio can Greece, Hungary, Italy, Mexico, Netherlands, Poland, Romania, Spain, Switzerland, Ukraine,
deliver exceptional results – the UK.
with revenue growth in all Effective from 2023, the Group revised its regional structure from four regions to three. The markets in
categories. Our Non-Combustibles the Americas (excluding the U.S.) previously reported within the region Americas and Sub-Saharan Africa
(AmSSA) are now reported within AME. Regional data for 2022 and 2021 has been revised accordingly.
grew strongly and now account
for 17.5% of total revenue.

Fred Monteiro Volume

Regional Director 2023 vs 2022 2022 vs 2021 2021
units % units % units

2023 revenue by category New Categories:

Vapour (10ml units / pods mn) 312 +19.4% 261 +15.3% 226
HP (sticks bn) 11.1 -7.5% 12.0 +42.7% 8.4
Modern Oral (pouches mn) 4,210 +36.5% 3,083 +30.5% 2,363
Traditional Oral (stick eq bn) 1 -5.2% 1 -9.8% 1
Cigarettes (bn sticks) 265 -5.3% 280 -2.5% 286
Other (bn sticks eq)* 13 -12.0% 14 -10.5% 16
Total Combustibles 278 -5.7% 294 -2.9% 302
Note:
* Other combustibles includes MYO/RYO.

Revenue
Revenue by category as % of total Region
vs 2022 vs 2021
2023 2022
2023 vs 2022 (adj at cc) 2022 vs 2021 (adj at cc)
New Categories 17.1 14.0 £m % % £m % %
Traditional oral 0.4 0.4 New Categories:
Combustibles 77.8 81.7 Vapour 686 +47.6% +46.9% 465 +41.4% +38.4%
HP 505 +2.3% +3.0% 494 +68.8% +64.7%
Other 4.7 3.9
Modern Oral 482 +41.5% +44.6% 341 +29.9% +31.6%
Total New Categories 1,673 +28.8% +29.6% 1,300 +47.0% +45.1%
Traditional Oral 36 +1.7% +7.9% 35 -12.3% -7.7%
Combustibles 7,614 +0.3% +2.9% 7,588 +5.7% +4.0%
Other 468 +28.2% +25.2% 364 +7.0% -1.3%
Revenue 9,791 +5.4% +7.6% 9,287 +10.0% +8.0%

Profit from operations/operating margin

vs 2022 vs 2021
2023 vs 2022 (adj at cc) 2022 vs 2021 (adj at cc)
£m % % £m % %
Profit from Operations 3,194 +9.2% +5.9% 2,926 +0.8% +6.8%
Operating Margin (%) +32.6% +110 bps -50 bps +31.5% -290 bps -40 bps

flat +29%
Cigarette value share change Revenue growth
in New Categories

46
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Revenue and Profit from Operations At constant rates of exchange, adjusted In 2023, Modern Oral revenue grew 41.5%
Reported revenue in 2023 was 5.4% higher profit from operations was up 5.9% in 2023 (2022: up 29.9%), led by 36.5% volume
than 2022 (2022: up 10.0%) driven by price/ (2022: up 6.8%). growth (2022: 30.5% increase).
mix in combustibles (of 8.6% in 2023 and New Categories During 2023, we increased our geographic
6.9% in 2022) and the continued growth Revenue from Vapour was up 47.6% in footprint with expansion of Modern Oral into
in New Categories revenue (2023: up 29%, 2023, maintaining the momentum after Finland, Italy and France. We remain the
2022: up 47%). This was, in both years, having grown 41.4% in 2022. This was clear market leaders (by volume share) in
partly offset by lower combustible volume driven by higher volume (up 19.4% in 2023 14 Modern Oral markets. From a high base,
(down 5.7% in 2023 and 2.9% lower in 2022). and 15.3% in 2022) and strong pricing volume share was marginally lower at 67.0%,
2023 was impacted by a £456 million (higher by 27.5% in 2023 and 23.1% in 2022). down 170 bps. As the Modern Oral category
negative drag on the regional performance Positive regulatory developments enabled continues to grow and becomes more
which comprises the combined impact of a our entrance into a number of emerging established in Europe, we continue to see
lower performance from Russia compared to markets (Colombia, Paraguay, Peru), and the strong growth in adult consumer numbers.
2022 and the timing of the sale of the Group's roll-out of Vuse Go in a number of markets
businesses in Russia and Belarus partway In Sweden, Velo is the largest (by volume
(including Italy, Germany, Poland, the Czech share) of any snus or Modern Oral nicotine
through the year. Translational foreign Republic, Switzerland and Romania). We **
exchange was a headwind in 2023 of 2.2%, pouch brand .
continue to approach the growing modern
compared to a tailwind of 2.0% in 2022. single-use product category in a responsible Combustibles
Excluding the impact of currency, revenue way (through Underage Access Prevention In 2023, revenue was 0.3% higher,
grew 7.6% on a constant rates basis programmes and enhanced product Take- compared to an increase of 5.7% in 2022.
(2022: up 8.0%), driven by higher revenue Back schemes). Favourable price/mix in both years (of 8.6%
in Germany, Türkiye, Poland and Brazil. However, the growth of the single-use in 2023 and 6.9% in 2022) was offset by the
Reported profit from operations increased segment in 2022 and 2023 has impacted impact of lower combustible volume, down
by 9.2% to £3,194 million in 2023, having our value share of total Vapour across a 5.7% in 2023 and 2.9% in 2022. Excluding
grown 0.8% to £2,926 million in 2022. Both number of markets. For example: the impact of translational foreign
years were affected by a number of exchange, at constant rates of exchange,
– In France, we maintained value share revenue increased 2.9% (2022: 4.0%).
adjusting items. These were, in aggregate, leadership, with value share flat at 38.8%;
charges of £266 million in 2023 compared The decrease in combustible volume in
to charges of £422 million in 2022. In – In Germany, we lost value share 2023 was driven by the sale of the Group's
summary these were: leadership despite an increase of 500 bps businesses in Russia and Belarus partway
*
to 25.9% ; through the year and lower volume in
– charges of £353 million in 2023, including
the reclassification of foreign exchange – In the UK, our value share declined Canada, Chile and Romania. These more
reserves, related to the sale of the 440 bps to 10.3%. than offset a recovery in Türkiye and
Group's businesses in Russia and Belarus. In Canada, volume declined 23%, yet Vuse Germany (having been a contributing
These businesses were classified as held- maintained its leadership position with factor in the regional volume decline in
for-sale at 31 December 2022 with a total value share at 92.5% (up 210 bps )
* 2022), the continued improvement in
charge of £612 million in 2022 - please in 2023, having grown 890 bps in2022. volume in Brazil, which benefited from
refer to note 6 in the Notes on the lower illicit trade in both years, and higher
In 2023, HP volume declined by 7.5% volume in Mexico and Italy.
Accounts; and (2022: up 43%), with revenue 2.3% higher
– income of £167 million in 2023 at £505 million (2022: up 68.8% to Cigarette value share was flat in 2023.
(2022: £460 million income) in respect of £494 million). The region now represents Higher value share in Mexico, Italy,
the recognition of credits regarding the 46.7% of our global HP volume. In 2023, our Germany, Spain, France and Colombia was
calculation of VAT and excise tax claims HP performance was negatively impacted offset by lower value share in Brazil, the UK,
in prior periods (as the Group's litigation by the timing of the sale of the Group's Canada, the Czech Republic and Denmark,
was successfully concluded in 2022). businesses in Russia and Belarus, which while 2022 was down 30 bps.
In 2022, the Group also incurred charges offset the performance in Italy, the Czech Cigarette volume share grew 10 bps
of £202 million in respect of Quantum and Republic, Poland and Romania. Our (2022: down 30 bps) with volume share up
the factory rationalisation programme. aggregate category volume share in key HP in Ukraine, Mexico, Italy, Spain, France,
markets (excluding Russia as that market Colombia and Germany, partially offset by
Excluding the impact of currency and has ceased to be a key market for the reductions in Brazil, Switzerland, Belgium,
adjusting items (described above), the Group), reached 18.2%, down 30 bps .
*
Romania, the Czech Republic, Canada, the
regional performance was driven by: UK, Greece and Poland.
In 2023, the HP portfolio was extended
– Germany and Türkiye (where the with the launch of veo across key European
combustibles portfolio performed well markets (such as Poland, Romania,
with higher pricing and volume); Germany, the Czech Republic and Greece).
– Poland, Sweden and the Czech Republic,
which all improved their New Category
financial performance; and
– Ukraine, where the Group had
temporarily suspended operations in
the first six months of 2022;
partly offset by:
– the timing of the sale, partway through Notes:
the year, of the Group's businesses in * Following rebasing of third party databases, the 2022
Russia and Belarus, which, combined value share for the Group was revised in Germany (from
21.4% to 21.1%) and in Canada (from 89.5% to 90.4%).
with a lower comparative operational This impacted the Group's total HP value share in 2022,
performance, was a negative drag of lowering the 2022 value share from 18.7% to 18.5%.
£126 million. ** Source: Kantar New Category Tracker.

47
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

APMEA
Asia-Pacific, Middle East and Africa

A good performance across Key markets

the region, driven by Australia, Bangladesh, Japan, Kazakhstan, Malaysia, New Zealand, Pakistan, Saudi Arabia,
combustibles pricing and South Africa, South Korea, Taiwan, Vietnam.
our growing New Categories Effective from 2023, the Group revised its regional structure from four regions to three. The markets in the
portfolio, was masked by Sub-Sharan Africa previously reported within the region Americas and Sub-Saharan Africa (AmSSA) are now
reported within APMEA. Regional data for 2022 and 2021 has been revised accordingly.
translational foreign
exchange headwinds.

Michael (Mihovil) Dijanosic

Regional Director Volume
2023 vs 2022 2022 vs 2021 2021
units % units % units
2023 revenue by category
New Categories:
Vapour (10ml units / pods mn) 44 +43.1% 31 +73.2% 18
HP (sticks bn) 12.6 +4.9% 12.0 +12.3% 10.7
Modern Oral (pouches mn) 853 +36.2% 626 +89.0% 331
Traditional Oral (stick eq bn) — — — — —
Cigarettes (bn sticks) 238 -10.6% 266 -5.2% 281
Other (bn sticks eq)* 2 -3.1% 2 -6.8% 2
Total Combustibles 240 -10.6% 268 -5.2% 283
Note:
* Other combustibles includes MYO/RYO.

Revenue by category as % of total Region

Revenue
2023 2022
vs 2022 vs 2021
New Categories 11.2 11.3
2023 vs 2022 (adj at cc) 2022 vs 2021 (adj at cc)
Traditional oral 0.0 0.0 £m % % £m % %
New Categories:
Combustibles 86.4 86.8
Vapour 93 +60.5% +74.6% 58 +55.1% +53.0%
Other 2.4 1.9
HP 491 -13.2% -7.3% 566 +1.1% +7.0%
Modern Oral 32 +50.3% +70.8% 21 +114% +112%
Total New Categories 616 -4.5% +2.6% 645 +6.3% +11.5%
Traditional Oral — — — — — —
Combustibles 4,750 -4.5% +5.2% 4,972 +2.8% +3.8%
Other 132 +18.9% +32.0% 112 +2.8% -4.3%
Revenue 5,498 -4.0% +5.5% 5,729 +3.2% +4.4%

Profit from operations/operating margin

vs 2022 vs 2021
2023 vs 2022 (adj at cc) 2022 vs 2021 (adj at cc)
£m % % £m % %
Profit from Operations 1,836 +31.9% +6.9% 1,392 -21.2% +2.7%
Operating Margin (%) +33.4% +910 bps +60 bps +24.3% -750 bps -70 bps

-60 bps -4.5%

Cigarette value share change Revenue growth
in New Categories

48
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Revenue and Profit from Operations New Categories Combustibles

Reported revenue declined 4.0% to Total revenue from New Categories Revenue from combustibles declined by
£5,498 million (2022: increased 3.2% declined 4.5% to £616 million 4.5% to £4,750 million (2022: up 2.8% to
to £5,729 million). (2022: increased 6.3% to £645 million), £4,972 million), with both years impacted
Our reported performance is affected by as the translational foreign exchange by the translational foreign exchange
translational foreign exchange, which was headwinds more than offset (in 2023) the headwind. At constant rates of exchange,
a headwind in both years. Excluding the operating performance in the markets. On revenue increased 5.2% in 2023 and by
impact of this translational foreign a constant currency basis, revenue from 3.8% in 2022.
exchange, revenue was up 5.5% against New Categories increased 2.6% in 2023 In 2023, this was driven by combustibles
2022, itself an increase of 4.4% compared and 11.5% in 2022. pricing of 15.8%, notably in Pakistan, which
to 2021, at constant rates. Excluding translational foreign exchange, more than offset a decrease in total
The performance in both 2023 and 2022 which we believe reflects the operational combustible volume of 10.6%, as lower
was driven by the continued growth in performance, this was driven by: volume in Pakistan more than outweighed
New Categories and favourable pricing in – Vapour, with revenue up 74.6% in 2023 higher volume in Bangladesh.
combustibles (2023: 15.8%; 2022: 9.0%). (2022: up 53.0%) driven by a combination This compares to 2022, when the revenue
These more than offset lower combustibles of higher volume (up 43.1% in 2023 and growth was driven by improved pricing
volume (down 10.6% in 2023 and 5.2% in 2022). 73.2% in 2022) and price/mix in 2023 of (up 9.0%) and a partial recovery of GTR
+31.5% led by South Africa, New Zealand, following the COVID-19 restrictions of 2020
In 2022, volume benefited (compared to Malaysia and Indonesia. In 2022, price mix and 2021, which more than offset the
2021) from the emerging market recovery was a negative drag of 20.2% due to negative impact of the sale of the Group's
from COVID-19, although this was partly discounting in New Zealand in response Iranian business midway through 2021.
offset by the sale of the Group's Iranian to a competitive pricing environment; and
business midway through 2021. In 2023, value share decreased 60 bps
– Modern Oral, as revenue grew 70.8% in (2022: up 10 bps), with volume share down
Reported profit from operations increased 2023, led by higher volume (up 36.2%) 20 bps (2022: flat), as volume share gains
31.9% to £1,836 million, while 2022 was and price/mix of 34.6%. In 2022, revenue in Bangladesh and Pakistan were offset by
down 21.2% to £1,392 million. increased by 112%, driven by volume losses in Japan, South Korea, Australia, New
In 2022, the Group recognised a number (up 89.0%) and price/mix (up 22.9%). Zealand, South Africa and Malaysia.
of charges that impacted the reported This was mainly driven by strong volume
performance in that year and, because they performances in Pakistan and Kenya. In
did not repeat to the scale of the prior year, Pakistan, through stronger consumer
led to a commensurate increase in acquisition, we have achieved our highest
performance in 2023. These included: active consumer base (as a % of
– charges related to the allegation of population) in Modern Oral globally. In
historical breaches of sanctions (of which Kenya, our accelerated national roll-out in
£450 million was recognised in 2022, with January 2023 has driven a near fourfold
a further £75 million recognised in 2023, as increase in adult consumer numbers.
described on page 52 and in note 6(h) in However, HP revenue declined 7.3% in
the Notes on the Accounts on page 227); 2023, after a period of growth (2022: up
– the exit from Egypt (£118 million); and 7.0%). The decline in 2023 was despite a
further increase in consumable volume
– a charge of £79 million (related to the (up 4.9% to 12.6 billion sticks), as this was
conclusion of the investigation into more than offset by the competitive pricing
alleged violations of the Nigerian environment in Japan which included the
Competition and Consumer Protection final step in the five-year excise
Act and National Tobacco Control Act). harmonisation programme, leading to
Excluding adjusting items and the a decline in regional price/mix of 12.2%.
translational foreign exchange headwind, In Japan, the largest HP market in the
the performance was driven by: world, glo performed well. glo's volume
– Pakistan where pricing more than offset share in Japan started to stabilise in Q3
a reduction in combustibles volume; 2023, driven by the activation of our
– Sri Lanka, largely due to pricing in commercial plans.
combustibles as macro-economic
stability returned;
– Uzbekistan, driven by combustibles
pricing; and
– Asset sales in West Africa related
to various market exits.
These more than offset a decline in Japan,
largely due to the highly competitive
pricing environment in combustibles and
HP (including the final step in the five-year
excise harmonisation programme).
Adjusted profit from operations at constant
rates of exchange increased 6.9% in 2023,
having increased 2.7% in 2022. The growth
in 2022 was negatively impacted by the sale
of the Iranian business, due to its timing
midway through 2021.

49
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

Financial Performance Summary

Non-GAAP Measures These non-GAAP measures are explained,

Highlights In the reporting of financial information, the defined and reconciled from the most
Revenue Group uses certain measures that are not comparable GAAP metric on pages 335

-1.3%
defined by IFRS, the Generally Accepted to 349 and note 2 in the Notes on the
Accounting Principles (GAAP) under which Accounts.
the Group reports. The Group believes that Use of Organic Measures for
these additional measures, which are used Remuneration Purposes
New Categories revenue growth and internally, are useful to users of the financial
The sale of our businesses in Russia and
pricing in combustibles offset by the information in helping them understand the
Belarus was completed in September 2023.
sale of our Russian and Belarusian underlying business performance.
The sale has not been treated as a
businesses, lower combustible volume The principal non-GAAP measures which discontinued operation as, in our
and currency headwinds. Excluding the Group uses are adjusted profit from judgement, this was neither a sale of a
currency, revenue grew 1.6% operations, adjusted net finance costs, business line (as the Group continues to
adjusted taxation, adjusted diluted manufacture and sell cigarettes and new
earnings per share, which are before the category products elsewhere in the world)
Profit from Operations impact of adjusting items and are or a disposal of a major geographic area of

-250%
reconciled from profit from operations, net operations (as the impact of the sale is 1.8%
finance costs, taxation, diluted earnings per of Group revenue and 1.5% of profit from
share. The Group also uses adjusted share operations, excluding the impact of
of post-tax results of associates and joint adjusting items), as discussed on page 280.
Profit from operations was down 250%. ventures, and underlying tax rate. However, due to the scale of the businesses
On an adjusted, constant currency
Adjusting items are significant items in and the timing of the transactions, this is a
basis, profit from operations grew 3.1%,
profit from operations, net finance costs, drag on our comparative performance.
with an improvement in the financial
taxation, the Group’s share of the post-tax Where appropriate, the impact has been
performance of New Categories, which
results of associates and joint ventures explained in the following review of the
are now profitable (on a category
which individually or, if of a similar type, Group's financial results.
contribution basis) - two years ahead
of plan in aggregate, are relevant to an As shown on pages 171 to 177, the Group's
understanding of the Group’s underlying KPIs for the purposes of remuneration
financial performance. have been revised to be on an organic
Diluted EPS The Group also supplements its basis, excluding the results of Russia and

-322%
presentation of revenue in accordance Belarus in the current and comparator
with IFRS by presenting the non-GAAP period. Full reconciliations from the
component breakdowns of revenues by relevant IFRS measure have been
product category (including revenue provided on pages 335 to 345.
Adjusted diluted EPS up 4.0% generated from Vapour, Heated Products,
at constant rates of exchange Modern Oral, New Categories as a whole, The discussion of 2021 results that
Combustibles and Traditional Oral), are not necessary to an understanding
including by geographic segment (including of the Group’s financial condition,
revenue generated in the United States, changes in financial condition and
Americas and Europe and Asia-Pacific, results of operations is excluded from
Middle East and Africa). this Financial Review in accordance
As an additional measure to indicate the with applicable U.S. securities laws.
results of the Group before the impact of Discussion of such 2021 metrics is
exchange rates on the Group’s results, contained in the Group’s Annual
the movement in revenue from New Report on Form 20-F 2022, which
Categories, adjusted profit from is available at bat.com/annualreport
operations, adjusted net finance costs and and has been filed with the SEC,
Dividend per share as revised by the revised financial
adjusted diluted earnings per share are all

235.52p
shown at constant rates of exchange. statements and other affected
financial information to reflect
changes made in the fiscal year 2023
to the Group's reportable operating
Dividend per share up 2.0% at 235.52p segment data contained in the Form
6-K filed with the SEC on July 26, 2023
at 12:04pm EST.
Information contained in pages 32
to 40, pages 98 to the first column
on page 106 and from the heading
‘Retirement benefit schemes’ on page
106 to page 107 of the Annual Report
on Form 20-F 2022 (as revised, as
discussed above) are accordingly
incorporated by reference into this
Annual Report on Form 20-F 2023
only to the extent such information
pertains to the Group’s financial
condition and results of operations for
the fiscal year ended 31 December 2021.

50
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Revenue Our performance in 2023 has been Revenue

In 2023, revenue was £27,283 million negatively impacted by the impairment
(£m)
(down 1.3%), with 2022 7.7% higher than charge against goodwill in the U.S. of
2021 at £27,655 million.
Translational foreign exchange impacted
both years (2023: 2.9% headwind; 2022:
£4.3 billion as a non-cash adjusting charge.
This reflects the ongoing difficult macro-
economic environment and continued drag
on our legal Vapour business by the illicit
£27,283m
5.4% tailwind). Revenue at constant rates
of exchange increased 1.6% (2022: up 2.3%).
single-use products in that market. -1.3%
Also in 2023, we have recognised a
In 2023, our performance was negatively
non-cash adjusting impairment charge 2023 27,283 -1.3%
impacted by the sale of our Russian and
of £23.0 billion largely against our U.S.
Belarusian businesses, which completed 2022 27,655 +7.7%
combustible brands which have been
in September 2023. A combination of the
previously recognised as indefinite-lived. Definition: Revenue recognised, net of duty,
timing of the sale and a lower performance excise and other taxes.
These combustible brands will commence
from Russia was a drag on revenue by
amortisation from 1 January 2024. l IFRS GAAP l KPI l NON-GAAP
£456 million.
Please refer to note 12 for more details.
In both 2023 and 2022, our New Categories Our reported performance in 2023 was also
portfolio continued to perform well with Change in revenue at constant rates
impacted by lower comparative sales in
revenue up 17.8% in 2023 and 37.0% in (%)
Russia and the sale of Group's businesses

+1.6%
2022 (at constant rates). in Russia and Belarus partway through the
In combustibles, revenue declined 4.0% year. This was a combined headwind of
to £22,108 million (2022: up 4.5% to £126 million.
£23,030 million). Continued robust Our financial performance was further
combustibles price/mix (of 7.5% in 2023, affected by a number of charges 2023 +1.6%
compared to 4.6% in 2022) was more than recognised in 2022 that did not repeat or
2022 +2.3%
offset by lower cigarette volume (down 8.2% were significantly reduced in 2023. These
in 2023 at 555 billion sticks, having declined include charges related to the sale of the Definition: Change in revenue before the impact of
5.1% in 2022 to 605 billion sticks) and the Group's Russian and Belarusian businesses, fluctuations in foreign exchange rates.
impact of translational foreign exchange the agreement with the U.S. Department l IFRS GAAP l KPI l NON-GAAP
movement (2023: 3.2% headwind; 2022: 5.1% of Justice (DOJ) and Department of the
tailwind). Consequently, revenue from Treasury's Office of Foreign Assets Control
combustibles declined 0.8% (at constant Profit from operations
(OFAC) to resolve investigations into
rates of exchange) in 2023, having declined (£m)
historical breaches of sanctions and the

-£15,751m
0.6% in 2022. Group's restructuring programme
In the U.S., Group combustibles volume Quantum, discussed below.
was down 11.3% in 2023 and 15.5% in 2022, 2023 was impacted by a translational
as both years were negatively impacted by
the continued pressure of macro-economic
foreign exchange headwind (2022: tailwind).
Raw materials and other consumables
-250%
headwinds and, in 2023, the impact of the
costs declined 4.9% to £4,545 million in
flavour ban in California (which particularly 2023 -15,751 -250%
2023, following an increase of 5.3% to
impacted Newport and Camel) and growth
£4,781 million in 2022. 2022 10,523 +2.8%
of illicit single-use vapour products as
consumers increased polyusage. The results in both years are impacted by Definition: Profit for the year before the impact of
Accordingly, industry volume was down 7% translational foreign exchange (a tailwind net finance costs/income, share of post-tax results
(2022: down 10%) in the U.S. in 2023, and a headwind in 2022). of associates and joint ventures and taxation on
ordinary activities.
In 2022, Group cigarette volume was also Both years were negatively impacted by
negatively impacted by the full year impact the macro-economic headwinds, with l IFRS GAAP l KPI l NON-GAAP
of the sale of the Group's Iranian business inflation of £527 million (or 9.1%) in 2023
(which completed midway through 2021), (2022: £352 million) due to higher energy, Change in adjusted profit from
while revenue was also lapping an fertiliser and other commodity input raw operations at constant rates
estimated £200 million benefit from trade material costs. This was partly offset by (%)
inventory movements in the U.S. in 2021, efficiency initiatives which delivered

+3.1%
mainly linked to the timing of price £471 million in 2023 (2022: £422 million)
increases and uncertainty about a potential in savings.
excise increase.
Transactional foreign exchange was also
Profit From Operations a negative drag to our performance, at
Profit from operations was down 250% being £293 million in 2023 and £167 million in 2023 +3.1%
a loss of £15,751 million compared to a profit 2022, due to movement in our operating 2022 +4.3%
in 2022 of £10,523 million (up 2.8% on 2021). currencies largely against the US dollar.
Definition: Change in profit from operations before
the impact of adjusting items and the impact of
fluctuations in foreign exchange rates.
Reconciliation of revenue to revenue at constant rates l IFRS GAAP l KPI l NON-GAAP
2023 2022 2021
Change % Change %
£m (vs 2022) £m (vs 2021) £m
Revenue 27,283 -1.3% 27,655 +7.7% 25,684
Impact of exchange 813 (1,382)
Revenue at constant rates 28,096 +1.6% 26,273 +2.3% 25,684

51
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

Financial Performance Summary

Continued

Employee benefit costs reduced 10.4% Adjusting items included within profit from Operating margin
to £2,664 million (2022: up 9.4% to operations totalled £28,216 million in 2023
(%)
£2,972 million). The reduction in 2023 (2022: £1,885 million). These related to:
was partly due to a translational foreign
exchange tailwind (2022: headwind).
The reduction in 2023 also reflects the
lower average headcount (2023: 49,839;
– goodwill impairment of £4.6 billion largely
recognised in respect of the U.S. business
as discussed on page 45 and within note
-57.7%
12 in the Notes on the Accounts;
2022: 52,077) due to the impact of the 2023 -57.7%
Group's restructuring programme, – trademark amortisation and impairment
Quantum, the redundancy costs of (2023: £23,202 million; 2022: £285 million) 2022 38.1%
which were incurred in 2022. with the higher charge in 2023 due to the
Definition: Profit from operations as a percentage
impairment of certain of the U.S. acquired of revenue.
Depreciation, amortisation and brands as discussed on page 45 and within
impairment costs increased by note 12 in the Notes on the Accounts; l IFRS GAAP l KPI l NON-GAAP
£27,309 million to £28,614 million in 2023
compared to an increase of £229 million – other litigation costs of £96 million
(2022: £170 million) which, in both periods, Adjusted operating margin
to £1,305 million in 2022. This includes the (bps)
amortisation and impairment charges in was mainly in respect of U.S. litigation

45.7%
respect of trademarks and similar intangibles costs including Engle progeny;
of £23,232 million (2022: £317 million). The – restructuring and integration credit
increase was driven by the impairment of (due to a provision reversal) of £2 million
certain of the U.S. acquired trademarks. (2022: costs of £771 million), as the Group
The charge also includes the impairment of concluded the Quantum restructuring 2023 45.7%
goodwill of £4,614 million in 2023, largely due programme which will simplify the
2022 44.9%
to ongoing difficult U.S. macro-economic business and create a more efficient and
environment, uncertainty regarding the agile organisation to support the growth Definition: Adjusted profit from operations
impact of the potential menthol ban and of New Categories; as a percentage of revenue.
continued drag on our legal Vapour – charges of £353 million (2022: l IFRS GAAP l KPI l NON-GAAP
business by the illicit single-use products £612 million) in respect of the sale of the
in that market. These are described in notes Group's businesses in Russia and Belarus;
4, 6 and 7 in the Notes on the Accounts. Excluding the adjusting items, in 2023,
– a charge of £75 million, in 2023, having adjusted operating margin increased
2022 also included charges in respect recognised £450 million in 2022, in
of Quantum (recognised as a non-cash 80 bps to 45.7%, compared to an increase
respect of resolving the investigations of 150 bps in 2022. The improvement in
adjusting item) of £220 million as part of by the DOJ and OFAC into historical
the factory closures announced in the U.S., both years was driven by the reduction
breaches of sanctions; in losses from New Categories which, in
Singapore and Switzerland.
– a credit of £19 million, in 2023, having 2023, are now profitable (on a category
Expenditure on research and development recognised £460 million in 2022 related contribution basis), two years ahead of
was £408 million in 2023 (2022: £323 million), to the calculation of VAT on social the Group's original plan.
with a focus on products that could contributions in Brazil; and
potentially reduce the risk associated with Net Finance Costs
smoking conventional cigarettes. – a further credit in Brazil of £148 million, In 2023, net finance costs were
in respect of calculation of excise on social £1,895 million, an increase of £254 million
Other operating income decreased contributions in Brazil. on 2022 which, at £1,641 million, were
by £290 million to £432 million
In 2022, the Group also recognised: £155 million higher than 2021.
(2022: £722 million), largely due to the
recognition in respect of the Brazilian VAT – a charge of £79 million (related to the While the movements in 2023 and 2022
and excise on social contributions claims conclusion of the investigation into alleged were negatively impacted by a translational
of £167 million in 2023, which was lower than violations of the Nigerian Competition and foreign exchange headwind due to the
the £472 million in 2022 and the majority of Consumer Protection Act and National movements of sterling compared to the
which was included within adjusting items. Tobacco Control Act); and US dollar in both 2023 and 2022, interest
– a credit of £16 million following the partial expense increased, as debt issuances in
Other operating expenses decreased
buy-out of the pension fund in the U.S. the year were at higher interest rates than
by £1,480 million to £7,538 million (2022:
those maturing. These were partly offset
increase of £1,550 million to £9,018 million), Adjusted profit from operations is the by higher interest income (2023:
largely due to the movement in adjusting Group’s profit from operations before £186 million; 2022: £92 million), of which
items in respect of the sale of Russia and adjusting items referred to above. £97 million (2022: £42 million) related to
Belarus, the DOJ and OFAC investigations,
Adjusted profit from operations increased income on cash and cash equivalents on
the Nigeria investigation and other litigation,
0.5% to £12,465 million, as the reduction in restricted cash balances (including in
as referred to below, combined with a
losses from New Categories was partly Canada due to the cash build up in that
reduction in MSA charges of £364 million
offset by the foreign exchange headwind. market) with the remainder driven by
in the U.S. driven by lower volume.
On a constant currency basis, this was an higher interest rates on local deposits.
The Group continued to invest in increase of 3.1%. In 2021, the Group issued perpetual hybrid
New Categories, maintaining the gross
In 2022, adjusted profit from operations was bonds totalling €2 billion, recognised, in line
investment in line with 2022.
up 11.3% to £12,408 million, being an increase with IAS 32 Financial Instruments, as
As discussed in note 6(l) in the Notes of 4.3% on a constant currency basis. equity. Interest on such instruments is
on the Accounts (page 227), the Group recognised in reserves rather than as a
incurred £27 million of costs related to Operating Margin
charge to the income statement in net
recycling (Take-Back and waste collection Operating margin in 2023 was down
finance costs. Accordingly, in 2023, in line
schemes). Also in 2023, an extreme 95.8 ppts to -57.7% having declined 170 bps
with IAS 33 Earnings Per Share, £45 million
weather event caused the destruction of to 38.1% in 2022. These movements in 2023
(2022: £49 million) has been recognised as
warehouse and stock of tobacco leaf, the were due to the impairment charges related
a deduction from earnings similar to non-
impact of which was a charge of £9 million. to the U.S. goodwill and trademarks.
controlling interests.

52
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

In August 2023, the Group completed Associates and Joint Ventures In both 2023 and 2022, due to the volatility
a tender offer to repurchase sterling- Associates largely comprised the Group’s in global cannabis stock prices, the Group
equivalent £3,133 million of bonds, including shareholding in its Indian associate, ITC. recognised an impairment charge (net of
£43 million of accrued interest. Other costs The Group’s share of post-tax results of tax) of £34 million in 2023 and £59 million
directly associated with the early associates and joint ventures, included at in 2022 related to the Group's investment
repurchase of bonds, including the premium the pre-tax level under IFRS, increased in Organigram Holdings Inc.
paid, were treated as adjusting items. from £442 million to £585 million in 2023. Furthermore, in 2022, the Group impaired
Before adjusting items in respect of the early This follows an increase in 2022 of 6.5% its investments in Yemen, recognising
repurchase of bonds described above and the (from £415 million in 2021). The movements a charge of £18 million.
Franked Investment Income Group Litigation are largely due to the economic recovery
Excluding such adjusting items and the
Order (FII GLO), as discussed on page 232 in India in 2023 and 2022 from COVID-19.
impact of translational foreign exchange,
(£60 million; 2022: £33 million), and the impact Included in the results for 2023 and 2022 the Group’s share of associates and joint
of translational foreign exchange in both years, are adjusting items, which included a ventures on an adjusted, constant currency
adjusted net finance costs were 11.6% higher deemed gain of £40 million in 2023 basis increased 14.5% in 2023 to
in 2023 and 2.5% higher in 2022. (2022: £3 million deemed loss), arising on £611 million. In 2022, this was an increase
The Group’s average cost of debt in 2023 the deemed disposal of part of the Group’s of 19.6% on 2021.
was 5.2%, compared to 4% in 2022. shareholding in ITC (due to issuances of
ordinary shares under the ITC Employee
The Group has debt maturities of around
Share Option Scheme).
£3.2 billion annually in the next two years. Due
to higher interest rates, net finance costs are
expected to increase as debts are refinanced.

Analysis of Profit from Operations, Net Finance Costs and Results from Associates and Joint Ventures - 2023
Adjusting Impact of Adjusted
1
Reported items Adjusted exchange at CC
£m £m £m £m £m
(Loss)/Profit from operations
U.S. (20,781) 27,602 6,821 42 6,863
AME 3,194 266 3,460 87 3,547
APMEA 1,836 348 2,184 195 2,379
Total regions (15,751) 28,216 12,465 324 12,789
Net finance (costs)/income (1,895) 96 (1,799) 5 (1,794)
Associates and joint ventures 585 (8) 577 34 611
Profit before tax (17,061) 28,304 11,243 363 11,606
3
Analysis of Profit from Operations, Net Finance Costs and results from Associates and Joint Ventures - 2022
Adjusting Impact of Adjusted
2
Reported items Adjusted exchange at CC
£m £m £m £m £m
Profit from operations
U.S. 6,205 630 6,835 (740) 6,095
AME 2,926 422 3,348 (80) 3,268
APMEA 1,392 833 2,225 38 2,263
Total regions 10,523 1,885 12,408 (782) 11,626
Net finance (costs)/income (1,641) 34 (1,607) 140 (1,467)
Associates and joint ventures 442 92 534 (24) 510
Profit before tax 9,324 2,011 11,335 (666) 10,669
3
Analysis of Profit from Operations, Net Finance Costs and results from Associates and Joint Ventures - 2021
Adjusting
Reported items Adjusted
£m £m £m
Profit from operations
U.S. 5,566 321 5,887
AME 2,902 157 3,059
APMEA 1,766 438 2,204
Total regions 10,234 916 11,150
Net finance (costs)/income (1,486) 55 (1,431)
Associates and joint ventures 415 12 427
Profit before tax 9,163 983 10,146
Notes:
1. As translated in 2022 rates of exchange.
2. As translated in 2021 rates of exchange.
3. Effective 2023, the Group changed the regional management structure from four regions to three regions, with the prior years' data revised to reflect the new structure.

53
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

Financial Performance Summary

Continued

Tax accordance with appropriate transfer Major taxes paid 2023

In 2023, the tax credit in the income pricing rules and OECD principles.
(£bn)
statement was £2,872 million, compared

£39.1bn
The tax strategy outlined above is
to a charge of £2,478 million in 2022 and applicable to all Group companies, including
£2,189 million in 2021. the UK Group companies. Reference to tax
The effective tax rates in the income authorities includes HMRC.
statement are therefore 16.8% in 2023, The publication of this strategy is
26.6% in 2022 and 23.9% in 2021. These are considered to constitute compliance with
also affected by the inclusion of adjusting the duty under paragraph 16(2) Schedule 19
items described earlier and the associates Part 2 of the UK Finance Act 2016.
and joint ventures’ post-tax profit in the
In December 2021, the Organisation for
Group’s pre-tax results.
Economic Co-operation and Development
During 2023 the Group has recognised (OECD) released model rules for a new
a further £70 million in respect of the global minimum corporate tax framework
ongoing tax disputes in the Netherlands, applicable to multinational enterprise
with a total provision at 31 December 2023 groups with global revenues over
of £145 million. Please refer to page 307, €750 million (Pillar Two rules). The UK
in note 31 of the Notes to the Accounts for substantively enacted legislation
further information. implementing these rules on 20 June 2023
Excluding these items, the underlying tax rate and the rules apply to the Group as of 2023 2022
for subsidiaries was 24.5% in 2023, 24.8% 1 January 2024. The Group is reviewing £bn £bn
in 2022 and 24.7% in 2021. The marginal this legislation together with developing
Tobacco excise, net VAT and 35.3 36.8
decrease in the underlying tax rate in 2023 guidance. The Group is also monitoring
other sales taxes (collected)
largely reflects the absence of one-off rate the status of implementation of the model
rises and mix of profits, while the increase rules outside of the UK to assess the Corporation Tax 2.6 2.5
potential impact. Based on the information (borne)
in 2022 largely reflects the corporate tax
rate rises in Sri Lanka and Pakistan. currently available, the impact of these Customs and import duties 0.4 0.3
rules on the Group tax position is not (borne)
See the section Non-GAAP measures
expected to be material. The Group has
on page 343 for the computation of Employment Taxes 0.6 0.6
applied the mandatory exception to (collected)
underlying tax rates for the periods
recognising and disclosing information
presented. Employment taxes 0.2 0.2
about deferred tax assets and liabilities (borne)
Tax strategy related to Pillar Two income taxes in
The Group’s global tax strategy is reviewed accordance with IAS12 Income Taxes. Total 39.1 40.4
regularly by the Board. The operation of the
The taxation on ordinary activities was a
strategy is managed by the Interim Finance
credit of £2.9 billion in 2023, a charge of The total tax paid in 2023 of £39.1 billion
Director and Group Head of Tax with the
£2.5 billion in 2022 and a charge of £2.2 billion (2022: £40.4 billion, 2021: £40.5 billion)
Group’s tax position reported to the Audit
in 2021. Corporation Tax paid (due to the therefore consists of both taxes borne
Committee on a regular basis. The Board
timing of Corporation Tax instalment and taxes collected as shown in the table
considers tax risks that may arise as a result
payments which straddle different financial provided.
of our business operations. In summary,
years) was £2.6 billion in 2023, £2.5 billion
the strategy includes: In addition to the major taxes, there are
in 2022 and £2.3 billion in 2021.
– complying with all applicable laws and a host of other taxes the Group bears and
Our tax footprint extends beyond collects such as transport taxes, energy
regulations in countries in which we
Corporation Tax, including significant and environmental taxes, and banking
operate;
payment of employment taxes and other and insurance taxes.
– being open and transparent with tax indirect taxes, including customs and
authorities and operating to build mature The movement in deferred tax shown
import duties. The Group also collects
professional relationships; below for the year 2023 relates primarily
taxes on behalf of governments (including
to the impairment of certain of the U.S.
– supporting the business strategy of tobacco excise, employee taxes, VAT and
acquired trademarks, as described above.
the Group by undertaking efficient other sales taxes).
Further details of deferred tax movements
management of our tax affairs in line are disclosed in note 16 to the Accounts.
with the Group’s commercial activity;
– transacting on an arm’s-length basis
for exchanges of goods and services
between companies within the Group;
and
– engaging in pro-active discussions with Deferred tax asset/(liability)
tax authorities on occasions of differing 2023 2022 2021
legal interpretation. £m £m £m
Where resolution is not possible, tax Opening balance (17,746) (15,851) (15,780)
disputes may proceed to litigation. The Difference on exchange 762 (2,007) (148)
Group seeks to establish strong technical
tax positions. Credits to the income statement 5,577 174 29
Where legislative uncertainty exists, Changes in tax rates 106 66 158
resulting in differing interpretations, the Other credits/(charges) to other
Group seeks to establish that its position comprehensive income 12 (106) (110)
would be more likely than not to prevail.
Net reclassification as held-for-sale 8 (22) —
Transactions between Group subsidiaries
are conducted on arm’s-length terms in Closing balance (11,281) (17,746) (15,851)

54
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Earnings Per Share Dividends Diluted earnings per share

1

Profit for the year was a loss of The Group pays its dividends to (p)
£14,189 million, a 307% decrease shareholders over four quarterly interim
compared to a profit of £6,846 million in
2022 (itself a decrease of 1.8% on 2021).
In 2023, this decrease was driven by the
dividends. Quarterly dividends provide
shareholders with a more regular flow of
dividend income and allow the Company
-646.6p
impairment of U.S. goodwill and some of
the acquired combustibles brands totalling
to spread its substantial dividend
payments more evenly over the year, -322%
£27.3 billion. This more than offset the aligning better with the cash flow
reduction in losses from New Categories generation of the Group and so enable 2023 -646.6 -322%
which underpinned a good operational the Company to fund the payments more
2022 291.9 -1.3%
performance in both years. efficiently. The Board seeks to reward
In 2022, the Group undertook a £2 billion shareholders with an increase in dividend, Definition: Profit attributable to owners of BAT
share repurchase programme, reducing by reference to 65% of adjusted diluted p.l.c. over weighted average number of shares
EPS over the long-term. outstanding, including the effects of all dilutive
the number of shares (for the purposes potential ordinary shares.
of the EPS calculation) by 1.3%. The Board has declared an interim dividend
of 235.52p per ordinary share of 25p, l IFRS GAAP l KPI l NON-GAAP
After accounting for the movement in
non-controlling interests in the year, basic payable in four equal quarterly instalments
of 58.88p per ordinary share in May 2024, Change in adjusted diluted EPS
earnings per share were 320% lower at
August 2024, November 2024 and February (%)
-646.6p (2022: 293.3p; 2021: 296.9p).

+1.1%
2025. This represents an increase of 2.0%
In 2023, the Group reported a loss of on 2022 (2022: 230.90p per share, up 6.0%)
£14,189 million for the year. Following the and a payout ratio, on 2023 adjusted diluted
requirements of IAS 33, the impact of share earnings per share, of 62.7% (2022: 62.2%).
options would be antidilutive. Therefore,
they are excluded from the calculation of The quarterly dividends will be paid to 2023 +1.1%
diluted earnings per share in accordance shareholders registered on either the UK
2022 +12.9%
with IFRS in 2023, but are included in the main register or the South Africa branch
calculation in prior years. As the impact of register and to ADS holders, each on the Definition: Change in diluted earnings per share
share options on adjusted earnings per applicable record dates. before the impact of adjusting items.
share would be dilutive in 2023, share Under IFRS, the dividend is recognised in l IFRS GAAP l KPI l NON-GAAP
options are included in adjusted diluted the year that it is approved by shareholders
earnings per share for 2023, as well as or, if declared as an interim dividend, by Change in adjusted diluted EPS
2022 and 2021. Directors, in the period that it is paid.
1
at constant rates
Diluted earnings per share were a loss The cash flow, prepared in accordance (%)
of 646.6p in 2023, a decline of 322% with IFRS, reflects the total cash paid in the
compared to 291.9p in 2022 (2021: 295.6p).
Earnings per share (EPS) are impacted
by the adjusting items discussed earlier.
period. Further details of the total amounts
of dividends paid in 2023 and 2022 (with
2021 comparatives) are given in note 22
in the Notes on the Accounts.
+4.0%
Adjusted diluted EPS, as calculated in note
11 in the Notes on the Accounts, was up Dividends are declared and payable in 2023 +4.0%
against the prior year by 1.1% at 375.6p, sterling except for those shareholders on 2022 +5.8%
with 2022 ahead of 2021 by 12.9% at 371.4p. the branch register in South Africa, where
Adjusted diluted EPS at constant rates dividends are payable in rand. The Definition: Change in diluted earnings per share
before the impact of adjusting items and the
would have been 4.0% ahead of 2022 at equivalent dividends receivable by holders impact of fluctuations in foreign exchange rates.
386.4p, with 2022 up 5.8% against 2021. of ADSs in US dollars are calculated based
on the exchange rate on the applicable l IFRS GAAP l KPI l NON-GAAP
As mentioned earlier, the sale of our
businesses in Russia and Belarus was payment date.
completed in September 2023. Due to the Further details of the quarterly dividends Note:
timing of the transactions, combined with and key dates are set out under 'Shareholder 1. Following the requirements of IAS 33, the impact of
a lower underlying performance as we information’ on pages 388 and 389. share options would be antidilutive. Therefore, they are
reduced investment and focus on Russia, excluded from the calculation of diluted earnings per
share in accordance with IFRS in 2023, but are included
this was a drag on our comparative in the calculation in prior years.
performance by 1.2%, at constant rates
of exchange.

55
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

Treasury and Cash Flow

Treasury, Liquidity The Group continues to maintain As of 31 December 2023, the Group did
*
and Capital Structure investment‑grade credit ratings , with not have any financial instruments using
The Treasury Function is responsible for ratings from Moody's, S&P and Fitch of the historical benchmarks that are no
raising finance for the Group and managing Baa2 (positive outlook), BBB+ (negative longer available.
the Group’s cash resources and the outlook), BBB (positive outlook), Use of facilities
financial risks arising from underlying respectively. See Notes on the Accounts, These facilities ensure that the Group has
operations. Clear parameters have been note 26. access to funding to supplement the cash
established, including levels of authority, The strength of the ratings has available or generated by the business in
on the type and use of financial underpinned debt issuance and the Group the period to meet the operational
instruments to manage the financial risks is confident of its ability to successfully (including working capital) and general
facing the Group. Such instruments are access the debt capital markets. corporate requirements including, but
only used if they relate to an underlying The Group is party to the ISDA fallback not limited to, the timing of payments
exposure; speculative transactions are protocol and in January 2022, it automatically in relation to:
expressly forbidden under the Group’s replaced GBP LIBOR with an economically – dividends (2023: £5.1 billion; 2022:
treasury policy. All these activities are equivalent interest rate referencing SONIA £4.9 billion);
carried out under defined policies, for derivatives on their reset date. For
procedures and limits, reviewed and – capital expenditure (2023: £0.5 billion;
further information please refer to note 26 2022: £0.6 billion);
approved by the Board, delegating in the Notes on the Accounts.
oversight to the Finance Director and – Master Settlement Agreement in the U.S.
Treasury Function. See note 26 in the Available facilities (2023: £2.3 billion; 2022: £2.5 billion);
Notes on the Accounts for further detail. The Group maintains a £25 billion Euro
Medium Term Note (EMTN) programme, – refinancing obligations;
It is the policy of the Group to maximise and U.S. (US$4 billion) and European – share repurchase programme, as
financial flexibility and minimise refinancing (£3 billion) commercial paper programmes applicable; and
risk by issuing debt with a range of to accommodate the liquidity needs of the
maturities, generally matching the – other corporate activity, such as litigation
Group. At 31 December 2023, no or acquisitions, as relevant.
projected cash flows of the Group and commercial paper was outstanding
obtaining this financing from a wide range (2022: £27 million outstanding). Cash flows Management believes that the Group
of sources. The Group targets an average relating to commercial paper that have has sufficient working capital for present
centrally managed debt maturity of at least maturity periods of three months or less requirements, taking into account the
five years of which no more than 20% are presented on a net basis in the Group’s amounts of undrawn borrowing facilities
matures in a single rolling year. As at cash flow statement. and levels of cash and cash equivalents,
31 December 2023, the average centrally and the ongoing ability to generate cash.
managed debt maturity was 10.5 years The Group’s main bank facility is a syndicated
£5.4 billion committed revolving credit facility. Issuance, drawdowns and
(2022: 9.9 years) with the highest repayment in the period
proportion maturing in a single rolling This facility was undrawn at 31 December
2023 (31 December 2022: undrawn). – In January 2023, the Group repaid a
12-month period being 15.7% (2022: 18.6%).
€750 million bond at maturity;
In order to manage its interest rate risk, In March 2023, the Group refinanced the
£2.7 billion 364-day tranche of the revolving – In February 2023, the Group accessed
the Group maintains both floating rate
credit facility at the reduced amount of the Euro market under its EMTN
and fixed rate debt. The Group sets targets
£2.5 billion, maturing in March 2024 with Programme, raising a total of
(within overall guidelines) for the desired
two one-year extension options, and €800 million;
ratio of floating to fixed rate debt on a net
basis (at least 50% fixed on a net basis in a one-year term out option. Additionally, – In May 2023, the Group repaid a total of
the short to medium term). The interest £2.85 billion of the five-year tranche US$48 million of bonds at maturity;
rate profile of liquid assets included in net remains available until March 2025, – Given the refinancing levels in the
debt are considered to offset floating rate with £2.7 billion extended to March 2026 medium term and to reduce near term
debt and are taken into account in and £2.5 billion extended to March 2027. refinancing risks, in August 2023, the
determining the net interest rate exposure. Also in 2023, the Group extended short- Group accessed the US dollar market
At 31 December 2023, the relevant ratios term bilateral facilities totalling £2.65 billion under its SEC Shelf Programme, raising a
of floating to fixed rate borrowings after from March to December 2024, some with total of US$5 billion across five tranches
the impact of derivatives were 10:90 extension options to extend for further whilst also announcing a concurrent
(2022: 12:88). On a net basis, after periods. As at 31 December 2023, £100 million capped debt tender offer, targeting a
offsetting liquid assets and excluding cash was drawn on a short-term basis. series of GBP-, EUR- and USD-
and other liquid assets in Canada, which Cash flows relating to bilateral facilities denominated bonds maturing between
are subject to certain restrictions under that have maturity periods of three months 2024 and 2027. Pursuant to this tender
Companies' Creditors Arrangement Act or less are presented on a net basis in the offer, BAT repurchased bonds prior to
(CCAA) protection, the relevant ratio of Group’s cash flow statement. their maturity in a principal amount of
floating to fixed rate borrowings was 2:98 £3.1 billion and
(2022: 7:93). Following the initial filing in 2019, the
Group's shelf registration statement on – In September, October and November
As part of the management of liquidity, Form F-3 was renewed with the SEC in 2023, the Group repaid US$550 million,
funding and interest rate risk, the Group 2022, pursuant to which B.A.T Capital €800 million and €750 million of bonds at
regularly evaluates market conditions and Corporation, BAT p.l.c. and B.A.T. maturity, respectively.
may enter into transactions, from time International Finance p.l.c. may issue debt In 2022, the Group raised US$3.1 billion
to time, to repurchase outstanding debt, securities guaranteed by certain members and repaid €600 million, £180 million and
pursuant to open market purchases, tender of the Group from time to time. This forms US$1.8 billion bonds at maturity.
offers or other means. part of the Group’s strategy to ensure
flexible and agile access to capital markets Note:
* A credit rating is not a recommendation to buy, sell or
and the registration statement is initially hold securities. A credit rating may be subject to
valid for three years. withdrawal or revision at any time. Each rating should be
evaluated separately of any other rating.

56
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Cash Flow As described earlier, the Group completed In 2023, interest paid increased by 6.6% to
Net cash generated from the sale of its businesses in Russia and £1,682 million (2022: £1,578 million), driven
operating activities Belarus in September 2023. Proceeds of by higher interest charges as new debt
Net cash generated from operating £425 million were received in 2023, net of issued replaced cheaper debt on maturity.
activities increased by £320 million to cash disposed of £266 million, being a net In 2023, the Group repaid borrowings of
£10,714 million in 2023, compared to an cash inflow from the disposal of £6.8 billion and issued £5.1 billion of new
increase of £677 million to £10,394 million £159 million, as shown in the cash flow borrowings. The Group repaid borrowings
in 2022. In 2023, translational foreign statement on page 214. of £3.0 billion in 2022, and issued £3.3 billion
exchange was a marginal headwind Purchases of property, plant of new borrowings.
(2022: tailwind) due to the relative and equipment were lower than 2022, Please refer to note 26 in the Notes
movements of sterling against the Group at £460 million (2022: £523 million). on the Accounts for further details.
reporting currencies, notably the US dollar, In 2023, the Group invested £541 million Cash flow conversion
in those periods. in gross capital expenditure, a decrease of The conversion of profit from operations
In 2023, the increase was driven by: 14.2% on the prior year (2022: £630 million). to net cash generated from operating
This includes purchases of property, plant activities may indicate the Group’s ability
– the realisation of tax credits in Brazil and equipment and certain intangibles,
(related to the previously disclosed VAT to generate cash from the profits earned.
and the investment in the Group’s global
and excise on social contributions); and operational infrastructure (including, but not Based upon net cash generated from
– higher dividends received from the limited to, the manufacturing network, trade operating activities, the Group’s conversion
Group's associates of £506 million (2022: marketing software and IT systems and the rate was -68% compared to 99% in 2022,
£394 million), mainly related to ITC. expansion of our New Categories portfolio). impacted, in 2023 by the non-cash charges
in respect of goodwill and trademark
These were partially offset by: The Group expects gross capital impairments described earlier.
– payments in respect of the settlement expenditure in 2024 of approximately
agreements with the DOJ and OFAC £550 million.
(2023: £262 million; 2022: £nil million); Net cash used in financing activities
– increases in tax paid of £2,622 million, Net cash used in financing activities
compared to £2,537million in 2022; and was an outflow of £9,314 million in 2023
– a payment of £59 million to settle the (2022: £8,878 million outflow), with the
investigation by the Nigerian Federal outflow in each year largely driven by:
Competition and Consumer Protection – dividend payments (2023: £5,055 million,
Commission (FCCPC). up 2.8%; 2022: £4,915 million, up 0.2%).
In 2023, other litigation payments (mainly The movement in both years was
related to Engle) were lower at £73 million affected by the higher dividend per share.
(2022: £181 million). The increase in 2023 was partially offset
by the reduction in the number of shares
The Group made interim repayments to due to the share buy-back programme
HMRC of £50 million in both 2023 and undertaken in 2022;
2022, and intends to make further interim
repayments in future periods in respect of – the net repayment of borrowings
the Franked Investment Income Group (2023: £1,635 million; 2022: £223 million
Litigation Order (FII GLO), as described on net issuance) as described on page 56;
page 232. and
Net cash used in investing activities – in 2022, the purchases of shares under
In 2023, net cash used in investing the share buy-back programme of
activities decreased to £296 million £2,012 million.
(2022: £705 million), partly due to a lower
net outflow of £43 million from short-term
investment products, including treasury
bills (2022: £129 million net outflow).

Summary Cash Flow

2023 2022 2021
£m £m £m
Cash generated from operating activities 12,830 12,537 11,678
Dividends received from associates 506 394 353
Tax paid (2,622) (2,537) (2,314)
Net cash generated from operating activities 10,714 10,394 9,717
Net cash used in investing activities (296) (705) (1,140)
Net cash used in financing activities (9,314) (8,878) (8,749)
Transferred from/(to) to held-for-sale 368 (368) —
Differences on exchange (292) 431 (253)
Increase/(decrease) in net cash and cash equivalents in the year 1,180 874 (425)

57
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Business

Other

Restricted cash Retirement Benefit Schemes

Cash and cash equivalents include The Group’s subsidiary undertakings
restricted amounts of £1,904 million operate defined benefit schemes, including
(2022: £1,411 million) due to subsidiaries in pension and post-retirement healthcare
CCAA protection (note 32 in the Notes schemes, and defined contribution
on the Accounts) as well as £392 million schemes. The most significant
(2022: £324 million) principally due to arrangements are in the U.S., the UK,
exchange control restrictions. Canada, Germany, Switzerland and the
Borrowings and Net Debt Netherlands. Together, schemes in these
Total borrowings (which includes lease territories account for over 90% of the total
liabilities) decreased to £39,730 million in underlying obligations of the Group’s
2023 (2022: £43,139 million) impacted by defined benefit arrangements and over
the relative movement of sterling against 70% of the current service cost. Benefits
other currencies, particularly the US dollar provided through defined contribution
and the euro. In 2023, this was a tailwind of schemes are charged as an expense as
£1,981 million (2022: £3,911 million headwind). payments fall due. The liabilities arising in
respect of defined benefit schemes are
The movement in borrowings is impacted determined in accordance with the advice
by the net issuance and repayment of of independent, professionally qualified
bonds, as discussed on page 56 including actuaries, using the projected unit credit
the tender offer and subsequent method. It is Group policy that all schemes
repayment of £3.1 billion (equivalent) are formally valued at least every three
of bonds. years. Contributions to the defined benefit
Total borrowings include £700 million schemes are determined after consultation
(31 December 2022: £798 million) in respect with the respective trustees and actuaries
of the purchase price adjustments related of the individual externally funded schemes,
to the acquisition of Reynolds American Inc. taking into account regulatory environments.
As discussed on page 56, the Group The present total value of funded scheme
remains confident about its ability to liabilities as at 31 December 2023 was
access the debt capital markets £6,417 million (2022: £6,515 million), while
successfully and reviews its options unfunded scheme liabilities amounted to
on a continuing basis. £785 million (2022: £797 million). The
Net debt is a non-GAAP measure and schemes’ assets decreased to £7,317 million
is defined as total borrowings (including from £7,424 million in 2022, itself a
related derivatives and lease liabilities) decrease from £10,816 million in 2021.
less cash and cash equivalents and current The overall position for all pension and
investments held at fair value. healthcare schemes in Group subsidiaries
amounted to a net asset of £75 million at
Net debt, at 31 December 2023, was the end of 2023, compared to a net asset
£34,640 million (2022: £39,281 million; of £51 million at the end of 2022.
2021: £36,302 million), with the movement
in net debt largely due to the relative In addition, during 2022, the risk profiles
movement of sterling against other and values of amounts relating to
currencies, particularly the US dollar retirement benefit arrangements were
and the euro, which was a tailwind of impacted by a partial buy-out in the U.S.
£1,338 million in 2023 (2022: £3,030 million Litigation and Settlements
headwind) and the net repayment in As discussed in note 31 in the Notes on
borrowings described on page 56. the Accounts, various legal proceedings
or claims are pending or may be instituted
against the Group.
Government Activity
The marketing, sale, taxation and use
of tobacco products have been subject
to substantial regulation by government
and health officials for many years.
For information about the risks related
to regulation, see page 123 and pages
361 to 369.

58
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Off-balance Sheet Arrangements The critical accounting estimates are Foreign Exchange Rates
and Contractual Obligations described in note 1 in the Notes on the The principal exchange rates used to
Except for certain indemnities, the Group Accounts and include: convert the results of the Group's foreign
has no significant off-balance sheet – review of asset values, including operations to sterling, for the purposes
arrangements other than in respect of goodwill and impairment testing; of inclusion and consolidation within the
leaf purchase obligations. The Group has Group's financial statements, are indicated
– estimation and accounting for
contractual obligations to make future in the table below.
retirement benefit costs; and
payments on debt guarantees. In the Where the Group has provided results at
normal course of business, it enters into – estimation of provisions, including as
constant rates of exchange, this refers to
contractual arrangements where the related to taxation and legal matters.
the translation of the results from the
Group commits to future purchases The critical accounting judgements are foreign operations at rates of exchange
of goods and services from unaffiliated described in note 1 in the Notes on the prevailing in the prior period, thereby
and related parties. See page 352 for a Accounts and include: eliminating the potentially distorting
summary of the contractual obligations – identification and quantification of impact of the movement in foreign
as at 31 December 2023. adjusting items; exchange on the reported results.
Accounting Policies – the determination as to whether the Assessment as a Going Concern
The application of the accounting disposal of a business or businesses is In conjunction with the assessment of
standards and the accounting policies significant enough to require disclosure viability, the Directors have also assessed
adopted by the Group are set out in the as discontinued operations; the short-term cash flow forecasts and
Group Manual of Accounting Policies and debt refinancing requirements.
– determination as to whether to recognise
Procedures (GMAPP).
provisions and the exposures to The Group has, at the date of this report,
GMAPP includes the Group instructions contingent liabilities related to pending sufficient existing financing available for
in respect of the accounting and reporting litigation or other outstanding claims; its estimated requirements for at least the
of business activities, such as revenue next 12 months and beyond in respect of
– determination as to whether control
recognition, asset valuations and general corporate purposes, including in
(subsidiaries), joint control (joint
impairment testing, adjusting items, respect of the Master Settlement
arrangements), or significant influence
the accrual of obligations and the appraisal Agreement due in the U.S. in 2024 and
(associates) exist in relation to
of contingent liabilities, which include taxes other known liabilities or future payments
investments held by the Group;
and litigation. Formal processes are in (including interim dividends).
place whereby central management and – review of applicable exchange rates
for transactions with and translation The Group has £60 million of future
End Market management confirm
of entities in territories where there are contractual commitments (2022:
adherence to the principles and the
restrictions on the free access to foreign £80 million) related to property, plant
procedures and to the completeness of
currency or multiple exchange rates; and and equipment, as discussed in note 13
reporting. Central analyses and revision of
in the Notes on the Accounts.
information are also performed to ensure – the determination as to whether
and confirm adherence. perpetual hybrid bonds should be After reviewing the Group’s annual budget,
classified as equity instead of borrowings. plans and financing arrangements,
In order to prepare the Group’s
including the availability of a £5.4 billion
consolidated financial information in
revolving credit facility, the Directors
accordance with IFRS, Management has
consider that the Group has adequate
used estimates and assumptions that
resources to continue operating and that
affect the reported amounts of revenue,
it is therefore appropriate to continue to
expenses and assets, and the disclosure
adopt the going concern basis in preparing
of contingent liabilities, at the date of the
the Annual Report and Form 20‑F.
financial statements.

Foreign Exchange Rates

Average Closing
2023 2022 2021 2023 2022 2021
Australian dollar 1.873 1.779 1.832 1.868 1.774 1.863
Bangladeshi taka 134.747 115.040 117.023 139.909 123.502 116.212
Brazilian real 6.208 6.384 7.421 6.192 6.351 7.544
Canadian dollar 1.678 1.607 1.724 1.681 1.630 1.711
Chilean peso 1,044.498 1,076.291 1,045.816 1,113.264 1,024.811 1,153.991
Euro 1.150 1.173 1.164 1.154 1.127 1.191
Indian rupee 102.707 97.030 101.702 106.081 99.516 100.684
Japanese yen 174.883 161.842 151.124 179.721 158.717 155.972
Romanian leu 5.688 5.783 5.727 5.741 5.577 5.894
1
Russian ruble 102.662 87.184 101.388 120.111 87.812 101.592
South African rand 22.962 20.176 20.335 23.313 20.467 21.617
Swiss franc 1.117 1.179 1.258 1.073 1.113 1.234
US dollar 1.244 1.236 1.376 1.275 1.203 1.354
Note:
1. As a result of the disposal of the Russian businesses, the 2023 rates reflect the average for the period ended and as at 13 September 2023, respectively.

59
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Strategic Pillar Overview

Tobacco Harm Reduction Acceptance Vapour products are more successful than
Sustainable Future A Better Tomorrow™ through THR
The best choice any adult smoker can
nicotine replacement therapy in helping
2
people stop smoking , by providing a
make will always be quitting combustible satisfactory alternative to cigarettes
Building a Sustainable tobacco products completely. Yet many despite not being smoking cessation
Future is about seeking do not. products or marketed as such.
World-class science
to actively migrate Our ambition for A Better Tomorrow™ is
World-class science is crucial to providing
to reduce the health impact of our business
consumers away from via Tobacco Harm Reduction (THR) to help a robust evidence base to substantiate the
cigarettes and to Build a Smokeless World. role of New Category products in THR.
smokeless alternatives We know that stakeholders increasingly We use a wide range of analytical and
expect us to demonstrate that we are a pre-clinical techniques, specialised
sustainably, responsibly purpose-driven enterprise, and that we are laboratory technology and expertise to test
and with integrity. committed to a future where, ultimately, our products and aim to ensure they meet
we move away from combustible high quality standards.
cigarettes.
Science will be a primary This is supplemented by collaborations
This is why, for several years now, we have with an ecosystem of global external
driver of our efforts, been transforming. We have created a researchers, and clinical research
supported by more active multi-category portfolio of scientifically-
*†
organisations, who bring independent
and specialist expertise that enhance
external engagement and substantiated, reduced-risk alternatives,
tested to meet or exceed industry-leading our internal capabilities.
regulatory focus, while standards. THR substantiation: Our nine-step
embedding sustainability THR underpins our purpose and, as such, is risk assessment framework
across our organisation. a vital part of our transformation. Ultimately, Most smokeless alternatives are still
our THR ambition will be quantified by relatively new to the market. As a
improved health outcomes (decrease of consequence, in most cases, there is a lack
The key building blocks of the morbidity and mortality) at both individual of long-term epidemiological data needed
and population levels relative to the scenario to demonstrate the overall impact on
Sustainable Future pillar are:
of a world with only combustible cigarettes. public health. That is why it is necessary
Tobacco Harm Reduction Acceptance to take a ‘weight of evidence’ approach.
Why THR matters
Shaping the Landscape We know combustible cigarettes pose Drawing on work by the U.S. Institute of
Leading in Sustainability & Integrity serious health risks. The only way to avoid Medicine, we utilise our nine-step risk
those risks is not to start smoking or to quit. assessment framework. This evaluates
However, more than one billion people the emissions, exposure and risk profile of our
Our commitments under today continue to smoke, and, according New Category products and compares them
Sustainable Future: to the World Health Organization, it is to smoking cigarettes or other comparators,
estimated that smoking-related diseases such as nicotine replacement therapy.
Building a Smokeless World
cause more than eight million deaths In terms of THR scientific substantiation,
Investing in the products, science globally each year. our Heated Products, Vapour, and Modern
and engagement to make A Better Oral products have been reported in
TM
Tomorrow a reality THR is a well recognised public health
strategy that aims to minimise the harm peer-reviewed pre-clinical, clinical, and
Conducting our business sustainably caused by smoking. This is done by population level research publications
and with integrity encouraging adult smokers, who would and journals, summarising significant
otherwise continue to smoke, to switch reductions in emissions, exposure and
*†
completely to reduced-risk , smokeless risk reduction versus smoking.
alternatives. Looking ahead, we are working on delivering
There has been significant progress in the the next horizon of science to demonstrate
global THR journey over the past decade. that our Non-Combustible products not
Today, there are three significant global only reduce risk, but quantitatively reduce
smokeless categories: Vapour, Heated disease-relevant harm.
Products and Modern Oral. We aim to follow best practice and adhere
The global adoption of these smokeless to high standards of governance and ethics
product categories over the last decade in all our scientific research. Regardless
has been significant. The latest estimate of the results of such research, we are
of the global number of vapers alone is committed to sharing the outcomes.
82 million.
1 Our scientists have published more than
198 scientific papers to date about our
For those adult consumers who would New Category products.
otherwise continue to smoke, we encourage
making the switch to smokeless products. + For more information on Tobacco Harm reduction,
see page 78
We provide adult consumers with a range
of scientifically-substantiated, smokeless
alternatives to smoking.
Our aim is to provide products that deliver
comparable satisfaction in nicotine
delivery, use, and sensorial aspects. For
example, some studies suggest that

60
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

We ensure our New Categories product

innovation pipeline is based on data-backed
foresights, to anticipate category and
consumer trends. Through deep consumer
insights we deliver new product propositions
that are consumer-centric in their design
and performance, to meet the most important
consumer preferences and opportunities.
Our approach to regulation
We recognise and support the objective
of governments to reduce smoking rates
and its associated health impact.
We have always been clear that we
support regulation which is based on
robust evidence, is tailored to local
circumstances, and delivers on the
intended policy aims, while preventing
unintended consequences such as the
growth in illegal markets.
Although not risk free, recent technological
and scientific advancements in smokeless
products offer consumers the opportunity
to enjoy nicotine products, without the
need to burn tobacco.
Experience shows that where risk-
proportionate regulation encourages
smokers to choose these smokeless
alternatives instead of cigarettes, smoking
rates can be more effectively reduced
compared to relying on coercive policies
which are either outdated or bluntly seek
5
to prohibit products or behaviours .
THR success will depend as much on
Shaping the Landscape As well as publishing our own research, our progressive regulation as it will on changes
THR and nicotine scientists also monitor and review external in consumer behaviour. We believe both
Societal sentiment towards nicotine will publications to gain a holistic view of the are essential if countries around the world
play an important role in THR. evidence base. are to achieve the accepted “smoke-free”
Nicotine is recognised by several regulators We work hard to make our science threshold of less than 5% smoking
(including the U.S. FDA) and public health accessible and understandable to a wider incidence in the population.
stakeholders (including the UK Royal audience. We have a dedicated website This is what has been demonstrated to be
College of Physicians) as not being the www.bat-science.com, and publish a possible in markets like Sweden. There, the
cause of smoking-related diseases Science and Innovation Report on a 2023 smoking incidence of 5.6% illustrates
(which are caused by smoke toxicants). regular basis, which showcases our latest they are on the verge of achieving their ‘no
scientific research. smoking target’ 16 years ahead of the 2040
Moreover, the UK National Health Service
states that "Evidence shows that nicotine Product innovation and choice EU target, due to the widespread
vapes are actually more effective than Consumer choice is an important awareness, availability and usage of snus
nicotine replacement therapies, like component of THR success. We recognise and other smokeless alternatives.
3
patches or gum." that smokers are most likely to switch
to smokeless alternatives when they find
However, currently more than 60% of
a product that delivers comparable
adults and 80% of doctors believe that
4 satisfaction in the sensorial experience
nicotine causes cancer.
they deliver, and fits with their usage
With this level of misperception, and occasions and lifestyle.
nicotine being a highly politicised topic,
That is why we offer a multi-category
society’s negative sentiment towards
portfolio of smokeless alternatives tailored
nicotine is one of several substantial
to meet the varied preferences of different
challenges that still needs to be overcome
adult smoker consumer segments. Importantly,
to enable further THR progress.
these products are supported by world-
We have a global science engagement class science and industry-leading product
programme where we seek to validate our safety and quality standards.
science with other external scientists via
peer review publications and conferences.

61
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Strategic Pillar Overview

Continued

Our views on regulation of smokeless Regulation of New Category products

tobacco and nicotine products continues to evolve. Globally, there are
We believe regulation should recognise regulators passing progressive laws that
that smokeless tobacco and nicotine encourage adult smokers who would
products are less risky than cigarettes and otherwise continue to smoke to switch
support their use as an alternative for those to New Category products, but there
adult smokers that are unwilling or unable are other regulators who view them
to quit nicotine. more cautiously.
We believe that four guiding principles As the science and evidence to
should be applied to the development of substantiate these products grow,
any regulation of smokeless products: we hope to see more countries passing
progressive regulations, further
– Based on science and evidence:
accelerating New Category growth and
Regulation should be based on the best
accelerating a reduction in smoking rates.
available science and evidence for each
product category, and be proportionate We believe a stakeholder-inclusive,
to the risk of the product versus whole-of-society, open and honest
combustible tobacco. dialogue is essential. One that includes
regulators, policy-makers, public health,
– Ensure product quality and consumer
consumers, and the industry.
relevance: Regulation should mandate
robust product quality and safety It is key to align all stakeholders on the
standards to protect consumers and positive public health potential and develop
allow access to products with satisfying effective policies and consumer behaviour
nicotine levels and adult-targeted flavours. that can accelerate tobacco harm reduction
as quickly as possible. Regulation around
– Allow adult-only awareness and
New Category products should be founded
access: Regulation should enable adults
on evidence and science, not opinion.
to access and gain information about
the availability of reduced risk products, A general regulatory framework, to
while preventing use by the underage. maximise smokeless products’ harm
reduction potential, is outlined on page 63.
– Enable effective enforcement:
Regulation should include an effective
regime for penalties, sanctions and
enforcement to drive compliance.

Notes:
* Based on the weight of evidence and assuming
a complete switch from cigarette smoking. These
products are not risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro
and Vibe), and certain products, including Velo, Grizzly,
Kodiak, and Camel Snus, which are sold in the U.S., are
subject to FDA regulation and no reduced-risk claims will
be made as to these products without agency clearance.
1. Jerzyński, T. and Stimson, G.V. (2023). Estimation of the
global number of vapers: 82 million worldwide in 2021.
Drugs, Habits and Social Policy, 24(2). doi:https://
doi.org/10.1108/dhs-07-2022-0028.
2. Lindson N, Butler AR, McRobbie H, Bullen C, Hajek P,
Begh R, Theodoulou A, Notley C, Rigotti NA, Turner T,
Livingstone-Banks J, Morris T, Hartmann-Boyce J.
Electronic cigarettes for smoking cessation. Cochrane
Database of Systematic Reviews 2024, Issue 1. Art.
No.: CD010216. DOI: 10.1002/14651858.CD010216.pub8.
3. NHS (2023). Vaping myths and the facts - Better Health.
[online] nhs.uk. Available at: https://www.nhs.uk/better-
health/quit-smoking/vaping-to-quit-smoking/vaping-
myths-and-the-facts/.
4. World, F. for a S.-F. (n.d.). Nearly 80% of Doctors
Worldwide Mistakenly Believe Nicotine Causes Lung
Cancer, Thwarting Efforts to Help One Billion Smokers
Quit. [online] www.prnewswire.com. Available at: https://
www.prnewswire.com/news-releases/nearly-80-of-
doctors-worldwide-mistakenly-believe-nicotine-causes-
lung-cancer-thwarting-efforts-to-help-one-billion-
smokers-quit-301881655.html.
5. Fagerström, K. (2022). Can alternative nicotine products
put the final nail in the smoking coffin? Harm Reduction
Journal, 19(1). doi:https://doi.org/10.1186/
s12954-022-00722-5.

Photo of our national ad campaign for better Vapour product regulation, London, UK

62
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Maximising smokeless products' harm reduction potential: A regulatory framework

In all countries, whether such a framework is in place or not, we are guided by our
Product Stewardship approach - with regard to quality and safety standards – and
our International Marketing Principles to ensure that we market our products responsibly.

Access to Consumer Relevant Products Adult-only Consumer

– Regulations in all countries where cigarettes are sold should also – The use and sale of smokeless tobacco and nicotine products
allow a wide range of smokeless alternatives to smoking to by and to the underage should be prohibited by law.
ensure that consumers can access these alternatives and make – Age-verification mechanisms should be mandated at point
informed choices. of purchase and, where feasible, regulation should aim to
– Nicotine levels should be established to ensure smokeless encourage the integration of underage access prevention
products are a satisfying alternative for adult smokers. technologies.
– Adult-targeted flavours should be available, as evidence shows – Communication with adults should be permitted in adult-
that certain flavours help smokers transition to reduced-risk targeted touchpoints and display responsible content.
*†
alternatives and prevent them from going back to smoking. Communication is necessary to provide adult consumers
*†
Flavours, packaging designs and descriptors that are particularly with accurate information about reduced-risk products.
appealing to the underage should be prohibited. – Any communication with consumers should have a clear and
– Regulation should keep pace and be adaptable to new product visible health warning and inform that nicotine-containing
innovation. This would help ensure that scientific and products are for adults only.
technological advancements can deliver consumer relevant new
product propositions and solutions, so that smokers are given
even better options to switch away from combustible cigarettes.

Product Quality and Safety Robust Enforcement

– Robust and properly enforced product quality and safety standards – Regulation should provide enforcement authorities with the
should be at the heart of any regulation, to protect consumers. necessary powers to apply penalties and sanctions to those
– Products should be used as intended by consumers and who fail to comply with regulations, particularly those who
manufacturers should be required to ensure that all products are supply non-compliant products and provide products to
tamper-evident to secure product integrity. those underage.

Notes:
* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak, and Camel Snus, which are sold
in the U.S., are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

63
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Advancing Sustainability
for A Better Tomorrow™
Dear Stakeholders, Leading in Sustainability – a core
As we transition from cigarettes We are pleased to present our 2023 component of our corporate strategy
to smokeless products, we are Combined Annual and Sustainability Report, Our strategic purpose is to create
not only addressing the public underlining the progress made towards our A Better Tomorrow™ by Building a
*†1
health impact of our products sustainability commitments. Smokeless World.
but also other material 2023 highlights Over the last 10 years, we have developed
sustainability topics. We have continued to tackle the and deployed a portfolio of reduced-risk
*†
environmental and social impact of our products , tailored to meet the evolving
value chain, including climate change, preferences of adult consumers.
Kingsley Wheaton
biodiversity and underage access of our Our Sustainability strategy focuses on four
Chief Strategy & Growth Officer
products. Key achievements include: cross-cutting Sustainability Priorities:
– Progressed towards our 2050 Net Zero – Responsible Leadership
greenhouse gas (GHG) emissions target in New Categories;
and our interim target of a 50% emissions
reduction by 2030; – Create Positive Value in Agriculture;
– Achieved a 33.1% reduction in – Deliver Net Zero GHG Emissions
Scope 1 and 2 GHG emissions in 2023, Across our Value Chain; and
and a 12.48% reduction in Scope 3 GHG – A Trusted Organisation, Operating
emissions in 2022, vs our 2020 baseline. with Integrity.
Our Scope 3 performance is reported Through these priorities, we believe we can
one year later, due to the complexity of make a real difference for consumers and
obtaining this data across our global other stakeholders across our business and
value chain; value chain, and for wider society.
– Embedded further our Underage Access Harm Reduction remains key to our Group
Prevention and International Marketing strategy. Circularity and responsible
Principles programmes into our Group- marketing of New Category products are
wide Standards of Business Conduct a focus areas for 2024, as we make
(SoBC) employee training and sign-off progress towards Building a Smokeless
process; and World.
– Continued to promote sustainable value As the world around us evolves, so too will
in agriculture, with 93.3% of farmers in our approach to sustainability. We will
our Thrive Supply Chain also growing continue to challenge ourselves to take a
other crops in 2023, and 418,584 farmers forward-looking approach to our products,
and community members engaged in our governance, our stakeholder engagement,
human rights training and awareness our goals and targets, and our reporting.
programmes.
Delivered ahead of 2025 target: + Learn more about our four Sustainability
Priorities on pages 66 and 67
– Circular economy: Achieved 28.2%
reduction in waste generated in our Our approach to
own operations - vs our 2017 baseline - sustainability reporting
surpassing our 25% reduction target; and We have established a cross-functional
– Water: Achieved a 39.2% reduction in team of experts tasked to ensure we are
water withdrawn - vs our 2017 baseline - well prepared to deliver against the
surpassing our 35% reduction target. disclosure requirements of the EU
Corporate Sustainability Reporting
Directive (CSRD) in 2026.
Building on the previous year's approach,
this year, we updated our Double
1
Materiality Assessment (DMA) with
reference to the latest available European
Sustainability Reporting Standards (ESRS)
at the time of the assessment.

+ Learn more about our Double Materiality

Assessment on pages 74 to 77

64
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Harm Reduction, followed by Climate Selecting our four

Change and Circular Economy, rank as our Sustainability Priorities Our refined corporate strategy
most material sustainability topics. Our four cross-cutting focus areas broadly focuses on four cross-cutting
Supplier Engagement was identified as a encompass our material sustainability topics – Sustainability Priorities:
material topic for the first time, reflecting as defined by our 2023-updated DMA.
Responsible Leadership
the importance of our proactive They are grounded in our everyday in New Categories;
engagement with our suppliers (and other business, and are key elements of how we
value chain partners) to drive progress on interact with our consumers, suppliers and Create Positive Value in Agriculture;
sustainability matters. value chain partners, employees, investors Deliver Net Zero GHG Emissions
We are progressing to identify the relevant and other stakeholders. Across our Value Chain; and
disclosure requirements and data points We will continue to work in partnership Trusted Organisation, Operating
for BAT under CSRD and will continue to with all our stakeholders to deliver against with Integrity.
work towards CSRD compliance in order our Sustainability Priorities.
to align our approach to the latest available
Chief Sustainability Officer
By delivering on these priorities,
standards and guidance. we believe we can make
In 2023, we were pleased to appoint
CSRD requires third-party assurance of Donato Del Vecchio to the role of Chief a real difference for other
sustainability information, including limited Sustainability Officer, effective 1 January stakeholders, across our
assurance from the date of initial reporting 2024, reporting to Kingsley Wheaton, business and value chain,
with the ambition of moving to reasonable Chief Strategy & Growth Officer. and for wider society.
assurance by financial year 2028.
Donato succeeds Mike Nightingale, who
We continue to assess and maintain our retires from BAT after 32 years of service. Donato Del Vecchio
control environment to support efficient
Donato joined BAT in 2001 and has held Chief Sustainability Officer
and effective external assurance of non-
various senior Corporate and Regulatory
financial information, and to enable
Affairs roles around the world.
consistency and connectivity of financial
and sustainability information. 2024 and beyond
As we transition to CSRD compliance, We are proud of the progress we have
we have continued to report with reference made towards our sustainability
to other applicable frameworks, such as: commitments.
– Global Reporting Initiative (GRI); However, we recognise that there remains
much to be done and that appropriate
– Sustainability Accounting Standard regulation, strong cooperation and effective
Board (SASB); partnerships are essential to create a truly
– Sustainable Finance Disclosure sustainable business and society.
Regulation (SFDR) Principal Adverse Nevertheless, we are encouraged by our
Impacts (PAI); and progress and welcome comments, feedback
– Taskforce on Climate-related Financial or new ideas to sustainability@bat.com.
Disclosures (TCFD) - whose monitoring
of climate-related financial disclosures
is being taken on by the International
Sustainability Standards Board (ISSB)
in 2024.
In addition, for the first time, we have
outlined our progress in relation to the
Taskforce on Nature-related Financial
Disclosures (TNFD) reporting.

+ Learn more about our ESG reporting frameworks

in our ESG Performance Data Book on bat.com

Notes:
* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are
not risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak,
and Camel Snus, which are sold in the U.S., are subject to FDA regulation and no reduced-risk claims will be made
as to these products without agency clearance.
1. Although financial materiality has been considered in the development of our Double Materiality Assessment (DMA),
our DMA and any conclusions in this document as to the materiality or significance of sustainability or ESG matters
do not imply that all topics discussed therein are financially material to our business taken as a whole, and such topics
may not significantly alter the total mix of information available about our securities.

65
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Leading in Sustainability and Integrity

As we transition from cigarettes to smokeless products, we are

addressing not only our products' public health impact but also
1
our other material sustainability topics.

Related Material Topics:

+ Read more on each material topic:

Harm Reduction page 78
Circular Economy page 82
Marketing and Communications page 96
Supplier Engagement page 100

Related Material Topics:

+ Read more on each material topic:

Biodiversity and Ecosystems page 84
Water page 86
Human Rights page 92
Farmer Livelihoods and Communities page 94

Related Material Topics:

+ Read more on each material topic:

Climate Change page 80
Circular Economy page 82
Biodiversity and Ecosystems page 84
Supplier Engagement page 100

Related Material Topics:

+ Read more on each material topic:

Employees, Diversity and Culture page 88
Marketing and Communications page 96
Note:
1. Although financial materiality has been considered Ethics and Integrity page 98
in the development of our Double Materiality Supplier Engagement page 100
Assessment(DMA), our DMA and any conclusions
in this document as to the materiality or significance
of sustainability or ESG matters do not imply that all
topics discussed therein are financially material to
our business taken as a whole, and such topics may
not significantly alter the total mix of information
available about our securities..

66
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

We have identified four cross-cutting Sustainability Priorities in our

refined corporate strategy. They broadly encompass our material
sustainability topics.

Responsible Leadership in New Categories

We aim to address Harm Reduction and contribute to Key areas and initiatives
Building a Smokeless World by setting industry standards – Continuing investments and innovations to
for the development, manufacture, circularity and marketing reduce the health impacts of our products
of New Category products.
– Improving circularity to reduce the
environmental impact of our product portfolio
– Responsible sourcing and marketing standards

Create Positive Value in Agriculture

By leveraging our agricultural sourcing model - directly Key areas and initiatives
contracting with more than 91,000 farmers, who delivered – Positively addressing Human Rights matters
c. 73% of the tobacco volume we purchased in 2023 - we seek and Farmer Livelihoods
to deliver a positive impact in our agricultural supply chain,
particularly with respect to social and environmental issues. – Demonstrating leadership in and a positive
impact on Biodiversity
– Responsibility addressing other relevant topics,
such as water

Deliver Net Zero GHG Emissions Across Our Value Chain

We aim to reduce Scope 1 and 2 GHG emissions by 50% Key areas and initiatives
and Scope 3 GHG emissions by 50% by 2030 (vs a 2020 – Decarbonising our own operations
1
baseline ) and to reach Net Zero GHG emissions across our (Scope 1 and 2 GHG emissions)
value chain by 2050 at the latest. We recognise that our
business and wider society relies on natural resources which – Decarbonising our value chain
will be impacted by the effects of climate change, and that (Scope 3 GHG emissions)
we must work to adapt to those effects. – ‘Carbon Smart’ farming in our agricultural
supply chain (Scope 3 GHG emissions)

Trusted Organisation, Operating with Integrity

We are committed to always operating to the highest Key areas and initiatives
standards and in full adherence to our Standards of Business – An ethical, trusted and respected company
Conduct (SoBC). We are working to create and maintain a and culture
culture where our people are proud of the role they play in
driving our transformation. – Attracting, developing and retaining a talented,
diverse workforce
– Zero tolerance towards health and safety
and business conduct incidents

Note:
1. Compared to a 2020 baseline. Our near-term 2030 science-based targets comprise a 50% reduction in Scope 1 and 2 and 50% reduction in Scope 3 GHG emissions.
Scope 3 emissions target includes purchased goods and services, upstream transportation and distribution, use of sold products and end-of-life treatment of sold
products, which collectively comprised >90% of Scope 3 emissions in 2020.

67
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Sustainability Highlights

In 2023, we have driven action across our four Sustainability Priorities

and the topics they encompass.

Responsible Leadership in New Categories

Our cross-sectional studies

demonstrated a reduction
*†

in biomarkers associated with

28.2%
reduction in waste generated, vs 2017
94%
of packaging was reusable,
negative health impacts for those baseline, achieving our 25% reduction recyclable or compostable
who switch from cigarettes to Velo target two years early
or Vuse as compared to continued Designed new Responsible
smoking Marketing Principles (RMP)
and supporting guidelines, which
will be implemented in 2024

Create Positive Value in Agriculture

We implement sustainable
agricultural practices and support
farmer livelihoods through
39.2%
reduction in water withdrawn in
93.3%
of farmers in our Thrive
monitoring and sharing best practices our direct operations, vs 2017 baseline; Supply Chain reported to
achieving our 35% reduction target be also growing other crops

10
two years early. Our goal is to support
water resource availability in the
catchments where our operations
Human Rights Impact Assessments
are located
(HRIA) conducted by year-end 2023

Deliver Net Zero GHG Emissions Across Our Value Chain

33.1%
reduction in total Scope 1 and 2
10 Golden Rules
Programme developed to standardise
how we run operational sites in the most
600+
suppliers invited to provide
(market based) CO2e emissions energy efficient way data through the CDP Supply
vs our 2020 baseline Chain Programme in 2023
Invested £24m in capital expenditure to
support emissions reductions and energy
efficiency initiatives

Trusted Organisation, Operating with Integrity

iCommit training to drive IMP

and UAP compliance incorporated
into the onboarding process for
Updated our SoBC Assurance
Procedure so that all cases are
triaged and assigned accordingly
100%
of key leadership teams
all new employees have at least a 50% spread
Set a new ambition for 40% of distinct nationalities across
Lowest Total Recorded Incident Rate of our Management Board members our management employees
for accidents in BAT’s global globally to be ethnically diverse by 2027
historical data
Notes:
* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak, and Camel Snus, which are sold in the U.S., are subject
to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

68
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Ratings and recognitions in 2023^

1
MSCI Financial Times Climate Leader
In 2023, BAT was upgraded to a rating of A In 2023, BAT was named as a Climate
(on a scale of AAA to CCC) in the MSCI ESG Leader by the Financial Times for the
Ratings assessment. msci.com third successive year, for reduction in
2 greenhouse gas emissions (GHG) intensity,
Sustainalytics and placed in the top 3% of more than
As of January 2024, BAT received an ESG 4,000 European companies evaluated.
Risk Rating of 32.8 from Sustainalytics
and was assessed to be at high risk of Global Top Employer
experiencing material financial impacts In 2023, BAT was named as a Global Top
3,4
from ESG factors . sustainalytics.com Employer for the sixth consecutive year,
recognising our commitment to best-in-
Best-in-class ISS Score class working environments and career
As of November 2023, BAT received an ISS opportunities.
Environment and Social Quality Score of 1.
Scores are ranked on a scale of 1 to 10, Race at Work Charter
where 1 is the maximum score and 10 We are signatories to the UK Race at Work
the minimum score. issgovernance.com Charter for supporting racial equality
in the workplace.
A- in CDP Climate Change, Water
Security and Forests Bloomberg GEI
For 2023, BAT achieved A-, A- and A- in the BAT was included in the 2023 Bloomberg
CDP Climate Change, Water Security and Gender-Equality Index, which measures
Forests assessments. cdp.net. gender equality performance globally,
in the first year of participation.
Dow Jones Sustainability Indices (DJSI)
As at 8 December 2023, BAT was selected Workforce Disclosure Initiative (WDI)
for inclusion in the DJSI Europe Index, Our 2023 WDI submission was scored
based on S&P Global Corporate in the top 20% of participating companies.
Sustainability Assessment results, and
has been included in the DJSI indices
Gartner Supply Chain Top 15
for 22 consecutive years. spglobal.com In 2023, our global supply chain was
recognised in the Gartner Supply Chain
Top 15 Europe rankings.

Notes:
1. The use by BAT of any MSCI ESG research LLC or its affiliates (MSCI) data, and the use of MSCI logos, trademarks,
service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion
of BAT by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ‘as-is’
and without warranty. MSCI names and logos are trademarks or service marks of MSCI.
2. Copyright © 2023 Morningstar Sustainalytics. All rights reserved. This section contains information developed by
Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third
party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an
endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely,
accurate or suitable for a particular purpose. Their use is subject to conditions available at https://
www.sustainalytics.com/legal-disclaimers.
3. Sustainalytics state, with regard to their use of this risk rating, "Note that because ESG risks materialize at an unknown time
in the future and depend on a variety of unpredictable conditions, no predictions on financial or share price impacts, or on the
time horizon of such impacts, are intended or implied by these risk categories.".
4. Note 12(b)(i) on page 239 addresses the consideration of climate change matters in preparation of the financial
statements in this report.
^ A rating or award is not a recommendation to buy, sell or hold securities. A rating or award may be subject to
withdrawal or revision at any time. Each rating and award should be evaluated separately of any other rating. The
methodologies of any rating or award presented here may not be the same as those of other ratings, awards or
methodologies that may be used by our stakeholders and may emphasise different aspects of ESG practices and
performance, and, thus, may not be representative of our ESG performance in all respects.

69
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Sustainability Governance

Overview of Group governance arrangements that include oversight of sustainability and ESG matters

Board Level Oversight

Board of Directors Audit Committee
The Board of Directors has at least six meetings per year. The Audit Committee has at least five meetings per year.
Responsible for the long-term success of BAT and the Group’s strategic All members are independent, Non-Executive Directors.
direction, purpose, values and governance - including sustainability and Monitors and reviews the effectiveness of the Group’s internal controls,
climate strategy. auditing matters, and business risk and compliance systems,
and oversees the Group's sustainability reporting.

+ Read more about Board Committee oversight of

sustainability and ESG matters on page 143 Reporting and Feedback + Read more about Audit Committee oversight of
sustainability and ESG matters on page 143

Management Board Level Oversight

Management Board Group Risk Management Corporate Audit Committee (CAC)
Meets at least seven times per year. Committee and Regional Audit Committees
Chaired by the Chief Executive or Finance Meets twice per year. (RACs)
Director and comprises the one Executive Chaired by the Finance Director and composed Each meet at least twice a year.
1
Director and 13 other senior Group executives . of Senior Leadership. CAC chaired by a Regional Director and RACs by
Responsible for overseeing the implementation Oversees assessment and monitoring of risks the Chief Executive or Finance Director. All are
of Group strategy and policies, and monitoring to the Group. composed of Group executives.
Group operating performance, including in
relation to sustainability and climate. Review the effectiveness of the accounting,
internal control and business risk identification
and management systems within the central
business functions for the CAC and the regions
for the RACs.

Reporting and Feedback

Leadership Team Oversight

Group Operations Sustainability Leaf Sustainability Forum Supply Chain Due
Sustainability Forum Diligence (SCDD)
Leadership Team Meets circa four times per year. Meets circa four times per year. Committee
Meets at least weekly. Chaired by the Director, Operations Chaired by the Group Head of Leaf Meets circa four times per year.
Chaired by the Chief Sustainability and composed of Senior Leadership and composed of Senior Leadership Comprises senior leaders in
Officer and composed of senior and subject matter experts. and subject matter experts. Procurement, Operations,
sustainability leadership and subject Reviews and drives performance Reviews strategic direction Sustainability and compliance;
matter experts. against environmental and social and targets for addressing including the Group Head of
metrics and targets. sustainability risks and Procurement.
Reviews the Group's targets and
strategy on sustainability, aiming Has oversight of the Leaf opportunities across the leaf Reviews direct materials supply
to ensure that its sustainability Sustainability Forum and Supply supply chain, and performance chain performance (excl. leaf)
impacts, risks and opportunities are Chain Due Diligence Committee. against leaf supply chain against environmental and social
appropriately managed. Drives the environmental and social metrics metrics and targets.
Group’s sustainability reporting and and targets.
performance against its targets.

Talent, Reward Business Integrity Panel Regulation and Science Responsible Marketing
and D&I Leadership Teams The Group BIP meets on a monthly Committee Committee
Composed of senior Human basis and is composed of the Chaired by Director Corporate Chaired by Global Head
Resources leadership and subject Group Designated Officers (GDOs) & Regulatory Affairs (CORA) and of New Categories.
matter experts, meeting weekly. and invited guests (as required). Director Research & Science.

Reporting and Feedback

Departments, Functions, Regions and Markets

Group Sustainability Department and Centres of Excellence
Composed of the Chief Sustainability Officer and the wider Group Sustainability Team with sustainability Centres of Excellence and subject matter experts.
Develops the Group Sustainability strategy and supports business functions, regions and markets in driving its implementation.

Group Business Functions, Regions and Markets

Implements and executes the Group Sustainability strategy, including through Leadership Teams and cross-functional workstreams and programmes.
Tracks and monitors sustainability performance.

Note:
1. As at 31 December 2023. Read more on pages 136 to 137.

70
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Approach Management of sustainability and ESG Board Composition

Regulations and expectations continue priorities is embedded across relevant and Diversity Overview
to evolve. Having appropriate governance business areas at the Group, regional and Our Board Diversity & Inclusion Policy sets
is key to delivering on our sustainability local market levels. This approach provides the Board's commitment to considering all
commitments. In particular, effective channels for appropriate flow of aspects of diversity when reviewing the
oversight and management of information, monitoring and oversight of composition of, and succession planning
sustainability-related risks and sustainability issues across the Group. for, the Board, its Committees and the
opportunities are essential to BAT’s ability Embedding Sustainability Expertise Management Board.
to deliver A Better Tomorrow™ and achieve at the Executive Level The Nominations Committee is responsible
long-term sustainable growth.
Our Board members have international for reviewing the composition of the Board,
Frameworks experience that includes a wide range of its Committees and Management Board to
GRI 2-9 to 2-21 leadership expertise in industries such as ensure they have an appropriate balance of
fast-moving consumer goods, infrastructure, skills, expertise and knowledge, and that all
TCFD Governance
food, beverage and tobacco, among others. appointments are made on merit against
TNFD Governance To varying degrees, their experience includes objective criteria and with due regard for
Recommendations A and B
the oversight of companies impacted by a the benefits of diversity.
range of environmental and social issues. The Nominations Committee also has an
Board Oversight
The Board is collectively responsible for Non-Executive Directors, as well as the oversight of the development of a pipeline
the long-term success of the Company Audit Committee, and the Remuneration of diverse, high-performing potential
and the Group’s strategic direction, purpose, Committee, receive regular briefings on legal Executive Directors, Management Board
values and governance. This includes and regulatory developments, including members and other senior managers.
responsibility for the Group's strategy those in the ESG landscape. For example, Sustainability Due Diligence
and ensuring that resources are allocated in 2023, the Audit Committee received an
We have a range of due diligence
appropriately to meet the objectives and update on key regulatory developments in
processes in place which aim to address
to manage risks, including internal controls. relation to ESG reporting regimes, including
the actual and potential impacts and risks
the Sustainable Finance Disclosure
Our Board has strategic oversight of our associated with our own operations and
Regulation (SFDR), the Corporate
sustainability matters and takes climate- in our upstream and downstream supply
Sustainability Reporting Directive (CSRD),
related considerations into account where chain. Our approach to human rights is
the Task Force on Climate-Related
applicable when making strategic aligned with UNGP and OECD Guidelines,
Financial Disclosures (TCFD) and the UK
decisions, including in relation to includes engagement with rights holders,
and EU Taxonomy Regulations.
budgeting, risk management and and results in actions plans and
overseeing capital expenditure. Integrating Sustainability remediation, as appropriate.
During 2023, the Board reviewed and Considerations Into Remuneration
approved a revised version of the Group Where relevant, employees from the + Read more about our sustainability due diligence
on pages 92 and 100

Environment Policy, and new Responsible Management Board (including the Director,
Marketing Principles which will be Operations) to local management have Governing our Material Impacts
implemented in 2024. individual performance objectives that To manage our material sustainability
form part of their responsibilities and are impacts we have set up topic-specific
+ Read more about our Climate and Circular Economy
risk in the Group Principal Risks on page 121 and in
linked to their remuneration, including Centres of Excellence at the middle
the Group Risk Factors on page 354 delivery against ESG and climate-related management level. These include Climate
priorities and metrics. Change, Circular Economy, Nature and
The Audit Committee receives reports Delivery against individual performance Social Centres of Excellence. In addition,
from the Group’s Regional Audit objectives is a key consideration in individual business functions, such as
Committees and Corporate Audit determining employee performance Legal, Corporate & Regulatory Affairs and
Committee, which monitor the ratings, which in turn have a direct impact HR, manage material issues relevant to
effectiveness of business risk management on compensation as they are used to their areas. The management of material
and internal controls across regions and determine salary adjustments. sustainability topics is also discussed in
central functions. The Audit Committee various Committees and Forums, such as:
In addition, the Group retains the discretion
also has oversight of the external assurance – Group Sustainability Leadership Team,
to make downward adjustments to
of ESG-related information.
individual bonus payments in the event – Environmental Sustainability Committee,
Management's Role of persistent underperformance against – Operations Sustainability Committee,
Our Management Board, chaired by our performance objectives.
Chief Executive, is responsible for overseeing – Leaf Sustainability Forum,
The ESG objectives within the
the implementation of the Group’s strategy remuneration of Tadeu Marroco, Chief – Supply Chain Due Diligence Committee,
and policies set by the Board, including those Executive, and Javed Iqbal, Interim Finance – IMP Steering Committee,
relating to sustainability and ESG, and for Director, are focused on Tobacco Harm
creating the framework for the day-to-day – Regulation and Science Committee,
Reduction. We intend to keep further
operation of the Group’s subsidiaries. integration of ESG metrics in Management – Business Integrity Panel, and
Members of the Management Board are Board remuneration under active review. – Talent Reward and D&I Leadership
responsible for delivery against targets Teams.
under their individual remit with respect + Read more about our approach to Remuneration
for directors and employees on pages 170 to 181 Issues considered in these Forums are
to sustainability and ESG targets, raised, where appropriate, at Management
including those relating to harm reduction. Board level or with the Audit Committee.
They are supported by their respective
teams who, in turn, work with other
functions and markets to make progress
towards the Group’s targets.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Sustainability Policies,
Procedures and Standards
We have a clearly defined governance framework to support management
control and Board-level oversight of sustainability matters. This provides the
policies, procedures and standards which determine and guide how we operate
our business – from local markets and business units up to Board level.
Our Group policies (indicated by * in the Our Group policies are underpinned by a Together, this framework supports the
table below) are approved at Board level range of principles, statements, operating effective identification, management and
and are implemented for application by all procedures, standards and guidelines to control of risks and opportunities for our
Group companies. help support effective implementation of business in these and other areas.
our commitments.

Policies and Procedures Summary of Areas Covered Key Stakeholder Groups

Standards of Business Sets out our policies for: Speak Up; respect in the workplace; human rights; Our People
Conduct (SoBC)* health; safety and welfare; environmental; lobbying and engagement; Governments and wider society
Available at www.bat.com/principles conflicts of interest; anti-bribery and corruption; gifts and entertainment;
political contributions; community investment; protection of corporate
assets and financial integrity; competition and anti-trust; anti-money
laundering and tax evasion; sanctions; anti-illicit trade; data privacy;
and information security.
Supplier Code of Conduct* Covers compliance; human rights; environmental sustainability; Customers
Suppliers
Available at www.bat.com/principles trade and marketing; and business integrity.
Governments and wider society
Group Environment Policy* Commits to following standards of environmental protection, adhering Our People
Consumers
Available at www.bat.com/principles to the principles of sustainable development and protecting biodiversity
Suppliers
throughout our direct operations and supply chain including agricultural, Customers
manufacturing and distribution operations. Our Environment Policy was Governments and wider society
revised in 2023 to include an assessment of our value chain impacts,
Circular Economy principles, new biodiversity commitments and
information on metrics and targets.
Group Health and Safety Covers health, safety and welfare of our employees, contractors, visitors Our People
Policy Statement* and other relevant stakeholders. Governments and wider society
Available at www.bat.com/principles

Employment Principles* Sets out our employment practices, including commitments to workforce Our People
Available at www.bat.com/principles diversity, reasonable working hours, family-friendly policies, employee
wellbeing, talent, performance, equal opportunities, and fair, clear and
competitive remuneration and benefits and responsible restructuring.
International Marketing Govern marketing of all our products and include the requirement Consumers
Principles (IMP)* for all our marketing to be targeted at adult consumers only. Customers
Suppliers
Available at www.bat.com/principles Governments and wider society
Group Quality Policy Formalises how we strive to deliver high-quality products, processes and Consumers
Statement capabilities that create sustainable value for our brands while exceeding
Available at www.bat.com/principles the expectations of adult consumers. It is the responsibility of our
leadership team at all levels to ensure the understanding and
implementation of this policy by providing the necessary processes,
practices, procedures, resources, and training.
Product Stewardship Sets out the steps we take to ensure our products are developed and Consumers
Framework* manufactured responsibly. It reflects our commitment to have products Suppliers
Customers
Available at www.bat.com/principles that meet consistently high quality and safety standards and guides the Governments and wider society
development and testing of all our products, helping to promote a rigorous
and systematic approach.
Circular Economy Position Contains our commitment to applying Circular Economy principles across Our People
Statement our operations and product categories. Consumers
Suppliers
Available at www.bat.com/principles Customers
Governments and wider society
Biodiversity Statement Sets out the principles we follow to manage our impact on biodiversity Our People
and the wider environment. Suppliers
Available at www.bat.com/
biodiversity
Governments and wider society

Biodiversity Operational Sets out requirements that all Group's own Leaf Operations must adhere Our People
Standard on Tobacco to for the following tobacco crop activities: use of wood as fuel for tobacco Suppliers
Governments and wider society
Farming curing and for the construction of curing barns; new farmland
development for growing tobacco; and tobacco farming and associated
agricultural practices. Third-party leaf suppliers are also required to follow
this standard within their own practices and operations.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Policies and Procedures Summary of Areas Covered Key Stakeholder Groups

Underage Access Supports our strict UAP requirement to market our products to adult Consumers
Prevention (UAP) consumers only by setting out requirements for retailer-facing UAP Customers
Governments and wider society
Guidelines activities to be carried out in all our markets.
BAT Leaf Operations Detailed guidance and procedures for tackling the risk of child labour in Our People
Standard on Child Labour the Group's own Leaf Operations, comprising our directly contracted leaf Suppliers
Governments and wider society
Prevention supply chain.
Climate Change and Provides guidance for all our employees and suppliers who have Our People
Energy Standard responsibility for the application of implementing a climate change-related Suppliers
Governments and wider society
initiative across all our facilities and working environments.
Green Mobility Standard Outlines our strategy for reducing the environmental impact of our car Our People
fleet, namely carbon dioxide equivalent emissions (CO2e), air pollution, Suppliers
Governments and wider society
and noise reduction through the deployment of Electric Vehicles.
Environment and Health Sets out comprehensive guidance and procedures for Group companies Our People
and Safety (EHS) Policy on the implementation of EHS policy commitments. Governments and wider society
Suppliers
Manual
Operational standard on Requires all Group's own Leaf Operations contracted farmers and their Our People
personal protective workers to have access to PPE for agrochemical use, for tobacco Suppliers
Governments and wider society
equipment (PPE) harvesting in order to prevent Green Tobacco Sickness (GTS).
Water Security Standard Aligned to CDP standards for managing water risk effectively and provides Our People
guidance for Group companies on water conservation and actions for our Suppliers
Governments and wider society
sites in water stressed areas.
Soil and Groundwater Defines the controls and standards required for Group companies to Our People
Protection Standard prevent and protect against spillages and leakages that could impact soil Suppliers
Governments and wider society
or groundwater.
Leaf Supplier Manual Sets out the detailed standards we expect our suppliers to adhere to. Suppliers
(LSM) These include a range of criteria relating to standards in agricultural Governments and wider society
practices, quality specifications and processing, such as relating to
agrochemicals compliance and the prevention of child labour.
Anti-illicit Trade (AIT) Guidance for all Group companies for complying with our AIT Policy in the Our People
Supply Chain Compliance SoBC. It sets out procedures for maintaining robust supply chain controls Suppliers
Customers
Procedures and taking appropriate action where there are risks that our tobacco and/ Governments and wider society
or products may be smuggled.
Group SoBC Assurance Defines how all reports of alleged SoBC breaches should be investigated Our People
Procedure and remediated fairly and objectively. This includes a four-step process,
involving an initial assessment, in line with data privacy and employment
laws, followed by an investigation plan, implementation, reporting of
findings, and closure.
Sanctions Compliance Outlines our comprehensive sanctions compliance framework covering Our People
Procedure Group companies, suppliers, third parties and financial transactions. Customers
Suppliers
Governments and wider society
Third-Party Anti-Financial Sets out Group-wide minimum mandatory steps required for our Our People
Crime Procedure dealings with third parties. Designed to assess and mitigate third party Customers
Suppliers
risks regarding: bribery and corruption; money laundering; terrorist Governments and wider society
financing; illicit trade (supply chain compliance); sanctions; and the
facilitation of tax evasion.
Mergers and Acquisitions Sets out mandatory steps, along with best-practice guidelines for M&A Our People
(M&A) Transactions transactions involving any Group company and one or more third parties Customers
Suppliers
Compliance Procedure covering compliance risks, such as bribery, corruption and human rights. Governments and wider society

73
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Double Materiality Assessment^

BAT has undertaken materiality assessments since 2007. In 2023, we updated

our Double Materiality Assessment (DMA). The DMA process allows us to understand
the impact of sustainability topics on stakeholders and our business. Topics with
the greatest impact form the basis of our sustainability agenda and reporting.
Overview How the Process is Informed by CSRD Horizon Scan and Topic Short List
In 2023, we updated our DMA with the help Our DMA is informed by the specifications In 2022, we identified 11 material topics
of an external consultancy, building on the and requirements within the CSRD's through a risk assessment and horizon
previous year's approach. We were also ESRS 1. This includes: scan. In 2023, we undertook a broader
guided by the latest available European – Stakeholders and their relevance to horizon scan to identify any gaps, using
Sustainability Reporting Standards (ESRS) the materiality assessment process: sources such as regulation, frameworks,
requirements at the time of the assessment. we engaged affected stakeholders, or global and industry trends. The review
Our 2023 assessment has provided greater their representatives, and users of included high-level desk-based research,
insight, focus and granularity in terms of the sustainability statements, to assess the a media scan, a peer review, and
'nested materiality' concept, which articulates impacts of different sustainability topics. considerations of location of impacts
three dimensions of impact: in our value chain.
– Material matters and materiality of
1) Outward impact: BAT's impact information: we considered all ESRS Assessing Impact
on health, environment, society and topics, sub-topics, and sub-sub topics We developed assessment criteria aligned
governance-related topics; when collating our topic short-list. with ESRS requirements and tailored to our
2) Inward impact: The impact of these organisation for the following dimensions:
– Double materiality: we assessed
topics on BAT; and outward and inward impact materiality – Outward impact: including the severity
3) Financial materiality: The significance and financial materiality by considering of the impact by the Group and the
of risks, opportunities and dependencies negative, positive, actual and potential likelihood of the impact occurring;
posed by these topics on BAT's financial impacts, as well as risks and – Inward impact: the impact of the topic
position. opportunities in the short-, medium- on our strategic objectives; our ability
Through this approach, we have sought to and the long-terms. to use natural resources and to rely on
align our DMA to key elements of reporting – Impact materiality: we assessed business relationships; our risk profile;
frameworks. The CSRD, which requires negative and positive impacts, and the our license to operate; our stakeholders'
consideration of impact materiality and actual and potential impacts BAT has on opinions; and decisions, and our legal
financial materiality; the ISSB, which the environment, economy, society and compliance; and
requires consideration of financial governance. – Financial materiality: the financial
materiality; and the GRI, which requires – Financial materiality: we assessed the impact (risks and opportunities) of a
consideration of outward impact. significance of risks and opportunities sustainability topic in relation to our
posed to BAT's financial position using business. The following financial
financial magnitude criteria. magnitude criteria were used to guide
stakeholder scores: High Impact
– Material impacts arising from action
(in excess of £250 million); Medium
to address sustainability matters:
Impact (£120-250 million); Low Impact
we discussed the interplay between
(up to £120 million); None (£0), each on an
topics in stakeholder interviews.
annual basis. Each of these three impact
– Level of disaggregation: we discussed dimensions were assessed across two
disaggregation between geographical time horizons:
and product category impacts in
– Short- and medium-term: from
stakeholder interviews.
0 to 5 years; and
– Long-term: more than 5 years.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Engaging Stakeholders Following discussion, review and analysis, Increased impact: Human Rights has
Engaging with stakeholders is key to our DMA matrix was refined to better reflect increased both for inward and outward
ensuring an inclusive and balanced our current understanding of impacts and impact. Water has moved closer to
perspective on the impacts of sustainability validated by the Sustainability Leadership Biodiversity and Ecosystems, increasing
topics. We spoke with stakeholders who Team and other subject matter experts. both in inward and outward impact.
can be considered 'affected stakeholders' Double Materiality Matrix Insights Next Steps – Defining our Action Plan
and 'users of sustainability information' The outcome of our assessment is The outcomes of our 2023 Business
in accordance with the CSRD definitions. reflected in the DMA matrix below, which Stakeholder Engagement, which included
In 2023, we took a more targeted approach shows the relative position of each topic the 2023 DMA update, have been reviewed
to engaging stakeholders, reducing the according to its outward and inward by the Main Board and Management Board.
number of survey participants but impact. The topics with the highest impact This plays an important role in setting our
performing more interviews among form the basis of BAT's sustainability current and future sustainability strategy
targeted stakeholder groups with expertise agenda and reporting. The matrix also and ESG reporting framework. As we
matching the topic short-list. In total, indicates the financial materiality of each progress in our journey towards CSRD
we engaged with more than 90 survey topic, using colour codes to represent the compliance, a key step is to identify, with
participants and hosted more than financial magnitude criteria. Some of the support from external consultants, relevant
15 interviews. Overall, we have engaged key insights from the matrix are: disclosure requirements and data points for
with more than 2,900 stakeholders since BAT under CSRD.
the start of our DMA journey in 2022. Unchanged: Harm Reduction remains
a topic of high impact. Climate Change and We will continue to evolve our approach
Validation Circular Economy remain areas of impact. to CSRD reporting in line with latest
Our external DMA partner guided a group available standards.
of subject matter experts, Sustainability Removed: Sustainability Governance is no
Managers, Heads of Sustainability and longer in the list of material topics on the Note:

executives, including the Chief basis that it now refers to the management ^ Although financial materiality has been considered in

Sustainability Officer, in reviewing the of all our material topics. the development of our Double Materiality Assessment
(DMA), our DMA and any conclusions in this document as
impact of our material sustainability topics. New: Supplier Engagement is a new topic to the materiality or significance of sustainability or ESG
and reflects the importance of BAT's matters do not imply that all topics discussed therein are
This took into consideration the scope, financially material to our business taken as a whole, and
impact and magnitude of each topic engagement with suppliers on such topics may not significantly alter the total mix of
as well as affected stakeholders. sustainability matters. information available about our securities.

Financial Materiality^
The financial impact of sustainability topics on BAT

High Financial Impact:

Harm Reduction

Medium Financial Impact:

Climate Change
Circular Economy
Biodiversity and Ecosystems
Employees, Diversity and Culture
Marketing and Communications
Ethics and Integrity
Human Rights
Supplier Engagement

Low Financial Impact:

Water
Farmer Livelihoods
and Communities

Our Sustainability approach and priorities

Harm Reduction: Responsible Leadership
in New Categories

Environment: Deliver Net Zero GHG Emissions

Across our Value Chain

Social: Create Positive Value in Agriculture

Governance: Trusted Organisation, Operating

with Integrity

+ See an overview of our four Sustainability Priorities

on pages 66 and 67

75
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Double Materiality Assessment

Continued

Our Double Materiality Assessment identified 11 key topics – each comprising several sub-topics – as being material in terms of a) BAT’s
impact on society and the environment, and b) the impact of sustainability-related topics on BAT. These topics and sub-topics are listed
here, along with where to find more information on them.

Material Topic Topic Boundary

Harm Reduction The effects and risks on consumer and public health of our products, including their quality and safety.
See page 78 for details Sub-topics include:
Tobacco harm, Product risk, Nicotine, Product quality and safety standards, Personal safety of consumers*, Health and
Safety*, Continuous negative health impact on consumers, Underage Access, Tobacco Harm Reduction through
replacement of cigarettes with New Category Products for those who would otherwise continue to smoke
Climate Change The effects of climate change (including business resilience) across our value chain and those derived from
See page 80 for details our emissions.
Sub-topics include:
Energy consumption and efficiency, Air pollution, GHG emissions, Renewable energy transition, Decarbonisation, Energy consumption
and efficiency*, Climate change mitigation and adaption*, Energy sources and supply, Extreme weather and Air pollution*
Circular Economy The design and sourcing of products, materials and packaging including end of life management.
See page 82 for details Sub-topics include:
Circularity (recyclability, reusability, resource use), Substances of concern, Microplastics
Biodiversity and The biodiversity and ecosystems affected as a result of the processes used to source raw materials.
Ecosystems The effects of changing natural systems on our operations including sourcing of raw materials.
See page 84 for details Sub-topics include:
Land degradation, Forest conservation, Land use change*, Sustainable/regenerative, Agricultural practices, Tobacco curing,
Pulp and paper sourcing, Supply chain resilience, Climate change impacts, Soil pollution*/degradation, Land degradation*
Water The consumption and stewardship of water resources, and discharges, across the value chain. The availability
See page 86 for details of sufficient volumes and quality of water across our value chain.
Sub-topics include:
Water stewardship, Water consumption*, Waste water discharges*, Water withdrawals*, Water discharges*,
Water pollution*, Water scarcity
Employees, Diversity The culture and care for our employees, including diversity and inclusion, talent attraction and retention,
and Culture equal pay for work of equal value and employee wellbeing and safety.
See page 88 for details Sub-topics include:
Employee wellbeing, Diversity and inclusion*, Talent attraction and retention, Remuneration, Health and safety*, Training and skills
development*, Gender equality and equal pay for work of equal value*, Employee wellbeing* including work-life balance
Human Rights The fundamental rights and labour conditions of farmers and workers in our supply chain.
See page 92 for details Sub-topics include:
Health and safety*, Child labour*, Modern slavery, Forced labour*, Standards in the supply chain and value chain,
Freedom of association*, Collective bargaining*, Working conditions, Equality of treatment and opportunity
Farmer Livelihoods The socio-economic development of and support for farmers and tobacco-growing communities in areas
and Community where we operate.
See page 94 for details Sub-topics include:
Living income, Community impact, Crop and income diversification, Water and Sanitation* Hygiene (WASH),
Women's empowerment, Rights of indigenous peoples*, Climate change resilience
Marketing and The marketing and communication of our products to retailers and consumers, including the influence we
Communications hold over how they are subsequently marketed by our partners. Regulatory compliance of our marketing,
See page 96 for details communication and sales activities.
Sub-topics include:
Personal safety of consumers*, Underage access to and use of products, Product regulation and compliance, Education and information,
Protection of children*, Responsible consumption, Transparency, Information-related, Impacts for consumers and/or end-users*,
Access to (quality) information*, Access to product safety information, Responsible marketing practices*
Ethics and Integrity The application of ethics and integrity in our direct operations and with our value chain partners, including
See page 98 for details how we engage with regulators, policy makers, and government officials.
Sub-topics include:
Standards of Business Conduct, Anti-illicit trade, Tax transparency, Corruption and bribery*, Privacy, Cybersecurity,
Supplier management*, Collaboration with law enforcement agencies, Lobbying, Transparent engagement and advocacy,
Ethical Scientific Research
Supplier Engagement The influence we hold with our suppliers of materials and services to reduce emissions and environmental
See page 100 for details impact of suppliers, and to ensure fair treatment of workers in the supply chain. The ethical governance of
suppliers, including fair transactions and management of intellectual property.
Sub-topics include:
Human Rights, Conflict minerals, Labour standards and working conditions, Adequate wages, Secure employment,
Working time, Grievance mechanisms, Equity, diversity, and inclusion, Training and skills development, Health and Safety,
Supply chain resilience and business continuity plans , Fair transactions , Intellectual property, Environmental impact
and emissions, Resource circularity, Material traceability and transparency

Note:
* CSRD sub-topics.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dynamic Materiality – Restricting the underage use and appeal of Next steps
Dynamic materiality is a continuous and Vapour products is increasingly becoming We will keep reviewing sustainability
evolving process that can be used to top of mind for many stakeholders, hence developments and regulations to ensure
identify emerging and pertinent topics. In the inward impact of Marketing and our materiality topics remain up to date
our 2023 assessment, dynamic principles Communication may increase over time for each reporting period.
have been incorporated throughout by as New Category products become a
using the horizon scan to identify growing greater part of our portfolio. + Read more about the dynamic materiality
outcomes of our DMA in the ‘Stakeholder
trends and assess impacts in the long-term. – The current inward impact of Ethics and perceptions and key insights from our DMA’
for each material topic from pages 78 to 101
Dynamic shifts over time Integrity is significant but may reduce
– We expect the overall health impact of over time. We have an opportunity to
our portfolio to decrease over time and strengthen due diligence and proactively
the impact of Harm Reduction on our move towards a positive outward impact.
business may also reduce in parallel. – With rising global temperatures, the
– Our ambition is to reduce the risk of impacts of Climate Change will likely
human rights infractions through our increase over time and our business
mitigation practices. will feel its effects on topics such as
Biodiversity and Ecosystems, and Water.
– Our ambition is for the circularity of our
products to improve over time, hence our – With new generations entering the
negative impact on circular economy workforce, we have an opportunity to
could reduce over time. However, this is grow our positive impact on Employees,
dependent on significant further product Diversity and Culture. Note:
development and the implementation of – As we transition to New Category ^ Although financial materiality has been considered in
the development of our Double Materiality Assessment
changes in our processes and value chain. products, the inward impact of Farmer (DMA), our DMA and any conclusions in this document as
and Community Livelihoods is likely to to the materiality or significance of sustainability or ESG
reduce. Conversely, the importance of matters do not imply that all topics discussed therein are
financially material to our business taken as a whole, and
Supplier Engagement with non-leaf such topics may not significantly alter the total mix of
suppliers is expected to increase. information available about our securities.

Financial Materiality^
The financial impact of sustainability topics on BAT

High Financial Impact:

Harm Reduction

Medium Financial Impact:

Climate Change
Circular Economy
Biodiversity and Ecosystems
Employees, Diversity and Culture
Marketing and Comms
Ethics and Integrity
Human Rights
Supplier Engagement
Low Financial Impact:
Water
Farmer Livelihoods
and Communities
Dynamic Materiality
How impacts may shift over time
Arrows indicate the expected direction
of shift in the long-term

Our Sustainability Priorities

Harm Reduction: Responsible Leadership
in New Categories

Environment: Deliver Net Zero GHG Emissions

Across our Value Chain

Social: Create Positive Value in Agriculture

Governance: Trusted Organisation, Operating

with Integrity

+ See an overview of our Sustainability Priorities

on pages 66 and 67

77
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Harm Reduction

World-class science and due diligence

Ambitions Metrics 2023 Status We invest more than £300 million a year in
R&D to develop New Category products and

£5bn
Revenue from New 3.3 establish substantiation for their reduced-
Categories (up 15.6% On track risk potential. We also collaborate with
in 2023) in £ billion global external researchers who bring
in revenue from New Category
products by 2025 independent and specialist expertise that
enhance our internal capabilities.

50m
Number of consumers 23.9 Our multidisciplinary teams of scientists
of our Non-Combustible On track ensure our products meet high quality
products in 2023, standards in line with our Product
consumers of our Non-Combustible
excluding Russia Stewardship Framework and Group Quality
products by 2030
and Belarus (millions) Policy Statement. Our Global Toxicology
team provides expert advice on, and
conducts toxicological and safety risk
assessments of, ingredients and materials
used in our products to ensure that they
meet the standards required to bring our
products to market.
We have published more than 198 scientific
papers to date about our New Category
‡ products. We adhere to peer-review
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com
processes to ensure that we publish our
research in reputable journals globally.
As well as publishing our own research,
Frameworks our scientists continue to monitor
GRI This topic is not mapped by a specific GRI standard and review external publications to gain
SASB FB-TB 260a.1, FB-TB-260a.2 a holistic view of the evidence base.
PAI This topic is not mapped by a specific PAI indicator We are committed to sharing the
outcomes in peer-reviewed journals
to ensure that our studies, data, and
Our Impact Our Actions in 2023 conclusions are objectively reviewed by
Inward impact: The global nicotine industry Accessibility to smokeless products independent, third-party subject matter
continues to grow. By investing in Research We know that adult smokers are more experts before they are published.
*†
and Development (R&D) and engaging with likely to switch to less risky alternatives We are also dedicated to making our
our stakeholders to raise awareness when they find a product that meets their research accessible and understandable
around our New Category products, preferences and expectations. Therefore, we to a wider audience.
including their potential to help accelerate utilise our consumer insights and global R&D
the reduction in smoking rates, we can centres to deliver innovations that anticipate Some recent examples of our scientific
build stakeholder trust and grow our and satisfy consumer needs. We also achievements include:
1
market share in the nicotine space. collaborate with external partners and our – A cross-sectional study on our Vapour
Outward impact: We encourage those corporate venture capital arm, Btomorrow product, Vuse, which showed significantly
who would otherwise continue to smoke Ventures (BTV), to gain early access to better results for several biomarkers
to make the switch, by providing a range emerging technologies and trends. relevant to smoking-related diseases,
of satisfying smoking alternatives that are In 2023, we recorded 23.9 million such as cancer, chronic obstructive
scientifically substantiated. We believe consumers of our Non-Combustible pulmonary disease, and cardiovascular
progressive, evidence-based regulation products, which include Vapour, Heated disease, for those who switch exclusively
of alternatives, supported by meaningful Products, and Modern Oral products. from cigarettes to Vuse compared to
enforcement, is key to reducing smoking those who continue to smoke.
We also recognise that having the right 2
rates faster. These regulations ensure that regulatory and market conditions in place, – A cross-sectional study on our Modern
adult smokers have access to these along with responsible industry practices, Oral product, Velo, which showed
alternatives, as well as the confidence to is key to ensuring the availability of and significantly favourable differences in
use them, knowing that they adhere to high *†
accessibility to reduced-risk alternatives . several biomarkers of exposure and
product safety and quality standards. Therefore, we conduct scientific research biomarkers of potential harm relevant to
Managing Impact to seek to obtain regulatory approval and smoking-related diseases, compared to
consumer confidence for our products and adult smokers, for those who exclusively
Tobacco Harm Reduction is at the core of our
science. We utilise our scientific research used Velo for over six months.
strategy to deliver A Better Tomorrow™ -
Building a Smokeless World. We have set to engage with our stakeholders, including – A submission of our Premarket Tobacco
targets to migrate our consumers of regulators, and to support regulatory Product Application (PMTA) to the U.S.
combustible tobacco products to reduced- processes, as well as to gain consumer Food and Drug Administration (FDA) for
*†
risk alternatives , which we are on track to confidence in our products. Over the course our HP glo is undergoing the FDA’s review
achieve. In doing so, we intend to manage of 2023, we conducted stakeholder process. An associated Modified Risk
our combustibles business in a responsible engagement across in approximately Tobacco Application (MRTPA), in support
manner, while also investing in R&D required 100 markets with our research. of proposed reduced exposure claims,
to continue to develop smoking alternatives was submitted in December 2023.
and engaging with our stakeholders to share According to the FDA, an MRTPA must
our science and to promote Tobacco Harm demonstrate that the product will or is
Reduction (THR) as a public health strategy. expected to benefit the health of the
population as a whole.
+ Read more about sustainability policies,
procedures and standards on page 72 and 73

78
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

– The creation of the Corporate and

Regulatory Affairs function to help Stakeholder perceptions
facilitate external engagement with our and key insights from our DMA
stakeholders, including regulators and
policy makers. Through this new function,
we will take a more proactive role in
sharing our scientific research and
insights to support the development
of regulations concerning our New
Category products.
– In Greece, successfully obtaining the
approval to make the claim that our
Heated Product, glo, supports THR,
based on the evidence that it produces
a lower concentration of toxicants in
emissions than cigarettes. What do our Stakeholders
Lessons Learnt Think About Harm Reduction?
We believe that a science-based dialogue Our stakeholders see this topic as
that includes all stakeholders – from crucial for the success of our business.
regulators and policymakers to consumers Uncertainty about the future of
and the industry - is key to developing the New Categories and the associated
effective policies needed to accelerate the regulatory risks were some of the
reduction in smoking rates. concerns raised by stakeholders, which
A progressive regulatory environment that is why we must continue to work on
leverages smokeless alternatives as THR R&D and engage with regulators.
tools encourages adult smokers who would How Will the Material Impact
otherwise continue to smoke to switch of Harm Reduction Shift
completely to scientifically substantiated,
†
reduced-risk alternatives.* As the science
Over Time?
and evidence to substantiate these products With the shift towards New Category
continue to develop, we hope to see more products, we believe the health impact
countries introducing progressive regulation, of our portfolio is likely to reduce over
reducing smoking rates faster and time and the impact that this topic has
accelerating New Category products' growth. on our business may also reduce
Standards and regulation accordingly.
We support the development and What’s Next?
implementation of coherent and – Continuing to focus our efforts on
proportionate regulation and standards for reducing the health impacts of our
New Category products, based on scientific business through our reduced-risk
*†
evidence. We engage with regulators, products ;
policymakers, and standard-setting bodies – Publishing our A Better Tomorrow™
to share our research, as well as insights Science compendium report;
on THR and New Category products. We
operate and submit data and information – Tackling nicotine misconception as
to the relevant authorities as required. a renewed focus; and
The appointment of our new Director, – Advancing the scientific understanding
*†
Research and Science, James Murphy, of our reduced-risk alternatives to help
marks the next chapter for BAT's scientific demonstrate their role in reducing
research. Over the course of 2023, we smoking rates more quickly.
continued to advocate for THR as a public Notes:
* Based on the weight of evidence and assuming
health strategy and the importance of a complete switch from cigarette smoking. These
science-based regulation in reducing products are not risk free and are addictive.
smoking rates. † Our Vapour product Vuse (including Alto, Solo, Ciro
and Vibe), and certain products, including Velo,
Examples of our engagement and Grizzly, Kodiak, and Camel Snus, which are sold in
compliance activities in 2023 include: the U.S., are subject to FDA regulation and no
reduced-risk claims will be made as to these
– Throughout the year, our Chief Executive products without agency clearance.
and our Chief Strategy & Growth Officer 1. Haswell, L.E., Gale, N., Brown, E. et al. Biomarkers of
shared our approach to THR in the UK exposure and potential harm in exclusive users of
electronic cigarettes and current, former, and never
media, calling for better regulation of smokers. Intern Emerg Med 18, 1359–1371 (2023).
vapour products. https://doi.org/10.1007/s11739-023-03294-9. The
study focused on self-reported exclusive users of
– In response to the UK government’s commercially available Vuse ePod or Vuse ePen3.
Tobacco and Vapes Bill announced in Thus, references to “Vuse” in the context of the
November 2023, our UK business ran study means either Vuse ePod or Vuse ePen3.
2. David Azzopardi, Linsey E. Haswell, Justin Frosina,
a major, proactive media campaign to Michael McEwan, Nathan Gale, Jesse Thissen,
demonstrate its support for the UK Filimon Meichanetzidis & George Hardie (2023)
government's 'smoke-free' ambition. The Assessment of biomarkers of exposure and
potential harm, and physiological and subjective
campaign called for images and flavours health measures in exclusive users of nicotine
targeting the underage to be banned and pouches and current, former and never smokers,
for vaping product sellers to be licensed. Biomarkers, 28:1, 118-129, DOI:
10.1080/1354750X.2022.2148747

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Climate Change

Renewable energy
Targets Metrics 2023 Status Our target is to use 50% renewable energy
3

by 2030 in our direct operations. In 2023,

50%
% reduction in Scope 1 33.1 38.1% of our direct energy usage came from
and 2 CO2e emissions On track renewable sources, an increase of 5.2 ppts
vs 2020 baseline from 2022. 37 of our operations sites are
reduction in Scope 1 and 2
GHG emissions by 2030
1 purchasing 100% renewable electricity and
(vs 2020 baseline) 29 were generating renewable energy
on-site from solar technology. This

50%
% reduction in Scope 3 12.5 generation replaces standard grid electricity
CO2e emissions in that otherwise would have been required,
On track
2022 vs 2020 baseline and avoids approximately 5,000 tCO2e.
reduction in Scope 3 GHG emissions
1
by 2030 (vs 2020 baseline) Our key initiatives in 2023 included the
expansion of:

50%
% of renewable energy 38.1 – On-site solar panels to a number of sites,
consumption within On track including Nigeria, Italy, Chile, Fiji and
the organisation Samoa, producing approximately
renewable energy use by 2030
963 MWh of renewable electricity.
In Türkiye, we installed a 6.5MWp off-site
solar facility, capable of generating
10,000 MWh per year. Once it becomes
‡ fully operational, it will produce the
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com equivalent of the average electricity
4
consumption of around 3,700 UK homes .
Frameworks – Renewable energy purchases in
GRI GRI 302-1, 302-3, 302-4, 305-1, 305-2, 305-3, 305-4, 305-5 Bangladesh, Nigeria, Pakistan and the U.S.
SASB FB-AG-110a.1, FB-AG-110a.2, FB-AG-110a.3, FB-AG-130a.1, FB-AG-430a.3 Increasing the use of renewable
PAI 1, 2, 3, 5, 6, E4, E5 energy in our direct operations (GWh)
TCFD Strategy, Risk Management, Metrics and Targets 2,500

Our Impact Our Actions in 2023 2,000

Inward impact: The effects of climate Scope 1 and 2: decarbonising
change such as rising temperatures, our operations
changes in precipitation and extreme We have invested £24 million in emission 1,500
weather events can threaten our ability and energy reduction projects across 67%
to secure the natural resources we need of our operations sites. These projects 1,000
to run our business. included replacing carbon intensive assets
Outward impact: We have an impact on with low-carbon alternatives such as wood
climate change through our operations pellet biomass boilers in South Korea and 500
sites and reliance on natural resources. waste wood biomass boilers in Germany.
Reducing GHG emissions and mitigating From these initiatives we expect an
0
climate change risks will require estimated reduction in absolute emissions
2021 2022 2023
fundamental shifts in the way we operate of over 6,500 tonnes of CO2e. We have also
our businesses. developed a '10 Golden Rules Programme' 2021 2022 2023
to standardise how we run energy
Managing Impact Total energy 2,480 2,344 2,182
efficiency practices across our sites. consumption (GWh)
Our approach to managing Climate Change We continued to roll out this programme
impacts is shaped by our climate strategy, to 20% of our manufacturing sites. Our Total renewable energy 708 771 832
which is aligned to our Group Environment factory in Casablanca, Chile was our first consumption (GWh)
Policy, as well as our Climate Change and operational site to fully adopt the
Energy Standard. We continue to drive programme, reducing energy consumption
progress towards our near-term 2030 by 7% versus our 2020 baseline.
+ For more information and a breakdown of our
energy usage see our ESG Performance Data Book
science-based targets across Scope 1, 2 Our target is to be carbon neutral in our
and 3 emissions, through which we aim to direct operations by 2030. In 2023, 36% of Reducing fleet emissions
achieve Net Zero GHG emissions across our operational sites were carbon neutral. In 2023, our vehicle fleet accounted for
our value chain by 2050 at the latest. Each site must have demonstrated a track approximately 21% of our Scope 1 and 2
record of actual emission reductions GHG emissions.
+ Read more about sustainability policies,
procedures and standards on page 72 and 73 to be classified as carbon neutral. As noted As set out in our Green Mobility Standard,
in our Climate Change and Energy Standard, we are seeking to reduce associated
we supplement actual emission reduction emissions through several initiatives,
2
with the purchase of verified credits to such as optimising travel routes to enhance
offset remaining residual emissions. road safety and fuel efficiency, as well as
switching to lower emissions vehicles,
where possible. In doing so, we have
reduced fleet emissions by around 19%.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Scope 3: engaging with our Value Chain Lessons Learnt

Scope 3 emissions represent more than Stakeholder perceptions
We have made steady progress towards
90% of the Group's GHG emissions. To our emissions reduction targets, but we also and key insights from our DMA
reach our near-term Scope 3 reduction face challenges. For instance, accessing new
target, we are focusing our efforts on our technologies and renewable energy sources
most carbon-intensive areas: our largest can be challenging and costly in some
direct and indirect suppliers of goods and countries. Therefore, we need to work with
services, and purchased tobacco. external partners and third parties to find
Collaborating with direct the most efficient solutions.
and indirect suppliers While we continue to foster engagement
Group-wide, we have more than 34,000 direct with our suppliers on the importance of
and indirect suppliers whose emissions quality data, we continue to face
accounted for circa 50% of our Scope 3 challenges related to data availability and
inventory, contributing to a total of accuracy. We also recognise that carbon
3,000,000 tCO2e. smart farming techniques can be costly
We are working with them to reduce their and complex to implement, especially for What do our Stakeholders
emissions by enhancing our standards, small farmers. Therefore, we will continue Think About Climate Change?
collecting and sharing data, and supporting to work with external partners to develop
Our stakeholders are watching this topic
them to set their own Science-Based carbon smart farming techniques that are
keenly, and have emphasised the
Targets (SBTs). suitable for different contexts.
importance of meeting the targets we
We aim to have 20% of suppliers of purchased What's Next? have set. The impact of climate change
goods and services by spend to set SBTs – Continuing to explore and implement on our operations is expected to remain
by 2025. By the end of 2023, we were more carbon reduction and energy efficiency stable, but stakeholders expect to see
than halfway to achieving this goal, with initiatives such as the expansion of our increased engagement with our
15% of suppliers having SBTs in place. global intermodal logistics network, the suppliers on this topic.
use of biofuels and Power Purchasing How Will the Material Impact of
+ Read more on supplier engagement on
Climate Change on page 100
Agreements (PPAs);
Climate Change Shift Over Time?
– Reviewing our approach to carbon Supported by the resilience of our supply
Collaborating with neutrality; and chain, we currently experience limited
tobacco leaf farmers – Building on our near-term targets, we will disruptions resulting from climate
Purchased tobacco accounted for about submit our long-term Net Zero GHG change. However, the impacts of climate
23% of our Scope 3 GHG emissions, emissions targets, and Forest, Land and change will likely increase over time
contributing 1,402,000 tCO2e in 2022. Agricultural (FLAG) near-term and long- regardless of mitigations (if globally
The majority of these emissions came term Net Zero GHG emissions targets to a 1.5 degree warming pathway is not
from fuels used in the processes to cure the SBTi. These targets will be in-line with achieved) and our operations will likely
tobacco leaves. a 1.5-degree warming pathway. experience an impact on topics such as
We are helping farmers to reduce emissions biodiversity and ecosystems and water.
from farming activities by introducing new + For more information about our targets see
TCFD reporting on page 102 Therefore, we will continue to put
curing technologies, alternate fuel sources, considerable focus on this material topic.
new fertilisers with lower emissions and
‘carbon-smart’ practices.
Our carbon-smart farming programme aims
to reduce emissions from farming activities
and remove carbon from the atmosphere Notes:
through reforestation and reduction in soil 1. Compared to a 2020 baseline. Comprises 50%
disturbance. We are implementing this reduction in Scope 1 and 2 and 50% reduction in
Scope 3 GHG emissions, where Scope 3 emissions
programme in our Leaf Operations in Brazil, target includes purchased goods and services,
Bangladesh, Mexico, Pakistan and the U.S., upstream transportation and distribution, use of
which represent the highest directly sold products and end-of-life treatment of sold
products, which collectively comprised >90% of
contracted tobacco volumes. Scope 3 emissions in 2020. Due to the complexity of
In 2023, we reduced the use of coal for consolidating and assuring Scope 3 data from our
suppliers and value chain, we report Scope 3 data one
tobacco curing in our supplier-purchased year behind other metrics. In 2022, we have further
tobacco to 3.3% after eliminating coal enhanced our Scope 3 calculation methodology and
and replacing it with biomass in our Leaf data precision leading to the reporting periods 2020
and 2021 being restated accordingly. Refer to the BAT
Operations in China and Vietnam in 2022. 'Reporting Criteria' for our full methodology: bat.com/
Overall, in 2023, there has been further reporting.
replacement of the remaining coal in our 2. BAT's carbon neutral sites are externally verified as
tobacco supply chain with renewable fuels. adhering to internationally recognised standards /
carbon neutrality methodologies, such as PAS 2060.

+ See our TCFD report on page 102 for the

complete breakdown of our GHG emissions
Purchased carbon credits are verified by third parties,
such as VCS, Gold Standard and American Carbon
and for our Climate Change Strategy Registry. They offset residual emissions for which
immediate plans do not offer financially viable and/or
real emission reductions.
3. Renewable energy includes: Energy generated from
renewable fuels at our sites (e.g. wood fuel, biomass
fuels) and in fleet vehicles, owned or leased (e.g.
biodiesel); Purchased renewable electricity, hot
water and steam; and Renewable energy generated
on site using non-fuel technology (e.g. with
photovoltaic installations or solar water heaters).
4. Calculated using Ofgem estimate of a medium
household electricity band 2,700 kWh.

81
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Circular Economy

We also reduced the size of the boxes

Targets Metrics 2023 Status for devices, saving approximately 250
metric tonnes of paper and other wood

25%
% of reduction in 28.2 ü fibre materials, and achieving a 58%
waste generated Achieved reduction in CO2e footprint for starter kit
reduction in waste generated in own packaging, in comparison to 2022.
operations by 2025 vs 2017 baseline Modern Oral: All our Velo cans are now 100%
recyclable, where local facilities exist and

100%
% of packaging that is 94 assuming consumers properly recycle them.
reusable, recyclable or On track In the UK and Ireland, they are composed of
1
compostable 91% recycled plastic (mass balance approach ).
packaging to be reusable, recyclable
In Sweden, we are piloting recyclable mono-
or compostable by 2025 material sachets with refillable cans. In
addition, in Sweden and Denmark, our ‘Lyft

30%
% share of recycled 1.15 premium’ brand now uses 83% bio-based
content in plastic Not on track plastic (mass balance approach).
packaging
average recycled content across Cigarettes and Consumables for Heated
all plastic packaging by 2025* Products: Our two most significant 2023
packaging design projects were:
– In AME, in cigarettes and HP consumables
packaging, we replaced all aluminium foil
‡ and metallised paper inner bundles with
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com paper inner bundles that can be recycled
where facilities exist. This has reduced
CO2e emissions by approximately
Frameworks 84,000 tonnes and improved our material
GRI GRI 306-1, GRI 306-2, GRI306-3, GRI-306-5a recyclability by around 2% since the start
SASB This topic is not mapped by a specific SASB standard of the project in 2022; and
PAI 9, E13, E9 – Across all regions for cigarettes packaging
boards and for HP packs in AME and
Our Impact Our Actions in 2023 APMEA, we reduced the weight, which
Inward impact: Consumer demand for Fostering circularity in R&D process resulted in emissions reductions of
more circular products continues to rise. In 2023, we began formally embedding our approximately 10,600 tonnes in 2023.
Regulators are also increasingly introducing three strategic priorities within our Product Both projects achieved their associated
measures that hold manufacturers Lifecycle Management (PLM). This CO2e emissions reduction targets for 2023
accountable for managing the impact of approach requires an assessment of the and are on track to achieve 2024 targets.
their products' full life cycle. Extended environmental impact (CO2e-based) across
producer responsibility schemes are prime all development phases of our products Other Tobacco Products (OTP): We are
examples of such initiatives. from the early stages of R&D, informing working on converting all non-recyclable
materials and components selection. plastic laminate pouches and standing bags to
Outward impact: Our business relies on the recyclable plastic. Our ambition is to have this
ability to access raw materials. This includes We also developed and piloted a Green portfolio migrated to recyclable plastic by 2025.
products and their packaging across all our Design Tool, in collaboration with a
categories. In addition to cigarette butts, sustainability consultancy, to equip End-of-life Treatment
we acknowledge that the waste generated our product development teams with Butt littering and disposal of New Category
from New Category products has a screening tool to compare the CO2e products are two key challenges. We seek
a negative environmental impact. impact of different materials and to address these issues in a number of
components and inform early design ways, including consumer education,
Managing Impact Take-Back schemes and partnerships.
Our approach to circular economy is set out in decisions. The pilot was successfully
our Circular Economy Position Statement. completed and we plan to deploy it Tackling cigarette butt littering
It focuses on mitigating the environmental across New Categories R&D in 2024. We support education campaigns and work
impacts of our current and future product Reducing product-related waste with consumers to encourage responsible
portfolio, guided by our strategic priorities: Our progress in 2023 is detailed below. disposal. For example, in collaboration with
local Ministries of Environment, our ‘Small
– Simplify product and packaging design Vapour: We reduced the pack profile of our Actions, Big Crimes’ programme has been
to improve recyclability and reduce the use Vapour refills; removed plastic film from all rolled out in a number of Markets in
of virgin materials and finite resources; of our products, plastic trays from our Southeast Europe. In Italy, we expanded
– Maximise the longevity of our products device kits, and silicone caps from our pods. the programme to four more cities in 2023,
to improve the experience for our These initiatives saved approximately which included distributing more than
consumers; and 380.75 tonnes of plastic globally since 2022. 30,000 recyclable plastic pocket ashtrays
– Recover: Minimising waste through Heated Products (HPs): We made a number and reusable ashtrays. An average reduction
increased product recovery, reusability of changes across the Group. For example, of 59% in littering from cigarette butts was
and recycling. our glo device packaging can now be seen during the campaign period.
recycled, wherever local facilities exist In Greece, we extended the programme
We monitor progress through our and assuming consumers properly recycle
circularity targets and carry out life cycle to Naxos, after its launch in Rafina in 2021.
them. In glo devices and starter kits, Through a combination of awareness
analysis (LCA) across our products to we removed the polypropylene device
identify areas for further improvement. raising initiatives and specifically designed
overwrap and replaced plastic trays with bins and signage for cigarette butt disposal,
a pulp-based alternative.
+ Read more about sustainability policies,
procedures and standards on page 72 and 73
over 255,000 cigarette butts have been
collected across the two locations since
November 2021.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The use of technology was the key to this Tackling waste in our direct operations
campaign: the combination of monitoring Stakeholder perceptions

115
satellite data interpreted with artificial and key insights from our DMA
intelligence systems made it possible to
measure the potential impact in cities
before and after implementation, as well Total waste generated (thousand tonnes)
as the provision of useful data to local
authorities for managing butt litter.
Take-Back schemes
We continue to support the responsible
disposal of our New Category products in
a number of ways, depending on the local
infrastructure and regulatory environment.
We utilise our own stores and third-party
retail outlets through our own Take-Back
schemes, as well as existing local electrical What do our Stakeholders
return and recycling schemes.
Think About Circular Economy?
Partnerships and pilots Our stakeholders see this topic as
We are collaborating with various partners challenging due to the growth of New
to bring new technologies to reduce the Category products, and stakeholders
environmental impact and increase Total waste disposed (thousand tonnes) 14.3 stressed that we must make further
the circularity of our product portfolio. progress on this front. They also think
Total waste recycled (thousand tonnes) 100.7
Over the course of 2023, we have been that its impact on our business is high
working with Ocean Plastics Technologies, On the scientific innovation side, our R&D due to rising consumer expectations
a community-based waste plastic recycling team developed a process for removing and stricter regulations in this area.
solution in South Africa on a vapour pod nicotine from waste to levels that are below How Will the Material Impact of
recycling pilot. Once it is launched, the project the hazardous waste limits set in the UK, Circular Economy Shift Over Time?
is expected to recycle approximately 250,000 with the view to testing its commercial Our goal is to improve the circularity of
pods per month and create an estimated viability in managing waste with nicotine our products and packaging over time
16 jobs per recycling container. content. and, as such, we expect our impact on
We also partnered with FlexSea, a this topic to reduce accordingly.
sustainable packaging company, exploring + For more performance metrics and operational
data refer to the BAT 'ESG Performance Data However, this will depend on significant
technologies that could improve future Book' on bat.com/sustainabilityreporting
investments in R&D and adoption of
packaging and product development to emerging innovations, as well as the
help make progress towards our Lessons Learnt availability of local infrastructure.
sustainability targets while delivering Our ability to monitor progress across our
product portfolio is facilitated by our Life Moreover, the results of our DMA
competitive benefits.
Cycle Assessment and Green Design Tool. revealed that upcoming environmental
Reducing Operational Waste While we continue to demonstrate and reporting regulations present
Our Global Waste Centre of Excellence progress in most of our circular economy a material risk from a regulatory
(CoE) applies our Integrated Work targets, our efforts are hindered by global perspective - one that will require
System tool to identify and address shortages in key materials, such as food- significant investment over time to
our 'waste top losses'. grade post-consumer resin. This scarcity manage effectively.
In 2023, we achieved a 28.2% reduction in has impacted progress against our 30%
waste generated. This means that we average recycled content target*.
exceeded our target of a 25% reduction in Addressing this challenge requires
waste generated (vs our 2017 baseline), two collaborative efforts across industries,
years ahead of schedule. This was driven by supported by changes in government
various waste-reduction activities, such as policies to enhance the accessibility of this
improvements in machinery efficiency and material. We will continue to engage with
material management. We are committed our stakeholders, explore alternative
to maintaining our target and exploring solutions, pilot new ideas, with a view to
further waste reduction initiatives within incorporating materials that can be widely
our direct operations. recycled across our markets.
Our target is to achieve a 90% recycling What’s Next?
rate of waste generated within our direct
– Developing a Sustainability Design
operations by 2025. This year, our waste
Manifesto, which will inform our product
recycling rate increased to 87.6%, driven
design in line with our circular economy
by waste segregation and recycling
strategic priorities;
programmes across our operations sites.
– Working with our network of partners to
In addition, 68.8% of our operations sites
leverage technologies that will improve the
achieved zero waste to landfill, placing us
circularity of our products and packaging;
on track to achieve our target of <1% waste
going to landfill by 2025. – Working with suppliers to foster
collaboration and access to recycled
content; and Note:
1. ‘Mass balance’ is an accounting principle that
– Working with start-ups and established matches inputs (such as plastic waste) with
waste management companies to focus outputs from a recycling or production process,
on finding solutions for device and battery to determine the recycled content
(source: zerowasteeurope.eu).
recycling.

83
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Biodiversity and Ecosystems

1 management, natural ecosystems

Targets Metrics 2023 Status conversion, agrochemical use, and soil
and water management. More than 1590
Deforestation and % of wood used in
1
96.5 people, including 100% of our field technicians,
Thrive Supply Chain On track were trained on our biodiversity standard
Conversion Free with Deforestation in 2023. Here are some key actions and
tobacco supply chain by 2025 and Conversion Free procedures that we undertake to help
(vs 2021 baseline) (DCF) status ensure all farmers in our tobacco supply
chain are complying with the BOS.
Deforestation Free % of pulp and paper
materials sourced with
69.3 Managing primary native forests: We
On track support our directly contracted farmers
pulp and paper supply chain by 2025 low risk of deforestation through training and provide them with
tree saplings to use as part of their
Forest Positive Hectares of forests
planted for
68.8
On track
sustainable fuel sources for tobacco curing.
Such sources include other alternative fuels
in our tobacco supply chain by 2025 conservation and and methods like biomass, sun and air
(vs 2021 baseline) for Forest Positive curing. We ask our third-party suppliers
to do the same. In 2023, 47% of our
contracted farmers used alternative
biomass fuels for tobacco curing.
Protecting forests in partnership with
‡
farmers and suppliers: We conduct
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com
regular and unannounced farm visits in our
directly contracted farmers and undertake
due diligence before contracting with a
Frameworks new farmer. Remediation is put in place
GRI GRI 304-1, 304-2 in case of any deforestation or conversion
SASB FB-AG-430a.3, FB-AG-430b.1, FB-AG-440a.1 case and we ask our third-party suppliers
to take equivalent steps.
PAI 7, E15
TNFD Strategy, Risk Management, Metrics and Targets We monitored 100% of our directly
contracted farmers in 2023 for deforestation
Our Impact Our Actions in 2023 and natural ecosystems conversion. We also
trained our farmers and Field Technicians
Inward impact: Deforestation, soil pollution Managing biodiversity
on best practices for resource preservation,
and biodiversity loss can cause environmental in our direct operations
such as the use of sustainable wood for
disruptions and increase production costs. In 2023, with the aid of a specialist tobacco curing, forest conservation,
Outward impact: Our business operations, consultancy, we expanded the scope of biodiversity, integrated pest management
including conventional agricultural our BRA to assess our direct operations and soil and water management. In 2023,
practices, rely on the use of natural against the nine biodiversity risk indicators 458,017 attendees were reported to have
resources, such as forest products, soil and identified 22 high priority sites. In 2024, received this training.
and water. Failure to preserve and protect we will be rolling out training to all sites and
implementing BMPs to high priority sites Additionally, we deployed BMPs to mitigate
the biodiversity where we operate could
to mitigate risks they pose. risks in farms identified as high risk from
negatively impact ecosystems, as well
our BRA. Out of the eight Leaf Operations
as farmers and communities.
+ For more information, including our high
priority sites, see TNFD report on page 117
assessed, more than 500 farmers in six
Managing Impact and our 2023 Biodiversity Risk Assessment Leaf Operations were required to have
Our approach to protecting biodiversity at bat.com/biodiversity BMPs implemented. We also partnered
and ecosystems is embedded in our Group with universities to conduct third-party
Environment Policy and Biodiversity Statement. Working towards positive impact assessments on the sustainability and
These set out our principles for minimising and Working towards a net positive impact on traceability of the wood used in Brazil and
mitigating our environmental impacts. Further, forests is a key component of our approach the presence of biodiversity risk in Mexico.
we manage the impacts from our activities to biodiversity. In 2023, the Group's own Leaf Supporting biodiversity and natural
and sites through our Soil and Operations and strategic third-party suppliers capital: Our Global Leaf Agronomy
Groundwater Protection Standard, which delivered training through farm visits, online Development Centre continues to work on
sets out requirements for preventing and training and communication materials. integrated pest management strategies,
handling contamination issues. Our target In line with the Science Based Targets which are then adopted for local
is to have Deforestation Free tobacco, pulp Network (SBTN)-recommended AR3T implementation by our Field Technicians
and paper supply chains by 2025. mitigation hierarchy framework, we seek to who deploy them to local farmers. Ongoing
In our tobacco supply chain, we aim to make reduce current and avoid future impacts as developments include selecting disease-
a net positive impact on forests by 2025 by a first step to preserving natural capital. In resistant tobacco varieties and using
planting more hectares of forests than we use. order to do so, we aim to have 100% of the biological control strategies that can lead
In our direct operations, following the wood used in our tobacco supply chain to to a reduction in the use of agrochemicals.
geospatial Biodiversity Risk Assessment (BRA) be Deforestation and Conversion free. Reducing agrochemical usage: We only
we conducted in 2023, we aim to have Managing compliance through our use locally approved agrochemicals with
Biodiversity Management Plans (BMPs) Biodiversity Operational Standard: the lowest possible toxicity according to
in high-risk manufacturing sites identified by We launched a Biodiversity Operational the World Health Organization (WHO)
2025, with the view to reducing and mitigating Standard for Tobacco Farming (BOS) in classification, avoiding any highly hazardous
the impacts of our continued operations 2023 which sets operational requirements pesticides. We monitor adherence to our
on the land and the surrounding areas. for the Group's own Leaf Operations and agrochemical standard from crop planning
+ Read more about sustainability policies,
procedures and standards on page 72 and 73
provides guidance to our third-party leaf to the final packed leaf.
suppliers. It covers forest and biodiversity

84
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

In 2023, it was reported via our Thrive In 2023, we assessed 77% of our pulp and
assessments that 81% of tobacco hectares paper materials. Of the 77% assessed, 90% Stakeholder perceptions
1
in our Thrive Supply Chain had best practice were established as sourced with low risk and key insights from our DMA
soil and water management plans in place. of deforestation. This means that, in 2023,
Promoting best practice in soil 69.3% of our pulp and paper materials were
management: In 2023, 93.3% of farmers identified as sourced with low risk of
1
in our Thrive Supply Chain were growing deforestation according to the following
other crops - such as rice, corn, vegetables, assessment criteria:
wheat and soy - in addition to tobacco. – 25% of the volume was certified by the
We also focus on improving crop yield and Forest Stewardship Council (FSC) or by
reducing land impact by using sustainable the Programme for the Endorsement of
agriculture practices and tobacco varieties Forest Certification (PEFC);
with higher yield. In Kenya, we improved our – 34% of volume was traceable to low risk
yield by 18% from 2021 to 2023, which geographies;
reduced the need for 449 hectares of land.
In Brazil, we improved our yield by more – 10% of volume was traceable to certified
forests located in high risk geographies; What do our Stakeholders
than 30% since 2010 and reduced the need
for more than 12,000 hectares of land. and Think About Biodiversity?
– No volume (0%) was recovered or from Our stakeholders think that protecting
+ For more information about our Biodiversity
Operational Standard, see TNFD report on page 117 recycled sources. biodiversity and ecosystems is crucial
to protecting our crop yields, and
31% of volume was not assessed in 2023; stakeholders acknowledge our work
Sourcing responsibly
hence not yet classifiable as low risk of to mitigate our biodiversity impacts.
In our paper and pulp supply chain,
deforestation. We will continue working While many stakeholders see
we work with suppliers who can
with our suppliers to increase the coverage biodiversity and water as intrinsically
demonstrate that material is sourced
of our assessment of pulp and paper linked topics, some stress the
with low risk of deforestation.
volumes in scope of our programme, importance of considering these topics
We have aligned our due diligence approach targeting 100% of volume by the end of
to the Accountability Framework initiative separately to optimise our activities.
2024.
(AFi) in preparation for SBTN and TNFD How Will the Material Impact of
Lessons Learnt
requirements. Our approach includes: Biodiversity Shift Over Time?
Manufacturing processes for New
– Enabling material traceability to origin; Our turnover relies on tobacco as an
Category products and cigarettes are
agricultural commodity and, as such,
– Identifying, assessing and managing risks different. It is clear that we need to better
changes to biodiversity and ecosystems
throughout our paper and pulp supply understand the impact of our non-leaf
and climate change will likely create
chain; and supply chain on biodiversity, particularly
further challenges over time. This may
– Establishing guidelines for supplier as volumes grow.
include impacts to the cost and
selection and performance management. Additionally, there is no single, up-to-date availability of raw materials. Moreover,
This due diligence approach will support data set that covers all the information incoming legislation and more stringent
our management of material deforestation required to understand biodiversity impacts standards such as the TNFD are likely to
risks, as well as our understanding of our across our business. To address this, we are put more pressure on the business. We
suppliers' capabilities and implementation conducting pilot programmes in are already taking steps in that regard,
of deforestation-free standards and collaboration with start-ups, exploring such as setting out our approach to
commitments. innovative ways to more accurately quantify TNFD in this year's reporting.
impacts and monitor the state of nature.
Breakdown of pulp and paper Outside the tobacco supply chain,
volumes under assessment availability and quality of data is a common
(%) issue. To tackle this issue, we are
collaborating with CDP to build supplier
capability and improve access to supplier Notes:
1. Our ambitions cover all tobacco we purchase for
data on climate, forest and water to help us our products (‘tobacco supply chain’); which is used
better understand our upstream in our combustibles, Traditional Oral and Tobacco
dependencies and impacts. Heated Products. Our metrics, however, derive data
from our annual Thrive assessment, which includes
What’s Next? our directly contracted farmers and those of our
third-party suppliers, which represented over 94%
– Preparing to set nature targets aligned of the tobacco we purchased by volume in 2023
to the Science-Based Targets Network (‘Thrive Supply Chain’).
(SBTN) and to align with the Taskforce
‡
on Nature-related Financial Disclosures Definitions:
(TNFD) as well as FLAG guidance in Conversion: Change of a natural ecosystem
to another land use or profound change in a natural
2024; and ecosystem’s species composition, structure, or function.
– Creating a 10-year strategic roadmap Deforestation: Loss of natural forest as a result of
to promote nature-positive leadership. i) conversion to agriculture or other non-forest land
Volumes certified by FSC/PEFC 25% use; ii) conversion to a tree plantation; or iii) severe
and sustained degradation.
Volumes traceable to low risk geographies 34% Forest Positive: To be considered 'Forest Positive'
a forest should be planted for conservation purposes.
Volumes traceable to certified forests 10% Further, the area must be monitored at least one year
located in high risk geographies after the planting date, to verify the survival rate
quantification of the area planted and the number
Volumes recovered or from recycled sources 0% of trees that have become viable
Volumes not yet possible to classify as 31% ‡
low risk of deforestation + Refer to the BAT ‘Reporting Criteria’ for a full
description of key terms and definitions at
bat/reporting.com

85
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Water

In 2023, some of our tobacco sourcing

Targets Metrics 2023 Status areas in 18 countries - including India,
Chile and Türkiye - which are located in

35%
% reduction in water 39.2 ü water-stressed areas, estimated 18.5% of
withdrawn vs 2017 Achieved the tobacco we purchased in 2023 came
baseline from these areas, where we seek to work
reduction in water withdrawn
by 2025 vs 2017 baseline with farmers to optimise and reduce crop
water usage.

100%
% operations sites 68.8 Water stewardship
Alliance for Water On track across our direct operations
Stewardship (AWS) We aim to ensure all our sites comply
operation sites Alliance for Water
certified with our water withdrawal and discharge
Stewardship certified by 2025
guidelines and follow our Water Roadmap,

30%
% of water recycled 24.4 which links to the Alliance for Water
Stewardship (AWS) process. We continue
On track
to invest in water efficiency
of water recycled by 2025 and recycling projects to eliminate water
losses, reduce water withdrawn and
replace fresh water with recycled water,
where possible. For example, by replacing
water-cooling systems with more efficient
dry coolers in our factory in Samsun,
‡
+ Find out more: Türkiye, we reduced our withdrawn water
3
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com by approximately 20,000m annually.
We also invest in water treatment
Frameworks technologies to improve the quality of
GRI GRI 3, 303-1, 303-2, 303-3, 303-4, 303-5 our water discharged and increase water
SASB FB-AG-140a.1, 140a.2, 140a.3, FB-AG-430a.3, FB-AG-440a.2
recycling. Through these initiatives, we
achieved a 39.2% reduction in water
PAI 8, E6, E7, E8
withdrawn (vs 2017 baseline), surpassing
our 2025 target of 35% two years ahead
Our Impact Our Actions in 2023 of schedule.

70%
Inward impact: The impact of climate Assessing our water risks
change on freshwater, as well as industrial Our direct operations: In 2023, we used
water usage, is endangering the healthy a total of 86% of water in our operations
functioning of water ecosystems. sites and 14% in our offices, retail, R&D and of our operations sites reduced
other sites. We operate in some water- water withdrawn by recycling water
Outward impact: Water is vital both for
stressed locations such as Mexico and on site to date.
our direct manufacturing processes and
for our tobacco crops. While taking into Uzbekistan, where optimising water use
In addition, 34% of our operations sites
account the investments we have made is critical. This year, following the World
implemented both water efficiency and
in our direct operations and tobacco crops, Resources Institute (WRI) AQUEDUCT
recycling activities, investing £2.8 million
we recognise that our business activities Water Atlas, we have reassessed our
in capital expenditure. We expect an
generate emissions to water, which can operational exposure to water stress risks. 3
estimated 140,000 m of savings in water
threaten biodiversity and ecosystems. The tool identified 24 operations sites in
withdrawn over the course of 2024 (vs 2017
By using water more efficiently, we can water stressed areas (2022: 16), making
baseline). We also achieved 24.4% of total
reduce negative ecological impacts while up 45.6% of our water withdrawn in 2023.
water recycled in 2023, with our top
protecting community access to water. For these sites, we have more stringent performing sites being in Chile, South
standards for on-site water management Korea, Croatia, and Pakistan.
+ For more performance metrics and operational
data refer to the BAT 'ESG Performance Data and recycling rates. Local markets are
As members of the AWS, we committed to
Book': at bat.com/sustainability reporting responsible for ensuring that they have
100% of our operations sites being certified
appropriate water policies in place to fulfill
Managing Impact against the AWS Standard by 2025. In
such requirements.
Our approach to managing water impacts 2023, 22 more operations sites became
We also conducted a Water Risk AWS certified, bringing the total number of
in our direct operations is outlined in our
Assessment to identify sites near AWS certified sites to 44 or 68.75% of our
Group Environment Policy, which is
important marine habitats, such as coral operations sites.
complemented by our Water Security
reefs, mangroves and seagrass beds.
Standard, and our Soil and Groundwater Our AWS certified sites have performed
We have incorporated our findings into
Protection Standard, as well as our water a wide range of stakeholder engagement
our Biodiversity Risk Assessment and
recycling and reduction targets for our throughout the year, such as:
implemented Biodiversity Management
direct operations. For our tobacco supply – Involvement in advisory committees at
plans for sites in high-risk areas.
chain, our Supplier Code of Conduct (SCoC) water basin level to promote collaboration;
is complemented by our Leaf Supplier Tobacco supply chain: A number of
Manual (LSM), which includes the locations where we source tobacco – Awareness sessions for stakeholders
requirements for water protection planning are located in ‘water stress’ areas. We use and communities on water risks and
and water extraction for irrigation. the WRI Aqueduct Tool to monitor the stewardship; and
proportion of tobacco crops in these – The construction of infrastructure to
+ Read more about sustainability policies,
procedures and standards on page 72 and 73
areas and map supplier locations. enable access to potable water and
WASH facilities for local communities.

86
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Where we source our water from We have also tested and adopted the
Stakeholder perceptions

3.16
Alternate Furrow Irrigation system. This
practice saves an estimated 10% more and key insights from our DMA
water when compared to traditional
3 furrow irrigation without negatively
Total water withdrawn (million m )
affecting the yield. In 2023, we continued
with trials in Pakistan and in Bangladesh,
and the commercial adoptions reached
19,700 hectares across both countries.
In Pakistan, our Alternate Furrow Irrigation
technique now covers 27% of the total
tobacco area - this resulted in 9% savings
in water compared to traditional furrow
irrigation practice.
GLAD continues to run programmes to
anticipate future challenges with water What do our Stakeholders
scarcity, water reduction and engagement Think About Water?
with local communities. The programmes Some stakeholders raised the point that
include innovative seedling floating systems, we have sites located in regions of
smart irrigation using real-time sensors, water stress. While they acknowledge
From water utility supplies 64% and new drought resistant tobacco varieties. our progress on water management in
From fresh surface water sources 1.5% Lessons Learnt our direct operations, they are keen to
We know that with a global supply chain, see us engage more with our suppliers
From groundwater sources 35%
there is no one-size-fits-all solution. Our key on this topic.
learning in this area is that clustering our How Will the Material Impact of
+ For more performance metrics and operational
data, refer to the BAT 'ESG Performance Data sites into archetypes, based on factors Water Shift Over Time?
Book' at bat.com/sustainabilityreporting such as water composition, quality,
Climate change will likely cause
process requirements, and volumes, helps
Water stewardship across changing weather patterns and
us to align the technical solutions and
our tobacco growing increasing rates of low rainfall in certain
investment requirements with the unique
regions - both of which impact the
In the majority of the regions where we needs of each site.
availability of water. The emergence of
operate, there is enough rainfall to meet We still face some challenges in our nature-related frameworks such as the
the water needs of tobacco growing. tobacco supply chain, in areas where TNFD was mentioned as a sign of rising
Where rainfall is insufficient, farmers may access to water reduction technologies is stakeholder expectations. There are
use irrigation. In 2023, 32% of the hectares limited by high costs and a scarcity of local
1 also social implications of water use in
of our Thrive Supply Chain used some form supply. We continue to work with our water stressed areas, which means
of irrigation systems. farmers to find alternative solutions and that water scarcity may become a
Where irrigation is used, we monitor and to share best practices. more significant issue over time.
report water use via our Thrive programme, What’s Next?
which also helps us monitor and promote
– Continuing to invest in water efficiency
best practice water and soil management.
and recycling projects and making
In 2023, we implemented best practices
progress towards the number of AWS
for 81% of tobacco hectares in our Thrive
1 certified sites to meet our 2025 targets;
Supply Chain , which included farmer
trainings on water and soil conservation – Completing the construction of the
SM
management. WaterHub in the U.S. - a major water
recycling facility with a capacity of
We also use our Global Leaf Agronomy 3
200,000 m in the U.S;
Development Centre (GLAD) to research,
and Group subsidiaries then implement – Adapting our '10 Golden Rules' approach
ways to reduce water usage in tobacco to water management, so that we can
growing. We focus on Leaf Operations, standardise how we run water efficiency
which have a higher dependency on practices across our operations sites.
irrigation and/or higher water stress risk. This aims to provide technical solutions
and optimisation practices for water
We have introduced drip irrigation
management in those sites; and
technology in eight Leaf Operations,
including Brazil and Mexico, which reduces – Conducting a detailed impact,
soil erosion, boosts yields and saves up to dependency and footprint assessment
50% more water compared to traditional across the upstream value chain, which
non-drip systems. Currently a deployment will help us to identify suppliers with
plan for the next five years is being built for high-risk of adverse water impacts, to
the expansion of drip irrigation in Chile, help define an engagement strategy.
Mexico and Vietnam.
Note:
1. Our goals cover all tobacco we purchase for our
products (‘tobacco supply chain’), which are used in
our combustibles, Traditional Oral and Tobacco
Heated Products. Our metrics, however, derive data
from our annual Thrive assessment, which includes
our directly contracted farmers and those of our
third-party suppliers, which represented over 94%
of the tobacco we purchased by volume in 2023
(‘Thrive Supply Chain’).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Employees, Diversity and Culture

Since 2019, the total number of hires

Targets Metrics 2023 Status bringing new capabilities – such as data
analytics, digital, sustainability, innovation,

45%
% female 42 IP and science – is more than 3,800, and
representation Ongoing focus of these 45% are female.
in Management roles area
increase the proportion of women in
Management roles to 45% by 2025
+ Find out more about our ongoing investment in
talent at careers.bat.com

40%
% female 33 Learning and development: We develop
representation Ongoing focus
leadership and functional capabilities
on Senior Leadership area within the organisation through a range
increase the proportion of women of learning programmes. Some highlights
teams
on Senior Leadership teams to 40% in 2023 include:
by 2025
– an average of 36 hours of learning
over the year for each of our c.14,000

50%
% of Key Leadership 100 ü managers; and
teams with at least a Achieved
50% spread of distinct – an average of £301 investment in learning
achieve at least 50% spread of per employee.
nationalities
distinct nationalities in all Key
Across all of our 72 instructor-led
Leadership teams by 2025
programmes, we have achieved very high
overall satisfaction and Net Promoter
‡ Scores of 4.6/5 and 96% respectively.
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com
+ Find out more about our skills development
programmes at careers.bat.com

Frameworks Fostering a diverse

GRI GRI 2-7, 2-8, 2-30, 401-1, 401-3, 404-1, 404-2, 405-1, 405-2
and dynamic workplace
SASB 7, E15 We seek to monitor, track and support
PAI 12, 13, S4, S5 the progression of diverse groups.
Diversity starts at the top, as shown
Our Impact – Our Employment Principles, which by our Board, which as at 31 December
encompass commitments to a diverse 2023, had 11 Board Directors of whom
Inward impact: Society’s expectations of
workforce, reasonable working hours, 6 were male and 5 were female.
employers continue to evolve. By bringing
in different perspectives to the workplace, a family-friendly environment, employee Main Board Diversity
we can better respond to customer needs, well-being, talent, performance, equal
thereby enhancing our performance and opportunities, and competitive 5 45.5%
2023
innovation. Moreover, investing in our remuneration. 6 54.5%
people and taking care of their physical and – Our Standards of Business Conduct 4 36.4%
mental well-being enhances our reputation (SoBC), which include the Respect in the 2022
as an employer of choice, which in turn 7 63.6%
Workplace Policy, outlining commitments
enables us to attract and retain talent. to equality, diversity, anti-harassment,
Women
Outward impact: We support our and safeguarding employee well-being.
employees in realising their individual – Our Group Health and Safety Policy Men
purpose by fostering a dynamic and Statement, which outlines our
inclusive culture and providing commitment to apply the highest In 2023, 33.1% of roles on Leadership teams
development opportunities and fair international standards of health and and 42% of Management roles were held
treatment. Moreover, by supporting their safety for our employees, as well as by women. As at 31 December 2023, 15,437
physical and mental health, we can third-party personnel on company of our employees were women and 31,280
positively impact our peoples’ lives within premises. We are committed to providing were men.
and outside the workplace. Given our global a safe working environment for all our
footprint, we believe that our impact can employees and contractors to achieve Senior Managers:
also extend beyond the organisation our goal of zero accidents.
by setting an example of good practice Companies Act 2006
in the business community. + Read more about sustainability policies, For the purposes of disclosure under
procedures and standards on page 72 and 73
Section 414C(8) of the Companies Act
Managing Impact 2006, the Group had 173 male and
We have a clear strategy and policy Our Actions in 2023 67 female senior managers as
framework to guide our approach to Building multi-category of 31 December 2023. Senior managers
employees, diversity, culture, and health skills and capabilities are defined here as the members of the
and safety. Some of the key elements are: We aim for our recruitment process to Management Board (excluding the
– Our Diversity and Inclusion (D&I) strategy, be fair and inclusive. We have rolled out Executive Directors) and the directors
which is built on strategic pillars for training on inclusive hiring practices and of the Group’s principal subsidiary
ownership; accountability; diverse talent we require all recruitment agencies we undertakings. The principal subsidiary
pipelines, and enablers, all fostering an work with to provide gender-balanced undertakings, as set out in the Financial
inclusive culture. This strategy is longlists of candidates. Statements, represented approximately
reinforced by our gender and ethnicity In 2023, 42% of our external Management 54% of Group company employees and
pay metrics, which seek to drive equity recruits brought new capabilities into the contributed approximately 91%
and fairness. organisation to accelerate our business of Group revenue in 2023.
transformation.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Women in STEM strategy focuses on

attracting, developing, and retaining more Strengthening gender diversity across BAT
women in our R&D, Operations, Finance and
Digital Business Solutions functions. In the Employee breakdown by level Employee breakdown by level
UK, we are members of the multi-stakeholder in 2023 (Management grade) in 2023 (Senior Leadership teams)
group Women in Science and Engineering
(WISE), to provide evidence-based action,
knowledge, and tools for achieving gender
balance in the STEM workforce, and against
which we achieved Rank 1 in 2023. Our
Women in Leadership (WIL) programme
works to accelerate the development of
women at middle to senior levels. As of
2023, 1,078 women have completed
the programme.
As well as striving for gender balance, our D&I
strategy focuses on diversity of nationalities
and ethnicities. In 2023, we achieved 100% of Women 5,707 Women 235
Key Leadership teams with at least a 50% Men 7,915 Men 475
spread of distinct nationalities across our
management employees, two years ahead
of schedule. We also collect voluntary + For more performance metrics and operational data refer to the BAT 'ESG Performance Data Book'
on bat.com/sustainabilityreporting and for definitions refer to page 91
ethnicity data in seven markets and have 66%
ethnically diverse employees among those
markets. Globally, 27% of our Board and We engage with employees in a number of Rewarding our people
37% of our Management Board and their ways in order to reflect on their feedback We strive to provide fair and competitive
direct reports are ethnically diverse. In and seek to implement meaningful changes. remuneration and benefits globally. In 2023,
addition, we have set a new ambition for For example, following the year-end and we were independently certified by the Fair
40% representation of Ethnically Diverse half-year results the Chief Executive and Wage Network for paying all our direct
Groups for the Management Board and members of the Management Board send employees at least the applicable living
1
direct reports, taking into account the Parker complementary communications which wage . This review covered approximately
Review’s 2023 report. are accessible to all employees. 42,000 employees in 100+ countries (and
Disability Confident Workforce voice in the boardroom: over 600 locations).
Our workforce voice in the boardroom We were also certified by Fair Pay
programme enables ongoing dialogue Workplace for providing equal pay for work
2
between all levels of the workforce across of equal value . Our pay equity review covers
the Group with both our Board and our approximately 42,000 employees in 100+
Management Board. locations from a gender perspective, and
The Board is regularly updated on feedback approximately 13,000 employees in seven
Our disability agenda is critical to our D&I from our people, alongside identified focus locations from an ethnicity perspective.
strategy and we are committed to promoting areas and progress updates. Feedback Our benefits offering is a core component of
positive outcomes for individuals with a from the Board and associated actions our reward strategy. We continue to enhance
disability, mental health condition and/or are communicated back to our people our benefits portfolio to offer physical,
neurodiverse condition. In December 2023, as appropriate and the Board is kept emotional, financial and social wellbeing
we were recognised by a major UK up-to-date on progress against agreed benefits. We support improved work-life
government-backed accreditation scheme actions during the year. integration to create a more productive
for the way we attract, develop and support and empowered workforce. Across our
people with disabilities and long-term health + Find out more about how our Board engages with
our global workforce on pages 140, 148 and 181 business, a hybrid remote working model
conditions and awarded Disability Confident is considered normal practice.
Leader status (Disability Confident Level 3 Your Voice: Our global Your Voice survey We offer our UK employees the opportunity
of 3) having achieved Level 2 in 2022. is conducted every two years and covers to share in our success via our Sharesave
Workforce engagement approximately 40,000 employees. It Scheme, Partnership Share Scheme and
Our workforce engagement strategy includes topics such as strategy, talent, Share Reward Scheme, and offer several
centres around ongoing and open dialogues and sustainability. Results are shared with similar schemes for employees in other
between employees and leadership teams, the Main Board and all employees. Group companies.

94%
which enables us to create a more
collaborative, diverse and inclusive culture. + Find details of our Directors’ Remuneration Policy
on pages 170 to 174
We have established a range of
engagement channels to understand of global employee participation was We recognise that macro-economic
employees’ perspectives, including market recorded for our 2023 Your Voice survey factors are affecting many of our
and site visits by our Directors and (12% higher than the average of our global employees, with rising prices being a source
Management Board members, town halls, FMCG comparator group). of financial stress. We continue to make
global, functional and regional webcasts, significant reward-related investments to
We are ahead of our global FMCG
Q&A sessions, and meetings with works support our employees, including additional
comparator group in the Sustainable
councils and trade unions. We also conduct salary budgets for wider workforce salary
Engagement, D&I and People Management
a global Your Voice Survey and surveys on increases in the UK and globally, and an
categories. Key themes identified as our
specific topics, enable in-depth focus updated incentives design and delivery.
focus areas for improvement are Talent
groups where employees share their
feedback, and operate global multilingual
Development; Reward and Recognition; + Find more details on rewards, benefits, living
wage and pay equity in our Diversity and
Innovation; and Leadership and
speak-up channels. Inclusion Report 2023 and on bat.com
Empowerment.

89
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Employees, diversity and culture

Continued

Preventing accidents
Ambition Metrics 2023 Status In 2023, we had the lowest record number
of Total Recorded Incidents Rate in BAT’s
Zero % of reduction in total
Group-wide accidents
15 global historical data. Overall, there was a
Ongoing focus 15% reduction in reported incidents in
accidents Group-wide each year vs 2022 area 2023, to 99 (vs 116 in 2022). This data is
supported by a 36% reduction in serious
% of our sites that 83 injuries and a 23% reduction in Lost Time
achieved zero Ongoing focus Injuries vs the same period last year, mainly
accidents in 2023 area driven by a reduction in slips and trips
(-35%) and attacks and assaults (-27%).
Lost time incident rate 0.17 In 2023, 83% of our sites achieved zero
(LTIR) Ongoing focus accidents. All accidents are investigated
area by multiple task forces and action plans
are implemented when required to avoid
recurrences.

Reducing incidents across

our business
2023 Lost time incident rate (LTIR)

+
‡
Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com
0.17
Lost time incidents (LTIs) LTIR
Frameworks
GRI GRI 403.1-10 (Inclusive) 2023 78 0.17
SASB FB-AG-320a.1 2022 0.19
83
PAI S1, S2, S3, S4
2021 95 0.20

Our Actions in 2023 In addition to our regular Health and Safety

Health and safety in our operations (H&S) forums, our Centre of Excellence + For more performance metrics and operational
data refer to the BAT 'ESG Performance Data
Our EHS Management System, which (CoE) provides solutions, guidelines and Book' on bat.com/sustainabilityreporting
includes our EHS Policy Manual and related technical knowledge to the Group.
documents, provides guidance and This reduction was driven by our
Our CoE has representatives from all
procedures on implementing our Health improvements in health and safety
our Regions and Functions, with the
and Safety (H&S) commitments effectively. engagement and governance, such as
main objectives of:
We track health and safety performance increased cooperation within our business
– Defining and updating global H&S functions; increased sharing of best practices
across all our sites. A dedicated team then guidelines and process standardisation;
analyses the information to identify trends across our markets; conducting more top
and losses assessments for each of our top
or high-risk areas that require coordinated
cross-functional action. – Guiding End Markets and sharing best four losses (attacks and assaults, vehicle-
practices. related, slips and trips, and manual handling).
More than 70% of work accidents in our
business operations occur outside of BAT Our annual H&S compliance review is an In addition, vehicle-related accidents and
premises. In Trade Marketing and integral part of the Corporate Governance attacks and assaults have seen a decline
Distribution (TM&D), where there are high and Assurance process. over recent years. In 2023, we recorded
risks of road traffic accidents, attacks, and a 10% decrease, compared to 2022.
As part of the compliance review, H&S
assaults, driver safety and security representatives visit selected sites to Sadly, there were four fatalities of
programmes are implemented to manage assess their compliance against our global employees and contractors in 2023
risks. This includes telematic systems in guidelines. The site selection criteria is risk – two BAT employees in Mexico,
our work-related vehicles fleet to monitor based, always considering its accident a BAT-supervised contractor in South
driving behaviour and identify areas for profile; the size of operations or activities Africa, and an independent contractor
improvements. In 2023, we improved and performed; and/or new sites/processes to in Bangladesh. There were also three
standardised our telematics guidelines to be assessed. This thorough process allows members of the public who lost their lives
ensure they are clear and consistent. We us to identify any gaps and support the in traffic-related accidents involving a BAT
will continue to enhance vehicle safety markets in implementing plans for vehicle. We deeply regret this loss of life
through a variety of safety precautions continuous improvement. The outcome and the suffering it has caused to their
and technologies. of the H&S Compliance Review is reported families, friends, and colleagues.
In locations that are high-risk for attacks to the Corporate Audit Committee and the For fatalities or serious incidents that occur,
and assaults, we regularly assess threats result can be: we work with the relevant authorities on
to ensure appropriate protocols are in place – Compliant: H&S controls are adequately their investigations. These incidents are
to keep our people safe. This can include designed and are operating effectively investigated by local teams, and we conduct
placing limits on loads carried to reduce rigorous internal investigations to determine
– Non-Compliant: Immediate actions
value, strategic route planning to avoid the cause, identify lessons and develop an
required by management as the H&S, key
predictability and providing security escorts. action plan.
risks and/or legal compliance controls are
inadequate + To learn about Health and Safety in our tobacco
supply chain, see page 93

90
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

These are then reviewed by the regional What's Next?

and global H&S teams to prevent Stakeholder perceptions
– Enhancing our learning experiences
recurrences. Learnings and action plans through a newly branded Learning & and key insights from our DMA
are disseminated across all regions. Events Development portfolio and investment
beyond our control can regretfully happen, in new hybrid leadership and
and we still have challenges and risks to transformation learning programmes;
overcome and improve upon.
– Planning to revise our existing D&I
Occupational health & framework, including our metrics and
safety and wellbeing ambitions, to further move towards
We aim to be among the leaders in achieving gender and ethnicity parity
occupational health management. As in our Management as well as in our
well as focusing on identifying hazards, Senior Leadership population;
assessing risks to people’s health at work, – Accelerating the deployment of our
and introducing appropriate controls, we new standards, 'Telematics 2.0', and
also have global programmes that protect continuing our work in local and regional
and promote the health and wellbeing of technology, HR and legal assessments,
employees, their families, and local How Will the Material Impact of
and tracking tool development; and
communities. These include: Employees, Diversity and Culture
– Planning on expanding our Safe Shift Over Time?
– Medical services, health screening Workplace programme with an
and insurance; Our stakeholders think that as new
Integrated Work System H&S Pillar generations enter the workforce, the
– Mental health support and counselling revamp, high risk and top losses business will face new expectations
services; assessments and a best practices and different demands. This presents
– Healthy lifestyle and fitness schemes; benchmark. an opportunity to develop our culture
and and grow our impact across diversity
– Family-friendly policies and initiatives, and inclusion.
such as flexible working and support What do our Stakeholders
for childcare. Think About Employees,
Lessons Learnt Diversity and Culture?
While we have progressed our D&I This topic is integral to the success of
agenda across the Group, bringing our business's transition, especially
about widespread change will take time. given the value of diverse thought. There
We need to embrace a broader focus is an interconnection between corporate
on championing inclusion and achieving culture and our ability to operate with
equity, embedding our new value of ethics and integrity. Female representation
“Truly Inclusive” across all parts of the and inclusion were raised as areas for
people agenda. improvement. As discussed in this section,
female representation remains a focus area
+ Find out more about our new corporate values
on page 40
for our D&I agenda. We will continue to
work to make progress on this front
Active listening, facilitated through robust through our programme and targets.
employee engagement, is paramount to Notes:
retaining, developing, and upskilling our talent. 1. Our interpretation of a "living wage" is aligned with
the UN Global Compact definition: "living wage is the
As the EU Pay Transparency Directive local remuneration received for a standard work
continues to evolve, some uncertainties week that enables workers and their families to meet
their basic needs".
remain regarding the way localised 2. Employees performing the same work or work of
differences will impact reporting equal value are paid equitably and any difference in
requirements and existing structures. While pay are for objective reasons and not influenced by
factors such as gender and/or ethnicity.
we are preparing to respond to the Directive ‡
by disclosing additional data on a voluntary Definitions:
basis, we will also continue to review our Ethnically diverse groups includes global ethnic
groups: six global ‘Ethnically Diverse Groups’ were
offering to ensure we meet both workforce determined considering BAT's global market footprint:
needs and regulatory requirements. Asian, Black, Hispanic/Latin American, Indigenous,
Mixed and Other Ethnic Groups. Individuals self-
With regard to Health & Safety, the identified as White, those that have selected ‘Preferred
extensive reach of our supply chain not to Disclose’ and individuals that have opted 'Not
exposes us to regions with geopolitical Disclosed’ i.e, their ethnicity field remains blank, are not
captured in the data set 'Ethnically Diverse Groups'.
disturbances and security risks. To this end, Key Leadership teams: categorised as the group of direct
we continue to examine ways to improve reports that report to a Management Board member.
our prevention measures and processes Management: Management level employees include all
employees at job grade 34 or above, as well as any
to protect the wellbeing of our employees global graduates. The gender of each employee is
and contractors throughout the Group. typically recorded at the point of hire.
Senior Leadership teams: any employee who is either
a direct report of a Management Board member or a
direct report of a Management Board’s direct report
(i.e., MB-1 or MB-2).
Senior Management: It includes all employees at job
grade 37 or above. The gender of each employee is
typically recorded at the point of hire.
‡
+ Refer to the BAT ‘Reporting Criteria’ for a full
description of key terms and definitions at
bat/reporting.com

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Human Rights

1 Sustainable Tobacco Programme (STP):

Ambition Metrics 2023 Status All of our Leaf suppliers are expected to
participate in the industry’s STP, which
Zero child labour % of farms in our Thrive
1
Supply Chain monitored
100 ü
Achieved
requires an annual self-assessment against
priority themes, including Human Rights.
aiming for zero incidents in our for child labour
tobacco supply chain by 2025 + Read more about our Thrive programme and STP
in the Farmers Livelihoods and Community
% of farms with 0.15 section on page 94
incidents of child Ongoing focus
labour identified vs area On-the-ground assessments: A key
0.38% in 2022 element of STP is to prioritise Leaf suppliers
with a higher risk profile for in-depth
% incidents of child 100 ü
assessments (IDAs), which are on-the-
labour identified and Achieved ground reviews conducted by an
reported as resolved independent third party. By the end of 2023,
by the end of the a total 7 leaf suppliers in 5 countries
growing season underwent IDAs, covering sustainability
topics. Among these, 4 suppliers were
assessed on human rights topics and action
plans were developed as a result. In 2024,
5 IDAs on Human and Labour Rights are
planned in BAT sourcing countries.
‡ We undertake Human Rights Impact
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com Assessments (HRIAs) to provide greater
understanding of human rights topics.
These are carried out in line with the
Frameworks
UNGPs and conducted by independent
GRI GRI 408-1, 413-1, 413-2, 414-1, 414-2
human rights experts. Since its inception
SASB FB-AG-430a.3 in 2019, we have completed 10 HRIAs in
PAI S9, S10, S12, S13, S14 eight of our tobacco sourcing countries,
engaging more than 5,239 rights-holders
in tobacco-growing communities. In 2023,
Our Impact Our Actions in 2023
we focused on follow-up assessments in
Inward impact: The International Labour Training countries where a HRIA had been
2
Organization (ILO) estimates that 60% Our own Leaf Operations and strategic completed to track remediation and
of child labour incidents globally occur in third-party suppliers provide human rights progress. Common themes identified
agriculture. Inherent challenges exist in training for farmers and community included children on farms, rights of
agricultural supply chains, and the tobacco members, with a focus on child labour and workers, health and safety and farmer
supply chain is no exception. Human rights- workers’ rights. In 2023, 418,584 attendees livelihoods. As our portfolio is expanding
related risks include workers’ rights, rural were reported to have received this to include other agricultural commodities,
poverty, and issues associated with the use training. Child labour training, developed we are expanding our understanding of
of child labour on small family farms. in line with the UNGPs, is also available human rights issues in those areas. In
Outward impact: Our business and to everyone with access to our internal 2023, we completed an HRIA in the main
supply chain cover several industries with training platform. rooibos growing region, engaging with
significant human rights considerations, Access to grievance mechanisms 240 rights-holders. An action plan is in
including agriculture, electronics and As part of our Thrive programme, we track progress to advance our efforts aligned
manufacturing. We recognise our duty access to grievance mechanisms across our with our commitments.
to respect the human rights of our 1
Thrive Supply Chain . In 2023, it was reported Reporting and resolving incidents of child
employees and rights-holders across our that 99.9% of farmers and farm labourers 1
labour in our Thrive Supply Chain
value chain, as well as the communities reported having access to at least one type We recognise child labour is a complex issue
affected by our operations. of grievance mechanism. 292 grievances and incidents can be hidden or under-
Managing Impact were raised in 2023, of which 100% were reported. This is why, in addition to due
Our approach to managing human rights reported as resolved. diligence, we work on addressing root
is aligned to the UN Guiding Principles for Tobacco supply chain due diligence causes. We set out detailed guidance
Business and Human Rights. Additionally, Farmer Sustainability Management procedures in our BAT Leaf Operations
we manage our impact through a number (FSM): Our digital platform for FSM allows Standard on Child Labour Prevention and
of policies, including those outlined in our our Field Technicians to collect data during closely monitor outcomes associated with
3
Standards of Business Conduct (SoBC) and farm visits with 95% of our directly this policy, as described in more detail below.
Supplier Code of Conduct (SCoC), as well contracted farmers. Over 30% of the
as due diligence and remediation criteria in FSM relate to human rights. + Read about how we are assessing root causes in
our Farmers Livelihoods and Community section
programmes. Child labour is a complex Thrive: Our Thrive programme collects on page 94
and challenging issue. We have a range of data and indicators across a number of
approaches to support our aim of zero child issues, including human rights. This data
and forced labour in our tobacco supply represents over 94% of our tobacco
chain by 2025. volumes sourced in 2023.
+ Read more about sustainability policies,
procedures and standards on page 72 and 73
Third-party suppliers are expected to use
their own systems to monitor their
contracted farmers in a similar way.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our aim is to have zero child labour in our Product material supply chain
tobacco supply chain by 2025. In 2023, Before we approve any new suppliers for Stakeholder perceptions
359 incidents (2022: 942) of child labour our non-leaf product materials supply chain, and key insights from our DMA
were reported on 0.15% (2022: 0.38%) of they must undergo an independent due
1
farms in our Thrive Supply Chain , with the diligence audit aligned to ILO standards.
majority of incidents relating to harvesting.
100% of incidents were reported as + Details of our independent due diligence audits
are outlined on pages 100 and 101 within our
resolved during the growing season. Supplier Engagement section.
In cases of recurring non-compliance, the
farmer’s contract is not renewed for the By 2025, we aim for all our product
next growing season. 18 contracts were materials and higher-risk indirect suppliers
not renewed in 2023 due to child labour (e.g. machinery and point of sale materials)
incidents identified. to have undergone at least one independent
labour audit within a three-year cycle. By the
We also continued to build on traceability,
end of 2023, this had been achieved for
leading to a better mapping of the number of
58.8% of in-scope suppliers.
farmers supplying tobacco specifically to BAT What do our Stakeholders
(rather than our suppliers' total farmer base). Managing human rights Think about Human Rights?
We analyse root causes to identify an in our direct operations While our stakeholders acknowledge
appropriate approach to remediation and We use Verisk Maplecroft’s human rights our mitigation practices, this topic is
we monitor 100% of our directly indices, including its Modern Slavery Index, seen as an inherent risk and one with
contracted farmers on child labour risk to assess the risk level of BAT's direct potentially significant implications. Key
and prevention. For example, in Brazil, operations. The outcomes are noted by human rights concerns cited include
the school enrolment of farmers' children the Group Corporate Committee and Audit child labour, worker health and safety,
is a prerequisite for entering into a crop Committee, and by the relevant Regional and equality. Hence we must strive for
contract with the BAT entity in Brazil. In Audit & Corporate Social Responsibility continuous improvement and
Pakistan, we have collaborated with an Committees (RACCs), including actions for communicate clearly on these topics.
NGO since 2018 to establish 30 summer any areas for improvement identified. In
2023, 24 countries within BAT's direct How Will the Material Impact of
camps as summer holidays can be a high
operations were identified as higher risk Human Rights Shift Over Time?
risk period for child labour. In 2023,
and underwent additional assessments. Incoming human rights regulation is
1,800 children were involved.
Human rights in our workplace seeking to raise the standards for
Forced labour in our leaf supply chain corporations' actions in this area. Over
Forced labour is also a complex issue that In 2023, we received 216 reports of alleged
time, we must continue to strengthen
is often hidden and, therefore, often SoBC breaches relating to our Respect in
our due diligence processes,
difficult to detect. Our aim is to have zero the Workplace and Human Rights Policy.
remediation procedures and
forced labour incidents in our tobacco Upon investigation, breaches were found
engagement activities to manage our
supply chain by 2025. There were no forced to have occurred in 69 cases and actions
risks effectively and to also ensure
labour-related non-compliances reported were taken, including disciplinary actions
compliance with relevant regulations.
in our Thrive Supply Chain in 2023. that resulted in 33 people leaving BAT.
Health and safety in the In 73 cases, no evidence of wrongdoing
tobacco supply chain was found, and the remaining cases were
still under investigation at the end of 2023.
Our Operational Standard for personal
protective equipment (PPE) in tobacco Lessons Learnt
farming applies to all 91,196 farmers directly Given the human rights risks in agricultural
contracted by the Group's own Leaf supply chains, instances of child and forced
Operations. It outlines the mandatory labour may arise despite the multi-faceted
requirements for PPE for all farmers and approach and due diligence processes we
their workers. We expect third-parties to have in place. A recent examination of the
adopt similar standards. The PPE must be root causes of child and forced labour has
suitable for agrochemical use and helped us identify best practices and
harvesting, Green Tobacco Sickness (GTS) controls. These insights allow us to better Notes:
prevention and for different climates and address root causes, and contribute to the 1. Our ambitions cover all tobacco we purchase for
our products ('tobacco supply chain'), which is used
conditions. The document also specifies the ongoing efforts to reduce child and forced in our combustibles, traditional oral and Tobacco
training and monitoring requirements for labour in our supply chain. Heated Products. Our metrics, however, derive data
PPE for agrochemical use and GTS What's Next? from our annual Thrive assessment, which includes
our directly contracted farmers and those of our
prevention. In 2023, 99.99% of our directly – Undertaking an external review of our third-party suppliers, which represented over 94%
contracted farmers and those supplying our due diligence processes and policies of the tobacco purchased by volume in 2023 ('Thrive
strategic third-party suppliers were reported across our value chain by independent
Supply Chain').
to have sufficient PPE for agrochemical use human rights experts; and
2. International Labour Office and United Nations
Children’s Fund, Child Labour: Global estimates 2020,
and 99.7% for use when harvesting. Training trends and the road forward, ILO and UNICEF, New
sessions on the correct and safe use, – Seeking new opportunities in 2024 to York, 2021. License: CC BY 4.0.
storage and disposal of agrochemicals and advocate for positive, lasting change with a 3. 95% of our contracted farmers are covered by FSM.
GTS prevention reached 384,157 attendants. continued focus on addressing root causes. The remaining 5% are monitored through local
monitoring systems.
‡
Definitions:
Child Labour: The definition of child labour used to
identify child labour incidents is aligned to the
International Labour Organization's definition of child
labour.
‡
+ Refer to the BAT ‘Reporting Criteria’ for a full
description of key terms and definitions at
bat/reporting.com

93
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Farmer Livelihoods and Communities

2 Yield and cost of production

Ambition Metrics 2023 Status We aim to increase the productivity
and profitability of our farmers through a
We are committed to working Crop diversification: 93.3 number of initiatives, such as developing
to enable prosperous livelihoods % of farmers in our On track and deploying new tobacco varieties to
2
for all farmers in our tobacco Thrive Supply Chain increase yield and curing technologies to
1
supply chain growing other crops optimise cost of production.
Developing new tobacco varieties:
Potential % increase in 20 Data in support
Our Global Leaf Agronomy Development
yields from BAT hybrid of ambition
(GLAD) centre in Brazil creates new
tobacco varieties tobacco varieties that improve crop quality
and increase yield by up to 20%. In 2023,
People engaged in 67 Data in support our Group's own Leaf Operations in
women empowerment of ambition 12 countries used new varieties from GLAD
training (thousands) or conducted field trials.
Introducing mechanised solutions and
curing technologies: We are also working
on machines and curing systems that help
farmers to produce more, save labour and
reduce fuel. These include fertilising
machines, automated harvesters and curing
‡ systems. Automated curing barns cut fuel
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com
use by up to 30% and make the curing
process 45% less labour-intensive. We are
testing or using this technology in several
Frameworks countries where we source tobacco, such
GRI GRI 203-1 , GRI 203-2, GRI 413-1 , GRI 413-2 as Brazil, India, Sri Lanka and Vietnam.
SASB This topic is not mapped by a specific SASB standard Enhancing farmer training and capacity
PAI This topic is not mapped by a specific PAI standard building: Farm productivity can also grow
through farmer training and capacity
building. Our expert Field Technicians
Our Impact These programmes help us to collect data,
support our directly contracted farmers
Inward impact: Agricultural supply chains identify issues, and develop action plans to
throughout the growing cycle, helping
face vulnerabilities from climate change; help remediate any negative impacts and
them to develop skills, boost yields and
demand for natural resources; rural improve performance. Our sourcing
build resilience. Our suppliers offer similar
poverty; social inequality; human rights strategy aims to support our directly
support for their contracted farmers.
concerns, and ageing populations. By contracted farmers, and those contracted
Our Thrive assessments reported that
working towards prosperous livelihoods for to our strategic suppliers to increase their
78,238 people participated in farm
all farmers in our supply chain, we can help farming income and help manage their
business management training in 2023.
make farming more attractive to the next environmental and social impacts.
generation, reduce the risks of child and Income diversification
forced labour, and improve standards. + Read more about sustainability policies,
procedures and standards on page 72 and 73
We encourage our farmers to diversify their
crops and income sources, which can
Outward impact: The majority (73%) of our improve food security, increase resilience
tobacco volume is sourced by the Group's Our Actions in 2023
Thrive and reduce dependence on tobacco. Our
own Leaf Operations through direct assessment of 13 Group's own Leaf
contracts with more than 91,000 farmers. In 2023, we continued to improve our
Thrive digital platform, focusing on Operations indicates that around 40% of
The remainder is from approximately total farm income comes from non-tobacco
154,579 farmers who are contracted to increasing data coverage, especially from
third-party suppliers. Our data now sources and other non-agricultural activities.
our third-party Leaf suppliers. By improving
the socioeconomic development and represents more than 94% of our total In 2023, 93.3% of our farmers in the Thrive
2
long-term resilience of our farmers and tobacco leaf purchases, increasing from Supply Chain were reported to be growing
tobacco-growing communities, we also 84% in 2022. other crops. The Group's own Leaf
make our business more resilient. We also continued to build on traceability, Operations and strategic third-party
leading to a better mapping of the number of suppliers support tobacco farmers on
Managing Impact improving crop diversification techniques,
We are committed to working towards farmers supplying tobacco specifically to BAT
(rather than our suppliers' total farmer base). with more than 91,817 people trained in
prosperous livelihoods for all farmers in 2023. We support diversification
1
our tobacco supply chain . Farmer living income analysis 2022 programmes in several tobacco growing
Our Thrive programme uses a framework In 2022, we conducted an independent countries, where we tailor our approach to
covering five 'capitals': financial, natural, review of our living income calculation to local contexts. Some key examples are:
human, physical and social. This helps analyse farm total income and compare
– In Brazil, we support farmers to grow
us to address long-term challenges in with macro-economic indicators, including
grains and pastures after the tobacco
farming communities. the cost of living. The methodology was
harvest, improving soil health and
applied to 13 Group's own Leaf Operations
We also participate in the Sustainable reducing crop losses. The programme,
(excluding the U.S.) and is based on the
Tobacco Programme (STP), a global industry 3 which was established in 1985, covered
Anker Methodology . In 2023, we developed
initiative to promote good practice in tobacco over 123,000 hectares of land and
the BAT Sustainable Living Income
growing. We also conduct in-country generated additional revenue of around
Guidance to help bring a more positive
Human Rights Impact Assessments. £106.45 million for the farmers in
financial return to farmers with a focus
2023. 85% of our 16,200 directly
on action plans; yield; cost of production;
contracted farmers in Brazil participate
training, and income diversification.
in crop diversification activities.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

– In Kenya, we aim to promote farmer Lessons Learnt

food security and reduce dependency Stakeholder perceptions
BAT has worked with farming communities
on tobacco. In 2023, 100% of the farmers for many years and through our Thrive and key insights from our DMA
directly contracted by BAT Kenya assessments, and other programmes, we
participated in diversification activities, have learnt that a long-term, collaborative
such as growing avocados in regions with approach that accounts for local conditions
sufficient rainfall, which can provide a and impacts, can be the most challenging
significant additional future income. but is also the most successful in
– In Sri Lanka, we provide free seeds of improving farmer livelihoods. We are
cereals and vegetables to contracted learning more about the interconnectivity
farmers and community members, of environmental issues and human rights,
enabling them to grow their own food working in areas such as climate change
and earn extra money. The programme and biodiversity, in order to increase
benefited 5,020 people in 2023 and environmental and economic resilience
generated an additional income of for farmers and rural communities.
US$ 490,361. What's Next? What do our Stakeholders
Building community resilience – Continuing to focus on living income Think About Farmer Livelihoods?
Our community programmes cover issues action plans, diversification and ongoing While this topic remains highly
ranging from women’s empowerment and training for directly contracted farmers; important to BAT, the inward and
rural development to providing access to – Addressing the systemic issues that outward impact of this issue is seen
healthcare, clean water and sanitation. impact the communities by taking a to be lower than other topics in relative
For example, our mobile doctor units in holistic approach to advance gender terms. As we still very much rely on
Pakistan, operational since 1985, provided equality through our new Women’s tobacco growing, stakeholders expect
healthcare services to more than Empowerment Framework; our efforts to have a positive impact
100,000 people in remote tobacco-growing on the socio-economic wellbeing of
– Continuing to explore new partnerships
communities to date. In Bangladesh, farmers and affected communities.
to positively impact farmer livelihoods
we installed 119 water filtration plants since
and build community resilience. How Will the Material Impact
2009, providing more than 595,000 litres
of safe drinking water per day to more of Farmer Livelihoods Shift
than 290,000 people. This included 7,000 Over Time?
new beneficiaries in 2023. The transition to New Category
Our Women Empowerment products and the associated decrease
Programme in tobacco demand will undeniably
impact farmers over time. As the
Lack of women’s empowerment in rural
number of contracted farmers
communities is one of the root causes of
decreases, we must continue to
child and forced labour.
strengthen our mitigation measures
As reported in Thrive, women's to minimise negative impacts on the
empowerment training reached more than livelihoods of farmers and affected
67,186 people in 2023. Below are some communities, and allow for a
examples of achievements in 2023. sustainable transition.
– The Women Empowerment Programme
in Pakistan trained 11,387 rural women to
boost their family income. 100% of the
contracted farmers had at least one
female family member trained (wives,
daughters, sisters or mothers), an
increase from 77% in 2022.
– Women's empowerment training
programmes by 17 Thrive suppliers.
In 2023, we reviewed our existing approach
and developed a Women’s Empowerment
Framework, which we will continue to build
and implement. This includes:
– Women’s and girls’ welfare and health;
capacity building;
– Creating opportunities to improve
livelihoods; and
– Addressing cultural barriers and more.

+ Read about our women empowerment programmes

at bat.com/womenempowerment
Notes:
1. This is our ambition, which covers all tobacco we
purchase for our products (‘tobacco supply chain’);
which is used in our combustibles, Traditional Oral
and Tobacco Heated Products.
2. Our metrics derive data from our annual Thrive
assessment, which includes our directly contracted
farmers and those of our third-party suppliers,
which represented over 94% of the tobacco we
purchased by volume in 2023 (‘Thrive Supply Chain’).
3. https://www.living-income.com/measurement-
living-income.

95
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Marketing and Communications

Our ongoing iCommit

Ambition Metrics 2023 Status training programme
iCommit is our training programme for
Full compliance Incidents of non- 0 responsible marketing, covering key
with marketing regulations compliance with Ongoing focus measures for ensuring IMP and UAP
regulations resulting area compliance across all channels.
1
in regulatory warning
In 2023, we incorporated iCommit into the
onboarding process for all new employees
Incidents of non- 3
and the key components into the Standards
compliance with Ongoing focus of Business Conduct (SoBC) mandatory
regulations resulting area
annual sign-off, to provide a refresher for all
1,2
in a fine or penalty employees.
All new employees to our partner
marketing agencies are also asked to
complete the training as part of
onboarding. In 2023, we achieved 100%
iCommit completion rate.

+ For more information about our SoBC sign-off,

please see page 98

Setting standards for retailers

‡ Our UAP Guidelines mandate that each
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com
market has a UAP programme in place.
We conduct engagement activities with
physical and e-commerce third-party retail
Frameworks customers and distributors to uphold
GRI GRI 417-2, GRI 417-3 BAT's responsible marketing standards.
SASB FB-TB-270.a.1, FB-TB-270.a.2 Examples of engagement include providing
PAI This topic is not mapped by a specific PAI indicator training and signage with UAP messaging
to retailers.
Our Impact All our marketing suppliers are held to the Marketing in a digital age
Inward impact: Marketing freedoms with same standards. Their compliance with the Our e-commerce and social media
respect to our New Category products are IMP is explicitly required in our contracts, channels play an important role in digitising
critical for our ability to deliver on Tobacco as well as through the Supplier Code of our business. We seek to approach these
Harm Reduction (THR). Through Conduct (SCoC). channels in a responsible way and in
communicating and raising awareness accordance with our responsible marketing
around reduced-risk products , we
*† + Read more about sustainability policies,
procedures and standards on page 72 and 73
standards and processes, including those
can support the acceleration in reduction relating to UAP. We do not use open social
in smoking rates and, in turn, smoking- Our Actions in 2023 media for our combustibles brands.
related diseases. Reporting and resolving incidents of We only use social media sites where the
Outward impact: We can only achieve non-compliance majority of users are adults. Our social media
sustainable, long-term growth as a business In 2023, we identified 3 incidents of non- accounts, and our paid content on these
through responsible marketing of our compliance with marketing regulations platforms, are only visible to users who have
products. We communicate that tobacco resulting in a fine or penalty and 0 incidents confirmed they are adults.
and nicotine products are for adults only. of non-compliance with regulations Where we use social media partnerships to
We recognise concerns regarding underage resulting in a regulatory warning. Any promote New Category products, we select
consumption, particularly with respect to allegations of non-compliance are third party partners where their audience is
Vapour products. We emphasise the need managed and escalated by the relevant predominately adult.
for clear and meaningful product market. Regional Heads of Legal who Our Digital Marketing Hub continues
information, while also focusing on report any relevant findings to the Regional to provide guidance on how to achieve
preventing underage access. Audit Committee and remediation actions long-term consumer satisfaction and
are implemented, as appropriate. product awareness in a responsible way.
Managing Impact
Our approach to responsible marketing is Evolving our approach In our own e-commerce channels, we
governed by our International Marketing to responsible marketing implemented digital age-verification
Principles (IMP), which apply to all BAT We regularly review our marketing practices solutions. For instance, in the UK, France
entities and marketing suppliers. These to ensure they remain fit for purpose and and Ireland, we use a privacy-focused facial
principles emphasise responsible, accurate, reflect developments in marketing, our age estimation technology to age-verify
and adult-targeted marketing. They apply product portfolio, technology, evolving customers in our own e-commerce
even when they are stricter than local legal regulatory developments and stakeholder channels. We also have pilots in place in
standards. During 2023, the Board expectations. In 2023, we initiated a project some of our physical stores in the UK and
reviewed and approved new Responsible to review and refresh our IMP and Norway using the same technology. In the
Marketing Principles which will be supporting frameworks. U.S., we sponsor TrueAge™, a digital ID
implemented in 2024. A crucial aspect of In 2024, we plan to launch refreshed check solution that enhances the accuracy
responsible marketing is underage access principles and publish the supporting of age-verification when purchasing
prevention (UAP), supported by guidelines frameworks, providing transparency age-restricted products in stores.
and toolkits in all our markets, including on our standards and commitments
third-party distribution channels. to responsible marketing and UAP.

96
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Monitoring social media marketing What's Next?

The Digital Confidence Unit (DCU) is Stakeholder perceptions
– Planning to launch our refreshed
dedicated to monitoring social media Responsible Marketing Principles and and key insights from our DMA
content 24/7 for compliance and Responsible Marketing Code. The rollout
reputational management purposes. will include training for all employees and
To provide central oversight of our social third parties involved in the development,
media posts, the team reviews our social marketing and sales of our products
media posts to check for compliance with (see Our Responsible Marketing Strategy
our IMP and UAP guidelines. The DCU at page 96);
engages with markets, as appropriate, – Planning to strengthen underage access
to ensure swift remediation of any prevention measures, as well as
incidents identified. engaging further with regulators and
Committed to communicating retailers across our markets to support
transparently education, engagement and
We continue to strive for our enforcement to prevent underage
communication and marketing initiatives access to tobacco and nicotine products; What do our Stakeholders
to be responsible across all channels, and Think About Marketing and
paying close attention to how, what – Continuing to invest in innovative third- Communications?
and with whom we communicate. party technologies to mitigate risks Our stakeholders believe that not
This approach also extends to the quality relating to underage access, such as managing marketing and
of our data and associated disclosures in computer vision and artificial intelligence communications responsibly will have
relation to sustainability. Any claims and (AI) to strengthen the age verification a high impact on our social license to
statements in our communications process across our e-commerce channels operate. They also acknowledge that
undergo an established review and sign-off and retail stores. regulatory restrictions can limit our
process that involves representatives from ability to inform adult smokers about
all relevant functions, including the Legal our products.
function. For example, in order to improve
the accuracy of and to help substantiate How Will the Material Impact of
the sustainability claims for our products, Marketing and Communications
we work closely with our suppliers to Shift Over Time?
obtain information regarding the materials Limitations imposed by regulatory
and processes used, and carry out checks restrictions on tobacco and nicotine
to verify the accuracy of the contents. products could present a competitive
Lessons Learnt disadvantage for our business over
time. Moreover, underage access of
In recent years, concerns have been raised
New Category products was raised as
by our stakeholders, including regulators,
an issue of increasing severity, and it is
regarding certain marketing practices of
a topic that stakeholders, regulators
others within the tobacco and nicotine
and the media are watching keenly. We
industry, such as marketing that appears
discuss our actions to tackle this issue
to target the underage and the sale of
in the Our Actions in 2023 and What's
non-compliant products through
Next sections above.
unregulated channels.
We are committed to marketing our
products responsibly. We strive to elevate
industry standards through our
responsible marketing and underage
access prevention practices.
We have sought to proactively engage
with relevant authorities to address
irresponsible marketing practices. While
we impose high standards on our retailers Notes:
through our SCoC, our ability to directly 1. Incidents of non-compliance with regulations that
result in warning or in fine or penalty are dealt with
control their impacts is constrained. at End Market level. To collect the 'Incidents of non-
For retailers, non-compliance cases are compliance with regulations resulting in warning/
handled locally and involve measures such fine or penalty' compliance data, the local teams are
asked to report any instances or potential instances
as training, warnings and penalties. We will of breach, which may include allegations of
continue to work with our customers and inappropriate marketing, or investigations regarding
retailers to raise awareness on the marketing non-compliance that they are aware of in
their market.
importance of underage access prevention. 2. In line with a reclassification of 'ongoing
incidents' (which, from 2023 reporting will be
included as an 'incident' when the final decision
is issued). The 2022 number has been restated
(three previously reported for 2022).
* Based on the weight of evidence and assuming a
complete switch from cigarette smoking. These
products are not risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro
and Vibe), and certain products, including Velo,
Grizzly, Kodiak, and Camel Snus, which are sold in the
U.S., are subject to FDA regulation and no reduced-
risk claims will be made as to these products without
agency clearance.

97
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Ethics and Integrity

Addressing non-compliance
Ambition Metrics 2023 Status with our SoBC
In 2023, 427 of all the 707 SoBC contacts

100%
% of Group employees 100 ü were assessed as alleged SoBC breaches
completed SoBC Achieved and reported to the Audit Committee. In
training and 49% of these alleged breaches, the person
Aiming for full adherence to our
compliance sign-off raising the case chose to remain
Standards of Business Conduct
procedure anonymous. Our SoBC Assurance
(SoBC)
Procedure defines how all reports of
Number of established 123 alleged SoBC breaches should be triaged,
1
SoBC breaches Ongoing focus investigated and remediated fairly and
area objectively. Our Business Integrity Panel
seeks to ensure that the procedure is
Number of disciplinary 79 applied consistently. In 2023, figures for
actions resulting in Ongoing focus detailed investigations conducted into all
people leaving BAT area reported cases were:
– No wrongdoing was found in 135 cases
(2022: 111);
– Investigation ongoing at year-end for
169 cases (2022: 97); and
– 123 cases were established as breaches
‡ and appropriate action taken (2022: 84).
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com In 2023, the established SoBC breaches
resulted in 79 people leaving BAT (2022: 58)
Frameworks and 53 written warnings (2022: 36). If any
GRI GRI 2-26, 205-2, 205-3, 415-1 weakness in internal controls is identified,
appropriate measures are taken to
SASB This topic is not mapped by a specific SASB standard
strengthen them.
PAI 10, 11, 14, S5, S7
Breakdown of reports of alleged
1
Our Impact Our Actions in 2023 SoBC breaches in 2023
Inward impact: Unethical behaviour can Enabling everyone to 'Speak Up'
damage business, reputation and Our SoBC and SCoC make it clear that
consumer trust. It can also distort markets, our employees, business partners and
causing economic, social and political suppliers should Speak Up if they have
impacts, often with more pronounced a concern about actual or suspected
impacts on developing countries. wrongdoing. We do not tolerate
Outward impact: As a global business, harassment, victimisation or reprisals of
promoting ethical behaviour and monitoring any kind against anyone raising a concern,
for compliance is essential. This is why we such conduct is itself a breach of our SoBC.
continue to review and improve our Anyone working for or with the Group,
compliance programmes across the Group. including employees; contractors;
Managing Impact contingent workers; business partners;
Our approach to ethics and integrity is customers; suppliers, and their workers
outlined in our Standards of Business can Speak Up. They can raise concerns
anonymously, if they wish, through our Policy areas Breakdown (%)
Conduct (SoBC). Moreover, our Delivery
with Integrity programme aims to increase confidential, independently-managed Social and Environment 51
awareness on business ethics and drive a 'Speak Up' online and telephone channels, Corporate Assets 25
consistent approach to the application of available 24 hours a day in local languages. and Financial Integrity
our SoBC across the Group. Our Supplier They can also speak to Human Resources,
Personal and Business 16
Code of Conduct (SCoC) defines the their line manager or a Designated Officer. Integrity
minimum standards expected of our In 2023, we updated our SoBC Assurance
Procedure so that all cases are triaged Others not relating to a 6
suppliers in a number of areas, including specific policy area
compliance, human rights and business and assigned in a more standardised and
systematic manner. National and International 2
integrity. The Anti-Illicit Trade (AIT) chapter Trade
is an integral part of our SoBC and sets out Not all contacts involve breaches. Some
the controls all Group companies must relate to questions regarding the SoBC. For External stakeholders 1
have in place to prevent and deter illicit established breaches, we take appropriate Notes:
trade. Our Supply Chain Compliance (SCC) disciplinary actions, ranging from formal 1. Consistent with previous years' reporting, cases are not
Procedures provide guidance for our written warnings to termination of included in the above if they were not resolved at year-end.
customers to comply with our AIT chapter employment. Where appropriate, we will This data excludes Russia and Belarus. Refer to our ESG
Performance Data Book 'Reporting Criteria' for further
as well. These requirements are report matters to the relevant authorities. information.
incorporated into all our contracts with
both suppliers and customers.

+ Read more about sustainability policies,

procedures and standards on page 72 and 73

98
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Preventing non-compliance Amongst other supply chain controls, we

Our Sanctions Compliance Procedure and roll out a dedicated eLearning programme Stakeholder perceptions
Third-Party Anti-Financial Crime Procedure to all relevant employees every year. The and key insights from our DMA
create a comprehensive framework to completion rate for the 2023 SCC Procedures
promote compliance with a range of legal eLearning was above 99% across the Group.
and regulatory requirements applicable to Regulation and engagement
the Group. In 2023, our Global Sanctions 'Lobbying and Engagement' and 'Political
e-learning programme was completed by Contributions' are chapters of our SoBC,
approximately 22,000 employees. It is which is implemented by all Group companies
designed to support employees to build and applicable to all our employees.
confidence in identifying key sanctions
compliance risks. In addition, we have These policies require all our engagement
updated our employee onboarding protocol activities with external stakeholders to be
by including a requirement to complete an conducted with transparency, openness
e-Induction on our SoBC within four weeks and integrity.
of commencing employment. For global regulatory priorities, the views
we advocate are the same as those we What do our Stakeholders
We have also updated our retailers’
publish on our website, and we have long Think About Ethics and Integrity?
onboarding protocol and framework to
enable the detection of retailers’ potential supported the OECD’s Principles for Stakeholders considered that this
exposure to sanctions and risks. With this Transparency and Integrity in Lobbying. presented important risks for our
new protocol, customers (e.g. retailers and We also respect the call for transparent business, as well as opportunities.
distributors) are screened before onboarding and accountable interaction between They acknowledged and applauded the
to allow for better risk management. governments and relevant stakeholders, mitigation measures that we have put
including the tobacco industry, established in place, but also noted the need to
As set out in our M&A Transactions remain vigilant and refresh our
Compliance Procedure, our due diligence in Article 5.3 of the World Health
Organization’s Framework Convention on mitigation measures as appropriate.
procedures for mergers, acquisitions and
corporate ventures include human rights and Tobacco Control. We are open about what How Will the Material Impact
modern slavery checks. If risks are identified, we think, and always try to offer of Ethics and Integrity Shift
mitigation steps are taken as appropriate. constructive solutions that will best meet Over Time?
the objectives of regulation, while The current inward impact of this topic
Further, we invested in technology-driven minimising any negative unintended
solutions to refine our compliance on our business is significant. While
consequences. Regulatory engagement Ethics and Integrity remains crucial to
platforms. For example, we enhanced by our businesses is monitored throughout
our Delivery with Integrity programme our license to operate and corporate
the year by our Regional Audit and CSR culture, its inward impact may reduce
by implementing continuous real-time Committees.
screening for all business partners. over time as we continue to improve
Lessons Learnt upon and leverage due diligence
Preventing and tackling illicit processes we have put in place.
In recent years, the evolving stakeholder
trade in tobacco products expectations and regulations have made
Focusing and maintaining controls to it imperative for businesses to embrace
prevent diversion of our products is a key heightened transparency across all facets
component in our fight against illicit trade. of their operations. As a company
We have a dedicated Forensic and navigating diverse jurisdictions, the call for
Compliance Team (FaCT) that analyse transparency and integrity becomes even
seized products, determine counterfeits more important. To remain a trusted
and identify illicit machinery used in their organisation, we recognise the need
production. In addition, they maintain to champion transparency.
supply chain controls through a seizure What's Next?
management process tailored to satisfy – Continuing to refine our Speak Up
our contractual and regulatory obligations. system to increase employees' trust in
The team is also instrumental in the system; and
conducting Empty Pack Survey (EPS), – Innovating on our compliance monitoring
a global anti-illicit trade research programme through technology that enables us to
that provides insight into illicit trade analyse data from our systems and
incidences. Last year, more than generate insights and foresights.
40 markets participated in approximately
80 surveys. + Find details of our other governance priorities,
including data privacy and cyber security on
We continue to strengthen our AIT pages ## and ##
approach by reviewing our existing
obligations followed by regular updates
of our Policies and Procedures. This year,
we launched the SCC Procedures App,
which seeks to ensure that a consistent
approach is taken across all BAT operating
companies. We also streamlined the AIT
self-risk assessment process to allow for
evaluation of our supply chain risks globally
as well as in individual markets.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

Supplier Engagement

Additionally, we invited more than

Targets Metrics 2023 Status 600 suppliers representing 92% of our
purchased goods and services emissions,

100%
% of product materials 58.8 to respond to the CDP Supply Chain
and high-risk indirect On track programme. The data we collect from our
suppliers to have suppliers through the programme enables
of product materials and high-risk
undergone at least one us to better understand our wider
indirect suppliers to have undergone
independent labour environmental impact and set targets.
at least one independent labour 1
audit within a three- We recorded a 92% response rate, which
audit within a three-year cycle
year cycle is above the average industry response rate
by 2025
of 59%. This level of engagement is almost
a threefold increase in comparison to 2022

20%
% of suppliers of 15 (over 200 suppliers) and builds upon our
purchased goods and On track recognition as a Supply Chain Engagement
services by spend to Leader by CDP in 2022. Throughout the
of suppliers of purchased goods
set Science-Based disclosure cycle, we invited our suppliers
and services by spend, to set
Targets (SBTs) by to multiple capability building webinars.
Science-Based Targets (SBTs)
2025
by 2025
+ Details of our carbon reduction programme can
be found in our Low Carbon Transition Plan

Human rights programme

and capability
‡ In 2023, we developed a tracking and
+ Find out more:
Refer to the BAT 'Reporting Criteria' for a full description of key terms and definitions at bat/reporting.com monitoring tool, which allows BAT’s
procurement teams to have greater
Frameworks visibility of our Social Due Diligence
programme. We also provided training
GRI GRI 308-1, 414-1, 414-2
to our procurement teams on the tool,
SASB FB-AG-430a.2 raising social awareness and building
PAI S4 capability in our value chain.
Sharing our learnings
Our Impact Our Actions in 2023 beyond our supply chain
Inward impact: We have a relationship Engaging with direct and indirect As a member of The Sustainable
with 1,300 direct and 32,500 indirect suppliers on climate change Procurement Pledge, we joined other
product material suppliers. Our suppliers’ We continue to make progress on our professionals, academics and practitioners
environmental and social performance is SBTi supplier engagement goal, which to share and learn best practice in
critical to meeting our own social and is for 20% of suppliers of purchased goods responsible sourcing practices; and in
environmental targets. Proactively and services by spend, to set Science- partnership with Gartner (one of the
engaging with our suppliers and working Based Targets (SBTs) by 2025. This year, leading sustainability consultancies),
with them to build capability contributes we are more than halfway to achieving this we took part in their Supply Chain podcast
to the Group’s overall success. goal, with 15% of such suppliers having series, sharing our insights on how to drive
Outward impact: We strive to be a positive SBTs in place. organisational success.
influence on how our suppliers approach We continued to invest in our supplier Social due diligence in our
sustainability, including how they manage enablement programme, which helps our product material supply chain
environmental, human rights and health suppliers to improve their environmental Adherence to the SCoC is mandatory in all
and safety risks. As valued business partners, performance and data quality. Examples sourcing processes and sets the guidelines
it is crucial to listen to and engage with our of our achievements include: and standards for all our suppliers to
suppliers to build trust and drive progress. conduct their operations in a responsible
– Working with our top 60 CO2e emitting
Managing our Impact suppliers to share best practices and and ethical manner.
Our approach to Supplier Engagement is insights on reducing their carbon Any new product materials supply chain
set out in our Supplier Code of Conduct footprint, based on our own carbon suppliers must undergo an independent
(SCoC). It defines the minimum standards reduction programme. due diligence audit aligned to ILO
we expect from our suppliers in supplying – Providing one-to-one training on standards and achieve a score of 70%
goods or services to BAT or its Group renewable energy in our New Category to qualify.
companies and complements our supply chain, which has led to an increase Existing suppliers are assessed using a
Standards of Business Conduct (SoBC). in our suppliers' procuring renewable risk-based approach, depending on their
To meet our sustainability goals, we energy, backed by iREC certificates. category and risk level. All New Category and
particularly focus our supplier high-risk direct material suppliers undergo
engagements on human rights and climate – Holding sustainability-focused supplier
events in Bangladesh and Pakistan to on-site audits by Intertek. The assessment
change, and we have set our Supplier criteria include labour, wages and hours,
Engagement targets in these areas. help our suppliers build the capabilities
to manage local challenges in these health and safety, environment and
management systems. All other suppliers
+ Read more about sustainability policies,
procedures and standards on pages 72 and 73
key geographies.
undertake self-assessments by EcoVadis
Our efforts have resulted in suppliers to evaluate their performance in areas such
implementing their own low carbon as environment, labour and human rights,
initiatives such as lower carbon generation, and ethics. All New Category Tier 1
setting emission baselines, and reporting suppliers are audited on a annual basis.
and tracking emissions – many of them
did it for the first time in 2023.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

In 2023, 623 social assessments of suppliers Lessons Learnt

in 55 countries were conducted through Stakeholder perceptions
Navigating the complexities of our supply
our external audit partners, Intertek chain and adapting to local contexts are and key insights from our DMA
and EcoVadis: key to successful collaborations with our
– Tier 1 product materials suppliers: 478; global supplier base. Over the years, we
have refined our engagement with
– Lower-tier product materials suppliers:
suppliers, fostering a more collaborative
50; and
and continuous approach, complemented
– Indirect suppliers: 95. by targeted training initiatives.
Out of the 623 assessments, 167 were We understand the need to adapt our
re-audits from previous years and 186 were engagement approach to suppliers' needs and
new audits. We require further cycles of to leverage our interactions to support their
audits based on our suppliers' previous progress in reducing their carbon footprint.
audit score.
What's Next?
The number of second cycle of audits was – Expanding our Supplier Enablement
144 and 34% of those Programme to cover both global and local What do our Stakeholders
re-audited improved their audit strategic suppliers and drive capability Think About Supplier
performance from the first audit. within our non-leaf supply chain; and Engagement?
Of the issues identified, 83% were – Continuing to engage with our non-leaf While farmer relationships are well
classified as 'moderate' and 17% as 'major'. suppliers to improve the visibility and understood, stakeholders noted that
'Major' non-compliances included: traceability of our supply chain and the awareness of our impact on other
– Labour Standards/Human Rights 75% prepare for upcoming legislation on suppliers is less mature. As we further
– Environmental issues 25% supply chain transparency. transition to New Categories, more
attention is needed on this topic.
51% of corrective actions identified were Engaging with this supplier group will
completed and verified by year-end 2023, be critical to our work on human rights
with the remainder on track to close by and climate change, in particular.
the end of Q2 2024.
How Will the Material Impact
We have joined the Responsible Business
of Supplier Engagement Shift
Alliance (RBA) as a Supporter Member and
the Supplier Ethical Data Exchange (Sedex) Over Time?
to expand the coverage of audits globally The impacts of this topic may become
and to improve our own social due more significant over time as our
diligence and those of our suppliers, business transforms. Further, the level
particularly in the electronics supply chain. of maturity of our New Categories
supply chain means that new risks may
Responsible mineral sourcing emerge, for example, in its resiliency. It
Our electronics supply chain for our New is crucial that we continue our work on
Category products can have many layers supplier engagement to better manage
of suppliers between the raw materials and mitigate those risks.
and the final product. This complexity can
increase risks for both the security of the
supply chain and human rights. Therefore,
we focus on mapping our supply chain and
continue to drive our key suppliers to
manage sustainability issues in their supply
chains by holding them accountable for
their progress in this area.
Our commitment to responsible mineral
sourcing is outlined in our SCoC. This
includes, but is not limited to, working with
our suppliers to:
– Exercise appropriate due diligence; and
– Identify the origin of ‘conflict minerals’ in
our New Category products, with reference
to the OECD’s internationally recognised
guidelines for responsible mineral supply
chains. We report on our findings
annually in our Conflict Minerals Report. Note:
In 2022, we obtained membership to the 1. Excluding Russia and Belarus. More details about
changes to the Group related to Russia and Belarus
Responsible Minerals Initiative (‘RMI’ – are available on page 280 of this document.
formerly the Conflict-Free Sourcing ‡
Definitions:
Initiative). As members of the RMI, we Tier 1 suppliers: Direct suppliers of final products
participate in cross-industry efforts to or materials.
support responsible minerals sourcing, Lower-tier suppliers: Suppliers, with whom we have
and by utilising the resources that are a commercial relationship, who supply materials or
products to our Tier 1 Suppliers.
available to RMI members, we seek to
further enhance our minerals supply chain ‡

due diligence process. + Refer to the BAT ‘Reporting Criteria’ for a full
description of key terms and definitions at
bat/reporting.com

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

TCFD Reporting

A summary of our response to the Task Force on Climate-related Financial Disclosures

(TCFD) recommendations is set out below. Under the FCA’s Listing Rules, our reporting is
consistent with the four TCFD recommendations and 11 recommended disclosures set out
in Figure 4 of Section C of the TCFD report “Recommendations of the Task Force on Climate-
related Financial Disclosures”, including the guidance set out within the 2021 TCFD annex.
We will continue to develop our climate-related disclosures in the future. For more information see page 116.

TCFD at a Glance: Summary of our Response

Governance: Disclose the organisation's governance around climate-related issues and opportunities

a) Describe the board’s oversight of climate- Our Board has oversight of our climate-related risks and opportunities. The Board + Read more on
pages 70 and 103
related risks and opportunities. approves the Group’s environmental targets. It reviews the Group's environment strategy,
targets and performance twice a year and the Group risk register and ESG risk register,
both of which include climate-related risks, annually. In 2023, the Board approved a
revised version of the Environment Policy. The Audit Committee reviews the Group risk
register and ESG risk register twice a year and oversees the Group's approach to TCFD
reporting.

b) Describe management’s role in assessing Management is responsible for identifying and assessing risks including climate-related + Read more on
pages 70 and 103
and managing climate-related risks and risks. Mitigation plans are required to be in place to manage the risks identified and
opportunities. progress against those plans is monitored.

Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy, and financial
planning where such information is material

a) Describe the climate-related risks and We have identified six climate-related risks and two opportunities. For each, the level of + Read more on
pages 106 to 112
opportunities the organisation has identified likelihood and impact has been analysed up to 2050 with a particular focus on 2030 and
over the short, medium, and long-term. 2050 to match the time frames of our key ESG commitments.

b) Describe the impact of climate-related risks We have assessed the impact of these risks and opportunities on our strategy and + Read more on
pages 106 to 112
and opportunities on the organisation’s financial planning. The results show that, while there are financial risks that would need
businesses, strategy, and financial planning. to be managed, these are not substantive enough to require a material change to our
business model.

c) Describe the resilience of the organisation’s We have conducted an assessment of the resilience of our strategy, taking into + Read more on
pages 106 to 112
strategy, taking into consideration different consideration three climate-related scenarios: Sustainable Transition (based on a global
climate-related scenarios, including a 2°C or 1.5°C temperature rise), Delayed Transition (based on a global 2°C temperature rise) and
lower scenario. Climate Change Inaction (based on a global 3°C temperature rise).

Risk management: Disclose how the organisation identifies, assesses, and manages climate-related risks

a) Describe the organisation’s processes Directly-reporting business units (DRBUs) and functions identify risks and opportunities, + Read more on
pages 111 and 112
for identifying and assessing climate- including climate-related physical risks, which are captured on risk registers and assessed
related risks. against the materiality thresholds for impact (high/medium/low) and likelihood (probable/
possible/unlikely), defined by our Risk Management Framework. Group KPIs are set to
identify climate-related physical and transition risks (where relevant).

b) Describe the organisation’s processes for Mitigation plans are required to be in place to manage the risks, including + Read more on
pages 111 and 112
managing climate-related risks. climate-related risks identified, and progress against those plans is monitored. Decisions
on how to manage the risks are based on a variety of considerations, including risk score,
our ability to influence or control the risk and cost and effectiveness of mitigation.

c) Describe how processes for identifying, Our processes for identifying, assessing, and managing risks, including climate-related risks, + Read more on
pages 111 and 112
assessing, and managing climate-related are integrated across the Group as part of our Risk Management Framework. This includes
risks are integrated into the organisation’s regular reviews of the Group risk register and ESG risk register by our Group Risk
overall risk management. Management Committee, chaired by the Finance Director. The Group risk register and ESG
risk register are also reviewed annually by the Board and biannually by the Audit Committee.

Metrics and targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such
information is material

a) Disclose the metrics used by the We have clearly defined metrics for each of our sustainability priority areas, including + Read more on
pages 113 and 114
organisation to assess climate-related risks climate change, against which we report on our performance and progress each year.
and opportunities in line with its strategy
and risk management process.
b) Disclose Scope 1, Scope 2, and, if appropriate, We disclose Scope 1, Scope 2 and Scope 3 GHG emissions and the related risks + Read more on
pages 113 and 114
Scope 3 greenhouse gas (GHG) emissions, in our reporting.
and the related risks.

c) Describe the targets used by the Our targets to manage climate-related risks and opportunities include targets of 50% + Read more on
pages 113 and 114
organisation to manage climate-related reduction of Scope 1 and 2 GHG emissions, and 50% reduction of Scope 3 GHG emissions
1
risks and opportunities and performance by 2030 (vs a 2020 baseline) and to reach Net Zero GHG emissions across our value chain
against targets. by 2050 at the latest. These are supported by a range of other environmental targets against
which we report our performance and progress each year.

Note:
1. Compared to a 2020 baseline. Comprises 50% reduction in Scope 1 and 2 and 50% reduction in Scope 3 GHG emissions, where Scope 3 emissions target includes purchased goods and
services, upstream transportation and distribution, use of sold products and end-of-life treatment of sold products, which collectively comprised >90% of Scope 3 emissions in 2020.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Governance The Chair of the Audit Committee provides Each reporting unit reports on a monthly
Board oversight a full briefing to the Board following each basis. Monitoring and reporting of
The Board is collectively responsible for Audit Committee meeting, including consolidated Group performance and
the sustainable, long-term success of the decisions taken and key topics discussed metrics is completed quarterly by the
Company's and the Group’s strategic by the Audit Committee. Group Operations Sustainability team.
direction, purpose, values and Management’s role Each directly-reporting business unit of
governance. This includes responsibility The assessment and management of the Group (DRBU) has an Environment,
for the Group's strategy and ensuring that climate-related risks is embedded across Health & Safety (EHS) Steering
resources are in place for the Group to relevant business areas at Group, regional Committee, with overall responsibility
meet its business objectives within a and local levels, with appropriate to deliver environmental targets at site
framework of internal controls. management oversight at each level, level held by the General Manager or site
as shown on the chart on page 70. manager. EHS is also a standing agenda
Our Board has strategic oversight of our
item for management meetings and
sustainability agenda and takes climate- Our approach provides a flexible channel governance committees at area,
related considerations into account where for the structured flow of information, regional and global levels.
applicable when making strategic monitoring and oversight of climate-related
decisions, including in relation to risks and environmental matters at the level These local management meetings and
budgeting, risk management and and format best suited to the context. committees report into the Operations
overseeing capital expenditure. The Board Sustainability Forum, chaired by the
Our Management Board, chaired by Director, Operations. This acts as a conduit
has approved all Group environmental
our Chief Executive, is responsible for to track delivery of environmental targets
targets (including for GHG emissions) and
overseeing the implementation of Group and gain visibility of new and emerging
receives an update on performance twice
strategy and policies, and monitoring risks posed by climate change.
a year from the Director, Operations.
Group operating performance, including
The Board reviews the Group risk register in relation to sustainability and climate. The Operations Sustainability Forum oversees
and ESG risk register, both of which The Chief Executive and other business plans to mitigate risks identified,
incorporate climate-related risks, on an Management Board members then report reviews performance and tracks progress
annual basis. In addition, the Board reviews on performance to the Board. of our regions and business units in delivering
the Group budget which takes into account the Group’s environmental targets.
Management Board members are regularly
capital allocation to deliver the Group’s
updated on material risks and development
sustainability agenda and associated Summary of Climate-related
of strategic plans, including those relating
targets.
to climate change, along with associated Matters Reviewed by the Board
+ Read more about our Climate Change and risk mitigation plans, by risk owners, risk in 2023:
Circular Economy risk in the Group Principal
Risks on page 121 and in the Group Risk Factors
managers and their respective teams. This – Group risk register and ESG risk
on page 354 includes regular monitoring by the Group register (annually)
Risk Management Committee, chaired by
In 2023, the Board approved a revised – Environmental performance
the Finance Director. The Chief Strategy
version of the Group's Environment Policy, (twice a year)
& Growth Officer has overall responsibility
effective from July 2023, and the for the delivery of the Group Sustainability – Approval of the ARA and 20-F
introduction of updated versions of our Agenda, supported by the Sustainability in February/March 2023
SoBC and SCoC (from 1 January 2024), team, including our Chief Sustainability – In-depth review of sustainability
both of which include environmental Officer, Head of Corporate Sustainability reporting regulations in April 2023
management requirements. In 2023, the and sustainability subject-matter experts
– Approval of the revised Group
Board also received an in-depth briefing on across the Group.
Environment Policy effective from
developments in sustainability regulations, The Director, Operations has overall July 2023
including TCFD requirements. responsibility for delivery of the Group’s
– Review of business stakeholder
The Board has delegated certain climate strategy and environmental
engagement in October 2023, which
responsibilities to the Audit Committee, targets, supported by the Group Head
included an update on the refreshed
which is responsible for reviewing the of Operations Development and
Double Materiality Assessment
effectiveness of the Group’s risk Sustainability, the Operations Sustainability
management and internal controls systems, team, the Group Sustainability team and – 2024 Budget Review (including
including those relating to climate change. regional sustainability managers. Operations sustainability budget)
in December 2023
The Audit Committee reviews the Group
risk register and the ESG risk register twice – Approval of an updated version of
a year and regularly reviews the Group’s the SoBC and SCoC, effective from
progress against sustainability targets, 1 January 2024
including emission targets that address
climate-related issues (see targets on page
113). The Audit Committee also receives
reports from the Group’s Regional Audit
Committees and Corporate Audit
Committee, which monitor the
effectiveness of business risk management
and internal controls across regions and
central functions. In 2023, the Audit
Committee continued to oversee
developments in our approach
to reporting in alignment with the TCFD
framework, including the introduction of
additional climate scenario analysis in our
risk assessments.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

TCFD Reporting
Continued

Strategy Financial Planning in Decarbonisation The climate scenario analysis undertaken has
Our purpose to build A Better Tomorrow™ The risks and opportunities posed by been performed against three time horizons:
and our Group strategy are set out on climate change continue to be deeply (i) short-term (2024-2030): this time period
page 2. Our Sustainability Priorities, with embedded within our financial planning and is linked to our 2030 ESG commitments,
climate change as a key priority under the form a critical part of our Net Zero GHG (ii) medium-term (2031-2040) and (iii) long-
'Delivering Net Zero GHG Emissions Across emissions strategy. We have incorporated term (2041-2050), which aligns to our LCTP
Our Value Chain' pillar, are set out on page 66. Internal Carbon Pricing (ICP) in our financial across our value chain.
We rely heavily on natural resources to run planning and rolled out a Balanced Our material climate related risks and
our business and our ability to secure these Scorecard for capital investment activities opportunities are detailed on pages
resources is directly linked to the effects of across our Global Operations, whereby the 108 to 110.
climate change. Not only does the climate environmental and social impacts of
Revenue
crisis impact society and the environment, potential projects are considered against
our commitments and targets. Through Physical risks of climate change have
it also threatens our business growth. It is the potential to adversely impact revenue
therefore imperative that we develop this approach, we are able to enhance our
decision-making and governance processes through supply chain constraints. Our
strong mitigation and adaptation business planning helps us to mitigate
strategies and work together with the to consider these impacts, particularly
where policy and regulation are yet to exist these risks through detailed continuity
private and public sector to take action. plans such as sufficient inventory durations
and, therefore, the effectiveness of
In this context, BAT has a target to reduce conventional financial appraisal tools such (with a trade-off on working capital and
our value chain GHG emissions by 50% by as NPV and payback analysis is reduced. funding costs) to mitigate short-term
2030 and, by 2050, to achieve Net Zero supply risks and understanding the longer
GHG emissions across our value chain. Financial Planning Elements That terms risks on our supply chain.
In 2022, we published our Low Carbon Have Been Influenced by Risks In addition, sustainability is an increasing
Transition Plan (LCTP), which outlines how and Opportunities factor in consumer purchasing decisions. That
we intend to align our business model with The Group’s climate change-related risks is why we continuously seek insights that feed
a world in which the rise in global average and opportunities are considered in our into future product innovations and initiatives.
temperature should be limited to no more strategic and financial planning, our capital
than 1.5°C above pre-industrial levels and Our Take-Back schemes for responsible
allocation decisions and our operational
contribute to an economy that works for disposal are an example of an initiative we
management. The impacts of risks and
people and the planet by addressing are implementing to improve our product
opportunities arising from climate change
climate-related risks and opportunities. circularity and reduce associated end-of-life
help inform our strategies and financial
carbon emissions.
planning to enhance the overall resilience
+ Read more about our approach to Financial
of our business.
Planning in Decarbonisation in 2022 Low-Carbon
Transition Plan at bat.com/LCTP
+ Read more about our approach to end-of-life
processes and product circularity on page 82

Our climate strategy

To deliver on our climate goals, we have an
integrated climate strategy covering both
our own business operations and our wider
value chain. Key attributes of our climate
strategy include:
– Reducing the environmental impact of
our direct operations (see page 80);
– Building a climate-resilient supply chain
in partnership with our key direct and
indirect suppliers (see page 100) and
performing climate scenario analysis to
understand the resilience of our business
against a set of identified climate-related
risks and opportunities;
– Collaborating with our directly
contracted tobacco farmers to introduce
sustainable agricultural practices
(see page 81);
– Promoting a circular economy model
to reduce downstream emissions
(see page 82); and
– Protecting our ecosystems, to enhance
the resilience of our internal supply chain
and wider value chain (see page 84).

+ Read more about our approach to managing our

environmental impacts within our sustainability
material topics on page 80

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Direct operating costs Access to capital

Ways in which climate change Climate risks and opportunities may impact
considerations can impact cost of sales BAT’s financing in multiple ways, for
and, as such, are considered as part of our example (1) climate change may impact
financial planning include: the business financially through potentially
– Tobacco leaf cost increases due to higher costs and/or our consumers' ability
potential supply constraints caused to buy our products which, if they
by chronic or extreme weather events; materialised, could impact our profitability
and credit ratings; and (2) perception of our
– Raw materials and innovation cost investors towards our ESG progress which
increases due to raw material shortages could reduce their willingness to invest in
and enhancements to our product BAT or restrict our access to capital, should
designs to reduce waste and increase BAT fail to achieve, or be perceived as
recyclability; and having failed to achieve, sufficient progress.
– The cost of emerging regulation, as well By having clear visibility of climate-related
as taxes on carbon emissions and risks and opportunities and mitigating
potential increases to the cost of energy these where possible, the Group expects
impacting our direct operations and to have continued access to capital and to
wider value chain as we transition to be able to undertake acquisitions or
a low-carbon model. divestments, as needed.
Capital allocation The process of managing these risks is
As part of our financial planning, we require embedded in our financing principles which
that significant capital investments must are reported on to the Board. Operationally,
include carbon emissions impact funding is also discussed at the Corporate
calculations which are priced into cash flow Finance Committee (chaired by our
projections using Internal Carbon Pricing Finance Director).
(ICP), as well as marginal abatement cost,
and most recently, balanced scorecard We also have a Treasury Risk Committee
appraisal tools. that meets monthly and monitors climate-
related risks in the context of the Group's
The level of ICP is reviewed annually, financing needs. In terms of metrics, we
following benchmarking of external metrics have an established medium-term target
and was set at £67 tCO2e in 2023 and is credit rating which seeks to achieve a
forecasted to rise incrementally year-on- balance between balance sheet
year to £120 tCO2e by 2030. requirements and access to capital as well
Capital investment as various other metrics. In addition, the
We fund a dedicated capital expenditure Corporate Treasury team is embedded in
budget that is used to progress the delivery key discussions on sustainability, as well
of our ESG commitments. In 2023, this as dialogues through debt investor
amounted to £34 million with investments engagement to understand the dynamics
in energy efficiency and renewable energy of ESG impact on funding and capital
generation, water recycling and efficiency markets. The Corporate Treasury team
projects, waste reduction, and product takes appropriate actions to mitigate any
innovation-led specification improvements potential impact on our access to capital
to drive recyclability. due to ESG factors.
Assets and liabilities
The impact of climate change is considered
in the estimates of future cash flows used
in impairment assessments, as detailed in
note 12 of the financial statements.

+ Read more about the impact of climate change

as part of our impairment disclosure on page 239

105
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

TCFD Reporting
Continued

Climate Scenario Analysis The TCFD working group, with input from In light of current progress against the
Identification BAT’s subject matter specialists and using pledges laid out within the Paris Agreement,
The selection of the risks and opportunities the methodology defined in the Group Risk and to bolster our assessment of business
in our TCFD report was thoroughly Management Framework, reviewed the resilience, this year we determined that it
reviewed in 2023 as a result of our Double identified TCFD risks and opportunities. was appropriate to add a third climate
Materiality Assessment process and ESG This review was presented to the scenario to our analysis.
risk register, which captures risk Sustainability Leadership Team, who The Delayed Transition scenario is
information gathered from the validated the selected six risks and two described below and its impact on our
identification and assessment of the Group opportunities with the most material climate-related risks is set out on pages
ESG-related risks. financial impact to investigate in more 107-110. A Delayed Transition scenario
detail using scenario analysis. analysis was not modelled for our climate-
+ See more details on our DMA on page 74
and our ESG Risk Management process on Energy sourcing and energy efficiency related opportunities as it was considered
page 112 were presented as separate opportunities to be materially similar to the Sustainable
in 2022 but have been consolidated into a Transition scenario in this regard.
single opportunity this year given that they The identification of risks and opportunities
are clearly interrelated. Similarly, cost of is reviewed annually to help ensure that it
capital and cost of insurance have been remains appropriate in the context of a
consolidated into a single transition risk dynamic business and physical environment,
compared to 2022. and to take account of improved data or
modelling which may become available.

Time Horizons
2030 2050
We have identified and prioritised six climate-related risks This time frame reflects our targets This time frame aligns to our Low
and two opportunities. For each, the level of likelihood and in relation to 50% reduction in Scope Carbon Transition Plan across our
impact has been analysed across three time frames being 1 and 2 and 50% reduction in Scope 3 value chain and our commitment to
short-term up to 2030, medium-term up to 2040 and emissions by 2030. The analysis links Net Zero GHG emissions, which
long-term up to 2050. The 2030 and 2050 time frames our most recent business plans, incorporates an awareness of the
have been selected as they align to our external targets including glide-paths across our highly uncertain potential risks and
(further details of which are shown in this table). 2040 operations to mitigate risks and opportunities.
was selected for our medium-term time horizon, given maximise opportunities that may
that it represents a suitable mid-point between the other arise to ensure delivery of our
two periods. business objectives and external
commitments.

Three Climate Scenarios

Sustainable Transition Delayed Transition Climate Inaction
Description In containing global warming to Significant action by economic Countries are unable to meet
1.5°C, a wide-ranging transition actors is delayed to 2030, after pledges laid out within the Paris
of our global economy would which a rapid transition of our global Agreement and global warming
be required, encompassing economy would be required, reaches 3-4°C. Transition risks are
policy and regulation, encompassing policy and regulation, considered to be much lower, whilst
economic and societal shifts, economic and societal shifts, and the physical risks would be much higher
and the development and development and deployment of new driven by significant impact to
deployment of new infrastructure and technologies. In biodiversity as a result of acute and
infrastructure and this scenario, transition risks are chronic weather events.
technologies. In this scenario, more significant although physical
transition risks are more risks are considered higher than
significant than the severity of under the Sustainable Transition
physical risks that may arise. scenario.
Estimated 2100 warming 1.5°C 2°C 3-4°C

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Material Climate-related Risks The two physical risks are more significant
and Opportunities Identified in the 3-4°C scenario and relate to the
The six climate-related risks referenced impact of extreme weather events and
above can be divided into four transition changes to precipitation patterns principally
risks and two physical risks. affecting our tobacco supply chain.
Transition risks are most notable in relation The climate-related opportunities are
to carbon taxes, new regulation on modest and relate to the potential launch
products, higher energy costs and of products with positive ESG-related
increased cost of capital and insurance. features that consumers value and
optimisation of our energy strategy.

Climate Change-related Risks and Opportunities Summary Table

Estimated financial impact on Likelihood
Risk/Opportunity profit in a year 1.5°C 2°C 3-4°C Strategy resilience
Transition risks ■■■ ■■■ ■ Strong
Carbon Taxes up to £220 million
Product Taxes up to £270 million ■■■ ■■■ ■ Strong
Energy Costs up to £340 million ■■■ ■■■ ■ Strong
Cost Capital/Insurance up to £390 million ■ ■■ ■■■ Strong
Physical risks ■ ■■ ■■■ Strong
Acute Weather up to £150 million
Chronic Weather up to £240 million ■ ■■ ■■■ Medium
Transition opportunities ■■ ■■ ■ Medium
Products and Services up to £230 million
Energy Sourcing and Efficiency up to £80 million ■■ ■■ ■ Strong

Likelihood Key Strategy Resilience Key

■ ■■ ■■■ Strong: The targets and mitigation actions in place are providing BAT confidence in our business resilience
Low High Medium: Targets and mitigation actions are in place, but external events may challenge our business resilience
Needs work: Developing targets and/or mitigation actions to improve our business resilience

Methodology and Assumptions and 2050 using the methodology defined

In accordance with UK Government in the Group Risk Management Framework. Defining Material Risks
expectations, we have conducted our and Opportunities
The modelling drew on external and
climate scenario analysis on at least one internal data sources. External sources Material risks: Material risks are those
scenario under 2°C or lower. We have were used for carbon and energy pricing that could have a significant effect on
aligned our methodology to the most projections using REMIND-MAgPIE 3.0-4.4 our operations, strategy, and financial
recent Intergovernmental Panel on Climate datasets whilst internal sources were used performance or position if they are not
Change (IPCC) assessment, which for potential future surcharges on single- managed appropriately.
indicates that limiting global warming to use plastics in our products; Group Material opportunities: Material
1.5°C is necessary to prevent the most financial data; energy consumption and opportunities are those that may improve
severe consequences of climate change. costs by BAT site; business growth our financial performance or position over
As such, we have aligned our climate projections; and consumer trends. time in the event they can be realised.
scenario analysis to the IPCC methodology, Risk impact scoring The selection of the risks and
and GHG concentration trajectories known The scenarios and their impact were opportunities was the result of a
as Representative Concentration Pathways assessed in accordance with our Group thorough identification and materiality
(RCP) 2.6 and 8.5, specifically considering Enterprise Risk Management process as assessment process, which was
three climate scenarios: follows: undertaken with the assistance of an
– 1.5°C ‘Sustainable Transition’ external party. Out of all the risks and
Risk Score Financial Impact (p.a.) opportunities we assessed there are
– 2°C 'Delayed Transition'
Low £60-120 million eight, which we believe are significant
– 3-4°C ‘Climate Inaction’ Medium £120-250 million and could at some time in the future
The six risks and two opportunities have High In excess of £250 million be material to our business.
been modelled, under the three climate
scenarios, drawing upon the expertise of The application of the financial risk scoring
BAT’s subject matter specialists and parameters may change over time to
external consultants. reflect the financial position of the business.
Consequently, the rating of risks may move up
Quantitative assessments were performed Note:
or down, as appropriate, as quantification ^ Although financial materiality has been considered in
to understand how the potential impact
becomes more precise in future years, and the development of our Double Materiality Assessment
and likelihood of risks and opportunities (DMA), our DMA and any conclusions in this document as
particularly where the financial impact may
may change under each time horizon and to the materiality or significance of sustainability or ESG
lessen or increase compared to the Group’s matters do not imply that all topics discussed therein are
climate scenario. The analysis considers
results in future years. financially material to our business taken as a whole, and
the impact to the business for both 2030 such topics may not significantly alter the total mix of
information available about our securities.

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Sustainable Future

TCFD Reporting
Continued

Climate Change-related Risks and Opportunities

Transition risks associated with transitioning to a low carbon economy
Risk overview and assumptions Impact Mitigations
Carbon taxes Financial impact – Implementation of our Low-Carbon
New carbon pricing mechanisms on Carbon pricing mechanisms expose the Transition Plan energy efficiency
the emissions within our value chain Group to additional costs in both the initiatives
increase costs. Sustainable and Delayed Transition – R&D developing new products with
scenarios. The former has a greater impact lower CO2e footprint - supported by
in the medium-term as the rate of increased the Green Design Tool, which enables
carbon taxes is forecast to outweigh the rate product development teams to assess
of reduction of CO2e in our LCTP glidepath. materials and components based on their
CO2 impact in relation to our targets
2023 2030 2040 2050
– Engagement with suppliers to support
1.5˚C scenario
reduction in their value chain
2˚C scenario
emissions
3-4˚C scenario

Related targets: 50% reduction in Geographical impact

Scope 1 and 2 GHG emissions by 2030, Carbon pricing mechanisms will impact
50% reduction in Scope 3 GHG emissions all regions.
by 2030, Net Zero GHG emissions across
our value chain by 2050.
Product taxes Financial impact – R&D developing new products with
Governmental mandates on, and Product regulations expose the Group to lower CO2e footprint - supported by
regulation of, products and services additional costs if product taxes such as the Green Design Tool, which enables
increase product taxes around Extended Extended Producer Responsibility schemes product development teams to assess
Producer Responsibility schemes, and taxes on plastics are widely introduced materials and components based on their
plastics and waste disposal. around the world to drive reductions in CO2e impact in relation to our targets
emissions and waste. The impact in a Delayed – Working with third parties to pilot
Transition scenario is considered to have device and battery recycling solutions
greater impact in the long-term as new – Expanding our Take-Back schemes
countries set higher rates to compensate for and other initiatives to accelerate
the limited regulations in place until 2030. product circularity
2023 2030 2040 2050
1.5˚C scenario
2˚C scenario
3-4˚C scenario

Related targets: 30% average recycled Geographical impact

content across all plastic packaging by Product regulations will initially largely
2025, <1% waste to landfill by 2025. emanate from European countries, but they
are likely to spread.
Direct and indirect energy costs Financial impact – Decarbonising our operations through
Increasing energy prices impacting Energy pricing exposes the Group to energy efficiency measures
direct operating costs, as well as the additional costs across all scenarios and time – Transitioning to lower emission and
cost of buying raw materials or frames, with a higher impact noted for both renewable sources
manufactured goods from our suppliers. the Sustainable and Disorderly Transition – Engagement with suppliers to support
scenarios. The main drivers are short- to them in running energy efficiency
medium-term electricity price increases and projects
medium- to long-term natural gas price
increases.
2023 2030 2040 2050
1.5˚C scenario
2˚C scenario
3-4˚C scenario

Related targets: 50% reduction in Scope 1 and Geographical impact

2 GHG emissions by 2030, 50% reduction in Energy pricing impact will be felt throughout
Scope 3 GHG emissions by 2030, Net Zero most parts of the world.
GHG emissions across our value chain by
2050, 50% renewable energy use by 2030,
20% of suppliers set Science Based Targets
by 2025.

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Transition risks associated with transitioning to a low carbon economy (continued)

Risk overview and assumptions Impact Mitigations
Cost of capital/insurance Financial impact – Ongoing risk engineering programme
Contraction of financial services markets Potential 25 basis points impact for 1.5˚C and to ensure compliance with internal
arising from climate change could result 2˚C scenarios and 50 basis points for 3-4˚C guidance and regulation
in increased cost of capital and scenario. – Site and supply chain resilience
insurance or a reduction in its availability. Full impact of credit adjustment over time through business continuity plans
as c.50% of currently issued bonds mature – Engaging with key insurance and
by 2030, with over 90% by 2050. capital stakeholders on ESG metrics
Assumed increase of 20-40% for insurance and risks
costs across the three scenarios. – Continuing to access diversified
2023 2030 2040 2050 funding sources
1.5˚C scenario
2˚C scenario
3-4˚C scenario

Related targets: N/A Geographical impact Increases in cost of

capital/insurance will impact all regions.

Physical risks associated with physical impacts of climate change – either acute risks (relating to extreme weather
events) or chronic risks (such as relating to longer-term shifts in climate patterns and higher temperatures)
Risk overview and assumptions Impact Mitigations
Acute weather Financial impact – Leaf farmers adopt sustainable
Increased severity and frequency of Potential financial impact greatest under agriculture practices to increase our
extreme weather events such as Climate Inaction scenario due to increased resilience to extreme weather under
cyclones, floods and heatwaves leading frequency of occurrence and heightened Biodiversity Management Plans
to agricultural supply chain disruption severity. – Business continuity plans across
and / or reduced production capacity the supply chain including leaf,
resulting in increased costs. manufacturing, distribution and key
2023 2030 2040 2050
suppliers
1.5˚C scenario
2˚C scenario – Loss prevention programme for
3-4˚C scenario property risks
Related targets: 50% reduction in Geographical impact
Scope 1 and 2 GHG emissions by 2030, Sourcing of tobacco, particularly from South
50% reduction in Scope 3 GHG emissions America, Sub-Saharan Africa, South Asia and
by 2030, Net Zero GHG emissions across the U.S.
our value chain by 2050.
Chronic weather Financial impact – Water efficiency and stewardship
Continued change in climate leading Potential financial impact greatest under programmes
to ongoing changes in precipitation the Climate Inaction scenario due to a higher – Customised Agronomy Plans for each
patterns and temperatures leading to tobacco yield loss. sourcing country
increasing levels of water stress in our – Carbon Smart Farming programme –
agricultural supply chain resulting in review of our inventory duration
lower yields. policies to enhance the resilience
2023 2030 2040 2050
of our supply chain
1.5˚C scenario
2˚C scenario – Expansion of Climate Diagnostic
3-4˚C scenario Model to key suppliers
Related targets: 50% reduction in Geographical impact
Scope 1 and 2 GHG emissions by 2030, Sourcing of tobacco, particularly from South
50% reduction in Scope 3 GHG America, Sub-Saharan Africa, South Asia and
emissions by 2030, Net Zero GHG the U.S.
emissions across our value chain
by 2050.

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Sustainable Future

TCFD Reporting
Continued

Opportunity Impact Scoring The application of the financial opportunity as appropriate, as quantification
Opportunity Score Financial Impact (p.a.) scoring parameters may change over time becomes more precise in future years, and
Low £60-120 million
to reflect the financial position of the particularly where the financial impact may
business. Consequently, the rating of lessen or increase compared to the Group’s
Medium £120-250 million
opportunities may move up or down, results in future years.
High In excess of £250 million

Opportunities* associated with transitioning to low carbon economy

Opportunities overview and assumptions Impact Actions
Products and services Financial impact – Incorporation of end-of-life treatment
Developing more sustainable products Consumer sensitivity to ESG-related and increased recyclability into
to meet consumers’ increasing features assumed to be higher under 1.5 C
o product design
demands. scenario, with the greater opportunity for – Expanding our Take-Back schemes
additional growth in New Categories and other initiatives to accelerate
compared to combustibles. product circularity
2023 2030 2040 2050 – Innovation to deliver more circular
1.5˚C scenario products
3-4˚C scenario

Related targets: 100% of our packaging Geographical impact

to be reusable, recyclable or Opportunity envisaged across all regions as
compostable by 2025, 30% average New Categories products continue to be
recycled content across all plastic rolled out globally.
packaging by 2025.
Energy sourcing and efficiency Financial impact – Decarbonising our operations through
Investment in lower-emission sources of Energy sourcing and efficiency is an energy efficient measures
energy or more efficient production and opportunity for the Group under both the – Transitioning to lower emission and
distribution processes within our direct Sustainable Transition and Climate Inaction renewable sources
operations. scenarios through accelerated
decarbonisation of our value chain. Overall
additional savings are considered low due to
absolute level of the Group’s energy costs and
the progress made over the last few years.
2023 2030 2040 2050
1.5˚C scenario
3-4˚C scenario

Related targets: Increase the proportion Geographical impact

of renewable energy we source to 50% All sites are focusing on reducing energy costs.
of total energy consumption by 2025.
Note:
* A 2˚C scenario was not modelled for opportunities as the impact is considered to be materially similar to the 1.5˚C scenario.

Strategy Resilience The majority of our risks and opportunities The insights gained from the climate
While there are climate-related challenges are not expected to show significant modelling further strengthen the
and uncertainties ahead, we believe that regional variations. The most notable importance and relevance of our climate
the Group is well placed to manage the regional variations concern our two acute strategy and Net Zero GHG emissions
risks associated with all three of the and chronic weather physical risks given target to mitigate these risks. We will
scenarios modelled. Supported by our they relate to the sourcing of tobacco, continue to review each material climate-
global reach; supply chain flexibility; diverse particularly from South America, Sub- related risk and opportunity and build upon
product portfolio, leading brands, and Saharan Africa, South Asia and the U.S. our existing mitigation strategies to
capital strength we believe that we have enhance the resilience of our climate
the resilience and agility to transition and strategy and our business to climate change.
create new growth opportunities.

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Risk Management Alignment with our Sustainability The tool will be used to further support
Introduction Material Topics and ESG Performance and enhance risk management through the
In 2023, BAT made continued progress to Data Book identification of potential climate-related
further embed both ESG and climate- Each ESG risk has been linked to one of our physical hazard 'hotspots' (both acute and
related risks into our Enterprise Risk material topics. This systematic chronic), evolving patterns and trends
Management (ERM) framework. These categorisation ensures that the risks across various time frames and will provide
advancements have been built upon the associated with each material topic are valuable insights into shifting climate risk
work completed in previous years, which captured and thoroughly examined. factors that may impact our manufacturing
included climate scenario modelling Aligning these individual risks with their and other locations.
(physical and transitional risks), our Double respective topics also helps ensure the Our Risk Management Process –
Materiality Assessment (DMA), and the completeness of the ESG risk register and Climate-related Risks
integration of ESG and climate-related risk that all ESG-related dimensions within the In combination with the risk management
factors into our risk registers. These Group’s risk landscape are both recognised processes detailed above, risk registers,
actions all emphasise the Group’s and addressed during the assessment based on a standardised methodology, are
commitment to understand, manage and process. used at Group, functional, and DRBU levels
mitigate risks that could impact our to (1) identify, (2) assess and evaluate,
During the latter half of 2023, we further
organisation, our stakeholders, and the (3) manage and (4) monitor the risks (both
improved our ESG risk management
wider environment. financial and non-financial), including
approach by incorporating metrics from
As we continue our journey to deliver our our ESG Performance Data Book into our climate-related risks. This four-step
sustainability agenda, we have focused on risk assessment and monitoring process is defined and articulated within
further enhancing our risk management methodology. This provides enhanced the Group’s Risk Management Manual and
methodology. Two recent initiatives, visibility of the risk profile to the Group Risk is deployed to ensure a uniform approach
namely the creation of our ESG risk register Management Committee. to risk management and to ensure that
and the development of a Climate risks are understood, managed, recorded,
Diagnostic Tool, were completed in 2023,
Climate Diagnostics Tool
monitored and communicated effectively
details of which are set out below. During 2023, we finalised the development throughout the Group. It also ensures that
of a Climate Diagnostic Tool which will climate-related risks receive appropriate
ESG Risk Register and its Relationship enable us to understand the impact on our
to our Group Risk Register specialist attention whilst also being
physical property locations and subsequent integrated into the Group's overall risk
Following the DMA in 2022, which business interruption of climate change management framework.
included an assessment of the Group's across 1.5˚C, 2-3˚C and 4˚C global warming
ESG-related risks and scored each risk on a scenarios by 2030 and 2050.
gross risk basis, the Group has now
developed and established our ESG risk
register.
During 2023, the Group's ERM procedures
were broadened to include identification
and assessment of ESG-related Group
risks. These risks are assessed on a residual
risk basis and are now reviewed biannually Integration of climate-related risks
and evaluated in terms of their relevance into the Group Risk Management Framework
and materiality to the business,
in accordance with the Group's risk
Climate Change and Circular Economy “Direct and indirect
management methodology. adverse impacts associated with Climate Change and the move
The ESG risk register includes the six towards a Circular Economy” is recognised as a Principal Risk to
material climate-related risks modelled and the Group; impact and mitigation steps are set out on page 127.
referenced above at page 107. Group relevant climate-related objectives, targets and metrics
are articulated and monitored.
Each ESG risk is linked to the Group risk
Climate and other ESG risks are captured within the Group’s
register by inclusion within the individual ESG risk register and are also embedded as risk factors in risks
drivers or impacts of the relevant Group risk within the Group risk register.
in focus.
This ensures that each risk is given full Functions are required to identify and assess risks and
consideration, assessed and described, opportunities, including climate-related physical and
transitional risks.
and allows for the associated mitigation
activities to be clearly defined, understood Environmental, Social and Governance thresholds are set out
in the Group Risk Management Manual and used by the Group
and reported. when assessing risks.
The Climate Change and Circular Economy Functions are required to review all physical asset values
risk on the Group risk register is an and associated business interruption impact across the Group
aggregation of multiple Physical (acute to understand potential impact from climate change.
and chronic) and Transitional risks identified
within the ESG risk register. DRBUs (directly-reporting business units) are required to
identify and assess risk and opportunities, including climate-
related physical risks.

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Sustainable Future

TCFD Reporting
Continued

The Group Risk Management Committee

retains oversight of the processes highlighted Our Risk Management Process
above and works to maintain ongoing
compliance with our ERM methodology.

+ Material risks are disclosed within our Principal

Risk and 20-F section of this report and further
information on our approach to risk
management is on pages 119 to 128 Identify Assess
Risk Assessment Methodology
– Events, situations or – The potential size, scope and
There are various criteria, both qualitative circumstances that would duration of climate-related risks
and quantitative, against which impact adversely affect the achievement are assessed in the same manner
may be measured. In financial (quantitative) of business objectives, including as the Group's other risks and as
terms, high impact is deemed as in excess the failure to capitalise on part of BAT’s standardised risk
of £250 million, with medium impact opportunities, are considered. management practices.
£120- £250 million, and low impact
£60-£120 million per annum. Risks below – Climate-related risks and – Risks are prioritised at three
£60 million are not included in the Group opportunities are identified levels by reference to their
risk register but are managed and reported through a combination of internal impact (high/medium/low) and
at regional and DRBU level. Qualitative stakeholder consultation, desktop likelihood (probable/possible/
impact criteria are legal (including existing research, external consultation, unlikely), as defined in our Group
and emerging regulatory requirements), and insights from our climate Risk Management Manual.
reputational, environmental, social and scenario modelling and climate – Risks are scored based on a
governance. The qualitative impact is impact assessments. combination of their impact and
assessed based upon the scale of the – When a potential risk is identified, likelihood ratings and captured
detrimental effect of the risk. the causes are examined within associated risk matrices.
Risk assessments are completed on a thoroughly and any potential
residual risk basis (i.e. with consideration consequences, time frame and
to the effectiveness of the existing control mitigation activities are identified.
environment), providing an accurate
depiction of the current risk exposure.
The impact is assessed based on the
current net impact on the business for
a single year. This methodology, including
financial thresholds and the likelihood
overlay, was also applied in the allocation Monitor Manage
of the high/medium/low materiality levels
for the six climate-related risks and
– On-going tracking, monitoring – Mitigation measures are devised
three opportunities. Following the
and reporting of climate-related and assigned ownership along
application of these standardised risk
risks is promoted through our with implementation timelines.
assessment procedures, risks (including
ERM Framework. – The effectiveness of current
climate-related risks) are prioritised based
on their relative significance to the Group – Risk mitigation activities are activities and the allocation of
as a whole. monitored by risk managers to further activities is agreed by
help ensure they remain relevant, relevant Risk Managers and
Risk Monitoring Methodology
effective and that information Leadership Teams.
Risk data, including assessment captured remains accurate and
information and risk scores, is collected – Decisions on how to manage the
up to date. risks (including how to mitigate,
and recorded within the Group’s Risk
Management System. The system applies – The effectiveness of mitigation transfer, accept or control risks)
aggregation of risk impact/likelihood scores activities and the status of are based on a variety of
and provides a standardised risk reporting outstanding actions is tracked considerations, including risk
suite which supports the risk tracking and and reviewed by Leadership score, the ability to influence or
monitoring process. Teams and at various Risk control the risk, and cost and
Committees. effectiveness of mitigation.
The Group risk register and ESG risk
Effective mitigation activities
register are reviewed biannually by
can also be considered as cost
the Group Risk Management Committee,
avoidance opportunities.
chaired by the Finance Director
and subsequently reviewed biannually
by the Audit Committee and annually
by the Board.
In addition, functional, regional and DRBU
risk registers (which also capture climate-
related risk factors) are reviewed on a
biannual basis by applicable Leadership
Teams and reviewed biannually by the
Corporate Audit Committee and Regional
Audit Committees, respectively.

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Metrics and Targets Remuneration The Group’s GHG emissions and energy
We measure and track a wide range of Our Director, Operations, a member of the reduction targets are examples of
sustainability metrics and targets which Management Board, is responsible for the environmental metrics contained within
help us assess and manage climate-related delivery of our climate-related targets as the Director, Operations' performance
risks and opportunities. part of the overall sustainability agenda. objectives. The threshold for success is
The most important targets are externally achieving or exceeding the targeted
+ Read more about our ESG Metrics
and Targets on page 11 communicated and linked to evaluation amount of emission/energy reduction for
of the Director, Operations' performance the year, as described by target glidepaths.
Our Harm Reduction metrics and targets and remuneration. For example, by the end of 2023 a
link to the opportunity we have identified reduction of 24.1% in BAT’s Scope 1 and 2
in Products and Services, while our climate + Read more about our remuneration agreements
for Executive Directors and the Management GHG Emissions (vs 2020 baseline) was
metrics and targets link both to the Board on page 71 required and a reduction of 33.1% (vs 2020
opportunities identified in Energy Sourcing baseline) was achieved, exceeding the
and Efficiency and to our transition and The Director, Operations' performance target threshold for this year; meaning the
physical risks. The latter are particularly objectives contain environmental targets, Director, Operations met this performance
important to our climate targets, as outlined which are directly linked to their assessment objective which contributed to their
in 'Our Path to Net Zero GHG emissions of performance alongside other non- eligibility for an annual bonus payment.
by 2050' below, as inaction would result environmental performance objectives.
in product shortfalls. The Director, Operations' eligibility for + The value of the company bonus plan is tied
to non-environmental metrics set out in the
an annual bonus under the Group’s Remuneration Policy described on page 174
+ Read more about our climate-related risks and
opportunities on pages 105 and 107
International Executive Incentive Scheme
(IEIS) plan is based on their performance
assessment, which considers performance
against environmental metrics, non-
environmental metrics and other factors.

1
Breakdown of BAT's GHG Emissions

6.47¹
Total million tonnes of CO2e in 2022

FY20 0.342 0.199 4.817 2.090

FY21 0.325 0.170 4.814 1.682

FY22 0.308 0.113 4.611 1.433

0 1 2 3 4 5 6 7
Million tonnes of CO2e

Scope 1 Scope 2 Scope 3 reportable non-biogenic Scope 3 net biogenic

Note:
1. 2022 numbers.

Understanding Scope 1, 2 and 3 emissions

Scope 1, 2 and 3 emissions are categories of greenhouse gas (GHG) emissions an organisation's activities create.
Scope 1 emissions: Direct emissions occur from sources owned or controlled by an organisation.
Scope 2 emissions: Indirect emissions generated from purchased electricity, heat, steam or cooling. These can be ‘location-based’ -
which use a quantification method based on average energy generation emission factors for defined locations, including local, subnational,
or national boundaries; or ‘market-based' - which use a quantification method based on GHG emissions emitted by the generators from
which the reporter contractually purchases electricity bundled with instruments, or unbundled instruments on their own.
Scope 3 Reportable (non-biogenic) emissions: Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in
the value chain of the reporting organisation, including both upstream and downstream emissions and excluding biogenic emissions.
Biogenic emissions: CO2 emissions from the combustion or biodegradation of biomass.
Biomass: Any material or fuel produced by biological processes of living organisms, including organic non-fossil material of biological
origin (e.g., plant material), biofuels (e.g., liquid fuels produced from biomass feedstocks), biogenic gas (e.g. landfill gas), and biogenic
waste (e.g. municipal solid waste from biogenic sources).

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Sustainable Future

TCFD Reporting
Continued

Our Climate Change-related As such, we have set near-term 1.5ºC-aligned,

Metrics and Targets absolute reduction targets that
Limiting the rise in average global accommodate Net Zero GHG criteria and
temperature to 1.5°C above pre-industrial definitions. Our near-term targets were
levels requires major and widespread action validated by the Science Based Targets
and companies have an important role to play. Initiative (SBTi) in July 2022 and are outlined
in the graph below alongside our path to
Net Zero GHG emissions.

Our Path to Net Zero GHG Emissions by 2050

Our Climate Targets How We Intend to Reduce How We Intend to Reduce
50% reduction in Scope 1 and 2 GHG Scope 1 and 2 GHG Emissions Scope 3 GHG Emissions
1
emissions by 2030 Creating site-specific decarbonisation Building a climate-resilient supply
50% reduction in Scope 3 GHG roadmaps and investing in energy chain with direct and indirect suppliers.
emissions by 2030
1 efficiency projects and management Eliminating the remaining use of coal
systems. for tobacco curing; using sustainable
Net Zero GHG emissions in our value
chain by 2050 Increasing renewable energy use by curing fuels (e.g. sustainable wood
entering into longer-term power purchase fuel, agricultural waste).
50% total renewable energy use by 2030 agreements and investing in on-site Fostering circularity in our value chain.
2
Carbon Neutral in Scope 1 and 2 GHG renewable energy generation projects.
emissions from operations by 2030 Designing for the reuse and recycling
Rolling out electric and hybrid vehicles
of end-of-life products.
20% of suppliers by spend to set in our fleet.
Science-Based Targets by 2025 Increasing the use of low carbon
materials.

Notes:
1. Compared to 2020 baseline. Comprises a 50% reduction in Scope 1 and 2 and 50% reduction in Scope 3 GHG emissions. Scope 3 GHG emissions target includes purchased
goods and services, upstream transportation and distribution, use of sold products and end-of-life treatment of sold product, which collectively comprised >90% of Scope 3
emissions in 2020. In 2022, we have further enhanced our Scope 3 calculation methodology and data precision leading to the Scope 3 data for reporting periods 2020 and 2021 being
restated accordingly.
2. BAT's carbon neutral sites are externally verified as adhering to internationally recognised standards / carbon neutrality methodologies, such as PAS 2060. Purchased carbon
credits are verified by third parties, such as VCS, Gold Standard and American Carbon Registry. They offset residual emissions for which immediate plans do not offer financially
viable and/or real emission reductions.

BAT’s 1.5°C-aligned Emissions Pathway

8 Actual
Scope 1, 2 and 3 GHG emissions
7
Projected
6 Scope 1, 2 and 3 GHG emissions
Emissions (mn tCO2e)

Neutralisation
5
Measures that companies take to remove
carbon from the atmosphere and permanently
4
store it, to counterbalance the impact of
emissions that remain unabated
3
Compensation
2 GHG reductions or removals used to
compensate for GHG emissions made
1 elsewhere

-1 Note:
17 18 19 20 21 22 23 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Figures include biogenic emissions and removals.
Years

Understanding the difference between Net Zero GHG emissions and Carbon Neutral
Net Zero GHG emissions: It means reducing greenhouse gas emissions to as close to zero as possible, with any remaining
emissions re-absorbed from the atmosphere, by oceans and forests for instance. Setting corporate Net Zero targets aligned
with meeting societal climate goals means: (a) reducing Scope 1, 2 and 3 emissions to zero or a residual level consistent with
reaching net-zero emissions at the global or sector level in eligible 1.5°C scenarios or sector pathways and (b) neutralising any
residual emissions at the Net Zero target date – and any GHG emissions released into the atmosphere thereafter.
Near-term science based target: GHG reduction targets in line with what the latest climate science deems necessary to limit
warming to 1.5°C above pre-industrial levels and are achieved within a 5-10 year time frame from the date of submission to the SBTi.
Long-term science-based target: GHG reduction targets in line with what the latest climate science deems is necessary to
reach Net Zero at the global or sector level in 1.5°C pathways before 2050.
Carbon Neutral: Carbon neutrality is the balance between emitting carbon and absorbing carbon emissions from carbon sinks.
The term “neutral” accounts for that balance; the GHGs released into the atmosphere are offset by an equivalent amount being removed.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Reporting Methodology for CO2e 36% of BAT's operational sites have been Data collection & validation
Emissions certified as carbon neutral. Such sites GHG emissions data for Scope 1 & 2
We use the World Business Council for are externally verified as adhering to is collected within our internal EHS
Sustainable Development GHG Protocol internationally recognised standards/ reporting system; it includes 180 reporting
Corporate Standard to guide our reporting carbon neutrality methodologies, such units located across 90 countries.
of carbon dioxide equivalent (CO2e) as PAS 2060. BAT’s Scope 3 GHG emissions reporting
emissions. We also use supporting In addition to emissions reduction achieved process aligns with the GHG Protocol
standards including: through decarbonisation initiatives, carbon Corporate Value Chain (Scope 3)
– GHG Protocol Scope 2 Guidance, 2015 neutral sites purchase carbon credits Accounting and Reporting Standard.
– GHG Protocol Corporate Value Chain verified by third parties, such as Verified We report emissions where the Group has
(Scope 3) Standard, 2011 Carbon Standard (VCS), Gold Standard and operational control and include CO2, CH4
We report emissions where we have American Carbon Registry, to offset and N2O within our CO2e emission reporting.
operational control and include CO2, residual emissions for which immediate A full breakdown of our GHG emissions is
CH4 and N2O within our CO2e emission plans do not offer financially viable and/or presented below.
reporting. We consolidate the data on real emission reductions. While the
other GHG emissions (HFCs, PFCs, SF6 proportion of emissions reduction
and NF3), but do not include them in our compared to offsets through carbon
reporting as they do not meet our credits varies for each site, on average,
materiality thresholds. While we account around 40% of their emissions were offset
for the contribution CO2, CH4 and N2O make by way of purchased carbon credits.
to our CO2e emissions, we do not disclose Baseline
the breakdown of CO2e data on an Currently, we use a 2020 baseline year
individual GHG basis. for emissions reporting, which has a total
of 7,447,657 tCO2e split as follows:
– Scope 1: 342,034 tCO2e
– Scope 2: 198,830 tCO2e market-based
(Scope 2: 417,572 tCO2e location-based)
– Scope 3: 6,906,793 tCO2e

BAT Group Greenhouse Gas Emissions

Total emissions (thousand tonnes CO2e)
Emission Source 2020 2021 2022 2023
1
Total Scope 1 CO2e 342 325 308 267
Total Scope 1 CO2e emissions, including fugitive emissions N/A N/A 329 299
1
Total Scope 2 CO2e Market-based 199 170 113 95
Total Scope 2 CO2e Location-based 418 393 356 342
2
Total Scope 3 CO2e 6,907 6,496 6,045 N/A
Total Scope 3 CO2e Reportable Emissions 4,817 4,814 4,611 N/A
Total Scope 3 CO2e Net Biogenic Emissions (including biogenic removals) 2,090 1,682 1,433 N/A
Category 1: Purchased Goods and Services (Total) 5,120 4,660 4,301 N/A
Category 1: Purchased Goods 1,898 1,905 1,890 N/A
Category 1: Purchased Services 972 839 818 N/A
Category 1: Purchased Tobacco Leaf 2,061 1,733 1,402 N/A
Category 1: Other Purchased Goods and Services 189 183 191 N/A
Category 2: Capital Goods 172 142 140 N/A
Category 3: Fuel and Energy Related Emissions 164 197 179 N/A
Category 4: Upstream Transportation and Distribution 348 365 370 N/A
Category 5: Waste Generated in Operations 9 8 5 N/A
Category 6: Business Travel 18 18 33 N/A
Category 7: Employee Commuting 67 75 71 N/A
Category 9: Downstream Transportation and Distribution 17 17 15 N/A
Category 11: Use of Sold Products 756 788 769 N/A
Category 12: End-of-Life Treatment of Sold Products 231 225 161 N/A
Category 14: Franchises 5 1 1 N/A
Notes:
1. In 2023, UK-based activities included 2,245 tonnes of Scope 1 CO2e emissions (2022: 2,376) and 0 tonnes of our Scope 2 CO2e emissions (2022: 10). Scope 1 and 2 CO2e emissions
intensity (tonnes per £m revenue) 13.3 (2022: 15.2), (2021: 19.3).
2. Scope 3 emissions target includes purchased goods and services, upstream transportation and distribution, use of sold products and end-of-life treatment of sold products, which collectively
comprised >90% of Scope 3 emissions in 2020. Due to the complexity of consolidating and assuring Scope 3 data from our suppliers and value chain, we report Scope 3 data one year behind
other metrics. In 2022, we have further enhanced our Scope 3 calculation methodology and data precision leading to the reporting periods 2020 and 2021 being restated accordingly. Refer to the
BAT 'Reporting Criteria' for our full methodology: bat.com/reporting.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Sustainable Future

TCFD Reporting
Continued

2023 GHG emissions performance Reporting Methodology for Energy

Our combined Scope 1 and 2 (market- Energy consumption is reported in line with Next Steps
1
based) GHG emissions are decreasing year GRI 302, Energy, 2016, Disclosure 302-1, Through the adoption of the TCFD
on year. In 2023, we reduced our Scope 1 Energy consumption within the organisation. recommendations and making the
and 2 GHG emissions by 13.9% vs 2022 Energy consumption is calculated from recommended disclosures, we have
(-33.1% vs 2020 baseline). raw data of fuel, electricity, hot water and continued to analyse the resilience of
Scope 1 GHG emissions decreased by steam consumption, which is submitted our strategy against three potential
13.4% vs 2022 (-22.0% vs 2020 by reporting units across the Group via our climate scenarios and three time
baseline).This is driven by energy efficiency Internal Reporting Tool. horizons up to 2050. This helped us in
activities and projects across our operational mitigating risks, adapting to a changing
The data used in calculations are the same landscape, seeking new opportunities
sites, lower production output and changes as used for Scope 1 and 2 CO2e emissions.
in footprint in certain geographies. and preparing for new regulations.
2023 energy consumption In light of this evolving landscape, we will
Scope 2 GHG emissions decreased by 34%
performance keep strengthening our understanding
vs 2022 (-52.1% vs 2020 baseline). This was
While details of the principal measures and management of climate-related
driven by an increase in renewable energy
taken for the purpose of increasing energy risks and opportunities by:
sourcing for our sites, including an
efficiency across the Group are available
expansion to new geographies - for – Keeping the assessment of our
on pages 80-81, our energy consumption
example in Bangladesh, Nigeria and impacts, risks and opportunities
performance is outlined as follows:
Zambia - where renewable energy sourcing 3
under review;
opportunities emerged and increased the – Energy consumption from activities for
– Expanding the use of the Climate
proportion of renewable electricity we which the Group is responsible (in million
Diagnostic Tool to include our wider
source. This was further supported by kWh): 2023: 1,292; 2022: 1,435;
supply chain, which will support our
energy efficiency activities and increase 2021: 1,508. Of the total figure reported
existing modelling of these exposures;
of on-site renewable energy generation, for the Group for 2023, 10 million kWh
mostly from solar technologies. Our is from UK-based activities (2022: – Keeping further integration of
targets cover Scope 2 emissions aligned 11 million kWh, 2020: 10 million kWh). additional ESG- and climate-related
with the market-based approach, but metrics in Management Board
– Energy consumption resulting from the
we are also monitoring and disclosing remuneration under active review; and
purchase of energy by the Group for its
Scope 2 emissions as per the location- own use (in million kWh): 2023: 890; – Continuing to assess how we can
based approach. Scope 2 emissions 2022: 909; 2021: 972. work with our colleagues, external
(location based) decreased by 4.0% vs 2022 partners and suppliers to reduce the
– Of the total figure reported for the
(-32.0% vs 2020 baseline). environmental impact of our
Group for 2023, 13 million kWh is from
2
Our total Scope 3 GHG emissions operations and value chain.
UK-based activities (2022: 15 million,
decreased by 6.9% vs 2021 (-12.5% vs 2020 2021: 16 million). We will also continue to monitor the
baseline). This reduction resulted from the evolving regulatory landscape, including
strengthening of our approach to on-the- + Read more about our sustainability metrics
and targets on our ESG Performance Data Book any changes to the UK Listing Rules to
ground farmer-related data collection and at bat.com/reporting require companies to report against
associated wood density factors, in order international standards other than
to be able to more accurately calculate TCFD (e.g. ISSB and SEC rules), and will
their associated emissions. In 2023, we update our approach to our climate-
have further enhanced our Scope 3 related disclosures accordingly.
calculation methodology and data
precision leading to the reporting periods
2020 and 2021 being restated accordingly.

Notes:

1. In 2023, UK-based activities included 2,245 tonnes

of Scope 1 CO2e emissions (2022: 2,376) and
0 tonnes of our Scope 2 CO2e emissions (2022: 10).
Scope 1 and 2 CO2e emissions intensity (tonnes per
£m revenue) 13.3 (2022: 15.2), (2021: 19.3).
2. Scope 3 emissions target includes purchased goods
and services, upstream transportation and
distribution, use of sold products and end-of-life
treatment of sold products, which collectively
comprised >90% of Scope 3 emissions in 2020. Due to
the complexity of consolidating and assuring Scope 3
data from our suppliers and value chain, we report
Scope 3 data one year behind other metrics. In 2022,
we have further enhanced our Scope 3 calculation
methodology and data precision leading to the
reporting periods 2020 and 2021 being restated
accordingly. Refer to the BAT 'Reporting Criteria' for
our full methodology: bat.com/reporting
3. Energy intensity (GWh per £ million of revenue):
2023: 0.080; 2022: 0.085.

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Our approach to Taskforce on Nature-related

Financial Disclosures (TNFD)
Our Group-wide Double Materiality Assessment highlights the importance of biodiversity and ecosystems. As a result, BAT has signed
up to be an inaugural Early Adopter of the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations. Below is a
summary of our current progress towards certain of the recommended TNFD disclosures that we consider the most relevant at this
stage. We will continue to build on the below and develop how we disclose nature-related information as an Early Adopter.

TNFD: a Summary of our Approach and Progress

Governance: Disclose the organisation’s governance of nature-related dependencies, impacts, risks and opportunities.

a) Describe the board’s oversight of nature-related dependencies, impacts, risks and opportunities.
The governance of biodiversity is overseen at the most senior level by the Main Board, supported by the Management Board. The Main Board takes nature-
related considerations into account, where applicable, when making strategic decisions, including risk management, overseeing capital expenditure, and
oversight of nature strategy and biodiversity-related risks and opportunities.
The Main Board annually reviews the Group risk register and ESG risk register, which include biodiversity, deforestation and soil health-related risks.
The Audit Committee also reviews the Group risk register and ESG risk register twice a year and regularly reviews the Group’s progress against Deforestation
and Conversion Free targets.
b) Describe management’s role in assessing and managing Nature-related dependencies, impacts, risks and opportunities.
The Main Board and the Management Board are supported by the Leaf Sustainability Forum and the Operations Sustainability Forum, where broader
environmental matters are discussed. These two forums are informed by the Biodiversity Centre of Excellence, where biodiversity- and water-related issues,
progress against targets, metrics, SBTN and TNFD alignment, and other important updates, are discussed.
Strategy: Disclose the effects of nature-related dependencies, impacts, risks and opportunities on the organisation’s business model, strategy and
financial planning where such information is material.
a) Describe the nature-related dependencies, impacts, risks and opportunities the organisation has identified over the short-medium-and long-term.
We worked with an external consultancy to identify our nature-related priorities, dependencies, impacts, risks and opportunities detailed below.
Dependencies
Priority natural asset dependencies identified were: Atmosphere, Water, Habitats, Soils and Sediments. For the full list of assets assessed and definitions, please
see https://encorenature.org/en/data-and-methodology/assets.
Impacts
The land occupancy impact of our upstream tobacco supply chain, including sourcing of tobacco and fuel wood, was estimated (based on our 2021 footprint*)
to be 382,462 ha with a biodiversity footprint of 330,959 Mean Species Abundance (MSA.ha).
The total land use impact of BAT’s direct operations based on our 2022 footprint is estimated to be 1,190 ha.
A Life Cycle Assessment (LCA) for our non-tobacco purchased goods and services concluded that land use is the estimated primary impact driver for
biodiversity loss, accounting for 73% of estimated impacts. Pulp and paper make up the largest footprint for non-tobacco purchased goods with 70% of the
estimated non-tobacco land use.
Risks and Opportunities
We depend on nature for many things, from the raw materials we use to manufacture our goods to the role ecosystems play in the prevention of natural hazards,
such as flooding or landslides. As we learn more about the extent to which our business depends on nature, we also keep track of the risks we face by
maintaining a ESG risk register.
We also recognise there are many opportunities with regard to resource efficiency; new products; markets; capital flow and financing; reputational capital;
ecosystem protection; restoration and regeneration; and sustainable use of natural resources.
We are already disclosing some risks and opportunities under our CDP Climate Change, Water Stewardship and Forests submissions - which can be found on
bat.com - and plan to work on more comprehensive TNFD-led disclosures over the course of 2024.
d) Disclose the locations of assets and/or activities in the organisation’s direct operations and, where possible, upstream and downstream value chain(s)
that meet the criteria for priority locations.
We worked with an external consultancy to help identify assets, activities and priority locations and have applied additional analysis for these disclosures.
Priority Activities
The sectoral screening and footprint assessment conducted confirmed tobacco sourcing as our highest priority, followed by pulp and paper and owned
manufacturing locations. As a result, these sectors form the basis of the summary of our current understanding as set out below.
Tobacco Sourcing
In addition to the initial screening based on the newly released guidance from TNFD, which assesses the farms against two biodiversity criteria, a more
comprehensive Geospatial Biodiversity Risk Assessment (BRA) conducted in 2022 mapped 69,000+ directly contracted farmers against five global biodiversity
indicators, scoring each farm from Low to High biodiversity risk. Of the farms assessed, only 1.5% of the farms (3.3% of the area covered by mapped farms)
were identified as potentially having a high risk to biodiversity. BAT has considered these as high priority locations for deeper analysis and potential action.
The greatest extent of priority located areas are in Brazil, Venezuela, Mexico, and Sri Lanka. We will be conducting the evaluation again in 2024 with the latest
footprint, updated datasets and methodology.
For third-party leaf suppliers, the assessment was conducted at the level of administrative area, and overall, the assessment estimated that 14% of the area used
by third-party suppliers is likely to have High biodiversity risk. We are currently re-evaluating the list of priority farms based on our latest footprint with results to
be published later in 2024.
Direct Operations
Our Geospatial BRA conducted based on BAT’s December 2022 footprint identified high priority sites if they scored “high” in any of the following risk categories:
Species Threat Abatement and Restoration (STAR) Risk Score, Proximity to Internationally Recognised Area’s (IRA), or Species Risk Score.
The 22 operational sites identified (accounting for 30% of our global operations mapped area) are located across Chile, Croatia, Fiji, Honduras, Poland, Samoa,
Singapore, Solomon Islands, Sri Lanka, Sudan, Trinidad and Tobago, Türkiye, Venezuela and Zambia.
Based on further TNFD screening - conducted in 2023 and based on data collected in 2022 - other sites can be considered as priority locations. Sites located
in Brazil, Chile, Indonesia, South Africa, Türkiye and the U.S. account for 67.8% of the total biodiversity footprint for BAT’s operations (as measured by the MSA.ha
indicator) and will be included in the list of priority sites in the future.
Non-tobacco Purchased Goods and Services
The largest share of the negative impacts identified as part of the assessment for non-tobacco purchased goods and services are indicated to come from
‘directly procured goods’, in particular pulp and paper which accounts for an estimated 70% of the total land footprint. 87% of the negative impacts of pulp
and paper are due to land use. Land use refers to the conversion of natural habitats to agricultural or industrial land, which can result in biodiversity loss, soil
degradation, and carbon emissions. The total land use impact of BAT’s direct operations based on our 2022 footprint is estimated to be 1,190 ha.
We have gathered the paper mill and manufacturing plant coordinate locations that account for 85% of pulp and paper volume purchased and will be conducting
assessments to identify priority locations, with the view to publish results in 2024.

Note:
* Assessment based on a snapshot in time, footprint assessment will be refreshed in 2024 based on December 2023 sites for operations and directly contracted farmers.

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Sustainable Future

Our approach to Taskforce on Nature-related

Financial Disclosures (TNFD)
Continued

Risk and impact management: Describe the process used by the organisation to identify, assess, prioritise and monitor nature-related dependencies,
impacts, risk and opportunities.
a) i) Describe the organisation’s processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities in its
direct operations.
a) ii) Describe the organisation’s processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities in its
upstream and downstream value chain.
Identifying Dependencies
The ENCORE database was used to conduct sectoral-level screening of the natural capital assets on which our business activities across our direct operations with
upstream and downstream value chains (categorised as ISIC codes) depend.
Identifying Impacts
Geospatial Biodiversity Risk Assessments (BRA) for our direct operations and directly contracted farmers were conducted, as precise coordinate location and
occupied area data was available.
For direct operations this helped locate high priority sites where actions to protect and restore biodiversity are most important. For directly contracted tobacco
farmers, high priority farms were identified where actions to protect and restore biodiversity, as well as prevent deforestation, are most important.
The Biodiversity Extent, Condition and Significance ‘BECS’ approach assesses the land used for production by considering two metrics: Biodiversity extent, the
biodiversity loss relative to a pristine condition, and the significance that loss has globally, based on the ‘type’ and ‘relative value’ of biodiversity present in that area.
The significance is primarily measured using the TNFD recommended International Union for Conservation of Nature (IUCN) Species Threat Abatement and
Restoration (STAR) metric, split into STARt (abating threats) and STARr (restoring habitat). The Biodiversity Land occupancy footprint is expressed in MSA.ha. This
metric shows the abundance of original species relative to their abundance in undisturbed ecosystems. As an example, a MSA of 0% means a destroyed ecosystem,
with no original species remaining.
For third-party tobacco suppliers, the top five suppliers were assessed, representing 67% of the tobacco volume we buy outside of the Group's own Leaf Operations.
As we do not purchase all the tobacco produced by the third-party suppliers, the assessment covered all regions where they operate. BAT then apportioned the
footprint result by the percentage of tobacco purchased.
To measure the environmental impact of non-tobacco goods and services, a LCA approach following the Intergovernmental Science-Policy Platform on Biodiversity
and Ecosystem Services, (IPEBS) Pressures Framework was used to assess the ‘magnitude’ of impact on biodiversity.
BAT’s estimated annual spend per goods sector and country was fed into the TNFD recommended EXIOBASE database to estimate the environmental impacts
associated with our procured goods. The data generated are used to estimate the pressures and impacts on biodiversity using LCA conversion factors and identify
the most material sectors.
TNFD
We were able to conduct initial screening based on newly released guidance from TNFD for direct operations. This analysis identified a priority operation site if it met
one of the following criteria: top 20% of estimated MSA.ha, or top 20% of STARt Score within 5km of priority area dependent on size of site. We plan to continue our
TNFD analysis and prioritisation over the course of 2024.
Identifying Risks and Opportunities
Nature-related risks and opportunities are identified through a combination of internal stakeholder consultation, desktop research and external consultation. Currently,
we assess our risks qualitatively, using data from our impact and prioritisation analysis, our industry and supply chain expertise, and advice from consultants.
Nature-related risks, such as Biodiversity Loss and Deforestation are also captured within the Group’s ESG risk register.
Risks are reviewed biannually, assessed on a residual risk basis, and evaluated in terms of their relevance and materiality for the business. Risk assessments are
completed in line with our overall Enterprise Risk Management (ERM) methodology.
b) Describe the organisation’s processes for monitoring nature-related dependencies, impacts, risks and opportunities.
We set our 2025 Deforestation targets in 2021. The targets below form the basis of our commitment and inform our approach to biodiversity and ecosystems. These
are: Deforestation and Conversion Free tobacco supply chain by 2025; Deforestation Free pulp and paper supply chain by 2025; Forest Positive in our tobacco supply
chain by 2025 (vs 2021 baseline).
In our tobacco supply chain, we have already achieved: 96.5% of the wood used in our Thrive Supply Chain is assessed as Deforestation and Conversion Free status.
In 2023, we launched a new Biodiversity Operating Standard (BOS) to support our Group commitments on reducing our impact on forests and natural ecosystems.
This provides guidance on due diligence and traceability to help protect biodiversity in our tobacco supply chain, including the use of traceable wood that is
Deforestation and Conversion Free, and Biodiversity Management Plans.
In direct operations we will be rolling our biodiversity management plans to high risk sites in 2024 and we have been strengthening our due diligence processes on pulp
and paper. Read more about managing compliance with our BOS and how we are managing biodiversity in our own operations and pulp and paper on pages 84 to 85.
We plan to release our 10 Year Nature Roadmap later in 2024, which will outline and support our ambition to set new nature targets in 2024 and 2025 aligned to the SBTN.
Finally, risk data, including assessment information and risk scores, is collected, recorded and monitored within the Group’s Risk Management System. The system
provides a standardised risk reporting suite which supports the overall risk tracking and monitoring process.
The Group’s ESG risk register, which includes nature-related risks, is reviewed biannually by the Group Risk Management Committee, chaired by the Interim Finance
Director and subsequently reviewed biannually by the Audit Committee and annually by the Board.
Metrics and targets: Disclose the metrics and targets used to assess and manage material nature-related dependencies, impacts, risks and opportunities

a) Disclose the metrics used by the organisation to assess and manage dependencies and impacts on nature
A range of metrics has been used to assess and manage nature-related dependencies, impacts, risks and opportunities.
Land Occupancy
For total area controlled or managed by BAT’s direct operations and total disturbed areas from BAT’s tobacco supply chain and procured goods and services the
2
area is expressed in units: 1 hectares = 0.01 km .
2
For land use impacts of procured goods and services units: m crop-land equivalent has been used.
State of Nature
For ecosystem condition, the biodiversity footprint for direct operations and tobacco supply chain has been estimated using units: MSA.ha.
For each location in direct operations (site) and tobacco supply chain locations (farms), species extinction risk has been assessed via threat abatement potential
measured using units: Species Threat Abatement and Restoration - Abating threats (START) Score.
3
For procured goods and services water use was measured in quantity using units: m .
Pollution impacts were measured in units: SO2 equivalents, P equivalents, N equivalents.
GHG emissions were measured in units: CO2 equivalents.
Note:
‡
Refer to the BAT ‘Reporting Criteria’ for a full description of key terms and definitions at bat/reporting.com

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Group Principal Risks

Overview Time frame

The Principal Risks that may affect the Short-term
Group are set out on the following pages. Medium-term
Each risk is considered in the context of the Long-term
Group’s strategy and business model, as
set out in this Strategic Report beginning
on page 2 and page 18. On the following Strategic impact
pages is a summary of each Principal Risk,
Quality Growth
its potential impact. The Group defines the
Principal Risks as those assessed with a Sustainable Future
high impact and probable likelihood. Dynamic Business
Additionally, "Supply Chain Disruption",
"Cyber Security", "Litigation" and "Solvency
and liquidity" risks are also recognised as Key Stakeholders
Principal Risks; they are not assessed as
having high impact and probable likelihood
but are material to the delivery of the Consumers
Group's strategic objectives.
Society
This section focuses on those risks that the
Directors believe to be the Principal Risks to
the Group. Not all of these risks are within Our people
the control of the Group and other risks
besides those listed may affect the Group’s Shareholders & Investors
performance. Some risks may be unknown
at present. Other risks, currently regarded
as less material, could become material in Considered in viability statement
the future. Clear accountability is attached
to each risk through the risk owner. Yes
We identified two new Principal Risks to
the Group during the year: "Cyber Security", No
taking into account the evolving complexity
of the cyber-threat environment and
"Supply Chain Disruption" in view of the
macro-economic and geopolitical
environment and the complexity of the
Group's New Categories supply chain.
The risks listed in this section should be
considered in the context of the Group’s
internal control framework. This process is
described in the section on risk
management and internal control in the
corporate governance statement from
page 159. This section should also be read
in the context of the cautionary statement
on page 386.
A summary of all the risk factors (including
the Principal Risks) which are monitored by
the Board through the Group’s risk register
is set out in the Additional Disclosures
section from page 353.

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Group Principal Risks

Group Principal Risks

Continued

Risks
Competition from illicit trade
Increased competition from illicit trade and illegal products – either local duty evaded, smuggled, counterfeits, or non-regulatory
compliant, including products diverted from one country to another.
Time frame Strategic impact Key Stakeholders

Short-/medium-/long-term Quality Growth/Sustainable Consumers, Society,

Future Shareholders & Investors
Impact
Erosion of goodwill, with lower volumes and/or increased
operational costs (e.g. track and trace costs) and reduced profits.
Reduced ability to take price increases.
Investment in trade marketing and distribution is undermined
and the product is commoditised.
Counterfeit products (especially in New Categories) and other
illicit products could harm consumers, damaging goodwill, and/or
the category (with lower volumes and reduced profits), potentially
leading to misplaced claims against BAT, further regulation and
a failure to deliver the corporate harm reduction objective.
Breach of legislation, criminal offences, contract breaches under
the EU Cooperation Agreement, allegations of facilitating
smuggling and reputational damage, including negative
perceptions of our governance.
Existence of illicit trade reduces our ability to reduce the
health impact of our business, it undermines policies of state
governments with respect to underage tobacco users and
creates basis for inappropriate regulation.

Geopolitical tensions
Geopolitical tensions, civil unrest, economic policy changes, global health crises, terrorism and organised crime have the potential
to disrupt the Group’s business in multiple markets.
Time frame Strategic impact Key Stakeholders

Short-/medium-term Quality Growth/Sustainable Society, Our people,

Future Shareholders & Investors
Impact
Potential injury or loss of life, loss of assets and disruption to
supply chains and normal business processes.
Increased costs due to more complex supply chain and security
arrangements and/or the cost of building new facilities
or maintaining inefficient facilities.
Lower volumes as a result of not being able to trade in a country.
Higher taxes or other costs of doing business as a foreign
company or the loss of assets as a result of nationalisation.
Reputational damage, including negative perceptions of our
governance and protection of our people and our ESG credentials.
Disruption to the supply chain impacts our ability to reduce the
health impact of our business.

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Tobacco, New Categories and other regulation interrupts growth strategy

The enactment of, proposals for, or rumours of, regulation that significantly impairs the Group’s ability to communicate,
differentiate, market or launch its products, and/or the lack of appropriate regulation for New Categories.
Time frame Strategic impact Key Stakeholders

Short-/medium-/long-term Quality Growth/Sustainable Consumers, Society,

Future Shareholders & Investors
Impact
A lack of acceptance or rejection of Tobacco Harm Reduction as
a tobacco control policy could prevent a balanced regulatory
framework for New Categories. Restricted ability to sell and
communicate New Categories could lead to failure of the harm
reduction objective and loss of confidence in the Group’s ESG
performance. Lack of appropriate regulation and its enforcement
may impact our opportunity for quality growth and affect our ability
to develop an outstanding pipeline of new products.
Disproportionate regulations for New Categories, such as
questionable regulatory classifications or total bans, that may not be
science-based and/or risk-proportionate and that neither recognise
unintended consequences nor respect legal rights (e.g. wrong
regulatory classifications or total bans). Reduced ability to make
scientific claims and compete in future product categories and make
new market entries. Erosion of brand value through commoditisation
and the inability to launch innovations may negatively affect our
ability to generate value growth. Regulation with respect to bans or
severe restrictions on menthol flavours, product design & features
and nicotine levels may adversely impact individual brand portfolios.
Reduced consumer acceptability of new product specifications,
leading to consumers seeking alternatives in illegal markets or
irresponsible operators exploiting regulatory loopholes. Shocks to
share price on rumours of, or the announcement or enactment of,
restrictive regulation (e.g. sales ban to future generations). Failure to
deliver appropriate and proportionately costed Extended Producer
Responsibility (EPR) schemes.
Please refer to the to the description of the tobacco and nicotine regulatory regimes under which the Group’s businesses operate set out from page 375

Supply chain disruption

Disruption to the global supply chain that may impact our ability to manufacture products or supply our consumers.
Time frame Strategic impact Key Stakeholders

Short-term Quality Growth/Sustainable Consumers, Our people,

Future/Dynamic Business Shareholders & Investors
Impact
Disruption to the global supply chain may impact all aspects
of our business and impede our ability to manufacture products
and supply our consumers.
Disruption to supply chain can lead to volume shortfalls and
inability to supply markets, increased replacement or/and rebuild
costs consequently leading to reduced profit and reputational
damage. This may affect our ability to reinvest into New Categories
and deliver our Tobacco Harm Reduction commitment.
Loss of one or more key facilities or suppliers may cause loss of life
and injuries. It may also lead to societal dislocation resulting in
population migration and loss of key skills.
Our supply chain could be negatively impacted by events arising
from, but not limited to natural disasters, man-made accidents,
cyber incidents.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Group Principal Risks

Group Principal Risks

Continued

Risks continued
Litigation
Product liability, regulatory or other significant cases (including investigations) may be lost or settled resulting in a material loss or
other consequence.
Time frame Strategic impact Key Stakeholders

Short-/medium-/long-term Quality Growth/Sustainable Shareholders & Investors

future
Impact
Damages and fines, negative impact on reputation (including ESG
credentials), disruption and loss of focus on the business.
Consolidated results of operations, cash flows and financial
position could be materially affected by an unfavourable outcome
or settlement of pending or future litigation, criminal prosecution or
other contentious action, or by the costs associated with bringing
proceedings or defending claims.
Inability to sell products as a result of an injunction arising out of a
patent infringement action against the Group may restrict growth
plans and competitiveness.
Potential share price impact.
Sustainability-related litigation could also result in a reduction in the
investor base due to sustainability and sustainability-related
concerns.
Please refer to note 31 on page 286 in the Notes on the Accounts for details of contingent liabilities applicable to the Group.

Significant increases or structural changes in tobacco, nicotine and New Categories related taxes
The Group is exposed to unexpected and/or significant increases or structural changes in tobacco, nicotine and New Categories
related taxes in key markets.
Time frame Strategic impact Key Stakeholders

Short-/medium-/long-term Quality Growth/Sustainable Consumers, Society,

Future Shareholders & Investors
Impact
Consumers reject the Group’s legitimate tax-paid products for
products from illicit sources or cheaper alternatives.
Reduced legal industry volumes.
Reduced sales volume and/or portfolio erosion leading to inability
to invest in, develop, commercialise and deliver New Category
products.
Partial absorption of excise increases leading to lower profitability.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Inability to develop, commercialise and deliver the New Categories strategy

Risk of not capitalising on the opportunities in developing and commercialising successful, safe and consumer-appealing
innovations.
Time frame Strategic impact Key Stakeholders

Short-/medium-/long-term Quality Growth/Sustainable Consumers, Society,

Future/Dynamic Business Shareholders & Investors
Impact
Failure to deliver Group strategic imperative, 2025 growth
ambition and 2030 consumer targets.
Potentially missed opportunities, unrecoverable costs and/or
erosion of brand, with lower volumes and reduced profits.
Reputational damage and recall costs may arise in the event
of defective product design or manufacture.
Loss of market share due to non-compliance of product
portfolio with regulatory requirements or inability to engage on
our science, leading to a negative shift in sentiment and confidence
in Group products.
Loss of investor confidence in ESG performance.
Failure to deliver our corporate purpose of harm reduction.

Disputed taxes, interest and penalties

The Group may face significant financial penalties, including the payment of interest, in the event of an unfavourable ruling
by a tax authority in a disputed area.
Time frame Strategic impact Key Stakeholders

Short-/medium-term Quality Growth/Sustainable Shareholders & Investors

Future
Impact
Significant fines and potential legal penalties.
Disruption and loss of focus on the business due to diversion
of management time.
Impact on profit and dividend.

Injury, illness or death in the workplace

The risk of injury, death or ill health to employees and those who work with the business is a fundamental concern of the Group
and can have a significant effect on our operations.
Time frame Strategic impact Key Stakeholders

Short-term Quality Growth/Sustainable Our people

Future/Dynamic Business
Impact
Serious injuries, ill health, disability or loss of life suffered by
employees and the people who work with the Group.
Exposure to civil and criminal liability and the risk of prosecution
from enforcement bodies and the cost of associated legal costs,
fines and/or penalties.
Interruption of Group operations if issues are not addressed
promptly.
High staff turnover or difficulty recruiting employees if perceived
to have a poor Environment, Health and Safety (EHS) record.
Reputational damage to the Group and negative impact on our
ESG credentials.

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Group Principal Risks

Group Principal Risks

Continued

Risks continued
Solvency and liquidity
Liquidity (access to cash and sources of finance) is essential to maintaining the Group as a going concern in the short-term
(liquidity) and medium-term (solvency).
Time frame Strategic impact Key Stakeholders

Short-/medium-term Quality Growth/Sustainable Shareholders & Investors

Future/Dynamic Business
Impact
Inability to access the Group’s cash resources and to fund the
business under the current capital structure resulting in missed
strategic opportunities or inability to respond to threats.
Decline in our creditworthiness and increased funding costs
for the Group.
Requirement to issue equity or seek new sources of capital.
Reputational risk of failure to manage the financial risk profile
of the business, resulting in an erosion of shareholder value
reflected in an underperforming share price.
Inability to mitigate accounting and economic exposures.
Economic loss as a result of devaluation/revaluation of assets
(including cash) valued or held in local currency, and additional
costs as a result of paying premiums to obtain hard currency.
Failure to appropriately engage with investors’ and lenders’
sustainability criteria and concerns may impact BAT’s counterparty
availability, credit ratings, access to funding, or may result in an
increase in the cost of funding.
Exposure to the cannabis sector may lead to regulatory and legal
risk, reputation and compliance issues restricting bank and/or
investor access.

Foreign exchange rates exposures

The Group faces translational and transactional foreign exchange (FX) rate exposure for earnings/cash flows from its
global businesses.
Time frame Strategic impact Key Stakeholders

Short-/medium-term Quality Growth/Dynamic Shareholders & Investors

Business
Impact
Fluctuations in FX rates of key currencies against sterling introduce
volatility in reported earnings per share (EPS), cash flow and the
balance sheet driven by translation into sterling of our financial
results and these exposures are not normally hedged.
The dividend may be impacted if the payout ratio is not adjusted.
Differences in translation between earnings and net debt may
affect key ratios used by credit rating agencies.
Volatility and/or increased costs in our business, due to
transactional FX, may adversely impact financial performance.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Climate Change and Circular Economy

Direct and indirect adverse impacts associated with climate change and the move towards a circular economy.
Time frame Strategic impact Key Stakeholders

Short-/medium-/long-term Quality Growth/Sustainable Consumers, Society,

Future Shareholders & Investors
Impact
Direct physical risks to BAT agricultural, manufacturing, operational
and logistic processes may lead to reduced production capability,
delays, volume shortfalls, disruption of energy supply (and other
utilities) and business interruption.
Extreme temperatures and pollution could be harmful for
employees, creating health and safety risks.
Failure to adequately manage supply chain risks associated with
transitional and operational impacts (of climate change
particularly) may cause increased volatility in supply volume, quality
or cost of raw materials and services necessary for the effective
and efficient operation of BAT's business across its value chain.
GHG emissions can indirectly increase costs of supply and delivery.
Punitive actions against the Group or ability to sell products in key
markets, due to failure to comply in an effective, competitive or
economic manner with evolving regulations and requirements
relevant to business operations, products and supply chain,
and reporting.
Technology risk increase due to write-offs and early retirement
of existing assets. Additional cost required to deploy new practices
and processes.
Poor ESG ratings by investors or platforms/indices used by them
may lead to reduced access to capital, increased cost of capital
or impact the share price.
Loss or damage to reputation may reduce market share and
revenue, due to customers and/or consumers having a reduced
or negative perception of BAT and its products in comparison to
its competitors, or of specific products/product categories overall.
Negative impact upon the attraction, retention and motivation
of skilled employees and contractors.
Inadequate waste management can increase negative public
opinion on BAT and cause potential damage to brand value from
loss of consumer trust, increased costs in jurisdictions where
waste management is costly and/or insufficient.
Failure to adequately manage Group sustainability priorities like
climate change, protection of natural resources and forests, human
rights in leaf supply chain may restrict suppliers willing to do
business with BAT.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Group Principal Risks

Group Principal Risks

Continued

Risks continued
Cyber Security
Inability of the organisation to defend against an intentional or unintentional action that results in loss of confidentiality, availability
or integrity of systems and data.
Time frame Strategic impact Key Stakeholders

Short-/medium-/long-term Quality Growth/Sustainable Consumers, Society, Our

Future/Dynamic Business People, Shareholders &
Investors
Impact
Loss or theft of confidential business information, when used alone
or in conjunction with any other available information reduces the
impact of BAT business strategy, investments and commercial
operations.
Personal data breach incidents that result in the disclosure of
personally identifiable data resulting in legal, reputational, and
regulatory compliance impacts.
Disruption to BAT’s business operations that impacts R&D
facilities, manufacturing, distribution or technology services
resulting in business interruption and/or impacts to health & safety.
Inappropriate use of technology systems to enable fraud, or theft
of product, technology, or monetary resources.
Loss of digital trust resulting in brand damage and a loss of
consumer trust.
A cyber incident experienced by a third party partner or supplier
resulting in business interruption, supply chain disruption, loss of
company data or provides access or transmission of malicious
activity from the supplier to BAT.

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This page is intentionally left blank

The Strategic Report was approved by the Board of Directors on 07 February 2024 and signed on its behalf by Caroline Ferland, Company Secretary.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Governance

Chair’s Introduction on Governance

Dear Shareholder, The Board engages with our people and

The executive team worked The Board spends a lot of time engaging listens to their perspectives through a
closely with the Board in 2023 with the Group's purpose, strategy, values range of channels, discussed further on
to refine our A Better Tomorrow™ and culture. In developing these blueprints pages 89, 148 and 181. Our Directors travel
strategy, further emphasising for sustainable growth, we focus just as to different markets and business units
keenly on the Group's operational annually to meet our people and hear their
our purpose and commitment experiences first hand.
leadership who implement and embed
to fostering a collaborative them. The theory, and practice, are always In 2023, members of the Board travelled
and inclusive culture. evolving; we take care that they do so in step. to Sweden to visit distribution and other
In this context, the Board has overseen facilities. We also took the opportunity to
Luc Jobin a successful transition to our new Chief visit trade marketing operations in
Chair Executive in 2023, with Tadeu Marroco Romania during the Board's strategy
taking over from Jack Bowles in May. sessions in Bucharest. It was my pleasure
to meet with colleagues in both countries,
Tadeu has an outstanding record of
and this engagement was instructive as
developing teams capable of delivering
always. You can read more about the
our transformation, with a sharp and
Board's programme of market and site
consistent focus on strong execution and
visits on page 140.
financial performance. The Board also
wholeheartedly supports his collaborative In October, the Board completed a review
and inclusive leadership style. of how the Group engages with our
business stakeholders to support the
We are confident that under Tadeu's
continuing effectiveness of these channels.
leadership, we will continue to evolve as a
You can read about how we engage with
high-performing consumer goods group
our stakeholders and take their views into
that nurtures our people's passion for our
account on pages 144 to 149.
consumers and our brands.
We conducted a full programme of
Strategic focus
shareholder and investor engagement in
The executive team worked closely with
2023. I was pleased to meet with a number
the Board in 2023 to refine our A Better
TM of shareholders during the year and, as a
Tomorrow strategy and articulate our
Board, we look forward to further dialogue
commitment to Building a Smokeless
with shareholders ahead of our 2024 AGM.
World. To support this, we have introduced
our Strategic Navigator to provide greater Delivery with Integrity
insight to our stakeholders. Our Standards of Business Conduct (SoBC)
express the high standards of integrity we
In parallel, we have evolved the expression
are committed to upholding.
of our values with input from our people
across the Group, to underpin execution Compliance with our SoBC and our legal
of our strategy and drive a collaborative obligations are absolute requirements and
and inclusive culture. we will not tolerate any failure to comply
with these. Our SoBC and Delivery with
The Board fully endorses these efforts,
Integrity programme are discussed on
recognising that our collective tone can
page 98.
help to foster an environment where open
discussion and rigour in decision making In April 2023, it was announced that
can thrive together. agreement had been reached with the DOJ
and OFAC to resolve previously disclosed
In relation to capital allocation, we keep
investigations into breaches of sanctions,
our active framework under close review
concerning business activities relating to
and continue to evaluate a range of
North Korea between 2007 and 2017. The
opportunities to enhance financial
Company has entered into a deferred
flexibility, including disposals and exits
prosecution agreement with the DOJ and
from non-strategic markets.
a civil settlement agreement with OFAC.
Engagement with our stakeholders
Adherence to rigorous ethical and
As geopolitical turbulence continued
compliance standards has been, and
through 2023, the Board has overseen
remains, a key priority for the Group. In
various measures put in place to support
January 2024, we launched an updated
impacted colleagues.
version of our SoBC, developed to maintain
We have also overseen the sale of our strong linkage with our strategy and values
businesses in Russia and Belarus, with a and to take into account our stakeholders'
high degree of regard for the safety and expectations and the current regulatory
welfare of our people, our legal obligations environment.
and the perspectives of our shareholders
and wider society.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board efficacy Board Leadership and Company Purpose

Effective oversight of executive transition Throughout the year
is a critical part of our long-term success. Principle
The Board has given thorough
ended 31 December 2023, A. Long-Term Sustainable Success
consideration to the restructuring of our we applied the Principles pages 2 to 120 and 130 to 153
Management Board in 2023 to ensure of the UK Corporate B. Purpose, Values and Culture
we have the right capabilities to drive our pages 6 to 9, 14 to 17, 88 to 91, 139, 140 to 143, 148,
strategy. Having overseen the transition to Governance Code 2018. 149, 153 and 156 to 157
our new executive management structure, C. Resources and Control Framework
the Nominations Committee turned its The Company was pages 2 to 20, 121 to 129, 138, 139, 143, 153
focus to succession planning for and 159 to 169
Non-Executive Directors. compliant with all
D. Shareholder and Stakeholder Engagement
We were delighted to welcome Murray provisions of the Code pages 22 to 23, 89, 144 to 148 and 170 to 181
Kessler and Serpil Timuray to the Board during the year. The E. Workforce Engagement, Policies, Practices
in Q4 2023. Their experience in growing
consumer product companies will
Board considers that this pages 72, 88 to 89, 98 to 99, 139, 140 to 141, 148,
178 to 181
augment our existing expertise. Our Board Annual Report and Form
composition will be further enhanced with 20-F, and notably this Division of Responsibilities
the appointment of Soraya Benchikh as
Chief Financial Officer from 1 May 2024. Governance section, Principle
Soraya will bring a wealth of financial and provides the information F. Leadership of the Board
commercial expertise to the executive shareholders need to pages 130 to 153
team and I look forward to her joining us.
Reviewing the overall diversity of our
evaluate how we have G. Board Composition and Division of
Responsibilities
Board, I am pleased to report that women complied with our pages 131 to 135 and 150 to 151
currently represent 45% of the Board, and obligations under H. Role and Commitment of Non-Executive
27% of our Directors are from an ethnic
minority background. Promoting diversity the Code. Directors
pages 132 to 135, 150 to 151 and 155 to 156
in our executive management team and
I. Board Support
senior management pipeline remains a key Pages noted opposite refer to pages 150 to 152
focus area for the Board. We are encouraged particular discussion on the
by the diversity already present in our senior application of Principles of the Code
management, particularly increasing in this Annual Report and Form 20-F. Composition, Succession, Evaluation
strength in representation of ethnic diversity. Disclosure guidance and
However, we are keenly aware that we have Principle
transparency rules
more to do, and will continue to strive to J. Board Appointments, Succession and Diversity
further improve our gender balance. We comply with the Disclosure pages 131 to 135, 142 and 154 to 158
Guidance and Transparency Rules
As a Board, we review our effectiveness requirements for corporate governance K. Board Skills and Experience
every year. This year, I led an internal review pages 132 to 135 and 154 to 155
statements by virtue of the information
of the Board, its Committees and the included in this section, together with L. Board Evaluation
Directors. Having discussed the outcomes the information contained in the Other pages 152 to 153
of this exercise, the Board considers that it Information section.
continues to function effectively. We also
identified some areas in which we can The UK Corporate Governance Code Audit, Risk, Internal Control
further develop our effectiveness and plan 2018 is available at frc.org.uk.
Principle
to implement these in 2024. You can read U.S. corporate governance
M. Internal and External Audit Functions
about our review process and its outcomes As a result of the listing of the pages 162 to 169
in detail on pages 152 and 153. Company’s American Depositary
Sue Farr and Dimitri Panayotopoulos will Shares (ADSs) on the NYSE, the N. Fair, Balanced and Understandable Assessment
Company is required to meet certain pages 168 and 193
step down from the Board at the close of
the 2024 AGM. I would like to thank them NYSE requirements relating to O. Risk Management and Internal Controls
for their extensive contributions to the corporate governance matters. pages 121 to 129, 142 to 143, 159 to 169 and 384
Board over their tenures. From the close of Certain exceptions to these
the 2024 AGM, Holly Keller Koeppel will be requirements apply to the Company
appointed as Senior Independent Director, as a foreign private issuer. For details Remuneration
Darrell Thomas will succeed Holly as Chair of the significant differences between Principle
of the Audit Committee and Kandy Anand the NYSE requirements and the P. Remuneration Policies and Practices
will succeed Dimitri as the Chair of the Company’s practices, please see pages 170 to 192
Remuneration Committee (subject to page 383
Q. Development of Policy on Remuneration
re-election at the 2024 AGM). pages 170 to 192
On behalf of the Board, I confirm that we
R. Judgement and Discretion
consider that this Annual Report and Form pages 170 to 192
20-F is fair, balanced and understandable,
and presents the information necessary to
assess the Company’s position, performance, + For reference, we prepare a separate voluntary
annual compliance report by reference to each
business model and strategy. Principle and Provision of the Code, available at
bat.com/governance
Luc Jobin
Chair

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Governance

Board of Directors
As at 07 February 2024

Luc Jobin Tadeu Marroco Sue Farr

Chair (64) Chief Executive (57) Senior Independent Director (67)

Nationality: Canadian Nationality: Brazilian Nationality: British

Appointed: Chair since April 2021; Non- Appointed: Chief Executive since May Appointed: Non-Executive Director since
Executive Director since July 2017 2023; Director since August 2019 February 2015; Senior Independent
Experience: Luc was President and Chief Experience: Tadeu joined the Group in Director since August 2022
Executive Officer of Canadian National 1992 and joined the Management Board Experience: Sue’s extensive career
Railway Company from July 2016 until as Director, Business Development in includes Director, Strategic and Business
March 2018, having served as Executive 2014, later becoming Regional Director, Development of Chime Group and a
Vice President and Chief Financial Officer Western Europe in 2016, then Regional number of senior marketing and
since 2009. Previously, he was Executive Director, Europe and North Africa in communications positions, including
Vice President of Power Corporation of January 2018. He became Director, Group Director of Marketing BBC, Corporate
Canada (an international financial Transformation in January 2019 and, in Affairs Director of Thames Television and
services company) from 2005 to 2009. addition to this role, he was appointed Director of Communications of Vauxhall
Luc was Chief Executive Officer of Deputy Finance Director in March 2019, Motors. Sue is a former Chairwoman of
Imperial Tobacco Canada from 2003 to before joining the Board as Finance both the Marketing Society and the
2005 and Executive Vice President and Director in August 2019 and later Marketing Group of Great Britain. She
Chief Financial Officer from 1998 to 2003. becoming Finance and Transformation was formerly a Non-Executive Director of
Luc previously served as an independent Director. He became Chief Executive in Dairy Crest plc, Millennium & Copthorne
Non-Executive Director of Reynolds May 2023. Hotels plc, Accsys Technologies plc, New
American Inc. from 2008 until its Relevant skills and contribution to the Look, and Lookers plc.
acquisition by the Group. Board: Tadeu brings broad significant Relevant skills and contribution to the
Relevant skills and contribution to the management, innovation, and strategic Board: Sue contributes considerable
Board: Luc brings significant financial, leadership to the Board gained in various expertise in relation to marketing,
regulatory and consumer business regional, global finance and general branding and consumer matters, which
experience to the Board, together with leadership roles across the Group. This are key areas of focus for the Board.
extensive North American knowledge and enables him to effectively lead the Group
and deliver our ambition to build A Better External appointments: Non-Executive
experience of enterprise transformation.
Tomorrow .
TM Director and Chair of the Remuneration
External appointments: Independent Committee of Helical PLC; Non-Executive
Director and Chair of the Audit and External appointments: No external Director of Unlimited Group Ltd; and
Finance Committee of Gildan Activewear appointments. Senior Independent Director of THG plc.
Inc..

Balance of Non-Executive Directors Length of tenure of Nationality of Directors

and Executive Directors Non-Executive Directors

Chair 1 0–3 Years 6 American 4 Canadian 1

Executive Directors 1 4–6 Years 2 Brazilian 1 French 1

Independent Non-Executive Directors 9 7+ Years 2 British 3 Turkish/British 1

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Audit Committee
Nominations Committee
Remuneration Committee
Committee Chair
Executive Director
Non-Executive Director
Interim Group Finance Director

Krishnan (Kandy) Anand Karen Guerra

Non-Executive Director (66) Non-Executive Director (67)

Nationality: American Nationality: British

Appointed: February 2022 Appointed: September 2020
Experience: Kandy previously held Experience: Karen has held a variety of
several senior positions at Molson Coors executive roles, including President and
Brewing Company, including Chief Director General of Colgate Palmolive
Growth Officer, CEO of Molson Coors France, and Chairman and Managing
International and Head of Strategy, M&A Director of Colgate Palmolive UK Limited.
and Transformation. He also held senior She was formerly a Non-Executive
positions at the Coca-Cola Company, Director of RS Group plc (formerly
including President, Coca-Cola Electrocomponents p.l.c.), Davide
Philippines and Vice President, Global Campari-Milano S.p.A, Paysafe PLC,
Commercial Leadership. Prior to joining Inchcape PLC, Samlerhuset BV and
Coca-Cola, Kandy held several senior Swedish Match AB.
marketing leadership positions at Relevant skills and contribution to the
Unilever plc. Kandy previously served on Board: Karen brings valuable international
the boards of Popeyes Louisiana Kitchen experience, particularly in marketing,
Inc. and Empower Acquisition Company. sales and consumer goods insight to the
Relevant skills and contribution to the Board.
Board: Kandy brings valuable External appointments: Independent
international experience to the Board, Non-Executive Director and Chair of the
particularly in the marketing and Nominating and Corporate Governance
consumer goods sectors. Committee of Amcor plc.
External appointments: Director of
Wingstop Inc.; Chief Executive Officer of
Igniting Business Growth L.LC.; and
Chairman and Chief Executive Officer of
Igniting Consumer Growth Acquisition Co.

Directors’ Directors’
gender balance ethnicity balance

Note:
1
Male 6 Ethnic Minorities 3 1. Applying UK Office for National Statistics ethnicity
categories of: Asian; Black; Mixed/Multiple Ethnic
Female 5 White 8 Groups; Other Non-White Ethnic Group, in alignment
with the UK Listing Rules.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Governance

Board of Directors
Continued

Holly Keller Koeppel Murray S. Kessler Véronique Laury

Non-Executive Director (65) Non-Executive Director (64) Non-Executive Director (58)

Nationality: American Nationality: American Nationality: French

Appointed: July 2017 Appointed: November 2023 Appointed: September 2022
Experience: Up until April 2018, Holly Experience: Murray previously held Experience: Over the course of her career,
was a Senior Advisor to Corsair Capital several senior positions, including Chief Véronique has held several leadership
LLC, where she had previously served as Executive, President and Board Member roles. From September 2014 to September
Managing Partner and Co-Head of of Perrigo plc, President, Chief Executive 2019, she was Chief Executive Officer of
Infrastructure from 2015 until her Officer & Chairman of the Board of Kingfisher plc, an international home
retirement in 2017. From 2010 to 2015, Lorillard Tobacco Co., Vice Chair of Altria improvement company across Europe
she served as Co-Head of Citi Group, Inc. and President, Chief Executive operating under several brands including
Infrastructure Investors. Prior to 2010, Officer & Chairman of the Board of UST B&Q, Castorama, Brico Dépôt, Screwfix
she held financial and executive LLC. Prior to joining UST, Murray had a and Koçtaş. She spent over 16 years at
management roles with Consolidated twelve-year career with Campbell Soup Kingfisher and during her tenure she also
Natural Gas Company and American Company, having served as Vice served as Chief Executive Officer and
Electric Power Company, Inc. (AEP), President of Sales and Marketing, Commercial Director at both B&Q and
ultimately serving as Chief Financial General Manager of the Swanson Castorama. Véronique previously served
Officer of AEP. Holly previously served as Division of Campbell Soup and other on the Board of WeWork Inc..
an independent Non-Executive Director leadership roles. Relevant skills and contribution to the
of Reynolds American Inc. from 2008 Relevant skills and contribution to the Board: Véronique brings extensive
until its acquisition by the Group. Board: Murray brings valuable international consumer goods, strategic,
Relevant skills and contribution to the international experience to the Board, transformation and digital experience to
Board: Holly’s extensive international particularly in growing consumer product the Board.
operational and financial management companies and managing regulated External appointments: Board member
experience in a range of industry sectors businesses. of Sodexo SA; Inter IKEA Holding B.V.;
enables her to make important External appointments: No external Eczacıbaşı Holding Company; and Société
contributions to the Board. appointments. Bic S.A..
External appointments: Non-Executive
Director and Chair of Audit Committee
of Flutter Entertainment plc; Director
and the Chair of the Financial Audit
Committee of AES Corporation; and
Director of Arch Resources Inc..

Attendance at Board meetings in 2023

Notes:
1
Attended/Eligible to attend 1. Number of meetings in 2023: The Board held eleven meetings in 2023, six of which
Name Director since Meetings
4 were ad hoc, to review: Executive Director and Management Board succession
planning; an update on Group patents matters; status of DOJ and OFAC
Luc Jobin 2017 11/11 investigations; and the sale of the Group's businesses in Russia and Belarus.
2(a) 2. (a) Tadeu Marroco and Jack Bowles were recused from the ad hoc meeting
Tadeu Marroco 2019 10/10 convened in May 2023 to consider succession planning for the role of the Chief
2(b), (d)
Kandy Anand 2022 9/10 Executive; (b) Kandy Anand did not attend the scheduled meeting in February 2023
2(c) due to unforeseen personal circumstances; (c) Sue Farr did not attend the ad hoc
Sue Farr 2015 10/11 meeting in January 2023 convened at short notice due to prior commitments;
(d) Kandy Anand, Holly Keller Koeppel and Darrell Thomas recused themselves
Karen Guerra 2020 11/11 from the ad hoc meeting convened in September 2023 in view of a potential
2(d)
Holly Keller Koeppel 2017 10/10 conflict with U.S. sanctions regulations; (e) Véronique Laury did not attend the ad
2(e) hoc meeting in March 2023 convened at short notice due to prior commitments;
Véronique Laury 2022 10/11 (f) Dimitri Panayotopoulos did not attend the ad hoc meetings in March, June and
3(a) September 2023 and the scheduled meeting in July 2023 due to illness.
Murray Kessler 2023 1/1 3. Composition: The Board of Directors is shown as at the date of this Annual Report
2(f)
Dimitri Panayotopoulos 2015 7/11 and Form 20-F; (a) Murray Kessler joined with Board with effect from 6 November
2(d) 2023 on his appointment as a Non-Executive Director; (b) Serpil Timuray joined the
Darrell Thomas 2020 10/10 Board with effect from 4 December 2023 on her appointment as a Non-Executive
3(b) Director; (c) Jack Bowles stepped down from the Board with effect from 15 May
Serpil Timuray 2023 1/1 2023; (d) Savio Kwan stepped down from the Board with effect from the conclusion
2(a),3(c) of the AGM on 19 April 2023.
Jack Bowles 2019-2023 5/5
3(d) 4. Number of meetings in 2024: Five Board meetings are scheduled for 2024,
Savio Kwan 2014-2023 5/5 with ad hoc meetings convened as may be required.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dimitri Panayotopoulos Darrell Thomas Serpil Timuray

Non-Executive Director (72) Non-Executive Director (63) Non-Executive Director (54)

Nationality: British Nationality: American Nationality: Turkish/British

Appointed: February 2015 Appointed: December 2020 Appointed: December 2023
Experience: Dimitri was Vice Chairman Experience: Most recently, Darrell served Experience: Serpil has carried out a
and Advisor to the Chairman and CEO of as Vice President and Treasurer for number of executive roles, including her
Procter & Gamble (P&G), where he started Harley-Davidson, Inc., a position which he current role as CEO of the Europe Cluster
his career in 1977. During his time at P&G, held from June 2010 to April 2022, having at Vodafone Group. Serpil's former roles
Dimitri led on significant breakthrough previously held several senior finance on Vodafone Group's Executive
innovations and continued to focus on positions, including Interim Chief Financial Committee include Group Chief
this, speed-to-market and scale across all Officer for Harley-Davidson, Inc., Chief Commercial Operations and Strategy
of P&G’s businesses while Vice Chairman Financial Officer for Harley Davidson Officer, and Regional CEO of AMAP
of all the Global Business Units. Financial Services, Inc. and Vice President (Africa, Middle East, Asia-Pacific). She
Relevant skills and contribution to the and Assistant Treasurer, PepsiCo, Inc.. joined Vodafone in 2009, as CEO of
Board: Dimitri has extensive general Prior to joining PepsiCo, Inc. Darrell had a Vodafone Turkey. Prior to joining
management and international sales and 19-year career in banking with Vodafone she spent 10 years at Danone,
brand building expertise, which enables Commerzbank Securities, Swiss Re New latterly as the CEO of Danone Dairy
him to make valuable contributions to Markets, ABN Amro Bank and Citicorp/ Turkey. She began her career in 1991 at
Board discussions on these important Citibank where he held various capital Procter & Gamble, where she held several
topics. markets and corporate finance roles. marketing roles for eight years and
Relevant skills and contribution to the latterly as a member of the Executive
External appointments: Independent Committee in Türkiye. She was previously
Director and Chair of the Compensation Board: Darrell brings invaluable
experience to the Board, particularly in an independent Non-Executive Director
Committee of North Atlantic Acquisitions of Danone Group Plc from 2015 to 2023
Corporation; Senior Advisor at The Boston finance and treasury, in addition to his
extensive operational and management and the Chair of the Corporate Social
Consulting Group; Advisory Board member Responsibility Committee.
of JBS USA; Board Member of IRI; and skills and knowledge of capital markets.
Chairman of Airway Therapeutics Inc.. External appointments: Independent Relevant skills and contribution to the
Director of Dorman Products Inc.; Non- Board: Serpil brings extensive
Executive Director of Scotia Holdings (US) operational, strategy and marketing
Inc., Pitney Bowes Inc. and Board member experience to the Board, drawn from
of Sojourner Family Peace Center, Inc.. roles in large companies operating in the
technology and fast-moving consumer
goods sectors.
External appointments: CEO of Europe
Cluster at Vodafone Group; and Non-
Executive Director of TPG Telecom Plc.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Governance

Management Board
As at 07 February 2024

Tadeu Marroco Javed Iqbal Jerome Abelman James Barrett

Chief Executive (57) Interim Finance Director, and Director, Legal and General Director, Business
Director, Digital and Information Counsel (60) Development (49)
(51)
Nationality: Brazilian Nationality: Pakistani Nationality: American Nationality: British
Tadeu joined the Group in 1992 Javed joined the Jerome was appointed James joined the
and joined the Management Management Board as Director, Legal Affairs and Management Board as
Board as Director, Business Director, Digital and General Counsel in Director, Business
Development in 2014, later Information in April 2022 and September 2023, after joining Development on 1 September
becoming Regional Director, was appointed Interim the Management Board as 2023. He has been with BAT
Western Europe in 2016, then Finance Director on 15 May Director, Corporate and since 1996, having joined as a
Regional Director, Europe and 2023. He joined the Group as Regulatory Affairs in January Management Trainee and has
North Africa in January 2018. a Management Trainee, 2015. In May 2015, he became taken various senior roles in
He became Director, Group Finance in 1996 having General Counsel and Director, finance, including a number of
Transformation in January previously held a number of Legal & External Affairs. He finance directorships globally,
2019 and, in addition to this senior roles, most recently as served as a Director on the Group Finance Controller,
role, he was appointed Deputy the Area Director for Middle Board of Reynolds American Head of M&A and most
Finance Director in March East, South Asia and North Inc. from February 2016 until recently as Consumer
2019, before joining the Board Africa. July 2017. Director, Beyond Nicotine.
as Finance Director in August
2019 and later becoming
Finance and Transformation
Director. He became Chief
Executive in May 2023.

+ Read more on page 132

Luciano Comin Michael Dijanosic Zafar Khan

Marketing Director, Regional Director, Asia- Director, Operations (51)
Combustibles & New Pacific, Middle East and
Categories (54) Africa (52)
Nationality: Italian/Argentinian Nationality: Australian Nationality: Pakistani
Luciano became Marketing Michael became Regional Zafar was appointed Director,
Director, Combustibles & New Director, Asia-Pacific, Middle Operations in February 2021
Categories in July 2023, having East and Africa in April 2023, and became a member of the
joined the Management Board having joined the Management Management Board at the
as Regional Director, Americas Board on 1 September 2020 in same time. Previously, he was
and Sub-Saharan Africa in the role of Regional Director, Group Head of New
January 2019. He joined the Asia-Pacific and Middle East. Categories Operations. Zafar
Group in 1992 and has held a Previously, he was Area joined BAT in 1996 and has
wide range of roles, including Director for Asia-Pacific and held several senior roles in the
Marketing Director in Global Travel Retail. Michael Group, including Regional
Venezuela, Marketing Director joined the Group in 1999 and Head of Operations Asia
in Mexico and General has held several senior roles in Pacific & Middle East, Group
Manager of BAT Mexico. the Group including General Head of Plan, Service &
Luciano was also Regional Manager (Papua New Guinea Logistics, Regional Head of
Marketing Manager for and Cambodia) and Regional Plan and Service for Western
Western Europe and then Manager, Asia-Pacific. Europe and Head of
Regional Head of Marketing, Operations, Bangladesh.
Americas and Sub-Saharan
Africa before his appointment
to the Management Board.

136
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Dr Cora Koppe-Stahrenberg Paul McCrory Fred Monteiro Dr James Murphy

Chief People Officer (58) Director, Corporate and Regional Director, Americas & Director, Research and
Regulatory Affairs (51) Europe (57) Science (48)

Nationality: German Nationality: Irish Nationality: Brazilian Nationality: Irish

Cora joined the Management Paul joined the Management Fred joined the Management James was appointed
Board as Chief People Officer Board as Director, Corporate Board on 1 April 2023 as Director, Research and
on 1 November 2023. and Regulatory Affairs on 1 Regional Director for the Science on 1 March 2023,
Immediately prior to joining September 2023. He has Americas & Europe. His having joined the
BAT, she was Global Head of been with BAT since 2006. previous roles include being Management Board on 1
Human Resources at His previous roles include Area Director for Central February 2023. He has been
Fresenius Medical Care, a being Head of Marketing Europe South and General with the Group for more than
publicly listed global Legal and Assistant General Manager of BAT Japan. 17 years in various senior roles
healthcare company. Counsel Corporate and Group in the Group, including EVP
Previously she held senior HR Company Secretary. U.S. Scientific Research &
leadership roles at various Development based in the US,
multinational companies as well as Group Head of
spanning government and PRRP Science and Regional
financial services. Product Manager for
Americas and Sub-Saharan
Africa.

David Waterfield Kingsley Wheaton Johan Vandermeulen

President and CEO, Reynolds Chief Strategy & Growth Chief Operating Officer (56)
American Inc. (51) Officer (50)

Nationality: British Nationality: British Nationality: Belgian

David joined the Management Kingsley was appointed Chief Johan was appointed Group’s
Board as President and CEO of Strategy & Growth Officer on Chief Operating Officer on 1 July
Reynolds American Inc. on 1 July 1 September 2023. He joined 2023. Johan joined the
2023. His previous roles include the Management Board in Management Board in 2014 as
being Area Director for 2012 and has held various Regional Director for Eastern
Western Europe and Head of roles since then – most Europe, Middle East and Africa,
International Brand Group. recently as Chief Growth then became Regional Director,
Officer. He joined the Group Asia-Pacific and Middle East in
in 1996 and has held various January 2018. He has been with
senior marketing positions, the Group for more than 30
including Managing Director, years and his previous roles
Next Generation Products, include General Manager in
Regional Director, Americas Russia and Türkiye and Global
and Sub-Saharan Africa, Chief Brand Director for the Kent
Marketing Officer and Chief brand.
Growth Officer.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board Leadership and Purpose

Governance Framework

An overview of our governance framework is set out below. There is a clear and
effective division of responsibility established between our Board, its Committees
and operational management.

Our Board

Primary Board responsibilities include:

– Group strategy (including – Dividend policy (including declaration of – Assessing and monitoring culture and
sustainability) and ensuring resources dividends) and returns to shareholders its alignment with Group purpose, values
are in place to meet objectives – Significant investments, disposals, and strategy
– Setting Group performance objectives corporate financing and other corporate – Ensuring workplace policies and practices
and monitoring performance activities align with values and support sustainable
– Group budget – Board, Management Board and success
– Effective risk management and internal Company Secretary appointments and – Monitoring compliance with the
control systems succession planning Standards of Business Conducts and
– Establishing appropriate systems of review of Speak Up channels and reports
– Periodic financial reporting arising
corporate governance within the Group
– Annual Report & Accounts and Form – Considering annual review of Board
20-F approval – Group policies
performance and effectiveness
– Effective engagement with shareholders,
our workforce and wider stakeholders

+ The statement of matters reserved for the Board

is available at bat.com/governance
+ Read more on our Board oversight of M&A transactions
on page 331

Board Committees

Audit Committee Nominations Committee Remuneration Committee

Monitors the integrity of financial Reviews the structure and composition Establishes the Directors’ Remuneration
reporting and consistency of accounting of the Board and Management Board; Policy; determines remuneration for the
policies; internal controls and risk recommends Board and Management Chair and Executive Directors; sets
management systems; assurance Board appointments; oversees remuneration for Management Board
of sustainability metrics; independence development of the executive talent members and the Company Secretary;
and effectiveness of the external pipeline; implements the Board Diversity sets and determines performance against
auditors; and effectiveness of the & Inclusion Policy. targets for incentive schemes.
internal audit function.

+ See page 159 for role and activities

Terms of reference at bat.com/governance
+ See page 154 for role and activities
Terms of reference at bat.com/governance
+ See page 190 for role and activities
Terms of reference at bat.com/governance

The Board has three principal Board Committees to which it Following each Committee meeting, the Chair of each Committee
has delegated certain responsibilities. The roles, memberships provides a full briefing to the Board, including on decisions made
and activities of these Committees are described in their and key matters discussed. Copies of the minutes of all
individual reports in this section. Committee meetings are circulated to all Board members
Each Committee has its own terms of reference, available to the extent appropriate.
at bat.com/governance. These are regularly reviewed and Directors that are unable to attend Board or Committee
updated where necessary. meetings have the opportunity to provide their comments
to the Chair in advance of the meeting.

Management Board

Management Board structure, role and responsibilities are discussed on page 139.

+ Delegation of Authorities: As part of our internal controls framework, the Board

delegates certain authorities to executive management through the Group Statement
of Delegated Authorities to enable effective delivery of Group strategy (see page 139)

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board Leadership

Board Leadership How our governance framework supports our strategy

The Board is collectively responsible to our shareholders for the An overview of our governance framework, including the structure
long-term sustainable success of the Company and for the of the Board and its principal Committees, is set out on page 138.
Group’s strategic direction, purpose, values and governance. Certain key decisions and matters are reserved for the Board and
The Board provides the leadership necessary for the Group to are not delegated to any Committees or executive management.
meet its business objectives within a robust framework of internal In 2023, the Board adopted a refreshed internal governance
controls, and is also responsible for ensuring the Group has an framework, including revised terms of reference for its
effective executive leadership team in place to execute the Committees, to reflect the Group's new executive management
Group's strategy. structure and to maintain alignment with evolving market practice.
The Board maintains oversight of the Group's operations, As part of our internal controls framework, the Board has
performance, governance and compliance with regulatory delegated certain authorities to executive management through
obligations. The Board’s primary responsibilities are summarised the Group Statement of Delegated Authorities (SoDA) to enable
on page 138. effective delivery of our strategy. Revisions to the SoDA were
introduced in 2023 to support implementation of the Group's new
+ Matters reserved to the Board
bat.com/governance regional and executive management structures.
Our SoDA is designed to empower management at the right level
Board activities of our organisation and promote accountability and ownership.
The Board has a comprehensive annual programme of meetings Overseeing the implementation of the Group strategy through
to review the Group’s strategy and monitor performance across our SoDA is one of the ways that the Board promotes robust
all elements of the Group’s business model. corporate governance, risk management and internal controls
The Board’s strategic priorities for 2023 are identified within the across the Group. Our SoDA also supports our Board members
key performance indicators set out on page 10. Its key activities in managing their responsibility for promoting the success of the
during the year are set out on pages 142 to 143. The Chair sets Company, in accordance with their directors’ duties.
structured meeting agendas in consultation with the Chief Management Board
Executive and the Company Secretary. The Management Board is responsible for overseeing the
As part of the Board meeting in October 2023 convened in implementation of Group strategy and policies set by the
Romania, the Board held strategy sessions over four days with Board, and creating the framework for Group subsidiaries’
members of executive management to assess the Group's strategy day-to-day operations.
and long-term growth opportunities, strategic priorities, progress Primary responsibilities of the Management Board include:
on key initiatives, and key challenges, risks and mitigation plans.
– Developing Group strategy for the Group’s product portfolio
The Board's consideration of stakeholder interests and for approval by the Board.
environmental and societal factors is fully embedded into Board
decision-making, strategy development and risk assessment on – Monitoring Group operating performance.
an ongoing basis. Examples of principal decisions made by – Ensuring Group, regional and functional strategies and resources
the Board during the year, and consideration given to the long- are effective and aligned.
term consequences of decisions, stakeholder interests, the impact – Managing the central functions.
of operations on the environment and corporate reputation in
– Overseeing the management and development of Group talent.
those contexts, are discussed on page 149.
Management Board structure
The continued impact of the conflict in Ukraine remained an
important focus for the Board in 2023 and the Board closely The Management Board is chaired by the Chief Executive and
oversaw the process towards the sale of the Group's businesses comprises the Chief Executive and 13 senior executives whose
in Russia and Belarus, which was completed and announced in names and roles are described on pages 136 to 137.
September 2023 (see page 280). A series of changes to the structure and composition of the
Throughout this process, the Board gave careful attention to Management Board were announced during 2023, including to
measures deployed to support the safety and welfare of our reflect the Group's new regional structures that took effect on
people in the region, the impact of the conflict on other 1 April 2023, and to sharpen focus on improved execution and
stakeholders and the Group's supply chain, compliance with operational excellence and enhance key capabilities.
international sanctions and other applicable regulations, and Subsequent to the changes summarised in the Company's Half
reputational considerations in the context of the transaction Year Report for the six months ended 30 June 2023, Cora Koppe-
and the Group’s broader operations in the region. Stahrenberg was appointed to the Management Board as Chief
People Officer reporting to the Chief Executive, with effect from
1 November 2023. Soraya Benchikh will join the Management Board
on her appointment as Chief Financial Officer from 1 May 2024.

139
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board Leadership and Purpose

Values and Culture

Our Purpose and Values Shaping and Overseeing Culture

TM
Our purpose, for A Better Tomorrow : Building a Smokeless World, The Board oversees and monitors our culture to enable the Board
is underpinned by our values. These build on the strong foundations to be satisfied that it aligns with the Group's purpose, values and
of the BAT ethos and are designed to act as a clear and authentic strategy, and is reflected consistently in our workplace policies and
guide for our culture and behaviours. practices. The Board supports our executive management team in
In the context of evolution of Group strategy, the Board conducted promoting our values in every area of our business.
a thorough assessment of our corporate values and approach to The Board has considered the Group’s culture in a range of
their development to maintain a clear connection to our strategy contexts throughout the year, including through workforce
and purpose, with focus on diversity and inclusion; empowerment engagement. Primary indicators used by the Board to gauge
and collaboration; and organisational agility. The Board has organisational culture and key examples of the Board’s oversight in
endorsed a refreshed statement of our values, taking into account 2023 are set out below. The effectiveness of the Board's oversight
a broad range of feedback from across our workforce, including of culture is considered as part of the annual review of Board
from a balanced cross-section of employee groups. More than one effectiveness (see pages 152 to 153).
thousand colleagues across the Group participated in focus Connecting directly with our people
sessions to contribute their views on developing our values. Our Directors participate in visits to markets and operations sites
Through our values, we strive to empower our people and foster during the year, spanning trade marketing and distribution
an exciting, rewarding workplace, emphasising inclusivity and operations, R&D and manufacturing facilities.
collaboration to deliver sustainable growth. These opportunities provide an important lens through which
Directors can assess organisational culture in context. Visits are
+ Read more about our values on page 40
structured to enable informal opportunities for Directors to hear
+ Read more about our purpose on page 16 directly from colleagues at different levels of the business and take
an on-the-ground pulse check of our corporate culture.
Delivery with integrity
How we execute our strategy is as important as its delivery.
Our values emphasise acting with integrity, taking care about our
impact on society, and thoughtfulness in decision making. It is
critical to the Group’s long-term, sustainable success that all our
people act with high standards of behaviour. We articulate this
through our Group Standards of Business Conduct (SoBC).
Compliance with our SoBC, in letter and spirit, is mandatory for
all our people worldwide.
Our SoBC is regularly reviewed and updated. A revised edition of
our SoBC was introduced in January 2024 (discussed on page 149),
supported by an extensive awareness campaign across the
organisation with emphasis on the role of everyone in the
organisation to act as a first line of defence against any conduct
Kandy Anand and Karen Guerra viewing Modern Oral product
that does not meet our standards. innovations at the Innovations Lab in Stockholm, Sweden.
Our SoBC includes our Lobbying and Engagement policy, In September 2023, Luc Jobin, Kandy Anand, Karen Guerra and
reinforcing our position that all our engagement activities with Darrell Thomas toured Group operations in Sweden, including a
governments, regulators and other external stakeholders must visit to retail locations in Stockholm to understand local
be conducted with transparency, openness and integrity. It also distribution capabilities, a virtual tour of modern oral
includes our Speak Up policy, reflecting the Speak Up channels manufacturing at our facilities in Malmö, and an immersive event
for raising any concerns in confidence (anonymously if preferred) with members of our Nordics innovation team to see how our
and without fear of reprisal. Modern Oral product developers work directly with consumers to
The Audit Committee monitors SoBC allegations reported during develop our product pipeline. Their visit concluded with
the year, and reports to the Board to enable Board oversight of any participation in a townhall and Q&A session, attended by more
behaviour falling short of our standards and corrective actions taken. than 300 colleagues from our Western Europe operations.
1
In October 2023, the Directors attended a market visit in Romania
as part of the Board's strategy sessions. The Directors visited retail
outlets in Bucharest to see local trade marketing and distribution
operations and how our local marketing representatives engage
with retailers to promote responsible marketing and age verification.
Since becoming Chief Executive in May 2023, Tadeu Marroco
has engaged with colleagues across the regions, visiting the U.S.,
Germany and Poland in our Central Europe area, and Japan and
China in our North Asia-Pacific area, to discuss their views and
his insights on priorities for business transformation, including
through town hall sessions. The Directors' workforce engagement
programme is discussed further at page 148.

+ Read more about our commitment to delivery with integrity and our Group
Standards of Business Conduct on pages 98 to 99

Note:
1. All Directors attended this market visit other than Dimitri Panayotopoulos.
Mr Panayotopoulos attended the Board strategy meetings in October 2023
via videoconference.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Understanding workforce feedback and perspectives Oversight of Group reward frameworks

Insights from a range of workforce engagement channels, During the year, the Remuneration Committee reviewed key
including employee focus groups, our global Your Voice employee elements of executive management and wider workforce
survey and interviews with leavers, support the Directors' remuneration frameworks, incentive schemes and non-financial
understanding of the views and sentiments of our people and benefits, and their alignment with the culture and strategy of
oversight of organisational culture. the Group.
Our Your Voice survey is conducted every two years, most recently In this context, the Committee considered initiatives underway
in 2023, and includes questions to gain feedback on employees' to promote talent retention and progress in the Group's gender
perceptions of culture, leadership, inclusion and wellbeing, and to and ethnicity pay reporting. The Committee also reviewed the
gain employees' views on opportunities for improvement. outcomes of the global living wage assessment conducted in 2023
How our Board engages with our people through our workforce across 100 countries in which the Group operates, discussed
engagement channels, and is kept informed of their interests and further at page 180.
perspectives, is discussed further on pages 89, 148 and 181. Oversight of business integrity and compliance
Keeping informed In 2023, the Audit Committee reviewed quarterly reports from
The Board regularly discussed organisational culture with the Chief the Group Head of Business Integrity & Compliance on the Group's
Executive and executive management, including through reports Delivery with Integrity programme, compliance with the SoBC
from the Chief Executive and the Chief People Officer, provided at and reports from Speak Up channels, and reported to the Board
Board meetings. on these topics.
Board briefings included a deep dive review of the Group's talent The Audit Committee also received regular reports from the
strategy, which enabled the Board to discuss progress towards Group Head of Internal Audit on the outcomes of internal audits
key objectives, responses to employee feedback and explore conducted in 2023 and action plans agreed with management
pressure points in the areas of talent retention in senior where areas for improvement were identified.
management, effective integration of new joiners into the
organisation and furthering gender diversity in senior
management. As part of the Board's Western Europe business
review, the Board also reviewed initiatives implemented in
Western Europe to support a progressive culture, with resilience
to manage through external volatility.
Additionally, the Director, Operations, reported to the Board twice
during the year on workforce health and safety standards and
performance, including progress towards zero accident site
targets and programmes in place to enhance vehicle and driver
safety standards.
At the Board strategy sessions held in October 2023, the Directors
had the opportunity to consider organisational culture and employee
perspectives in depth in the context of working sessions to develop Culture insights and trends
our corporate values, which included a review of employee feedback To complement the Board's consideration of organisational
on core values and opportunities for these to be evolved. The Chief culture as illustrated above, the Board reviewed the Group culture
Strategy & Growth Officer also updated the Board with several dashboard in 2023. The dashboard presents a series of insights
culture pulse-checks during the year, offering a snapshot of and indicators related to culture and engagement, measured
employee perspectives on organisational transformation. across the organisation over time, to support the Board in
monitoring trends.
Indicators tracked in the dashboard include diversity at different
levels of the organisation, employee engagement and
empowerment (measured through our global Your Voice employee
survey), leadership stability, employee retention, voluntary turnover,
new capabilities hires, environmental management, health and
safety, and business conduct (including Speak Up reports).

Tadeu Marroco meeting with product developers at the

Global Device Development Centre in Shenzhen, China.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board Leadership and Purpose

Board Activities in 2023

Inspiring New Categories Exciting, Winning Company Operational Excellence

Innovations & Brands – overseeing the transition of the role of – reviewing U.S. business operations
– reviewing New Categories performance Chief Executive and approving the and approach to resetting the strategy
at Group, regional and key market levels appointment of Tadeu Marroco as Chief for our U.S. business, including macro-
against strategy and key performance Executive and Javed Iqbal as Interim economic and structural challenges,
indicators, including New Categories Finance Director with effect from May sharpening portfolio management,
revenue, contribution and market share; 2023, on the recommendation of the and strengthening route-to-market
– reviewing the outlook for New Categories Nominations Committee; and digital executional excellence to drive
performance for the Group, regions and – approving the appointment of Soraya quality growth;
the wider industry, consumer product Benchikh as Chief Financial Officer and – overseeing the implementation of the
adoption and developments in the as an Executive Director with effect from new regional, business unit structures
competitor landscape; May 2024; and organisational design structures
– reviewing the approach to investment – approving the appointments of Murray across the Group;
in New Categories and developments in Kessler and Serpil Timuray as Non- – reviewing the Group risk register, and risk
the innovation pipeline across the Vuse, Executive Directors and members of appetite in the context of strategic
glo and Velo product portfolios; the Remuneration and Nominations objectives and emerging risks, with focus
– reviewing geographic expansion plans for Committees, on the recommendation on emerging cyber security threats, risks
New Categories products in the context of the Nominations Committee; related to supply chain disruption and the
of market archetypes and developing – succession planning for the role of Senior impact of continued conflict between
regulations; and Independent Director and for the Audit Russia and Ukraine and the broader
and Remuneration Committee Chairs; geopolitical environment;
– overseeing the Group's New Categories
patents portfolio, approach to IP – approving changes to the structure and – reviewing the development of the
management and ongoing patent composition of the Management Board, Group's strategic market footprint and
litigation. on the recommendations of the opportunities for reduction of geographic
Nominations Committee; and supply chain complexities;
Managed Combustible Transition – reviewing plans for further complexity
– reviewing combustibles performance – determining the independence of Non-
Executive Directors prior to proposing reduction programmes, including
at Group, regional and key market levels product portfolio rationalisation and leaf
against strategy and key performance them for appointment at the Company’s
AGM; sourcing optimisation strategies;
indicators, including revenue and value
share growth; – approving revisions to Non-Executive – assessing the application of the market
Director fees; archetypes framework to drive effective
– reviewing combustibles industry outlook, resource allocation;
trading environment and competitor – shaping the development and endorsing
landscape from global and regional a refreshed statement of the Group's – reviewing plans for strategic
perspectives; and corporate values; partnerships to optimise the Group's
operational network and asset footprint;
– reviewing application of market – monitoring corporate culture and its
archetypes to drive value from alignment with the Group’s purpose, – reviewing opportunities to further
combustibles to fund New Categories values and strategy; leverage the Group's Global Business
investment and efficient resource Solutions organisation to drive above-
– reviewing the Group’s talent strategy, market synergies and embed new
allocation, and portfolio complexity diversity and inclusion agenda, and
reduction, revenue growth management capabilities;
progress against objectives;
and marketing spend efficiency – reviewing the Group's information and
initiatives. – reviewing feedback from the Group’s digital technology (IDT) transformation
workforce engagement channels; programme and initiatives underway to
Beyond Nicotine Foundations – reviewing health and safety performance drive productivity through enhanced use
– overseeing strategy to develop for the preceding year, outcomes of of technology and automation, improve
opportunities for the Group beyond Environment, Health & Safety roadmap data capabilities and simplify the Group's
nicotine in the wellbeing and stimulation assessments, targets for the coming year technology landscape; and
category; and action plans; – approving revisions to the Group's
– reviewing plans to launch Ryde, a new – reviewing the outcomes of the internal corporate governance framework and
functional wellness and stimulation review of the effectiveness of the Board, Statement of Delegated Authorities.
brand, in pilot markets, including its Committees and Directors in 2023;
approach to product stewardship,
outcomes of total offer testing and route – reviewing the funding positions relating
to market strategy; to the Group’s post-employment benefit
schemes; and
– assessing Btomorrow Ventures’
performance as a corporate venture – approving the introduction of additional
capital fund, scope of strategic mandate malus and clawback arrangements for
and approach to maturing its venturing applicable senior executives, in alignment
capabilities; and with U.S. SEC regulation and NYSE rules.
– overseeing progress in the product
development collaboration with
Organigram Holdings, Inc.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Capital Effectiveness Tobacco Harm Reduction Acceptance Sustainability & Integrity

– approving the Group budget, reviewing – reviewing strategic focus, initiatives and – overseeing the Group's sustainability
the application of the Group's capital capabilities in relation to tobacco harm strategy, including climate-related issues,
allocation strategy, and oversight of reduction science and advocacy in the opportunities and risks for the Group,
resource allocation activities to support context of our ambition to reduce the and reviewing performance against the
strategy execution; health impact of our business; Group's sustainability metrics;
– reviewing Group financial performance – reviewing the Group's approach to – reviewing environmental performance
against key performance metrics, current scientific product stewardship for the prior year and progress towards
outlook, challenges and opportunities for underpinning the development of achieving the Group’s environmental
growth in each region, and FX impacts; sustainable products; targets, including climate targets aligned
– assessing capital efficiency in the context – reviewing the scope of engagement with to net zero emissions by 2050, renewable
of cash generation and cash flow scientific and public health stakeholders energy, water stewardship, waste and
performance, access to financing, on tobacco harm reduction science and recycling, and priorities for the Group's
capacity, cost of debt and investments; research, including the role of the sustainability agenda;
– reviewing Group half-year results, trading External Scientific & Regulatory Panel – approving a revised version of the Group
updates, year-end results and the Annual (see page 147); and Environment Policy effective from July 2023;
Report and Form 20-F; – understanding the digital resources – overseeing progress towards the sale of
– approving interim dividend proposals and made available to consumers about the Group's businesses in Russia and
assessing distributable reserves of the tobacco harm reduction and New Belarus which completed in September
Company prior to authorising dividend Categories to help consumers make 2023, taking into account the safety and
payments; informed product decisions. welfare of Group company personnel in
Shaping the Landscape the region, impact on other stakeholders
– determining Group viability, taking into and the supply chain, regulatory
account current position and principal risks; – reviewing strategy for the Corporate &
Regulatory Affairs function and approach compliance and reputational
– reviewing compliance with Group to proactive engagement with regulators considerations;
financing principles, including liquidity, and other external stakeholders; – approving new Responsible Marketing
capital allocation and net debt/EBITDA; Principles, to be implemented in 2024;
– reviewing the regulatory landscape in
– reviewing the Group’s revolving credit New Categories across key markets, – reviewing the perspectives of the Group’s
facilities, refinancings, the Euro hybrid with in-depth insights on regulatory key stakeholders, the Group’s response
bond issuance, and debt issuance engagement initiatives to progress to stakeholder perspectives, and the
programmes; tobacco harm reduction recognition effectiveness of engagement
– assessing the impact of macro-economic in Western Europe and regulatory mechanisms;
trends on Group performance, outlook engagement with the U.S. FDA; – overseeing the refreshed Sustainability
and operations due to geopolitical – understanding the impact of growth Double Materiality Assessment
instability and continued inflationary in illicit products, partnerships with conducted in 2023, building on the
pressures; stakeholders to help combat illicit trade extensive assessment conducted in 2022;
– reviewing share price performance and regulatory enforcement activities, – approving the annual Modern Slavery Act
and investor and broker perspectives; in the context of combustible products statement and annual Conflict Minerals
– reviewing status of litigation involving and New Categories; Report;
Group companies, including updates on – reviewing developments in the regulation – approving updated versions of the
the Companies' Creditors Arrangement of single-use vapour products and the Group's Standards of Business Conduct
Act (CCAA) process in relation to Imperial impact of regulatory enforcement and Supplier Code of Conduct (SCoC),
Tobacco Canada; against illicit single-use vapour products; effective from January 2024;
– reviewing Group insurance coverage; and – reviewing evolving regulation applicable – reviewing the effectiveness of Speak Up
– reviewing investments in associates of to combustible products, with focus on channels;
the Group and their financial the regulation of menthol and flavours in
the U.S.; and – reviewing updates on compliance
performance. matters, including allegations of
– reviewing the impact of evolving tax misconduct, reports from Speak Up
regimes, including excise tax channels and investigations, and the
developments in various markets. Group’s Delivery with Integrity
programme initiatives; and
– overseeing the agreement reached
with the DOJ and OFAC to resolve
investigations into historical business
activities, as set out on page 227.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board Leadership and Purpose

Board Engagement
with Stakeholders
We understand the strategic importance of stakeholders to our business.
Our Directors value engagement with our shareholders and wider stakeholders
to understand their views and inform the Board’s decision-making, strategy
development and risk assessment.

Shareholder and Tadeu updated investors on our strategic

priorities and continued progress on our Investor meetings 2023
Investor Engagement
transformation journey. In September 2023 Geographic scope (%)
The Board is committed to open and
transparent dialogue with shareholders at the Barclays Global Consumer
and investors to ensure their views are Conference in Boston, Kingsley Wheaton
understood and considered. presented via a live webcast and Q&A to
over 200 investors on aspects of our
The Chair and Chief Executive’s annual corporate vision and our approach to
engagement programme is discussed leveraging our consumer insights and data
below. The Senior Independent Director to support our multi-category strategy.
and other Non-Executive Directors are also Javed Iqbal joined Kingsley in hosting
available to meet with major shareholders investor meetings at the Barclays
as appropriate. Conference, connecting in person with
Annual investor relations programme 40 investors from North America, Europe,
A global engagement programme is UK and Asia.
conducted annually with shareholders, Shareholder communications
investors, potential investors and analysts. A refreshed IR communications approach United Kingdom 53
This is led by the Chair and the Chief was launched with the release of the 2023
Executive, supported by the Investor Half-Year Results to provide further United States 31
Relations team. The Chief Executive and transparency and insight into the focus South Africa 6
Finance Director presented our Full-Year areas of the Board and the Chief Executive,
results in February 2023 and our Chief and the progress being made. The Europe (ex UK) 6
Executive and Interim Finance Director approach includes a more transparent tone, Rest of world 4
presented our Half-Year results and pre- new interactive features in results
close statements in 2023, with investor materials, and bespoke digital tools.
Q&A calls. Presentations and transcripts Our investor website enhances our digital
are published on bat.com. interaction with investors. It includes our

488
In total we hosted 488 investor meetings investment case, our approach to
in 2023, covering 69% of our shareholder sustainability, shareholder FAQ and regular
base with broad geographic coverage. consensus sharing. Our Investor News hub
Utilising both physical and virtual event pulls our press releases, news and features Meetings in 2023
formats, our investor engagement together in one place for investors, with an
programme included attendance at two automated news alerts service available to
global investor conferences, nine investor keep investors up to date. Our investor
roadshows and two salesforce briefings. website covers live broadcasts of events,
In June 2023, following his appointment including results and conferences, with
as Chief Executive, Tadeu Marroco hosted playback slides and transcript available online.
investor meetings at the Deutsche Bank
Global Consumer Conference in Paris,
engaging with over 50 international investors.

Spotlight
ESG Investor Programme
In 2023, we continued to enhance our ESG Investor programme, including providing
additional details in the Full Year and Half Year results statements, proactive
engagement plans focused on key topics and ensuring our ESG disclosures are
delivered across a range of formats.
The scope of our ESG investor engagements is broad, from investors seeking a more
generalist overview of ESG strategy and activities, to more 'specialist’ meetings on a
specific stewardship area such as human rights, circular economy and biodiversity.
Encouragingly, our activities are being well received by investors, who welcome the
collaborative nature of such engagements and the opportunity to share best practice.
We have also engaged with wider stakeholders at investor events sharing our insights
on ESG topics and broader regulatory requirements such as TCFD recommendations
and the CSRD. We are committed to further developing our ESG Investor programme
throughout 2024.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

How the Board considers shareholder

Investor Relations Calendar 2023 and investor views
The Chair, the Chief Executive and
Remuneration Committee Chair regularly
update the Board on their dialogue with
shareholders and investors. The Board also
receives updates from the Head of Investor
Relations and our brokers on stock
performance and on our shareholders' key
issues, perspectives, and expectations.
Shareholder and investor perspectives
considered by the Board in 2023 included
the Group's transformation journey,
Management Board changes, New
Category strategy and performance,
approach to navigating macro economic
pressures, capital allocation, sustainability
strategy and progress, and key regulatory
developments and enforcement.
In response to shareholder feedback, through
our enhanced investor communications at
Half-Year Results, we shared additional
data points on the progress we are making
towards our New Category profitability target.
The Board takes shareholder feedback into
account in its decision-making and when
developing the Group strategy. This is
discussed further on page 149, including in
relation to capital allocation decisions, and
on pages 170 to 172 in relation to executive
remuneration.
Annual General Meeting (AGM)
Our AGM is an opportunity for further
shareholder engagement, for the Chair
to set out progress, and for the Board to
answer questions.
Shareholders were welcomed in person to
attend our AGM in 2023, at which the Chair
reflected on business performance in 2022
and discussed the outlook for 2023. The
Chair and other Directors also responded
to shareholder questions. Shareholders
were also given the opportunity to submit
questions about AGM business in advance
of the meeting and responses to the
queries received were published at
bat.com/agm.
Voting on resolutions presented to the
AGM was carried out by way of a poll in
accordance with the Company's Articles of
Association and all resolutions as set out in
the Notice of Meeting were passed with no
significant vote against any resolution. All
Directors attended our 2023 AGM other
than Holly Keller Koeppel due to prior
commitments.

+ For disclosures required by paragraph 7.2.6 of

the Disclosure Guidance and Transparency Rules
and the UK Companies Act 2006 see
Other Information section

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board Leadership and Purpose

Board Engagement with Stakeholders

Continued

Wider Stakeholder Engagement The Board conducted a review of key stakeholders in 2023.
A broad range of stakeholders are important to the Group at local, This included how engagement is carried out across the Group,
regional and functional levels. Key stakeholders are strategically stakeholders’ perspectives, and how the Board is kept informed
important to our business and essential to our ability to generate of those perspectives where engagement is not at Board level.
long-term, sustainable value. We identify them by applying an Following its review, the Board remains satisfied that there is well-
established stakeholder engagement framework, which takes into established and effective engagement with the Group’s key
account strategic objectives and risks to the Group. stakeholders, enabling the Board to understand their perspectives.
The Board's assessment of key stakeholders is further informed The Board will continue to monitor the ongoing effectiveness of
by the outcomes of the Group's Sustainability Double Materiality stakeholder engagement.
Assessment conducted in 2022 and updated in 2023 (discussed Where the Board does not engage directly with our stakeholders,
further on pages 74 to 77 and 147). it is kept updated by reports from management so Directors
Our key stakeholders are referenced in our business model on maintain an effective understanding of what matters to them
page 20, with an overview of their importance, what matters to and can draw on these perspectives, including in Board decision-
them, and how we engage and respond to them on pages 22 to 23. making and strategy development.
The imperative of transparency of engagement is built into An overview of how the Board engaged with wider stakeholders
relevant Group policies, such as our SoBC and specific frameworks and maintained its understanding of their interests during the year
for stakeholder engagement. is set out below.

Consumers Suppliers

Our consumers are our judge and at the core of everything we Our relationships with leaf suppliers, contracted farmers and
do. Consumer-led innovation and product development are suppliers of direct materials and indirect services are managed
central to achieving our purpose and we believe that our multi- day-to-day by the Group’s Operations function and at local
category approach is the most effective way to appeal to market level. The Board oversees the Group’s supply chain
the diverse preferences of adult consumers worldwide. strategies and progress on sustainable agriculture and farmer
Our marketing teams lead our engagement with consumers livelihoods programmes, through briefings and strategic reviews
and we engage through extensive consumer market research provided by the Chief Operating Officer, the Director, Operations
and sales and marketing interactions. and other members of senior management.
On a market visit to Stockholm in September 2023, several of In the context of leaf supply, the Board was briefed on
our Directors had the opportunity to experience this first hand perspectives of suppliers and contracted farmers and how we
at a live co-creation session with consumers and members of respond to feedback, including how we address Scope 3 supply
our Nordics innovation team which explored the role of 'sweet chain carbon emissions and initiatives such as the Carbon Smart
territory' in flavours for modern oral products. Farming Programme to reduce emissions in tobacco farming;
how we address the risk of child labour in our supply chains and
The Board is regularly briefed by the Chief Executive and senior the impact assessments and other activities we undertake in
management on product performance across all portfolio leaf sourcing countries towards eliminating child labour; and the
categories, on our product development pipeline and how steps we take to protect biodiversity and the implementation of
product innovation is focused on satisfying adult consumer our Biodiversity Operating Standard in 2023.
preferences and directed by consumer insights and foresights.
In the context of direct materials and indirect services, the Board
In 2023, the Board was updated on a range of consumer was briefed on a range of supplier perspectives and how we
insights and how we respond to feedback, for example, respond, such as how we can innovate in our engagement, the
feedback from nicotine consumers that more information roll-out of our 'Be Supplier' programme (an initiative to introduce
on the role of New Categories products in tobacco harm new supplier solutions to address business challenges) and
reduction is needed to help them make informed product supplier innovation workshops at our Global Device
choices and the digital resources we make available to Development Centre in China; how we address supply chain
consumers to support this; and how we address the carbon emissions and conduct responsible water stewardship;
environmental impacts of our products and initiatives in place and progress in our CDP Supply Chain Programme to support
such as Take-Back schemes, reduction in plastic packaging and reduction in Scope 3 GHG emissions.
other measures to reduce the carbon footprint of our products.
The Board was also updated on engagement with suppliers at
The Board was also briefed on consumer expectations for the Supplier ESG conference held in Bangladesh in July 2023,
responsible marketing practices and restrictions on underage which enabled suppliers to contribute to the development of
access and the governance and controls in place to support our sustainability agenda and participate in discussion panels
marketing practices. on local ESG challenges.
In 2023, the Board approved the introduction of new The Board approved a revised version of our Supplier Code of
Responsible Marketing Principles applicable to the Group's Conduct (discussed on page 149) and reviewed our annual
nicotine products and brands, to be implemented in 2024. Our Modern Slavery Statement (available at www.bat.com/msa)
Responsible Marketing Principles take account of consumer which reports on our progress to ensure that our operations are
expectations in relation to responsible marketing practices and free from labour exploitation, and on human rights impact
underage access prevention, with implementation supported assessments and monitoring programmes conducted in support
by the introduction of a new Responsible Marketing Code. of this commitment.
The Board also reviewed the annual conflict minerals statement
and continuous improvement efforts implemented with
our New Categories material suppliers to mitigate supply
chain risks.

+ Read more about our approach to engaging with consumers

Pages 19 to 22, 60 to 63 and 96 to 97
+ Read more about our approach to engaging with suppliers
Pages 19 to 23 and 100 to 101

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Customers Society

Retailer, wholesaler and distributor relationships and customer We recognise our responsibility to wider society to reduce
engagement programmes are managed at local market and the health, environmental and social impacts of our business
business unit levels. and seek to play a positive role in debates that shape the
The Board is regularly updated through reports from the Chief regulatory environment in which we operate.
Executive and other Management Board members on the Across the Group, we engage with a wide variety of
global retail environment and the promotion of responsible stakeholders in scientific and public health communities,
marketing practices. governments and regulators, non-governmental organisations
During the year, the Board was also briefed on improvements (NGOs) and local communities, with engagement managed by
made to customer engagement models, e-commerce local market, business unit and functional teams, including
platforms and other digital services in response to customer legal, regulatory affairs and scientific research. The Board is
feedback and collaborations with customers to help combat briefed on engagement with scientific communities, regulators
illicit trade. In 2023, Directors also had the opportunity to visit and public health bodies.
retail outlets in Stockholm and Bucharest to see local trade During the year, this included briefings on the impact of
marketing interactions. engagement relating to the regulation of New Categories in
The Audit Committee oversees compliance with the Group’s Western Europe, engagement with public health advocates at
responsible marketing and youth access prevention forums such as the Global Tobacco and Nicotine Forum and
procedures and initiatives to reinforce associated governance the Tobacco Science Research Conference, published scientific
and controls. research on flavours in New Categories products, and the role
of the External Scientific & Regulatory Panel, formed of external
experts offering strategic input on our scientific product
+ Read more about customers and our approach to responsible marketing
Pages 19 to 23 and 96 to 97 stewardship programme.
The Board regularly reviews updates from the legal and
corporate and regulatory affairs teams, covering engagement
Spotlight with governments and regulators and anti-illicit trade
collaborations. For example, in 2023 updates were provided on
our contribution to local standards authorities in various markets
Sustainability Double Materiality Assessment^ (DMA) to develop industry safety standards for New Categories
With the support of a specialist external consultancy firm, in products and our participation in public consultations and other
2023, we reviewed and updated our DMA conducted in 2022 so processes through which we submit our views on the regulation
that it continues to inform our sustainability programmes and of vapour products and other New Categories.
business strategy effectively.
The Board also considered how the Group responds to
Our updated DMA builds on the extensive stakeholder stakeholder feedback on the environmental impact of our
engagement and sustainability topic mapping completed in operations and products. Examples in 2023 included continued
2022 and aligns our DMA process with the methodology of the progress against our science-based emissions reduction
CSRD and ESRS. targets (building on our Low Carbon Transition Plan published
The scope of the 2023 refresh of the DMA conducted in 2022 in 2022), a refresh of the Sustainability Double Materiality
is outlined on pages 74 to 77, with key developments Assessment conducted in 2022 and reporting on Principal
summarised below. Adverse Impact indicators under the EU Sustainable Finance
Disclosure Regulation (initiated in 2022).
100+ The Board is kept informed on engagement initiatives with
In depth, structured stakeholder dialogues conducted in 2023, local communities. For example in 2023, the Board was briefed
covering outward and inward impact materiality and financial on engagement with farmers and wider rural communities
materiality in line with CSRD and ESRS requirements. These through multi-stakeholder partnerships; community
dialogues enhanced the insights gained from engagement with investment projects in relation to afforestation programmes
more than 2,600 internal and external stakeholders in 2022. and child labour prevention projects in collaboration with the
industry, local governments and NGOs; and community
support offered following the earthquake in Türkiye.
Horizon scan & topic review
Non-Executive Directors regularly attend the Corporate Audit
Our 2023 horizon scan and cross-industry benchmark focused Committee and Regional Audit Committees, where societal
on recent and emerging developments in sustainability and community perspectives at regional and local levels are
matters and we reviewed and updated our sustainability topic discussed, and the Audit Committee reviews feedback from
shortlist. these Committees.
The Audit Committee is also regularly updated on our
Robust assessment criteria engagement with tax authorities on material Group tax
Applying the DMA methodology of the July 2023 ESRS, we matters and has oversight of political contributions in the U.S.
have introduced additional structure to our impact materiality
and financial materiality assessment criteria. + Read more about our engagement with governments and wider society
Pages 19 to 23 and 60 to 118

Note:
UK Companies Act: Business relationships
^ Although financial materiality has been considered in the development of our Double
Materiality Assessment (DMA), our DMA and any related conclusions in this document as This section summarises how the Directors have regard to the need to
to the materiality or significance of sustainability or ESG matters do not imply that all topics foster business relationships with customers, suppliers and other external
discussed therein are financially material to our business taken as a whole, and such stakeholders. Further information is provided on pages 19 to 23 and 149,
topics may not significantly alter the total mix of information available about our including information about the effect of that regard.
securities.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Board Leadership and Purpose

Board Engagement with Stakeholders

Continued

Our People Key themes and priorities from workforce feedback

Our people are critical to our success and the Board is Our values and culture
committed to regular and meaningful engagement Overall feedback from engagement during the year is that our
with our workforce and to taking their perspectives into people are proud of our global and diverse organisation, the
account in decision-making and strategy development. people they work with, our business performance and their
The Board keeps up to date with the views of our workforce career development opportunities.
through a combination of well-established engagement They are excited about our transformation, our product
methods in place across multiple channels and at different innovation, the foundations we are developing in categories
levels of our organisation. beyond nicotine and how our leadership inspires a collaborative
These channels include direct engagement discussed on page and inclusive culture. Our people believe that diversity, responsibility,
140 through Directors’ market and site visits; participation in accountability and resilience are core to our values.
town hall and Q&A sessions; and the Chief Executive's Diversity
engagement programme of regional and business visits to Feedback shows that continued action is needed to enhance
connect with local employees, employee resource group (ERG) diversity within our Senior Leadership, with emphasis on
events such as B United's Pride event hosted by our LGBT+ improving gender balance, objectives that the Board has fully
ERG, a 'Let's Talk' virtual call open to staff across the Group, committed to. The Board monitors progress towards our
and live webcasts with discussion and Q&A on our strategy, targets for representation of women in Senior Leadership team
culture, performance and business outlook. roles and ethnically diverse representation in senior management
Overall, there were 27 market visits or other engagement and their direct reports, and initiatives in place to support this
forums attended by one or more Directors in 2023, (discussed further at page 156).
comprising 3 in the U.S., 7 in the Americas and Europe region, Our ways of working
2 in the Asia-Pacific, Middle East and Africa region and 15 with Feedback highlights the opportunities to further empower our
global functions. people and foster greater collaboration, focus, prioritisation and
Indirect engagement is enabled through feedback from town agility in our ways of working. Our learning and development
halls, employee focus groups, works councils, regional, function portfolio for employees across the Group will be fully refreshed
and local live webcasts, our global Your Voice employee survey, to drive capability development in these areas, with progress
and Speak Up channels, discussed on pages 89, 98 and 181. measured through employee feedback monitored by the Board.
The Board reviewed our workforce engagement channels across Feedback from focus groups held across key UK sites in August
the Group, including consolidated and specific feedback from 2023 highlighted specific opportunities to develop a thriving
engagement channels. In addition, the Board discussed a range work environment, including wellbeing and family-friendly
of workforce feedback in the context of developing our values policies and hybrid working arrangements.
(see page 140). The Board also considered workforce The Chief Executive and the Group Head of Talent & Inclusion
perspectives in other contexts during the year, such as oversight have briefed the Board on initiatives implemented or underway
of progress towards the sale of the Group's businesses in Russia in direct response to feedback, including introduction of new
and Belarus, and updates on initiatives to support colleagues in guidelines on hybrid working and a new progressive dress code,
Türkiye impacted by the earthquake in February 2023. 'Dress for Your Day'.
Key themes and priorities from workforce feedback considered
by the Board, and how that feedback has been responded to,
are discussed opposite.
Given the spread, scale and diversity of the Group’s workforce,
the Board continues to consider it effective to use this
combination of established channels, augmented by
structured and regular reporting to the Board on our people's
views during the year. This enables the Board as a whole to
understand the perspectives of our workforce received through
the full breadth of engagement channels at all levels.
These engagement channels, combined with Group-wide
reporting structures to capture workforce feedback, cover
all Group company employees and fixed-term contractors
undertaking permanent roles. Focus and action areas are
reviewed by the Board and feedback on how we respond is Luc Jobin, Darrell Thomas and Kandy Anand participating
provided back to our workforce. in a townhall with colleagues from our Western Europe
The Board continues to assess the effectiveness of operations team.
engagement with our people and how its engagement informs
Board decision-making and strategy development.

+ Read more about our approach to engaging with our people

pages 89 and 181

UK Companies Act: Employee engagement

This section summarises the Directors' approach to engaging with the Group's workforce, including employees of UK Group
companies, and how the Directors have regard to their interests. Further information is provided on pages 89 and 140 and pages 178
to 181 in relation to remuneration matters, including further details about the effect of that regard.

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Principal Decisions
Made by the Board
Outlined below are some of the principal decisions made by the Board over the year,
highlighting how the Board considered relevant factors, including key stakeholder
perspectives, the environment, reputation for high standards of business conduct,
and the long-term impact of decisions. Our key stakeholders and how the Board engages
with them are discussed further on pages 144 to 148. Board activities in 2023 are set out in
pages 142 to 143.

Refined Strategic Direction and Purpose

Following the Board's oversight of Tadeu Marroco's appointment as Chief Executive Key stakeholder perspectives taken into account
in May 2023, the Board worked closely with management to refine our A Better
Shareholders and Investors
Tomorrow™ strategy to strengthen our long-term profitable growth and sustainable
value creation. Consumers
Customers
As part of this refined strategic direction, we have committed to ‘Building a Smokeless
World’, deploying the Group's global multi-category portfolio to actively encourage Suppliers
smokers to ‘Switch to Better’ nicotine products. Our refined strategic direction focuses Our people
the Group on sharper strategic execution and driving a collaborative and inclusive Governments and wider society
culture. To support this, the Board has also overseen the introduction of our Strategic
Navigator to provide greater insight to our stakeholders.

Capital allocation
The Board assessed capital allocation priorities when approving the 2024 budget, Key stakeholder perspectives taken into account
aiming to develop the Group's long-term sustainable growth in the context of the
Shareholders and Investors
challenging and inflationary macro-economic environment, and continued pressure
on transactional foreign exchange rates. Our people
Consumers
The 2024 budget has been designed to strengthen New Categories performance,
invest in the U.S. business, and continue to focus on deleveraging in accordance with Customers
our guidance and taking into account shareholder expectations. Suppliers
Capital allocation in the 2024 budget also factors in the resources required to drive a Governments and wider society
step change in our product innovation and speed to market, deliver our sustainability
targets, continue to offer competitive remuneration for our people, and develop our
business partnerships with our customers and suppliers.

Standards of Business Conduct and Supplier Code of Conduct 2024

The Board reviewed and gave approval to the introduction of updated versions of our Key stakeholder perspectives taken into account
SoBC and SCoC from 1 January 2024. Our updated SoBC emphasises that employees
Shareholders and Investors
across the Group are empowered to act as a first line of defence to flag any potential
for conduct falling short of our standards and our SCoC has been revised to reflect our Our people
updated SoBC. Consumers

In approving the revised policies, the Board considered their alignment to our strategy and Customers
values and how revisions took account of the expectations of our shareholders and wider Suppliers
stakeholders for high standards of integrity in our business conduct and changes to Governments and wider society
applicable regulations. Revisions made to our SoBC and SCoC were informed by external
benchmarking, current industry best practice, evolving legal requirements, and feedback
from employees and business partners.

Responsible Marketing Principles 2024

The Board gave approval to new Responsible Marketing Principles (RMP), which build Key stakeholder perspectives taken into account
on our International Marketing Principles, to be implemented in 2024. Our RMP confirm
Shareholders and Investors
our commitment to responsible marketing and underage access prevention across our
tobacco and nicotine products and brands. Consumers
Customers
Our RMP were developed taking into account the importance to our shareholders,
consumers, employees and regulators that we continue to demonstrate responsible Employees
marketing practices and that we support our trade customers to do the same. Governments and wider society
Application of our RMP will be supported by our Responsible Marketing Code and
training programmes for Group company employees and our external partners, to
enable consistent application of our RMP across our route to market channels.

We define principal decisions as those decisions and discussions by the Board that are strategic or material to the Group and those of significance to any
of our key stakeholders.

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Division of Responsibilities

Our Approach to Division

of Responsibilities
The Board comprises the Non-Executive Chair, one Executive
Director and nine independent Non-Executive Directors.
This section sets out the roles and division of responsibilities between
1
the Chair, Executive Directors and Non-Executive Directors.

Roles and Division of Responsibilities Board Efficacy

The Chair facilitates constructive Board relations, supporting
Role Responsibilities
effective contribution from Non-Executive Directors and
Chair – Leadership of the Board and its overall promoting a culture of openness and debate. The Chair seeks
effectiveness a consensus at Board meetings but, if necessary, decisions are
– Promotes constructive debate and taken by majority decision. If any Director has concerns about any
effective decision-making issues that cannot be resolved, such concerns are noted in the
Board minutes. No such concerns arose in 2023.
– Sets the Board agenda
Scheduled board meetings during the year were convened in
– Facilitates Directors’ contributions
person. The Board held its strategy sessions in October 2023 in
– Interfaces with shareholders Bucharest, Romania. Feedback from the annual Board evaluation
– Ensures effective shareholder engagement confirmed that Board meetings continued to operate well and are
– Representational duties on behalf of the considered to be chaired effectively.
Company Non-Executive Director Meetings
Chief Executive – Overall responsibility for Group Meetings of the Non-Executive Directors, led by the Chair and
performance without any Executive Director present, are scheduled in the Board
calendar. These meetings are usually held following scheduled
– Leadership of the Group Board meetings, with additional Non-Executive Director meetings
– Enables planning and execution of Group convened where required.
objectives and strategies The Executive and the Non-Executive Directors also meet annually,
– Stewardship of Group assets led by the Senior Independent Director and without the Chair
– Drives the cultural tone of the organisation present, to discuss the Chair’s performance.
Finance – Leadership of the Group in respect Independence
Director
1
of financial matters The Board considers all Non-Executive Directors to be independent,
as they are free from any business or other relationships that
– Enables planning and execution of Group
could interfere materially with, or appear to affect, their judgement.
financial objectives and strategies
Luc Jobin was determined by the Board to be independent on his
– Provision of accurate, timely and clear
appointment as Chair, as reported in the Company’s Annual
information to the Board on the Group's
Report and Form 20-F for 2020.
financial performance
The Board has determined Holly Keller Koeppel to be independent,
Senior – Leads review of the Chair’s performance
having taken into account her service on the board of Reynolds
Independent – Presides at Board meetings in the Chair’s American Inc. (Reynolds American) as an independent, non-
Director absence executive director.
– Chairs the Nominations Committee when Luc and Holly were originally appointed to the Board in 2017
Chair succession considered following the acquisition of Reynolds American and pursuant
– Sounding board for the Chair to the Agreement and Plan of Merger with Reynolds American.
– Intermediary for other Directors The Board has also considered the independence requirements
– Available to meet with shareholders outlined in the NYSE’s listing standards and has determined
that these are met by the Chair and all the Non-Executive
Non-Executive – Oversee Group strategy and resource Directors. The Board considers that it currently includes an
Directors allocation appropriate combination of Executive and Non-Executive
– Monitor Group performance and delivery Directors, and will continue to do so when Soraya Benchikh is
of Group strategy appointed as Chief Financial Officer and as an Executive Director
from 1 May 2024.
– Oversee systems of control and risk
management
– Review management proposals and provide
strategic guidance
– Scrutinise and hold to account
performance against objectives
– Bring external judgement, perspective
and effective challenge to management
Note:
1. Javed Iqbal currently holds the role of Interim Finance Director and will step down from
that role on 30 April 2024. Javed is not an Executive Director. Soraya Benchikh will be
appointed as Chief Financial Officer and as an Executive Director from 1 May 2024.

+ The responsibilities of the Chair, Executive Directors and Senior Independent

Directors are available at bat.com/governance

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Directors’ Commitment
and Board Support
Commitment Directors' Information and Advice
Before appointing new Directors, the Board takes into account Directors receive effective support to assist them in meeting
their other commitments and significant time commitments are their responsibilities under the UK Corporate Governance Code
disclosed prior to appointment. The letters of appointment for and discharging their directors’ duties, both individually and
the Chair and Non-Executive Directors set out their expected time collectively:
commitment to the Company (see page 156). – Directors receive papers for review in good time ahead of each
Any additional external appointments following appointment to Board and Committee meeting.
the Board require prior approval by the Board in accordance with – Papers and presentations to the Board and its Committees
the UK Corporate Governance Code (the Code). include discussion of specific stakeholder considerations
The Board assesses the significance of any additional external as applicable.
appointment notified by a Director, supported by the Company – The Company Secretary ensures effective information flow
Secretary. During 2023, the Board considered the following within and between the Board and its Committees, and between
external appointments: the Non-Executive Directors and senior management. The
– Darrell Thomas' appointment as a Non-Executive Director of Company Secretary, in conjunction with external advisers where
Pitney Bowes, Inc. (a company listed on the New York Stock appropriate, advises the Board on all governance matters.
Exchange) from 2 March 2023. – All Directors have access to the advice and services of the
– Sue Farr's appointment as the Senior Independent Director of Company Secretary. The appointment and replacement of the
THG plc (a company listed on the London Stock Exchange) from Company Secretary is a matter for the Board.
24 April 2023. – A procedure is in place for all Directors to take independent
– Véronique Laury's appointment as a Director of Société Bic S.A. professional advice at the Company’s expense if required.
(a company listed on Euronext Paris) from 16 May 2023. – Each Board Committee may obtain independent legal or other
These additional appointments were considered by the Board to professional advice, at the Company’s expense, and secure
be significant in accordance with the Code, however the Board attendance at meetings of external participants if needed.
concluded that the appointments would not impair the Directors' Board Induction
ability to serve as Non-Executive Directors in view of the
All Directors receive a comprehensive and personalised induction
anticipated time commitment.
programme on joining the Board, tailored to their skills, experience,
Conflicts of Interests background, committee membership and requirements of their role.
The Board has formal procedures for managing conflicts of Tadeu Marroco completed his Executive Director induction
interest. Directors are required to give advance notice of any programme following appointment to the Board in 2019. Tadeu's
conflict issues to the Company Secretary. These are considered transition to the role of Chief Executive was supported by briefings
either at the next Board meeting or, if timing requires, at a meeting with the Chair, all members of the Management Board and a range
of the Board’s Conflicts Committee. of senior managers following his appointment as Chief Executive
Each year, the Board considers afresh all previously authorised in May 2023.
situational conflicts. Directors are excluded from the quorum and Murray Kessler and Serpil Timuray are undertaking a full Non-
vote in respect of any matters in which they have an interest. Executive Director induction following their appointment to the
In relation to the following appointments, potential situational Board, as highlighted below.
conflicts were considered by the Board:
– In relation to Darrell's appointment as a Non-Executive Director Spotlight
of Pitney Bowes, Inc., a potential situational conflict was
reviewed and authorised by the Board, as a subsidiary of Pitney Non-Executive Directors' Induction
Bowes Inc. is a supplier to the Group in New Zealand. Those
Murray Kessler and Serpil Timuray
supply arrangements are not material and Darrell has no
involvement in the operations of the supplier or the Group in Murray and Serpil are progressing through their Non-Executive
New Zealand. Director induction following their appointment to the Board in
Q4 2023. Sessions are conducted through virtual and in-person
– In relation to Véronique's appointment as a Director of Société briefings to enable efficient delivery of a comprehensive
Bic S.A., a potential situational conflict was reviewed and programme.
authorised by the Board, as the Bic group is a supplier to the
Group. Those supply arrangements are not material and Their induction programme includes meetings with the Chair
Véronique has no involvement in the operations of the supplier and each of the Directors and a detailed series of briefings with
or Group companies supplied by Bic. senior management covering Group strategy and
transformation, business regions, product portfolios, our values
The Board determined these arrangements did not impact and culture, the Group's sustainability agenda, shareholder and
Darrell's or Véronique's independence as Non-Executive Directors. wider stakeholder engagement, corporate governance, integrity
and compliance, directors' duties, and treasury, risk, legal and
regulatory matters.
In preparation for their Remuneration Committee roles, the
induction programme for Murray and Serpil also includes
specific focus on executive remuneration matters and an
induction session with the Remuneration Committee’s UK
and U.S. consultants.

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Composition, Succession, Evaluation

Board Effectiveness

Professional Development Board Review Process

Non-Executive Directors receive a full programme of briefings Annually, the Board undertakes a rigorous review of its
during the year across all areas of the Group’s activities from the effectiveness and performance, and that of its Committees and
Chief Executive, members of the Management Board, the individual Directors. The Chair is responsible for the overall review
Company Secretary, other senior executives and outside advisors. process and each Committee Chair is responsible for the review
During 2023, key briefings for the Board included an in-depth of the performance and effectiveness of their Committee.
review of sustainability regulation and broader corporate The effectiveness and performance of the Board, its Committees
governance developments from a UK and U.S. perspective and the Directors were reviewed internally in 2023, led by the Chair
provided by external legal counsel, coupled with a discussion on and facilitated by the Company Secretary. An externally-facilitated
shareholder and wider stakeholder perspectives on sustainability review of the performance and effectiveness of the Board, its
metrics and reporting, led by the Chief Sustainability Officer and Committees and each of the Directors was conducted in 2022.
a corporate broker representative. For the 2023 internal review, all Directors participated fully in the
The Board was also briefed on the cyber risk landscape and the review, with the exception of Murray Kessler and Serpil Timuray
Group’s cyber security risk programme by the Director, Digital who joined the Board towards the end of the year. Murray and
& Information and external advisers, and it was updated on the Serpil participated in the Board consideration of the outcomes of
introduction of further international sanctions in relation to Russia the review. As part of the internal review process, a series of
during the year and operation of the Group's governance questionnaires were completed by the participating Directors,
framework to support sanctions compliance. through which they were requested to assess the effectiveness
Committees of the Board are kept updated on developments and performance of the Board, the Committees of which they
within their respective remits. were a member or regularly attended during the year, and each
of the Directors. Several members of senior management also
In 2023, the Audit Committee was briefed on developments participated in aspects of the review process.
in sustainability reporting requirements on a regular basis by the
Chief Sustainability Officer and the external auditors. Coverage Feedback was collated on an anonymised basis and reports on the
included reporting in alignment with TCFD recommendations, outcomes of the review process and action areas for consideration
the impact of the EU Sustainable Finance Disclosure Regulation, were prepared for the Board and each Committee. The Board and
anticipated future application of the EU Corporate Sustainability the Committees then reviewed and discussed their respective
Reporting Directive, data reporting standards to be implemented reports and identified action areas for 2024, taking into account
by the International Sustainability Standards Board, the review findings. The Committee Chairs also reported back to
recommendations for the Taskforce on Nature-related Financial the Board on the outcomes of their Committee evaluations.
Disclosures framework, and developments in the U.S. SEC's The Chair received reports from the Company Secretary on the
proposals to introduce climate-related disclosure requirements. performance and effectiveness of the Directors (other than
These briefings have served to inform the Audit Committee's himself) and he provided individual feedback to each Director. The
oversight of the Group's sustainability reporting framework and Senior Independent Director received a report from the Company
its future development. Secretary on the Chair’s performance and effectiveness, and led
The Audit Committee was also briefed on developments in UK a discussion reviewing the Chair’s effectiveness with the other
audit and corporate governance reforms during the year, including Directors (without the Chair present). The Senior Independent
the FRC's consultation on the revised Corporate Governance Code, Director then provided feedback to the Chair.
which was published in January 2024. In addition to the 2023 internal review, a review session with
The Remuneration Committee is kept updated by its external the Board was facilitated to follow up from the externally-
consultants on UK and U.S. corporate governance developments facilitated review conducted in 2022.
impacting executive and wider workforce remuneration.
2023: Internal Board review process
Briefings provided to the Committee during the year included
outcomes of the global living wage assessment conducted across 1 Plan and Evaluate
the Group, introduction of new U.S. SEC and NYSE rules on – The Chair and Company Secretary reviewed the scope
mandatory clawback arrangements, insights on market practice and focus areas for the review and defined the series
relating to the use of sustainability metrics in incentive schemes of questionnaires to be used to support the review
and updates on other trends in executive remuneration to inform process.
development of a revised Directors' Remuneration Policy ahead – The Directors provided their assessment of the
of policy renewal planned for 2025. performance and effectiveness of the Board, its
All Board members attended the meetings of the Audit and Committees and the Directors.
Remuneration Committees held in October 2023 to promote a
deeper understanding of the work of the Committees of which 2 Reporting
they are not members. – Participant feedback was collated on an anonymised
Non-Executive Directors regularly attended meetings of the basis and reports were prepared for the Board, its
Group’s Regional Audit Committees and Corporate Audit Committees and the Directors.
Committee to gain a better understanding of the Group’s regions
and central functions and the risks faced by the business at 3 Review and Action
market, regional and functional levels. – Board Committees reviewed and discussed the review
The Chair met with each Non-Executive Director individually outcomes, identified actions arising and provided
towards the end of the year to discuss their individual training feedback to the Board.
and development plans. – The Board then discussed the review outcomes
and identified action areas for 2024.
– The Chair provided feedback to the other Directors.
– The Senior Independent Director provided feedback
to the Chair.

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Spotlight

2023 Board review Key Actions for 2024

Overview of Outcomes Following the internal review conducted in 2023, the Board
The outcomes of the internal review support the overall and its Committees plan to implement forward-focused
conclusion that the Board is effective and maintains a sound actions in the following key areas:
working relationship with its Committees. Strategy
The review found the composition of the Board to be well- – Following introduction of the Group's refined strategic
balanced, including in relation to diversity and Directors' skills direction, support management with execution of Group
and experience. The working relationships and communication strategy and oversee progress against strategic key
between the Non-Executive Directors, and between the performance indicators.
Non-Executive Directors, Chief Executive and wider executive – In view of developing regulatory frameworks, maintain
management team, are well-regarded and support open emphasis on the Board's oversight of the Group's
discussion in the boardroom. sustainability strategy as part of the Board agenda,
The Board's focus during the year was generally found to be supported by structured briefings for Directors, including
appropriately balanced across the elements of the Group's external stakeholder perspectives.
strategy, with due attention to risk, control and compliance Board leadership
matters. The Board's approach to monitoring corporate culture – Taking into account changes in the composition of the Board
is considered to be effective, with feedback demonstrating that during the year, refresh the Board's assessment of skills
the enhanced programme of workforce engagement led by the requirements to support the Group's strategy.
Chief Executive in 2023 was well-received. The value of market
and operational site visits was highlighted by the Board as an – Develop the Directors' programme for market and
important way in which to monitor workforce sentiment. operational site visits in 2024, including a range of
opportunities for informal workforce engagement.
Board and Committee meetings are considered to be chaired,
managed and supported effectively to enable decision-making, Risk management
with Committee Chairs providing thorough and efficient – Recognising the evolving nature of risks relating to cyber
reporting to the Board. security and supply chain management, maintain
appropriate time on the Board and Audit Committee
Progress against key action areas identified for 2023
agendas for review and discussion of these risks and
Strategy: The Board's agenda for the year maintained focus mitigation activities, alongside other existing and emerging
on strategic discussion and development, supported by reviews risks to the Group.
of the competitive environment, with the Board leading the
TM
refinement of the Group's A Better Tomorrow strategy – Maintain Audit Committee focus on business controls and
discussed further on page 149. sustainability reporting, particularly in the context of evolving
regulatory frameworks, and on cyber security risk
Board leadership: Feedback from the internal review management oversight, with those priorities reflected in the
demonstrated effective working relationships between the Internal Audit Plan for 2024.
Directors, enhanced through a blend of formal and informal
meetings and site visits. Feedback also acknowledged further People and culture
improvements in information flows between the Board and – Continue to focus on succession planning for Non-Executive
management, with some additional opportunities identified Directors to retain an appropriate balance of diversity, skills
for continuous improvement. and expertise in the longer-term.
Risk management: During 2023, the Board's programme of – Promote the development of broader diversity in the
risk management oversight was supplemented with focused Management Board and senior management, with continued
briefings on risk management topics, including sustainability attention to improving gender diversity at those levels.
regulations and the cyber security risk landscape. The Audit – Implement a comprehensive induction programme for the new
Committee also received a range of briefings relevant to risk Chief Financial Officer following her appointment in May 2024.
management oversight of the Group's sustainability agenda. – For the Remuneration Committee, focus on development
These briefings are discussed further on page 152. of the revised Directors’ Remuneration Policy in readiness
People and culture: The Board recognised the effectiveness for presentation to shareholders at the AGM in 2025 and
of the Nominations Committee during the year through its completion of a thorough induction on executive
significant focus on Chief Executive transition planning, and remuneration for new Committee members.
Chief Financial Officer and Non-Executive Director succession
planning. Maintaining momentum on longer-term Non-
Executive Director succession planning, and oversight of the
development of a diverse pipeline for Management Board and
senior management succession, was identified as a continuing
priority for 2024.

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Composition, Succession, Evaluation

Nominations Committee

Nominations Committee Role

current members As set out in the Terms of Reference, the Nominations Committee is responsible for:
Luc Jobin (Chair) – reviewing the structure, size and composition of the Board and Management Board
on a regular basis to ensure both have an appropriate balance of skills, expertise,
Kandy Anand knowledge and, in relation to the Board, independence;
Sue Farr – reviewing the succession plans for appointments to the Board, the Management Board
Karen Guerra and Company Secretary to maintain an appropriate balance of skills and experience and
to ensure progressive refreshing of both the Board and the Management Board;
Holly Keller Koeppel
– making recommendations to the Board on suitable candidates for appointments
Murray Kessler to the Board, the Management Board and Company Secretary, ensuring that the
Véronique Laury procedure for those appointments is rigorous, transparent, objective and merit-
based and has regard for diversity;
Dimitri Panayotopoulos
– assessing the time needed to fulfil the roles of Chair, Senior Independent Director
Darrell Thomas and Non-Executive Director, and ensuring Non-Executive Directors have sufficient
Serpil Timuray time to fulfil their duties;
– overseeing the development of a pipeline of diverse, high-performing potential
Executive Directors, Management Board members and other senior managers; and
– implementing the Board Diversity & Inclusion Policy and monitoring progress
Luc Jobin
towards the achievement of its objectives, summarised on page 157.
Chair of the Nominations Committee

Key Activities in 2023

– Making recommendations to the Board – Reviewing Executive Director's and
in relation to transition of the role of Chief Management Board members’ annual
Executive and Interim Finance Director, performance assessments and assessing
as set out on page 155. development of candidates for
– Reviewing plans for Management Board Management Board roles.
restructuring and making a series of – Oversight of the Group’s diversity and
recommendations to the Board to revise inclusion agenda, its role in promoting
the structure, roles and composition of an inclusive and high-performing culture
the Management Board and to appoint a as part of the Group’s talent strategy,
new Company Secretary (see page 156). and progress in building diverse talent
– Making recommendations to the Board pipelines and creating enablers across
in respect of Non-Executive Director the organisation.
and Board Committee appointments, Balance and Diversity
including the appointments of Murray The Board appreciates the benefits of
Kessler and Serpil Timuray as Non- diversity in all of its forms, within its own
Executive Directors and members of membership and at all levels across our
the Remuneration and Nominations organisation. Our Non-Executive Directors
Committees, discussed on page 155. come from a broad range of industry and
– Recommending the appointment of a professional backgrounds, with varied
new Chief Financial Officer to the Board, experience and expertise aligned to the
to take effect from 1 May 2024. Group’s strategy.
– Succession planning for the role of Senior Biographies of the Directors, including
Independent Director and for the Audit a summary of their skills, experience and
and Remuneration Committee Chairs. contribution to the Board, are set out on
pages 132 to 135 with details of the
– Ongoing assessment of the profile, skills representation of key diversity attributes
and experience required of future Non- on our Board.
Executive Directors in the context of the
Group’s strategy, to support Board Our Board Diversity & Inclusion Policy is
succession planning activities. discussed on page 157. We report Board and
executive management diversity data on
– Making recommendations to the Board in page 158 in accordance with the UK Listing
relation to Directors’ annual appointment Rules requirements. Currently, 45% of our
and re-election at the AGM, discussed Directors are women and 27% from an
further on page 155. ethnic minority background (as defined
by the UK Office of National Statistics).

Nominations Committee terms of reference

The Committee’s terms of reference align with the requirements of the UK Corporate
Governance Code.
Revised terms of reference for the Committee were introduced with effect from
1 September 2023 to reflect changes to the structure of executive management roles.

+ For the Committee’s terms of reference see

www.bat.com/governance

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The Senior Independent Director is Following this process, the Committee Careful consideration was given to
currently Sue Farr. From close of the 2024 recommended to the Board the candidates' skills, experience, diversity of
AGM, Holly Keller Koeppel will succeed Sue appointment of Tadeu Marroco as Chief attributes and their fit with the role criteria
as Senior Independent Director (subject to Executive to succeed Jack Bowles. Jack had for each appointment. The Committee
re-election). Soraya Benchikh will be served as Chief Executive since 2019 and then recommended the preferred
appointed as Chief Financial Officer from stepped down from the Board with effect candidate for appointment to the Board.
1 May 2024. At the close of the 2024 AGM, from 15 May 2023. Murray and Serpil each bring a range of
it is anticipated that representation of In the context of succession planning for extensive transformation, technology and
women on the Board will be 45% and the Chief Executive, the Committee also consumer products expertise to the Board.
representation of Directors from ethnic gave full consideration to a range of Their biographies are set out on pages 134
minority backgrounds will be 33%. The candidates for appointment as Finance and 135.
Board remains committed to enhancing its Director. Taking into account the
diversity and the Nominations Committee Board Retirements
candidates' skills, experience and broader
continues to actively progress Non- Savio Kwan stepped down from the Board
attributes and longer-term succession
Executive Director succession supported with effect from the conclusion of the
planning for the composition of the Board,
by our Board Diversity & Inclusion Policy. Company’s AGM on 19 April 2023 and Jack
the Committee recommended to the Board
Bowles stepped down from the Board with
Board Succession Planning that Javed Iqbal be appointed as Finance
effect from 15 May 2023.
The Board considers the length of service Director on an interim basis, alongside
of Board members as a whole and the need his existing role of Director, Digital & Sue Farr and Dimitri Panayotopoulos will
for Board membership to be refreshed Information (Javed was not appointed step down from the Board with effect from
progressively over time. The Committee as an Executive Director in the interim). the conclusion of the Company's AGM on
is responsible for regularly reviewing the 24 April 2024.
Subsequently, the Committee led a
composition of the Board and the comprehensive search process resulting Annual General Meeting 2024
Management Board to ensure both have in the Committee recommending to the With the exception of Sue Farr and Dimitri
an appropriate balance of skills, expertise Board the appointment of Soraya Benchikh Panayotopoulos, the Company will submit
and experience. The Committee is also as Chief Financial Officer and as an all eligible Directors for re-election and, in
responsible for identifying candidates for Executive Director. Soraya's appointment the case of Murray Kessler and Serpil
Board positions and ensuring that all will take effect from 1 May 2024 and the Timuray, election for the first time.
appointments are made on merit, against process leading to her appointment will be Prior to making recommendations to the
objective criteria, and with due regard for reported in the Annual Report and Form Board in respect of Directors’ submissions
our Board Diversity & Inclusion Policy. This 20-F for 2024. for re-election, the Committee carried out
process includes interviews with a range an assessment of each Director, including
Non- Executive Director succession
of candidates and full evaluation of their performance, contribution to the
candidates’ experience and attributes and In 2023, the Committee recommended
to the Board the appointments of Murray long-term sustainable success of the
how these would augment the Board’s mix Company and, in respect of each of the
of skills, expertise and knowledge. Kessler and Serpil Timuray as Non-
Executive Directors. Heidrick & Struggles
1
Non-Executive Directors, their continued
Executive Director succession supported the selection process leading independence and ability to devote
In 2023, the Committee led the process to these appointments. As part of these sufficient time to their role (discussed
to identify a new Chief Executive to further appointment processes, specific candidate on pages 150 and 151).
drive the Group's transformation in a selection criteria were developed to reflect The Chair’s letter accompanying the 2024
fast-changing environment. the Board's requirements, including for AGM Notice confirms that all Non-
The Committee gave thorough business transformation, consumer products Executive Directors being proposed for
consideration to a range of candidates, and digital technology experience. re-election are effective and that they
their relative experience, skills and other For each appointment, a short list continue to demonstrate commitment
attributes, and ability to fulfil the role of candidates was presented to the to their roles.
criteria with emphasis on a demonstrated Committee and preferred candidates
track record for developing collaborative were interviewed by members of the
teams capable of delivering transformation Notes:
Board, who reported their feedback on 1. Heidrick & Struggles International, Inc. is an independent
and strength in execution. candidates to the Committee. executive search firm, which applies the Standard and
Enhanced Codes of Conduct for Executive Search Firms.
2(a), 3(a) The firm has no connections with the Company or its
Attendance at meetings in 2023 Directors other than in respect of the provision of
4 executive search services.
Meeting attendance 2. Number of meetings in 2023: (a) the Committee held
Name Member since Attended/Eligible to attend seven meetings, four of which were ad hoc. Three
meetings of the Committee are scheduled for 2024;
Luc Jobin 2017 7/7 (b) Kandy Anand did not attend the scheduled meeting
2(b) in February 2023 due to unforeseen personal
Kandy Anand 2022 6/7 circumstances; (c) Sue Farr did not attend the ad hoc
2(c) meeting in January 2023 convened at short notice due
Sue Farr 2015 6/7 to prior commitments; (d) Dimitri Panayotopoulos did
Karen Guerra 2020 7/7 not attend the ad hoc meeting in June 2023 and the
scheduled meeting in July 2023 due to illness.
Holly Keller Koeppel 2017 7/7 3. Membership: (a) all members of the Committee are
3(b) independent Non-Executive Directors in accordance
Murray Kessler 2023 1/1 with UK Corporate Governance Code 2018 Provisions
Véronique Laury 2022 7/7 10 and 17, applicable U.S. federal securities laws and
NYSE listing standards; (b) Murray Kessler joined the
2(d)
Dimitri Panayotopoulos 2015 5/7 Committee on 6 November 2023 on his appointment to
the Board; (c) Serpil Timuray joined the Committee on
Darrell Thomas 2020 7/7 4 December 2023 on her appointment to the Board;
3(c) (d) Savio Kwan ceased to be a member of the
Serpil Timuray 2023 0/0 Committee on stepping down from the Board at the
3(d) conclusion of the AGM on 19 April 2023.
Savio Kwan 2014 - 2022 2/2
4. Other attendees: the Chief Executive and the Chief
People Officer attend meetings by invitation but not
as members.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Composition, Succession, Evaluation

Nominations Committee
Continued

Terms of Appointment to the Board Talent Pipeline Development

Details of the Directors’ terms of The Board regularly reviews talent Executive Management Balance
appointment to the Board and the development more broadly, including as at 31 December 2023
Company’s policy on payments for loss progress on our talent strategy to develop
Management Board:
of office are contained in the current an engaged, agile and high-performing
Directors’ Remuneration Policy, which is organisation through: Nationality
set out in full in the Remuneration Report – employer brand and talent attraction:
in the Company’s Annual Report and attracting fit for future talent with a
Form 20-F for 2021 available on bat.com. purpose-led employer brand;
The Executive Directors have rolling – capabilities and learning: accelerating
one-year contracts. Non-Executive capability development focused on
Directors do not have service contracts with transformation across product
the Company but instead have letters of categories;
appointment for one year, with an expected
time commitment of 25 to 30 days per year. – diversity and inclusion: fostering
conscious inclusion and equity, and
Senior Management delivering the Group's diversity and
Succession Planning inclusion agenda; and
As part of the Committee’s responsibility – progressive culture and creating a
to oversee the development of a pipeline great place to work: promoting a culture American 1
of diverse, high-performing senior of trust, empowerment and collaboration, Australian 1
management, it reviews succession plans and listening and responding to feedback
and talent pools at short-term, mid-term from our people to enable change. Belgian 1
and long-term time horizons for the
Progress against our objective to develop Brazilian 2
Executive Directors, other Management
Board members, and certain other a pipeline of diverse, high-performing British 3
members of senior management. senior managers is set out on page 88.
German 1
The Committee takes into account the Diversity and Inclusion Agenda
importance of growing an executive talent Our talent strategy is underpinned by Italian/Argentinian 1
pipeline reflecting the ambition to increase our diversity and inclusion agenda, which Irish 2
executive management diversity and to focuses on the core areas of driving
support requirements for transformation, ownership and accountability, building Pakistani 2
digital and key functional capabilities. diverse talent pipelines and creating enablers.
In 2023, the Committee reviewed plans The Board oversees and monitors progress
1
to restructure the Management Board to of our diversity and inclusion agenda. Senior Management
support a sharpened focus on execution In 2023, this included: and their direct reports:
and operational excellence and enhance – endorsing an ambition for 40% Gender balance
capabilities critical for the Group's strategic representation of Ethnically Diverse
2
development and transformation. Groups for the Management Board and
The Committee gave thorough direct reports, taking into account the
consideration to the approach for revising Parker Review's 2023 report that asked
the composition of the Management Board FTSE 350 companies to set a target for
and the candidates identified for ethnic diversity of their senior
appointment to Management Board roles management team by 2027;
during the year, before making – reviewing progress against the Group’s
recommendations to the Board diversity and inclusion ambitions through
accordingly. Revisions to the composition to 2025, including to have women in 40%
of the Management Board during the year of Senior Leadership team roles and 45%
are summarised at page 139. of Management roles;
In this context, the Committee also – voluntary ethnicity reporting covering
considered succession planning for the role Male 74 69%
employees in Australia, Brazil, Canada,
of Company Secretary and recommended Malaysia, South Africa and the U.S., in Female 34 31%
to the Board the appointment of Caroline addition to the UK; and
Ferland to this role. Following Board – focus on initiatives to develop and retain Notes:
approval, Caroline was appointed as women in senior teams, including
1. Senior Management comprises the Management
Board and the Company Secretary, in accordance
Company Secretary with effect from mentoring programmes and structured with the UK Corporate Governance Code.
1 September 2023. 'stay interviews' to inform development 2. See page 334. Refer to BAT 'Reporting Criteria'
for a full description of key definitions at bat/
of policy and other enablers. reporting.com.
Our Strategic Report discusses our
diversity and inclusion agenda and
initiatives further, and provides details
on the diversity of our workforce, and in our Management Board ethnicity and
senior management population, on pages gender balance is reported on
88 to 91. page 158 as part of our diversity
reporting for executive management
as at 31 December 2023.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Our Board Diversity & Inclusion Policy

A revised Board Diversity & Inclusion Policy was approved by the Board and took effect from 7 February 2024
to reflect the refreshed statement of our values.
At BAT, we are proud to be a diverse and inclusive global organisation that We recognise that diversity is a critical component of board effectiveness
encourages our people to value their differences and bring their authentic and we are committed to promoting diversity in the composition of the
selves to work. Board, its Committees and the Management Board.
Our ongoing commitment to fostering a progressive culture is underpinned The Nominations Committee is responsible for regularly reviewing the
clearly by our values: “Truly Inclusive”. Our commitment to diversity and composition of the Board, its Committees and the Management Board to
inclusion across BAT is also embedded through our Group Standards of ensure these have an appropriate balance of skills, expertise, and knowledge,
Business Conduct, applicable to all employees of the Group. and for ensuring that all appointments are made on merit against objective
Our Board Diversity & Inclusion Policy sets out our approach to diversity criteria and with due regard for the benefits of diversity. This includes our
1
applicable to the Board, its Committees and the Management Board .
2 Board Diversity & Inclusion Policy objectives set out below.
This policy is intended to support the Board, through the activities of its The Nominations Committee is responsible for implementing this policy and
Nominations Committee, in maintaining the effectiveness and balance monitoring progress against its objectives. This policy and progress against
of the Board, its Committees and the Management Board. its objectives is reviewed annually by the Nominations Committee, in addition
Diversity and inclusion are key principles of our values. We think of diversity to other BAT initiatives that promote diversity in all its forms across BAT.
in its widest sense, as those attributes that make each of us unique. These As part of the annual evaluation of the effectiveness of the Board,
include our race, ethnicity, cultural and social backgrounds, geographical consideration is given to the balance of experience, skills, knowledge,
origin, nationality, gender, age, any disability, sexual orientation, religion, independence and all attributes of diversity of the Board.
skills, experience, education, socio-economic and professional background,
perspectives and thinking styles.

Board Diversity Objectives and Progress Updates

The objectives of our Board Diversity & Inclusion Policy and progress against these objectives in the year are set out below.
Considering all aspects of diversity when reviewing the composition The Nominations Committee has regard to diversity in its widest sense,
of, and succession planning for, the Board, including attributes such as gender, race, ethnicity, cultural and social
1 2
its Committees and the Management Board backgrounds, and other personal attributes referred to in our Board Diversity
& Inclusion Policy above, when undertaking these activities.
Considering a wide and gender-balanced pool of candidates Executive search firms are engaged to support Board and Management
for appointment to the Board Board succession planning where applicable and are required to provide
gender-balanced shortlists of candidates. Succession planning for Executive
Directors and Management Board members takes into account potential
internal candidates from across the Group and potential external candidates.
Maintain at least 40% representation of women The representation of women on the Board was 45% as at 31 December 2023
on the Board (2022: 36%). At the close of the 2024 AGM, it is anticipated that women will
represent 45% of the Board, increasing to 50% from 1 May 2024.
At least one of the following senior positions on the Board The role of Senior Independent Director is currently held by Sue Farr. Sue was
to be held by a woman: Chair; Senior Independent Director; appointed as Senior Independent Director with effect from 1 August 2022. At
Chief Executive; Chief Financial Officer the close of the 2024 AGM, Holly Keller Koeppel will be appointed as Senior
Independent Director (subject to re-election).
Other senior positions on the Board are held by Luc Jobin (Chair) and Tadeu
Marroco (Chief Executive). Javed Iqbal currently holds the role of Interim
Finance Director but is not a member of the Board. From 1 May 2024, the
senior Board position of Chief Financial Officer will be held by Soraya
Benchikh, accordingly it is anticipated that a total of two of the four senior
positions on the Board will be held by women from 1 May 2024.
At least one Director of a minority ethnic background on As at 31 December 2023, the representation of ethnic minority backgrounds
3
the Board on the Board was 27% (2022: 27%).
At the close of the 2024 AGM, it is anticipated that the representation of ethnic
minority backgrounds on the Board will be 33%. The Board complies with the
recommendations on ethnic diversity made by the UK Parker Review.
Giving preference, where appropriate, to engagement of executive Where executive search firms are engaged to provide executive search
search firms accredited under the Standard and Enhanced Code of services to support Board succession planning, preference is given to those
Conduct for Executive Search Firms that are accredited under the Standard and Enhanced Code of Conduct for
Executive Search Firms.
Oversight of the development of a pipeline of diverse, The representation of women on the Management Board was 7% as at
high-performing potential Executive Directors, Management Board 31 December 2023 (2022: 7%), anticipated to increase to 13% from 1 May 2024,
members and other senior managers. following the appointment of Soraya Benchikh as Chief Financial Officer.
Management Board succession planning takes into account the ambition to
progress towards improved gender diversity. Emphasis is placed on building
diverse talent pools at all levels of the organisation through recruiting,
developing and retaining diverse and high-performing talent. In 2023, 50%
of the Group’s external management recruits were women (2022: 47%) and
women comprised 62% of our new graduate intake in 2023 (2022: 57%).
Further information about the Group’s diversity and inclusion agenda is set
out on pages 88 to 91.

Notes on Board Diversity & Inclusion Policy Objectives:

1. The principal committees of the Board comprise the Audit, Remuneration and Nominations Committees.
2. The Management Board is the executive level committee of the Group.
3. Applying UK Office for National Statistics ethnicity categories of: Asian; Black; Mixed/Multiple Ethnic Groups; Other Ethnic Group, in alignment with the UK Listing Rules.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Composition, Succession, Evaluation

Nominations Committee
Continued

Reporting in alignment with UK Listing Rules provisions on diversity and inclusion

We report our Board and executive management diversity data as at 31 December 2023 in accordance with the UK Listing Rules
disclosure requirements and our progress in meeting the UK Listing Rules board diversity targets.
As at 31 December 2023, one of the three senior positions on the Board was held by a woman, Directors from an ethnic minority
background represented 27% of the Board and the representation of women on the Board was 45% (this remains the case as at the date
of this Annual Report and Form 20-F).
The representation of women on the Board currently meets the UK Listing Rules target of 40%. It is anticipated that the representation
of women on the Board will remain at 45% at the close of the 2024 AGM (following Sue Farr and Dimitri Panayotopoulos stepping down
from the Board) and will increase to 50% from 1 May 2024 following the appointment of Soraya Benchikh as Chief Financial Officer. It is
further anticipated that a total of two of the four senior positions on the Board will be held by women from 1 May 2024.
The Board is committed to continued enhancement of its diversity, supported by the succession planning activities conducted by the
Nominations Committee, discussed on pages 155 to 156.
Gender Representation: Board & Executive Management as at 31 December 2023
Number of senior positions
1
Number of Board Percentage of on the Board (CEO, CFO , SID Number in Percentage of
2 2
members the Board and Chair) executive management executive management
Men 6 55 % 2 13 87 %
Women 5 45 % 1 2 13 %
Not specified/prefer not to say — — — — —

Ethnic Background: Board & Executive Management as at 31 December 2023

Number of senior
positions on the Number in Percentage
1
Number of Board Percentage of Board (CEO, CFO , executive of executive
2 2
members the Board SID and Chair) management management
White British or other White (including
minority-white groups) 8 73 % 2 10 67 %
Mixed/Multiple Ethnic Groups — — — — —
Asian/Asian British 1 9% — 2 13 %
Black/African/Caribbean/Black British 1 9% — — —
Other ethnic group, including Arab 1 9% 1 3 20 %
Not specified/prefer not to say — — — — —
Notes:
1. The role of Interim Finance Director (equivalent to CFO) is not currently an Executive Director role on the Board.
2. Executive management includes the Management Board (most senior executive body below the Board) and the Company Secretary, excluding administrative and support staff,
as defined by the UK Listing Rules.

Approach to data collection

Gender and ethnicity data relating to the Board, Management Board and (2) Self-reported ethnic background (classifications as designated by the UK
Company Secretary is collected on an annual basis applying a standardised Office of National Statistics). Selection from: [a] White British or other
process managed by the Company Secretary. White; [b] Mixed or Multiple Ethnic Groups; [c] Asian or Asian British;
Each Board member, Management Board member and the Company Secretary [d] Black; [e] Other Ethic Group/please specify [f] not specified (due to local
is requested to complete a standard form questionnaire on a strictly confidential data privacy laws); or [g] prefer not to say.
and voluntary basis, through which the individual self-reports their ethnicity and For the 2023 data collection process, the standard form questionnaire
gender identity (or specifies they do not wish to report such data). included further guidance to participants in respect of the category 'Other
Consent is provided for data collection and processing of that data in Ethnic Group' following publication of the 2021 census ethnicity data by the
accordance with the applicable privacy notice set out in the questionnaire and UK Office of National Statistics.
in accordance with the Group Data Privacy Procedure. This approach to data collection is consistently applied across all members
The criteria of the standard form questionnaire are fully aligned to the definitions of the Board, Management Board and Company Secretary in relation to the
specified in the UK Listing Rules, with individuals requested to specify: collection and reporting of their gender and ethnicity data in this Annual
Report and Form 20-F.
(1) Self-reported gender identity. Selection from [a] male; [b] female]; [c] other
category/please specify; [d] not specified (due to local data privacy laws); or
[e] prefer not to say.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Audit, Risk, Internal Control

Audit Committee

Introduction The Committee has monitored progress

Over the first half of 2023, the On behalf of the Audit Committee, I am in the Group’s business integrity and
Committee led a rigorous audit pleased to introduce our report discussing compliance programme through the year,
the Committee's role and responsibilities with emphasis on our framework for
tender process, which resulted
and our activities during 2023. compliance with international sanctions
in the Board's approval of our which rapidly escalated as a consequence
recommendation to appoint At the start of the year, we commenced
of the ongoing conflict between Russia
KPMG LLP as external auditors planning for the competitive tender of the
and Ukraine.
Group's external audit for the 2025 financial
for financial year 2025. year. Over the first half of 2023, the We have also addressed a series of
Committee led a rigorous audit tender important accounting judgements in 2023,
Holly Keller Koeppel process, which resulted in the Board's including the complex treatment applicable
Audit Committee Chair approval of our recommendation to to the sale of the Group’s businesses in
appoint KPMG LLP as external auditors for Russia and Belarus and analysis of the
financial year 2025. This proposal will be carrying value of goodwill and intangible
presented to shareholders at the Annual assets in the U.S.
General Meeting in 2025. Our report on Alongside these activities, the Committee
the external audit tender process and the has overseen the continued development
Audit Committee objective decision criteria applied by the of our sustainability reporting framework,
Current Members Committee is set out at page 167. including updates to the Group's Double
Holly Keller Koeppel (Chair) Our risk management and internal controls Materiality Assessment conducted in 2022
framework has been another key focus for and introduction of further climate scenario
Karen Guerra the Committee in 2023. Our oversight in analysis into our TCFD risk assessment.
Véronique Laury this area included a robust review of risks We work to ensure that our reporting is
across our Group register and emerging aligned to the expectations of our
Darrell Thomas risks for the Group. stakeholders and that we are ready to
We identified two new Principal Risks to adapt to significant regulatory change
the Group during the year; cyber security, expected to impact on sustainability
taking into account the evolving complexity reporting. Looking ahead, the Committee
of the cyber-threat environment and has endorsed an extensive programme
supply chain disruption in view of the to develop our assurance and reporting
macro-economic and geopolitical structures to facilitate future reporting
environment and the complexity of the in alignment with anticipated regulatory
Group's New Categories supply chain. requirements including the EU Corporate
Sustainability Reporting Directive.

Role
As set out in its terms of reference, the Audit Committee monitors and reviews:
– integrity of the Group’s financial statements and any formal announcements
relating to the Company’s performance, considering any significant financial
reporting issues, significant judgements and estimates reflected in them, before
their submission to the Board;
– consistency of the Group’s accounting policies;
– effectiveness of, and makes recommendations to the Board on, the Group’s
accounting, financial controls, auditing matters and business risk management
systems;
– effectiveness of the Group’s internal audit function;
– independence, performance, effectiveness and objectivity of the Company’s
external auditors, makes recommendations to the Board as to their reappointment
(or for a tender of audit services where appropriate), and approves their terms of
engagement and the level of audit, audit-related and non-audit fees; and
– assurance activities conducted by the external assurance provider in relation to
Group sustainability reporting and scope of assurance activities, makes
recommendations for their appointment, and approves their terms of engagement
and fees.

Audit Committee terms of reference

The Committee’s terms of reference align with the requirements of the UK
Corporate Governance Code.
Revised terms of reference for the Committee were introduced with effect from
1 September 2023 to reflect changes to the structure of executive management roles.

+ For the Committee’s terms of reference see

www.bat.com/governance

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Audit, Risk, Internal Control

Audit Committee
Continued

Key Activities in 2023 – regular reports from the Group Head of Internal Audit on
Regular work programme includes reviewing: the internal audits of markets, business units, processes,
– the Group’s annual results, half-year results, the application of operations and major change initiatives, management
accounting standards and the external auditors’ reports where responses to internal audit findings and action plans put
results are audited; in place to address any issues raised;
– the Group’s external auditors’ year-end audit, including the key – progress against the internal audit plan for 2023 and design
audit matters, critical audit matters, assessments of of the 2024 internal audit plan;
materiality and the Group’s control environment, and – annual and interim reports on the Group’s Delivery with
confirming the independence of the Group’s external auditors; Integrity compliance programme (discussed on pages 98 to
– the basis of preparation and accounting judgements; 99), monitoring compliance with the SoBC, and monitoring
SoBC incident reporting and the effectiveness of Speak Up
– adjusting items, applicable accounting treatments and the use
channels prior to review by the Board;
of alternative performance measures;
– the Group’s sustainability performance on an annual basis,
– the annual programme of assessment of goodwill and including performance against the Group’s sustainability
intangibles impairment; targets, the Group’s responsible marketing and youth access
– the steps taken to validate the Group’s ‘going concern’ prevention activities (discussed on pages 96 and 97);
assessment at half-year and year-end and agreeing on the – external assurance activities conducted in respect of defined
process and steps taken to determine the Group’s viability sustainability metrics and related information conducted by
statement at year-end; the external assurance provider and assessing the outcomes
– the Group’s liquidity position, including current facilities of assurance with the external provider;
and financing needs; – the outcomes of human rights assessments for countries in
– the assessment of Group viability, taking into account its which Group companies operate that are identified to have
current position and Principal Risks and associated stress- a higher degree of exposure to human rights risks in 2023,
testing analysis, prior to review by the Board; including local compliance with Group policies, standards and
– significant tax matters for the Group, including rate of taxation controls and local measures in place to enhance human rights
and external developments that may impact the Group's tax risk management;
position; – periodic reports from the Group’s Corporate Audit Committee and
– the accounting applicable to post-employment benefits Regional Audit and Corporate Social Responsibility Committees;
liabilities and assets; – the annual report from the Group Head of Security on security
risks, losses and fraud arising during the preceding year;
– the internal processes followed for the preparation of the
Annual Report and Form 20-F and confirming that the – half-year and year-end reports on the Group’s political
processes appropriately facilitated the preparation of an contributions (discussed on page 169); and
Annual Report and Form 20-F that is ‘fair, balanced and
– the Committee's effectiveness, following the annual review of
understandable’;
the Committee's performance (discussed on pages 152 to 153).
– risks to the Group, including the Group risk register,
prioritisation and categorisation of Group risks, relevant Further specific matters considered by the Committee
mitigating factors and emerging risks to the Group (discussed in relation to the financial statements:
on pages 121 to 128 and 162); – Introduction of organic adjusted diluted EPS as a new non-
– oversight of management’s activities to ensure ongoing GAAP measure for remuneration purposes: Following
compliance with the U.S. Sarbanes-Oxley Act of 2002 (SOx) completion of the sale of the Group's businesses in Russia and
(discussed on page 168); Belarus, the Committee assessed the impact of non-adjusting
events on adjusted diluted EPS and approved the introduction
– the Company’s status as a Foreign Private Issuer for the of organic adjusted diluted EPS as a new non-GAAP measure
purposes of U.S. securities laws; for remuneration purposes (see page 173).

1
Attendance at meetings in 2023
3,4
Meeting attendance
Name Member since Attended/Eligible to attend
2(a),(b)
Holly Keller Koeppel 2017 6/6
2(a)
Karen Guerra 2021 6/6
2(a)
Véronique Laury 2022 6/6
2(a),(b)
Darrell Thomas 2020 6/6
Notes:
1. Meetings: the Committee held six meetings in 2023. Five meetings of the Committee are scheduled for 2024. Additional meetings are convened on an ad hoc basis as required during
the year. In June 2023, there was one ad hoc meeting of the Committee to review proposals from candidate firms tendering to conduct the external audit for the 2025 financial year.
2. Membership: (a) all members of the Committee are independent Non-Executive Directors in accordance with the UK Corporate Governance Code 2018 Provisions 10 and 24 and
applicable U.S. federal securities laws and NYSE listing standards. The Board has determined each Committee member to meet the financial literacy requirements applicable under
NYSE listing standards. Each member of the Committee has recent and relevant financial experience in accordance with the UK Corporate Governance Code 2018. The Committee
members as a whole have competence relevant to the sectors the Group operates in; (b) Holly Keller Koeppel and Darrell Thomas are each designated as an audit committee financial
expert in accordance with applicable U.S. federal securities laws and NYSE listing standards.
3. The Finance Director attends all Committee meetings but is not a member. Other Directors may attend by invitation. The Director, Legal & General Counsel, the Group Head
of Internal Audit and the external auditors generally attend all meetings of the Committee.
4. The Committee meets alone with the external auditors, and, separately with the Group Head of Internal Audit, at the end of every Committee meeting (except for the ad hoc meeting
convened in June 2023 to review external audit tender proposals). The Committee also meets periodically with management.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Significant accounting judgements and estimates – Income and receivables related to VAT on social
considered in relation to the 2023 financial statements: contributions in Brazil: Following the conclusion of claims
The significant accounting judgements and estimates made by a Group subsidiary related to the calculation of VAT
considered by the Committee in relation to the financial on social contributions made in Brazil, the Committee
statements for the year ended 31 December 2023 are assessed the accounting treatment applicable to the recovery
summarised below. of tax credits during 2023. The Committee also considered the
accounting treatment applicable to further claims relating to
– Changes in the Group - sale of the Group’s businesses in the calculation of tobacco excise within social contributions in
Russia and Belarus: The Committee assessed the accounting Brazil and considered it appropriate to recognise the impact of
treatment applicable to completion of the sale of the Group’s those claims within adjusted income and normal operating
businesses in Russia and Belarus, including the basis for profit (see note 17 in the Notes on the Accounts).
deconsolidation of those businesses from the Group financial
statements on completion of the sale, the treatment of the – Foreign exchange and hyperinflation: As the Group has
sale as not a discontinued operation and the recognition of operations in certain jurisdictions with severe currency
impairment charges, foreign exchange charges and associated restrictions where foreign currency is not readily available,
costs as non-cash adjusting items (see note 6(j) in the Notes including in hyperinflationary territories such as Venezuela, the
on the Accounts). Committee reviewed management’s approach to applicable
accounting treatment and confirmed that methodologies used
– Significant tax exposures for the Group: The Committee to determine relevant exchange rates for accounting purposes
reviewed updates on corporate tax matters and reports from were appropriate (see note 1 in the Notes on the Accounts).
the Group Head of Tax on the status of the Franked Investment
Income Group Litigation Order (FII GLO) and developments in – Goodwill and intangibles impairment review: The
various markets, including tax disputes in the Netherlands. The Committee reviewed management’s assessments of the
Committee concurred with management’s assessments and carrying value of intangibles including goodwill (see note 12
disclosures in respect of these tax exposures (see note 10 and in the Notes on the Accounts), with particular focus on:
note 31, respectively, in the Notes on the Accounts). U.S. Business: Following a review of the U.S. combustibles
– Contingent liabilities, provisions and deposits in connection market that recognised the post-COVID-19 performance
with ongoing litigation: projections, assumptions related to the potential menthol ban,
growth of illicit single-use vapour products and continued
Imperial Tobacco Canada (ITCAN): The Committee continued
macro-economic headwinds, the Committee concluded that
to monitor the status of the Canadian Companies’ Creditors
it was appropriate to recognise an impairment charge of
Arrangement Act (CCAA) proceedings under which Group
£23.0 billion in 2023 and to commence amortisation of the
subsidiary ITCAN filed for protection in 2019 following the
U.S. combustibles brands from 1 January 2024, over a period
judgment of the Quebec Court of Appeal in the Quebec Class
of between 20 and 30 years. The Committee agreed with
Action lawsuits, with stays currently in place until March 2024.
Management that it was appropriate to assess the future
The Committee determined it continued to be appropriate to
value in use of the combustibles brands over the useful
consolidate ITCAN’s financial results in the Group financial
economic lives noted above, as compared to the indefinite-
statements whilst ITCAN continues to be subject to the CCAA
lived perpetuity calculation used in prior periods. The
proceedings. The Committee also reassessed the accounting
Committee also concluded that, due to the macro-economic
treatment applicable to other ongoing tobacco-related
headwinds and revised forecasts, an impairment charge to
litigation to which ITCAN is a defendant and confirmed that it
goodwill of £4.3 billion would also be recognised in 2023.
remained appropriate to make no provision in respect of that
litigation, as it is not possible to reasonably estimate the Imperial Tobacco Canada (ITCAN): The Committee
amount of any potential settlement (see note 31 in the Notes concluded that in respect of Group subsidiary ITCAN, there
on the Accounts). was no indication of impairment to goodwill, taking into
account the status of ongoing proceedings (including the
Fox and Kalamazoo Rivers: The Committee reassessed the
CCAA process in respect of which there had been no
provision in respect of the Fox River clean-up costs and related
significant developments during the year).
legal expenses and confirmed that the provision would
continue to be retained at the prior year level, although South Africa: The Committee concluded that in respect
inherent uncertainties remain (see note 24 in the Notes on the of the Group's South African operation, an impairment charge
Accounts). The Committee reviewed the position in respect of of £291 million was appropriate due to the lower forecast cash
the Kalamazoo River claim and assessed that no provision flows as the market has been negatively impacted by higher
should be recognised on the basis set out at note 31 in the illicit trade and increased regulation.
Notes on the Accounts. – Investments in Associates - Organigram Holdings, Inc.
Reynolds American Companies: The Committee endorsed (OGI): Following recognition of an impairment charge against
management’s approach to accounting for the Master the carrying value of the Group’s investment in OGI in 2022,
Settlement Agreement and the Engle class-action and progeny the Committee concluded it was appropriate to recognise an
cases as consistent with the prior year (see note 31 in the additional impairment against the investment carrying value
Notes on the Accounts). as a result of further reduction in OGI's market capitalisation.
DOJ Deferred Prosecution Agreement/OFAC civil – Adjusting items: The Committee conducted a thorough
settlement agreement: Following the agreement reached review of all adjusting items, including amortisation of certain
with the DOJ and OFAC in April 2023 to resolve previously brands, charges related to the completion of the sale of the
disclosed investigations into suspicions of sanctions breaches, Group's businesses in Russia and Belarus, the recognition of an
the Committee assessed recognition of an additional charge to additional charge in respect of the settlement arrangements
reflect the total amounts payable to U.S. authorities under the agreed with the DOJ and OFAC and the recognition of a
settlement arrangements, having previously approved the tobacco excise-related social contributions credit in Brazil
recognition of a provision in the interim financial statements (see note 7 in the Notes on the Accounts).
to 30 June 2022 (see note 31 in the Notes on the Accounts).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Audit, Risk, Internal Control

Audit Committee
Continued

Specific risk topics considered by the Committee included: Functional and regional risk registers are reviewed biannually by
– current and emerging risks in relation to the Group’s digital the relevant Regional Audit Committee or the Corporate Audit
strategy and technology architecture and data management, Committee, as appropriate. DRBU risk registers are reviewed as
with particular focus on digital transformation, cyber security, part of DRBU Risk and Controls meetings.
protection of the Group’s information systems and data, and At the Group level, specific responsibility for managing each
the approach to managing those risks (discussed further at identified risk is allocated to a member of the Management Board.
pages 128 and 163 to 164); The Group risk register is reviewed twice yearly by the Group Risk
– climate change risks and their impact on the Group, including Management Committee, a committee of senior managers chaired
oversight of processes in place to manage physical and by the Finance Director. In addition, it is reviewed annually by the
transitional climate change risks, and annual reporting on the Board and twice yearly by the Committee. The Board and the
identification, assessment and management of those risks, Committee review changes in the status of identified risks and
in alignment with the TCFD framework (discussed further at assess the changes in impact and likelihood. Any delayed
pages 102 to 116 and 127); mitigations are also presented to the Committee. In addition,
the Committee conducts detailed reviews on selected risks, with
– risks related to ESG and continued integration of ESG risks into discussion of those risks at a more granular level with senior
the Group’s risk register, complemented by a ESG risk register managers responsible for managing and mitigating them.
(discussed below) to ensure appropriate mechanisms are in
Board oversight
place for longer-term identification, assessment and continued
monitoring of ESG risks and to support the development of During the year, the Board considered the nature and extent of Group
sustainability reporting in alignment with the EU Corporate risks (irrespective of their impact or likelihood) which are material to
Sustainability Reporting Directive (CSRD) and other recognised the Group and the delivery of its strategic objectives (its ‘risk
international standards; appetite’), and the Group's framework for maintaining sound risk
management and internal control systems.
– risks associated with continued exposure to interest rate As part of the Board's assessment of risks faced by the Group,
changes on net finance costs arising from existing, new and the Board considered the material climate-related risks and
refinanced debt and restricted cash in the Group and actions opportunities for the Group (discussed in the context of our TCFD
to mitigate those risks (discussed on page 126); reporting on pages 102 to 116). Climate change and circular
– review of the Group's Principal Risks, including identification economy is maintained as a Principal Risk to the Group,
of cyber security and supply chain disruption as new Principal recognising the Group's existing commitments in relation to
Risks, and the report on the effectiveness of the Company’s climate change and circular economy matters and mitigation
risk management system prior to Board assessment; of associated risks.
– revisions to the Group’s risk appetite framework as it relates to In 2023, two new risks were identified as Principal Risks to the
the Group’s strategic objectives, and review of emerging risks Group; cyber security, reflecting the heightened risks presented by
to the Group twice per year, prior to Board consideration; and an evolving cyber-threat environment, increased digital interaction
– regulatory developments in relation to international sanctions with consumers and changes to the regulatory landscape; and
and trade restrictions and updates on the Group's Anti- supply chain disruption, taking into account the macro-economic
Financial Crime Procedures, sanctions and supply chain and geopolitical environment and complex nature of the New
controls and compliance programme. Categories supply chain.
Risk appetite is reviewed annually by the Board to ensure that it is
+ For further information please refer to the Group Principal Risks on appropriate. Alongside a robust assessment of the Principal Risks
pages 121 to 128 and the Group risk factors on pages 353 to 374 and uncertainties facing the Group (including those that would
threaten its business model, future performance, solvency, liquidity
Risk Management and Internal Control and viability), the Board also considers emerging risks which may
Overview challenge the Group’s ability to achieve its strategic objectives in
The Company maintains its system of risk management and the future. Each emerging risk is assessed by the Board on its
internal control with a view to safeguarding shareholders’ potential impact and likelihood and, where applicable, incorporated
investment and the Company’s assets. It is designed to identify, into the Group’s risk register with appropriate mitigating activities.
evaluate and manage risks that may impede the Company’s Emerging risks are reviewed regularly by the Committee, prior to
objectives. It cannot, and is not designed to, eliminate them Board assessment.
entirely. This system provides a reasonable, not absolute,
During the year, the Board maintained close oversight of the
assurance against material misstatement or loss. The main
Group’s response to critical external uncertainties arising,
features of the risk management processes and system of internal
including the impact of the ongoing conflict in Ukraine. Risks are
control operated within the Group are described below. These
actively assessed and mitigated at Group, functional, DRBU and
have been in place throughout the year under review and remain
market levels, in compliance with international sanctions. The
in place to date. These do not cover associates of the Group.
Board and the Committee have monitored the continued
Risk management integration of ESG-related risks and associated mitigation
Risk registers, based on a standardised methodology, are used as activities into the Group's risk management framework over the
appropriate at Group, functional, above-market, directly-reporting year. ESG-related risks identified through the double materiality
business unit (DRBU) and individual market levels to identify, assessment conducted in 2022 were mapped and consolidated
assess and monitor the risks (both financial and non-financial) into a specific ESG risk register, to support consistent
faced by the business at each level. Risks are assessed and management and mitigation of ESG-related risks. The ESG risk
prioritised at three levels by reference to their residual impact register follows the Group's standardised risk methodology, this
(high/medium/low) and likelihood (probable/possible/unlikely). ensures that each risk is fully assessed and that associated
Mitigation plans are required to be in place to manage the risks mitigation activities are clearly understood, defined, recorded and
identified, and progress against those plans is monitored. The risk reported. ESG-related risks, when rolled up to the Group risk
registers are reviewed on a regular basis. The SAP Enterprise Risk register, form individual drivers and/or impacts to the relevant
Management module is used across the Group to record and track Group risk in focus. The ESG risk register also supports the
risk management activity. This system is subject to ongoing business with its sustainability reporting requirements and
management review to identify opportunities for increased supports the longer-term quantification of ESG risks.
efficiency and effectiveness.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

With the support of the Committee, the Board conducts an annual party service providers with access to Group IDT systems and
review of the effectiveness of the Group’s risk management and networks, or that process or store Group data, adhere to our
internal control systems. This review covers all material controls cyber security requirements and standards;
including financial, operational and compliance controls and risk – developing, maintaining and testing thorough incident response
management systems, with the Committee continuing to have a and business continuity procedures to ensure that the Group
strong focus on cyber security, sanctions compliance and ESG- can promptly detect, contain, analyse, report and recover from
related risks. In conducting the oversight responsibilities of the any potential or actual incidents and minimise their impact on
Board and the Committee, both forums meet with senior our operations and stakeholders, which procedures would be
management during the year to assess key judgements applied. triggered, as applicable, if any incident were to arise;
– engaging external assessors, consultants, auditors and other
third parties as appropriate, to support cyber security risk
assessment, identification and management processes and to
+ Refer to the Group Principal Risks on pages 121 to 128
and Group risk factors on pages 353 to 379 provide independent assurance and recommendations; and
Internal controls – engaging with relevant internal and external stakeholders, such
as regulators, law enforcement authorities, customers and other
Group operating companies and other business units are annually
industry stakeholders, on cyber security matters and being
required to complete a controls self-assessment, called Control
prepared to disclose any material cyber security risks or
Navigator, of the key controls that they are expected to have in
incidents in a timely and transparent manner, in accordance with
place. Its purpose is to enable them to self-assess their internal
applicable regulations if such issues were to arise.
control environment, assist them in identifying any controls that
may need strengthening and support them in implementing and The Group’s cyber security risk assessment, identification and
monitoring action plans to address control weaknesses. The management processes are regularly reviewed and updated to
Control Navigator assessment is reviewed annually to ensure that ensure these remain effective and aligned with our business
it remains relevant to the business and covers all applicable key objectives, regulatory obligations and industry standards. Where
controls. In addition, at each year-end, Group operating companies applicable, feedback and lessons learned from internal and
and other business units are required to: external audits, assessments and any incidents are taken into
account in developing the Group’s cyber security resilience. Cyber
– review their system of internal control, confirm whether it
security risk management is integrated into, and follows, the
remains effective, and report on any specific control deficiencies
Group’s processes for identification of risks to the business as set
and the action being taken to address them; and
out on page 162. Risks relating to cyber security are integrated into
– review and confirm that policies and procedures to promote the Group risk register and are assessed according to the Group’s
compliance with the SoBC are fully embedded and identify any defined impact and likelihood categories, as described on page 162.
material instances of non-compliance. Risks to the Group associated with cyber security threats are
The results of these reviews are reported to the relevant Regional discussed on pages 128 and 355.
Audit Committees or to the Corporate Audit Committee, and to Governance and oversight
the Audit Committee, to ensure that appropriate remedial action The Board is responsible for the Group's strategy, including
has been, or will be, taken where necessary. They are also oversight of the Group’s IDT and cyber security strategy, and for
considered by the SOx Steering Committee and the Disclosure reviewing the effectiveness of its risk management and internal
Committee in determining management’s opinion on the internal control systems. On an annual basis, the Board reviews the Group
controls over financial reporting (ICFR). risk register, which incorporates cyber security risks (discussed on
Cyber Security Risk Management and Internal Controls pages 128, 162 and 355). In 2023, the Board approved the updated
Risk management and strategy versions of our SoBC and SCoC from 1 January 2024, which both
Cyber security is a critical aspect of the Group’s business include requirements in relation to cyber security risk
operations, as the Group relies on IDT systems and networks management. For more information about the application of the
to conduct core activities, such as manufacturing, distribution, SoBC, see page 98, and page 100 for the application of the SCoC.
marketing, customer service, R&D and financial and management During the year, the Board also reviewed the Group’s IDT strategy
reporting, amongst other core activities. The Board recognises and was briefed on the cyber risk landscape by the Director, Digital
that cyber security threats could pose significant risks to the & Information and external advisers.
Group’s business, reputation, financial condition and competitive Through the Audit Committee’s terms of reference, the Board has
position, and to the safety and privacy of our consumers, delegated certain responsibilities to the Audit Committee, including
employees and other stakeholders. reviewing the effectiveness of the Group's internal controls and
Processes are implemented by the Group to identify, assess and business risk systems to ensure there is due process for the
manage material risks from cyber security threats. Cyber security identification and management of key business risks and for
risk assessment and identification processes are integrated into the monitoring the effectiveness of operational controls, reviewing the
Group’s overall risk management systems and processes, which are Group risk register and emerging risks, and monitoring procedures
overseen by the Board and implemented by management. The and controls for safeguarding assets including cyber security
Group implements various processes to manage and mitigate the controls. The Audit Committee reviews the Group risk register
material risks from cyber security threats, including: twice a year and is briefed periodically on the cyber risk landscape
and Group cyber resilience by the Group Chief Information Security
– implementing appropriate technical and organisational security
Officer (CISO) (reporting to the Director, Digital & Information). The
measures, such as defensive technologies, encryption,
Audit Committee receives reports from the Corporate Audit
authentication, and backup and recovery systems, to protect
Committee, which monitors the effectiveness of risk management
the confidentiality, integrity and availability of IDT systems and
and internal controls across the Group’s functions and oversees
networks, and the data stored on or transmitted through them;
the Group’s cyber security risk management framework. The
– providing regular training and awareness programmes to Group Corporate Audit Committee receives quarterly reports from the
company employees and contractors on cyber security best Group CISO on current and emerging cyber security threats
practices and procedures, adherence to our SoBC (including to the Group, measures taken to prevent, detect and respond to
cyber security and information security requirements) and other those threats and efficacy of cyber security controls and incident
relevant standards; response plans.
– establishing and enforcing vendor management processes such
as due diligence and contractual obligations to ensure that third-

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Audit, Risk, Internal Control

Audit Committee
Continued

The Group maintains a dedicated cyber security team, led by the The Committee reviews regular summary reports provided
Group CISO, responsible for developing and implementing the by the Group Head of Internal Audit in respect of internal audits
Group’s cyber security strategy, standards and procedures, including conducted during the year and findings from those audits,
to address any material incident that might arise. The Group's cyber together with management feedback and agreed action plans
security team has appropriate professional expertise, knowledge and established where areas for improvement are identified. The scope
experience in the field, including to identify, assess and manage cyber of each internal audit is assessed for SOx impact and audit of
security risks, maintain appropriate security monitoring, incident applicable SOx controls is included where relevant. Reviews of SOx
response and business continuity procedures, and to implement controls and their effectiveness are primarily conducted by the
those should an incident arise. All senior members of the cyber Group’s Business Controls Team. Assurance is also undertaken by
security team, including the Group CISO, hold industry certifications the Group’s external auditors, as referred to on page 168.
relevant for their roles and responsibilities, for example CISSP 2024 Internal Audit Plan
(Certified Information Systems Security Professional) or CISM
The Committee has approved the 2024 Internal Audit plan and
(Certified Information Security Manager), relevant SANS certifications
assessed its alignment with the Group’s risk register to ensure
in cyber defence teams (such as Certified Incident Handler,
robust coverage of Group risks and balanced coverage of Group
Continuous Monitoring Certification, Certified Forensic Analyst),
activities (measured by value and volume). The design of the 2024
CRISC (Certified in Risk and Information Systems Control), CISA
Internal Audit plan anticipates broader use of Internal Audit's
(Certified Information Systems Auditor) and/or CGEIT in
catalogue of data analytics developed in 2023 and retains an
governance, risk and compliance teams (Certified in
appropriate combination of remote fieldwork and focused site
the Governance of Enterprise IT). All members of the cyber security
visits. The plan also takes account of assurance provided by second
team have prior industry experience relevant to their current
line of defence functions, including the Group's Business Controls,
position. The Group CISO has over 20 years of information security
Security and Business Integrity & Compliance teams.
experience having held multiple roles in industry, most recently as
CISO for GSK’s Pharmaceutical, Supply Chain and R&D divisions prior The scope of the 2024 Internal Audit plan continues to be risk-
to joining the Group. focused, reflecting the Group’s risk register and identified
emerging risks. Emphasis will be placed on cyber security
The Group's cyber security team monitors and evaluates the
infrastructure, sustainability data management, sanctions
evolving cyber security threat landscape and conducts periodic
and other regulatory compliance procedures and responsible
assessments of the Group’s IDT systems and networks, using
marketing controls, alongside thorough coverage of core business
various tools including vulnerability scans, penetration tests and
activities, lines of defence and IT infrastructure and controls.
audits, to identify and prioritise potential cyber security risks and
vulnerabilities. Key outcomes of assessments and incident Regional and Corporate Audit Committee framework
summaries are reported to the Director, Digital & Information, and The Group’s Regional Audit Committee framework underpins the
periodically to the Audit Committee, along with recommendations Audit Committee. It provides a flexible channel for the structured
for mitigating or remedying any identified risks. Any material cyber flow of information through the Group, with committees for each
security incidents would also be reported to the Audit Committee of the Group's regions and for locally-listed Group entities and
in accordance with the Group’s incident response procedures, specific markets where appropriate. The Regional Audit
should any such incident arise. Committees are supported by Risk and Control Committees
established at business unit level, and within certain Group
Internal Audit function
functions where applicable. This framework ensures that
The Group’s Internal Audit function is responsible for carrying out
significant financial, social, environmental, governance and
risk-based audits of Group companies, business units, factories,
reputational risks faced by the Group are appropriately managed
global processes and major change initiatives. A separate Business
and that any failings or weaknesses are identified so that remedial
Controls Team provides advice and guidance on controls to the
action may be taken. The Group’s Regional Audit Committees are
Group’s business units. The purpose, authority and responsibilities
chaired by the Chief Executive or the Finance Director, comprise
of the Group’s Internal Audit function are defined by the
members of the Management Board and regularly attended by one
Committee through the Group’s Internal Audit Charter, which is
or more Non-Executive Directors.
reviewed by the Committee and refreshed on a three-year cycle.
The Committee reviews the effectiveness of the Group’s internal The Corporate Audit Committee focuses on the Group’s risks and
audit function annually, supported by an effectiveness review control environment that fall outside the regional committees’ remit,
conducted periodically by an independent third party (with the last such as central functions, and global programmes, processes and
external effectiveness review conducted in 2019). The Committee projects. It comprises members of the Management Board and is
considers the Internal Audit function to be effective and to have chaired by a Regional Director. One or more of the Non‑Executive
the necessary resources to fulfil its mandate. Directors also regularly attend meetings of the Corporate Audit
Committee. External and internal auditors attend meetings of these
2023 Internal Audit Plan
committees and have private audiences with members of the
The Group’s Internal Audit function works to a rolling audit plan, committees after meetings as needed. Additionally, central, regional
prioritising risk areas aligned to the Group’s risk register. During and individual market management, along with Internal Audit, support
2023, progress against the Internal Audit plan was regularly the Board in its role of ensuring a sound control environment.
reviewed with the Committee to enable monitoring of the ongoing
effectiveness of audit work, with flexibility to augment coverage of Annual review
internal audits in response to emerging risks where appropriate. In The Financial Reporting Council’s ‘Guidance on Risk Management,
2023, internal audits covered various markets and business units, Internal Control and Related Financial and Business Reporting’
manufacturing facilities and Leaf Operations in a range of locations provides guidance in relation to issues of risk and internal control
and a balanced cross-section of other business activities mapped management and related reporting. The Group's risk management
to the Group risk register, including digital infrastructure and cyber and internal control processes, and the reports these give rise to,
security threat detection; supply chain, route to market and IT enable the Board and the Audit Committee to monitor risk and
efficiency programmes; responsible marketing and data privacy internal control management on a continuing basis throughout the
controls; and sanctions compliance procedures. Audits were year and to review its effectiveness at the year-end. The Board,
conducted through balanced use of on-site and remote auditing, with advice from the Committee, has completed its annual review
combining the benefits of local fieldwork and full scope coverage. of the effectiveness of that system for 2023.The Board is satisfied
Enhanced use of data analytics was embedded into audit that the Group's system of risk and internal control management
assignments during the year to optimise efficiency, effectiveness accords with the UK Corporate Governance Code and satisfies the
and coverage of audits, and to deliver more insightful assurance to requirements for internal controls over financial reporting.
business units.

164
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

External Auditors Audit Committees and the External Audit

The Committee, on behalf of the Board, is responsible for the
relationship with the external auditors. KPMG LLP (KPMG) were Minimum Standard
appointed as the Company’s auditors with effect from 23 March
The Company and its Audit Committee apply the 'Audit
2015, following a competitive tender process carried out in 2015.
Committees and the External Audit: Minimum
During 2023, the Committee conducted a formal tender process
Standard' (Standard), published by the FRC in May 2023.
in respect of the external audit for the 2025 financial year, this is
discussed further on pages 159 and 167. This Annual Report and Form 20-F, and particularly this Audit
Committee report, sets out how the Standard has been applied
The external auditors report to the Committee in depth on the
during the year. Pages noted below refer to specific discussion
work programme, scope and outcomes of the annual audit,
relevant to the application of the Standard in this Annual Report
including their procedures in relation to internal controls over
and Form 20-F.
financial reporting.
Responsibilities
There is regular and open communication between the Committee
and the external auditors and with management. The Committee The Committee's responsibilities are set out in its terms of
reviews and discusses the external audit plan and the external reference, available at www.bat.com/governance. An overview
auditors’ assessments of management's proposed treatment of the Committee's responsibilities is provided at page 159 and
of significant transactions and accounting judgements, inviting the Committee's work programme for the year is discussed at
challenge and giving due consideration to points raised by the page 160.
external auditors. During the year, the Committee also met The Chair of the Committee provides a briefing to the Board
independently with the external audit partner after every following each Committee meeting covering the Committee's
Committee meeting (with the exception of the ad hoc meeting activities, including how it has undertaken its responsibilities in
convened in June 2023 to review the external audit tender relation to the external audit.
proposals from candidate firms). The annual investor engagement programme provides a range
Outside of Committee meetings, the Committee Chair, the Finance of opportunities for shareholders to engage with the Company
Director, the Director, Legal & General Counsel, the Group Head of on governance topics, including the scope of the external audit.
Internal Audit and the Company Secretary all meet with the external The Chair and other members of the Committee are available
auditors regularly throughout the year to discuss relevant issues and to meet with major shareholders on request. There were no
the progress of the external audit. Any significant issues are also requests from shareholders in 2023 for any specific matters
included on the Committee’s agenda. More broadly, access to to be covered in the audit.
personnel and records across the Group is facilitated as required Tendering
to enable the external auditors to conduct the external audit. How the Committee has carried out its responsibilities in
External auditor effectiveness relation to the external audit tender process for the 2025
The Committee carries out an annual assessment of the external financial year is discussed on page 167, with details of the
auditors, including their expertise, qualification and resources, their criteria used to make the selection and the process followed.
objectivity and independence, and the quality and effectiveness of All members of the Committee were involved throughout the
the audit process. This assessment takes into account the external audit tender process conducted during the year.
Committee’s interactions with, and observations of, the external
Oversight of auditors and audit
auditors and a range of other factors, including:
The Committee is responsible for overseeing and assessing
– experience and expertise of the external auditors in their the external audit and the external auditors. The Committee's
communications with the Committee; approach to reviewing the effectiveness of the external audit
– their mindset, objectivity and approach to challenging process and the external auditors' independence and
management’s assumptions and judgements where necessary; objectivity is discussed at page 165. The Group maintains an
– the effectiveness and efficiency of the external auditors in Auditor Independence Policy set out at page 166 and its
completing the agreed external audit plan and whether that plan application is overseen by the Committee.
has been met; The Committee has reviewed the FRC's audit quality inspection
– their approach to handling significant audit and accounting and supervision report issued in respect of KPMG in July 2023
judgements; and has discussed the findings of that report with the External
Audit Partner.
– content, quality and robustness of the external auditors’ reports;
Reporting
– the Committee's review of the content of the external auditors' The work of the Committee during the year is set out in the
management letter, and other communications with the Audit Committee's report, including significant issues that the
Committee, to assess their understanding of the business and Committee considered in relation to the financial statements
whether recommendations have been acted on (or if not, the at page 161. An explanation of the application of the Group's
reasons why not acted on); accounting policies is provided in the Notes on the Accounts
– provision by the external auditors of non-audit services, at pages 215 to 219.
discussed below, and other matters that may impact on their Information about the FRC's review of the Company's Annual
independence; and Report and Accounts to 31 December 2022 is set out on page
– relevant reviews and reports issued by external regulatory 168. There were no other regulatory inspections in relation to
bodies, including the FRC and the PCAOB. the Company's financial statements or audit for financial year
The Committee’s assessment is further informed by feedback 2022. Information about the limited scope review of the
from the Group's Internal Audit function and from a survey Company's Annual Report and Accounts to 31 December 2021
completed by members of the Group’s senior management to conducted by the FRC is provided in the Annual Report and
obtain their perspectives on the effectiveness and quality of the Form 20-F for 2022.
external auditors’ work. The external auditors provided certain non-audit services
to the Group during the year and information on how auditor
independence and objectivity are safeguarded is provided on
pages 165 and 166.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Audit, Risk, Internal Control

Audit Committee
Continued

There were no material issues or risks to audit quality identified Group Auditor Independence Policy (AIP)
through the external auditor effectiveness review in 2023. The The Group has an established AIP, reflecting the requirements
review identified certain opportunities to introduce further of applicable regulations, to safeguard the independence and
efficiencies, including through more extensive use of digital tools in objectivity of the Group’s external auditors and to specify the
audit processes. Actions identified have been discussed between approval processes for the engagement of the Group’s external
the external auditors and management and taken into account for auditors to provide audit, audit-related and other non-audit services.
planning for the following annual audit. The key principle of the AIP is that the Group’s external auditors
The Committee remains satisfied with the qualification, expertise may only be engaged to provide services where the provision of
and resources of KPMG as external auditors, that they have those services does not impair auditor independence and
demonstrated an appropriate degree of objectivity and that their objectivity.
independence is not in any way impaired by non-audit services The Committee recognises that using the external auditors to
which they provide. provide services can be beneficial given their detailed knowledge
The Committee considers it is in the best interests of the of our business. However, the AIP does not permit the Committee
Company’s shareholders for KPMG to remain as external auditors to delegate its responsibilities to the external auditors and the
for the following financial year and has recommended to the Board external auditors are only permitted to provide audit, audit-related
that KPMG are proposed for reappointment as the Company's and non-audit services in accordance with the AIP. The AIP does
external auditors at the 2024 AGM. not permit the external auditors to maintain a financial,
employment or business relationship with any Group company,
Audit Partner Rotation or provide services to any Group company, which:
The tenure of the current external audit partner, Mr Philip Smart,
commenced from the start of the audit for the financial year 2021. – creates a mutual or conflicting interest with any Group company;
Audit Partner rotation is implemented in accordance with the – places the external auditors in the position of auditing their
requirements of the FRC Ethical Standard and the U.S. SEC own work;
independence rules on partner rotation. – results in the external auditors acting as a manager or employee
External audit fees of any Group company; or
The Committee is responsible for approving the terms of – places the external auditor in the position of advocate for any
engagement and remuneration of the external auditors and has Group company.
approved KPMG's terms of engagement and level of fees for 2023.
Audit services are approved in advance by the Committee on the
The Committee reviews a schedule identifying the total fees for all basis of an annual engagement letter and the scope of audit
audit and audit-related services, tax services and other non-audit services is agreed by the Committee with the external auditors.
services expected to be undertaken by the external auditors in the
Subject to the restrictions specified in the AIP, the external
following year. Tax services and other non-audit services in excess
auditors may also provide certain non-audit services with the prior
of the thresholds in the Auditor Independence Policy must be
approval of the Committee. The requirement for the Committee’s
itemised. Updated schedules are also submitted to the Committee
pre-approval of non-audit services may be waived only if the
at mid- year and year-end, so that it has full visibility of the Group
aggregate amount of all non-audit services provided is less than
spend on services provided by the Group’s external auditors.
5% of the total amount paid to the external auditors during the
A breakdown of audit, audit-related, tax and other non-audit fees reporting year, where those services were not recognised to be
paid to KPMG firms and associates in 2023 is provided in note non-audit services at the time of engagement, and provided those
6(m) in the Notes on the Accounts and is summarised as follows: services are promptly brought to the attention of the Committee
and their provision is approved prior to completion of the audit in
Services provided by KPMG and associates 2023 the relevant reporting year.
2023 2022 The provision of permitted non-audit services must be put to
£m £m tender if expected spend exceeds limits specified in the AIP, unless
Audit services 20.8 20.4 a waiver of this requirement, in accordance with the terms of the
AIP, is agreed by the Finance Director and notified to the
Audit of defined benefit schemes 0.2 0.2
Committee. The AIP:
Audit-related assurance services 6.9 7.1 – requires Committee pre-approval for all audit, audit-related and
Total audit and audit-related other non-audit services, except in respect of non-audit services
services 27.9 27.7 falling within the exceptions described above;
Other assurance services 0.9 0.9 – prohibits the provision of certain types of services by the external
Tax advisory services — — auditors, including those with contingent fee arrangements, expert
services unrelated to audit and other services prohibited by U.S.
Tax compliance — — securities laws and the PCAOB;
Other non-audit services — — – prohibits the Chief Executive, Finance Director, Group Financial
Total non-audit services 0.9 0.9 Controller and Group Chief Accountant (or any person serving
in an equivalent position) from having been employed by the
Note: external auditors in any capacity in connection with the Group
In 2023, non-audit fees paid to KPMG amounted to 3.2% of the audit and audit‑related
assurance fees paid to them (2022: 3.2%). All audit and non-audit services provided
audit for two years before initiation of an audit;
by the external auditors in 2023 were pre-approved by the Committee. – specifies requirements in respect of audit partner rotation,
including for both the lead and the concurring external audit
partners to rotate off the Group audit engagement at least every
five years, and not to recommence provision of audit or audit-
related services to the Group for a further five years; and
– provides authority for the Committee to oversee any allegations
of improper influence, coercion, manipulation or purposeful
misleading in connection with any external audit, and to review
any issues arising in the course of engagement with the external
auditors.

166
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Spotlight

External auditor tender for financial year 2025 Selection process

As part of the Company’s Full-Year 2022 Preliminary The Committee gave careful consideration to the potential
Announcement issued in February 2023, it was announced that candidate firms that would be invited to tender.
the Committee had commenced planning for a competitive As part of this initial stage of the process, the Committee Chair
tender process in respect of the external audit for the 2025 held meetings with a range of Audit Partners from potential
financial year, in compliance with applicable regulations. candidate firms, supported by the Finance Director and the
In 2023, the Committee led a thorough competitive tender Group Head of Internal Audit, to assess interest and capability
process, supported by the Group Head of Internal Audit and to tender for the audit with focus on geographical coverage,
other members of senior management, taking into account the capability and resources to conduct a complex and
FRC’s guidelines on audit tenders throughout the process. international audit. At this stage in the process, due
The timetable for the tender process was designed to permit consideration was given to the capabilities of mid-tier firms
sufficient time to enable any new auditor firm to fully prepare to to conduct the external audit.
assume responsibility for a complex, international audit across Following review, the Committee gave approval for a request
the Group and to plan for an orderly transition of non-audit for proposal to be issued to the shortlisted candidate firms that
services if there were to be a change of auditor. This approach were eligible to tender. The request for proposal was issued to
facilitated engagement with the widest available range of candidate firms in March 2023, including full details of the
potential candidate firms. objective selection criteria to be applied by the Committee.
The overarching objective of the tender process was to appoint To ensure that every candidate firm received sufficient
the firm that would provide the highest quality, most effective information about the Group to adequately inform their tender
and efficient audit. Objective decision criteria were set by the proposal, each firm then attended a series of meetings,
Committee, designed to support this overarching objective. including with members of the Committee and with
Overview: Qualitative decision criteria representatives of senior management, to discuss key topics
and markets. To supplement these briefing meetings, the firms
Audit quality
were provided with equal access to a broad range of
– Technical expertise, experience and effectiveness of the firm
information about the Group and the scope of its audit
and proposed team, including geographical coverage and
requirements through a data room.
capabilities; quality methodology; approach to SOx procedures.
The Committee reviewed the tender proposals from each of
– Approach to achieving (where applicable) and maintaining
the candidate firms and considered the findings of recent FRC
independence.
reports on audit quality and quality indicators in respect of each
– Future capability to deliver the external audit in the context candidate firm. The Committee met in June 2023 to receive
of evolving regulatory frameworks, particularly in relation presentations from each firm, led by the proposed Audit
to internal controls, sustainability and cyber security. Partner. All members of the Committee attended that meeting,
– Audit quality indicators, auditor quality record, regulator all other members of the Board were also invited to attend.
findings and actions taken in response. Committee recommendation
Audit effectiveness Following thorough review of each of the candidate firms’
– Capabilities in areas of the audit requiring the exercise proposals and presentations, the Committee was satisfied that
of judgement. each firm had fully participated in the tender process, had
demonstrated the capability, geographical reach and capacity
– Audit methodology, review processes and approach
to act as the external auditor and, where applicable, would be
to interactions with technical review teams.
able to demonstrate independence within required timeframes
– Approach to effective use of technology and data analytics if selected. Accordingly, the Committee made its selection on
in the audit. the basis of its assessment of the relative abilities of each of
– Experience in transitioning comparable audits. the candidate firms to deliver against the objective decision
Audit efficiency criteria.
– Experience of driving audit efficiencies, including through At the Board meeting in July 2023 the Committee
the use of technology and data analytics. recommended two of the candidate firms to the Board, with
the Committee’s preference to appoint KPMG and supporting
– Knowledge sharing capabilities within the firm and across
justifications.
financial years.
The Committee’s recommendation was accepted by the Board
– Approach to evolving the scope, process and efficiency
and a resolution proposing the appointment of KPMG as the
of the audit over a projected 10-year plan.
external auditor for financial year 2025 will be put forward to
Fees shareholders for approval at the 2025 AGM, as previously
– Whilst not a significant aspect of the decision criteria, audit announced in the Company's Half-Year report to 30 June 2023.
fee proposals formed part of the request for proposal, including
transparency of cost drivers and opportunities for cost
efficiencies.

UK Competition and Markets Authority Audit Order

The Company has complied with the Statutory Audit Services Order issued by the UK Competition and Markets Authority for the
financial year ended 31 December 2023.

167
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Audit, Risk, Internal Control

Audit Committee
Continued

Financial reporting controls SOx compliance oversight

The Group maintains a series of policies, practices and controls The Company is subject to certain rules and regulations of U.S.
in relation to the financial reporting and consolidation process, securities laws, including the U.S. Securities Exchange Act 1934
designed to address key financial reporting risks, including risks and SOx. SOx places specific responsibility on the Chief Executive
arising from changes in the business or accounting standards and Finance Director to certify or disclose information applicable
and to provide assurance of the completeness and accuracy of to the financial statements, disclosure controls and procedures
the Annual Report and Form 20-F. (DCP) and internal controls over financial reporting (ICFR). This
A key area of focus is to assess whether the Annual Report and includes our Chief Executive and Finance Director giving
Form 20-F and financial statements are ‘fair, balanced and attestations in respect of ICFR effectiveness under §404 of SOx.
understandable’ in accordance with the UK Corporate Governance The Committee has oversight of processes established to ensure
Code, with particular regard to: full and ongoing compliance with applicable U.S. securities laws,
– Fair: Consistency of reporting between the financial statements including SOx. Two committees provided assurance during 2023
and narrative reporting of Group performance and coverage of with regard to applicable SOx certifications. The Disclosure
an overall picture of the Group’s performance; Committee reviews the Company’s financial statements for
appropriate disclosure, designs and maintains DCPs, and reports
– Balanced: Consistency of narrative reporting of significant to, and is subject to the oversight of, the Chief Executive and the
accounting judgements and key matters considered by the Finance Director.
Committee with disclosures of material judgements and
uncertainties noted in the financial statements; appropriate use, A sub-committee of the Disclosure Committee, the SOx Steering
prominence and explanation of primary and adjusted Committee, provides assurance that ICFR have been designed,
performance measures; and and are being operated, implemented, evaluated and disclosed
appropriately, in accordance with applicable requirements and
– Understandable: Clarity and structure of the Annual Report and subject to the oversight of the Chief Executive and Finance
Form 20-F and financial statements, appropriate emphasis of Director. The activities of this sub-committee are directly reported
key messages, and use of succinct and focused narrative with to the Disclosure Committee. The outputs from the Disclosure
strong linkage throughout the report, to provide shareholders Committee and SOx Steering Committee were presented to and
with the information needed to assess the Group’s business, reviewed by the Committee.
performance, strategy and financial position.
No material weaknesses were identified and the Committee
The Group Manual of Accounting Policies and Procedures sets is satisfied that, where areas for improvement were identified,
out the Group accounting policies, its treatment of transactions processes are in place to ensure that remedial action is taken
and its internal reporting requirements. and progress is monitored.
The internal reporting of financial information to prepare the In 2023, the Committee also reviewed the scope of the external
Group’s annual and half-year financial statements is signed off auditors’ SOx procedures, and received reports on their progress
by the heads of finance responsible for the Group’s markets and with their independent assessment of ICFR across the Group.
business units. The heads of finance responsible for the Group’s
markets and all senior managers must also confirm annually that
all information relevant to the Group audit has been provided to
the Directors and that reasonable steps have been taken to ensure
full disclosure in response to requests for information from the
external auditors.
The Committee Chair participated in the 2023 Annual Report and
Form 20-F drafting and review processes, and engaged with the
Finance Director and the Group Head of Internal Audit during
the drafting process.
FRC review of the Company's Annual Report
and Accounts to 31 December 2022
The FRC carried out a review of the Company's Annual Report
and Accounts for the year ended 31 December 2022. The FRC's
correspondence with the Company in 2023 raised several queries
in respect of goodwill impairment analysis, the approach to
impairment of former Group businesses in Russia and Belarus
and the presentation of derivatives cash flow. This review was
concluded in 2023. The outcomes of the UK FRC's review were
reviewed by the Committee and have been taken into account
in the preparation of this Annual Report and Form 20-F for 2023,
with a number of enhanced disclosures including in relation to the
Group's viability statement to provide users with greater insight
as to potential impacts on the Group's future operations.
The review conducted by the FRC was based solely on the
Company's Annual Report and Accounts to 31 December 2022.
The FRC's review does not provide any assurance that the
Company's Annual Report and Accounts to 31 December 2022
are correct in all material respects; the FRC's role is to consider
compliance with reporting requirements, not to verify the
information provided.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Group Standards of Business Conduct Code of Ethics for the Chief Executive
The SoBC requires all staff to act with a high degree of business and Senior Financial Officers
integrity, comply with applicable laws and regulations, and ensure The Company has adopted a Code of Ethics applicable to the
that standards are never compromised for the sake of results. All Chief Executive, the Finance Director, and other senior financial
Group companies have adopted the SoBC or local equivalent. officers, as required by U.S. securities laws and NYSE listing
Every Group company and all staff worldwide, including senior standards. No waivers or exceptions to the Code of Ethics were
management and the Board, are expected to adhere to the SoBC granted in 2023.
or local equivalent. The SoBC and the Group’s Delivery with Political contributions
Integrity compliance programme are discussed on pages 98 to 99. The Group does not make contributions to UK political
The Committee is responsible for monitoring compliance with the organisations or incur UK political expenditure.
SoBC, and reports on this to the Board. Information on compliance The total amount of political contributions made to non-UK
with the SoBC is gathered at a regional and global level and reports political parties in 2023 was £6,044,775 (2022: £4,576,059) as
of SoBC allegations, including details of the channels through follows: Reynolds American Companies reported political
which allegations are reported, are provided on a regular basis to contributions totalling £6,044,775 (US$7,519,700) for the full year
the Regional Audit Committees, Corporate Audit Committee, and 2023 to U.S. political organisations and to non-federal-level
to the Committee. political party and candidate committees in accordance with their
contributions programme. No corporate contributions were made
A breakdown of SoBC contacts and SoBC allegations reported
to federal candidates or party committees and all contributions
across the Group in 2023 is set out on page 98.
were made in accordance with applicable laws.
+ The SoBC and information on the total number of SoBC contacts and SoBC All political contributions made by Reynolds American Companies
allegations reported in 2023 (including established breaches) is available at
bat.com/sobc
are assessed and approved in accordance with Reynolds
American’s policies and procedures to ensure appropriate
Speak Up oversight and compliance with applicable laws.
The Group maintains Speak Up channels which enable concerns In accordance with the U.S. Federal Election Campaign Act,
regarding SoBC compliance matters, including concerns about Reynolds American Companies continue to support an employee-
possible improprieties in financial reporting, to be raised in operated Political Action Committee (PAC), a non-partisan
confidence (and anonymously should an individual wish) without committee registered with the U.S. Federal Election Commission
fear of reprisal. that facilitates voluntary political donations by eligible employees
The SoBC includes the Group’s Speak Up policy, which is of Reynolds American Companies. According to U.S. federal
supplemented by local procedures throughout the Group that finance laws, the PAC is a separate segregated fund and is
provide staff with further guidance on reporting matters and controlled by a governing board of individual employee-members
raising concerns, and the channels through which they can do so. of the PAC. In 2023, Reynolds American Companies incurred
expenses, as authorised by U.S. law, in providing administrative
The Board periodically reviews the Group’s Speak Up policy and support to the PAC.
reports arising from Speak Up channels. The Speak Up policy was No other political contributions were reported.
revised with effect from 1 January 2024 and introduced as part of
the revised SoBC (discussed on pages 98 and 148). The Board is
satisfied that the Group’s Speak Up policy and procedures enable
proportionate and independent investigation of matters raised,
and ensure that appropriate follow-up action is taken.

+ Read more about Speak Up channels

and Speak Up reports on page 98 and 149

169
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Remuneration Report

Annual Statement on Remuneration

Dear Shareholders, He will continue to participate in the

Our current Remuneration On behalf of the Board, I am pleased Company's existing short-term and long-
Policy strengthens the link to introduce our 2023 Directors’ term incentive schemes in line with the
Remuneration Report. 2023 was Directors’ Remuneration Policy.
between remuneration and
challenging and dynamic in equal Details related to the treatment of the
BAT's strategy: A Better
measure. We continued to accelerate outgoing Director's remuneration are
Tomorrow™ and provides our transformation in line with our strategy: described further in this report on page 184.
further alignment with A Better Tomorrow™, while navigating a
shareholders and our The Board has appointed Soraya
challenging external environment. High
Benchikh to the role of Chief Financial
ESG agenda. inflation and slower global growth
Officer and Executive Director. Soraya
continued to impact consumers and
will join BAT from 1 May 2024. Soraya's
Dimitri Panayotopoulos business. Yet our revenue, adjusted profit
base salary on appointment will be set
Chair of the Remuneration from operations (on an organic, constant
at £800,000, a 5% reduction versus her
currency basis) and cash performance
Committee predecessor's salary as at April 2023
were resilient, thanks to the hard work and
(£843,600). Soraya's remuneration will
commitment of our people around the
be set in line with the Directors'
world. We are making great progress in
Remuneration Policy. Further details are
Remuneration Committee our New Categories business in what
available on page 186 in this report.
current members continues to be a challenging environment,
highlighting the strength and resilience of Shareholder Engagement
Dimitri Panayotopoulos (Chair) our business. At the 2023 Annual General Meeting, the
Kandy Anand Board Succession Committee was pleased with the strong
support received for our 2022 Directors’
Sue Farr On 15 May 2023, Tadeu Marroco
Remuneration Report (95.18% votes in
succeeded Jack Bowles as the Chief
Murray Kessler favour). On behalf of the Remuneration
Executive who stepped down after four
Committee, I would like to thank
Serpil Timuray years in the role and 19 years with the
shareholders and their advisory bodies for
Company. The Company has been able
their continuous engagement and valuable
to appoint a new Chief Executive with an
input. During 2024, we will commence our
outstanding track record of developing
next iteration of engagement as part of the
teams to deliver our transformation.
review of our Directors' Remuneration
The remuneration arrangements for the
Policy, which will be presented to
outgoing and incoming Chief Executive are
shareholders at the 2025 Annual General
in line with the Directors' Remuneration
Meeting. The Committee will examine
Policy approved by shareholders and were
whether the current remuneration policy
disclosed at the time of the announcement.
remains appropriate in supporting the
On appointment, Tadeu's annual base future strategic direction of BAT in
salary was set at £1,343,700, a 3% delivering sustainable growth, encouraging
reduction versus his predecessor's salary more consumers to transition to reduced-
as at April 2023 (£1,385,300). The *†
risk products and reducing the health
Committee believes that this salary level impact of our business. We look forward to
is representative of Tadeu’s skills and engaging with shareholders later in 2024.
experience and was appropriately
positioned in market terms at the time Notes:
of appointment. As a Chief Executive, * Based on the weight of evidence and assuming a complete
Tadeu will continue to receive a pension switch from cigarette smoking. These products are not
allowance of 15% of annual base salary risk free and are addictive.
† Our Vapour product Vuse (including Alto, Solo, Ciro and
in line with the contribution level for the Vibe), and certain products, including Velo, Grizzly,
wider UK workforce, and other benefits Kodiak, and Camel Snus, which are sold in the U.S., are
as defined by the Directors' subject to FDA regulation and no reduced-risk claims will
be made as to these products without agency clearance.
Remuneration Policy.

The 2023 Annual Report on Remuneration has been prepared in accordance with the
relevant provisions of the Companies Act 2006 and as prescribed in The Large and
Medium-sized Companies and Group (Accounts and Reports) (Amendment)
Regulations 2013 (the UK Directors’ Remuneration Report Regulations).

Remuneration Committee terms of reference

The Committee’s terms of reference align with the UK Corporate Governance Code.
Revised terms of reference were introduced with effect from 1 September 2023.

+ For the Committee’s terms of reference see

www.bat.com/governance

170
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Remuneration Policy and ESG In 2023, the Group finalised the sale of the The outcomes are reflected below:
Our Remuneration Policy has strong links Russian and Belarusian businesses. The – Total shareholder return (TSR) relative to
with BAT's strategy, A Better Tomorrow™, 2023 STI targets were set excluding the peers (20%): Resulted in BAT TSR ranking
providing close alignment with our ESG Russian and Belarusian businesses, and 13th amongst our TSR peer group of
agenda and shareholders’ interests. We the results were assessed on the same 24 companies (page 177).
have put ESG at the heart of our strategy (organic) basis. – Adjusted diluted earnings per share (EPS)
and corporate purpose by delivering The 2021 LTI performance measures and (40%): We measure adjusted diluted EPS
sustainable growth, encouraging more targets have remained unchanged during at current and constant rates of exchange
consumers to transition to reduced-risk the three-year performance period. In (equally weighted). The three-year adjusted
*†
products and reducing the health impact assessing performance results for the 2021 diluted EPS compound annual growth
of our business. LTI award against the targets set at the rate (CAGR) was 4.7% and 5.9%, at
Our current Directors’ Remuneration Policy start of the performance period, current and constant rates, respectively.
firmly embeds ESG into our Executive performance has been assessed excluding – Group revenue (20%): The three-year
Directors’ remuneration through New the Russia and Belarusian businesses Group revenue CAGR was 4.1% at
Category performance measures which disposal impact from the 2023 results. constant rates of exchange.
directly support our strategic aim to Build a Performance in the years of 2021 and 2022 – Operating cash flow conversion rate (20%):
Smokeless World. Tobacco Harm Reduction will remain as previously reported. We have continued our strong track record
is a key component of our ESG strategy and This approach provides a fair, balanced, of cash conversion delivery, resulting in a
is identified in BAT’s 2023 Double Materiality and understandable measurement of the 101.6% operating cash flow conversion ratio
Assessment (page 74) as having the greatest LTI outcomes by excluding material one- at current rates measured over three years.
outward impact on society and the off events to ensure comparability period The above performance translates into
environment, the greatest inward impact to period. an outcome of 38.2% of maximum for the
on BAT, and the greatest financial materiality. 2021 LTI.
Pay outcomes under the Short-Term
2023 Short-Term Incentive
Our 2023 performance demonstrated our Following evaluation of the formulaic
Incentive (STI) and vesting outcomes from outcomes for both the STI plan and the LTI,
the Long-Term Incentive (LTI) awards continued focus on delivery against our
strategic priorities, with New Categories the Committee considered the results
granted from 2022 onwards provide a direct against the underlying performance of
link between our strategy and ESG agenda being a greater driver of Group
performance and a key performance metric the Group and the experience of our
and executive remuneration through the shareholders. The Committee concluded
following measures: New Categories revenue of the STI and the LTI. In 2023, organic
revenue growth continued (at constant that the outcomes were a fair reflection of
growth and New Categories contribution. performance delivered in what continues to
It is our intention to continue to review the rates of exchange), led by pricing
and organic New Category revenue growth be challenging and volatile market conditions
alignment of executive pay with ESG and and no adjustments were required. In
we will consider this as part of the Directors' which increased by 21.0% to £3,312 million
(at constant rates of exchange). New addition, share price fluctuations are
Remuneration Policy review. reflected throughout the Chief Executive’s
Categories organic contribution, improved
Performance and Remuneration by £363 million through volume growth, remuneration in the vesting and holding
Outcomes for 2023 strong pricing and cost of sales productivity periods as well as individual shareholdings.
The “At a Glance” section provides an savings. We have outperformed the 2023 The Committee also considered whether
overview of our financial performance targets for this measure, which were set there were any potential windfall gains for
and how it translates into outcomes under in relation to the original 2025 ambition, the LTI award granted in March 2021 and
the STI and LTI plans, with further details enabling the Group to accelerate progress concluded that an adjustment to the size of
provided on pages 176 and 177. After early in this critical area of our business. the awards was not warranted. More
reflecting on a range of considerations Adjusted organic profit from operations details are provided on page 177.
as described further in this report, the (at constant rates of exchange) improved Corporate governance
Committee was satisfied that the by 3.9%, driven by accelerated growth in As of 1 December 2023, the Remuneration
Remuneration Policy had operated as New Categories, strong pricing, optimised Committee introduced a new Malus and
intended during the year and confirmed resource allocation, productivity savings, Clawback Policy for Senior Executives that
that no discretion has been exercised and further costs saving initiatives. Cash will apply to their current and future
by the Committee. delivery continued to be strong realising awards granted under the Company’s
2023 Target Setting over £7.9 billion of adjusted organic cash short-term incentive (including deferral)
The performance targets set by the generated from operations. Group volume and long-term incentive plans. This
Committee early in the year have remained share (of cigarette and HP) in key markets followed the U.S. Securities and Exchange
unchanged throughout the 2023 reduced by over 10 bps. The above Commission’s adoption of final rules
performance period. 2023 target setting performance translates into a result of implementing the clawback provisions of
continued to focus on our ambition to reach 61.3% of maximum opportunity. Further the Dodd-Frank Act which required U.S.
£5 billion of New Category revenue and details of the performance against targets stock exchanges, including the NYSE, to
achieve New Category profitability, while for the 2023 STI measures are set out on require listed companies to adopt clawback
delivering value through our combustibles page 176. policies that meet its requirements. This
business supported by strong cash flow 2021 Long-Term Incentive policy will operate in addition to the
generation to reduce leverage and provide In assessing performance results for existing malus and clawback provisions
flexibility to the Group. the 2021 LTI award against the targets set already in place as part of the Directors’
at the start of the performance period, Remuneration Policy. Further details are
The New Categories revenue growth
performance has been assessed on an available on page 404.
targets in both the STI and LTI emphasise
the importance of New Categories growth organic basis for the 2023 results by Notes:
in our long-term strategy and ESG agenda. excluding the Russian and Belarusian * Based on the weight of evidence and assuming a complete
The STI measure will continue to provide businesses disposal impact (where switch from cigarette smoking. These products are not risk
free and are addictive.
focus on in-year delivery, while the LTIP applicable) as described above. † Our Vapour product Vuse (including Alto, Solo, Ciro and
measure will focus on cumulative and Vibe), and certain products including Velo, Grizzly, Kodiak,
and Camel Snus, which are sold in the U.S., are subject to
sustained performance over a FDA regulation and no reduced-risk claims will be made as
three-year period. to these products without agency clearance.

171
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Remuneration Report

Annual Statement on Remuneration

Continued

Wider Workforce Context The Group results show that men and We have carefully considered internal
We recognise that macro-economic women are paid within 1% of each other, forecasts, external market expectations
factors continue to affect many of our and ethnically diverse and non-ethnically for future growth, and the sensitivities
employees. In 2023, we continued to diverse groups are paid within 1% of one attached to target ranges and decided
closely monitor the workforce initiatives another for doing the same work or work of to make some changes for the 2024 LTI
designed to address the difficulties that the equal value. This demonstrates that our pay compared to previous awards. While the
increasing cost of living has had for our practices are founded on fair and measures remain unchanged, we have set
employees and made significant reward- consistent drivers of pay. Further the targets considering our internal
related investments, where appropriate, information about the Group’s approach forecasts and external market expectations
to support our people, including off-cycle to Pay Equality is described in the Diversity for future growth, as well as the current
salary increases, targeted increases to and Inclusion Report. business environment in which the Group
address non-management (lower-paid) 2024 salary changes is operating. Targets under the New
employee groups and additional Categories revenue growth and adjusted
In determining the 2024 salary increase
interventions to support employees in high EPS growth (at constant and current rates)
for the Chief Executive, the Remuneration
inflationary environments (including salary measures have been set lower than the
Committee noted that in the UK, salary
increases, one-off cash payments, targets set for the 2023 LTI to recognise
increases for the majority of employees are
temporary fixed allowances). These the challenging environment over the
expected to be around 6% on average.
initiatives covered eight markets with an forthcoming period, and targets for the
overall spend of an additional £5.9 million In addition, the Remuneration Committee adjusted operating cash flow conversion
across c.5,000 employees. Additional also considered the underlying Company ratio have been set higher. Targets for
budgets have been allocated by the Group performance for the financial year and the Group revenue growth and relative TSR will
in 2024 for wider workforce annual salary individual contribution of the Chief remain the same as for the 2023 LTI. The
increases in the UK and globally. Executive. Since his appointment, Tadeu Committee is confident that the targets
has brought tremendous focus to the remain suitably stretching and incentivising
The Committee keeps up to date with the review and refinement of the Group's for participants, ensuring only maximum
views of our wider workforce drawing from strategy, including the re-articulation of the payout for exceptional performance.
a range of well-established engagement Group’s values which will be central to the
channels worldwide to ensure there is a In addition, we will review the grant price
delivery of our ambitions. The Management
robust understanding of the issues of the 2024 LTI award, taking into account
Board structure has been refreshed and an
affecting the workforce globally. For more previous grant prices, and review both on
additional two key appointments, the Chief
information on engagement with the wider grant and on vesting whether there is or
People Officer and the Chief Financial
workforce refer to page 181. has been any potential for windfall gains.
Officer, were confirmed. The long-standing
The Committee retains discretion to
The Committee considers executive commitment to sell the Russian and
determine whether the formulaic outcome
pay in this broader context, ensuring the Belarusian businesses has been completed
of the 2024 LTI at vesting is a fair reflection
Remuneration Policy is implemented and the Group’s transformation has
of underlying business performance and
with the desired attributes of fairness, continued to progress in what has been an
consistent with the shareholder experience
transparency, proportionality, and increasingly difficult external environment.
over the performance period, and if not, to
alignment to broader organisational The Committee also reviewed the market adjust the outcome accordingly. Further
culture and societal expectations. data provided by external consultants to details are available on page 185.
Living Wage reference the competitive positioning of
In 2023, we continued to accelerate our
Living Wage is an ongoing area of focus for the Chief Executive's total remuneration in
transformation journey towards A Better
BAT. In 2023, in partnership with the Fair relation to our pay comparator group and
Tomorrow™ and create value for all
Wage Network (FWN) we completed a living wider market. The Remuneration
stakeholders. Our current Remuneration
wage assessment across our global business, Committee also reviewed the impact of
Policy drives pay for performance and
covering more than 42,000 employees, which salary adjustments on total remuneration
provides strong alignment with the Group
is 100% of our direct employee population in of the Chief Executive to ensure the overall
strategy and our ESG agenda. In 2024,
approximately 100 markets (600+ locations), potential quantum remains reasonable.
we will commence our next iteration of
and received FWN independent accreditation Taking the above points into account, the
engagement as part of the review of our
for all the markets included in the scope of the Remuneration Committee decided to
Remuneration Policy, which will be
review. We will continue to monitor global approve a salary increase of 3% for the
presented to shareholders at the 2025
living wage references regularly to ensure Chief Executive, which is below the average
Annual General Meeting.
that our fair and equitable principles for wage level of the wider UK workforce.
setting are upheld. We hope you find this report informative.
Looking Ahead to 2024
We continue to maintain an open dialogue
Pay Equity The Remuneration Committee have on remuneration matters and welcome
In 2023, for the third year in succession, reviewed the targets for the 2024 LTI. The your further comments and feedback and
we received an independent accreditation Group’s LTI structure and performance respectfully ask for your support at the
from Fair Pay Workplace for all markets ranges have remained relatively stable over forthcoming Annual General Meeting.
included in the scope, demonstrating our time, with some performance ranges such
commitment to pay equity in order to create as for the EPS measures, being in place
since 2013, when the combustibles Dimitri Panayotopoulos
a more equitable and inclusive workplace.
business was the dominant source of Chair, Remuneration Committee
Our pay equity review covers approximately
Group revenue and profit performance. 7 February 2024
42,000 employees in more than
100 markets from a gender perspective, The Committee discussed the importance
and approximately 13,000 employees in of ensuring the performance ranges are
7 markets from an ethnicity perspective appropriately calibrated to the Group’s
(approximately 30% of our global business model and future outlook and
workforce). remain stretching for participants.

172
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

2023 Remuneration at a Glance

Remuneration at the Group is designed to reward performance in line with the delivery
of the Group's strategy, A Better Tomorrow™, and provides alignment with shareholders'
expectations and our ESG agenda. In 2023, we continued to accelerate our transformation
journey towards A Better Tomorrow™. The below summary highlights how our business
performance translated into the remuneration of our Chief Executive.

2023 Business performance highlights

+21.0% £363m +3.1% 101% +3.9%

New Categories Change in organic New Organic revenue Organic operating Adjusted organic profit from
organic revenue growth Categories contribution cash flow operations growth
conversion ratio

STI STI LTI LTI STI

Performance outcomes Current Shareholding as % of salary

STI and LTI outcomes for 2023 are shown in the charts below. Chief Executive 319 %
Full details can be found on pages 176 and 177.
+ Further details on page 178

Short-Term Incentive 2023* Delivery: 50% in cash

and 50% in shares

Outcome as %
(0%) Threshold Maximum (100%)
of maximum 228%

61.3%
Group's volume share
growth (10%)
New Categories revenue
growth (15%)
Chief Executive (£'000) 114%
New Categories contribution
(20%) £1,650

Adjusted profit from

operations growth (25%)
205%
Adjusted cash generated
from operations (30%)

Tadeu Marroco
Long-Term Incentive 2021-2023**
Outcome as % At risk – unvested subject to performance
(15%) Threshold Maximum (100%)
of maximum Unvested subject to continued employment

38.2%
Relative total shareholder
return (20%) Ordinary Shares
Adjusted diluted EPS growth
(current) (20%) l Shareholding requirement: 500% of salary
Chief Executive (£'000) – Current shareholding includes: ordinary shares
Adjusted diluted EPS growth
(constant) (20%) £1,371 owned outright and shares subject to continued
employment on a net-of-tax basis (estimated).
Revenue – Shares "at risk" include unvested LTI awards
(20%) subject to performance on a net-of-tax basis.

Operating cash flow

conversion ratio (20%)

2023 Remuneration (£'000)

Notes:
Base salary Total Remuneration
* For the STI 2023 targets and performance have been set and assessed excluding
Chief Executive £1,149 £4,588 the impact of the disposal of the Russian and Belarusian businesses from outcomes.
** In assessing performance results for the 2021 LTIP award against the targets set at
The majority of the Chief Executive's remuneration package is made up the start of the performance period, performance has been assessed by removing the
of variable at-risk pay, linked to stretching targets that align with our impact of the disposal of the Russian and Belarusian businesses from the 2023 results.
strategy and shareholder value creation, and is largely delivered in shares. Performance in the years of 2021 and 2022 will remain as previously reported.

173
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Remuneration Report

Summary of Current Remuneration Policy

The Remuneration Policy was approved by shareholders at the AGM on 28 April 2022. The full Directors’ Remuneration Policy is set out
in the 2021 Remuneration Report contained in the Annual Report and Form 20-F for the year ended 31 December 2021 (pages 152-157),
which is available at www.bat.com.
Directors’ Remuneration Policy – Summary
Year 1 Year 2 Year 3 Year 4 Year 5
Fixed Pay – Salary
Attracts and retains high-calibre individuals to deliver the Group's long-term
strategy. Salaries are reviewed annually, taking into account factors including
individual performance, experience and business performance, as well as
1
reference versus appropriate market data and the approach taken for the
general UK employee population.
Fixed Pay – Pensions and Benefits
Pension provides competitive post-retirement benefits arrangements in the
form of a Defined Contribution benefit equivalent to a maximum of 15% of salary,
aligned with the rate applicable to the wider UK workforce.
Market competitive benefits are provided which are consistent with the role.
2
Short-Term Incentive
Incentivises the attainment of corporate targets aligned to the Group's strategic
objectives on an annual basis, with a deferred element to ensure alignment with
shareholders' interests. The Chief Executive's on-target opportunity is 125% of
salary and maximum is 250% of salary. The Chief Financial Officer's on-target 50% cash 50% shares deferred for 3 years
opportunity will be 95% of salary and maximum is 190% of salary. Malus and
Clawback provisions apply.
2
Long-Term Incentive
A combination of stretching targets aligned with long-term strategy delivery
that provides a balance relevant to the Group's business and market conditions
as well as alignment between Executive Directors' and shareholders' interests.
Awards granted under the Group's LTIP - Performance Share Plan vest after
a 5-year extended vesting period from the grant date, and only to the extent
that the performance conditions are satisfied at the end of the 3-year 3-year performance period 2-year holding period
performance period, and employment continues for an additional 2-year
period from the third anniversary of the grant date. Annual award of 500% of
salary for the Chief Executive and 400% of salary for the Chief Financial
Officer. Malus and Clawback provisions apply.
Shareholding (including post-employment)
Strengthens the long-term alignment between the interests of Executive
Minimum shareholding requirement
Directors and shareholders.
Executive Directors are required to hold BAT shares equal to the value of 500%
of salary for the Chief Executive and 400% for the Chief Financial Officer during
their service, and post-employment are required to maintain the same level of
shareholding until the second anniversary of cessation of employment.

Notes:
1. Pay comparator peer group: Anheuser-Busch InBev, Accenture, Altria, AstraZeneca, Bayer, Coca-Cola, Colgate-Palmolive, Danone, Diageo, GlaxoSmithKline, Heineken, Imperial Brands,
Johnson & Johnson, Kraft Heinz, L'Oréal, LVMH, Microsoft, Mondelēz International, Nestlé, Nike, Novartis, Procter & Gamble, PepsiCo, Philip Morris International, Reckitt Benckiser,
Salesforce, Siemens and Vodafone.
2. Further details on the performance measures for the performance period ended 31 December 2023 can be found on pages 176 and 177.

Remuneration Policy and the Corporate Governance Code Predictability and proportionality
When setting the Remuneration Policy, the Committee has There is a clear link between the operation of our short and long-
ensured that the provision 40 disclosures from the UK Corporate term incentive plan awards and the delivery of our strategy and long-
Governance Code are considered, as summarised below. term performance. Variable remuneration at the Company accounts
Clarity and simplicity for between 80%-90% of an Executive Director’s total remuneration,
ensuring that poor performance is not rewarded.
Our Remuneration Policy provides an overall remuneration package
that is transparent for our Executive Directors and shareholders alike; Alignment to culture
its simple structure has a clear and straightforward link to the delivery The Remuneration Committee has worked extensively to develop
of the Group’s long-term strategy. Principles driving fixed remuneration a policy that closely aligns the Executive Directors to the wider
(salary, benefits, pension) are closely aligned with the wider workforce workforce and rewards long-term sustainable performance. The
and variable remuneration (STI and LTI) rewards delivery of financial Remuneration Committee continually reviews the Remuneration
and strategic objectives both in the short- and long-term. Policy, taking into account any feedback received from engagement
Risk with the wider workforce and shareholders, to ensure it is aligned to
the Company’s purpose and values, and promotes the long-term
The combination of performance target setting for the STI and LTI,
success of the Company. The current Remuneration Policy was
the inclusion of provisions for discretionary adjustments and malus
approved at the 2022 AGM with 94.85% of votes in favour.
and clawback provisions ensure that we remunerate our Executive
Directors in accordance with high standards of governance while
mitigating, as far as possible, reputational and other risks arising
from remuneration that are not proportionate to outcomes.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

2023 Annual Report on Remuneration

The below section of the Remuneration Report sets out the Executive Directors’ remuneration for the year ended 31 December 2023.
Executive Director remuneration earned in the year ended 31 December 2023
Single figure of remuneration
Executive Directors
1
Tadeu Marroco Jack Bowles
£’000 2023 2022 2023 2022
2
Salary 1,149 803 495 1,326
Pension 173 121 75 199
Taxable Benefits 243 157 152 292
3
Other emoluments 2 3 — 3
Short-Term Incentives 1,650 1,186 — 2,575
4,5
Long-Term Incentives 1,371 2,345 — 4,592
Total Remuneration 4,588 4,615 722 8,987
Total Fixed Pay 1,565 1,081 722 1,817
6
Total Variable Pay 3,023 3,534 — 7,170
Notes:
1. Jack Bowles stepped down from the Board on 15 May 2023, and as such the figures shown for the 2023 financial year are for the part of the year during which Mr Bowles served on the
Board. Mr Bowles did not receive any short-term incentives for the 2023 performance year and his shares granted under the 2021 LTIP lapsed on departure.
2. Tadeu Marroco's 2023 salary figure reflects the increases applied during the year, i.e. it was £803,400 between 1 January and 31 March, £843,600 between 1 April and 14 May and
£1,343,700 between 15 May and 31 December 2023.
3. The amounts included as Other emoluments relate to the Share Reward Scheme and indicate the value of ordinary shares awarded in line with the Directors' Remuneration Policy.
The Executive Directors did not receive options during the year.
4. The 2021 LTI award is due to vest, by reference to performance on 29 March 2024, based on completion of the three-year performance period on 31 December 2023. The value shown
is based on the average share price for the three-month period ended 31 December 2023 of 2,453p and includes accumulated notional dividends. None of the value of the award is
attributable to share price appreciation. The actual value of shares to vest will be the value on 29 March 2026, when the award will fully vest after the additional two-year extended
vesting period and is released to the Chief Executive.
5. LTIP values shown for 2022 have been restated to reflect the actual closing BAT share price of 2,849p on the date the awards were adjusted for performance and include accumulated
dividends.
6. No malus or clawback occurred during the year.

The following sections provide further detail on the figures in the above table, including the underlying calculations and assumptions and
the Committee’s performance assessment for variable remuneration.
Salary
Salaries are normally reviewed annually in February with salary changes effective from April. In his capacity as Finance Director at the
time, Tadeu Marroco's salary was increased by 5% (£803,400 to £843,600) and for Jack Bowles, in his capacity as Chief Executive at the
time, salary was increased by 4.5% (£1,325,610 to £1,385,300) in April 2023. On appointment as Chief Executive, Tadeu Marroco's salary
was set at £1,343,700 effective 15 May 2023, a 3% reduction versus Jack Bowles' salary as Chief Executive.

Pension
The pension values shown in the table represent company contributions of 15% of an
Employer pension
annual base salary to the Defined Contribution arrangements in line with the
£'000 contributions
contribution level for the wider UK workforce. No excess retirement benefits have been
paid to, or receivable by, the Executive Directors in 2023 and neither were entitled to Tadeu Marroco £173
defined benefits pension arrangements. Jack Bowles £75

Benefits
The table below summarises the benefits provided to the Executive Directors in 2023. Where relevant, the costs include VAT and a
gross-up for tax.
Car or car Health Life & Accident Tax Company
1
£'000 allowance insurance insurance advice driver Security Other Total Benefits
Tadeu Marroco £20 £12 £3 £43 £36 £7 £122 £243
2
Jack Bowles £2 £6 £8 £34 £16 £78 £8 £152
Notes:
1. Security costs relate to annual maintenance and monitoring of personal and home security systems. For Jack Bowles, it includes a one-off cost for the security system upgrade during his
employment.
2. Jack Bowles stepped down from the Board on 15 May 2023, and as such the figures shown are for the part of the year during which Mr Bowles served on the Board.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

Short-Term Incentive outcomes for the Year Ended 31 December 2023

In 2023, our performance was focused on supporting delivery against our three strategic pillars, with New Categories being a greater
TM
driver of Group performance, delivering strong alignment with our corporate purpose to build A Better Tomorrow .
New Category performance measures directly support our strategic aim to Build a Smokeless World, reducing the health impact of our
*†
business and delivering sustainable growth through encouraging more consumers to transition to reduced-risk products. Tobacco
Harm Reduction is a key component of our ESG strategy and is identified in BAT’s 2023 Double Materiality Assessment (page 74) as
having the greatest outward impact on society and the environment, the greatest inward impact on BAT, and the greatest financial
materiality. New Categories revenue growth and New Categories contribution measures provide a direct link between BAT's strategy,
our ESG agenda and pay outcomes under the STI (and vesting under the LTI from 2022 awards onwards).
1
– Group volume share growth (10%) – Group volume share is based on duty-paid cigarettes and HP consumables. The Group’s share
of key markets reduced in 2023, resulting in a 0% outcome as threshold performance for this performance measure was not achieved.
– New Categories revenue growth (15%) (at constant rates) – New Categories revenue growth on an organic basis increased by 21%
to £3,312 million in revenue, resulting in a 1.5% outcome out of a 15% maximum for this performance measure.
– New Categories contribution (20%) – Measures year-on-year improvement (at constant rates) in organic New Categories
Contribution in line with the Group’s original break-even expectation by 2025. In 2023, New Categories losses reduced by £363 million
(on organic basis), resulting in maximum outcome for this performance measure.
– Adjusted profit from operations growth (25%) (on an organic basis, at constant rates) – A 3.9% improvement, driven by accelerated
growth in New Categories, strong pricing, optimised resource allocation, productivity savings, and further costs saving initiatives,
resulting in a 9.8% outcome out of a 25% maximum for this performance measure.
– Adjusted cash generated from operations (30%) – Cash delivery continued to be strong, realising over £7.9 billion of adjusted
organic cash generated from operations (at constant rates), achieving maximum outcome for this performance measure.
The chart below illustrates performance compared to the targets.
STI performance measures, weightings and outcomes for the year ended 31 December 2023
1,2
Measure Weighting Threshold (0%) Maximum (100%) Result Outcome
(max)

Group's volume share Year on year % growth of Group share

3,4 10% 0% 6% -10 bps 0.0% (10%)
growth of key markets, including HP

Year on year improvement % in organic

New Categories
revenue from Vapour, HP and Modern 15% 20% 30% +21.0% 1.5% (15%)
revenue
Oral at constant rates

Year on year improvement in organic

New Categories
New Categories contribution (loss 20% 150m 250m £363m 20.0% (20%)
contribution
reduction vs prior year)

Adjusted profit from Year on year % growth at constant rates 25% 3% 5.4% +3.9% 9.8% (25%)
operations of exchange (on an organic basis)

Adjusted cash
Annual adjusted organic cash generated
generated from 30% £6.8bn £7.4bn £7.9bn 30.0% (30%)
from operations (at constant rates)
operations

Total outcome as % of maximum 61.3% (100%)

Notes:
1. For the STI, 2023 targets and performance have been set and assessed excluding the impact of disposal of the Russian and Belarusian businesses from outcomes.
2. Non-GAAP measures: Organic New Categories revenue, Organic New Categories contribution, adjusted organic profit from operations and adjusted organic cash generated from
operations are non-GAAP measures used by the Remuneration Committee to assess performance. Please refer to pages 335 to 349 for definitions of these measures and a
reconciliation of these measures to the most directly comparable IFRS measure where applicable.
3. In 2023, the definition and measurement of volume share was updated to reflect the emergence of non-tobacco heated consumables within the category.
4. Group volume share is presented as a rounded movement to the nearest 10 bps. Payout is based upon the actual performance of -14 bps in 2023.

Following evaluation of the formulaic outcomes of the STI, the Committee considered the results against the underlying performance of
the Group and concluded that the outcomes were a fair reflection of performance delivered in what continues to be challenging and
volatile market conditions and no adjustments were required.
Under the Remuneration Policy, 50% of the annual STI will be delivered as an award of BAT shares which will be deferred for a three-year
period. The 2023 STI outcome for the Chief Executive is as follows:
STI outcome for the year ended 31 December 2023
Maximum
Base salary for opportunity as % STI outcome STI award 50% delivered in 50% deferred in
1,2 3 4
2023 (£'000) of base salary (out of 100%) achieved,(£’000) cash shares
190%
Tadeu Marroco £1,149 x x 61.3% = £1,650 £825 £825
250%
Notes:
1. Tadeu Marroco's 2023 STI reflects the maximum opportunity as the Finance Director, which was 190% of base salary between 1 January to 14 May, and 250% of base salary as Chief
Executive between 15 May and 31 December 2023.
2. Jack Bowles' maximum STI opportunity was 250% of base salary, however, he did not receive any short-term incentives for the 2023 performance year following his departure on 15 May
2023, and is excluded from the table above.
3. Malus and clawback provisions apply. Deferred share awards will be released in March 2027, subject to leaver and malus and clawback conditions. No further performance conditions apply.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Long-Term Incentive 2021 - 2023

The LTI is designed to align participants with shareholders through making awards which are subject to stretching performance
conditions. The measures below were set under the terms of our 2019 Directors' Remuneration Policy. In assessing performance results
for the 2021 LTIP award against the targets set at the start of the performance period, performance has been assessed on an organic
basis for the 2023 results by removing the impact of the disposal of the Russian and Belarusian businesses. Performance in the years
2021 and 2022 will remain as previously reported. This approach provides a fair, balanced, and understandable measurement of the LTI
outcomes, by removing material one-off events, to ensure comparability period to period. The performance results were assessed over
the three-year period from 2021 - 2023 as follows:
– Total shareholder return (TSR) (20%): BAT TSR ranked 13th amongst our 24 TSR peers resulting in no vesting for this measure.
– Adjusted diluted earnings per share (EPS) (40%): EPS growth is an important indicator that underpins the Group’s ability to grow
dividends. We measure EPS at current and constant rates of exchange (equally weighted). The three-year EPS compound annual
growth rate (CAGR) was 4.7% and 5.9% at current and constant rates, respectively, resulting in 0% and 6% vesting for this measure.
– Group revenue growth (20%): The three-year Group revenue CAGR was 4.1% at constant rates of exchange, resulting in 12.2% vesting
for this measure.
– Operating cash flow conversion ratio (20%): We have continued to demonstrate the ongoing strength of the Group in turning
operating performance into cash, resulting in a 101.6% operating cash flow conversion ratio at current rates of exchange over the three
years, resulting in full vesting for this measure.
The chart below illustrates performance compared to the targets.
LTI performance measures, weightings and results for year ended 31 December 2023
1
Measure Weighting Threshold (15%) Maximum Result Outcome
(100%)

2 Relative to a peer group of international

Relative TSR 20% Median UQ 13th 0.0% (20%)
FMCG companies

EPS growth at current Compound annual growth in adjusted

diluted EPS measured at current rates 20% 5% 10% 4.7% 0.0% (20%)
rates of exchange
of exchange

EPS growth at constant Compound annual growth in adjusted

diluted EPS measured at constant rates 20% 5% 10% 5.9% 6.0% (20%)
rates of exchange
of exchange

Revenue growth Compound annual growth measured 20% 3% 5% 4.1% 12.2% (20%)
at constant rates of exchange

Operating cash flow Ratio over the performance period

20% 85% 95% 101.6% 20.0% (20%)
conversion ratio at current rates of exchange

Total vesting as % of maximum 38.2% (100%)

Notes:
1. Non-GAAP measures: Adjusted diluted EPS (at current and constant rates of exchange) and operating cash flow conversion ratio are non-GAAP measures used by the Remuneration
Committee to assess performance of the 2021-2023 LTI. Please refer to pages 335 to 349 for definitions of these measures and a reconciliation of these measures to the most directly
comparable IFRS measure where applicable. In assessing performance results for the 2021 LTI award against the targets set at the start of the performance period, performance has
been assessed by removing the impact of the disposal of the Russian and Belarusian businesses from the 2023 results. Performance in the years of 2021 and 2022 will remain as
previously reported.
2. Relative TSR: the constituents of the FMCG peer group for the 2021-2023 LTIP were: Altria Group, Anheuser-Busch InBev, Campbell Soup, Carlsberg, Coca-Cola, Colgate-Palmolive,
Danone, Diageo, Heineken, Imperial Brands, Japan Tobacco, Johnson & Johnson, Kellogg, Kimberly-Clark, LVMH, Mondelēz International, Nestlé, PepsiCo, Pernod Ricard, Philip Morris
International, Procter & Gamble, Reckitt Benckiser and Unilever.

Following evaluation of the formulaic outcomes for the LTI, the Committee considered the results against the underlying performance
of the Group and concluded that the outcomes were a fair reflection of performance delivered in what continues to be challenging and
volatile market conditions and no adjustments were required on this basis. In addition, the Committee has reviewed the grant price of the
2021 LTIP (2,794p), as well as the share price movement over the 2021 to 2023 performance period, taking into account the BAT share
price on 29 December 2023 of 2,453p and was satisfied that no windfall gains have occurred and that no adjustment is required to the
award. The Committee noted that the value of shares reflects the share price changes that all shareholders experience and that the
value of the 2021 award is at this stage indicative. Shares will not be released to the Chief Executive until after the two-year additional
extended vesting period which will end on 29 March 2026.
2021-2023 LTIP outcome
Impact of share
Number of shares Dividend equivalent Total value to vest price change
1 1 2 3 4
Shares awarded Vesting % to vest £'000 £’000 £'000
Tadeu Marroco 115,017 38.2% 43,936 £294 £1,371 -£150
Notes:
1. The 230,314 shares granted to Jack Bowles under the 2021 LTI lapsed on his departure on 15 May 2023, and so he is excluded from the table above.
2. Value of the dividend equivalents accrued on the proportion of the award that is due to vest only. Dividend equivalents will be delivered as shares following the expiry of the two-year
extended vesting period on 29 March 2026.
3. The value of ordinary shares to vest is calculated using the average share price for the three-month period ended 31 December 2023 of 2,453p. The actual value of shares to vest will be
the value on 29 March 2026, when the award fully vests and is released to the Chief Executive.
4. None of the value of the award is attributable to share price appreciation and no discretion has been exercised as a result of share price appreciation or depreciation.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

The below table details the shares awarded under the LTI and Deferred Share Bonus Scheme (DSBS) during the 2023 financial year.
Details in relation to scheme interests granted during the year ended 31 December 2023
Market price
Shares at award Face value Performance Date from which
1 2 3
Plan Date of award awarded (pence) £’000 period shares will be released
Tadeu Marroco LTI 22 Mar 2023 108,165 2,971 3,214 2023-2025 22 Mar 2028
4
DSBS 22 Mar 2023 19,960 2,971 593 n/a 22 Mar 2026
5
Jack Bowles LTI 22 Mar 2023 223,091 2,971 6,628 — —
4
DSBS 22 Mar 2023 43,335 2,971 1,287 n/a 22 Mar 2026
Notes:
1. Shares awarded represents potential maximum opportunity.
2. The market price at award is the price used to determine the number of ordinary shares subject to the awards, which is calculated as the average of the closing mid-market price of an
ordinary share over the three dealing days preceding the date of grant.
3. The performance period for the LTI is from 1 January 2023 - 31 December 2025. Performance conditions for the LTI award can be found on page 189. The proportion of the award that will
vest for achieving threshold performance is 15% of maximum opportunity and 100% of award will vest at maximum.
4. DSBS awards relate to the 2022 performance as disclosed in the Annual Report and Form 20-F for the year ended 31 December 2022.
5. The Remuneration Committee exercised its discretion to enable Jack Bowles to retain his DSBS awards, including the DSBS award granted in 2023. The shares granted under the 2023
LTI lapsed on departure.

Executive Directors’ shareholding requirements

Executive Directors are encouraged to build up a high level of personal shareholding to ensure a continuing alignment of interests with
shareholders. Executive Directors are required to hold ordinary shares equal to the value of a percentage of salary as set out in the table
below. The shareholding requirement extends post-employment, such that Executive Directors will be required to maintain their
shareholding requirement for a period of two years post-employment, with a sale restriction mechanism in place for this period.
If, at any time, an Executive Director does not meet the requirements of the shareholding guidelines, the individual may, generally, only
sell a maximum of up to 50% of any ordinary shares vesting (after tax) under the Company share plans until the threshold required under
the shareholding guidelines has been met. Waiver of compliance with guidelines is permitted with the approval of the Remuneration
Committee in circumstances where a restriction on a requested share sale could cause undue hardship. No such applications were
received from the Executive Directors during 2023.
Non-Executive Directors are expected to purchase shares in the Company on the open market to build up a shareholding in the Company
during the term of their appointment.
Executive Directors’ shareholding as at the year ended 31 December 2023
Value of eligible
No. of eligible ordinary shares Actual Shareholding
ordinary shares held at percentage (%) requirements Compliance with
2
held at 31 Dec 2023 of base salary at (% of base salary shareholding
1
31 Dec 2023 £'000 31 Dec 2023 31 Dec 2023) requirement
3
Tadeu Marroco 186,645 4,284 319% 500% No
Former Executive Director
4
Jack Bowles 470,402 10,798 779% 500% Yes
Notes:
1. Eligibility of shares: (a) unvested ordinary shares under the DSBS, which represent deferral of earned bonus, are eligible and count towards the requirement on a net-of-tax basis;
(b) unvested ordinary shares under the LTI plan are not eligible and do not count towards the requirement during the performance period, but the estimated notional net number of
ordinary shares held during the LTI plan Extended Vesting Period are eligible and will count towards the requirement; and (c) ordinary shares held in trust under the all-employee share
plan are not eligible and do not count towards the shareholding requirement.
2. Value of ordinary shares shown above: this is based on the closing mid-market share price on 29 December 2023 of 2,295p.
3. Tadeu Marroco does not yet meet the shareholding requirement as a result of the increase in the requirement following his appointment as the Chief Executive on 15 May 2023, the
increase in Mr Marroco's salary, and BAT share price movements at the end of 2023. As such, Mr Marroco may only sell a maximum of up to 50% of any ordinary shares vesting (after
tax) under the Company share plans until he has met the threshold shareholding requirement unless a waiver is granted by the Committee.
4. Jack Bowles' shareholding is at the time of departure (15 May 2023). Included within the number of eligible ordinary shares held at 15 May 2023 are 213,279 shares which have been
pledged as security against a personal bank loan by Mr Bowles. The legal title of the shares is not affected by the security arrangement. Jack Bowles remains subject to a two-year post-
employment shareholding requirement of 500% of salary.

Remuneration in the context of the wider workforce

The Group’s remuneration policies and practices are founded on a high degree of alignment and consistency across the organisation.
Accordingly, remuneration for senior management is determined considering the remuneration principles that apply to the Executive
Directors, and similar principles also form the basis of the remuneration arrangements for the wider workforce.
The reward strategy for all employees is built around and designed to deliver the following objectives:
– Attract, retain and engage a diverse talent pool for competitive advantage
– Offer a reward that is externally competitive and internally equitable as well as being commercially sustainable
– Alignment with short-term and long-term shareholder interests
The key difference between Executive Directors’ remuneration and the wider employee population is the increased emphasis on long-
term performance in respect of Executive Directors, with a greater percentage of their total remuneration being performance-related
and delivered in BAT shares. This includes an additional two-year extended vesting period on LTI, and post-employment shareholding
requirements which do not apply to other employees.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The table below summarises the remuneration structure for the wider workforce.
Element Wider workforce remuneration
Salary – Salary ranges across all grades are set by reference to external market data, and individual positioning
within the set salary ranges will depend on level of experience, responsibility and individual performance
– A globally consistent Pay Comparator Group, derived from the peer group used by the Remuneration Committee
for executive pay benchmarking, is utilised across all levels of the organisation for pay benchmarking purposes,
with an appropriate level of flexibility provided to the other employing entities
Pension & – Retirement benefits and other benefit arrangements are provided to employees based on and to reflect local
Benefits market practice
– Company pension contribution rates for Executive Directors and the wider UK workforce are aligned
Short-Term – Our International Executive Incentive Scheme (IEIS) is operated consistently across the organisation and has more
Incentive than 1,600 employees participating. It is designed to reward employees for the delivery of financial, strategic and
operational targets
– IEIS is globally aligned for all managers in senior management roles, including Executive Directors, with a portion of
any award receivable deferred in BAT shares for three years and the remaining portion delivered in cash. Both cash
and deferred share awards are subject to malus and clawback. Approximately 1,400 employees globally participate
in the deferred share plan
– Corporate annual bonus plans are in operation for employees in corporate functions designed to mirror
the basic construct of the IEIS and with performance metrics which align with the IEIS
– Functional incentive schemes are in operation in non-corporate functions with functional performance metrics
incorporated to ensure line of sight for participants
Long-Term – The Group operates two globally aligned discretionary LTI plans designed to reward and retain our senior talent
Incentives while incentivising long-term business results and shareholder value creation, aligning interests of our senior
leaders with those of shareholders
– Performance Share Plan (PSP) awards are granted to the Group's most senior leaders (circa 150), including the
Management Board, which are subject to the same performance measures and three-year performance period as
for the Executive Directors. Executive Directors' awards are also subject to the additional 2-year extended vesting
period
– Restricted Share Plan (RSP) awards are granted to circa 1,000 Senior Leaders globally and are subject to
continuous employment conditions during the three-year vesting period. The Executive Directors do not
participate in the RSP
– Discretionary share awards are subject to malus and clawback for all participants
All-employee – Our all-employee share schemes are key to fostering a culture of ownership amongst our employees. In the UK,
share schemes all employees (circa 2,300) are eligible to participate in the Company's all-employee share schemes, Partnership
Share Scheme and Share Reward Scheme under our UK Share Incentive Plan, and the Sharesave Scheme. Similar
plans are also offered in Germany and Belgium

Process for setting Executive Directors’ remuneration

The Remuneration Committee considers the budgeted salary increases for the UK-based employee population, the guidance given to
managers on the range of salary increases and other remuneration arrangements and employment conditions for all UK-based
employees when determining remuneration for the Executive Directors.
It is expected that salary reviews for the Executive Directors will be in line with the approach taken for the general UK employee
population, except in exceptional circumstances, such as where a recently appointed Executive Director’s salary is increased to reflect
his or her growth in the role over time or where significant additional responsibilities are added to the role.
As a key principle, management provides the Remuneration Committee with visibility of the potential impact of proposed changes to
the Executive Directors’ Remuneration Policy on the wider employee population.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

103
Pay Equality at a glance
The intention of our Pay Equality Reporting is to complement the Group's focus on gender balance,
and diversity and inclusion, as part of the Group’s Diversity & Inclusion (D&I) and Environmental, Markets in scope
Social and Governance agendas. We are going beyond the requirements of the UK Regulations
and voluntarily publishing additional data. Our Pay Equality Reporting suite was further expanded in

42,000
2023 to cover all of the Group's direct employees, reflecting our strong commitment to Pay Equity.
Through building a more comprehensive picture of living wage, gender, ethnicity and pay, we can
more accurately measure the progress we are making in advancing a diverse and inclusive culture
and ensuring the delivery of fair pay across the Group. All direct employees

Living Wage

In early 2022, we began a partnership with the Fair Wage Spotlight

Network (FWN) to allow us to develop a better understanding of
We recognise that macro-economic factors are affecting many
independently assessed living wage levels. In 2023, the Group
of our employees, with rising prices being a source of financial
committed to paying all our direct employees at least the
stress. We continue to make significant reward-related
applicable living wage.
investments and commitments that recognise high levels of
In December 2023, we received independent accreditation from sustainable, long-term performance in a commercially relevant
FWN for all our direct employees included in the scope of our and equitable way, whilst supporting the diverse needs of our
living wage review. This certification confirms that we are paying employees:
all our employees fairly and in-line with the applicable living wage
– Targeted interventions in markets in consideration of macro-
benchmarks, as defined by FWN. This certification also validates
economic pressures (for example, inflationary allowances,
that the living wage analysis is being performed accurately and
salary adjustments).
fairly. For more information, refer to page 89 in the Employee,
Diversity and Culture section. – Additional salary budgets for wider workforce salary increases
in the UK and globally.
– Salary budget distribution prioritised towards those most
impacted by the external environment.
– Established framework for off-cycle pay increases informed
by timely market data and talent dynamics.
– Updated incentives design and delivery with an increased
emphasis on cash delivery.

Pay Equity
Our focus on pay equity is to ensure all employees performing the same work or work of equal value are paid fairly and that any
differences in pay are for objective reasons. In December 2023, we received our third independent accreditation from the Fair Wage
Workplace(FPW) for all the countries included in the scope of our pay equity audits. Certification validates that the pay equity work is
being performed accurately and fairly. It also confirms our commitment to identifying and correcting underlying policies, practices, and
behaviours, where required to ensure ongoing pay equity, within an agreed timeframe.
We want to be confident that our pay practices are delivering equal pay globally and that any differences in pay between employees
performing equal work are for objective reasons and not related to gender or ethnicity. We are pleased to confirm that the consolidated
results of our global pay equity assessment show:
– Women and men are paid within 1% of one another for doing the same work or work of equal value; and
– Ethnically diverse groups and non-ethnically diverse groups are paid within 1% of one another for doing the same work or work of
equal value.
UK ethnicity pay gap: We are transparent about our ethnicity pay gaps and we are publishing them voluntarily for the third year in a
row. We have encouraged our UK staff to share their ethnic backgrounds with us where they are comfortable to do so, to allow us to
assess the extent of any pay gaps. Out of the 82% who have done so, 21% are from ethnically diverse backgrounds and 61% are not
from ethnically diverse backgrounds. We recognise the different reporting approaches that organisations can take, such as providing
disaggregated data. We have evaluated this approach but found that the size of our comparison groups does not allow for statistically
robust comparisons to be made at this time. For more information, see the 2023 Diversity & Inclusion report.

Unadjusted Gender Pay Gap

For the first time in 2023, the Group has quantified and is publishing its global unadjusted gender pay gap for all its direct employees.
The unadjusted salary gap refers to the overall difference in average earnings between women and men in the global workforce,
without accounting for factors such as job level, experience, location, or other relevant aspects that could influence earnings. The
consolidated results show a mean pay gap of 14% in favour of women. For more information, see the 2023 Diversity & Inclusion report.

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Workforce engagement
The Board keeps up to date with the current views of our wider workforce and provides the workforce with information, including on how
executive pay and the pay of the wider workforce are aligned, through a combination of engagement methods across multiple channels
at different levels of our organisation.

In addition to the regular workforce engagement activities, in 2023, we conducted our

Let’s Talk – our all-employee all-employee biennial “Your Voice” survey and introduced new activities:
virtual call
– Your Voice 2023: we conducted our latest Your Voice global employee survey with
the results of this survey serving as a factor in shaping the reward agenda of the
Your Voice – our global organisation. The employees' views from the survey were collated and presented to
employee survey the Board.
– Values and Culture focus groups: we have run employee global focus groups, where
Speak Up channels – Global and the Chief Executive and the Management Board sought employees’ views about BAT's
independently managed Core Values, what employees appreciated about our current culture and where it could
be improved.
– Let’s Talk: we have also introduced Let’s Talk, our new all-employee virtual call where
Employee Focus Groups employees can ask the Chief Executive and the Management Board any questions,
offering an opportunity to talk freely with no scripts, no slides and no filters. These all-
employee calls are designed to open a two-way, transparent dialogue directly with the
Town Halls Management Board and support our cultural transformation to drive a collaborative
and empowering culture.
Feedback from these channels is collected across the Group and is independently
analysed to ascertain the priority themes. The consolidated feedback and themes are
Works Councils reviewed by our Board each year as part of our Workforce Voice in the Boardroom
programme, which gives the Board an opportunity to understand the views of our
workforce, review details of the key themes identified and evaluate how we have
Directors’ market and site visits responded. The views of our workforce are a key consideration for the Remuneration
Committee when reviewing the reward priorities of the organisation.

There continues to be an ongoing dialogue with employees, through a variety of channels, about the Company’s pay practices. Through
share ownership as a result of our all-employee share schemes, our employees are invited to vote on the Directors' Remuneration Policy
and Report at our Annual General Meeting in the same way as our wider shareholders.
In addition to the Workforce Voice in the Boardroom programme (discussed on page 148), the Main Board also receives updates from
management on feedback received during the year where relevant to remuneration matters considered by the Remuneration
Committee and takes feedback into account as applicable in determining executive remuneration. The Remuneration Committee is
regularly updated on the pay principles and practices in operation across the Group and considers them in relation to the implementation
of the Directors’ Remuneration Policy, and in ensuring there is an appropriate degree of alignment throughout the Group. Matters
considered by the Committee during 2023 included the design of the Group's incentive plans as applicable to the wider management
population, including incentive opportunity levels.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

Other Information Relating to Executive Directors' Remuneration for the Year Ended 31 December 2023
The below table details the comparative figures for Chief Executive remuneration for the performance years 2014 to 2023.
Chief Executive’s pay – Comparative figures 2014 to 2023
Tadeu
Nicandro Durante Jack Bowles Marroco
1 1 2 3 3
2014 2015 2016 2017 2018 2019 2019 2020 2021 2022 2023 2023
Chief Executive's
‘single figure’ of total 3,617 4,543 8,313 10,244 8,651 3,054 3,512 4,954 8,063 8,987 722 3,798
remuneration (£’000)
STI paid as % of
maximum opportunity
73.2% 100.0% 100.0% 97.2% 100.0% 50.0% 96.0% 71.1% 85.7% 77.7% —% 61.3%
LTI paid as % of
maximum opportunity
—% 8.7% 46.0% 96.1% 70.5% 69.3% 69.9% 54.2% 49.1% 58.9% —% 38.2%

Notes:
1. For 2019, the 'single figure' reflects the respective periods Jack Bowles and Nicandro Durante served as Chief Executive. Nicandro Durante retired as Chief Executive on 1 April 2019.
Historical data is taken from the Directors’ Remuneration Reports for the relevant years and is presented (as appropriate) on the basis of the ‘single figure’ calculation as prescribed in
the UK Directors’ Remuneration Report Regulations.
2. The 2022 figure has been updated to reflect the restated 2022 LTI amounts for the Chief Executive as per the single figure table on page 175.
3. For 2023, the 'single figure' reflects the respective periods for which Tadeu Marroco and Jack Bowles served as Chief Executive. Jack Bowles stepped down from the Board on 15 May 2023.

Performance graph
The graph below shows the TSR of the Company and the FTSE 100 index over the 10-year period 1 January 2014 to 31 December 2023.
The chart shows the growth in value of a hypothetical £100 invested on 31 December 2013. The FTSE 100 index was selected as an
appropriate comparator group by the Committee due to the Company's position within the FTSE.

Total shareholder return (TSR) performance: 1 January 2014 to 31 December 2023

200
Value of hypothetical £100 holding

175

150

125

100

75
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 Dec 23

British American Tobacco FTSE 100

Relative importance of spend on pay

The chart below sets out distributions to shareholders by way of dividends and share buy-backs, and total remuneration
paid to employees for the years 2022 and 2023. In 2023, there was a 27.0% reduction in distributions to shareholders
and a 10.4% reduction in total employee remuneration costs.

£2,972m
2022
£6,927m

£2,664m
2023
£5,055m

£0m £1,000m £2,000m £3,000m £4,000m £5,000m £6,000m £7,000m

Remuneration¹ Shareholder distributions²

Notes:
1. Remuneration: represents the total employee remuneration costs for the Group, set out on page 223 within note 3 in the Notes on the Accounts.
2. Shareholder distributions represent the total dividends paid and share buybacks made in 2022. For 2023, the amount represents the total dividends paid in 2023.
For further details please refer to page 56.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Chief Executive Pay Ratio Disclosure

The below table reflects the Chief Executive pay ratio when compared to employees at the 25th percentile, median and 75th percentile
of the Group’s UK workforce pay for the years 2019 - 2023. The table also includes the salary and total remuneration figures for
employees at each percentile for 2023.
Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio
1
2023 Option A 85:1 51:1 23:1
2
2022 Option A 167:1 108:1 43:1
2021 Option A 149:1 97:1 40:1
2020 Option A 103:1 66:1 29:1
2019 Option A 144:1 86:1 36:1

Employees remuneration for 2023 25th percentile Median 75th percentile

Salary £39,296 £61,631 £110,850
3
Total Remuneration £53,401 £88,731 £195,708
Notes:
1. The 2023 pay ratio figures are based on the prorated single figure for the Chief Executive, reflecting the respective periods for which Tadeu Marroco and Jack Bowles served in the role.
Jack Bowles stepped down from the Board on 15 May 2023.
2. 2022 pay ratio figures have been updated to reflect the restated 2022 LTI amounts for the Chief Executive as per the single figure on page 175.
3. Total Remuneration for the employees is based on the UK employees' data as at 31 December 2023, and is calculated as far as possible on the same basis as the Chief Executive single
figure calculation and includes salary, taxable benefits, short-term incentive, long-term incentive, dividends, pension benefits and any other remuneration receivable. For the purposes of
this analysis, the following methodology and assumptions have been used:
– Remuneration is annualised, where applicable, for the earnings period 1 January 2023 to 31 December 2023;
– For all employees that are eligible for a car benefit, the applicable car allowance amounts have been used;
– For all employees that participate in the global International Executive Incentive Scheme or equivalent corporate incentive scheme, incentive payouts are calculated based on the
same metrics;
– For all employees that participate in the UK DC scheme, Company contributions of 15% of salary have been used;
– Employees on international assignment into and out of the UK have been included; however, assignment benefits, such as housing support, education support, home leave allowance
or relocation costs, have not been included as these are not consistent with the benefits included in the Chief Executive single figure calculation, which is consistent with the
approach taken last year;
– For hourly paid employees who are not full time, total pay and benefits have been pro-rated based on full-time employee hours.

Option A uses the total full-time equivalent remuneration for all UK employees for the financial year ended 31 December 2023 and has
been used to calculate the ratio as this is viewed to be the most robust and comprehensive means of assessment and is also reflective
of shareholder preferences. For the Chief Executive, the total remuneration as provided in the single figure of remuneration table on
page 175 has been used. The figure that has been used in the calculation of the 2023 pay ratio is a combination of remuneration data for
both Mr Bowles and Mr Marroco, recognising the transition in the Group's leadership during the year.
The figures above show that there has been a significant decrease in the pay ratio across all quartiles from 2022 to 2023. The decrease is
mainly attributable to the Chief Executive's lower 2021 LTIP vesting amount, which was granted to the Chief Executive in his capacity as
Finance Director at the time, and a reduction in share price lowering the value of his LTI as stated in the single figure table. The majority
of UK employees do not participate in a similar type of long-term incentive plan and their overall remuneration is less leveraged
compared to the Chief Executive's remuneration with the variable pay opportunity accounting for 80% to 90% of total remuneration for
the Chief Executive. As such the Chief Executive pay ratio is likely to continue to vary over time. Fixed remuneration remained aligned
with that of the wider UK-based workforce, with the pension contribution percentage for the Chief Executive remaining aligned with the
wider workforce at 15% of salary.
The Company believes the median pay ratio for 2023 reflects the diversity of our business footprint and employee population across the
UK. The Group’s remuneration policies and practices are founded on a high degree of alignment and consistency, with total remuneration
at all levels providing competitive compensation that enables the attraction and retention of talent while also providing equitable
differentiated remuneration based on grade, performance and experience. Further details on all-employee remuneration at BAT can be
found on page 178.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

Chair and Non-Executive Directors’ Remuneration for the Year Ended 31 December 2023
The following table shows the single figure of remuneration for the Chair and Non-Executive Directors in respect of qualifying services
for the year ended 31 December 2023, together with comparative figures for 2022.
Chair/Committee
1 2
Base fee membership fees Taxable benefits Total remuneration
£’000 £’000 £’000 £’000
3 3 3 3 3 3,4 3 3
2023 2022 2023 2022 2023 2022 2023 2022
5
Luc Jobin (Chair) 688 670 — — 17 12 705 682
Kandy Anand 100 85 28 24 4 4 132 113
Sue Farr 142 114 28 27 4 4 174 145
Karen Guerra 100 97 28 27 4 5 132 129
6
Holly Keller Koeppel 100 97 55 55 6 15 161 167
Murray Kessler (appointed 6/11/2023) 16 — 4 — 1 — 21 —
Véronique Laury 100 28 28 8 3 — 131 36
Dimitri Panayotopoulos 100 121 55 55 3 2 158 178
Darrell Thomas 100 97 28 27 4 3 132 127
Serpil Timuray (appointed 4/12/2023) 8 — 2 — — — — — 10 —
Former Non-Executive Directors
Savio Kwan (stepped down 19/04/23) 29 97 8 27 2 3 39 127
Total 1,483 1,406 264 250 48 48 1,795 1,704
Notes:
1. Committee memberships are shown, together with changes during the year, in the reports of the respective committees in the Governance sections of the Directors’ Report.
2. Benefits for the Chair in 2023 comprised health insurance and ‘walk-in’ medical services £9,300 (2022: £8,000), hotel accommodation £5,200 (2022: £3,600), and the use of a company
driver. The benefits for the other Non-Executive Directors principally comprised travel-related expenses incurred in connection with individual and/or accompanied attendance at certain
business functions and/or events and ‘walk-in’ medical services. The figures shown are grossed-up for tax (as appropriate) as, in line with the UK market, it is the normal practice for the
Company to pay the tax that may be due on any benefits.
3. The 2023 fees and benefits reflect the following appointment dates: Murray Kessler’s appointment as a Non-Executive Director on 6 November 2023 and Serpil Timuray's appointment
as a Non-Executive Director on 4 December 2023.The 2022 fees and benefits reflect the following appointment dates: Kandy Anand’s appointment as a Non-Executive Director on
14 February 2022, Sue Farr's appointment as the Senior Independent Director on 1 August 2022, Véronique Laury’s appointment as a Non-Executive Director on 19 September 2022.
The 2022 fees also reflect Dimitri Panayotopoulos's tenure as the Senior Independent Director (May 2020 - July 2022).
4. The 2022 Taxable Benefits figures were re-stated for the following directors Luc Jobin, Kandy Anand, Karen Guerra, Savio Kwan, Dimitri Panayotopoulos and Darrell Thomas. This is due
to incorrect allocation of travel-related expenses as personal benefits.
5. As described in the Annual Report on Remuneration for the year ended 31 December 2022, the Chair’s fee was £697,000 from 1 May 2023. Luc Jobin receives a pension in respect of prior
service to Imasco Limited (acquired in 2000 by the Group) and Imperial Tobacco Canada Limited, a subsidiary of BAT. In 2023, this amount was CAD$150,228 (£88,878), in 2022:
CAD$150,228 (£94,232).
6. Deferred Compensation Plan for Directors of Reynolds American Inc. (DCP): as a former outside director of Reynolds American Inc. Holly Keller Koeppel participated in the DCP under
which she elected to defer payment of a portion of her Reynolds American retainers and meeting attendance fees to a Reynolds American stock account. Following the acquisition of
Reynolds American by BAT, amounts deferred to a stock account (Deferred Stock Units or DSUs) mirror the performance of, and receive dividend equivalents based on, BAT American
Depository Shares (ADSs). The DSUs of Holly Keller Koeppel are disclosed as a note to ‘Summary of Directors’ share interests'. DSUs deferred under the DCP will be paid in accordance
with the terms of the DCP, section 409A of the U.S. Internal Revenue Code of 1986, as amended, and the Director’s existing deferral elections.

Payments to past Directors or for loss of office

Mr Bowles stepped down from the Board on 15 May 2023. As part of the termination arrangements, Mr Bowles will be receiving payment in lieu
of notice equivalent to 12 months salary (£1,385,300) in respect of his 12-month contractual notice period. Payments will be made in equal
monthly instalments. Insured benefits with total value of £16,224 (comprising medical insurance and personal accident benefits) will continue to
be provided to Mr Bowles until the end of the 12-month contractual notice period. Mr Bowles is not eligible for any payments for loss of office.
For the period between 15 May 2023 and 31 December 2023, the value of the payment in lieu of notice paid to Mr Bowles was £873,341,
and the value of benefits provided was £21,821 (benefits include medical and personal accident insurance, tax advice from the Company's
nominated advisers and home security maintenance costs). In addition, Mr Bowles received a one off payment of £109,810 which relates
to overseas taxes paid by the Company in respect of his employment income in order to protect Mr Bowles to his UK tax position in line
with the Company policy for the wider workforce. A capped contribution of £25,000 was made to Mr Bowles towards legal fees incurred
in respect of his termination and an amount of £100 was paid in respect of post-employment covenants.
Mr Bowles has not received an annual bonus under the Company’s Short Term Incentive Plan in respect of the financial year 2023 and
his LTI awards granted in 2021, 2022 and 2023 have lapsed in full. Mr Bowles outstanding deferred bonus awards will be released on the
original timetable, subject to malus and clawback provisions. He will also retain LTIP awards granted in 2019 and 2020, which have
completed their three-year performance periods. These awards will be released following a two-year additional vesting period in
March 2024 and March 2025, respectively. These awards will continue to be subject to malus and clawback provisions. At the
termination date, Mr Bowles also held 1,103 shares under the BAT Share Incentive Plan, which were treated in accordance with the
applicable HMRC-approved rules, and accordingly sufficient shares were sold (230 shares) to cover the applicable taxes, and the
remaining 873 shares were transferred to Mr Bowles. Mr Bowles will continue to be subject to the post-employment shareholding
requirement (500% of his salary on the date he stepped down from the Board) for two years following cessation of employment
(to 15 May 2025). During this period, he will be required to obtain clearance to deal in the Company’s shares.
From 15 May 2023, no further Company contributions were paid for Mr Bowles into the UK Defined Contribution arrangement and
Unfunded Unapproved Retirement Benefits Scheme (UURBS). In line with Company policy for the UURBS, shortly after leaving,
Mr Bowles received a lump sum payment of £1,455,917 in respect of his full entitlement under this Scheme which is a standard approach
for employees leaving employment with the Company.
All payments made to Mr Bowles were in accordance with the Remuneration Policy. Other than as set out above, there were no
payments to past Directors or for loss of office.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Remuneration policy implementation for 2024

Base Salary for 2024
Base salary on Base salary Percentage
The Remuneration Committee has determined the following salary 1
Chief Executive appointment from 1 Apr 2024 change %
for the Chief Executive.
The Remuneration Committee has considered a number of factors Tadeu Marroco £1,343,700 £1,384,000 3.0%
in determining the appropriate salary review for the Chief Executive, Note:
1. On appointment, Tadeu's annual base salary was set at £1,343,700, a 3%
including: the average salary increase for the wider workforce in the reduction versus his predecessor's salary as at April 2023 (£1,385,300).
UK, the contribution of the Chief Executive, and the underlying
Company performance in 2023. Details of the salary of our Chief
Financial Officer on appointment is set out in the next section.
Pensions and Benefits
No changes have been made to the pension and benefits provision for Executive Directors, noting that the pension provision for
Executive Directors has been aligned with the wider UK workforce since 2019.
Short-Term Incentive for 2024 2024 STI performance measures and weightings
STI opportunity levels for Executive Directors will be in line with those 1
Volume share growth (incl. HP) 10%
set out in our Directors’ Remuneration Policy. STI performance
2
measures and weightings are set out to the right. New Categories revenue 15%
The STI performance measures and weightings will remain New Categories contribution
3
20%
unchanged for 2024. The performance measures continue to support
the prioritisation of New Categories performance aligning with our Adjusted profit from operations 25%
transformation strategy whilst also incentivising continued strong Adjusted cash generated from operations
4
30%
financial performance for the Group.
Total 100%
Due to the commercial sensitivity of the targets, details for the year ending
31 December 2024 will be disclosed retrospectively in the Annual
Report on Remuneration for the year ending 31 December 2024.

Notes:
1. Group share of key markets includes HP performance for all major markets (Japan, South Korea, Italy, Poland, Germany, Greece, Hungary, the Czech Republic and Romania).
2. New Categories revenue is the revenue derived from the Vapour, HP and Modern Oral product categories. This performance measure is assessed at constant rates of exchange.
3. New Categories contribution is the contribution to APFO from Vapour, HP and Modern Oral products. It is stated after deduction of directly attributable costs and allocated cross-
category shared costs, before the deduction of administrative overheads and excluding the impact of adjusting items in line with the policy for APFO. The measure is assessed at
constant rates of exchange.
4. Net cash generated from operating activities, less net finance costs, net capital expenditure, dividends from associates and dividends paid to non-controlling interests and before
cash paid/received in respect of litigation. Adjusted CGFO is measured at constant rates of exchange.

Long-Term Incentive for 2024 Threshold Maximum

The Chief Executive and the Chief Financial Officer will be granted an LTIP measures Weighting (15%) (100%)
LTIP - Performance Share Plan award equal to a maximum of 500% Relative TSR
1
Upper
of salary and 400% of salary, respectively. The 2024 PSP award for 20% Median
Quartile
the CFO will be made on appointment and will be pro-rated for time
served in the role. The measures and targets for the 2024 LTIP - EPS growth (at
Performance Share awards are set out to the right. The following constant and
30% 2% p.a. 6% p.a.
changes have been made to the targets in 2024: current rates of
– Operating cash flow conversion ratio range to be set at 87.5% to exchange)
97.5%, an increase to the current range to reflect our strong track Revenue growth 15% 3% p.a. 5% p.a.
record cash conversion delivery in recent years and the need to Growth in New
continue strong cash delivery despite expected challenges in Categories 15% 15% p.a. 25% p.a.
earning levels to enable deleverage and capital allocation. revenue
– New Categories revenue growth range will be set at 15% p.a. to
Operating cash
25% p.a., recognising that the previous targets reflected a lower
flow conversion 20% 87.5% 97.5%
New Categories revenue starting base, whereas New Categories
ratio
revenues are now at c£3.3 billion at 31 December 2023. The new
range continues to represent the Group’s ambition to reach Total 100%
£5.0 billion New Categories revenue by 2025. Note:
– EPS growth ranges (at current and constant rates) will be set at 2% 1. The 2024 TSR peer group constituents (14 companies) are: Altria Group,
p.a. to 6% p.a. This reflects accurately the Group’s current business Anheuser-Busch InBev, Carlsberg, Coca-Cola, Diageo, Heineken, Imperial
Brands, Japan Tobacco, PepsiCo, Pernod Ricard, Philip Morris International,
environment while continuing to be sufficiently stretching. Procter & Gamble, Reckitt Benckiser, and Unilever.
– Targets for Group revenue growth and TSR will remain unchanged.
The targets have been set having carefully considered our internal
forecasts and external market expectations for future growth, as well
as the current business environment in which the Group is operating.
The Committee is confident that the targets remain suitably
stretching and incentivising for participants, ensuring only maximum
payout for exceptional performance. In addition, the Committee retains
discretion to determine whether the formulaic outcome of the 2024
LTIP at vesting is a fair reflection of underlying business performance
and consistent with the shareholder experience over the performance
period, and if not, to adjust the outcome accordingly.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

Chief Financial Officer remuneration on appointment

Soraya Benchikh has been appointed to the role of Chief Financial Officer and Executive Director and will join the BAT p.l.c. and
Management Boards from 1 May 2024. Ms Benchikh’s base salary on appointment was set at £800,000 per annum, a reduction of 5%
versus her predecessor’s salary as at April 2023 (£843,600). The Committee believes that this salary level is consistent with Soraya’s skills
and experience and is reasonably positioned within the BAT pay comparator group of international companies.
As CFO, Soraya will receive a pension allowance of 15% of annual base salary in line with the contribution level for the wider UK workforce,
and other benefits as defined by the Directors' Remuneration Policy. She will also be eligible to participate in the Company's existing
short-term and long-term incentive schemes, on a pro-rated basis for 2024, in line with the Directors’ Remuneration Policy.
Conditional on Ms Benchikh commencing employment on 1 May 2024, the following replacement awards will be granted as soon as
practicable after 1 May 2024. The replacement awards are intended to cover short- and long-term incentives that are lost by
Ms Benchikh from her previous employer on joining BAT. In line with the Policy, the value of the replacement awards is based on an
expected value (at a discount to face value where appropriate, taking into account forecast vesting) of the awards being given up.
The vesting periods align fully with those being given up:
– A pro-rated cash award in the amount of £721,000 to compensate Ms Benchikh for ceasing to be eligible to receive an annual bonus
for the current financial year (June year-end);
– A cash award in the amount of £450,471 and an award of BAT shares which would be immediately available with a market value equal
to £247,612 to compensate Ms Benchikh for the forfeiture of restricted stock units and performance share awards which were due to
vest shortly after joining BAT in May 2024;
– An award under the BAT Restricted Share Plan with a market value equal to £549,405 on 1 May 2024 to compensate Ms Benchikh for
the forfeiture of the restricted stock units and performance share awards which were due to vest in 2025. The award shall vest, subject
to and conditional on the terms of the Restricted Share Plan, on 30 September 2025; and
– An award under the BAT Restricted Share Plan with a market value equal to £1,000,365 on 1 May 2024 to compensate Ms Benchikh for
the forfeiture of the performance share awards which are due to vest in 2026. The award shall vest, subject to and conditional on the
terms of the Restricted Share Plan, on 30 September 2026.
All cash awards are gross amounts and will be subject to applicable deductions in respect of tax and national insurance. At the discretion
of the Remuneration Committee, the amounts above are payable or will be granted provided Ms Benchikh provides formal confirmation
to the Company, prior to payment, of the forfeiture of the relevant incentive awards granted by her previous employer. In addition, having
received formal confirmation from Ms Benchikh that she is required to repay relocation benefits provided to her by her previous
employer, the Company will reimburse an amount of £95,940 as a gross payment which will be subject to legally required deductions.
All replacement awards will be subject to clawback provisions.
In addition, Soraya Benchikh will be eligible for relocation support to assist her and her family with relocating from Switzerland to the UK.
The support will include a housing allowance payable for three years from the start date, a schooling allowance for three years, and other
relocation support fully in line with the Global Mobility policy applicable to all the Group’s employees. The relocation support will be
subject to standard clawback provisions as per the Global Mobility policy applicable to all employees.
2024 Non-Executive Directors’ fees
The 2024 Non-Executive Directors’ fees structure is set out in the table below. The Chair's fee and the fees for Non-Executive Directors
have been reviewed with the changes below to apply in May 2024. Adjustments to fees have taken into consideration the increasing
demands placed on the Board, the strategic agenda of the business, the complexity of the sector and the approach to salary
adjustments among the wider UK workforce. The Chair's fee will be adjusted by 3% and the fees of Non-Executive Directors, when
viewed in aggregate, will be adjusted by 3%.
Fees from 1 May 2024 Fees to 30 April 2024
£ £
Chair's fee 718,000 697,000
Base fee 104,800 101,700
Senior Independent Director – supplement 43,150 41,500
Audit Committee: Chair 43,150 42,000
Audit Committee: Member 15,850 15,400
Nominations Committee: Chair — —
Nominations Committee: Member 13,600 13,200
Remuneration Committee: Chair 43,150 42,000
Remuneration Committee: Member 15,850 15,400

Other disclosures
Annual change in remuneration of Directors and employees
The following table shows the percentage change in the Directors’ remuneration measured against a comparator group comprising the
UK employee population across all UK entities. This comparator group is considered to be the most appropriate group due to the limited
number of employees employed under BAT p.l.c. contracts outside of the Director group. In addition, using a more widely-drawn group
encompassing the worldwide nature of the Group’s business would also present practical difficulties in collation and a less relevant
comparator given the significant variations in employee pay across the Group, the differing economic conditions and wide variations
in gross domestic product per capita.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

1
% change in salary/fees % change in taxable benefits % change in STI
2022 to 2021 to 2020 to 2019 to 2022 to 2021 to 2020 to 2019 to 2022 to 2021 to 2020 to 2019 to
2023 2022 2021 2020 2023 2022 2021 2020 2023 2022 2021 2020
Executive Directors
2
Tadeu Marroco 43% 0% 4% 5% 55% 57% (33%) 22% 39% (9%) 25% (24%)
3
Jack Bowles 3% 1% 5% 7% (13%) (9%) (37%) 84% (100%) (9%) 26% (21%)
Chair
4
Luc Jobin 3% 28% 334% 2% 42% 59% 24% (79%) n/a n/a n/a n/a
Non-Executive Directors
5
Kandy Anand 3% n/a n/a n/a (10%) n/a n/a n/a n/a n/a n/a n/a
Sue Farr 20% 18% 1% 2% 9% 931% 0% (100%) n/a n/a n/a n/a
6
Karen Guerra 3% 0% 0% n/a (24%) 3977% 0% n/a n/a n/a n/a n/a
Holly Keller Koeppel 2% 0% 1% 2% (61%) 4907% (99%) (82%) n/a n/a n/a n/a
7
Murray Kessler 0% n/a n/a n/a 0% n/a n/a n/a n/a n/a n/a n/a
8
Savio Kwan 2% 0% 1% 2% 137% 987% (97%) (84%) n/a n/a n/a n/a
9
Véronique Laury 2% n/a n/a n/a 100% n/a n/a n/a n/a n/a n/a n/a
Dimitri Panayotopoulos (12%) (12%) 9% 21% 8% 262% (78%) (88%) n/a n/a n/a n/a
Darrell Thomas 3% (6%) n/a n/a 48% 100% n/a n/a n/a n/a n/a n/a
10
Serpil Timuray n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
11
Average UK-based employee 5% 5% 6% 3% (23%) 2% (1%) 1% 0% 2% 20% (5%)
Notes:
1. Benefits: The 2022 taxable benefits figures were re-stated for the following directors: Luc Jobin, Kandy Anand, Karen Guerra, Savio Kwan, Dimitri Panayotopoulos and Darrell Thomas.
Consequently, the year-on year change figures showing 2022 vs 2021 were updated. The changes in taxable benefit values for 2022 vs 2021 and 2021 vs 2020 were primarily a result of
COVID-related travel restrictions in 2021 and 2020 with minimum or no travel compared to 2022 when COVID-related restrictions were lifted, as well as subsistence costs associated
with business functions due to COVID-related travel restrictions throughout 2020 and 2021. Further details of the taxable benefits figures can be found in the table on page 184.
2. Tadeu Marroco was appointed as an Executive Director from 5 August 2019, therefore the figures for 2019 were annualised to calculate the year-on-year change. Tadeu Marroco was
appointed as Chief Executive from 15 May 2023.
3. Jack Bowles stepped down as Executive Director from 15 May 2023, therefore the salary and benefits figures for 2023 were annualised to calculate the year-on-year change.
4. Luc Jobin was appointed Chair from 28 April 2021. The change in fees from 2020 to 2021 is due to the increase in fees received following the appointment.
5. Kandy Anand was appointed to the Board on 14 February 2022, therefore the figures for 2022 were annualised to calculate the year-on-year change.
6. Karen Guerra was appointed to the Board on 14 September 2020, therefore figures for 2020 were annualised to calculate the year-on-year change.
7. Murray Kessler was appointed to the Board on 6 November 2023. Accordingly, no year-on-year change figures have been included.
8. Savio Kwan stepped down from the Board from 19 April 2023, therefore the figures for 2023 were annualised to calculate the year-on-year change.
9. Véronique Laury was appointed to the Board on 19 September 2022, therefore figures for 2022 were annualised to calculate the year-on-year change.
10. Serpil Timuray was appointed to the Board on 4 December 2023. Accordingly, no year-on-year change figures have been included.
11. The data for the UK-based employees comparator group (which excludes directors) is on a full time equivalent basis and is made up as follows as at 31 December 2023: (1) the weighted
average base salaries; (2) the average taxable benefits per grade; and (3) the weighted average bonus result based on that population as at that date.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

Directors’ Share Interests

Summary of Directors’ Share Interests
1
Outstanding scheme interests 31 Dec 2023

Unvested
Unvested awards
awards subject subject to
to continued
performance employment Total ordinary Total of all
conditions and only shares subject interests in
Ordinary continued (DSBS and LTIP Unvested to outstanding ordinary
shares held at employment in extended interests scheme interes shares at
31 Dec 2023 (LTIP) vesting period) (Sharesave) ts 31 Dec 2023
Executive Directors
2
Tadeu Marroco 121,689 323,045 126,121 1,057 450,223 571,912
3
Jack Bowles 288,501 – 345,297 – 345,297 633,798
Chair
4
Luc Jobin 90,236 – – – – 90,236
Non-Executive Directors – – – –
4
Kandy Anand 7,585 – – – – 7,585
Sue Farr 392 – – – – 392
Karen Guerra 19,250 – – – – 19,250
5
Holly Keller Koeppel – – – – – –
Murray Kessler (appointed 6/11/23) – – – – – –
Véronique Laury 1,650 – – – – 1,650
Dimitri Panayotopoulos 3,300 – – – – 3,300
3
Darrell Thomas 4,600 – – – – 4,600
Serpil Timuray (appointed 4/12/23) – – – – – –
6
Savio Kwan (stepped down 19/04/23) 17,320 – – – – 17,320
Changes from 31 December 2023: Tadeu Marroco: purchase of six ordinary shares on 3 January 2024 under the SIP. Tadeu Marroco: delivery on 5 February 2024 of 409 ordinary shares,
representing dividend equivalents due on outstanding DSBS awards and 47 ordinary shares representing reinvested dividends on UK SIP shares in respect of the quarterly dividend paid to
shareholders on 1 February 2024.There were no changes in the interests of the Chair and the other Non-Executive Directors.

Notes:
1. On 30 March 2023, Jack Bowles received 53,618 shares and Tadeu Marroco received 24,388 shares following the vesting of their 2020 awards under the Deferred Share Bonus Scheme.
2. Tadeu Marroco: ordinary shares held include 1,887 held by the trustees of the BAT Share Incentive Plan (SIP).
3. Jack Bowles: holdings are as at the date of departure on 15 May 2023. Ordinary shares held include 1,103 held by the trustees of the SIP at the date of departure. The unvested LTIP
awards figure include 218,099 shares which are no longer subject to performance conditions but are still within the two-year extended vesting period.
4. American Depositary Shares (ADSs): each of the interests in ordinary shares held by Luc Jobin, Kandy Anand and Darrell Thomas consists of an equivalent number of BAT ADSs, each
of which represents one ordinary share in the Company.
5. Holly Keller Koeppel: at the date of this report Holly Keller Koeppel, being a former director of Reynolds American Inc. and a participant in the Deferred Compensation Plan for Directors
of Reynolds American (DCP), holds Deferred Stock Units (DSUs) which were granted prior to becoming a Director of BAT. In accordance with an election made by Holly Keller Koeppel
in December 2016, a proportion of her DSUs representing her fees as a director of Reynolds American Inc. for 2017 are payable from January 2023 over a period of 10 years, with the
remainder of her DSUs (representing her fees as a director of Reynolds American Inc. in prior years) becoming payable following her cessation as a Director of BAT. Each DSU entitles the
holder to receive a cash payment equal to the value of one BAT ADS. The number of DSUs increases on each dividend date by reference to the value of dividends declared on the ADSs
underlying the DSUs. Ms Koeppel currently holds 30,721 DSUs (2022: 28,928 DSUs).
6. Savio Kwan: holdings are as of the date of departure (19 April 2023).

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Further details in relation to performance conditions attaching to outstanding scheme interests

LTIP awards granted in 2022 LTIP awards granted in 2023

1 January 2022–31 December 2024 1 January 2023–31 December 2025

Threshold Maximum Threshold Maximum
Weighting (15% vests) (100% vests) Weighting (15% vests) (100% vests)
1
Relative TSR 20% Median Upper quartile 20% Median Upper quartile
Ranking against a peer group of
international FMCG companies
EPS growth at current rates of exchange 15% 5% CAGR 10% CAGR 15% 5% CAGR 10% CAGR
Compound annual growth (CAGR) in
adjusted diluted EPS measured at current
rates of exchange
EPS growth at constant rates of 15% 5% CAGR 10% CAGR 15% 5% CAGR 10% CAGR
exchange
Compound annual growth (CAGR) in
adjusted diluted EPS measured at constant
rates of exchange
Revenue growth 15% 3% CAGR 5% CAGR 15% 3% CAGR 5% CAGR
Compound annual growth (CAGR)
measured at constant rates of exchange
New Categories revenue growth 15% 20% CAGR 30% CAGR 15% 20% CAGR 30% CAGR
Compound annual growth (CAGR)
measured at constant rates of exchange
Operating cash flow conversion ratio 20% 85% 95% 20% 85% 95%
Measured at current rates of exchange,
as a percentage of APFO
Note:
1. The relative TSR peer group constituents for the LTIP awards granted in 2022 and 2023 are: Altria Group, Anheuser-Busch InBev, Carlsberg, Coca-Cola, Diageo, Heineken, Imperial
Brands, Japan Tobacco, PepsiCo, Pernod Ricard, Philip Morris International, Procter & Gamble, Reckitt Benckiser, and Unilever.

Directors and Management Board

No Directors or Management Board Members own more than 1% of the ordinary shares in issue. At 5 February 2024, the Directors and
Management Board collectively held interests (or their calculated equivalents) under the Company share schemes of: 871,377 ordinary shares,
655,048 restricted share units, 1,243,416 performance share units, 23,027 options over ordinary shares and 31,320 deferred share units.

Shareholder dilution – Options and awards outstanding

Satisfaction of Company share plan awards in accordance with the Investment New ordinary shares issued by the Company during the year ended
Association’s Principles of Remuneration 31 December 2023
– by the issue of new ordinary shares; – 74,489 ordinary shares issued by the Company in relation
– ordinary shares issued from treasury only up to a maximum to the Sharesave Scheme;
of 10% of the Company’s issued share capital in a rolling – 466,337 treasury shares issued by the Company in relation
10-year period; to the LTI awards vesting;
– within this 10% limit, the Company can only issue (as newly – a total of 820,219 Sharesave Scheme options over ordinary
issued ordinary shares or from treasury) 5% of its issued share shares and a total of 1,589,609 LTI awards that may be settled
capital to satisfy awards under discretionary or executive plans; using newly-issued or treasury shares were outstanding at
and 31 December 2023, representing 0.11% of the Company’s issued
– the rules of the Company’s DSBS do not allow for the satisfaction share capital (excluding shares held in treasury); and
of awards by the issue of new ordinary shares. – options outstanding under the Sharesave Scheme are
exercisable until 1 June 2029 at option prices ranging from
2,076p to 2,727p.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

The Remuneration Committee Governance

Remuneration Committee current members
Dimitri Panayotopoulos (Chair)
Kandy Anand
Sue Farr
Murray Kessler
Serpil Timuray

Role
As set out in the Terms of Reference, the Remuneration Committee is responsible for:
– determining and proposing the Directors’ Remuneration Policy (covering salary, benefits, performance-based variable rewards and
retirement benefits) for shareholder approval;
– determining, within the terms of the approved Directors’ Remuneration Policy, the specific remuneration packages for the Chair and
the Executive Directors, on appointment, on review and, if appropriate, any compensation payment due on termination of appointment;
– the setting of targets applicable for the Company’s performance-based variable reward schemes and determining achievement
against those targets, exercising discretion where appropriate and as provided by the applicable scheme rules and the Directors’
Remuneration Policy;
– reviewing Group workforce remuneration and related policies, and the alignment of incentives and rewards with Group culture, taking
these into account when setting the policy for Executive Director remuneration. Providing feedback to the Board on workforce reward,
incentives and conditions applicable across the Group and supporting the Board’s monitoring of the Group’s culture and its alignment
with the Group’s purpose, values and strategy;
– setting remuneration for members of the Management Board and the Company Secretary; and
– monitoring and advising the Board on any major changes to the policy on employee benefit structures for the Group.

The Committee’s Terms of Reference align with the requirements of the UK Corporate Governance Code. Revised Terms of Reference
were introduced from 1 September 2023 to reflect the Group's new Executive Management structure and to maintain alignment with
evolving market practice.
1
Attendance at meetings in 2023
Member Meeting attendance
2(a) 1(a)
Name since Attended/Eligible to attend
1(b)
Dimitri Panayotopoulos 2015 5/7
1(c)
Kandy Anand 2022 6/7
1(d)
Sue Farr 2016 6/7
2(b)
Murray Kessler 2023 1/1
2(c)
Serpil Timuray 2023 1/1
2(d)
Savio Kwan 2016 - 2023 2/2
Notes:
1. Number of meetings in 2023: (a) the Committee held seven meetings in 2023, three of which were ad hoc. Five meetings of the Committee are scheduled for 2024; (b) Dimitri
Panayotopoulos did not attend the ad hoc meeting in June 2023 and the scheduled meeting in July 2023 due to illness; (c) Kandy Anand did not attend the scheduled meeting in
February 2023 due to unforeseen personal circumstances; (d) Sue Farr did not attend the ad hoc meeting in January 2023 convened at short notice due to prior commitments.
2. Membership: (a) all members of the Committee are independent Non-Executive Directors in accordance with the UK Corporate Governance Code 2018 Provisions 10 and 32
and applicable NYSE listing standards; (b) Murray Kessler joined the Committee on 6 November 2023 on his appointment to the Board; (c) Serpil Timuray joined the Committee on
4 December 2023 on her appointment to the Board; (d) Savio Kwan stepped down from the Committee with effect from the conclusion of the AGM on 19 April 2023.

Other attendees: the Chair, the Chief Executive, the Chief People Officer (previously the Director, Talent, Culture & Inclusion), the Group
Head of Reward and other senior management, including the Company Secretary, may be consulted and provide advice, guidance and
assistance to the Remuneration Committee.
They may also attend Committee meetings (or parts thereof) by invitation. None of the Chair, any Executive Director or member of
senior management plays any part in determining their own respective remuneration.
Independence and advice
PricewaterhouseCoopers LLP (PwC): PwC were appointed by the Remuneration Committee following a rigorous tender process in
January 2020 as one of the Remuneration Committee’s remuneration consultants. PwC provided independent advice to the Committee
in 2023 and a representative of PwC attended scheduled Remuneration Committee meetings in 2023. PwC's advice included, for
example, support with market trends and comparator group analysis, updates on market practice, shareholder engagement
perspectives and independent measurement of the relative TSR performance conditions. PwC is a member of the Remuneration
Consulting Group and, as such, operates under the code of conduct in relation to executive remuneration consulting in the UK. The
Committee is satisfied that the advice received is objective and independent. The Committee is comfortable that the PwC advisory team
is not involved in any other services PwC provides to the Company, such as tax, corporate finance and consulting services to Group
companies worldwide excluding the U.S. Total fees for the provision of remuneration advice to the Committee in 2023 were £190,400.
Meridian Compensation Partners (Meridian): Meridian, a U.S. based advisory firm, were appointed by the Remuneration Committee
following a rigorous tender process in January 2020 as one of the Remuneration Committee’s remuneration consultants. Meridian
provided advice to the Committee in 2023 and a representative of Meridian attended scheduled Remuneration Committee meetings in
2023. Meridian's advice included advice on remuneration matters including market trends, shareholder engagement perspectives and
comparator group analysis from a U.S. perspective. The Committee is satisfied that the advice received is objective and independent.
Meridian did not provide any other services to the Company. Total fees for the provision of remuneration advice to the Committee in 2023
were $44,781.

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Regular work programme 2023

The Remuneration Committee:
– reviewed the Chair's fee from 1 May 2023, taking into account market positioning, the broader external environment and the level of
salary increases awarded to UK employees;
– reviewed salaries for the Executive Directors to take effect from 1 April 2023, taking into account market positioning, the external
environment including stakeholder expectations and shareholder perspectives, and the level of salary increases awarded to UK
employees;
– reviewed salaries for members of the Management Board and the Company Secretary from 1 April 2023, taking into account market
positioning, the external market environment and the level of salary increases awarded to UK employees;
– assessed the achievement against the targets for the 2022 STI award and set the STI targets for 2023 (on an organic basis) to ensure
an appropriate degree of stretch within the target ranges to drive performance in alignment with the Group's strategic objectives and
shareholder interests;
– reviewed updates on performance against the 2023 STI target measures and for outstanding LTI awards;
– assessed the achievement against the performance conditions for the vesting of the 2020 LTIP award, determined the contingent
level of LTI awards for March 2023 and reviewed the associated performance conditions;
– assessed the achievement against the targets for the 2022 Share Reward Scheme and set the targets for the 2023 award;
– reviewed the Annual Statement and the Annual Report on Remuneration for the year ended 31 December 2022 prior to its approval
by the Board and subsequent proposal to shareholders at the Company’s AGM on 19 April 2023;
– reviewed the 2023 AGM voting results relating to remuneration resolutions, market trends in the context of that annual general
meeting season and corporate governance developments relating to executive remuneration and wider workforce remuneration in the
UK and the U.S.;
– monitored the continued application of the Company’s shareholding guidelines for the Executive Directors and members of the
Management Board; and
– reviewed the Committee’s effectiveness following the Board and Committees review process (discussed on pages 152 to 153).
Other activities in 2023
The Remuneration Committee:
– assessed and determined the remuneration applicable to the appointment of Tadeu Marroco as Chief Executive from 15 May 2023
and to the appointment of Soraya Benchikh as Chief Financial Officer with effect from 1 May 2024, in accordance with the Directors'
Remuneration Policy, with specific consideration given to relative market positioning and the wider external environment, including
shareholder and other stakeholder perspectives;
– determined the remuneration payable to Jack Bowles on stepping down as Chief Executive, applying the Directors' Remuneration
Policy including the exercise of discretion in respect of retention of awards under the Company’s performance-based variable reward
schemes;
– reviewed the terms of appointment and associated remuneration, and terms of termination of employment, in connection with
Management Board roles and personnel changes during the year;
– determined the terms of appointment and associated remuneration applicable to the appointment of Caroline Ferland as Company
Secretary from 1 September 2023;
– recommended to the Board that additional malus and clawback arrangements be introduced for senior executives, in alignment with
U.S. SEC regulation and NYSE rules, which were subsequently approved by the Board;
– assessed various aspects of the Group’s workforce remuneration strategy and alignment with Executive Directors’ remuneration,
corporate culture and external market positioning, with specific focus on variable pay architecture for management grade employees
across the Group;
– approved changes to the methodology for calculating the share of market read for the STI volume share metric in several markets,
based on the local market environment and reporting capabilities;
– approved the exclusion of the impact of the disposal of the Russian and Belarusian businesses from the 2023 results in the assessment
of performance for the 2021 LTI awards against the targets set at the start of the performance period;
– reviewed the Group's pay equality data and associated reporting, including UK gender pay reporting for 2022 for applicable UK Group
companies prior to publication in March 2023, and voluntary reporting on international gender pay and ethnicity pay;
– reviewed the outcomes of the Group's global living wage assessment for 2023, approach to validation of living wage data with the
external organisation Fair Wage Network, and evolving stakeholder expectations in relation to reporting on living wage analysis;
– considered initiatives to enhance talent retention across the Group, including benefits and non-financial rewards, focused activities
to promote the retention of women in senior management, and associated feedback from employees; and
– reviewed the Committee's Terms of Reference and recommended revisions to those Terms of Reference be introduced from
1 September 2023, which were subsequently approved by the Board.

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Remuneration Report

2023 Annual Report on Remuneration

Continued

Voting on Remuneration and Engagement with Shareholders

At the AGM on 19 April 2023, shareholders considered and voted on the 2022 Directors’ Remuneration Report as set out in the table
below. No other resolutions in respect of Directors’ remuneration or incentives were considered at the 2023 AGM. The current
Remuneration Policy was approved by shareholders at the AGM on 28 April 2022 as set out below. The full Directors’ Remuneration
Policy is set out in the 2021 Annual Report on Remuneration . A summary of this policy is provided on page 174. Further information
regarding shareholder engagement in relation to remuneration matters is set out in the Annual Statement on Remuneration on page 170
and in the discussion of Board engagement with shareholders on pages 144 and 145.
1 2
Approval of Directors' Remuneration Report and Policy
Directors' Remuneration Policy 2022 AGM Directors' Remuneration Report 2023 AGM
Percentage for 94.85 95.18
Votes for (including discretionary) 1,663,434,518 1,585,393,499
Percentage against 5.15 4.82
Votes against 90,313,970 80,274,647
Total votes cast excluding votes withheld 1,753,748,488 1,665,668,146
3
Votes withheld 2,811,496 14,532,234
Total votes cast including votes withheld 1,756,559,984 1,680,200,380
Notes:
1. Directors’ Remuneration Report: does not include the part of the Remuneration Report containing the Directors' Remuneration Policy (see note 2 below).
2. Directors’ Remuneration Policy: was approved by shareholders at the 2022 AGM held on 28 April 2022 and is set out in full in the 2021 Annual Report on Remuneration.
3. Votes withheld: these are not included in the final proxy figures as they are not recognised as a vote in law.

The Directors’ Remuneration Report has been approved by the Board on 07 February 2024 and signed on its behalf by:

Dimitri Panayotopoulos
Chair, Remuneration Committee
07 February 2024

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Financial Statements

Report of Independent Registered Public

Accounting Firm>>
To the Shareholders and Board of Directors British American Tobacco p.l.c.
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying Group Balance Sheet of British American Tobacco p.l.c. and subsidiaries (the “Group”) as of
December 31, 2023, and 2022, the related Group Income Statement, Group Statement of Comprehensive Income, Group Statement
of Changes in Equity, and Group Cash Flow Statement for each of the years in the three-year period ended December 31, 2023, and the
related notes (collectively, the consolidated financial statements). We also have audited the Group’s internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Group as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year
period ended December 31, 2023, in conformity with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board. Also in our opinion, the Group maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Group’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the Group’s consolidated
financial statements and an opinion on the Group’s internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements,
taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Impairment analysis of goodwill and trademarks and similar intangibles with indefinite lives arising from the 2017 acquisition
of Reynolds American Inc. (Reynolds American)
As discussed in Note 12 to the consolidated financial statements, the Group, as at December 31, 2023, has goodwill and trademarks and
similar intangibles with indefinite lives of £30,938 million and £51,930 million, respectively, arising from the 2017 acquisition of Reynolds
American. As a result of the impairment analysis, the Group recognised an impairment of £4,299 million for goodwill and £22,992 million
for trademarks and similar intangibles with indefinite lives, respectively, during the period. The Group has prepared the value-in-use
calculations for their impairment assessment, supplemented by a cash flow forecast on a discrete period basis to reflect the estimated
life for certain currently classified indefinite-lived trademarks.
We identified the evaluation of the impairment analysis of goodwill and trademarks and similar intangibles with indefinite lives arising
from the 2017 acquisition of Reynolds American as a critical audit matter. There was a high degree of auditor judgment involved in
evaluating: (i) the projected net revenue, long-term growth rates including the assumptions related to the estimated life for certain
currently classified indefinite-lived trademarks and post-tax discount rates used in the analysis of the recoverable amount of trademarks
and similar intangibles with indefinite lives and goodwill allocated to the Reynolds American cash-generating unit; and (ii) the impact of

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the proposed menthol ban on the assumptions listed above for the Newport and Camel indefinite-lived trademarks and the goodwill
allocated to the Reynolds American cash-generating unit.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the goodwill and trademarks with indefinite lives impairment testing
process including controls related to the development of the projected net revenue and management’s determination of the applicable
long-term growth rates and post-tax discount rates. In addition, we assessed the impairment analysis by:
– assessing and challenging Reynolds American’s projected net revenue and long-term growth rates including the assumptions related
to the estimated life for certain currently classified indefinite-lived trademarks by examining externally derived publicly available data,
including broker and analyst reports, industry reports, media reports, macro-economic assumptions, academic and scientific studies
and regulatory changes;
– assessing and evaluating the reasonableness of the assumptions and methods used by the market research specialist engaged by the
Group to develop the assumptions related to the estimated life and projected net revenue of certain currently classified indefinite-lived
trademarks by comparing them against independent data sources;
– challenging the projected net revenue and long-term growth rates by comparing the historical projections to actual results to assess
the Group’s ability to accurately forecast;
– performing sensitivity analysis on the projected net revenue, long-term growth rates and post-tax discount rates to assess the impact
of changes in these assumptions on the amount of impairment recorded for the Reynolds American goodwill and trademarks with
indefinite lives;
– assessing and challenging the impact of the proposed menthol ban on the projected net revenue, long-term growth rates and post-tax
discount rates used in the value-in-use based assessment of the recoverable amount of the goodwill allocated to the Reynolds
American cash-generating unit and the Newport and Camel currently classified indefinite-lived brands by evaluating the updates to the
FDA rulemaking process and recent litigations and by comparing Reynolds American’s projected brand retention rates against actual
retention rates in other countries and domestic regions where a menthol ban has been implemented; and
– involving a valuation professional with specialised skills and knowledge, who assisted in independently developing a range of the post-
tax discount rates using publicly available market data for comparable companies and comparing these rates to those utilised by
Reynolds American.
Canadian legal proceedings
As discussed in Note 31 to the consolidated financial statements, the Group’s operating company in Canada, Imperial Tobacco Canada
(“Imperial”), has received an unfavorable judgment on the smoking and health class actions certified by the Quebec Superior Court. As a
result of this judgment, Imperial has filed for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”) and has
asked the Ontario Superior Court to stay all pending or contemplated litigation against Imperial in order to resolve all of the outstanding
litigation across the country.
We identified the evaluation of the Canadian legal proceedings as a critical audit matter because complex and subjective auditor
judgment was required in evaluating the Group’s assessment of the relevant law, historical and pending court rulings, and the Group’s
ability to estimate the likelihood and extent of any future economic outflow arising from the ultimate resolution of the Canadian litigation.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the legal exposure process including controls related to the interpretation
of relevant law and related court rulings and estimation of the likelihood and extent of any future economic outflow arising from the
ultimate resolution of the Canadian litigation. In addition, we assessed the Canadian legal proceedings by:
– reading letters received directly from the Group's external and internal legal counsel that evaluated the current status of the Canadian
legal proceedings. We further inquired of internal legal counsel to evaluate their basis for conclusions in their letter; and
– assessing relevant historical and recent judgments passed by the judicial court authorities in relation to the Canadian litigation and
read the related Canadian court rulings in order to challenge Imperial’s interpretation of the Canadian legal proceedings.

/s/ KPMG LLP

We have served as the Group’s auditor since 2015.
London, United Kingdom
February 7, 2024

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Income Statement

For the years ended 31 December

2023 2022 2021
Notes £m £m £m
1
Revenue 2 27,283 27,655 25,684
Raw materials and consumables used (4,545) (4,781) (4,542)
Changes in inventories of finished goods and work in progress (96) 227 160
Employee benefit costs 3 (2,664) (2,972) (2,717)
Depreciation, amortisation and impairment costs 4 (28,614) (1,305) (1,076)
Other operating income 5 432 722 196
Loss on reclassification from amortised cost to fair value (9) (5) (3)
Other operating expenses 6 (7,538) (9,018) (7,468)
(Loss)/profit from operations 2 (15,751) 10,523 10,234
Net finance costs 8 (1,895) (1,641) (1,486)
Share of post-tax results of associates and joint ventures 2,9 585 442 415
(Loss)/profit before taxation (17,061) 9,324 9,163
Taxation on ordinary activities 10 2,872 (2,478) (2,189)
(Loss)/profit for the year (14,189) 6,846 6,974
Attributable to:
Owners of the parent (14,367) 6,666 6,801
Non-controlling interests 178 180 173
(14,189) 6,846 6,974
(Loss)/earnings per share
Basic 11 (646.6) 293.3 296.9
Diluted 11 (646.6) 291.9 295.6
Note:
1. Revenue is net of duty, excise and other taxes of £36,917 million, £38,527 million and £38,595 million for the years ended 31 December 2023, 2022 and 2021, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Group Statement of Comprehensive Income

For the years ended 31 December

2023 2022 2021
Notes £m £m £m
(Loss)/profit for the year (14,189) 6,846 6,974
Other comprehensive (expense)/income
Items that may be reclassified subsequently to profit or loss: (3,317) 8,506 509
Foreign currency translation and hedges of net investments in foreign operations
– differences on exchange from translation of foreign operations (4,049) 8,923 32
– reclassified and reported in profit for the year 22(c) 552 5 291
– net investment hedges - net fair value gains/(losses) on derivatives 236 (578) 75
– net investment hedges - differences on exchange on borrowings 9 (21) 24
Cash flow hedges
– net fair value gains 59 81 95
– reclassified and reported in profit for the year 12 101 32
– tax on net fair value gains in respect of cash flow hedges 10(f) (23) (17) (32)
Investments held at fair value
– net fair value (losses)/gains 18 (6) 6 9
Associates – share of OCI, net of tax 9 (107) 6 (17)
Items that will not be reclassified subsequently to profit or loss: (57) 201 313
Retirement benefit schemes
– net actuarial (losses)/gains 15 (106) 316 382
– surplus recognition 15 24 (39) (1)
– tax on actuarial losses/(gains) in respect of subsidiaries 10(f) 30 (95) (82)
Associates – share of OCI, net of tax 9 (5) 19 14

Total other comprehensive (expense)/income for the year, net of tax (3,374) 8,707 822
Total comprehensive (expense)/income for the year, net of tax (17,563) 15,553 7,796
Attributable to:
Owners of the parent (17,699) 15,370 7,622
Non-controlling interests 136 183 174
(17,563) 15,553 7,796

The accompanying notes are an integral part of these consolidated financial statements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Statement of Changes in Equity

Attributable to owners of the parent

Share
premium,
capital In respect Total
redemption of assets attributable Perpetual Non-
Share and merger Other Retained held-for- to owners of hybrid controlling Total
capital reserves reserves earnings sale parent bonds interests equity
Notes £m £m £m £m £m £m £m £m £m
Balance at 1 January 2023 614 26,628 2,655 44,081 (295) 73,683 1,685 342 75,710
Total comprehensive
(expense)/income for the year — — (3,281) (14,418) — (17,699) — 136 (17,563)
comprising:
(Loss)/profit for the year — — — (14,367) — (14,367) — 178 (14,189)
Other comprehensive
— — (3,281) (51) — (3,332) — (42) (3,374)
expense for the year
Other changes in equity
Cash flow hedges reclassified
— — 27 — — 27 — — 27
and reported in total assets
Employee share options
– value of employee services 28 — — — 71 — 71 — — 71
– proceeds from new shares
— 2 — — — 2 — — 2
issued
Dividends and other
appropriations
– ordinary shares 22(c),(f) — — — (5,071) — (5,071) — — (5,071)
– to non-controlling interests — — — — — — — (110) (110)
Purchase of own shares
– held in employee share
— — — (110) — (110) — — (110)
ownership trusts
Perpetual hybrid bonds
– coupons paid — — — (58) — (58) — — (58)
– tax on coupons paid — — — 14 — 14 — — 14
Reclassification of
equity in respect of assets 27(d) — — (295) — 295 — — — —
classified as held-for-sale
Other movements — — — 22 — 22 — — 22
Balance at
614 26,630 (894) 24,531 — 50,881 1,685 368 52,934
31 December 2023

The accompanying notes are an integral part of these consolidated financial statements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Attributable to owners of the parent

Share
premium,
capital In respect Total
redemption of assets attributable Perpetual Non-
Share and merger Other Retained held-for- to owners of hybrid controlling Total
capital reserves reserves earnings sale parent bonds interests equity
Notes £m £m £m £m £m £m £m £m £m
Balance at 1 January 2022 614 26,622 (6,032) 44,212 — 65,416 1,685 300 67,401
Total comprehensive income
— — 8,521 6,849 — 15,370 — 183 15,553
for the year comprising:
Profit for the year — — — 6,666 — 6,666 — 180 6,846
Other comprehensive income
— — 8,521 183 — 8,704 — 3 8,707
for the year
Other changes in equity
Cash flow hedges reclassified
— — (129) — — (129) — — (129)
and reported in total assets
Employee share options
– value of employee services 28 — — — 81 — 81 — — 81
– proceeds from new shares
— 5 — — — 5 — — 5
issued
– treasury shares used for
— 1 — (1) — — — — —
share option schemes
Dividends and other
—
appropriations
– ordinary shares 22(c),(f) — — — (4,915) — (4,915) — — (4,915)
– to non-controlling interests — — — — — — — (141) (141)
Purchase of own shares
– held in employee share
— — — (80) — (80) — — (80)
ownership trusts
– share buy-back programme 22(c)(vi) — — — (2,012) — (2,012) — — (2,012)
Perpetual hybrid bonds
– coupons paid — — — (59) — (59) — — (59)
– tax on coupons paid — — — 11 — 11 — — 11
Non-controlling interests –
27(b) — — — (1) — (1) — — (1)
acquisitions
Reclassification of equity in
respect of assets classified as 27(d) — — 295 — (295) — — — —
held-for-sale
Other movements — — — (4) — (4) — — (4)
Balance at
614 26,628 2,655 44,081 (295) 73,683 1,685 342 75,710
31 December 2022

The accompanying notes are an integral part of these consolidated financial statements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Statement of Changes in Equity

Continued

Attributable to owners of the parent

Share
premium,
capital Total
redemption attributable Perpetual Non-
Share and merger Other Retained to owners of hybrid controlling Total
capital reserves reserves earnings parent bonds interests equity
Notes £m £m £m £m £m £m £m £m
Balance at 1 January 2021 614 26,618 (6,600) 42,041 62,673 — 282 62,955
Total comprehensive (expense)/income
— — 523 7,099 7,622 — 174 7,796
for the year comprising:
Profit for the year — — — 6,801 6,801 — 173 6,974
Other comprehensive (expense)/income
— — 523 298 821 — 1 822
for the year
Other changes in equity
Cash flow hedges reclassified and
— — 45 — 45 — — 45
reported in total assets
Employee share options
– value of employee services 28 — — — 76 76 — — 76
– treasury shares used for share option
— 4 — (4) — — — —
schemes
Dividends and other appropriations
– ordinary shares 22(c),(f) — — — (4,904) (4,904) — — (4,904)
– to non-controlling interests — — — — — — (162) (162)
Purchase of own shares
– held in employee share ownership
— — — (82) (82) — — (82)
trusts
Perpetual hybrid bonds
– proceeds, net of issuance fees — — — — — 1,681 — 1,681
– tax on issuance fees — — — — — 4 — 4
– coupons paid — — — (6) (6) — — (6)
– tax on coupons paid — — — 1 1 — — 1
Non-controlling interests - acquisitions — — — (5) (5) — — (5)
Other movements non-controlling
27(b) — — — — — — 6 6
interests
Other movements — — — (4) (4) — — (4)
Balance at 31 December 2021 614 26,622 (6,032) 44,212 65,416 1,685 300 67,401

The accompanying notes are an integral part of these consolidated financial statements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Group Balance Sheet

31 December
2023 2022
Notes £m £m
Assets
Intangible assets 12 95,562 129,075
Property, plant and equipment 13 4,583 4,867
Investments in associates and joint ventures 14 1,970 2,020
Retirement benefit assets 15 956 1,000
Deferred tax assets 16 911 682
Trade and other receivables 17 321 241
Investments held at fair value 18 118 121
Derivative financial instruments 19 109 131
Total non-current assets 104,530 138,137
Inventories 20 4,938 5,671
Income tax receivable 172 149
Trade and other receivables 17 3,621 4,367
Investments held at fair value 18 601 579
Derivative financial instruments 19 181 430
Cash and cash equivalents 21 4,659 3,446
14,172 14,642
Assets classified as held-for-sale 14 767
Total current assets 14,186 15,409
Total assets 118,716 153,546
Equity – capital and reserves
Share capital 22(a) 614 614
Share premium, capital redemption and merger reserves 22(b) 26,630 26,628
Other reserves 22(c) (894) 2,655
Retained earnings 22(c) 24,531 44,081
In respect of assets held-for-sale 22(c) — (295)
Owners of the parent 50,881 73,683
Perpetual hybrid bonds 22(d) 1,685 1,685
Non-controlling interests 22(e) 368 342
Total equity 52,934 75,710
Liabilities
Borrowings 23 35,406 38,726
Retirement benefit liabilities 15 881 949
Deferred tax liabilities 16 12,192 18,428
Other provisions for liabilities 24 531 434
Trade and other payables 25 893 944
Derivative financial instruments 19 206 502
Total non-current liabilities 50,109 59,983
Borrowings 23 4,324 4,413
Income tax payable 992 1,049
Other provisions for liabilities 24 468 1,087
Trade and other payables 25 9,700 10,449
Derivative financial instruments 19 189 427
15,673 17,425
Liabilities associated with assets classified as held-for-sale — 428
Total current liabilities 15,673 17,853
Total equity and liabilities 118,716 153,546

The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board
Luc Jobin
Chair
07 February 2024

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Cash Flow Statement

For the years ended 31 December

2023 2022 2021
Notes £m £m £m
(Loss)/profit for the year (14,189) 6,846 6,974
Taxation on ordinary activities (2,872) 2,478 2,189
Share of post-tax results of associates and joint ventures (585) (442) (415)
Net finance costs 1,895 1,641 1,486
(Loss)/profit from operations (15,751) 10,523 10,234
Adjustments for
– depreciation, amortisation and impairment costs 4 28,614 1,305 1,076
– decrease/(increase) in inventories 265 (246) 433
– increase in trade and other receivables (487) (42) (393)
– decrease in Master Settlement Agreement payable 6 (287) (145) (36)
– increase in trade and other payables 640 3 183
– decrease in net retirement benefit liabilities (111) (110) (104)
– (decrease)/increase in other provisions for liabilities (489) 643 (145)
– other non-cash items 27(d) 436 606 430
Cash generated from operating activities 12,830 12,537 11,678
Dividends received from associates 506 394 353
Tax paid (2,622) (2,537) (2,314)
Net cash generated from operating activities 10,714 10,394 9,717
Cash flows from investing activities
Interest received 145 85 33
Purchases of property, plant and equipment (460) (523) (527)
Proceeds on disposal of property, plant and equipment 54 31 31
Purchases of intangibles (141) (133) (218)
Proceeds on disposals of intangibles 27 3 —
Purchases of investments 18 (448) (257) (369)
Proceeds on disposals of investments 18 405 128 141
Investment in associates and acquisitions of other subsidiaries net of cash acquired (37) (39) (133)
Disposal of subsidiary, net of cash disposed of 27(d) 159 — (98)
Net cash used in investing activities (296) (705) (1,140)
Cash flows from financing activities
Interest paid on borrowings and financing related activities (1,682) (1,578) (1,479)
Interest element of lease liabilities (30) (25) (23)
Capital element of lease liabilities (162) (161) (154)
Proceeds from increases in and new borrowings 5,134 3,267 978
Reductions in and repayments of borrowings (6,769) (3,044) (4,843)
(Outflows)/inflows relating to derivative financial instruments (480) (117) 229
Purchases of own shares - share buy-back programme 22(c) — (2,012) —
Purchases of own shares held in employee share ownership trusts 22(c) (110) (80) (82)
Proceeds from the issue of perpetual hybrid bonds, net of issuance costs 22(d) — — 1,681
Coupon paid on perpetual hybrid bonds (59) (60) (6)
Dividends paid to owners of the parent (5,055) (4,915) (4,904)
Capital injection from and purchases of non-controlling interests 30 — (1) 1
Dividends paid to non-controlling interests (105) (158) (150)
Other 4 6 3
Net cash used in financing activities (9,314) (8,878) (8,749)
Net cash flows generated from/(used in) operating, investing and financing activities 1,104 811 (172)
*
Transferred from/(to) held-for-sale 368 (368) —
Differences on exchange (292) 431 (253)
Increase/(decrease) in net cash and cash equivalents in the year 1,180 874 (425)
Net cash and cash equivalents at 1 January 3,337 2,463 2,888
Net cash and cash equivalents at 31 December 21 4,517 3,337 2,463
Note:
* Included in the transferred from held-for-sale in 2023 is £102 million of foreign exchange loss due to the devaluation of the Russian ruble, as explained in note 27(d)(i).

The accompanying notes are an integral part of these consolidated financial statements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Notes on Accounts

1 Accounting policies The critical accounting judgements include:

Basis of preparation – the determination as to whether control (subsidiaries), joint
The consolidated financial statements have been prepared in control (joint arrangements), or significant influence (associates)
accordance with International Financial Reporting Standards (IFRS) exists in relation to the investments held by the Group. This is
as issued by the International Accounting Standards Board (IASB) assessed after taking into account the Group’s ability to appoint
and UK-adopted international accounting standards. UK-adopted Directors to the entity’s Board, its relative shareholding
international accounting standards differ in certain respects from compared with other shareholders, any significant contracts or
IFRS as issued by the IASB. The differences have no impact on the arrangements with the entity or its other shareholders and other
Group’s consolidated financial statements for the periods relevant facts and circumstances. The application of these
presented. policies to Group subsidiaries in territories, including Canada,
The consolidated financial statements have been prepared on a is explained in note 32;
going concern basis under the historical cost convention except as – the determination as to whether the disposal of a business or
described in the accounting policy below on financial instruments. businesses is significant enough to require disclosure in current
In performing its going concern assessment, Management and prior years as a discontinued operation;
considered forecasts and liquidity requirements covering a period – the review of applicable exchange rates for transactions with
of at least twelve months from the date of approval of the financial and translation of entities in territories where there are
statements and including the Group’s ability to fund its operations restrictions on free access to foreign currency, or multiple
and generate cash to pay for debt as it falls due and takes into exchange rates;
account the payments arising from the Master Settlement
Agreement due in the U.S. in 2024 and other known liabilities or – the determination as to whether to recognise provisions and the
future payments (including interim dividends), as they fall due. This exposures to contingent liabilities related to pending litigation or
assessment includes consideration of geopolitical events in Europe other outstanding claims, as well as other contingent liabilities.
and the general outlook in the global economy, as well as plausible The accounting policy on contingent liabilities, which are not
downside scenarios after taking into account the Group’s Principal provided for, is set out below and the contingent liabilities of the
Risks and how they could impact the Group’s operations. Any Group are explained in note 31. Judgement is necessary to assess
mitigating actions, should they be required, are all within the likelihood that a pending claim is probable (more likely than
management’s control and could include reductions in not to succeed), possible or remote;
discretionary spending such as acquisitions and capital – the determination as to whether perpetual hybrid bonds should
expenditure, or drawdowns on committed facilities. After reviewing be classified as equity instead of borrowings (note 22(d)); and
the Group’s annual budget, plans and financing arrangements, the – the identification and quantification of adjusting items. These are
Directors consider that the Group has adequate resources to separately disclosed as memorandum information as explained
continue operating and that it is therefore appropriate to continue below, and the impact of these on the calculation of adjusted
to adopt the going concern basis in preparing the Annual Report earnings per share is described in note 11.
and Form 20‑F.
The critical accounting estimates include:
In preparing the financial statements, Management has considered – the review of asset values, including indefinite life assets, such as
the impact of climate change and determined that the impact is goodwill and certain trademarks and similar intangibles. The key
not expected to be material: assumptions used in respect of the impairment testing are the
– On the going concern of the Group; determination of cash-generating units, the budgeted and
– On the Group’s assessment of future cash flows (including as forecast cash flows of these units, the long-term growth rate for
related to the capital expenditure plans as related to the Group’s cash flow projections and the rate used to discount the cash flow
Scope 1 and 2 GHG emission reduction commitments) as used in projections. These are described in note 12;
impairment assessments for the value in use of non-current – the estimation of amounts to be recognised in respect of taxation
assets including goodwill (note 12(b)); and and legal matters, and the estimation of other provisions for
– In respect of factors including useful lives and residual values liabilities and charges are subject to uncertain future events, may
that determine the carrying value of non-financial current assets. extend over several years and so the amount and/or timing may
There has been no material impact identified on the financial differ from current assumptions. The accounting policy for
reporting judgements and estimates. Management is aware that taxation is explained below. The recognised deferred tax assets
the risks related to climate change are developing and ever and liabilities, together with a note of unrecognised amounts, are
changing. Accordingly, these judgements and estimates will be shown in note 16, and a contingent tax asset is explained in note
kept under review as the future impacts of climate change on the 10(b). Other provisions for liabilities and charges are as set out in
Group’s financial statements depend on environmental, regulatory note 24. Litigation related deposits are shown in note 17. The
and other factors outside of the Group’s control which are not all application of these accounting policies to the payments made
currently known. and credits recognised under the Master Settlement Agreement
by Reynolds American Inc. (Reynolds American) is described in
The preparation of the consolidated financial statements requires note 6(b); and
management to make estimates and assumptions that affect the
– the estimation of and accounting for retirement benefit costs.
reported amounts of revenues, expenses, assets and liabilities, and
The determination of the carrying value of assets and liabilities,
the disclosure of contingent liabilities at the date of the financial
as well as the charge for the year, and amounts recognised in
statements. The key estimates and assumptions are set out in
other comprehensive income, involves judgements made in
the accounting policies below, together with the related notes
conjunction with independent actuaries. These involve estimates
to the accounts.
about uncertain future events on a country-by-country basis,
including life expectancy of scheme members, salary and pension
increases, inflation, as well as discount rates and asset values at
the year-end. The assumptions used by the Group and sensitivity
analyses are described in note 15.

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Financial Statements

Notes on Accounts
Continued

Such estimates and assumptions are based on historical The differences arising on the retranslation to sterling of Group
experience and various other factors that are believed to be undertakings with functional currencies other than sterling are
reasonable in the circumstances and constitute management’s presented as a separate component of equity in the Translation
best judgement at the date of the financial statements. In the reserve within Other reserves, as shown in note 22. They are
future, actual experience may deviate from these estimates and recognised in the income statement when the gain or loss on
assumptions, which could affect the financial statements as the disposal of a Group undertaking is recognised.
original estimates and assumptions are modified, as appropriate, Transactional foreign exchange gains and losses on the revaluation
in the year in which the circumstances change. or settlement of receivables and payables are recognised in the
These consolidated financial statements were authorised for income statement, except when deferred in equity on
issue by the Board of Directors on 7 February 2024. intercompany net investment loans, on qualifying net investment
With effect from 1 January 2023, the Group has adopted two hedges, or as qualifying cash flow hedges. Foreign exchange gains
Amendments to IAS 12 Income Taxes: in respect of deferred tax or losses recognised in the income statement are included in profit
in relation to assets and liabilities arising from a single transaction; from operations or net finance costs depending on the underlying
and in respect of exceptions from the recognition and disclosure of transactions that gave rise to these exchange differences.
deferred tax related to income taxes arising from tax law enacted In addition, for hyperinflationary countries where the effect on the
or substantively enacted to implement the Pillar Two model rules Group results would be significant, the financial statements in local
published by the Organisation for Economic Co-operation and currency are adjusted to reflect the impact of local inflation prior to
Development (OECD), including tax law that implements qualified translation into sterling, in accordance with IAS 29 Financial Reporting
domestic minimum top-up taxes described in those rules. in Hyperinflationary Economies. Where applicable, IAS 29 requires all
The impact of applying these amendments was not material. transactions to be indexed by an inflationary factor to the balance
In addition, an Amendment to IAS 1 Presentation of Financial sheet date, potentially leading to a monetary gain or loss on
Statements requires the disclosure of material accounting policy indexation. The results and balance sheets of operations in
information as part of the Notes to the Accounts and these are set hyperinflationary territories are translated at the period end rate.
out below. Accounting policy information is material if, when Provisions, contingent liabilities and contingent assets
considered together with other information included in an entity’s
Provisions are recognised when either a legal or constructive
financial statements, it can reasonably be expected to influence
obligation as a result of a past event exists at the balance sheet
decisions that the primary users of general purpose financial
date, it is probable that an outflow of economic resources will be
statements make on the basis of those financial statements.
required to settle the obligation and a reasonable estimate can be
Basis of consolidation made of the amount of the obligation.
The consolidated financial information includes the financial Subsidiaries and associate companies are defendants in tobacco-
statements of British American Tobacco p.l.c. and its subsidiary related and other litigation. These exposures are regularly reviewed
undertakings, collectively ‘the Group’, together with the Group’s on an on-going basis and provision for this litigation (including legal
share of the results of its associates and joint arrangements. costs) is made at such time as an unfavourable outcome becomes
A subsidiary is an entity controlled by the Group. Non-controlling probable and the amount can be reasonably estimated.
interests represent the share of earnings or equity in subsidiaries that Contingent assets are possible assets whose existence will only
is not attributable, directly or indirectly, to shareholders of the Group. be confirmed by future events not wholly within the control of the
Identifiable assets and liabilities acquired in a business entity and are not recognised as assets until the realisation of
combination are measured at fair value at the date of acquiring income is virtually certain.
control. Disposals of subsidiaries and businesses due to sale or Where a provision has not been recognised, the Group records its
market withdrawal are accounted for as disposals from the date external legal fees and other external defence costs for tobacco-
of losing control and may be classified as held-for-sale disposal related and other litigation as these costs are incurred.
groups at the balance sheet date if specific tests under IFRS 5
Non-current Assets Held For Sale and Discontinued Operations As explained in note 17, certain litigation-related deposits are
are met. Discontinued operations, where applicable, comprise recognised as assets within loans and other receivables where
material disposal groups representing a significant geographical management has determined that these payments represent a
area of operations or business activities. resource controlled by the entity. These deposits are held at the
fair value of consideration transferred less impairment, if applicable,
Associates comprise investments in undertakings, which are not and have not been discounted.
subsidiary undertakings or joint arrangements, where the Group
exercises significant influence. They are accounted for using the Taxation
equity method. Tax is chargeable on the profits for the period, together with deferred
tax. The current income tax charge is calculated on the basis of tax
Joint arrangements comprise contractual arrangements where
laws enacted or substantively enacted at the balance sheet date in
two or more parties have joint control and where decisions regarding
the countries where the Group’s subsidiaries, associates and joint
the relevant activities of the entity require unanimous consent.
arrangements operate and generate taxable income.
Joint ventures are accounted for using the equity method. The
Group accounts for its share of the assets, liabilities, income and Deferred tax is determined using the tax rates that have been
expenses of joint operations. enacted or substantively enacted by the balance sheet date and
are expected to apply when the related deferred tax asset is
Foreign currencies and hyperinflationary territories
realised or deferred tax liability is settled. A deferred tax asset is
The functional currency of the Parent Company is sterling and this recognised only to the extent that it is probable that future taxable
is also the presentation currency of the Group. The income and profits will be available against which the asset can be utilised.
cash flow statements of Group undertakings expressed in
currencies other than sterling are translated to sterling using Tax is recognised in the income statement except to the extent that
exchange rates applicable to the dates of the underlying transactions. it relates to items recognised in other comprehensive income or
Average rates of exchange in each year are used where the average directly in equity, in which case it is recognised in the statement of
rate approximates the relevant exchange rate at the date of the other comprehensive income or the statement of changes in equity.
underlying transactions. Assets and liabilities of Group undertakings The Group has exposures in respect of the payment or recovery of
are translated at the applicable rates of exchange at the end of taxes and the financial statements reflect the probable outcome
each year. In territories where there are restrictions on free access with estimated amounts determined based on the most likely
to foreign currency or multiple exchange rates, the applicable rates amount or the expected value, depending on which method is
of exchange are regularly reviewed. expected to better predict the resolution of the uncertainty.

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Equity instruments Leased assets and lease liabilities

Instruments are classified as either financial liabilities or as equity The Group applies IFRS 16 Leases to contractual arrangements
in accordance with the substance of the contractual which are, or contain, leases of assets. Right-of-use assets are
arrangements. Instruments that cannot be settled in the Group’s included as part of property, plant and equipment in note 13, with
own equity instruments and that include no contractual obligation the lease liabilities included as part of borrowings in note 23. Right-
to deliver cash or another financial asset are classified as equity. of-use lease assets are initially recognised at an amount equal to
Equity instruments issued by the Group are recognised at the the lease liability, adjusted for initial direct costs in relation to the
proceeds received, net of issuance costs. assets, then depreciated over the shorter of the lease term and
Goodwill their estimated useful lives. Lease liabilities are initially recognised
Goodwill in respect of the acquisition of subsidiaries is included in at an amount equal to the present value of estimated contractual
intangible assets, net of impairment, where applicable. In respect lease payments at the inception of the lease, discounted using the
of associates and joint ventures, goodwill is included in the interest rate implicit in the lease if this can be readily determined,
carrying value of the investment in the associated company or or the applicable incremental rate of borrowing, as appropriate.
joint venture. The Group has adopted several practical expedients available
Intangible assets other than goodwill under the Standard including not applying the requirements of
IFRS 16 to leases of intangible assets, and not applying the
The intangible assets shown on the Group balance sheet consist
recognition and measurement requirements of IFRS 16 to leases
mainly of trademarks and similar intangibles, including certain
of less than 12 months maximum duration or to leases of low-value
intellectual property, acquired by the Group’s subsidiary
assets. Except for property-related leases, non-lease components
undertakings and computer software.
have not been separated from lease components.
Acquired trademarks and similar assets are carried at cost less
Impairment of non-financial assets
accumulated amortisation and impairment. Trademarks with
indefinite lives are not amortised but are reviewed annually for Assets are reviewed for impairment whenever events indicate
impairment. Other trademarks and similar assets are amortised that the carrying amount of a cash-generating unit may not be
on a straight-line basis over their remaining useful lives, consistent recoverable. In addition, assets that have indefinite useful lives are
with the pattern of economic benefits expected to be received, tested annually for impairment. An impairment loss is recognised
which do not exceed 20 years. Any impairments of trademarks are to the extent that the carrying value exceeds the higher of the
recognised in the income statement, but increases in trademark asset’s fair value less costs to sell and its value-in-use.
values are not recognised. With effect from 1 January 2024, the A cash-generating unit is the smallest identifiable group of assets
Group’s indefinite-lived combustible trademarks and similar assets that generates cash flows which are largely independent of
will be amortised on a straight-lined basis over periods not the cash flows from other assets or groups of assets. At the
exceeding 30 years. The revision in useful economic life reflects acquisition date, any goodwill acquired is allocated to the relevant
the ongoing challenging macro-economic conditions and revised cash-generating unit or group of cash-generating units expected
forecast in the U.S., with an expected increase in amortisation to benefit from the acquisition for the purpose of impairment
expense of £1.4 billion per annum. The Group's non-combustible testing of goodwill.
trademarks will remain as indefinite-lived assets. Retirement benefit schemes
Computer software is carried at cost less accumulated The Group's subsidiary undertakings operate various funded and
amortisation and impairment, and, with the exception of global unfunded defined benefit schemes, including pension and post-
software solutions, is amortised on a straight-line basis over retirement healthcare schemes, as well as defined contribution
periods ranging from three years to five years. Global software schemes in various jurisdictions.
solutions are software assets designed to be implemented on a The liabilities arising in respect of defined benefit schemes are
global basis and used as a standard solution by all of the operating determined in accordance with the advice of independent,
companies in the Group. Historically, these assets were amortised professionally qualified actuaries, using the projected unit credit
on a straight-line basis over periods not exceeding 13 years. With method. The net deficit or surplus for each defined benefit pension
effect from 1 January 2023, global software solutions are scheme is calculated on the present value of the defined benefit
amortised on a straight-line basis over periods not exceeding obligation at the balance sheet date less the fair value of the
15 years. The revision in useful life is a result of ongoing use of scheme assets adjusted, where appropriate, for any surplus
Global software solutions due to the extension of third-party restrictions or the effect of minimum funding requirements.
supplier support. The estimated impact of this change in
accounting estimate is a reduction in annual amortisation expense Benefits provided through defined contribution schemes are
of £16 million in 2023, with similar reductions expected in 2024 charged as an expense as payments fall due.
and 2025. Financial instruments
Property, plant and equipment The Group’s business model for managing financial assets aims:
Purchased property, plant and equipment are stated at cost less to protect against the loss of principal, to maximise Group liquidity
accumulated depreciation and impairment. Depreciation is by concentrating cash at the centre, to align the maturity profile
calculated on a straight-line basis to write off the assets over their of external investments with that of the forecast liquidity profile,
useful economic life. Purchased freehold and leasehold property to match the interest rate profile of external investments to that
are depreciated at rates between 2.5% and 4% per annum, and of debt maturities or fixings wherever practicable, and to optimise
plant and equipment at rates between 3% and 25% per annum. the investment yield within the Group’s investment parameters.
The majority of financial assets are held in order to collect
No depreciation is provided on freehold land or assets classified contractual cash flows (typically cash and cash equivalents and loans
as held-for-sale. Non-current assets are classified as held-for sale and other receivables), but some assets (typically investments)
if their carrying value will be recovered principally through a sale are held for investment potential.
transaction rather than through continuing use and if all of the
conditions of IFRS 5 are met. Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
relevant instrument and derecognised when it ceases to be a party
to such provisions.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

Non-derivative financial assets are classified on initial – for derivatives that are designated as hedges of net investments
recognition in accordance with the Group’s business model as in foreign operations, the changes in their fair values are
investments, loans and receivables, or cash and cash equivalents recognised directly in other comprehensive income, to the
and accounted for as follows: extent that they are effective, with the ineffective portion being
– Investments: these are non-derivative financial assets that recognised in the income statement. Where non-derivatives
cannot be classified as loans and other receivables or cash such as foreign currency borrowings are designated as net
and cash equivalents. Dividend and interest income on these investment hedges, the relevant exchange differences are
investments are included within finance income when the Group’s similarly recognised. The accumulated gains and losses are
right to receive payments is established. This category includes reclassified to the income statement when the foreign operation
financial assets at fair value through profit and loss and financial is disposed of; and
assets at fair value through other comprehensive income. – for derivatives that do not qualify for hedge accounting or are
– Loans and other receivables: these are non-derivative financial not designated as hedges, the changes in their fair values are
assets with fixed or determinable payments that are solely recognised in the income statement in the period in which
payments of principal and interest on the principal amount they arise. These are referred to as ‘held-for-trading’.
outstanding, that are primarily held in order to collect In order to qualify for hedge accounting, the Group is required to
contractual cash flows. These balances are measured at demonstrate an assessment of the economic relationship between
amortised cost, using the effective interest rate method, and the item being hedged and the hedging instrument, which shows
stated net of allowances for credit losses, and include trade that the hedge will be highly effective on an ongoing basis. This
and other receivables, and deposits with banks and other effectiveness testing is re-performed periodically to ensure that
financial institutions which cannot be classified as cash and the hedge has remained, and is expected to remain, highly
cash equivalents. In addition, as explained in note 17, certain effective. Hedge accounting is discontinued when a hedging
litigation related deposits are recognised as assets within loans instrument is derecognised (e.g. through expiry or disposal), or no
and other receivables where management has determined that longer qualifies for hedge accounting. Where the hedged item is a
these payments represent a resource controlled by the entity as highly probable forecast transaction, the related gains and losses
a result of past events. These deposits are held at the fair value remain in equity until the transaction takes place, when they are
of consideration transferred less impairment, if applicable, and reclassified to the income statement in the same manner as for
have not been discounted. cash flow hedges as described above. When a hedged future
– Cash and cash equivalents: cash and cash equivalents include transaction is no longer expected to occur, any related gains and
cash in hand and deposits held on call, together with other short- losses, previously recognised in other comprehensive income,
term highly liquid investments including investments in certain are immediately reclassified to the income statement.
money market funds. Derivative fair value changes recognised in the income statement
Fair values for quoted investments are based on observable are either reflected in arriving at profit from operations
market prices. If there is no active market for a financial asset, the (if the hedged item is similarly reflected) or in finance costs.
fair value is established by using valuation techniques principally Impairment of financial assets held at amortised cost
involving discounted cash flow analysis. Loss allowances for expected credit losses on financial assets
Non-derivative financial liabilities, including borrowings and trade which are held at amortised cost are recognised on initial
payables, are stated at amortised cost using the effective interest recognition of the underlying asset. As permitted by IFRS 9
method. For borrowings, their carrying value includes accrued Financial Instruments, loss allowances on trade receivables arising
interest payable, as well as unamortised issue costs. Drawdowns from the recognition of revenue under IFRS 15 Revenue from
and repayments of short-term borrowings which have a maturity Contracts with Customers are initially measured at an amount
period of three months or less are stated net in the cash flow equal to lifetime expected losses. Allowances in respect of loans
statement; drawdowns and repayments on all other borrowings and other receivables are initially recognised at an amount equal
are stated gross in the cash flow statement. Current liabilities to 12-month expected credit losses. Allowances are measured at
include amounts where the entity does not have an unconditional an amount equal to the lifetime expected credit losses where
right to defer settlement of the liability for at least 12 months after the credit risk on the receivables increases significantly after
the balance sheet date. As shown in note 23, certain borrowings are initial recognition.
subject to fair value hedges, as defined below. Revenue
Derivative financial assets and liabilities are initially recognised, Revenue principally comprises sales of cigarettes, other tobacco
and subsequently measured, at fair value, which includes accrued products, and nicotine products, to external customers. Revenue
interest receivable and payable where relevant. Changes in their excludes duty, excise and other taxes related to sales in the period
fair values are recognised as follows: and is stated after deducting rebates, returns and other similar
– for derivatives that are designated as cash flow hedges, the discounts and payments to direct and indirect customers.
changes in their fair values are recognised directly in other For the vast majority of the Group’s sales, revenue is recognised
comprehensive income, to the extent that they are effective, when control of the goods is transferred to a customer at a point
with the ineffective portion being recognised in the income in time; this is usually evidenced by a transfer of the significant
statement. Accumulated gains and losses are reclassified to risks and rewards of ownership upon delivery to the customer,
the income statement in the same periods as the hedged item, which in terms of timing is not materially different to the date of
unless the hedged item results in a non-financial asset where the shipping. For certain e-commerce subscription sales, revenue is
accumulated gains and losses are included in the initial carrying allocated to each component of the subscription, with revenue
value of the asset (basis adjustment); recognised as each component is delivered to the customer.
– for derivatives that are designated as fair value hedges, the These sales are not material to the Group’s results.
carrying value of the hedged item is adjusted for the fair value
changes attributable to the risk being hedged, with the
corresponding entry being made in the income statement.
The changes in fair value of these derivatives are also recognised
in the income statement;

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Inventories Research and development

Inventories are stated at the lower of cost and net realisable value. Research expenditure is charged to profit or loss in the year
Cost is based on the weighted average cost incurred in acquiring in which it is incurred. Development expenditure is charged
inventories and bringing them to their existing location and to profit or loss in the year it is incurred, unless it meets the
condition, which will include raw materials, direct labour and recognition criteria of IAS 38 Intangible Assets to be capitalised
overheads, where appropriate. Net realisable value is the as an intangible asset.
estimated selling price less costs to completion and sale. Tobacco Capitalised interest
inventories which have an operating cycle that exceeds 12 months Borrowing costs which are directly attributable to the acquisition,
are classified as current assets, consistent with recognised construction or production of intangible assets or property, plant
industry practice. and equipment that takes a substantial period of time to get ready
Segmental analysis for its intended use or sale, are capitalised as part of the cost of
The Group is organised and managed on the basis of its the asset.
geographic regions. These are the reportable segments for the Biological Assets
Group as they form the focus of the Group’s internal reporting The investments in associates and joint ventures shown
systems and are the basis used by the chief operating decision in the Group balance sheet include biological assets held by
maker, identified as the Management Board, for assessing Organigram Holdings Inc. In accordance with IAS 41 Agriculture, the
performance and allocating resources. While the Group has clearly Group measures biological assets at fair value less costs to sell up
differentiated brands, global segmentation between a wide to the point of harvest, at which point this becomes the basis for
portfolio of brands is not part of the regular internally reported the cost of finished goods inventories after harvest with
financial information. The results of New Category products are subsequent expenditures incurred on these being capitalised,
reported as part of the results of each geographic region. where applicable, in accordance with IAS 2 Inventories. Unrealised
Adjusting items fair value gains and losses arising during the growth of biological
Adjusting items are significant items of income or expense in assets are recognised immediately in the income statement.
revenue, profit from operations, net finance costs, taxation and Dividends
the Group’s share of the post-tax results of associates and joint The Company pays interim quarterly dividends, and the Group
ventures which individually or, if of a similar type, in aggregate, are recognises the interim dividend in the period in which it is paid.
relevant to an understanding of the Group’s underlying financial
performance because of their size, nature or incidence. In Repurchase of share capital
identifying and quantifying adjusting items, the Group consistently When share capital is repurchased, the amount of consideration
applies a policy that defines criteria that are required to be met for paid, including directly attributable costs, is recognised as a
an item to be classified as adjusting. These items are separately deduction from equity. Repurchased shares which are not
disclosed in the segmental analyses or in the notes to the cancelled, or shares purchased for the employee share ownership
accounts as appropriate. trusts, are classified as treasury shares and presented as a
deduction from total equity.
The Group believes that these items are useful to users of the Group
financial statements in helping them to understand the underlying Future changes to accounting policies
business performance and are used to derive the Group’s principal Certain changes to IFRS will be applicable to the Group financial
non-GAAP measures of adjusted profit from operations and statements in future years, but are not expected to have a material
adjusted diluted earnings per share, all of which are before the effect on reported profit or equity or on the disclosures in the
impact of adjusting items and which are reconciled from profit financial statements.
from operations and diluted earnings per share.
Other accounting policies:
Share-based payments
– The Group has equity-settled and cash-settled share-based
compensation plans.
– Equity-settled share-based payments are measured at fair value
at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed over
the vesting period, based on the Group’s estimate of awards that
will eventually vest. For plans where vesting conditions are based
on total shareholder returns, the fair value at date of grant
reflects these conditions, whereas earnings per share vesting
conditions are reflected in the calculation of awards that will
eventually vest over the vesting period.
– For cash-settled share-based payments, a liability equal to the
portion of the services received is recognised at its current fair
value determined at each balance sheet date.
– Fair value is measured by the use of the Black-Scholes option
pricing model, except where vesting is dependent on market
conditions when the Monte-Carlo option pricing model is used.
The expected life used in the models has been adjusted, based
on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural
considerations.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

1
2 Segmental analyses (revised)
The chief operating decision maker, the Management Board, reviews adjusted profit from operations at constant currencies to
evaluate segment performance and allocate resources to the overall business on a geographic region basis, including the results of
New Categories (comprising Vapour products, Heated Products and Modern Oral products), which are reported to the Management
Board as part of the results of each geographic region. The Management Board also reviews, at constant currencies, revenues on a
geographic region basis, which are included within adjusted profit from operations.
As part of plans to reduce complexity and drive efficiency in management structures and achieve a better balance in the scale of the
Group's regions, the management structure was reduced from four regions to three regions, with the new organisational structures
in place beginning April 2023 as follows:
– Americas and Europe (AME), comprising largely the former Europe region with the inclusion of the markets in Latin America and
Canada that were part of the former AmSSA region;
– Asia-Pacific, Middle East and Africa (APMEA) comprising the former APME region with the inclusion of the markets in Sub-Saharan
Africa. Armenia, Azerbaijan, Caucasus, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan and Uzbekistan that were
part of the former Europe region are now included as part of APMEA; and
– the U.S. has remained unchanged.
The three geographic regions are the reportable segments for the Group as they form the focus of the Group’s internal reporting
systems and are the basis used by the Management Board for assessing performance and allocating resources. Transactions between
Group subsidiaries are conducted on arm’s length terms in accordance with appropriate transfer pricing rules and Organisation for
Economic Cooperation & Development (OECD) principles. Net finance costs (comprising interest income and interest expense), share
of post-tax results of associates and joint ventures and taxation are centrally managed, and accordingly, such items are not presented
by segment as they are excluded from the measure of segment profitability.
Regional Directors are responsible for delivering the operating and financial results of their Region inclusive of all product categories.
Therefore, the results of New Categories (comprising Vapour products, Heated Products and Modern Oral products) are reported to
the Management Board as part of the results of each geographic region.
However, additional information has been provided to disaggregate revenue based on product category to enable investors to better
compare the Group’s business performance across periods and by reference to the Group’s investment activity.
In respect of the U.S. region, all financial statements and financial information provided by or with respect to the U.S. business or
Reynolds American Inc. (RAI) (and/or RAI and its subsidiaries (collectively, the ‘Reynolds Group’)) are prepared on the basis of U.S. GAAP
and constitute the primary financial statements or financial information of the U.S. business or RAI (and/or the Reynolds Group). Solely for
the purpose of consolidation within the results of BAT p.l.c. and the BAT Group, this financial information is then converted to IFRS. To
the extent any such financial information provided in these financial statements relates to the U.S. business or RAI (and/or the Reynolds
Group), it is provided as an explanation of the U.S. business’s or RAI’s (and/or the Reynolds Group’s) primary U.S. GAAP based financial
statements and information.
The following table shows 2023 revenue at 2023 rates of exchange, and 2023 revenue translated using 2022 rates of exchange. The 2022
figures are stated at the 2022 rates of exchange.
2023 2022
Revenue Revenue Revenue
constant Translation current current
rates exchange rates rates
£m £m £m £m
U.S. 12,065 (71) 11,994 12,639
AME 9,989 (198) 9,791 9,287
APMEA 6,042 (544) 5,498 5,729
Revenue 28,096 (813) 27,283 27,655
Note:
1. Effective from 2023, the Group revised its regional structure from four regions to three, with the comparator data provided on this revised basis.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The following table shows 2022 revenue at 2022 rates of exchange, and 2022 revenue translated using 2021 rates of exchange. The 2021
figures are stated at the 2021 rates of exchange.
2022 2021
Revenue Revenue Revenue
constant Translation current current
rates exchange rates rates
£m £m £m £m
U.S. 11,358 1,281 12,639 11,691
AME 9,119 168 9,287 8,444
APMEA 5,796 (67) 5,729 5,549
Revenue 26,273 1,382 27,655 25,684

The following table shows 2023 loss from operations and adjusted profit from operations at 2023 rates of exchange, and 2023 adjusted
profit from operations using 2022 rates of exchange.
2023
Adjusted* Adjusted*
segment segment Segment
result result result
constant Translation current Adjusting* current
rates exchange rates items rates
£m £m £m £m £m
U.S. 6,863 (42) 6,821 (27,602) (20,781)
AME 3,547 (87) 3,460 (266) 3,194
APMEA 2,379 (195) 2,184 (348) 1,836
Profit/(loss) from operations 12,789 (324) 12,465 (28,216) (15,751)
Net finance costs (1,895)
Share of post-tax results of associates and joint ventures 585
Loss before taxation (17,061)
Taxation on ordinary activities 2,872
Loss for the year (14,189)
Note:
* The adjustments to profit from operations are explained in notes 3, 4, 5(a), 6(d), 6(f), 6(h), 6(j) and 7.

The following table shows 2022 profit from operations and adjusted profit from operations at 2022 rates of exchange, and 2022 adjusted
profit from operations using 2021 rates of exchange.
2022
Adjusted*
segment Adjusted*
result segment Segment
constant Translation result current Adjusting* result current
rates exchange rates items rates
£m £m £m £m £m
U.S. 6,095 740 6,835 (630) 6,205
AME 3,268 80 3,348 (422) 2,926
APMEA 2,263 (38) 2,225 (833) 1,392
Profit from operations 11,626 782 12,408 (1,885) 10,523
Net finance costs (1,641)
Share of post-tax results of associates and joint ventures 442
Profit before taxation 9,324
Taxation on ordinary activities (2,478)
Profit for the year 6,846
Note:
* The adjustments to profit from operations are explained in notes 3, 4, 5(a), 6(d), 6(f), 6(h), 6(i), 6(j), and 7.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

The following table shows 2021 profit from operations and adjusted profit from operations at the 2021 rates of exchange.
2021
Adjusted*
segment Adjusting* Segment
result items result
£m £m £m
U.S. 5,887 (321) 5,566
AME 3,059 (157) 2,902
APMEA 2,204 (438) 1,766
Profit from operations 11,150 (916) 10,234
Net finance costs (1,486)
Share of post-tax results of associates
and joint ventures 415
Profit before taxation 9,163
Taxation on ordinary activities (2,189)
Profit for the year 6,974
Note:
* The adjustments to profit from operations are explained in notes 3, 4, 6(d), 6(f), 6(g) and 7.

Depreciation, amortisation and impairment charges

Adjusted profit from operations at constant rates of exchange of £12,789 million (2022 at constant rates: £11,626 million; 2021 at current
rates: £11,150 million) excludes adjusting depreciation, amortisation and impairment charges as explained in notes 4 and 7. These are
excluded from segmental adjusted profit from operations as per table below. 2023 and 2022 are disclosed at constant rates of exchange
and 2021 is disclosed at current rate of exchange.

2023
Adjusted
depreciation, Adjusted
amortisation depreciation, Depreciation,
and amortisation amortisation
impairment and and
constant Translation impairment Adjusting impairment
rates exchange current rates items current rates
£m £m £m £m £m
U.S. 218 — 218 27,518 27,736
AME 333 3 336 44 380
APMEA 218 (13) 205 293 498
769 (10) 759 27,855 28,614

2022
Adjusted
depreciation, Adjusted
amortisation depreciation, Depreciation,
and amortisation amortisation
impairment and and
constant Translation impairment Adjusting impairment
rates exchange current rates items current rates
£m £m £m £m £m
U.S. 221 16 237 322 559
AME 363 10 373 116 489
APMEA 186 4 190 67 257
770 30 800 505 1,305

2021
Adjusted
depreciation, Depreciation,
amortisation amortisation
and Adjusting and
impairment items impairment
£m £m £m
U.S. 203 276 479
AME 333 56 389
APMEA 188 20 208
724 352 1,076

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Additional information by product category

Although the Group’s operations are managed on a Regional basis, additional information for revenue is provided based on product
category as follows:
2023 2022 2021
Revenue £m £m £m
New Categories 3,347 2,894 2,054
Vapour 1,812 1,436 927
HP 996 1,060 853
Modern Oral 539 398 274
Traditional Oral 1,163 1,209 1,118
Combustibles 22,108 23,030 22,029
Other 665 522 483
Revenue 27,283 27,655 25,684
External revenue and non-current assets other than financial instruments, deferred tax assets and retirement benefit assets are analysed
between the UK and all foreign countries at current rates of exchange as follows:
United Kingdom All foreign countries Group
2023 2022 2021 2023 2022 2021 2023 2022 2021
Revenue is based on location of sale £m £m £m £m £m £m £m £m £m
External revenue 255 228 209 27,028 27,427 25,475 27,283 27,655 25,684

United Kingdom All foreign countries Group

2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Intangible assets 447 529 95,115 128,546 95,562 129,075
Property, plant and equipment 362 215 4,221 4,652 4,583 4,867
Investments in associates and joint ventures — — 1,970 2,020 1,970 2,020

The consolidated results of the Reynolds Group operating in the U.S. met the criteria for separate disclosure under the requirements
of IFRS 8 Operating Segments. Revenue arising from the operations of the Reynolds Group, inclusive of the sales made to fellow Group
companies, in 2023, 2022 and 2021 was £11,985 million, £12,635 million and £11,707 million, respectively. The majority of sales are to
customers based in the U.S. Non-current assets attributable to the operations of the Reynolds Group were £86,598 million
(2022: £119,707 million).
The main acquisitions comprising the goodwill balance of £41,091 million (2022: £47,956 million), included in intangible assets, are
provided in note 12. Included in investments in associates and joint ventures are amounts of £ 1,851 million (2022: £1,865 million)
attributable to the investment in ITC Ltd. Further information is provided in notes 9 and 14.
3 Employee benefit costs
2023 2022 2021
Note £m £m £m
Wages and salaries 2,263 2,553 2,315
Social security costs 219 201 185
Other pension and retirement benefit costs 15 108 133 139
Share-based payments - equity and cash-settled 28 74 85 78
2,664 2,972 2,717

Included within employee benefits costs is a credit in relation to the Group’s restructuring and integration initiatives of £26 million
(2022: £315 million charge; 2021: £160 million charge), as explained in note 7.
Following a partial buy-out in 2021, in 2022, a second partial buy-out was concluded in the U.S. with approximately US$1.6 billion
(£1.3 billion) (2021: US$1.9 billion (£1.4 billion)) of plan liabilities being removed from the balance sheet, resulting in a settlement gain
of £16 million (2021: £35 million), which was reported in the income statement, and recognised as an adjusting item.
4 Depreciation, amortisation and impairment costs
2023 2022 2021
£m £m £m
Intangibles – amortisation and impairment of trademarks and similar intangibles 23,232 317 333
– amortisation and impairment of computer software 125 142 129
– impairment of goodwill 4,614 — 57
Property, plant and equipment - depreciation and impairment 643 846 557
28,614 1,305 1,076

Enumerated below are movements in costs that have impacted depreciation, amortisation and impairment in 2023, 2022 and 2021.
These include changes in the Group's underlying business performance, as well as impact of adjusting items, as defined in note 1.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

Intangibles – amortisation and impairment of trademarks and similar intangibles

Acquisitions in previous years have resulted in the capitalisation of trademarks and similar intangibles, including those which
are amortised over their expected useful lives, which do not exceed 20 years. As mentioned in note 12, the amortisation and impairment
of these acquired trademarks and similar intangibles are charged to the income statement of which the adjusting element is
£23,202 million (2022: £288 million; 2021: £306 million). In 2022, included under amortisation and impairment of trademarks and similar
intangibles is a £3 million gain (2021: £nil million) related to a trademark disposal, which has been treated as adjusting.
Impairment of goodwill
The impairment of goodwill is charged to the income statement as adjusting.
During 2023, the Group impaired £4,614 million of goodwill in the U.S., South Africa and Peru, as explained in note 12(b).
During 2022, the Group made no impairments of goodwill.
During 2021, the Group impaired £3 million of goodwill held in Myanmar as a result of the decision to cease activities in the market.
The Group also recognised a goodwill impairment charge of £54 million in 2021 due to continued difficult trading conditions in Peru
as a consequence of the COVID-19 pandemic.
Property, plant and equipment – depreciation and impairment
The following items are included within depreciation and impairment of property, plant and equipment:
– Restructuring and integration related depreciation and impairment costs were a net charge of £39 million (2022: £220 million net cost;
2021: £11 million net credit) comprising an impairment of £46 million for machinery in Reynolds due to the adverse impact from macro-
economic headwinds and industry volume declines in the U.S., as explained in note 12(b)(iv). This was partially offset by depreciation
and impairment costs and reversals resulting from obsolete machines in relation to downsizing and factory rationalisation. These were
treated as adjusting, as mentioned in note 7; and
– Gains and losses recognised on disposal of property, plant and equipment.
5 Other operating income
Other operating income of £432 million (2022: £722 million; 2021: £196 million) comprises income that is associated with the Group’s
normal activities, but which falls outside the definition of revenue and includes gain on one-off transactions, such as capital profits arising
from the disposals of fixed assets, recoveries of indirect taxation and levies paid, and transfers of trademark rights.
(a) Brazil tax matters
In 2023, in Brazil, £150 million of income has been recognised in respect of excise on social contributions, as well as £19 million
(2022: £472 million) in respect of historical VAT on social contributions in Brazil. In 2023 and 2022, such recognised income has been
treated as an adjusting item.
In addition, in 2022, £78 million of the contingent asset in respect of historical VAT on social contributions claims was sold to financial
institutions for £38 million.
In 2021, the Group recognised £5 million in respect of a tax case in Brazil and £130 million of the unrecognised contingent asset in respect
of historical VAT on social contributions claims was sold to financial institutions for £45 million.
(b) Sale and leaseback
In 2023, the Group recognised £15 million of gains arising from a sale and leaseback transaction on excess warehousing capacity
in Argentina.
(c) Reynolds
In 2021, R.J. Reynolds Tobacco Company (RJRT) reached an agreement with several Master Settlement Agreement (MSA) states to
waive RJRT’s claims under the MSA in connection with a settlement between those MSA states and a non-participating manufacturer,
S&M Brands, Inc. (S&M Brands), under which the states released certain claims against S&M Brands in exchange for receiving a portion
of the funds S&M Brands had deposited into escrow accounts in those states pursuant to the states’ escrow statutes. In consideration
for waiving claims, RJRT, together with Santa Fe Natural Tobacco Company, received approximately £40 million from the escrow funds
paid to those MSA states under their settlement with S&M Brands.
(d) Other
In 2023, £85 million (2022: £27 million; 2021: £nil million) of income has been recognised in respect of the transfer of non-strategic
trademark rights, which had not previously been capitalised, to third parties.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

6 Other operating expenses

(a) Items included within other operating expenses
The following items are included within other operating expenses:
2023 2022 2021
Notes £m £m £m
Other operating expenses 7,538 9,018 7,468
The following items are included within other operating expenses:
Master Settlement Agreement and State Settlement Agreements 6(b),(d) 2,023 2,387 2,486
Marketing costs in operating expenses 6(c) 1,152 1,160 1,242
Inventory write-offs 20 250 250 215
Research and development expenses (excluding employee benefit costs 6(e)
181 138 141
and depreciation)
Loss/(gain) on disposal of businesses 6(f) 546 (6) 358
Excise, VAT and penalties in respect of disputes in Türkiye and South
6(g) — — 26
Korea
Charges in respect of DOJ and OFAC investigation 6(h) 75 450 —
(Reversals)/charges in respect of assets held-for-sale 6(j) (195) 612 —
Charges in respect of Nigerian FCCPC case 6(i) — 79 —
Brazil other taxes 6(k) 49 12 —
Exchange differences 17 92 19
Hedge ineffectiveness within operating profit (12) 36 (5)
Expenses relating to short-term leases 13 11 8
Expenses relating to leases of low-value assets 1 1 1
Auditor’s remuneration 6(m) 29 29 27

(b) Master Settlement Agreement and State Settlement Agreements

In 1998, the major U.S. cigarette manufacturers (including the R.J. Reynolds Tobacco Company, Lorillard and Brown & Williamson,
businesses which are now part of the Reynolds Group) entered into the Master Settlement Agreement (MSA) with attorneys general
representing most U.S. states and territories. The MSA imposes a perpetual stream of future payment obligations on the major U.S.
cigarette manufacturers. The amounts of money that the participating manufacturers are required to annually contribute are based upon,
amongst other things, the volume of cigarettes sold and market share (based on cigarette shipments in that year). The MSA has been
subject to certain adjustments since 1998, including agreements related to the Non-Participating Manufacturer (NPM) adjustment under
the MSA reached with various U.S. states between 2012 and 2023.
The amounts payable by Group companies under the arrangement accrue as and when shipments of tobacco products are made.
Adjustments to amounts due in relation to past payments are typically received in the form of credits offsettable only against current or
future performance obligations. Unless credits have been realised by way of cash refund or by offset against liabilities due, they are treated
as contingent assets until realised. Credits in respect of future years’ payments and the NPM adjustment claims would be accounted for
in the applicable year and will not be treated as adjusting items. Only credits in respect of prior year payments are included as adjusting
items.
The charge in each reporting period and the cashflow impact in the same period are not directly related, as the MSA is generally settled
once a year in April of the following year.
The BAT Group is subject to substantial payment obligations under the MSA and the state settlement agreements with the States of
Mississippi, Florida, Texas and Minnesota (such settlement agreements, collectively State Settlement Agreements). Reynolds Group’s
operating subsidiaries’ expenses and payments under the MSA and the State Settlement Agreements for 2023 amounted to
US$2,516 million (2022: US$2,951 million; 2021: US$3,420 million) in respect of settlement expenses and US$2,874 million (2022:
US$3,129 million; 2021: US$3,744 million) in respect of settlement cash payments.
2023 2022 2021
Note US$m £m US$m £m US$m £m
Opening MSA liability 25 2,637 2,193 2,815 2,079 3,139 2,296
Settlement expense 31 2,516 2,023 2,951 2,387 3,420 2,486
Cash paid 31 (2,874) (2,311) (3,129) (2,531) (3,744) (2,722)
Difference on exchange — (117) — 258 — 19
Closing MSA liability 25 2,279 1,788 2,637 2,193 2,815 2,079

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Financial Statements

Notes on Accounts
Continued

Non-Participating Manufacturer adjustments

During 2012, R.J. Reynolds Tobacco Company, Santa Fe Natural Tobacco Company (SFNTC), various other tobacco manufacturers,
17 states, the District of Columbia and Puerto Rico reached an agreement related to the Non-Participating Manufacturer (NPM)
adjustment under the MSA, and three more states joined the agreement in 2013. Under this agreement, R.J. Reynolds Tobacco Company
has received credits of more than US$1 billion, in respect of its Non-Participating Manufacturer (NPM) Adjustment claims related to the
period from 2003 to 2012. These credits have been applied against the companies’ MSA payments over a period of five years from 2013,
subject to, and dependent upon, meeting the various ongoing performance obligations. During 2014, two additional states agreed to settle
NPM disputes related to claims for the period 2003 to 2012. R.J. Reynolds Tobacco Company has received US$170 million in credits, which
has been applied over a five-year period from 2014. During 2015, another state agreed to settle NPM disputes related to claims for the
period 2004 to 2014 and included a method to determine future adjustments from 2015 forward. R.J. Reynolds Tobacco Company has
received US$285 million in credits, which was applied over a four-year period from 2016. During 2016, no additional states agreed to settle
NPM disputes. During 2017, two more states agreed to settle NPM disputes related to claims for the period 2004 to 2014. R.J. Reynolds
Tobacco Company has received US$61 million in credits through the 2020 fiscal year. During 2018, nine more states agreed to settle NPM
disputes related to claims for the period 2004 to 2019, with an option through 2022, subject to certain conditions. R.J. Reynolds Tobacco
Company has received US$182 million in credits for settled periods through 2017. Also, in 2018, one additional state agreed to settle NPM
disputes related to claims for the period 2004 to 2024, subject to certain conditions. R.J. Reynolds Tobacco Company has received
US$205 million in credits for settled periods through 2022. In the first quarter of 2020, certain conditions set forth in the 2017 and 2018
agreements were met for those 10 states. In 2022, an additional state settled NPM disputes related to claims for the period 2005 to 2028.
It is estimated that R.J. Reynolds Tobacco Company will receive a credit of US$130 million for settled periods through 2018, which will be
applied over a five-year period from 2022. In 2023, an additional state settled NPM disputes related to claims for the period 2005 to 2029.
It is estimated that R.J. Reynolds Tobacco Company will receive a credit of US$29 million for settled periods through 2018, which will be
applied over a five-year period from 2024.
State Settlement Agreements
In 2020, R.J. Reynolds Tobacco Company recognised additional expenses under the state settlement agreements in the States
of Mississippi, Florida, Texas and Minnesota. R.J. Reynolds Tobacco Company recognised US$241 million of expense for payment
obligations to the State of Florida for the ITG Brands, LLC acquired brands from the date of divestiture, June 12, 2015, as a result of
an unfavourable judgment. In addition, R.J. Reynolds Tobacco Company recognised US$264 million related to the resolution of claims
against it in the States of Texas, Minnesota and Mississippi for payment obligations to those states for the ITG Brands, LLC acquired
brands from the date of divestiture. Finally, R.J. Reynolds Tobacco Company settled certain related claims with Phillip Morris USA
under the state settlement agreements in the states of Mississippi, Texas and Minnesota for US$8 million. During 2021, an additional
US$17 million expense was recognised in relation to the final resolution of the Texas and Minnesota claims. Additional information related
to the resolution of these claims is included in notes 6(d) and 31. In 2022, R.J. Reynolds Tobacco Company recognised US$37 million
in additional expenses related to a settlement with Philip Morris USA resolving prior operating profit disputes under the MSA related
to the ITG Brands, LLC acquired brands.
(c) Marketing costs recognised as operating expenses
Certain marketing activities, such as discounts or allowances provided to customers, are required to be deducted from revenue as
explained in note 1. Other marketing expenses, such as point of sale and promotional materials, media advertising and sponsorship,
and consumer research, are reported as operating expenses and have been shown in the table above.
(d) Litigation costs
Litigation costs included within other operating expenses, and reported as an adjusting item, were £96 million (2022: £170 million;
2021: £54 million) predominantly related to litigation costs including Engle progeny and other health-related claims. Included in 2023
is an NPM credit of £6 million recognised for the settlement with the state of Iowa.
In 2022, the Group received £26 million of NPM credits related to a favourable resolution in respect of MSA litigation in the state of Illinois.
During 2021, a £12 million expense was recognised in relation to the final resolution of the Texas and Minnesota claims, under the state
settlement agreements, for payment obligations related to brands previously sold to a third party.
(e) Research and development
Total research and development costs, including employee benefit costs and depreciation, are £408 million (2022: £323 million;
2021: £304 million).
(f) Loss on disposal of businesses
On 13 September 2023, the Group disposed of its Russian and Belarusian businesses in compliance with international and local laws. The
Group had two subsidiaries in Russia ("BAT Russia"), being JSC British American Tobacco-SPb and JSC 'International Tobacco Marketing
Services', and one subsidiary in Belarus, International Tobacco Marketing Services BY. As explained in note 27(d)(i), net held-for-sale
assets of £770 million were disposed of for proceeds of £425 million, with an impairment charge of £345 million recorded at that time.
As discussed in note 6(j), the impairment charge recognised in 2022 of £554 million (net of £14 million utilised during the year) was
reversed and offset by the above mentioned £345 million recorded at the date of sale, with a net reversal of impairment recognised of
£195 million.
The loss on disposal of businesses included within other operating expenses and recognised as an adjusting item in 2023 is a charge of
£548 million and includes £554 million of foreign exchange reclassified from other comprehensive income (note 22(c)(i)) and associated
costs of £3 million partially offset by a realised foreign exchange gain on the proceeds received of £9 million.
The total net impact after the partial reversal and loss on disposal recognised in 2023 was therefore £353 million.
On 6 August 2021, the Group disposed of its Iranian subsidiary, B.A.T. Pars Company PJSC (BAT Pars). Included within other operating
expenses, and recognised as an adjusting item in 2021, was a charge of £358 million comprising £272 million of foreign exchange
reclassified from other comprehensive income (note 22(c)(i)) and an impairment charge and associated costs of £88 million. In 2022,
as a result of the unwind of discounting on the deferred proceeds and a true-up on the completion of accounts, a credit of £6 million
(2021: £2 million) was recognised. In 2023, a credit of £2 million arising from the revaluation of the receivable was recognised.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

(g) Tax disputes in Türkiye and South Korea

The settlement of tax disputes in Türkiye and South Korea were recognised as adjusting items.
Türkiye
British American Tobacco Tutun Mamulleri Sanayi ve Ticaret Anonim Sirketi (BAT Tutun) was subject to a series of tax audits mainly on
inventory movements for the years 2015, 2016 and 2019. In August 2021, BAT Tutun applied under the relevant tax amnesty law to settle its
retrospective tax assessments. Based on the settlement through the tax amnesty procedure, in 2021, BAT Tutun agreed to pay £47 million
in 18 instalments from 1 November 2021 until 31 July 2024. Of the £47 million, £30 million of excise and penalties were recognised and
charged to operating profit, £11 million as interest in net finance costs (note 8(b)) and £6 million in taxation.
South Korea
As explained in note 31, on 16 September 2021, Rothmans Far East B.V. Korea Branch Office received £4 million in relation to a VAT case.
In line with the treatment of the associated expense incurred in 2016, the cash received was recognised as an adjusting item in 2021.
(h) Charges in respect of DOJ and OFAC investigations
From time to time, the Group investigates, and becomes aware of governmental authorities’ investigations into allegations of
misconduct, including alleged breaches of sanctions and allegations of corruption, against Group companies. Some of these allegations
are currently being investigated. The Group cooperates with the authorities, where appropriate.
On 25 April 2023, the Group announced that it had reached an agreement with the DOJ and OFAC to resolve previously disclosed
investigations into suspicions of sanctions breaches. These concerned business activities relating to the Democratic People’s Republic
of Korea between 2007 and 2017. The Company entered into a three-year deferred prosecution agreement (DPA) with the DOJ and a civil
settlement agreement with OFAC. The DOJ’s charges against the Company − one count of conspiring to commit bank fraud and one
count of conspiring to violate sanctions laws − were filed and will later be dismissed if the Company abides by the terms of the DPA.
In addition, a BAT subsidiary in Singapore, British-American Tobacco Marketing (Singapore) Private Limited, pleaded guilty to the same
charges. The total amount payable to the U.S. authorities is US$635 million plus interest.
Having recognised an initial provision of £450 million (US$540 million) in 2022, the Group has recognised an additional charge of
£75 million in 2023. Refer to notes 24 and 25 for further details. Both charges are included within other operating expenses and
recognised as an adjusting item in 2023 and 2022.
(i) Charges in respect of Nigerian FCCPC case
In 2022, a charge of £79 million was recognised within other operating expenses, and treated as an adjusting item, relating to the conclusion
of the investigation into alleged violations of the Nigerian Competition and Consumer Protection Act and National Tobacco Control Act.
(j) Reversals/charges in respect of assets held-for-sale
On 11 March 2022, the Group announced the intention to transfer its Russian business in full compliance with international and local laws.
At that time, the Group had two subsidiaries in Russia (BAT Russia), being JSC British American Tobacco-SPb and JSC International
Tobacco Marketing Services. In September 2023, the Group formally entered into an agreement to sell the Group's Russian and Belarusian
businesses to a consortium led by then members of BAT Russia’s Management team, in compliance with local and international laws. As
previously announced, due to operational dependencies between BAT Russia and the Group’s subsidiary in Belarus (International Tobacco
Marketing Services BY) (BAT Belarus), the Belarusian business was included in the sale. The transaction was completed on 13 September
2023 and, since completion, the buyer consortium has wholly owned both businesses. These businesses are now known as the ITMS Group.
In accordance with IFRS 5 Non-current Assets Held For Sale and Discontinued Operations, the assets and liabilities of these subsidiaries
were classified as held-for-sale at 31 December 2022 and presented as such on the balance sheet at an estimated fair value less costs to
sell. An impairment charge of £554 million (and associated costs of £58 million) was recognised in other operating expenses as adjusting
items in 2022. During 2023, the previously recognised impairment was reversed (net of £14 million impairment utilised), offset by the net
£345 million (being the impairment arising on disposal of £770 million net assets for sales proceeds of £425 million). This resulted in a net
partial reversal of £195 million. This has been treated as a non-cash adjusting item. Further information on the sale of the Russian and
Belarusian businesses can be found in note 6(f) and note 27(d)(i).
(k) Brazil other taxes
Since 2017, Souza Cruz LTDA (BAT Brazil) has been involved in a legal case over whether a 10% tax imposed on a tax benefit associated
with investment grants by the Rio de Janeiro State was constitutional. In October 2023, the Supreme Court concluded on the leading
case’s trial, recognising that the tax was constitutional. This decision has binding effects on all taxpayers. BAT Brazil’s individual lawsuit
has not yet concluded. However, given the decision in the leading case, in 2023, £47 million was recognised in other operating expenses,
as an adjusting item, to reflect the probability of an unfavourable decision. Out of the £47 million, £40 million was reported as provisions
(note 24) and £7 million was reported as trade and other payables.
In addition, a charge of £2 million has been recognised in other operating expenses, as an adjusting item, in respect of social
contributions relating to the Brazil excise case, as mentioned in note 5(a). In 2022, a charge of £12 million was recognised in other
operating expenses, as an adjusting item, in respect of social contributions related to the Brazil VAT case, as mentioned in note 5(a).
(l) Sustainability costs
Included in other expenses are recycling costs in relation to our Take-Back schemes and waste collection costs mandated by Extended
Producer Responsibility (EPR) schemes and similar schemes. EPR schemes are where the producer’s responsibility for a product is
extended to the post-consumer stage of a product’s life cycle. In 2023, these costs amounted to £27 million. There are no meaningful
comparative costs available for prior years.
Also included in other expenses are costs of £2 million in 2023 in relation to the purchase of renewable energy attribute certificates.
In 2023, an extreme weather event caused the destruction of a stock of tobacco leaves in a warehouse. The impact of the write-off of this
inventory is £9 million.

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Financial Statements

Notes on Accounts
Continued

(m) Auditor’s remuneration

2023 2022 2021
£m £m £m
Auditor’s remuneration
Total expense for audit services pursuant to legislation:
– fees to KPMG LLP for Parent Company and Group audit 11.4 9.4 8.7
– fees to KPMG LLP firms and associates for local statutory and Group
9.4 11.0 9.5
reporting audits
Total audit fees expense - KPMG LLP firms and associates 20.8 20.4 18.2
Audit fees expense to other firms 0.2 0.2 0.2
Total audit fees expense 21.0 20.6 18.4
Fees to KPMG LLP firms and associates for other services:
– audit-related assurance services 6.9 7.1 8.0
– other assurance services 0.9 0.9 0.3
– tax advisory services — — —
– tax compliance — — —
– audit of defined benefit schemes of the Company 0.2 0.2 0.4
– other non-audit services — — —
8.0 8.2 8.7

The total auditor’s remuneration to KPMG firms and associates included above are £28.8 million (2022: £28.6 million; 2021: £26.9 million).
Under SEC regulations, the remuneration to KPMG firms and associates of £28.8 million in 2023 (2022: £28.6 million; 2021: £26.9 million)
is required to be presented as follows: audit fees £27.7 million (2022: £27.5 million; 2021: £26.2 million), audit-related fees £0.2 million
(2022: £0.2 million; 2021: £0.4 million), tax fees £nil million (2022: £nil million; 2021: £nil million) and all other fees £0.9 million
(2022: £0.9 million; 2021: £0.3 million). Audit-related fees are in respect of services provided to associated pension schemes. All other fees
are in respect of other assurance services, including those provided over information derived from the financial information systems
subject to audit.
7 Restructuring and integration costs
Restructuring costs reflect the costs incurred as a result of initiatives to improve the effectiveness and the efficiency of the Group as a globally
integrated enterprise. These costs represent additional expenses incurred that are not related to the normal business and day-to-day activities.
These initiatives include the costs associated with Quantum, being a review of the Group’s organisational structure announced in 2019 to simplify
the business and create a more efficient, agile and focused company. In 2022, these also included a review of the Group’s manufacturing
operations. No further Quantum restructuring charges were recognised as adjusting in 2023, following the completion of the Quantum
programme.
The costs of the Group’s initiatives are included in profit from operations under the following headings:
2023 2022 2021
Notes
£m £m £m
Employee benefit costs 3 (26) 315 160
Depreciation, amortisation and impairment costs 4 39 220 (11)
Other operating income 5 — (1) —
Other operating expenses (15) 237 1
(2) 771 150

The adjusting charge in 2022 and 2021 related to the cost of employee packages in respect of Quantum and the ongoing costs associated
with initiatives to improve the effectiveness and efficiency of the Group as a globally integrated organisation. In addition, Quantum
initiatives in certain countries have resulted in the move to above market business models utilising local distributors as importers. As a
consequence, with the cessation of a physical presence in these markets, foreign exchange previously recognised in other comprehensive
income for these countries has been reclassified to the income statement and reported within other operating expenses (note 22(c)(i)).
In 2023, following the completion of the Quantum programme, a credit of £26 million has been recognised due to the reversal of
restructuring provisions recognised in respect of employee packages. In addition, a credit of £7 million was recognised in relation to
impairment reversals associated with the Quantum programme. Included in this is an impairment reversal of £4 million in relation to
machinery in South Africa as the asset can be used by another market in the Group.
In addition, in 2023, an adjusting impairment charge of £46 million has been recognised for machinery in Reynolds due to the adverse
impact from macro-economic headwinds and industry volume decline in the U.S., as explained in note 12(b)(iv).
The reversal recognised in other expenses of £15 million includes unutilised Quantum provisions along with £3 million relating to the release
of a provision originally raised in 2007 relating to site clean up costs in Canada. As no further work is required on the site the remaining
provision has been reversed.
The restructuring costs in 2022 include costs related to factory closures or rationalisation in APMEA, AME and the U.S. and costs
recognised as part of the Group's announced exit from Egypt.
In 2021, included under the Quantum initiatives above is a charge of £27 million, including £4 million for foreign exchange reclassified from
equity (note 22(c)(i)), related to the Group's withdrawal from Myanmar. In addition, as set out in note 4, goodwill in relation to Myanmar
was impaired and charged to the income statement.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The depreciation, amortisation and impairment costs in 2021 included a credit of £25 million due to a partial reversal of previously
estimated impairment following the revision of factory rationalisation initiatives.
Also, in 2021, included within other operating expenses is a credit of £59 million representing the release of an accrual on the successful
conclusion of the dispute with former shareholders of Reynolds American, as explained in note 31.
8 Net finance costs
(a) Net finance costs/(income)
2023 2022 2021
£m £m £m
Interest expense 1,786 1,602 1,436
Interest expense on lease liabilities 30 25 24
Facility fees 19 21 33
Impact of the early repurchase of bonds (note 8(b)) 29 — —
Interest related to adjusting tax payables (note 8(b)) 71 36 31
Fair value changes on derivative financial instruments, hedged items and investments 599 (473) 252
Fair value change on other financial items (note 8(b)) (4) (2) 24
Exchange differences (449) 524 (279)
Finance costs 2,081 1,733 1,521
Interest income under the effective interest method (186) (92) (35)
Finance income (186) (92) (35)
Net finance costs 1,895 1,641 1,486

The Group manages foreign exchange gains and losses and fair value changes on a net basis excluding adjusting items, which are
explained in note 8(b). The derivatives that generate the fair value changes are explained in note 19.
Facility fees principally relate to the Group’s central banking facilities.
In August 2023, the Group completed a tender offer to repurchase sterling-equivalent £3,133 million of bonds, including £43 million
of accrued interest. Further details on the tender offer are provided in note 26. Other net costs directly associated with the early
repurchase of bonds were treated as adjusting items as detailed in note 8(b).
Finance income includes income on cash and cash equivalents of which £97 million (2022: £42 million) relates to restricted cash balances
(see note 21).
(b) Adjusting items included in net finance costs
Adjusting items are significant items in net finance costs which individually or, if of a similar type, in aggregate, are relevant to an
understanding of the Group’s underlying financial performance.
In 2023, in relation to the early repurchase of bonds, the Group incurred a fair value loss of £151 million on debt-related derivatives,
realised a net gain of £129 million arising on the difference between the redemption value and the amortised cost of the bonds, and
incurred other transaction costs of £7 million.
The Group recognised interest on adjusting tax payables of £71 million (2022: £36 million; 2021: £31 million), which included interest
of £60 million (2022: £33 million; 2021: £20 million) in relation to the Franked Investment Income Group Litigation Order (FII GLO)
(note 10(b)), interest of £16 million in relation to a tax provision in the Netherlands, a £3 million credit from the reversal of interest on a tax
provision in relation to the factory closure in Switzerland and a £2 million credit from the reversal of interest on tax provisions related
to Russia. In prior periods, the interest on adjusting tax payables also included £3 million in respect of a potential tax claw back due to
the factory closure in Switzerland in 2022 and an amnesty tax payment of £11 million in Türkiye in 2021.
Included within fair value changes on other financial items are:
(i) In 2021, as part of the disposal of the Group’s operations in Iran (note 27(d)), a provision of £24 million was charged to net finance costs
against non-current investments held at fair value due to the uncertainty around recovery of these funds. In 2022, part of these funds
were recovered and therefore a reversal of the provision of £17 million was recognised in net finance costs. In 2023, a further £4 million
was recovered and recognised in net finance costs; and
(ii) In 2022, £15 million of foreign exchange loss was recognised in net finance costs, arising on the revaluation of foreign currency
balances held in Russia that no longer qualified for hedge accounting due to the proposed sale of the Group's Russian business as
detailed in note 27(d)(i).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

9 Associates and joint ventures

2023 2022 2021
Group’s
Total share Total Group's share Total Group's share
£m £m £m £m £m £m
Revenue 9,412 2,630 9,486 2,675 7,668 2,164
Profit from operations 2,596 783 1,971 622 1,911 567
Net finance income 15 4 21 4 13 2
Profit on ordinary activities
2,611 787 1,992 626 1,924 569
before taxation
Taxation on ordinary activities (664) (194) (595) (176) (499) (147)
Profit on ordinary activities after taxation 1,947 593 1,397 450 1,425 422
Non-controlling interests (28) (8) (27) (8) (22) (7)
Post-tax results of associates and joint
1,919 585 1,370 442 1,403 415
ventures

Enumerated below are movements that have impacted the post-tax results of associates and joint ventures in 2023, 2022 and 2021.
The amounts below were reported as adjusting items under the share of profit from associates in the income statement.
(a) Adjusting items
In 2023, the Group’s interest in ITC Limited (ITC), an associate of the Group in India, decreased from 29.19% to 29.02% (2022: 29.38%
to 29.19%; 2021: 29.42% to 29.38%) as a result of ITC issuing ordinary shares under the ITC Employee Share Option Scheme. The issue
of these shares and change in the Group’s share of ITC resulted in a gain of £40 million (2022: £3 million loss; 2021: £6 million gain), which
is treated as a deemed partial disposal and included in the income statement.
In 2023, ITC recognised a credit in respect of the proceeds received in partial settlement of the insurance claim towards the cost of leaf
tobacco stocks destroyed in a third-party warehouse fire, the Group’s share of which was £2 million.
During the year, the Group impaired the investment in Organigram by £34 million (2022: £59 million) (net of tax), driven primarily by the
decrease in the company’s share price.
As a result of the impairment, the balance relating to goodwill and acquired intangibles associated with the acquisition of Organigram
in March 2021 was reduced to £nil million and therefore no further amortisation charge was incurred during the year (2022: £2 million;
2021: £2 million).
During 2022, the Group decided to cease business activities altogether in Yemen, including participating in the management of the
Group's associates, due to the challenging operating environment in the country. This led to the full impairment of the investment in
the Group's remaining associate in Yemen, United Industries Company Limited, with a charge of £18 million to the income statement.
In 2021, due to a challenging operating environment, the Group had already impaired the investment in Kamaran Industry & Investment
Company, the Group’s other associate in Yemen. This resulted in a charge of £18 million to the income statement.
Also, in 2021, as a result of the liquidation of Tisak d.d., the Group reclassified the foreign exchange previously recognised in other
comprehensive income to the income statement. This resulted in a credit of £2 million to the income statement.
(b) Other financial information
The Group’s share of the results of associates and joint ventures is shown in the table below.
2023 2022 2021
Group’s Group’s Group’s
share share share
£m £m £m
Profit on ordinary activities after taxation
– attributable to owners of the parent 585 442 415
Other comprehensive income:
Items that may be reclassified to profit and loss (107) 6 (17)
Items that will not be reclassified to profit and loss (5) 19 14
Total comprehensive income 473 467 412

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Summarised financial information of the Group’s associates and joint ventures is shown below.
2023
ITC Others Total
£m £m £m
Revenue 6,805 2,607 9,412
Profit on ordinary activities before taxation 2,813 (202) 2,611
Post-tax results of associates and joint ventures 2,121 (202) 1,919
Other comprehensive income (368) (20) (388)
Total comprehensive income 1,753 (222) 1,531

2022
ITC Others Total
£m £m £m
Revenue 7,126 2,360 9,486
Profit on ordinary activities before taxation 2,395 (403) 1,992
Post-tax results of associates and joint ventures 1,761 (391) 1,370
Other comprehensive income 56 32 88
Total comprehensive income 1,817 (359) 1,458

2021
ITC Others Total
£m £m £m
Revenue 5,312 2,356 7,668
Profit on ordinary activities before taxation 1,931 (7) 1,924
Post-tax results of associates and joint ventures 1,427 (24) 1,403
Other comprehensive income (11) — (11)
Total comprehensive income 1,416 (24) 1,392

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

10 Taxation on ordinary activities

(a) Summary of taxation on ordinary activities
2023 2022 2021
£m £m £m
UK corporation tax 32 (3) (25)
Comprising:
– current year tax expense 20 2 1
– adjustments in respect of prior periods 12 (5) (26)
Overseas tax 2,779 2,721 2,401
Comprising:
– current year tax expense 2,804 2,675 2,418
– adjustments in respect of prior periods (25) 46 (17)
Total current tax 2,811 2,718 2,376
Deferred tax (5,683) (240) (187)
Comprising:
– deferred tax relating to origination and reversal of temporary differences (5,577) (174) (29)
– deferred tax relating to changes in tax rates (106) (66) (158)
(2,872) 2,478 2,189

(b) Franked Investment Income Group Litigation Order

The Group is the principal test claimant in an action in the United Kingdom against HM Revenue and Customs (HMRC) in the Franked
Investment Income Group Litigation Order (FII GLO). There were 17 corporate groups in the FII GLO as at 31 December 2023. The case
concerns the treatment for UK corporate tax purposes of profits earned overseas and distributed to the UK.
The original claim was filed in 2003. The trial of the claim was split broadly into issues of liability and quantification. The main liability
issues were heard by the High Court, Court of Appeal and Supreme Court in the UK and the European Court of Justice in the period to
November 2012. The detailed technical issues of the quantification mechanics of the claim were heard by the High Court during May and
June 2014 and the judgment handed down on 18 December 2014. The High Court determined that in respect of issues concerning the
calculation of unlawfully charged corporation tax and advance corporation tax, the law of restitution including the defence on change of
position and questions concerning the calculation of overpaid interest, the approach of the Group was broadly preferred. The conclusion
reached by the High Court would, if upheld, produce an estimated receivable of £1.2 billion for the Group. Appeals on a majority of the
issues were made to the Court of Appeal, which heard the arguments in June 2016. The Court of Appeal determined in November 2016
on the majority of issues that the conclusion reached by the High Court should be upheld. The Supreme Court gave permission for a
number of issues to be appealed in two separate hearings. The first, in February 2020, concerned the time limit for bringing claims. In its
application for permission HMRC sought to reverse established House of Lords’ authorities on which those earlier judgments were
based. They were granted permission to do so by the Supreme Court who divided the appeal into two hearings, the first on the issue of
time limits and the second on the issue of interest and related topics. In November 2020, the Supreme Court handed down its judgment
on the first stage of that appeal. The Supreme Court agreed to overturn its existing case law partially but introduced a new test for
determining whether claims of this type are in time. The case was then remitted to the High Court to apply that new test to the facts.
The judgment from the second hearing was handed down in July 2021. Applying that judgment reduces the value of BAT's FII claim to
approximately £0.3 billion, mainly as the result of the application of simple interest and the limitation to claims for advance corporation
tax offset against lawful corporation tax charges, which is subject to the determination of the remitted timing issue by the High Court
and any subsequent appeal. The High Court hearing on time limits was heard in late November 2023 with judgment handed down in
February 2024. The High Court determined that claims should have been filed within 6 years of June 2000 meaning that BAT’s claims are
in time. It is uncertain whether HMRC will appeal the judgment.
During 2015, HMRC paid to the Group a gross amount of £1,224 million in two separate payments. The payments made by HMRC
have been made without any admission of liability and are subject to refund were HMRC to succeed on appeal. The second payment
in November 2015 followed the introduction of a new 45% tax on the interest component of restitution claims against HMRC. HMRC
held back £261 million from the second payment contending that it represents the new 45% tax on that payment, leading to total cash
received by the Group of £963 million. Actions challenging the legality of the withholding of the 45% tax have been lodged by the Group.
The First Tier Tribunal found in favour of HMRC in July 2017 and the Group’s appeal to the Upper Tribunal was heard in July 2018 and
judgment has not yet been handed down.
The net £0.9 billion held by the Group is higher than the current value of the claim referred to above. Due to the uncertainty of the
amounts and eventual outcome, the Group has not recognised any impact in the Income Statement in the current or prior period. The
receipt, net of the deduction by HMRC, is held within trade and other payables as disclosed in note 25. Any future recognition as income
will be treated as an adjusting item, due to the size of the amount, with interest of £60 million for the 12 months to 31 December 2023
(2022: £33 million; 2021: £20 million) accruing on the balance, which was also treated as an adjusting item.
The final resolution of all issues in the litigation is likely to take a number of years. The Group made interim repayments to HMRC
of £50 million in 2023 and 2022, and intends to make further interim repayments in future periods.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

(c) Factors affecting the taxation charge

The taxation charge differs from the standard rate of corporation tax in the UK of 23.5% for 2023, 19.0%for 2022 and 19.0% 2021.
The major causes of this difference are listed below:
2023 2022 2021
£m % £m % £m %
(Loss)/Profit before tax (17,061) 9,324 9,163
Less: share of post-tax results of associates and joint
(585) (442) (415)
ventures (see note 9)
(17,646) 8,882 8,748
Tax at 23.5% (2022: 19% and 2021: 19%) on the above (4,147) 23.5 1,688 19.0 1,662 19.0
Factors affecting the tax rate:
Tax at standard rates other than UK corporation tax rate 619 (3.5) 397 4.5 319 3.6
Other national tax charges 310 (1.8) 244 2.7 184 2.1
Permanent differences 845 (4.8) 83 0.9 87 1.0
Overseas withholding taxes 179 (1.0) 156 1.8 189 2.2
Double taxation relief on UK profits (46) 0.3 (26) (0.3) (23) (0.3)
(Utilised)/unutilised tax losses (15) 0.1 12 0.1 (10) (0.1)
Adjustments in respect of prior periods (13) 0.1 41 0.5 (43) (0.5)
Deferred tax relating to changes in tax rates (106) 0.6 (66) (0.7) (158) (1.8)
Additional net deferred tax (credits)/charges (498) 2.8 (51) (0.6) (18) (0.2)
(2,872) 16.3 2,478 27.9 2,189 25.0

The Group's reported 2023 tax rate is significantly impacted by the impairment of intangible assets as described in note 12.
– Permanent differences in 2023 consist mainly of the tax impact of the goodwill impairment (for which no tax relief is available).
– Additional net deferred tax (credits)/charges in 2023 consist mainly of the U.S. state deferred tax impact of the trademark impairment
(please see further in note 16).
(d) Adjusting items included in taxation
In 2023, adjusting items in taxation included a net credit of £73 million relating to the revaluation of deferred tax liabilities arising on
trademarks recognised in the Reynolds American acquisition in 2017 due to changes in U.S. state tax rates, the reversal of provisions for
Russia tax risks and a potential clawback of tax reliefs arising on the closure of the Group's factory in Switzerland offset by a provision for
potential tax exposures in the Netherlands and the tax impact in Brazil of the legal case regarding Rio de Janeiro VAT incentives
(described further in note 6(k)).
In 2022, adjusting items in taxation included a net credit of £27 million mainly relating to the revaluation of deferred tax liabilities arising
on trademarks recognised in the Reynolds American acquisition in 2017 due to changes in U.S. state tax rates and a potential clawback
of tax reliefs arising on the closure of the Group's factory in Switzerland.
In 2021, adjusting items in taxation included a net credit of £91 million mainly relating to the revaluation of deferred tax liabilities arising
on trademarks recognised in the Reynolds American acquisition in 2017 due to changes in U.S. state tax rates.
(e) Tax on adjusting items
In addition, the tax on adjusting items, separated between the different categories, as per note 11, amounted to £5,415 million
(2022: £176 million; 2021: £119 million). The adjustment to the adjusted earnings per share (note 11) also includes £1 million
(2022: £5 million; 2021: £6 million) in respect of the non-controlling interests’ share of the adjusting items net of tax.
(f) Tax on items recognised directly in other comprehensive income
2023 2022 2021
£m £m £m
Current tax (5) (6) (4)
Deferred tax 12 (106) (110)
(Charged)/credited to other comprehensive income 7 (112) (114)

(g) Tax on items recognised directly in equity

In relation to the perpetual hybrid bonds issued on 27 September 2021 (note 22(d)), tax relief of £14 million (2022: £11 million;
2021: £5 million) has been recognised, principally in relation to the coupon incurred.
(h) Global minimum tax
In December 2021, the OECD released model rules for a new global minimum corporate tax framework applicable to multinational
enterprise groups with global revenues of over €750 million (“Pillar Two” rules). The UK substantively enacted legislation implementing
these rules on 20 June 2023 and the rules apply to the Group as of 1 January 2024. The Group is reviewing this legislation together with
developing guidance. The Group is also monitoring the status of implementation of the model rules outside of the UK to assess the potential
impact. Based on the information currently available, the impact of these rules on the Group tax position is not expected to be material.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

11 Earnings per share

Earnings used in the basic, diluted and headline earnings per share calculation represent the profit attributable to the ordinary equity
shareholders after deducting amounts representing the coupon on perpetual hybrid bonds on a pro-rata basis regardless of whether
coupons have been deferred or paid in the period. Below is a reconciliation of the earnings used to calculate earnings per share:
2023 2022 2021
£m £m £m
(Loss)/earnings attributable to owners of the parent (14,367) 6,666 6,801
Coupon on perpetual hybrid bonds (59) (60) (15)
Tax on coupon on perpetual hybrid bonds 14 11 3
(Loss)/earnings (14,412) 6,617 6,789

In 2023, the Group reported a loss for the year. Following the requirements of IAS 33 Earnings per Share, the impact of share options
would be antidilutive and are excluded from the calculation of diluted earnings per share. Below is a reconciliation from basic to diluted
earnings per share for 2022 and 2021:
2023 2022 2021
Weighted Weighted Weighted
average average average
number of Loss number of Earnings number of Earnings
Loss shares per share Earnings shares per share Earnings shares per share
£m m pence £m m pence £m m pence
Basic (loss)/earnings per share
(ordinary shares of 25p each) (14,412) 2,229 (646.6) 6,617 2,256 293.3 6,789 2,287 296.9
Share options — — — — 11 (1.4) — 10 (1.3)
Diluted (loss)/ earnings per share* (14,412) 2,229 (646.6) 6,617 2,267 291.9 6,789 2,297 295.6
Note:
* In 2023, the Group reported a loss for the year. Following the requirements of IAS 33, the impact of share options would be antidilutive and is therefore excluded, for 2023, from the
calculation of diluted earnings per share, calculated in accordance with IFRS, for that year. For remuneration purposes, and reflective of the Group's positive earnings on an adjusted basis,
management have included the dilutive effect of share options in calculating adjusted diluted earnings per share. There were 8 million share options on a weighted average basis in 2023.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Adjusted earnings per share calculation

Earnings have been affected by a number of adjusting items, which are described in notes 3 to 10. Adjusting items are significant items
in the profit from operations, net finance costs, taxation and the Group’s share of the post-tax results of associates and joint ventures
which individually or, if of a similar type, in aggregate, are relevant to an understanding of the Group’s underlying financial performance.
The Group believes that these items are useful to users of the Group financial statements in helping them to understand the underlying
business performance. To illustrate the impact of these items, an adjusted earnings per share calculation is shown below.
Basic
2023 2022 2021
(Loss)/
(Loss)/ earnings Earnings Earnings
earnings per share Earnings per share Earnings per share
Notes £m pence £m pence £m pence
Basic (loss)/earnings per share (14,412) (646.6) 6,617 293.3 6,789 296.9
Effect of amortisation and impairment of
4 27,816 1,247.9 285 12.6 363 15.9
goodwill, trademarks and similar intangibles
Tax and non-controlling interests on
amortisation and impairment of goodwill, 10(e) (5,390) (241.8) (67) (3.0) (71) (3.1)
trademarks and similar intangibles
5(a),6(j),
Net effect of excise and VAT cases (167) (7.5) (460) (20.4) 26 1.1
6(k)
Tax on excise and VAT cases 10(e) 41 1.8 72 3.2 (3) (0.1)
Effect of disposal of subsidiaries 6(f) 546 24.5 (6) (0.3) 358 15.7
Effect of Brazil other taxes 6(k) 47 2.1 — — — —
Tax on Brazil other taxes 10(e) (16) (0.7) — — — —
Effect of charges in respect of DOJ and OFAC
6(h) 75 3.4 450 19.9 — —
investigations
Effect of charges in respect of Nigerian FCCPC
6(i) — — 79 3.5 — —
case
Effect of planned disposal of subsidiaries 6(j) (195) (8.7) 612 27.2 — —
Tax on planned disposal of subsidiaries 10(e) — — (10) (0.4) — —
Effect of restructuring and integration costs 7 (2) (0.1) 771 34.2 150 6.5
Tax and non-controlling interests on
10(d)(e) (3) (0.1) (116) (5.1) (39) (1.7)
restructuring and integration costs
Other adjusting items 3,6(d) 96 4.3 154 6.8 19 0.8
Tax effect on other adjusting items 10(e) (22) (1.0) (37) (1.6) (5) (0.2)
Effect of early repurchase of bonds 8(b) 29 1.3 — — — —
Tax effect of early repurchase of bonds 10(e) (8) (0.4) — — — —
Effect of interest on FII GLO settlement and
8(b) 67 3.0 34 1.5 55 2.4
other
Tax effect of interest on FII GLO settlement and
10(e) (18) (0.8) (6) (0.3) — —
other
Effect of associates' adjusting items net of tax 9(a) (8) (0.4) 92 4.1 12 0.5
Deferred tax relating to changes in tax rates 10(d) (97) (4.4) (44) (2.0) (98) (4.3)
Adjusting items in tax 10(d) 24 1.2 — — — —
Adjusted earnings per share (basic) 8,403 377.0 8,420 373.2 7,556 330.4

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

Diluted
2023 2022 2021
(Loss)/
(Loss)/ earnings Earnings Earnings
earnings per share Earnings per share Earnings per share
Notes £m pence £m pence £m pence
Diluted (loss)/earnings per share (14,412) (646.6) 6,617 291.9 6,789 295.6
Effect of amortisation and impairment of
4 27,816 1,247.9 285 12.6 363 15.8
goodwill, trademarks and similar intangibles
Tax and non-controlling interests on
amortisation and impairment of goodwill, 10(e) (5,390) (241.8) (67) (3.0) (71) (3.1)
trademarks and similar intangibles
5(a),6(j),
Net effect of excise and VAT cases (167) (7.5) (460) (20.3) 26 1.1
6(k)
Tax on excise and VAT cases 10(e) 41 1.8 72 3.2 (3) (0.1)
Effect of disposal of subsidiaries 6(f) 546 24.5 (6) (0.3) 358 15.6
Effect of Brazil other taxes 6(k) 47 2.1 — — — —
Tax on Brazil other taxes 10(e) (16) (0.7) — — — —
Effect of charges in respect of DOJ and OFAC
6(h) 75 3.4 450 19.9 — —
investigations
Effect of charges in respect of Nigerian FCCPC
6(i) — — 79 3.5 — —
case
Effect of planned disposal of subsidiaries 6(j) (195) (8.7) 612 26.8 — —
Tax on planned disposal of subsidiaries 10(e) — — (10) (0.4) — —
Effect of restructuring and integration costs 7 (2) (0.1) 771 34.0 150 6.6
Tax and non-controlling interests on
10(d)(e) (3) (0.1) (116) (5.1) (39) (1.7)
restructuring and integration costs
Other adjusting items 3,6(d) 96 4.3 154 6.8 19 0.8
Tax effect on other adjusting items 10(e) (22) (1.0) (37) (1.6) (5) (0.2)
Effect of early repurchase of bonds 8(b) 29 1.3 — — — —
Tax effect of early repurchase of bonds 10(e) (8) (0.4) — — — —
Effect of interest on FII GLO settlement and
8(b) 67 3.0 34 1.5 55 2.4
other
Tax effect of interest on FII GLO settlement and
10(e) (18) (0.8) (6) (0.3) — —
other
Effect of associates' adjusting items net of tax 9(a) (8) (0.4) 92 4.1 12 0.5
Deferred tax relating to changes in tax rates 10(d) (97) (4.4) (44) (1.9) (98) (4.3)
Adjusting items in tax 10(d) 24 1.2 — —
Impact of dilution* — (1.4)
Adjusted diluted earnings per share 8,403 375.6 8,420 371.4 7,556 329.0
Note:
* In 2023, the Group reported a loss for the year. Following the requirements of IAS 33, the impact of share options would be antidilutive and is therefore excluded, for 2023, from the
calculation of diluted earnings per share, calculated in accordance with IFRS, for that year. For remuneration purposes, and reflective of the Group's positive earnings on an adjusted
basis, management have included the dilutive effect of share options in calculating adjusted diluted earnings per share.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Headline earnings per share as required by the JSE Limited

The presentation of headline earnings per share, as an alternative measure of earnings per share, is mandated under the JSE Listing
Requirements. It is calculated in accordance with Circular 1/2023 ‘Headline Earnings’, as issued by the South African Institute of
Chartered Accountants.
Basic
2023 2022 2021
(Loss)/
(Loss)/ earnings Earnings Earnings
earnings per share Earnings per share Earnings per share
£m pence £m pence £m pence
Basic (loss)/earnings per share (14,412) (646.6) 6,617 293.3 6,789 296.9
Effect of impairment of intangibles, property, plant and
27,800 1,247.2 429 19.0 138 6.0
equipment, associates and assets held-for-sale
Tax and non-controlling interests on intangibles, property,
(5,430) (243.6) (77) (3.4) (42) (1.8)
plant and equipment, associates and assets held-for-sale
Effect of gains on disposal of property, plant and equipment,
trademarks, held-for-sale assets, partial/full termination of (125) (5.6) (21) (0.9) (10) (0.4)
IFRS 16 leases, and sale and leaseback
Tax and non-controlling interests on disposal of property,
plant and equipment, held-for-sale assets, partial/full 27 1.2 5 0.2 2 0.1
termination of IFRS 16 leases, and sale and leaseback
Effect of impairment of subsidiaries transferred to held-for-
(203) (9.1) 548 24.2 83 3.6
sale and associated costs
Tax on impairment of subsidiaries and associated costs — — (10) (0.4) — —
Effect of foreign exchange reclassification from reserves to
the income statement
- Subsidiaries 552 24.8 6 0.3 291 12.7
- Associates — — (1) — (2) (0.1)
Issue of shares and change in shareholding of an associate (40) (1.8) 3 0.1 (6) (0.3)
Headline earnings per share (basic) 8,169 366.5 7,499 332.4 7,243 316.7

Diluted
2023 2022 2021
(Loss)/
(Loss)/ earnings Earnings Earnings
earnings per share Earnings per share Earnings per share
£m pence £m pence £m pence
Diluted earnings per share (14,412) (646.6) 6,617 291.9 6,789 295.6
Effect of impairment of intangibles, property, plant and
27,800 1,247.2 429 18.9 138 6.0
equipment, associates and assets held-for-sale
Tax and non-controlling interests on intangibles, property,
(5,430) (243.6) (77) (3.4) (42) (1.8)
plant and equipment, associates and assets held-for-sale
Effect of gains on disposal of property, plant and equipment,
trademarks, held-for-sale assets, partial/full termination of (125) (5.6) (21) (0.9) (10) (0.4)
IFRS 16 leases, and sale and leaseback
Tax and non-controlling interests on disposal of property,
plant and equipment, held-for-sale assets, partial/full 27 1.2 5 0.2 2 0.1
termination of IFRS 16 leases, and sale and leaseback
Effect of impairment of subsidiaries transferred to held-for-
(203) (9.1) 548 24.1 83 3.6
sale and associated costs
Tax on impairment of subsidiaries and associated costs — — (10) (0.4) — —
Effect of foreign exchange reclassification from reserves to
the income statement
- Subsidiaries 552 24.8 6 0.3 291 12.6
- Associates — — (1) — (2) (0.1)
Issue of shares and change in shareholding of an associate (40) (1.8) 3 0.1 (6) (0.3)
Headline earnings per share (diluted) 8,169 366.5 7,499 330.8 7,243 315.3

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

1
12 Intangible assets (revised)
(a) Overview of intangible assets
2023
Trademarks Assets in
and similar Computer the course of
2 2
intangibles Goodwill software development Total
£m £m £m £m £m
1 January
Cost 83,454 48,488 1,379 153 133,474
Accumulated amortisation and impairment (2,851) (532) (1,005) (11) (4,399)
Net book value at 1 January 80,603 47,956 374 142 129,075
Differences on exchange (3,431) (2,251) (4) 1 (5,685)
Additions
– internal development — — — 75 75
– separately acquired 59 — — 3 62
Reallocations 2 — 115 (111) 6
Amortisation charge (237) — (120) — (357)
Impairment (22,995) (4,614) (5) — (27,614)
31 December
Cost 78,848 46,021 1,408 110 126,387
Accumulated amortisation and impairment (24,847) (4,930) (1,048) — (30,825)
Net book value at 31 December 54,001 41,091 360 110 95,562

2022
Trademarks Assets in
and similar Computer the course of
2 2
intangibles Goodwill software development Total
£m £m £m £m £m
1 January
Cost 74,227 43,715 1,266 156 119,364
Accumulated amortisation and impairment (2,360) (521) (858) — (3,739)
Net book value at 1 January 71,867 43,194 408 156 115,625
Differences on exchange 9,033 4,762 5 2 13,802
Additions
– internal development — — — 37 37
– separately acquired — — — 85 85
Reallocations 29 — 96 (125) —
Amortisation charge (309) — (128) — (437)
Impairment (10) — (3) (11) (24)
Disposals (7) — — — (7)
Held for sale — — (4) (2) (6)
31 December
Cost 83,454 48,488 1,379 153 133,474
Accumulated amortisation and impairment (2,851) (532) (1,005) (11) (4,399)
Net book value at 31 December 80,603 47,956 374 142 129,075
Notes:
1. Effective from 2023, the Group revised its regional structure from four regions to three, with the comparator data provided on this revised basis.
2. The table above has been re-presented for both the current and the comparative period to give a more meaningful disclosure of the Group's accumulated impairment of goodwill, which
was previously shown net in the opening and closing balances.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

(b) Impairment testing

(i) Overview
a. Estimation uncertainty
As described in note 1, the critical accounting estimates used in the preparation of the consolidated financial statements include the
review of asset values, especially indefinite-lived assets such as goodwill and certain trademarks and similar intangibles.
There is significant judgement with regard to assumptions and estimates involved in the forecasting of future cash flows, which form the
basis of the assessment of the recoverability of these assets, with the effect that the value-in-use of calculations incorporate estimation
uncertainty, particularly for certain assets held in relation to the Canadian and U.S. markets.
b. Impact of climate change
The impact of climate change has been considered in preparation of the financial statements. For impairment testing and valuation
purposes, the Group have included certain climate-related costs within the discounted cash flow forecast for impairment assessment.
The Group also completed scenario analyses of the potential impact of those climate change-related risks. This sensitised discounted
cash flow included such items as product taxes and carbon taxes within the future cash flows and resulted in no material adverse impact
to the impairment assessment.
(ii) Discount rates
Post-tax discount rates were used in the impairment testing, based on the Group’s weighted average cost of capital, taking into account
the cost of capital and borrowings, to which specific market-related premium adjustments are made. These adjustments are derived
from external sources and are based on the spread between bonds (or credit default swaps, or similar indicators) issued by the relevant
local (or comparable) government, adjusted for the Group’s own credit market risk. Valuations derived from applying post-tax discount
rates to post-tax cash flows are aligned to those that would arise from applying pre-tax discount rates to pre-tax cash flows. For ease of
use and consistency in application, these results are periodically calibrated into bands based on internationally recognised credit ratings.
This applies to all CGUs with the exception of Reynolds, which had its discount rate independently determined based on a weighted
average cost of capital in respect of the U.S. and U.S. market-related premiums, and Malaysia where the discount rate reflects BAT
Malaysia's weighted average cost of capital.
The long-term growth rates and discount rates have been applied to the budgeted cash flows of each cash-generating unit. These cash
flows have been determined by local management based on experience, specific market and brand trends, as well as pricing and cost
expectations. These have been endorsed by Group management as part of the consolidated Group’s approved budget.
Please refer to the discount rates applied for intangible assets with indefinite lives in note 12(b)(iv) and for cash-generating units in
note 12(b)(iii).
(iii) Impairment testing - summary
Total impairment charges of £27,614 million have been recognised in 2023, of which £27,291 million related to Reynolds American
(being a charge against goodwill of £4,299 million and against trademarks of £22,992 million), £291 million related to South Africa
goodwill, £24 million related to Peru goodwill and the remaining relating to other intangible assets.
a. Goodwill
Goodwill of £41,091 million (2022: £47,956 million) is included in intangible assets in the balance sheet of which the following are the
significant acquisitions: Reynolds American £30,938 million (2022: 37,181 million); Rothmans Group £4,274 million (2022: £4,704 million);
Imperial Tobacco Canada £2,386 million (2022: £2,460 million; ETI (Italy) £1,428 million (2022: £1,461 million) and ST (principally
Scandinavia) £1,074 million (2022: £1,102 million). The principal allocations of goodwill in the Rothmans acquisition are to the cash-
generating units of Europe and South Africa, with the remainder relating to operations in APMEA.
In 2023, goodwill was allocated for impairment testing purposes to 17 (2022: 17) individual cash-generating units (CGUs) – one in the U.S.
(2022: one), nine in AME (2022: nine) and seven in APMEA (2022: seven).
For the purpose of impairment testing, goodwill has been attributed to the following cash-generating units:
2023 2022
Carrying Pre-tax Carrying Pre-tax
amount discount rate amount discount rate
£m % £m %
Cash-generating unit
Reynolds American 30,938 9.6 37,181 8.8
Europe 5,596 6.6 5,670 7.5
Canada 2,386 20.3 2,460 19.4
Australia 717 7.3 755 8.2
South Africa 189 14.3 541 10.4
Singapore 382 7.4 398 7.9
GTR 253 7.6 264 7.6
Malaysia 217 10.2 240 11.4
Peru 73 12.4 103 7.5
Other 340 6.7 344 8.0
Total 41,091 47,956

Included within ‘Other’ above is goodwill arising on various acquisitions that have been allocated to eight cash-generating units which
are, individually, insignificant. The pre-tax discount rate represents the weighted average pre-tax discount rate.
During 2023, the Group recognised a total impairment charge to goodwill of £4,614 million (2022: £nil million) related to South Africa and
Peru as explained in note 12(b)(vi) and to Reynolds American as explained in note 12(b)(iv) below.

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Financial Statements

Notes on Accounts
Continued

b. Trademarks and similar intangibles with indefinite lives

The net book value of trademarks and similar intangibles with indefinite lives is £51,930 million (2022: £78,228 million) and relates to the
acquisition of Reynolds American. The trademarks acquired, including Newport, Camel, Natural American Spirit, Grizzly and Pall Mall, all of
which are part of the Group’s Strategic Portfolio of key brands, form the core focus of the U.S. business and receive significant support in
the form of dedicated internal resources, forecasting and, where appropriate, marketing investment. These trademarks have significant
market share and positive cash flow expectations. There are no regulatory or contractual restrictions on the use of the trademarks, and
there are no plans by management to significantly redirect resources elsewhere.
c. Trademarks and similar intangibles with definite lives
The majority of trademarks and similar intangibles with definite lives relate to trademarks acquired in previous years. These trademarks
are amortised over their expected useful lives, which do not exceed 20 years. As discussed below in Note 12(b)(iv), with effect from
1 January 2024, this category will be amortised over periods not exceeding 30 years to accommodate the estimate of useful economic
lives for Newport, Camel, Pall Mall and Natural American Spirit. Included in the net book value of trademarks and similar intangibles are
trademarks relating to the acquisition of Reynolds American £1,809 million (2022: £2,071 million).
The following disclosure will consider Reynolds American, Canada and the Rest of the World in turn.
(iv) Impairment testing – Reynolds American
Goodwill and the indefinite-lived brand intangibles relating to Reynolds American
Subsequent to the FDA announcement on 28 April 2022 of a proposed product standard to prohibit menthol as a characterising flavour
in cigarettes, the FDA formally submitted the final product standard to the Office of Management and Budget on 18 October 2023.
Management notes that the proposal of a product standard does not itself constitute a ban on menthol in cigarettes given the proposed
standard is still required to go through the established comprehensive U.S. rule-making process, the timetable and outcome for which
was, and remains, uncertain. Further to this, on 21 June 2022, the FDA announced plans to develop a proposed product standard that
would establish a maximum nicotine level in cigarettes and certain other combustible tobacco products to reduce addictiveness.
Management notes that the FDA announcement does not itself constitute restrictions on nicotine levels in cigarettes, and any proposed
regulation of nicotine in cigarettes would need to be introduced through the established comprehensive U.S. rule-making process, the
timetable and outcome for which was, and remains, uncertain. Management do not deem this to be a new development but rather
a continuation of the rulemaking process that the FDA initiated in 2017 that was later put on hold.
In December 2022, the sale of most tobacco products with characterising flavours (including menthol) other than tobacco were banned
in the state of California. The impact of the ban in California has been reflected in the cash flow forecasts used in the impairment model.
The Group has a long-standing track record of managing regulatory shifts and, in the event of regulatory change, the Group remains
confident in its ability to navigate that environment successfully.
In line with the approach used in 2022, the value-in-use calculations have been determined based on probability weighted scenarios to
derive a risk-adjusted cash flow forecast applied within the valuations. These scenarios incorporate varying assumptions on potential
timing for a final product standard to prohibit menthol as a characterising flavour in cigarettes becoming effective. However, the impact
of the timing of any potential menthol ban was not deemed to be a key assumption.
Management note that the U.S. combustibles market has experienced substantial volatility since 2020. In the period immediately prior to the
COVID-19 pandemic, U.S. combustibles industry volumes declined by c.5.0-5.5% per annum (2017-2019). During COVID-19, due to changes
in consumer behaviour, industry volume was largely flat in 2020 (0.1% decline) with 2021 also declining by only 3.0%. However, in 2022, as
the U.S. exited the pandemic combined with adverse impacts from the macro-economic headwinds, industry volume declined by 10.6%.
At the time, it was Management’s assessment that the performance was a rebalancing and would return to a more consistent decline
rate in future periods, supporting the judgement that it was not possible to reliably determine a definite useful life for the brands.
Accordingly, an indefinite life continued to be applied and the brands were not amortised in 2022 or 2023.
During 2023, however, evolving insights indicated that the decline in industry volume would be higher than forecast due to the continued
macro-economic headwinds in the U.S. combined with an acceleration of the vapour category growth. This growth is driven by
combustible consumers turning to Vapour devices (specifically through the use of illicit single-use products) with this market segment
growing by c.100% in the period.
Due to the continued challenging trading conditions in the U.S., a detailed external study was commissioned to assist Management with
an independent view of the potential forecast performance for the market.
The study assessed the future industry size, based upon, among other things:
– Macro-economic factors;
– Pricing and elasticity; and
– Long term trend assumptions which themselves include category-specific consumption patterns in comparison to other categories.
This review assisted Management in preparing the Group’s five-year forecast of the U.S. market, with further extrapolation based upon
the estimated performance of the brands.
Following the review and as a result of the higher forecast combustibles market decline as described above, a total impairment of
£27,291 million in respect of the U.S. CGU was identified. The impairment charge has been recognised using the exchange rate prevailing
on the date of the impairment assessment of £1 : US$1.213 as the underlying cash flows and net assets are US$ denominated.

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Impairment of trademarks and assessment of useful economic lives

Concurrent to the impairment assessment, and reflecting Management's revised volume projections, Management concluded that
it was appropriate to redesignate Newport, Camel, Natural American Spirit and Pall Mall as definite-lived from 1 January 2024
(2023: indefinite-lived, 2022: indefinite-lived) with an estimated life of between 20-30 years.
It was also concluded that it remains appropriate to continue to recognise Grizzly and Camel snus as indefinite-lived brands given the
expected continued performance of the traditional oral sector.
Corporate costs are allocated to the brand budgets based on either specific allocations, where appropriate, or based on revenue. As the
trademarks and similar intangibles with indefinite lives relate to the acquisition of Reynolds American, the brand budgets used in the value-in-
use calculations have also been incorporated into the budget information used in the impairment testing of Reynolds American goodwill.
The value-in-use calculations for the Reynolds American cash-generating unit and the indefinite-lived brands have been prepared based
on a five-year risk-adjusted cash flow forecast, incorporating the probability weighted scenarios above. After this forecast, for the
Reynolds American cash-generating unit and for the indefinite-lived brands Grizzly and Camel Snus, a probability weighted growth rate
of 1.0% (2022: 1.0%) is applied.
In order to support the long-term growth rates for Newport, Camel, Natural American Spirit and Pall Mall, a cash flow forecast has also
been prepared on a discrete basis, reflecting the revised useful economic lives from 1 January 2024. The long-term growth rates implied
by these value-in-use calculations with cash flows capped at 30 years or 20 years, as appropriate, are -4.7% (2022: 0.89%) for Newport,
-7.4% (2022: 0.93%) for Camel, -1.15% (2022: 1.0%) for Natural American Spirit and -13.7% (2022: 1.0%) for Pall Mall.
As a result of the revised forecasts, an impairment charge of £22,992 million has been recognised in relation to the brands.
Management recognise that the date at which the redesignation to definite-lived is made is judgemental and have determined that
amortisation will commence from 1 January 2024. From 2024, amortisation will be charged on a straight-line basis with the increase in
annual amortisation expense expected to be £1.4 billion (US$1.8 billion) per annum.
2023 2022

Carrying Pre-tax Carrying Pre-tax

amount Volume 5 Year discount rate* amount Volume 5 Year discount rate
£m CAGR** % £m CAGR %
Indefinite-lived intangibles
Newport 20,753 (11.3)% 8.7 33,236 (6.7)% 9.2
Camel 7,822 (12.3)% 8.9 14,058 (6.4)% 8.9
Pall Mall 2,608 (18.8)% 9.4 6,252 (13.0)% 8.6
Natural American Spirit 10,439 (7.6)% 7.9 13,019 (2.5)% 8.6
Camel Snus 1,099 (5.4)% 7.8 1,355 (5.3)% 8.6
Grizzly 9,209 (3.9)% 7.8 10,308 (3.7)% 8.6
Total 51,930 78,228
Notes:
* For the purpose of current year impairment assessment, the value-in-use calculations for the combustibles brands have been prepared based on a five-year risk adjusted cash flow forecast,
supplemented by a forecast on a discrete period basis reflecting the revised useful economic life effective 1 January 2024 for the combustibles brands to support the long term growth rates.
Following these updates, the Group has revisited the methodology by which the Tax Amortisation Benefit (TAB) included in the brand valuation is treated when determining the pre-tax discount
rates. In the previous years, the Group had considered the pre-TAB value-in-use to derive the pre-tax discount rate, however, under the revised approach, the Group has considered the post-TAB
value-in-use in deriving the pre-tax discount rates for disclosure purposes. If the revised methodology is applied to the year 2022, the pre-tax discount rate will result in 7.9% for Newport, 7.6%
for Camel and 7.4% for Pall Mall, Natural American Spirit, Camel Snus and Grizzly. The revision of the pre-tax discount rates does not result in any change in the impairment assessment or the
headroom calculated for each of the intangible assets in the year 2022. There are no other financial impacts on the financial statements for year-end 2022 as a result of this revision in
methodology in the application of the TAB factor for deriving pre-tax discount rate for disclosure purposes. Valuations derived from applying post-tax discount rates to post-tax cash flows are
aligned to those that would arise from applying pre-tax discount rates to pre-tax cash flows.
** Five year CAGR is calculated by reference to the first five years annual volumes in the value-in-use model against the 2023 baseline.

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Financial Statements

Notes on Accounts
Continued

The below table indicates the additional amount of impairment that would be required if the following individual changes were made to
the key assumptions used in the impairment model:
Natural
American
Newport Camel Pall Mall Spirit Grizzly Camel Snus
£m £m £m £m £m £m
Assumptions
*
Volume decline by additional 1% year on year (1,135) (427) (142) (572) (559) (68)
Decrease in long-term growth rate by 50bps (560) (163) (32) (467) (593) (70)
Increase in pre-tax discount rate by 75bps (1,105) (354) (86) (804) (945) (112)
Note:
* Volume sensitivity results in a proportional reduction in both net revenue and direct costs with no impact to operating margin %. Fixed overhead cost allocations remain flat. This
demonstrates a year-on-year decrease in operating cash flow for the discrete forecast years.

The volume decline assumption is based on the year on year decline rate increasing by an additional 1% each year in the five-year cash flow
forecast without any future recovery and assumes that other assumptions are not changed. The above sensitivities have been translated
using the exchange rate prevailing on the date of the impairment assessment of £1 : US$1.213 as the underlying cash flows and net assets
are US$ denominated.
Impairment assessment of Reynolds American goodwill
As a consequence of the challenges in the U.S. market and the impact to the Group's ongoing financial forecast, and having recognised
an impairment charge in respect of the trademarks referenced above, the Group has also recognised an additional impairment in respect
of U.S. goodwill of £4,299 million (2022: £nil million).
The table below indicates the additional amount of impairment that would be required if the following individual changes were made to
key assumptions within the value-in-use model and it has been translated using the exchange rate prevailing on the date of the
impairment assessment of £1 : US$1.213 as the underlying cash flows and net assets are US$ denominated:
Possible additional
Reynolds American goodwill impairment charge for impairment
2023 (£m) Assumptions Change in key assumption (£m)
Pre-tax discount rate Increase of 0.67% (6,169)
4,299
Long-term growth rates Decrease of 0.50% (4,962)
Note:
* The sensitivity to increase the pre-tax discount rate for the Reynolds American goodwill has been considered in isolation without any uplift to the brands discount rate (impact of which
is shown in the sensitivity table above). In the event of an increase to the brand's discount rate, any additional impairment to the Reynolds American goodwill will reduce by the
respective amount due to the resulting reduction to its net assets.

Reynolds American Summary

The following is a summary table showing the movement of the Reynolds American goodwill and other intangible and similar assets in
the U.S. during 2023
2023
Opening Differences on Closing
balance exchange Impairment balance
£m £m £m £m
Reynolds American goodwill 37,181 (1,944) (4,299) 30,938
Newport 33,236 (1,339) (11,144) 20,753
Camel 14,058 (517) (5,719) 7,822
Pall Mall 6,252 (187) (3,457) 2,608
Natural American Spirit 13,019 (642) (1,938) 10,439
Grizzly 10,308 (554) (545) 9,209
Camel snus 1,355 (67) (189) 1,099

(v) Impairment testing – Canada

Goodwill relating to Imperial Tobacco Canada Ltd (ITCAN)
In March 2019, ITCAN obtained an Initial Order from the Ontario Superior Court of Justice granting it protection under the Companies’
Creditors Arrangement Act (CCAA). If the CCAA creditor protection were to end, significant liabilities might crystallise. As a
consequence, to reflect the risk to future operating cash flows, the value-in-use calculations have been prepared based on a five-year
cash flow forecast, after which a growth rate of -2.5% and a pre-tax discount rate of 20.3% (2022: 19.4%) have been assumed. Further
information on the Quebec Class Actions and CCAA can be found in note 31.
In addition to the increase in discount rate, a reasonable range of sensitivities was applied to the value-in-use calculation, and there was
no risk of an impairment charge identified.
The excess of value-in-use earnings over the carrying values (headroom) of the ITCAN goodwill would be reduced to nil if the following
individual changes, none of which are considered reasonably possible by management, were made to the key assumptions used in the
impairment model.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Canada
goodwill
%
Assumptions
*
Decrease in revenue by 17.4
Increase in pre-tax discount rate by 8.5
Note:
* Revenue sensitivities are performed in isolation and do not include the removal of the corresponding variable cost of sales. This demonstrates a decrease in revenue in each of the
forecast years.

Below is the summary of ITCAN's income statement:

2023 2022
£m £m
Revenue 1,003 1,055
Profit from operations 600 589
Profit after tax 517 478

Please refer to note 32 for ITCAN's assets which are subject to restrictions.
The £2,386 million of goodwill relating to ITCAN on the Group’s balance sheet at 31 December 2023 will continue to be reviewed on a regular
basis. Any impairment charge would result in a non-cash charge to the income statement that will be treated as an adjusting item.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

(vi) Impairment testing – Goodwill and indefinite-lived brands (excluding Reynolds American and Canada)
The value-in-use calculations use cash flows based on detailed financial budgets prepared by management covering a one-year period
extrapolated over a 10-year horizon with growth of 3% (2022: 3%) in years two to ten, after which a growth rate of 1% (2022: 1%) has been
assumed as the long-term volume decline is more than offset by pricing to drive revenue growth. A 10-year horizon is considered appropriate
based on the Group’s history of profit and cash growth, its well-balanced portfolio of brands and the industry in which it operates.
For the Malaysian cash-generating unit, as a result of regulatory and macro-economic conditions, the above assumptions were amended
to reflect the short- to medium-term plans of the country or area management spanning a period of five years after which a long-term
growth rate of 0% for New Categories and -0.9% for combustibles has been assumed. For the Malaysian cash-generating unit headroom
to reduce to £nil, the forecasted cash flows would need to reduce by 30.7% in each discrete year in the five-year period or the pre-tax
discount rate would have to increase by 5.5%, both of which Management does not consider to be reasonably possible. The Group will
continue to monitor Malaysia's performance going forward to identify if any impairment triggers materialise.
Trading conditions have continued to be difficult in South Africa with the growth in illicit trade following the ban of the sale of tobacco
products introduced during the COVID-19 pandemic becoming further entrenched and, as a result, the Group has recognised an
impairment charge of £291 million.
Due to further market deterioration in Peru, which negatively impacts future forecasted operating cash flows for the CGU, the Group
has recognised an impairment charge of £24 million.
Value-in-use calculations for both the South African CGU and the Peruvian CGU have been based on Management's five-year cash flow
forecast, after which a long-term growth rate of 0% has been assumed.
The table below shows the headroom and the impairment charge that would be recognised if the assumptions used in the value-in-use
calculation were changed:
Carrying amount Increase in Decrease in Decrease in
of CGU discount rate* cash flows* terminal value*
£m £m £m £m
Change in headroom/impairment charge
Cash-generating unit
South Africa 189 (28) (38) (19)
Peru 73 (11) (11) (8)
Note:
* Sensitivities applied to key assumptions are a 100bps increase in the pre-tax discount rate, a 10% decrease in forecast cash flows reflecting a loss in volumes arising from difficult
trading conditions and a 100bps decrease in terminal value growth rate.

With the exception of South African and Peruvian cash-generating units, following the application of a reasonable range of sensitivities
to all cash-generating units, there was no reasonably possible scenario identified that would lead to a potential impairment charge.
(c) Computer software and assets in the course of development
Included in computer software and assets in the course of development are internally developed assets with a carrying value of
£450 million (2022: £423 million). The costs of internally developed assets include capitalised expenses of employees working full time
on software development projects, third-party consultants and software licence fees from third-party suppliers.
The Group has £2 million of future contractual commitments (2022: £1 million) related to intangible assets.

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13 Property, plant and equipment

(a) Overview of property, plant and equipment, including right-of-use assets
2023
Plant, Plant, Assets in the
Freehold Leasehold equipment and equipment and course of
property property other owned other leased construction Total
£m £m £m £m £m £m
1 January
Cost 1,475 940 5,962 362 767 9,506
Accumulated depreciation and impairment (473) (474) (3,507) (185) (4,639)
Net book value at 1 January 1,002 466 2,455 177 767 4,867
Differences on exchange (41) (25) (135) (8) (43) (252)
Additions
– right-of-use assets — 112 — 84 — 196
– separately acquired — — 20 — 460 480
Reallocations 69 24 431 — (524) —
Depreciation (34) (102) (293) (77) — (506)
Impairment — (5) (131) (9) (6) (151)
Right-of-use assets − reassessments,
modifications and terminations — (15) — (13) — (28)
Disposals (1) (3) (5) — — (9)
Net reclassifications as held-for-sale (14) — — — — (14)
31 December
Cost 1,418 895 5,702 375 654 9,044
Accumulated depreciation
and impairment (437) (443) (3,360) (221) (4,461)
Net book value at 31 December 981 452 2,342 154 654 4,583
2022
Plant, Plant, Assets in the
Freehold Leasehold equipment and equipment and course of
property property other owned other leased construction Total
£m £m £m £m £m £m
1 January
Cost 1,421 847 5,750 247 706 8,971
Accumulated depreciation and impairment (388) (370) (3,130) (130) (4,018)
Net book value at 1 January 1,033 477 2,620 117 706 4,953
Differences on exchange 68 30 164 9 48 319
Additions
– right-of-use assets — 117 — 117 — 234
– separately acquired — — 32 — 471 503
Reallocations 44 21 374 2 (441) —
Depreciation (36) (112) (323) (68) — (539)
Impairment (62) (39) (210) (4) (4) (319)
Right-of-use assets − reassessments,
modifications and terminations — (16) — 4 — (12)
Disposals (4) (2) (15) — 3 (18)
Net reclassifications as held-for-sale (41) (10) (187) — (16) (254)
31 December
Cost 1,475 940 5,962 362 767 9,506
Accumulated depreciation
and impairment (473) (474) (3,507) (185) (4,639)
Net book value at 31 December 1,002 466 2,455 177 767 4,867

Refer to notes 4 and 7 for more information on property, plant and equipment impairments. In 2022, the £254 million of assets
reclassified as held-for-sale primarily relates to the Group's businesses in Russia and Belarus.
As mentioned in note 5(b), the Group completed a sale and leaseback transaction in 2023. The cash flow effect of this transaction
is £15 million.

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Financial Statements

Notes on Accounts
Continued

ESG Investments: Included in additions in 2023 is an amount of £34 million (2022: £27.1 million) related to investments directed towards
equipment to drive energy efficiency and renewable energy generation, water recycling and efficiency projects, waste reduction, and
product innovation-led specification improvements to drive recyclability and reduce waste.
The Group has £60 million of future contractual commitments (2022: £80 million) related to property, plant and equipment.
(b) Right-of-use assets
In accordance with IFRS 16 Leases, the right-of-use assets related to leased properties have been included in the asset class ‘Leasehold
Property’ (note 13(c)) and other right-of-use assets have been reported under ‘Plant, equipment and other leased’.
The Group leases various offices, warehouses, retail spaces, equipment and vehicles through its subsidiaries across the globe.
Arrangements are entered into in the course of ordinary business, and lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions reflecting local commercial practice. The lease agreements do not impose any covenants
other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing
purposes.
Assets representing ‘plant, equipment and other’ relate to leases of various assets including tobacco vending machines, industrial
equipment and distribution vehicles in Brazil, China, Japan, Mexico, Pakistan, Poland, Romania, the U.S. and other countries.
(c) Leasehold property
As of 31 December 2023, the Group holds £147 million (2022: £152 million) of leasehold properties acquired and another £305 million
(2022: £314 million) of right-of-use leased properties.
Assets representing ‘leasehold property’ relate to leases in respect of offices, retail space, warehouses and manufacturing facilities
occupied by Group subsidiaries and include property leases with lease terms of more than five years in Bangladesh, Brazil, China,
Germany, Japan, Poland, Romania, the UK and the U.S., amongst other countries. In addition, capitalised expenditure representing
leasehold improvements is included in this asset class.
2023 2022
£m £m
Leasehold land and property comprises
- net book value of long leasehold 18 15
- net book value of short leasehold 434 451
452 466

2023

Net book value Differences on Depreciation Other net Net book value
*
Leasehold property net book value movements for the year at 1 January exchange and impairment movements at 31 December
ended 31 December 2023 £m £m £m £m £m
- Property acquired (IAS 16) 152 (10) (12) 17 147
- Right-of-use properties (IFRS 16) 314 (15) (95) 101 305
466 (25) (107) 118 452

2022

Net book value Differences on Depreciation and Other net Net book value
Leasehold property net book value movements for the year at 1 January exchange impairment movements* at 31 December
ended 31 December 2022 £m £m £m £m £m
- Property acquired (IAS 16) 165 11 (41) 17 152
- Right-of-use properties (IFRS 16) 312 19 (110) 93 314
477 30 (151) 110 466
Note:
* Property acquired (IAS 16 Property, plant and equipment) other net movements for leasehold improvements represent additions (directly acquired and/or transferred from assets in the
course of construction) net of disposals, whereas other net movements for right-of-use properties (IFRS 16) relate to new leases net of reassessments, modifications and terminations
as reported in the Property, plant and equipment movement table in note 13(a).

(d) Freehold property

As of 31 December 2023, the Group owns freehold property amounting to £981 million (2022: £1,002 million), representing factories,
warehouses and office buildings together with adjoining land, mainly in the U.S., the UK, Bangladesh, Indonesia and Mexico.
2023 2022
£m £m
Cost of freehold land within freehold property on which no depreciation is provided 238 246

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14 Investments in associates and joint ventures

2023 2022
£m £m
1 January 2,020 1,948
Total comprehensive income (note 9) 473 467
Dividends (559) (438)
Additions (note 27(c)) 13 39
Other equity movements 23 4
31 December 1,970 2,020
Non-current assets 1,331 1,400
Current assets 1,168 1,138
Non-current liabilities (78) (75)
Current liabilities (451) (443)
1,970 2,020
ITC Ltd. (Group’s share of the market value is £15,767 million (2022: £12,059 million)) 1,851 1,865
Other listed associates (Group’s share of the market value is £175 million (2022: £206 million)) 64 106
Unlisted associates 55 49
1,970 2,020

The principal associate undertaking of the Group is ITC Ltd. (ITC). Included within the dividends amount of £559 million
(2022: £438 million) are £545 million (2022: £427 million) attributable to dividends declared by ITC.
ITC Ltd.
ITC is an Indian conglomerate based in Kolkata and maintains a presence in cigarettes, hotels, paper and packaging, agri-business and other
fast-moving goods (e.g. confectionery, branded apparel, personal care, stationery and safety matches). BAT’s interest in ITC is 29.02%.
ITC prepares accounts on a quarterly basis with a 31 March year-end. As permitted by IAS 28 Investments in associates and joint ventures,
results up to 30 September 2023 have been used in applying the equity method. This is driven by the availability of information at the half-year,
to be consistent with the treatment in the Group’s interim accounts. Any further information available after the date used for reporting
purposes is reviewed and any material items adjusted for in the final results. The latest published information available is at 31 December 2023.
2023 2022
£m £m
Non-current assets 4,261 4,402
Current assets 3,622 3,465
Non-current liabilities (240) (233)
Current liabilities (1,267) (1,244)
6,376 6,390
Group’s share of ITC Ltd. (2023: 29.02%; 2022: 29.19%) 1,851 1,865

On 24 July 2023, ITC announced a proposed demerger of its ‘Hotels Business’ under a scheme of arrangement by which 60% of the
newly incorporated entity would be held directly by ITC's shareholders proportionate to their shareholding in ITC. On 14 August 2023,
ITC's Board of Directors approved the scheme of arrangement subject to necessary regulatory approvals. The demerger is expected
to complete by the end of 2024.
Organigram
On 11 March 2021, the Group announced a strategic collaboration agreement with Organigram Inc., a wholly owned subsidiary of publicly
traded Organigram Holdings Inc. (collectively, Organigram). Under the terms of the transaction, a Group subsidiary acquired a 19.9%
(2023: 18.79%; 2022: 19.4%) equity stake in Organigram Holdings Inc. (listed on both the Nasdaq and Toronto Stock Exchange under
the symbol ‘OGI’) to become its largest shareholder.
The Group’s share of the fair value of net assets acquired included £49 million of intangibles and £30 million of goodwill, representing
a strategic premium to enter the legal cannabis market in North America.
During 2023 Management reassessed the carrying value of the Group’s investment in Organigram Holdings Inc. due to a reduction in the
entity's share price being identified as a trigger for a detailed impairment assessment to be undertaken. As part of this exercise, management
took into consideration Organigram’s share price, internal value-in-use calculations, external trading multiples and broker forecasts. As a result
of this analysis, it was concluded that an impairment charge of £36 million (or £34 million net of tax) (2022: £65 million (or £59 million net of tax)),
was required against the carrying value of the investment in associate, with the recoverable amount as at 31 December 2023 being £30 million
(2022: £73 million). Management will continue to monitor the carrying value, in line with IAS 36, over the course of future periods.
In November 2023, the Group announced the signing of an agreement for a further investment in Organigram Holdings Inc. (Organigram).
At 31 December 2023, the proposed investment of CAD$125 million (approximately £74 million) was subject to customary conditions, including
necessary approvals by the shareholders of Organigram, which was given on 18 January 2024. On 24 January 2024, BAT made the first tranche
investment of CAD$42 million (£24 million) acquiring a further 12,893,175 common shares of Organigram at a price of CAD$3.22 per share.
Subject to conditions, the remaining 25,786,350 shares subscribed for shall be issued at the same price in two further equal tranches by the end
of August 2024 and February 2025, respectively. Based on Organigram’s current outstanding share capital, this investment will increase
the Group’s equity position from c.19% to c.45% (restricted to 30% voting rights) once all three tranches have been completed.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

Charlotte’s Web Holdings Inc.

In November 2022, the Group announced a £48 million investment in Charlotte’s Web Holdings, Inc. (Charlotte's Web). Based in
Colorado, USA, and listed on the Toronto Stock Exchange, Charlotte’s Web holds a prominent position in innovative hemp extract
wellness products. The Group’s investment has been made via a seven-year convertible debenture which is convertible at the Group’s
discretion into a non-controlling equity stake in Charlotte’s Web of around 19.9%. As part of the investment agreement, the Group has
the right to appoint directors to the Board of Charlotte’s Web. However, given the investment does not give the Group any current right
to a share of the earnings or net assets of the investee, the investment has been classified as an investment at fair value through profit
and loss (see note 18). On conversion of the loan note, the Group would equity account for its investment.
15 Retirement benefit schemes
The Group operates various funded and unfunded defined benefit schemes, including pension and post-retirement healthcare schemes,
and defined contribution pension schemes through its subsidiary undertakings in multiple jurisdictions, with its most significant
arrangements being in the U.S., the UK, Canada, Germany, Switzerland and the Netherlands. Together, schemes in these territories
account for over 90% of the total underlying obligations of the Group’s defined benefit arrangements and over 70% of the current
service cost.
Pension obligations consist mainly of final salary pension schemes which provide benefits to members in the form of a guaranteed level
of pension payable for life. The level of benefits provided depends on members’ length of service and their salary in the final years leading
up to retirement. In addition, the Group operates several healthcare benefit schemes, of which the most significant are in the U.S. and
Canada. The majority of defined benefit schemes allow for the future accrual of benefits. With the exception of arrangements required
under local regulations, most of the Group’s arrangements are closed to new entrants.
Benefits provided through defined contribution schemes are charged as an expense as payments fall due. The liabilities arising in respect
of defined benefit schemes are determined in accordance with the advice of independent, professionally qualified actuaries, using the
projected unit credit method. It is Group policy that all schemes are formally valued at least every three years.
Through its defined benefit pension schemes and healthcare benefit schemes, the Group is exposed to a number of risks, including:
– Asset volatility: The scheme liabilities are calculated using discount rates set by reference to bond yields. If scheme assets
underperform this yield, e.g. due to stock market volatility, this may create a deficit. However, most funded schemes hold a proportion
of assets which are expected to outperform bonds in the long-term, and the majority of schemes by value are subject to local
regulation regarding funding deficits. In addition, schemes in the UK and Canada have purchased insurance contracts which exactly
match valuation volatility of all or part of the scheme liabilities.
– Changes in bond yields: A decrease in corporate bond yields will increase scheme liabilities, although this will be partially offset by an
increase in the value of the schemes’ bond holdings, ‘buy-in’ insurance assets or other hedging instruments.
– Inflation risk: Some of the Group’s pension obligations are linked to inflation, and higher inflation will lead to higher liabilities, although
in most cases, caps on the level of inflationary increases are in place in the scheme rules, while some assets and derivatives provide
specific inflation protection.
– Life expectancy: The majority of the schemes’ obligations are to provide benefits for the life of the member, so increases in life
expectancy will result in an increase in the plans’ liabilities. Assumptions regarding mortality and mortality improvements are regularly
reviewed in line with actuarial tables and scheme specific experience.
The Group has an internal body, the Pensions Executive Committee (PEC), that is chaired by the Group Finance Director. The PEC sets
and oversees a set of philosophies, policies and practices in respect of post-employment benefits including, but not limited to, design,
funding, investment strategy, risk management and governance. It also reviews significant changes to defined benefit schemes in the
countries with the most significant liabilities, and defined contribution schemes in the countries with the most significant costs.
Significant changes to defined benefit arrangements include scheme closures to future accrual and risk management exercises such as
the ‘buy-in’ and ‘buy-out’ transactions referred to below.
A ‘buy-out’ transaction is where a pension scheme derecognises all (or part) of its liabilities, removing it from the balance sheet, by
permanently transferring those obligations from the sponsoring employer to a third-party provider and eliminating all further legal
or constructive obligation to the pension scheme or to the sponsoring employer. By contrast, with a ‘buy-in’ transaction the scheme
liabilities remain on the balance sheet and the sponsoring employer remains responsible for the fulfilment of the pension obligations.
However, these obligations are de-risked through the purchase of an insurance product designed to match the underlying cash flows
of the pension liability reducing the risks associated with improved longevity and interest and discount rate movements. The Group
consequently benefits from the ‘buy-in’ as it reduces the individual scheme’s reliance on the Group for future cash funding requirements.
All of the Group’s arrangements, including funded schemes where formal trusts or equivalents are required, have been developed
and are operated in accordance with local practices and regulations where applicable in the countries concerned. Responsibility for
the governance of these schemes, including specific investment decisions and funding contribution schedules, generally lies with
the trustees, or equivalent bodies, of each arrangement. The trustees will usually consist of representatives appointed by both the
sponsoring company and the beneficiaries.
The funded arrangements in the Group have policies on investment management, including strategies over a preferred long-term
investment profile, and schemes in certain territories including Canada and the Netherlands manage their bond portfolios to match
the weighted average duration of scheme liabilities. In addition, as noted below, certain arrangements in the UK and Canada have been
de-risked through the purchase of insurance policies. The majority of funded schemes are subject to local regulations regarding funding
requirements. Contributions to defined benefit schemes are determined after consultation with the respective trustees and actuaries
of the individual externally funded schemes, and after taking into account regulatory requirements in each territory. The Group’s
contributions to funded defined benefit schemes in 2024 in total are expected to be £48 million compared to £64 million in 2023.
U.S.
In the U.S., the main funded pension plan is the Reynolds and Affiliates Pension Plan (RAPP) which was formed at the end of 2022
through a merger of the Reynolds American Retirement Plan (PEP) and the Retirement Income Plan for Certain RAI Affiliates (Affiliates).
The only funded healthcare scheme is the Brown & Williamson Tobacco Corporation Welfare & Fringe Benefit Plan. Each of the above
were established with corporate trustees that are required to run the plan in accordance with the plan’s rules and to comply with all
relevant legislation, including the Employee Retirement Income Security Act of 1974.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The corporate trustees act as custodians with a committee of local management acting in a fiduciary capacity with regard to investment
decisions, risk mitigation and administration of the arrangements. Contributions to the various funded plans are agreed with the named
fiduciary, scheme actuaries and the committee of local management after taking account of statutory requirements including the
Pension Protection Act of 2006, as amended. Through its U.S. subsidiaries, the Group may make significant contributions, either as
required by statutory requirements or at the discretion of the Group, with the aim of maintaining a funding status of at least 90% and
remaining fully funded in the long-term. During 2023, the Group contributed £2 million to its funded pension and post-retirement plans
in the U.S. but does not expect to do so in 2024.
For funded plans in the U.S., the trustees employ a risk mitigation strategy which seeks to balance pension plan returns with a reasonable
level of funded status volatility. Based on this framework, the asset allocation has two primary components. The first component is the
hedging portfolio, which primarily consists of extended duration fixed income holdings (typically U.S. Government and investment grade
corporate bonds) and, to a lesser extent, derivatives used to match the majority of the interest rate risk associated with the benefit
obligations, thereby reducing expected funded status volatility. The second component is the return-seeking portfolio, which is designed
to enhance portfolio returns. The return-seeking portfolio is broadly diversified.
On 7 October 2021, the Group concluded a transaction affecting portions of the membership of the former PEP and former Affiliates
plans referred to above, allowing the Group to fully settle portions of its liability by transferring the obligations to the Metropolitan Tower
Life Insurance Company in a buy-out. Approximately US$1.9 billion (£1.4 billion) of plan liabilities were removed from the balance sheet,
resulting in a settlement gain of £35 million. A further partial buy-out affecting portions of the membership of the former PEP and former
Affiliates plans was concluded on 7 June 2022, with approximately US$1.6 billion (£1.3 billion) of plan liabilities removed from the balance
sheet, resulting in a settlement gain of £16 million.
At 31 December 2023, the Reynolds and Affiliates Pension Plan was reporting a surplus under IAS 19 in total of £516 million (2022: £567 million).
Under the rules of this plan, after assuming the gradual settlement of the plan liabilities over the lives of the arrangements, any surplus
would be returnable to the Group in the event of a termination or could otherwise be repurposed for other existing or replacement
benefit plans, and accordingly, no surplus restriction has been recognised.
United Kingdom
In the UK, the main pension arrangement is the British American Tobacco UK Pension Fund (UKPF), which is established under trust law
and has a corporate trustee that is required to run the scheme in accordance with the UKPF’s Trust Deed and Rules and to comply with
the Pension Scheme Act 1993, Pensions Act 1995, Pensions Act 2004 and all other relevant legislation. With effect from 1 July 2020, UKPF
was closed to further accrual of benefits with all active members becoming deferred members.
The formal triennial actuarial valuation of the UKPF was last carried out with an effective date of 31 March 2023. This showed that UKPF
had a surplus of £111 million on a Technical Provisions basis, in accordance with the statutory funding objective. Under IAS 19, this was
reported as a net retirement benefit asset of £184 million (2022: £143 million). Under the UKPF scheme rules, the Trustee does not have
a unilateral power to commence a wind up of UKPF, and the Group has recognised a surplus as an unconditional right to a refund
assuming the gradual settlement of the UKPF liabilities over the life of the scheme with any future surplus returnable to the Group at the
end of the life of the scheme.
Under an amendment to the Schedule of Contributions dated 8 August 2022, the Trustee and the Group agreed that the Group would
make no contributions in 2022 but would commit to pay £36 million in July 2023. However, the Trustee retained the right to require an
interim payment of up to £18 million at any time before 19 August 2023 should it consider this, in all the circumstances, to be necessary
and appropriate. On 16 March 2023, the Schedule of Contributions was further amended to remove any funding commitment for the
foreseeable future, which was reconfirmed in the current Schedule of Contributions dated 17 December 2023. Consequently, no
contributions were made to UKPF in 2023 or 2022 and no contributions are expected in 2024.
On 26 October 2022, the Group entered into an agreement with the Trustee to provide a temporary liquidity facility capped at £40 million
for up to two years. The facility provides short-term liquidity for UKPF, should this be necessary, in meeting capital calls in respect of the
certain residual investments held by UKPF. Once borrowed and repaid, amounts cannot be redrawn. Interest will accrue on the amounts
borrowed under the facility at SONIA plus 2.25% p.a. A commitment charge of 0.56% will be paid by the Trustee. As at 31 December 2022
and 31 December 2023 this facility was undrawn.
As part of its risk management strategy, on 31 May 2019, the UK Trustee entered into a buy-in agreement with Pension Insurance
Corporation plc (PIC) to acquire an insurance policy with the intent of matching a specific part of UKPF’s future cash flows arising from
the accrued pension liabilities of retired and deferred members and improving the security to the UKPF and its members. On 19 May
2021, the Trustee entered into an agreement with PIC to acquire a second buy-in policy which involved the transfer of £383 million of
assets held by UKPF to PIC, and on 26 October 2022, a third and final buy-in policy was acquired with PIC. £198 million of assets were
transferred immediately with £35 million of the premium deferred and subsequently settled in 2023.
As a result of these transactions, approximately 92% of the assets held by UKPF (2022: 94%) are represented by the buy-in contracts,
covering 100% of UKPF’s retirement liabilities (2022: 100%). On an IAS 19 basis, the subsequent fair value of the insurance policies
matches the present value of the liabilities being insured.
For the residual assets held by UKPF, the current allocation is broadly split as 65% in return seeking assets and 35% in liquid assets. The return
seeking portfolio is invested in illiquid assets which, in the normal course of events, will wind down naturally over time, with their value being
realised as the investments mature. The Trustee reviewed the investment strategy following the completion of the third and final buy-in
contract with PIC in October 2022. The residual liquid assets were transferred to a Liquidity Fund to support the ongoing and anticipated
expenses of the UKPF. The strategy remains consistent with their ultimate target to further reduce UKPF's exposure to asset volatility.

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Financial Statements

Notes on Accounts
Continued

Other territories
Payments made to pensioners by the operating companies in Germany, net of income on scheme assets, are deemed to be company
contributions to the Contractual Trust Arrangements and are anticipated to be around £19 million in 2024 and £38 million per annum for
the four years after that. Contributions to pension schemes in Canada, Netherlands and Switzerland in total are anticipated to be around
£12 million in 2024 and then also around £7 million per annum for the four years after that.
For schemes in the Netherlands reporting surpluses of £44 million (2022: £46 million), these surpluses have been recognised as an
unconditional right to a refund assuming the gradual settlement of the pension liabilities over the life of the scheme, with any future surplus
returnable to the Group at the end of the life of the scheme, and similarly for the surplus relating to schemes in Germany of £122 million
(2022: £150 million). For schemes in surplus in Canada of £33 million (2022: £35 million), the economic benefit has been calculated as a
combination of the expected level of administration expenses which may be charged to the plan assets in accordance with the plan rules,
which economically represents a potential surplus refund, and the value of the employer reserve account as defined in legislation, which
represents a potential reduction in contributions on an ongoing basis or a surplus refund at the end of the life of the scheme.
On 14 November 2023, the Group through its Canadian subsidiaries entered into a buy-in agreement with two insurers to acquire
insurance policies that operate as assets of its second largest Canadian scheme, the Imperial Tobacco Corporate Pension Plan
(Corporate Plan), by transferring plan assets of CAD$194 million (£114 million). The transaction was met entirely from the pension plan
assets with no further funding required from the Group. The buy-in covered all the Corporate Plan’s liabilities in relation to pensioners
and deferred members as well as the pensions accrued up to 31 December 2022 for active members. The Group consequently benefits
from the buy-in as it reduces the Corporate Plan’s reliance on the Group for future cash funding requirements. Previously, on
2 September 2021, the Group entered into a buy-in agreement in respect of its largest Canadian scheme, the Imasco Pension Fund
Society Plan (Society Plan), by transferring plan assets of CAD$766 million (£451 million). The buy-in covered all the Society Plan’s
liabilities in relation to pensioners and deferred members as well as the pensions accrued up to 31 December 2020 for active members.
Unfunded arrangements
The majority of benefit payments are from trustee administered funds, however, there are also a number of unfunded schemes where
the sponsoring company meets the benefit payment obligation as it falls due, including UK-based Defined Benefit and Defined
Contribution Unapproved Unfunded Retirement Benefit Schemes (DB UURBS and DC UURBS respectively). The DC UURBS credits
accrued in the year are increased in line with the Company’s Weighted Average Cost of Debt and the scheme is therefore treated as a
defined benefit scheme under IAS 19. For unfunded pension schemes in the U.S. and UK, 50% of the liabilities reported at year-end are
expected to be settled by the Group within 10 years, 29% between 10 and 20 years, 14% between 20 and 30 years, and 7% thereafter. For
unfunded healthcare schemes in the U.S. and Canada, 70% of the liabilities reported at year-end are expected to be settled by the Group
within 10 years, 24% between 10 and 20 years, 5% between 20 and 30 years, and 1% thereafter.
The amounts recognised in the balance sheet are determined as follows:
Pension schemes Healthcare schemes Total
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Present value of funded scheme liabilities (6,267) (6,310) (150) (205) (6,417) (6,515)
Fair value of funded scheme assets 7,172 7,271 145 153 7,317 7,424
905 961 (5) (52) 900 909
Unrecognised funded scheme surpluses (40) (61) — — (40) (61)
865 900 (5) (52) 860 848
Present value of unfunded scheme liabilities (380) (387) (405) (410) (785) (797)
485 513 (410) (462) 75 51

The above net asset/(liability) is recognised in the balance sheet as follows:

– retirement benefit scheme liabilities (467) (483) (414) (466) (881) (949)
– retirement benefit scheme assets 952 996 4 4 956 1,000
485 513 (410) (462) 75 51

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The net assets of funded pension schemes by territory are as follows:

Liabilities Assets Total

2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
– U.S. (1,439) (1,552) 1,890 2,046 451 494
– UK (2,132) (2,114) 2,315 2,256 183 142
– Germany (741) (711) 863 861 122 150
– Canada (556) (574) 594 613 38 39
– Netherlands (736) (693) 780 739 44 46
– Switzerland (273) (279) 295 308 22 29
– Rest of Group (390) (387) 435 448 45 61
Funded schemes (6,267) (6,310) 7,172 7,271 905 961

Of the Group’s unfunded pension schemes, 48% (2022: 47%) relate to arrangements in the UK and 38% (2022: 39%) relate to
arrangements in the U.S., while 86% (2022: 86%) of the Group’s unfunded healthcare arrangements relate to arrangements in the U.S.
The amounts recognised in the income statement are as follows:
Pension schemes Healthcare schemes Total
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Defined benefit schemes
Service cost
– current service cost 36 50 1 1 37 51
– past service (credit)/cost, curtailments
and settlements (7) (14) 1 1 (6) (13)
Net interest on the net defined benefit
liability
– interest on scheme liabilities 315 224 32 23 347 247
– interest on scheme assets (345) (240) (9) (6) (354) (246)
– interest on unrecognised funded scheme
surpluses 4 1 — — 4 1
3 21 25 19 28 40
Defined contribution schemes 80 93 — — 80 93
Total amount recognised in the income
statement (note 3) 83 114 25 19 108 133

The above charges are recognised within employee benefit costs in note 3 and include a credit of £9 million in 2022 in respect of
settlements, past service costs and defined contribution costs reported as part of the restructuring costs and other adjusting items
charged in arriving at profit from operations (note 7). Included in current service cost in 2023 is £10 million (2022: £13 million) of
administration costs. Current service cost is stated after netting employee contributions, where applicable.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

The movements in scheme liabilities are as follows:

Pension schemes Healthcare schemes Total
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Present value at 1 January 6,697 10,414 615 707 7,312 11,121
Differences on exchange (153) 567 (34) 78 (187) 645
Current service cost 36 50 1 1 37 51
Past service (credit)/cost and settlements (67) (1,308) 1 1 (66) (1,307)
Interest on scheme liabilities 315 224 32 23 347 247
Contributions by scheme members 2 3 — — 2 3
Benefits paid (484) (586) (52) (59) (536) (645)
Actuarial (gains)/losses
– arising from changes in demographic
(28) (18) — — (28) (18)
assumptions
– arising from changes in financial
268 (2,775) 9 (145) 277 (2,920)
assumptions
Experience losses/(gains) 61 126 (17) 9 44 135
Present value at 31 December 6,647 6,697 555 615 7,202 7,312

Changes in financial assumptions principally relate to discount rate movements in both years, offset by changes in inflation. Experience
losses/(gains) relates to variations from previous assumptions for inflationary increases for pensions-in-payment and deferred pensions
as well as adjustments for membership data. Past service (credit)/cost and settlements in the table above includes amounts relating to
the U.S. buy-out transaction in 2022.

Scheme liabilities by scheme membership:

Pension schemes Healthcare schemes Total
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Active members 656 756 23 31 679 787
Deferred members 1,025 1,055 1 1 1,026 1,056
Retired members 4,966 4,886 531 583 5,497 5,469
Present value at 31 December 6,647 6,697 555 615 7,202 7,312

Approximately 95% of scheme liabilities in both years relate to guaranteed benefits.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The movements in funded scheme assets are as follows:

Pension schemes Healthcare schemes Total
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Fair value of scheme assets
7,271 10,644 153 172 7,424 10,816
at 1 January
Differences on exchange (182) 606 (10) 21 (192) 627
Settlements (60) (1,294) — — (60) (1,294)
Interest on scheme assets 345 240 9 6 354 246
Company contributions 64 74 — — 64 74
Contributions by scheme members 2 3 — — 2 3
Benefits paid (448) (546) (14) (15) (462) (561)
Actuarial gains/(losses) 180 (2,456) 7 (31) 187 (2,487)
Fair value of scheme assets
at 31 December 7,172 7,271 145 153 7,317 7,424

The actuarial losses and gains in both years principally relate to movements in the fair values of scheme assets including revaluations
on initial recognition and subsequent remeasurement of insurance assets acquired in the buy-in transactions referred to above. Actual
returns are stated net of applicable taxes and fund management fees. Past service and settlements in the table above includes amounts
relating to the U.S. buy-out transactions in 2022.
Scheme assets have been diversified into equities, bonds and other assets and are typically invested via fund investment managers into
both pooled and segregated mandates of listed and unlisted equities and bonds.
Pension schemes Healthcare schemes Total
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Equities ‒ listed 629 623 5 5 634 628
Equities ‒ unlisted 675 756 49 50 724 806
Bonds ‒ listed 1,139 1,167 17 18 1,156 1,185
Bonds ‒ unlisted 803 768 58 64 861 832
Buy-in insurance policies 2,585 2,453 — — 2,585 2,453
Other assets ‒ listed 556 473 8 7 564 480
Other assets ‒ unlisted 785 1,031 8 9 793 1,040
Fair value of scheme assets
at 31 December 7,172 7,271 145 153 7,317 7,424

In the above analysis, investments via equity-based investment funds are shown under listed equities, and investments via bond-based
investment funds are shown under listed bonds. Other assets include insurance contracts, cash and other deposits, derivatives and other
hedges, recoverable taxes, infrastructure investments and investment property. The fair values of listed scheme assets were derived
from observable data including quoted market prices and other market data, including market values of individual segregated
investments and of pooled investment funds where quoted.
The fair values of insurance policies related to buy-in transactions in the UK and Canada were estimated as the present value of the
underlying obligations covered by the insurance policy and consequently the valuation of these assets at each balance sheet date is
subject to the same measurement uncertainty as for the related scheme liabilities.
The fair values of other unlisted assets were determined using an income approach that utilised cash flow models utilising observable
inputs and comparing these valuations to benchmark valuations of similar assets. In addition, the fair value of a proportion of the unlisted
bonds is estimated by reference to daily broker auctions.
In the U.S, pension plan assets are invested using active investment strategies and multiple investment management firms. Managers
within each asset class cover a range of investment styles and approaches. Allowable investment types include public equity, fixed
income, real assets, private equity and hedge funds. The range of allowable investment types utilised for pension assets provides
enhanced returns and more widely diversifies the plan.
As noted above, the UKPF Trustee has acquired insurance policies that operate as a UK Fund investment asset in a buy-in transaction.
The residual assets of this fund of £184 million (2022: £143 million) now predominantly consist of cash and a proportion of illiquid
investments, such as private equity and infrastructure investments, as well as certain liability-driven investments and absolute return funds.

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Financial Statements

Notes on Accounts
Continued

The recognition of retirement benefit surpluses on the balance sheet is restricted where the economic benefit, in the form of a potential
refund or reduction in future contributions, has a present value which is less than the net assets of the scheme. The movements in the
unrecognised scheme surpluses, recognised in other comprehensive income, are as follows:
Pension schemes Healthcare schemes Total
2023 2022 2021 2023 2022 2021 2023 2022 2021
£m £m £m £m £m £m £m £m £m
Unrecognised funded
scheme surpluses at
1 January (60) (16) (16) — — — (60) (16) (16)
Differences
on exchange — (4) 2 — — — — (4) 2
Interest on
unrecognised funded
scheme surpluses (4) (1) (1) — — — (4) (1) (1)
Movement in year
(note 22) 24 (39) (1) — — — 24 (39) (1)
Unrecognised funded
scheme surpluses at
31 December (40) (60) (16) — — — (40) (60) (16)

The principal actuarial assumptions (weighted to reflect individual scheme differences) used in the following territories are shown below.
In both years, discount rates are determined by reference to normal yields on high quality corporate bonds at the balance sheet date.
2023 2022
U.S. UK Germany Canada Netherlands Switzerland U.S. UK Germany Canada Netherlands Switzerland
Rate of increase in
salaries (%) 3.3 Nil 2.5 2.5 1.4 2.0 3.3 Nil 2.5 2.5 1.4 1.5
Rate of increase in
pensions in payment
(%) 2.4 3.1 2.3 Nil 2.5 Nil 2.4 3.2 2.3 Nil 2.2 Nil
Rate of increase in
deferred pensions (%) 0.1 2.5 2.3 Nil 2.5 — 0.1 2.8 2.3 Nil 2.2 —
Discount rate (%) 5.2 4.8 3.5 4.6 3.3 1.4 5.5 5.0 4.2 5.0 3.7 2.1
General inflation (%) 2.5 3.1 2.5 2.0 2.0 1.4 2.5 3.2 2.3 2.0 2.0 1.2

2023 2022
U.S. UK Germany Canada Netherlands Switzerland U.S. UK Germany Canada Netherlands Switzerland
Weighted average
duration of liabilities
(years) 10.2 12.2 10.6 9.0 15.0 10.8 10.7 12.4 10.9 9.0 14.4 10.2

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

For healthcare inflation in the U.S., the assumption is 7.5% for 2023 (2022: 7.5%) and in Canada, the assumption is 5.0% for both years.
Mortality assumptions are subject to regular review. The principal schemes used the following tables:
U.S. Pri-2012 mortality tables without collar or amount adjustments projected with MP-2021 generational projection except
for a specific group of retired members for which the mortality assumption is 99.5% of the RP-2006 table with white
collar adjustment, projected with MP-2021 generational projection (both years)
UK S3NA (YOB) with the CMI (2022) improvement model (smoothing parameter of 7) and 25% weighting to the 2022 data
with a 1.25% long-term improvement rate applied from 2020 onwards (2022: S3PA (YOB) with the CMI (2021)
improvement model with a 1.25% long-term improvement rate)
Germany RT Heubeck 2018 G (both years)
Canada CPM-2014 Private Table (both years)
Netherlands AG Prognosetafel 2022 (both years)
Switzerland LPP/BVG 2020 base table with CMI projection factors for mortality improvements with a 1.5% long-term improvement
rate (both years)
Based on the above, the weighted average life expectancy, in years, for mortality tables used to determine benefit obligations is as follows:
U.S. UK Germany Canada Netherlands Switzerland
Male Female Male Female Male Female Male Female Male Female Male Female
31 December 2023
Member age 65
(current life expectancy) 22.1 23.6 22.6 24.1 20.6 24.0 22.1 24.4 21.0 24.4 22.0 23.8
Member age 45
(life expectancy at age 65) 22.2 24.1 24.1 26.1 23.0 26.8 23.1 25.4 23.2 26.3 24.0 25.7
31 December 2022
Member age 65
(current life expectancy) 22.1 23.6 22.9 24.2 20.6 24.0 22.0 24.4 21.0 24.4 22.0 23.7
Member age 45
(life expectancy at age 65) 22.2 24.1 24.5 26.0 23.4 26.3 23.0 25.3 23.2 26.3 23.9 25.6

For the remaining territories, typical assumptions are that real salary increases will be from 0% to 11.7% (2022: 0% to 8.0%) per annum
and discount rates will be from 0% to 7.0% (2022: 0% to 7.5%) above inflation. Pension increases, where allowed for, are generally
assumed to be in line with inflation. Assumptions of life expectancy are in line with best practice in each territory. For countries where
there is not a deep market in such corporate bonds, the yield on government bonds is used.
The valuation of retirement benefit schemes involves judgements about uncertain future events. Sensitivities in respect of the key
assumptions used to measure the principal pension schemes as at 31 December 2023 are set out below. These sensitivities show the
hypothetical impact of a change in each of the listed assumptions in isolation, with the exception of the sensitivity to inflation which
incorporates the impact of certain correlating assumptions such as salary increases and pension increases. While each of these
sensitivities holds all other assumptions constant, in practice such assumptions rarely change in isolation, while asset values also change,
and the impacts may offset to some extent.

1 year 1 year percentage percentage

increase decrease increase decrease
£m £m £m £m
Average life expectancy – increase/(decrease) of scheme liabilities 184 (185)
Rate of inflation (+/- 25bps) – increase/(decrease) of scheme liabilities 95 (96)
Discount rate (+/- 50bps) – (decrease)/increase of scheme liabilities (308) 336

A one percent increase in healthcare inflation would increase healthcare scheme liabilities by £20 million, and a one percent decrease
would decrease liabilities by £18 million. The income statement effect of this change in assumption is not material.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

16 Deferred tax
Net deferred tax (liabilities)/assets comprise:
Excess of
capital Undistributed
allowances earnings of Other
Stock over Tax associates and Retirement temporary
relief depreciation losses subsidiaries benefits Trademarks differences Total
£m £m £m £m £m £m £m £m
1 January 2023 30 (115) 210 (229) 38 (18,773) 1,093 (17,746)
Differences on exchange 2 26 1 12 1 798 (78) 762
(Charged)/credited to the
income statement (1) 72 153 (4) (35) 5,384 8 5,577
Credited/(charged) relating
to changes in tax rates — — 9 — — 105 (8) 106
Credited/(charged) to other
comprehensive income — — — — 35 — (23) 12
Net reclassifications as
held-for-sale 1 (4) — — — — 11 8
31 December 2023 32 (21) 373 (221) 39 (12,486) 1,003 (11,281)
1 January 2022 (4) (151) 94 (221) 139 (16,779) 1,071 (15,851)
Differences on exchange (8) (20) 5 (8) 7 (2,109) 126 (2,007)
Credited/(charged) to the
income statement 46 50 77 — (18) 70 (51) 174
(Charged)/credited relating
to changes in tax rates — (3) 34 — (1) 45 (9) 66
Charged to other
comprehensive income — — — — (89) — (17) (106)
Net reclassifications as
held-for-sale (4) 9 — — — — (27) (22)
31 December 2022 30 (115) 210 (229) 38 (18,773) 1,093 (17,746)

The net deferred tax liabilities are reflected in the Group balance sheet as follows: deferred tax asset of £911 million and deferred tax
liability of £12,192 million (2022: deferred tax asset of £682 million and deferred tax liability of £18,428 million), after offsetting assets and
liabilities where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred income taxes relate
to the same fiscal authority.
The Group net deferred tax liability of £11,281 million includes a net deferred tax asset of £493 million in relation to UK Group companies,
which relates mainly to tax losses (£363 million) and the excess of capital allowances over depreciation (£196 million). The tax losses are
expected to be utilised in future periods as a result of increased profitability in UK Group companies which is expected follow from
improved efficiency in the delivery of business activities. Based on current forecasts UK group companies are expected to generate
taxable profits from 2026, from which time it is expected that the tax losses will start to reduce. The losses are forecast to be fully utilised
within 6 years thereafter, accounting for a 10% increase or decrease in the total profits of UK group companies.
As disclosed in Note 1 Accounting Policies, the Group has applied the mandatory exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes in accordance with IAS12 Income Taxes.
At the balance sheet date, the Group has not recognised a deferred tax asset in respect of unused tax losses of £360 million (2022:
£364 million) which have no expiry date and unused tax losses of £285 million (2022: £429 million) which will expire within the next 20 years.
In 2023 and 2022 the Group has not recognised any deferred tax asset in respect of deductible temporary differences which have no
expiry date and has not recognised £25 million (2022: £41 million) in respect of deductible temporary differences which will expire within
the next 10 years.
At the balance sheet date, the Group has unused tax credits of £80 million (2022: £80 million) which have no expiry date. No amount
of deferred tax has been recognised in respect of these unused tax credits.
At the balance sheet date, the aggregate amount of undistributed earnings of subsidiaries which would be subject to dividend
withholding tax and for which no withholding tax liability has been recognised was £1.1 billion (2022: £1.6 billion).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

17 Trade and other receivables

2023 2022
£m £m
Trade receivables 2,887 2,609
Loans and other receivables 663 1,568
Prepayments and accrued income 392 431
3,942 4,608
Current 3,621 4,367
Non-current 321 241
3,942 4,608

The majority of receivables are held in order to collect contractual cash flows, in accordance with the Group’s business model for
managing financial assets, and hence are measured at amortised cost. In certain countries, however, the Group has entered into
factoring arrangements and periodically sells certain trade receivables to banks and other financial institutions, without recourse, for
cash. These trade receivables have been derecognised from the statement of financial position to reflect the transfer by the Group of
substantially all of the risks and rewards of the receivables, including credit risk. Consequently, the cash inflows have been recognised
within operating cash flows. Typically in these arrangements, the Group also acts as a collection agent for the bank. At 31 December
2023, the value of trade receivables derecognised through the factoring arrangements where the Group acts as a collection agent was
£545 million (2022: £533 million) and where the Group does not act as a collection agent was £16 million (2022: £22 million). Included in
trade receivables above is £189 million (2022: £164 million) of trade debtor balances which were available for factoring under these
arrangements. In addition, the Group participates in certain supply chain finance programmes utilised by our customers allowing us to
receive payment for invoices earlier than the agreed due date at a discounted value. At 31 December 2023, the value of trade receivables
derecognised through these arrangements was £141 million (2022: £81 million).
Included in loans and other receivables are £131 million of litigation related deposits (2022: £114 million). Management has determined that
these payments represent a resource controlled by the entity, as a result of past events and from which future economic benefits are
expected to flow to the entity either by being recoverable on conclusion of ongoing appeal processes or by reducing amounts potentially
payable should the appeal process fail. These deposits are held at the fair value of consideration transferred and are offset against
provisions, if applicable, only once funds have transferred out from the deposit account. The effect of discounting would be immaterial.
In March 2017, the Brazilian Supreme Court ruled that for all taxpayers VAT should not be included in the calculation of social contribution
taxes (PIS/Cofins) which are levied based on revenue. In August 2022, Souza Cruz achieved the favourable final and unappealable decision
in its individual lawsuit in respect of overpaid taxes to the government. Accordingly, an asset was recognised in the amount of
£624 million (principal amount plus interest) . Furthermore, the Group had a right related to an earn-out linked to the timing of the credit
compensation of £97 million. In 2023, Souza Cruz fully offset the tax credit receivable with ordinary federal taxes payable, as allowed by
local legislation.
As explained in note 27(d)(ii), loans and other receivables include £56 million (2022: £56 million) in relation to outstanding proceeds from
the sale of the Group’s Iranian subsidiary in 2021 as a current receivable. Given the ongoing political situation, heightened sanctions and
other uncertainties coupled with the passage of time the receivable has been outstanding, the Group has recognised an expected credit
loss of £28 million at 31 December 2023.
Also included in loans and other receivables are deposits that do not meet the definition of cash and cash equivalents as well as loans
provided to farmers. The cash flows arising from these transactions are included in investing activities and have been reconciled,
in note 18, to the cash flow statement.
Prepayments and accrued income include £17 million (2022: £21 million) of accrued income primarily in relation to rebates.
Amounts receivable from related parties including associated undertakings are shown in note 30.
Trade and other receivables have been reported in the balance sheet net of allowances as follows:
2023 2022
£m £m
Trade receivables – gross 2,957 2,660
Trade receivables – allowance (70) (51)
Loans and other receivables – gross 691 1,568
Loans and other receivables – allowance (28) —
Prepayments and accrued income 392 431
Net trade and other receivables per balance sheet 3,942 4,608

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

The movements in the allowance account are as follows:

2023 2022
Loans Loans
Trade and other Trade and other
receivables receivables Total receivables receivables Total
£m £m £m £m £m £m
1 January 51 — 51 37 — 37
Differences on exchange 2 — 2 2 — 2
Provided in the year 33 28 61 28 — 28
Released (16) — (16) (16) — (16)
31 December 70 28 98 51 — 51

As permitted by IFRS 9, the loss allowance on trade receivables arising from the recognition of revenue under IFRS 15 is initially measured
at an amount equal to lifetime expected losses. Allowances in respect of loans and other receivables are initially recognised at an amount
equal to 12-month expected credit losses. Allowances are measured at an amount equal to the lifetime expected credit losses where the
credit risk on the receivables increases significantly after initial recognition.
The Group holds bank guarantees, other guarantees and credit insurance in respect of some of the past due debtor balances.
Trade and other receivables are predominantly denominated in the functional currencies of subsidiary undertakings apart from the
following: US dollar: 3.3% (2022: 1.9%), Euro: 6.6% (2022: 5.7%) and other currencies: 1.4% (2022: 2.4%).
There is no material difference between the above amounts for trade and other receivables and their fair value due to the short-term
duration of the majority of trade and other receivables as determined using discounted cash flow analysis. There is no concentration
of credit risk with respect to trade receivables as the Group has a large number of internationally dispersed customers.
18 Investments held at fair value
2023 2022
Fair value Fair value Fair value Fair value
through P&L through OCI Total through P&L through OCI Total
£m £m £m £m £m £m
1 January 640 60 700 469 37 506
Difference on exchange (52) (1) (53) 18 1 19
Additions 405 11 416 209 19 228
Disposals (372) — (372) (93) (3) (96)
Provisions 4 — 4 17 — 17
Reclassifications (3) 3 — — — —
Other fair value movements 30 (6) 24 20 6 26
31 December 652 67 719 640 60 700
Current 601 — 601 579 — 579
Non-current 51 67 118 61 60 121
652 67 719 640 60 700

The Group’s investments principally consist of non-derivative financial assets that cannot be classified as loans and other receivables
or cash and cash equivalents, as well as investments made by the Group’s corporate venture capital unit, Btomorrow Ventures, and other
Group companies.
Investments held at fair value through profit and loss principally consist of government securities, indexed deposits, treasury bills or other
treasury products with maturities of more than three months which, if held for less than 12 months, form part of the Group’s definition
of net debt. Investments held at fair value through profit and loss also includes the Group’s investment in Charlotte’s Web (see note 14).
Investments held at fair value through other comprehensive income (OCI) include equity investments in various start-up businesses
which are held for their strategic value.
Investments held at fair value through profit and loss above include restricted amounts of £446 million (2022: £396 million) due to
investments held by subsidiaries in CCAA protection (note 32), as well as £89 million (2022: £78 million) subject to potential exchange
control restrictions.
In 2021, as part of the disposal of the Group’s operations in Iran (note 27(d)), a provision of £24 million against non-current investments held
at fair value was charged to net finance costs as recoverability of these funds was not certain. During 2022, £17 million was recovered with
some progress on resolving issues over the release of the remaining funds. During 2023, an additional £4 million was recovered.
Investments held at fair value are predominantly denominated in the functional currencies of subsidiary undertakings with less than
6% in other currencies (2022: less than 5% in other currencies). There is no material difference between the investments held at fair value
and their gross contractual values.
The classification of these investments under the IFRS 13 Fair Value Measurement fair value hierarchy is given in note 26. Fair values for
quoted investments are based on observable market prices. If there is no active market for a financial asset, the fair value is established
by using valuation techniques, including discounted cash flow analyses and share of net assets. The fair value of the seven-year
convertible debenture in Charlotte’s Web has been determined using a binomial option pricing model.
Included in the values in the table above are £192 million (2022: £186 million) of level 3 assets. Movements in these assets in 2023
included £123 million (2022: £133 million) of additions, £90 million (2022: £82 million) of disposals and £27 million of net fair value loss
(2022: £26 million net fair value gain).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Below is a reconciliation of the fair value investments cash flows to the cash flow statement – investing activities:
2023 2022
£m £m
Cash outflow from investments held at fair value 416 228
Cash outflow from loans and other receivables 32 29
Cash outflows from investments per cash flow statement 448 257
Cash inflow from investments held at fair value (372) (96)
Cash inflow from loans and other receivables (33) (32)
Cash inflows from investments per cash flow statement (405) (128)

19 Derivative financial instruments

The fair values of derivatives are determined based on market data (primarily yield curves, implied volatilities and exchange rates) to
calculate the present value of all estimated flows associated with each derivative at the balance sheet date. In the absence of sufficient
market data, fair values would be based on the quoted market price of similar derivatives. The classification of these derivative assets
and liabilities under the IFRS 13 fair value hierarchy is given in note 26.
2023 2022
Assets Liabilities Assets Liabilities
£m £m £m £m
Fair value hedges
– interest rate swaps 10 187 27 435
– cross-currency swaps 18 — 126 —
Cash flow hedges
– interest rate swaps — — 5 —
– cross-currency swaps 97 13 127 121
– forward foreign currency contracts 48 55 70 71
Net investment hedges
– forward foreign currency contracts 81 9 45 247
*
Held-for-trading
– interest rate swaps — — 12 14
– forward foreign currency contracts 36 131 149 41
Total 290 395 561 929
Current 181 189 430 427
Non-current 109 206 131 502
290 395 561 929
Derivatives
**
– in respect of net debt 147 317 438 605
– other 143 78 123 324
290 395 561 929
Notes:
* Derivatives which do not meet the tests for hedge accounting under IFRS 9 or which are not designated as hedging instruments are referred to as ‘held-for-trading’. These derivatives
principally consist of interest rate swaps and forward foreign currency contracts which have not been designated as hedges due to their value changes offsetting with other
components of net finance costs relating to financial assets and financial liabilities. The Group does not use derivatives for speculative purposes. All derivatives are undertaken for risk
management purposes.
** Derivatives in respect of net debt are in a net liability position of £170 million as at 31 December 2023 (2022: net asset position of £167 million). The Group’s net debt is presented
in note 23.

For cash flow hedges, the timing of expected cash flows is as follows: assets of £144 million (2022: £202 million) of which £46 million
(2022: £72 million) is expected within one year and £nil million (2022: £ nil million) beyond five years and liabilities of £68 million (2022:
£192 million) of which £52 million (2022: £134 million) is expected within one year and £nil million (2022: £nil million) beyond five years.
The Group’s cash flow hedges are principally in respect of sales or purchases of inventory and certain debt instruments. A certain
number of forward foreign currency contracts were used to manage the currency profile of external borrowings and are reflected in the
currency table in note 23. Interest rate swaps have been used to manage the interest rate profile of external borrowings and are reflected
in the re-pricing table in note 23.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

The table below sets out the maturities of the Group’s derivative financial instruments on an undiscounted contractual basis, based
on spot rates. The table has been re-presented for the comparative period to include interest rates swaps, based on the nature of the
actual settlement. These cash flows are stated net in the cash flow statement.
The maturity dates of all gross-settled derivative financial instruments are as follows:
2023 2022
Assets Liabilities Assets Liabilities
Inflow Outflow Inflow Outflow Inflow Outflow Inflow Outflow
£m £m £m £m £m £m £m £m
Within one year
– forward foreign currency
8,163 (8,006) 10,354 (10,549) 12,506 (12,249) 8,691 (9,049)
contracts
– interest rate swaps — — 124 (256) 132 (144) 152 (310)
– cross-currency swaps 34 (42) 6 (10) 731 (608) 689 (767)
Between one and two years
– forward foreign currency
171 (168) 182 (186) 199 (193) 243 (247)
contracts
– interest rate swaps — — 77 (151) — — 152 (283)
– cross-currency swaps 34 (35) 306 (316) 9 (15) 10 (17)
Between two and three years
– interest rate swaps — — 77 (124) — — 103 (192)
– cross-currency swaps 34 (33) — — 9 (15) 460 (502)
Between three and four years
– interest rate swaps — — 39 (31) — — 104 (169)
– cross-currency swaps 618 (488) — — 9 (15) — —
Between four and five years
– interest rate swaps — — — — — — 52 (43)
– cross-currency swaps 26 (21) — — 756 (579) — —
Beyond five years
– cross-currency swaps 458 (453) — — — — — —
9,538 (9,246) 11,165 (11,623) 14,351 (13,818) 10,656 (11,579)

Group's net-settled derivative financial instruments are all due within one year with assets inflow of £10 million (2022: £7 million inflow)
and liabilities outflow of £5 million (2022: £5 million outflow).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The items designated as hedging instruments are as follows:

2023 2022
Nominal Changes in Changes in
amount of fair value used for Nominal fair value used for
hedging calculating hedge amount of hedging calculating hedge
instrument ineffectiveness instrument ineffectiveness
£m £m £m £m
Interest rate risk exposure:
Fair value hedges
– interest rate swaps 2,798 79 4,657 (417)
– cross-currency swaps 451 13 710 11
Cash flow hedges
– interest rate swaps — — 1,247 (5)
– cross-currency swaps 859 (26) 1,825 60
Foreign currency risk exposure:
Cash flow hedges
– forward foreign currency contracts 2,807 (6) 3,695 (2)
Net investment hedges (derivative related)
– forward foreign currency contracts 4,329 69 6,407 (208)
Net investment hedges (non-derivative related)
– debt (carrying value) in borrowings designated as net
investment hedges of net assets 380 9 389 21

20 Inventories
2023 2022
£m £m
Raw materials and consumables 2,198 2,370
Finished goods and work in progress 2,584 3,159
Goods purchased for resale 156 142
4,938 5,671

Write-offs taken to other operating expenses in the Group income statement were £250 million (2022: £250 million; 2021: £215 million).
As mentioned in note 6(l), this includes a write-off of stock of leaf following an extreme weather event. Goods purchased for resale
include Group brands produced under third-party contract manufacturing arrangements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

21 Cash and cash equivalents

2023 2022
£m £m
Cash and bank balances 3,247 3,116
Cash equivalents 1,412 330
4,659 3,446

The carrying value of cash and cash equivalents approximates their fair value.
Cash and cash equivalents are denominated in the functional currency of the subsidiary undertaking or other currencies as shown below:
2023 2022
£m £m
Functional currency 4,147 2,979
US dollar 373 207
Euro 81 129
Other currencies 58 131
4,659 3,446

In the Group cash flow statement, net cash and cash equivalents are shown after deducting bank overdrafts and accrued interest where
applicable, as follows:
2023 2022
£m £m
Cash and cash equivalents as above 4,659 3,446
Less overdrafts and accrued interest (142) (109)
Net cash and cash equivalents 4,517 3,337

Cash and cash equivalents also include £38 million (2022: £34 million) of cash that is held as a hedging instrument.
Accrued interest of £39 million (2022: £3 million) is primarily due to high cash and cash equivalent balances in certain markets, including
Brazil, where accumulated cash is temporarily higher than normal due to the recognition of tax credits, as explained in note 17, being
offset against tax liabilities payable.
Restricted cash
Cash and cash equivalents include restricted amounts of £1,904 million (2022: £1,411 million) due to subsidiaries in CCAA protection
(note 32), as well as £392 million (2022: £324 million) principally due to exchange control restrictions.

262
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

22 Capital and reserves

(a) Share capital
Ordinary
shares of 25p each
Number of shares £m
Allotted and fully paid
1 January 2023 2,456,867,420 614.21
Changes during the year
– share option schemes 74,489 0.02
31 December 2023 2,456,941,909 614.23
Allotted and fully paid
1 January 2022 2,456,617,788 614.15
Changes during the year
– share option schemes 249,632 0.06
31 December 2022 2,456,867,420 614.21
Allotted and fully paid
1 January 2021 2,456,591,597 614.14
Changes during the year
– share option schemes 26,191 0.01
31 December 2021 2,456,617,788 614.15

Share capital
The Company’s ordinary shares are fully paid and no further contribution of capital may be required by the Company from the
shareholders. All ordinary shares rank equally with regard to participation in dividends and to share in the proceeds of the Company’s
residual assets upon a winding up of the Company. Shareholders may, by ordinary resolution, declare final dividends, but not in excess
of the amount recommended by the Directors. Holders of ordinary shares have no pre-emptive rights.
On a show of hands every shareholder who is present in person at a general meeting is entitled to one vote regardless of the number
of shares held by the shareholder, unless a poll is demanded. On a poll, every shareholder who is present in person or by proxy has one
vote for every share held by the shareholder. The Company’s Annual General Meeting voting is undertaken by way of a poll.
All rights attached to the Company’s shares held by the Group as treasury shares are suspended until those shares are reissued.
(b) Share premium account, capital redemption reserves and merger reserves comprise:
Share Capital
premium redemption Merger
account reserves reserves Total
£m £m £m £m
31 December 2023 115 101 26,414 26,630
31 December 2022 113 101 26,414 26,628
31 December 2021 107 101 26,414 26,622

Share premium account

The share premium account includes the difference between the value of shares issued and their nominal value. The share premium
increase includes £2 million (2022: £5 million; 2021: £nil million) in respect of ordinary shares issued under the Company’s share option
schemes. A further £nil million (2022: £1 million; 2021: £4 million) increase in share premium is related to shares repurchased and not
cancelled that have been transferred from the Company to other Group undertakings, to be granted to certain employees on vesting
of awards, and represents the excess of transfer price of the share over the original weighted average cost of shares.
Capital redemption account
On the purchase of own shares as part of the share buy-back programme for shares which are cancelled, a transfer is made from
retained earnings to the capital redemption reserve equivalent to the nominal value of shares purchased. Purchased shares which are
not cancelled are classified as treasury shares and presented as a deduction from total equity.
Merger reserve account
The merger reserve comprises:
a.In 1999, shares were issued for the acquisition of the Rothmans International B.V. Group and the difference between the fair value
of shares issued and their nominal value of £3,748 million was credited to merger reserves; and
b.On 25 July 2017, the Group announced the completion of the acquisition of the remaining 57.8% of RAI not already owned by the Group.
Shares were issued for the acquisition and the difference between the fair value of shares issued and their nominal value of
£22,666 million was credited to merger reserves.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

(c) Equity attributed to owners of the parent − movements in other reserves and retained earnings (which are after
deducting treasury shares) comprise:
Retained earnings
Fair
Translation Hedging value Revaluation Total Treasury
reserve reserve reserve reserve Other other shares
(i) (ii) (iii) (iv) (v) reserves (vi) Other
£m £m £m £m £m £m £m £m
1 January 2023 2,200 (327) 30 179 573 2,655 (7,116) 51,197
Comprehensive income and expense
Loss for the year — — — — — — — (14,367)
Foreign currency translation and hedges of net
investments in foreign operations
– differences on exchange from translation of
(4,007) — — — — (4,007) — —
foreign operations
– reclassified and reported in profit for the year 552 — — — — 552 — —
– net investment hedges − net fair value
236 — — — — 236 — —
gains on derivatives
– net investment hedges − differences on exchange
9 — — — — 9 — —
on borrowings
Cash flow hedges
– net fair value gains — 59 — — — 59 — —
– reclassified and reported in profit for the year — 12 — — — 12 — —
– tax on net fair value gains in respect of cash flow
— (23) — — — (23) — —
hedges (note 10(f))
Investments held at fair value
– net fair value losses — — (6) — — (6) — —
Associates − share of OCI, net of tax (note 9) (165) 58 — — — (107) — —
Retirement benefit schemes
– net actuarial losses (note 15) — — — — — — — (106)
– surplus recognition (note 15) — — — — — — — 24
– tax on actuarial losses in respect of subsidiaries
— — — — — — — 30
(note 10(f))
Associates − share of OCI, net of tax (note 9) — — (6) — — (6) — 1
Other changes in equity
Cash flow hedges reclassified and
— 27 — — — 27 — —
reported in total assets
Employee share options
– value of employee services — — — — — — — 71
– treasury shares used for share option schemes — — — — — — 14 (14)
Dividends and other appropriations
– ordinary shares — — — — — — — (5,071)
Purchase of own shares
– held in employee share ownership trusts — — — — — — (110) —
Perpetual hybrid bonds
– coupons paid — — — — — — — (58)
– tax on coupons paid — — — — — — — 14
Reclassification of equity related to assets held-for-
(295) — — — — (295) — —
sale
Other movements — — — — — — 116 (94)
31 December 2023 (1,470) (194) 18 179 573 (894) (7,096) 31,627

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Retained earnings
Fair
Translation Hedging value Revaluation Total Treasury
reserve reserve reserve reserve Other other shares
(i) (ii) (iii) (iv) (v) reserves (vi) Other
£m £m £m £m £m £m £m £m
1 January 2022 (6,427) (363) 6 179 573 (6,032) (5,122) 49,334
Comprehensive income and expense
Profit for the year — — — — — — — 6,666
Foreign currency translation and hedges of net
investments in foreign operations
– differences on exchange from translation of
8,920 — — — — 8,920 — —
foreign operations
– reclassified and reported in profit for the year 5 — — — — 5 — —
– net investment hedges – net fair value gains on
(578) — — — — (578) — —
derivatives
– net investment hedges – differences on exchange
(21) — — — — (21) — —
on borrowings
Cash flow hedges
– net fair value gains — 81 — — — 81 — —
– reclassified and reported in profit for the year — 101 — — — 101 — —
– tax on net fair value gains in respect of cash flow
— (17) — — — (17) — —
hedges (note 10(f))
Investments held at fair value
– net fair value gains — — 6 — — 6 — —
Associates – share of OCI, net of tax (note 9) 6 — — — — 6 — —
Retirement benefit schemes
– net actuarial gains (note 15) — — — — — — — 316
– surplus recognition (note 15) — — — — — — — (39)
– tax on actuarial gains in respect of subsidiaries
— — — — — — — (95)
(note 10(f))
Associates − share of OCI, net of tax (note 9) — — 18 — — 18 — 1
Other changes in equity
Cash flow hedges reclassified and reported in
— (129) — — — (129) — —
total assets
Employee share options
– value of employee services — — — — — — — 81
– treasury shares used for share option schemes — — — — — — 14 (15)
Dividends and other appropriations
– ordinary shares — — — — — — — (4,915)
Purchase of own shares
– held in employee share ownership trusts — — — — — — (80) —
– share buy-back programme — — — — — — (2,012) —
Perpetual hybrid bonds
– coupons paid — — — — — — — (59)
– tax on coupons paid — — — — — — — 11
Non-controlling interests – acquisitions
— — — — — — — (1)
(note 27(b))
Reclassification of equity in respect of assets
295 — — — — 295 — —
classified as held-for-sale
Other movements — — — — — — 84 (88)
31 December 2022 2,200 (327) 30 179 573 2,655 (7,116) 51,197

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

Retained earnings
Fair
Translation Hedging value Revaluation Total Treasury
reserve reserve reserve reserve Other other shares
(i) (ii) (iii) (iv) (v) reserves (vi) Other
£m £m £m £m £m £m £m £m
1 January 2021 (6,830) (504) (18) 179 573 (6,600) (5,150) 47,191
Comprehensive income and expense
Loss for the year — — — — — — — 6,801
Foreign currency translation and hedges of net
investments in foreign operations
– differences on exchange from translation of
31 — — — — 31 — —
foreign operations

– reclassified and reported in profit for the year 291 — — — — 291 — —

– net investment hedges – net fair value

75 — — — — 75 — —
gain on derivatives
– net investment hedges – differences on exchange
24 — — — — 24 — —
on borrowings
Cash flow hedges
– net fair value gains — 95 — — — 95 — —
– reclassified and reported in profit for the year — 32 — — — 32 — —
– tax on net fair value gains in respect of cash flow
— (32) — — — (32) — —
hedges (note 10(f))
Investments held at fair value
– net fair value gains — — 9 — — 9 — —
Associates – share of OCI, net of tax (note 9) (18) 1 — — — (17) — —
Retirement benefit schemes
– net actuarial gains (note 15) — — — — — — — 382
– surplus recognition (note 15) — — — — — — — (1)
– tax on actuarial gains in respect of subsidiaries
— — — — — — — (82)
(note 10(f))
Associates - share of OCI, net of tax (note 9) — — 15 — — 15 — (1)
Other changes in equity
Cash flow hedges reclassified and reported in total
— 45 — — — 45 — —
assets
Employee share options
– value of employee services — — — — — — — 76
– treasury shares used for share option schemes — — — — — — 13 (17)
Dividends and other appropriations
– ordinary shares — — — — — — — (4,904)
Purchase of own shares
– held in employee share ownership trusts — — — — — — (82) —
Perpetual hybrid bonds
– coupons paid — — — — — — — (6)
– tax on coupons paid — — — — — — — 1
Non-controlling interests − acquisitions (note 27(b)) — — — — — — — (5)
Other movements — — — — — — 97 (101)
31 December 2021 (6,427) (363) 6 179 573 (6,032) (5,122) 49,334

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

(i) Translation reserve:

The translation reserve is explained in the accounting policy on foreign currencies in note 1.
In 2023, included within the differences on exchange from translation of foreign operations is £552 million (2022: £5 million;
2021: £291 million) which has been reclassified from reserves to the income statement and recognised in other operating expenses as
an adjusting item. In 2023, this amount includes £554 million in respect of the sale of the Russian and Belarusian subsidiaries. In 2022,
£4 million was in respect of the exit from Egypt and, in 2021, £272 million was in respect of the disposal of BAT Pars.
In certain markets, the Group has moved to above market business models utilising local distributors as importers. As a consequence,
with the cessation of a physical presence in these markets, foreign exchange previously recognised in other comprehensive income
for these entities has been reclassified to the income statement. In 2023, a loss of £2 million was recognised in reserves in relation to the
move to above market business models. In 2022 and 2021, a gain of £2 million and £19 million, respectively, was recognised in relation to
the move to above market business models and Quantum-related initiatives.
Also, in 2022, as a result of the liquidation of Yemen, the Group reclassified to the income statement the foreign exchange previously
recognised in associates other comprehensive income. This resulted in a credit of £1 million to the income statement.
(ii) Hedging reserve:
The hedging reserve is explained in the accounting policy on financial instruments in note 1.
Of the amounts reclassified from the hedging reserve and reported in profit for the year, a loss of £51 million (2022: £16 million loss;
2021: £29 million loss) and a loss of £4 million (2022: £2 million loss; 2021: £6 million gain) were reported within revenue and raw materials
and consumables, respectively, together with a loss of £17 million (2022: £46 million gain; 2021: £4 million loss) reported in other operating
expenses, and a gain of £84 million (2022: £73 million gain; 2021: £59 million gain) reported within net finance costs.
The Group hedges certain foreign currency denominated borrowings with cross-currency interest rate swaps. As permitted by IFRS 9
Financial Instruments, the foreign currency basis spreads have been separated from the hedging instrument and are recognised in
reserves as a ‘cost of hedging’ and are reclassified to the income statement in the same period in which profit and loss is affected by the
hedged expected cash flows as a component of the associated interest expense. The basis spreads are included within hedging reserves
as they are not material. Included within the balance of hedging reserves at 31 December 2023 is an accumulated loss of £6 million
(2022: £5 million gain; 2021: £4 million gain) in respect of the cost of hedging.
(iii) Fair value reserve:
The fair value reserve is explained in the accounting policy on financial instruments in note 1. Fair value gains and losses arising from
investments held at fair value through other comprehensive income are recognised in this reserve.
(iv) Revaluation reserve:
The revaluation reserve relates to the acquisition of the cigarette and snus business of ST in 2008.
(v) Other reserves:
Other reserves comprise:
(a) £483 million which arose in 1998 from merger accounting in a Scheme of Arrangement and Reconstruction whereby British American
Tobacco p.l.c. acquired the entire share capital of B.A.T Industries p.l.c. and the share capital of that company’s principal financial services
subsidiaries was distributed, so effectively demerging them; and
(b) In the 1999 Rothmans transaction, convertible redeemable preference shares were issued as part of the consideration. The discount
on these shares was amortised by crediting other reserves and charging retained earnings. The £90 million balance in other reserves
comprises the accumulated balance in respect of the preference shares converted during 2004.
(vi) Treasury shares:
Total equity attributable to owners of the parent is stated after deducting the cost of treasury shares which include £6,807 million
(2022: £6,821 million; 2021: £4,823 million) for shares repurchased and not cancelled and £289 million (2022: £295 million;
2021: £299 million) in respect of the cost of own shares held in employee share ownership trusts.
On 10 February 2022, the Board approved a proposed £2 billion share buy-back programme for 2022. The previous share buy-back
programme was suspended from 30 July 2014. As at 31 December 2023, treasury shares include 5,951,979 (2022: 5,920,638;
2021: 6,269,959) shares held in trust and 220,533,855 (2022: 221,000,192; 2021: 161,930,217) shares repurchased and not cancelled as part
of the Company’s share buy-back programme. From March 2020, the Company has utilised shares acquired in the share buy-back
programme to satisfy shared-based payment awards made to certain employees.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

(d) Perpetual hybrid bonds

On 27 September 2021, the Group issued two €1 billion perpetual hybrid bonds amounting to £1,703 million, which have been classified
as equity. Issuance costs of these bonds, amounting to €26 million (£22 million), have been recognised within equity.
These bonds include redemption options exercisable at the Group’s discretion from September 2026 to December 2026 (the 3%
perpetual hybrid bond) and June 2029 to September 2029 (the 3.75% perpetual hybrid bond), on specified dates thereafter, or
in the event of specific circumstances (such as a change in IFRS or tax regime) as set out in the individual terms of each issue.
The coupons associated with these perpetual hybrid bonds are fixed at 3% until 2026 and 3.75% until 2029, respectively, and would reset
to rates determined by the contractual terms of each instrument on certain dates thereafter. The bonds are perpetual in nature and do
not have maturity dates for the repayment of principal. The contractual terms of the perpetual hybrid bonds allow the Group to defer
coupon payments, however certain contingent events could trigger mandatory payments of such deferred coupons, including the
payment of dividends on, and the repurchase of, ordinary shares, subject to certain exceptions in each case. The full terms and conditions
of such events can be found in the prospectus dated 27 September 2021 which is available under the debt facilities section of the Group’s
debt microsite (bat.com/debt).
As the Group has the unconditional right to avoid transferring cash or another financial asset in relation to these bonds, they are
classified as equity instruments in the consolidated financial statements.
During the year, the Group did not defer any eligible coupon payments and paid a coupon of £33 million in September 2023
(September 2022: £33 million) on the 3.75% September 2029 bond and £26 million in December 2023 (December 2022: £27 million)
on the 3% December 2026 bond which has been recognised within equity.
Differences between the coupon recognised in the capital and reserves statement and the coupon paid on perpetual hybrid bonds
in the cash flow statement are due to foreign exchange arising on short timing differences between recognition and settlement.
The fair value of these bonds at 31 December 2023 is £1,512 million (2022: £1,331 million).
(e) Non-controlling interests
Movements in non-controlling interests primarily relate to profit for the year and dividends (reported as a movement in retained
earnings) and differences on exchange arising from the translation into sterling (reported as a movement in other reserves). Information
on subsidiaries with material non-controlling interests is provided in note 32.
(f) Dividends and other appropriations
The interim quarterly dividend payment for the year ended 31 December 2022 of 230.9p per ordinary share (31 December 2021: 217.8p per
ordinary share) was payable in four equal instalments: amounts payable in May 2023 of £1,282 million (May 2022: £1,239 million), August
2023 of £1,284 million (August 2022: £1,223 million), November 2023 of £1,293 million (November 2022: £1,219 million) and £1,287 million in
February 2024 (February 2023: £1,211 million), respectively. The total dividends recognised as an appropriation from reserves in 2023 was
£5,071 million (2022: £4,915 million; 2021: £4,904 million).
The Board has declared an interim dividend of 235.5p per ordinary share of 25p, for the year ended 31 December 2023, payable
in four equal quarterly instalments of 58.9p per ordinary share in May 2024, August 2024, November 2024 and February 2025.
These payments will be recognised as appropriations from reserves in 2024 and 2025. The total amount payable is estimated to
be £5,267 million based on the number of shares outstanding at the date of these accounts.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

23 Borrowings
2023 2022
Currency Maturity dates Interest rates £m £m
Eurobonds Euro 2024 to 2045 1.3% to 5.4% 5,569 7,149
UK sterling 2024 to 2055 2.1% to 7.3% 3,097 3,884
Swiss franc 2026 1.4% 234 226
Bonds issued pursuant to Rules under
US dollar 2024 to 2053 1.7% to 8.1% 29,913 30,152
the U.S. Securities Act (as amended)
Bonds and notes 38,813 41,411
Commercial paper — 27
Other loans 100 875
Bank loans 216 203
Bank overdrafts 103 106
Lease liabilities 498 517
39,730 43,139

Perpetual hybrid bonds issued by the Group have been classified as equity (note 22(d)) and are therefore excluded from borrowings.
Other loans comprise £100 million (2022: £875 million) relating to a bilateral facility. Commercial paper is issued at competitive rates to
meet short-term borrowing requirements as and when needed.
Current borrowings per the balance sheet include interest payable of £573 million at 31 December 2023 (2022: £524 million). Included
within borrowings are £5,935 million (2022: £9,223 million) of borrowings subject to fair value hedges where their amortised cost has
been decreased by £110 million (2022: £355 million decrease).
The fair value of borrowings is estimated to be £36,000 million (2022: £37,170 million) of which £35,083 million (2022: £35,440 million)
has been calculated using quoted market prices and is within level 1 of the fair value hierarchy and £917 million (2022: £1,730 million)
has been calculated based on discounted cash flow analysis and is within level 3 of the fair value hierarchy.
Amounts secured on Group assets including property, plant and equipment, inventory and receivables as at 31 December 2023 are
£nil million (2022: £9 million). The majority of lease liabilities are also secured against the associated assets.
Borrowings are repayable as follows:
Per balance sheet Contractual gross maturities
2023 2022 2023 2022
£m £m £m £m
Within one year 4,324 4,413 5,359 5,426
Between one and two years 3,319 4,253 4,784 5,763
Between two and three years 2,558 4,406 3,920 5,673
Between three and four years 2,947 3,013 4,393 4,141
Between four and five years 3,410 4,077 4,600 5,494
Beyond five years 23,172 22,977 35,163 33,806
39,730 43,139 58,219 60,303

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

The contractual gross maturities in each year include the borrowings maturing in that year together with forecast interest payments
on all borrowings which are outstanding for all or part of that year.
Borrowings are denominated in the functional currency of the subsidiary undertaking or other currencies as shown below:
Functional U.S. UK Other
currency dollar sterling Euro currencies Total
£m £m £m £m £m £m
31 December 2023
Total borrowings 32,215 3,656 302 3,301 256 39,730
Effect of derivative financial instruments
– cross-currency swaps 1,214 (451) (300) (559) — (96)
– forward foreign currency contracts (57) (892) — 537 414 2
33,372 2,313 2 3,279 670 39,636
31 December 2022
Total borrowings 33,438 3,383 452 5,579 287 43,139
Effect of derivative financial instruments
– cross-currency swaps 2,356 — (450) (2,085) — (179)
– forward foreign currency contracts (40) (998) — 590 454 6
35,754 2,385 2 4,084 741 42,966

The exposure to interest rate changes when borrowings are re-priced is as follows:
Within Between Between Between Between Beyond
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
£m £m £m £m £m £m £m
31 December 2023
Total borrowings 4,324 3,319 2,558 2,947 3,410 23,172 39,730
Effect of derivative financial instruments
– interest rate swaps 2,798 (229) (786) — (1,783) — —
– cross-currency swaps 448 — 6 — (98) (452) (96)
7,570 3,090 1,778 2,947 1,529 22,720 39,634
31 December 2022
Total borrowings 4,398 4,246 4,407 3,013 4,077 22,998 43,139
Effect of derivative financial instruments
– interest rate swaps 4,657 (500) (1,247) — (2,910) — —
– cross-currency swaps (77) — 36 — (138) — (179)
8,978 3,746 3,196 3,013 1,029 22,998 42,960

Lease liabilities are repayable as follows:

Per balance sheet Contractual gross maturities
2023 2022 2023 2022
£m £m £m £m
Within one year 131 142 155 161
Between one and two years 103 109 122 122
Between two and three years 77 76 91 85
Between three and four years 59 58 70 65
Between four and five years 29 50 38 54
Beyond five years 99 82 140 112
498 517 616 599

For more information on leasing arrangements, refer to note 13(b).

As at 31 December 2023, the Group’s undrawn committed borrowing facilities (note 26) amount to £7,923 million (2022: £7,828 million)
with £5,077 million maturing within one year (2022: £4,828 million maturing within one year), £154 million maturing between one and two
years (2022: £nil million maturing between one and two years), £154 million maturing between two and three years (2022: £150 million
maturing between two and three years), £2,538 million maturing between three and four years (2022: £350 million maturing between
three and four years) and £nil maturing between four and five years (2022: £2,500 million maturing between four and five years).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

The Group’s composition and movements in net debt are presented below along with a reconciliation to the financing activities in the
Group Cash Flow Statement:
2023
£m
Fair value,
accrued
Opening Foreign interest and Closing
Notes balance Cash flow exchange other Held for Sale balance
*
Borrowings (excluding lease liabilities) 42,622 (1,638) (1,956) 204 — 39,232
Lease liabilities 517 (162) (25) 168 — 498
Derivatives in respect of net debt 19 167 (238) 564 (323) — 170
Cash and cash equivalents 21 (3,446) (1,101) 30 226 (368) (4,659)
Current investments held at fair value 18 (579) (22) 49 (49) — (601)
39,281 (3,161) (1,338) 226 (368) 34,640

2022
£m
Fair value,
accrued
Opening Foreign interest and Closing
Notes balance Cash flow exchange other Held for Sale balance
*
Borrowings (excluding lease liabilities) 39,212 (17) 3,881 (454) — 42,622
Lease liabilities 446 (161) 30 218 (16) 517
Derivatives in respect of net debt 19 (91) 348 (435) 345 — 167
Cash and cash equivalents 21 (2,809) (571) (431) (3) 368 (3,446)
Current investments held at fair value 18 (456) (86) (15) (22) — (579)
36,302 (487) 3,030 84 352 39,281
Note:
* Borrowings as at 31 December 2023 include £700 million (2022: £798 million) in respect of the purchase price adjustments relating to the acquisition of Reynolds American.

In the table above, movements in accrued interest relate to the net movement year on year and cash flows related to interest payments
are not included.
'Fair value, accrued interest and other’ movements in lease liabilities in 2023 mainly comprise additions of £168 million (2022: £218 million)
(net of reassessments, modifications and terminations), see note 13(a). The movement of £49 million (2022: £22 million) in current
investments held at fair value represents the fair value gains for these investments.
2023 2022
£m £m
Cash flows per net debt statement (3,161) (487)
Non-financing cash flows included in net debt 1,126 897
Interest paid (1,682) (1,578)
Interest element of lease liabilities (30) (25)
Remaining cash flows relating to derivative financial instruments (242) (465)
Purchases of own shares held in employee share ownership trusts (110) (80)
Purchase of own shares — (2,012)
Coupon paid on perpetual hybrid bonds (59) (60)
Dividends paid to owners of the parent (5,055) (4,915)
Capital injection from and purchase of non-controlling interests — (1)
Dividends paid to non-controlling interests (105) (158)
Other 4 6
Net cash used in financing activities per cash flow statement (9,314) (8,878)

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

24 Provisions for liabilities

Restructuring Employee-
of existing related DOJ and OFAC Other
businesses benefits Fox River investigations provisions Total
£m £m £m £m £m £m
1 January 2023 297 44 54 450 676 1,521
Differences on exchange (32) (4) — — (46) (82)
Provided in respect of the year (*) (21) 13 — (450) 240 (218)
Utilised during the year (105) (11) (10) — (96) (222)
31 December 2023 139 42 44 — 774 999
Analysed on the balance sheet as
– current 96 13 3 — 356 468
– non-current 43 29 41 — 418 531
139 42 44 — 774 999

Restructuring Employee-
of existing related DOJ and OFAC Other
businesses benefits Fox River investigations provisions Total
£m £m £m £m £m £m
1 January 2022 179 41 62 — 571 853
Differences on exchange 9 2 — — 15 26
Provided in respect of the year (*) 198 10 — 450 187 845
Transferred to liabilities associated with
(20) — — — (6) (26)
assets held for sale
Utilised during the year (69) (9) (8) — (91) (177)
31 December 2022 297 44 54 450 676 1,521
Analysed on the balance sheet as
– current 240 14 10 450 373 1,087
– non-current 57 30 44 — 303 434
297 44 54 450 676 1,521
Note:
* Amounts provided above are shown net of reversals of unused provisions which include reversals of £42 million (2022: £35 million) for restructuring of existing businesses,
£14 million (2022: £10 million) for employee benefits and £128 million (2022: £225 million) for other provisions. For DOJ and OFAC investigations, £450 million that were provided in 2022
were reclassified to trade and other payables in 2023.

Restructuring of existing businesses

The restructuring provisions relate to the restructuring and integration costs incurred and are reported as adjusting items. The principal
restructuring activities in 2022 are as described in note 7 and primarily include the cost of employee packages and long-term social plans
associated with redundancy programmes from previous years, mainly in relation to Quantum. No further Quantum restructuring charges
were recognised as adjusting in 2023, following the completion of the Quantum programme. Provisions associated with redundancy
packages are determined based on termination packages offered in each country. The long-term social plans primarily relate to social
plans in Germany, which span over several years and are based on actuarial calculations. These are discounted to present value using
Central Bank rates. We do not consider the effect of discounting to be material. The provisions for long-term social plans include future
payments related to contracts that are already fixed. Given that there is little or no variability expected in the timing and amount of the
payments, no additional risk has been incorporated in the discounting. While some elements of the non-current provisions of £43 million
will unwind over several years, as termination payments are made over extended periods in some countries, it is estimated that
approximately 97% of these non-current provisions will unwind within five years.
Employee-related benefits
Employee-related benefits mainly relate to employee benefits other than post-employment benefits. The principal components of these
provisions are gratuity and termination awards, ‘jubilee’ payments due after a certain service period and expected payments associated
with long-term disability. The majority of these provisions are calculated by actuaries. It is estimated that approximately 67% of the non-
current provisions of £29 million will unwind within five years.
Fox River
A provision of £274 million was made in 2011 for a potential claim under a 1998 settlement agreement entered into by a Group subsidiary
in respect of the clean-up of sediment in the Fox River. On 30 September 2014, the Group, NCR, Appvion and Windward Prospects
entered into a funding agreement; the details of this agreement are explained in note 31. This agreement led to payments of £nil million
in 2023 (2022: £1 million). In addition, the Group incurred legal costs of £10 million (2022: £7 million), which were also charged against the
provision. It is expected that the non-current provision will unwind within five years.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

DOJ/OFAC investigations
As discussed earlier (in note 6(h)), on 25 April 2023, the Group announced that it had reached an agreement with the DOJ and OFAC for
a total amount payable to the U.S. authorities of US$635 million plus interest. Having recognised an initial provision of £450 million
(US$540 million), in 2022, the Group has recognised an additional charge of £75 million in 2023. During 2023, as a result of payment terms
being finalised, the provision was reversed and the liability was transferred to sundry payables where US$5 million (£4 million) was paid in
April, US$321 million (£258 million) including interest was paid in September and US$326 million (£263 million) including interest will be
paid in the first half of 2024.
Other
Other provisions comprise balances set up in the ordinary course of general business that cannot be classified within the other
categories, such as sales returns and onerous contracts together with amounts in respect of supplier, excise and other disputes.
The nature of the amounts provided in respect of disputes is such that the extent and timing of cash flows are difficult to estimate and
the ultimate liability may vary from the amounts provided.
In accordance with IFRS 15 Revenue from Contracts with Customers, sales return provisions are recognised based on a reasonable
estimate of likely returns. In 2023, the sales return provision, included in other provisions, was £55 million (2022: £62 million).
Included within other provisions there is a provision for interest of £244 million (2022: £183 million) in relation to the Franked Investment
Income Group Litigation Order (FII GLO), as mentioned in notes 8(b) and 10(b). The provision is calculated based on the UK central bank
base rate plus 2% and has been charged to net finance costs. As there is uncertainty over the potential timing of the utilisation, as
explained in note 10(b), the provision has been reported as a non-current provision.
Other provisions also include a provision of £89 million in relation to litigation-related deposits as explained in note 17. In addition, BAT
Brazil has recognised a provision of £40 million in relation to a legal case over whether a 10% tax imposed on a tax benefit associated with
investment grants by the Rio de Janeiro State was constitutional (as explained in note 6(k)).
25 Trade and other payables
2023 2022
£m £m
Trade payables 1,707 1,862
Master settlement agreement (U.S.) 1,788 2,193
Duty, excise and other taxes 2,994 3,104
Accrued charges and deferred income 2,608 2,713
FII GLO (note 10(b)) 863 913
Social security and other taxation 46 61
Sundry payables 587 547
10,593 11,393
Current 9,700 10,449
Non-current 893 944
10,593 11,393

As explained in note 17, the Group acts as a collection agent for banks and other financial institutions in certain debt factoring
arrangements. The cash collected in respect of these arrangements that has not yet been remitted amounts to £138 million
(2022: £119 million) and is included in sundry payables.
In addition, the Group has certain Supply Chain Financing (SCF) or ‘reverse factoring’ arrangements in place. The principal purpose of
these arrangements is to provide the supplier with the option to access liquidity earlier through the sale of its receivables due from the
Group to a bank or other financial institution prior to their due date. Management has determined that the Group’s payables to these
suppliers have neither been extinguished nor have the liabilities been significantly modified by these arrangements. The value of amounts
payable, invoice due dates and other terms and conditions applicable, from the Group’s perspective, remain unaltered, with only the
ultimate payee being changed. At 31 December 2023, the value of amounts payable under the SCF programmes was £201 million
(2022: £257 million). The cash outflows in respect of these arrangements have been recognised within operating cash flows. Included in
this amount is £110 million (2022: £161 million) of leaf payables where the standard payment terms with the vendor is 150 days, consistent
with credit terms normally available in certain markets.
In 2023, the Group announced that it had reached an agreement with the DOJ and OFAC to resolve previously disclosed investigations
into historical sanctions breaches. Included within sundry payables is US$326 million (£263 million) plus interest representing the third
and final payment due in the first half of 2024. Refer to note 24 for more information.
In 2022, following an investigation by the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) into alleged
violations of the Nigerian Competition and Consumer Protection Act and National Tobacco Control Act, a consent order was entered
into between the FCCPC and British American Tobacco (Holdings) Limited, British American Tobacco (Nigeria) Limited and British
American Tobacco Marketing (Nigeria) Limited, terminating the investigation and associated proceedings. A penalty equivalent to
US$110 million was accrued for with the resulting payments (equivalent to £59 million) made during 2023, among other measures.
Accrued charges and deferred income include £18 million of deferred income (2022: £20 million) relating to certain customer deposits
in advance of shipments and £82 million (2022: £66 million) in respect of interest payable mainly related to tax matters. FII GLO
of £863 million (2022: £913 million) relates to receipts in 2015, in respect of the Franked Investment Income Government Litigation Order
(note 10(b)). Amounts payable to related parties including associated undertakings are shown in note 30.
There is no material difference between the above amounts for trade and other payables and their fair value due to the short-term
duration of the majority of trade and other payables, as determined using discounted cash flow analysis.
Trade and other payables are predominantly denominated in the functional currencies of subsidiary undertakings with less than 10%
in other currencies (2022: less than 7% in other currencies).

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Financial Statements

Notes on Accounts
Continued

26 Financial instruments and risk management As part of its short-term cash management, the Group invests in a
Management of financial risks range of cash and cash equivalents, including money market funds,
One of the principal responsibilities of Treasury is to manage which are regarded as highly liquid and are not exposed to significant
the financial risks arising from the Group’s underlying changes in fair value. These are kept under continuous review as
operations. Specifically, Treasury manages, within an overall described in the credit risk section below. At 31 December 2023,
policy framework set by the Group’s Main Board and Corporate the Group had £173 million invested in money market funds
Finance Committee (CFC), the Group’s exposure to funding and (2022: £nil million).
liquidity, interest rate, foreign exchange and counterparty risks. As part of its working capital management, in certain countries,
The Group’s treasury position is monitored by the CFC which the Group has entered into factoring arrangements and supply
meets regularly throughout the year and is chaired by the Group chain financing arrangements. These are explained in further detail
Finance Director. The approach is one of risk reduction within an in note 17 and note 25.
overall framework of delivering total shareholder return. Subsidiary companies are funded by share capital and retained
The Group defines capital as net debt (note 23) and equity (note 22). earnings, loans from the central finance companies on commercial
There are no externally imposed capital requirements for the terms, or through local borrowings by the subsidiaries in
Group. Group policies include a set of financing principles that appropriate currencies to predominantly fund short- to medium-
provide a framework within which the Group’s capital base is term working capital requirements.
managed and, in particular, the policies on dividends (as a Available facilities in current year:
percentage of long-term sustainable earnings) and share buy-back
It is Group policy that short-term sources of funds (including
are decided. The key objective of the financing principles is to
drawings under both the Group US$4 billion U.S. commercial
appropriately balance the interests of equity and debt holders in
paper (U.S. CP) programme and the Group £3 billion euro
driving an efficient financing mix for the Group. The Group’s
commercial paper (ECP) programme) are backed by undrawn
average cost of debt in 2023 is 5.2% (2022: 4.0%).
committed lines of credit and cash. Commercial paper is issued
The Group manages its financial risks in line with the classification by B.A.T. International Finance p.l.c., B.A.T. Netherlands Finance
of its financial assets and liabilities in the Group’s balance sheet B.V. and B.A.T Capital Corporation and guaranteed by British
and related notes. The Group’s management of specific risks is American Tobacco p.l.c. At 31 December 2023, commercial paper
dealt with as follows: of £nil million was outstanding (2022: £27 million). Cash flows
Liquidity risk relating to commercial paper that have maturity periods of three
It is the policy of the Group to maximise financial flexibility months or less are presented on a net basis in the Group’s cash
and minimise refinancing risk by issuing debt with a range of flow statement.
maturities, generally matching the projected cash flows of the At 31 December 2023, the Group had access to a £5.4 billion
Group and obtaining this financing from a wide range of sources. revolving credit facility. In March 2023, the Group refinanced the
The Group has a target average centrally managed debt maturity £2.7 billion 364-day tranche of the revolving credit facility at the
of at least five years with no more than 20% of centrally managed reduced amount of £2.5 billion, maturing in March 2024 with two
debt maturing in a single rolling year. As at 31 December 2023, one-year extension options, and a one-year term out option.
the average centrally managed debt maturity was 10.5 years Additionally, £2.85 billion of the five-year tranche remains available
(2022: 9.9 years) and the highest proportion of centrally managed until March 2025, with £2.7 billion extended to March 2026 and
debt maturing in a single rolling year was 15.7% (2022: 18.6%). £2.5 billion extended to March 2027.
Perpetual hybrid bonds are treated as equity (note 22(d)) and During 2023, the Group extended short-term bilateral facilities
therefore not included within the debt maturity analysis. totalling £2.65 billion. As at 31 December 2023, £100 million was
The Group utilises cash pooling and zero balancing bank account drawn on a short-term basis with £2.55 billion undrawn and still
structures in addition to intercompany loans and borrowings to available under such bilateral facilities. Cash flows relating to
mobilise cash efficiently within the Group. The key objectives of bilateral facilities that have maturity periods of three months or less
Treasury in respect of cash and cash equivalents are to protect are presented on a net basis in the Group’s cash flow statement.
their principal value, to concentrate cash at the centre, to minimise Issuance, drawdowns and repayments in current year:
the required debt issuance and to optimise the yield earned. The
– In January 2023, the Group repaid a €750 million bond at maturity;
amount of debt issued by the Group is determined by forecasting
the net debt requirement after the mobilisation of cash. – In February 2023, the Group accessed the Euro market under its
EMTN Programme, raising a total of €800 million;
The Group continues to target a solid investment-grade credit
rating. Moody’s, S&P's and Fitch's current ratings for the Group – In May 2023, the Group repaid a total of US$48 million of bonds
are Baa2 (positive outlook), BBB+ (negative outlook) and BBB at maturity;
(positive outlook), respectively. The Group is confident of its – Given the refinancing levels in the medium term and to reduce
continued ability to successfully access the debt capital markets near term refinancing risks, in August 2023, the Group accessed
for future refinancing requirements. the US dollar market under its SEC Shelf Programme, raising a
total of US$5 billion across five tranches whilst also announcing a
concurrent capped debt tender offer, targeting a series of GBP-,
EUR- and USD-denominated bonds maturing between 2024 and
2027. Pursuant to this tender offer, BAT repurchased bonds prior
to their maturity in a principal amount of £3.1 billion; and
– In September, October and November 2023, the Group repaid
US$550 million, €800 million and €750 million of bonds at
maturity, respectively.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Available facilities in prior year: IFRS 7 Financial Instruments: Disclosures requires a sensitivity
At 31 December 2022, the Group had access to a £5.69 billion analysis that shows the impact on the income statement and on
revolving credit facility. This facility was undrawn at items recognised directly in other comprehensive income of
31 December 2022. hypothetical changes of exchange rates in respect of non-
During 2022, the Group extended short-term bilateral facilities functional currency financial assets and liabilities held across the
totalling £3.0 billion. As at 31 December 2022, £875 million was Group. All other variables are held constant although, in practice,
market rates rarely change in isolation. Financial assets and
drawn on a short-term basis. liabilities held in the functional currency of the Group’s subsidiaries,
Issuance, drawdowns and repayments in prior year: as well as non-financial assets and liabilities and translation risk,
– In March 2022, the Group accessed the US dollar market under are not included in the analysis. The Group considers a 10%
its SEC Shelf Programme, raising a total of US$2.5 billion across strengthening or weakening of the functional currency against the
three tranches; non-functional currency of its subsidiaries as a reasonably possible
– In May 2022, the Group repaid a €600 million bond at maturity; change. The impact is calculated with reference to the financial
– In June 2022, the Group repaid US$419 million and £180 million asset or liability held as at the year-end, unless this is
bonds at maturity; unrepresentative of the position during the year.
– In August 2022, the Group repaid US$750 million and A 10% strengthening of functional currencies against non-functional
US$601 million bonds at maturity; and currencies would result in pre-tax profit being £61 million lower
(2022: £49 million lower; 2021: £53 million lower) and items
– In October 2022, the Group raised US$600 million in the recognised directly in other comprehensive income being
US dollar market under its SEC Shelf Programme. £273 million higher (2022: £445 million higher; 2021: £144 million
Currency risk higher). A 10% weakening of functional currencies against non-
The Group is subject to exposure on the translation of the net functional currencies would result in pre-tax profit being £72 million
assets of foreign currency subsidiaries and associates into its higher (2022: £60 million higher; 2021: £65 million higher) and items
reporting currency, sterling. The Group’s primary balance sheet recognised directly in other comprehensive income being
translation exposures are to the US dollar, euro, Canadian dollar, £333 million lower (2022: £543 million lower; 2021: £177 million lower).
Australian dollar, Indian rupee, South African rand, Danish krone, The exchange sensitivities on items recognised directly in other
Indonesian rupiah, Brazilian real, Singaporean dollar and Swiss comprehensive income relate to hedging of certain net asset
franc. These exposures are kept under continuous review. The currency positions in the Group, as well as on cash flow hedges
Group’s policy on borrowings is to broadly match the currency of in respect of future transactions, but do not include sensitivities
these borrowings with the currency of cash flows arising from the in respect of exchange on non-financial assets or liabilities.
Group’s underlying operations. Within this overall policy, the Group
Interest rate risk
aims to minimise all balance sheet translation exposure where it is
practicable and cost-effective to do so through matching currency The objectives of the Group’s interest rate risk management policy
assets with currency borrowings. The main objective of these are to lessen the impact of adverse interest rate movements on
policies is to protect shareholder value by increasing certainty and the earnings, cash flow and economic value of the Group.
minimising volatility in earnings per share. At 31 December 2023, Additional objectives are to minimise the cost of hedging and the
the currency profile of the Group’s gross debt, after taking into associated counterparty risk.
account derivative contracts, was 72% US dollar (2022: 71%), 14% In order to manage its interest rate risk, the Group maintains both
euro (2022: 13%), 9% sterling (2022: 12%) and 5% other currencies floating rate and fixed rate debt. The Group sets targets (within
(2022: 4%). overall guidelines) for the desired ratio of floating to fixed rate debt
The Group faces currency exposures arising from the translation on a net basis (at least 50% fixed on a net basis in the short to
of profits earned in foreign currency subsidiaries and associates medium term) as a result of regular reviews of market conditions
and joint arrangements; these exposures are not normally hedged. and strategy by the Corporate Finance Committee and the board
Exposures also arise from: of the main central finance company. Underlying borrowings are
arranged on both a fixed rate and a floating rate basis and, where
(i) foreign currency denominated trading transactions undertaken appropriate, the Group uses derivatives, primarily interest rate
by subsidiaries. These exposures comprise committed and highly swaps to vary the fixed and floating mix, or forward starting swaps
probable forecast sales and purchases, which are offset wherever to manage the refinancing risk. The interest rate profile of liquid
possible. The remaining exposures are hedged within the Treasury assets included in net debt are considered to offset floating rate
policies and procedures with forward foreign exchange contracts debt and are taken into account in determining the net interest
and options, which are designated as hedges of the foreign rate exposure. At 31 December 2023, the relevant ratio of floating
exchange risk of the identified future transactions; and to fixed rate borrowings after the impact of derivatives was 10:90
(ii) forecast dividend flows from subsidiaries to the centre. To (2022: 12:88). On a net debt basis, after offsetting liquid assets and
ensure cash flow certainty, the Group enters into forward foreign excluding cash and other liquid assets in Canada, which are
exchange contracts which are designated as net investment subject to certain restrictions under CCAA protection, the ratio of
hedges of the foreign exchange risk arising from the investments floating to fixed rate borrowings was 2:98 (2022: 7:93).
in these subsidiaries.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

IFRS 7 requires a sensitivity analysis that shows the impact on The Group ensures that it has sufficient counterparty credit
the income statement and on items recognised directly in other capacity of requisite quality to undertake all anticipated
comprehensive income of hypothetical changes of interest rates transactions throughout its geographic footprint, while at the
in respect of financial assets and liabilities of the Group. All other same time ensuring that there is no geographic concentration
variables are held constant although, in practice, market rates in the location of counterparties.
rarely change in isolation. For the purposes of this sensitivity With the following exceptions, the maximum exposure to the
analysis, financial assets and liabilities with fixed interest rates credit risk of financial assets at the balance sheet date is reflected
are not included. The Group considers a 100 basis point change by the carrying values included in the Group’s balance sheet. The
in interest rates a reasonably possible change except where rates Group has entered into short-term risk participation agreements
are less than 100 basis points. In these instances, it is assumed in relation to certain leaf supply arrangements and the maximum
that the interest rates increase by 100 basis points and decrease exposure under these would be £51 million (2022: £90 million).
to zero for the purpose of performing the sensitivity analysis. In addition, the Group has entered into a guarantee arrangement
The impact is calculated with reference to the financial asset to support a short-term bank credit facility with a supply chain
or liability held as at the year-end, unless this is unrepresentative partner. The maximum exposure under the arrangement would
of the position during the year. be £1 million (2022: £1 million).
A 100 basis point increase in interest rates would result in pre-tax Price risk
profit being £5 million lower (2022: £50 million lower; The Group is exposed to price risk on investments held by the
2021: £44 million lower). A 100 basis point decrease in interest rates, Group, which are included in investments held at fair value on
or less where applicable, would result in pre-tax profit being the consolidated balance sheet, but the quantum of such is not
£5 million higher (2022: £50 million higher; 2021: £47 million higher). material.
The effect of these interest rate changes on items recognised
directly in other comprehensive income is not material in either year. Hedge accounting
In order to qualify for hedge accounting, the Group is required to
Following the decision taken by global regulators in 2018 to replace
document prospectively the economic relationship between the
Interbank Offered Rates with alternative nearly risk-free rates, such
item being hedged and the hedging instrument. The Group is also
benchmark rates were expected to be largely discontinued after
required to demonstrate an assessment of the economic
2021. Following announcements by the respective regulators,
relationship between the hedged item and the hedging
EURIBOR is expected to continue for the foreseeable future, with
instrument, which shows that the hedge will be highly effective
USD LIBOR rates discontinued (other than on a synthetic basis)
on an ongoing basis. This effectiveness testing is repeated
from June 2023.
periodically to ensure that the hedge has remained, and is
The Group is party to the ISDA fallback protocol and in January expected to remain, highly effective. The prospective effectiveness
2022, it automatically replaced the GBP LIBOR with economically testing determines that an economic relationship between the
equivalent interest rate derivatives referencing SONIA on their hedged item and the hedging instrument exists.
reset date. The four impacted derivatives (cross currency interest
In accordance with the Group Treasury Policy, the exact hedge
rate swaps) with nominal values totalling €800 million
ratios and profile of a hedge relationship will depend on several
(£672 million) matured in October 2023 and were in fair value
factors, including the desired degree of certainty and reduced
hedge relationships which were indexed to GBP LIBOR interest
volatility of net interest costs and market conditions, trends and
rates. As of 31 December 2023, the Group does not have any
expectations in the relevant markets. The sources of
outstanding financial instruments using the historical benchmarks
ineffectiveness include spot and forward differences, impact of
that are no longer available.
time value and timing differences between periods in the hedged
Credit risk item and hedging instrument.
The Group has no significant concentrations of customer credit The Group’s risk management strategy has been explained in
risk. Subsidiaries have policies in place requiring appropriate credit further detail under the interest rate risk and currency risk sections
checks on potential customers before sales commence. The of this note.
process for monitoring and managing credit risk once sales to
customers have been made varies depending on local practice Fair value estimation
in the countries concerned. The fair values of financial assets and liabilities with maturities
of less than one year, other than derivatives, are assumed to
Certain territories have bank guarantees, other guarantees or
approximate their book values. For other financial instruments
credit insurance provided in the Group’s favour in respect of Group
which are measured at fair value in the balance sheet, the basis
trade receivables, the issuance and terms of which are dependent
for fair values is described below.
on local practices in the countries concerned. All derivatives are
subject to ISDA agreements or equivalent documentation.
Cash deposits and other financial instruments give rise to credit
risk on the amounts due from the related counterparties.
Generally, the Group aims to transact with counterparties with
strong investment grade credit ratings. However, the Group
recognises that due to the need to operate over a large geographic
footprint, this will not always be possible. Counterparty credit risk
is managed on a global basis by limiting the aggregate amount and
duration of exposure to any one counterparty, taking into account
its credit rating. The credit ratings of all counterparties are
reviewed regularly.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Fair value hierarchy

In accordance with IFRS 13 classification hierarchy, the following table presents the Group’s financial assets and liabilities that are
measured at fair value:
2023 2022
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Notes £m £m £m £m £m £m £m £m
Assets at fair value
Investment held at fair value 18 527 — 192 719 514 — 186 700
Derivatives relating to
– interest rate swaps 19 — 10 — 10 — 43 — 43
– cross-currency swaps 19 — 115 — 115 — 254 — 254
– forward foreign currency contracts 19 — 165 — 165 — 264 — 264
Assets at fair value 527 290 192 1,009 514 561 186 1,261
Liabilities at fair value
Derivatives relating to
– interest rate swaps 19 — 187 — 187 — 450 — 450
– cross-currency swaps 19 — 13 — 13 — 121 — 121
– forward foreign currency contracts 19 — 195 — 195 — 358 — 358
Liabilities at fair value — 395 — 395 — 929 — 929

Level 2 financial instruments are not traded in an active market, but the fair values are based on quoted market prices, broker/dealer
quotations, or alternative pricing sources with reasonable levels of price transparency. The Group’s level 2 financial instruments include
OTC derivatives.
Netting arrangements of derivative financial instruments
The gross fair value of derivative financial instruments as presented in the Group balance sheet, together with the Group’s rights of
offset associated with recognised financial assets and recognised financial liabilities subject to enforceable master netting
arrangements and similar agreements, is summarised as follows:
2023 2022
Related Related
Amount amounts not Amount amounts not
presented in offset in the presented in offset in the
the Group Group the Group Group
balance balance balance balance
sheet* sheet Net amount sheet* sheet Net amount
£m £m £m £m £m £m
Financial assets
– Derivative financial instruments (note 19) 290 (199) 91 561 (405) 156
Financial liabilities
– Derivative financial instruments (note 19) (395) 199 (196) (929) 405 (524)
(105) — (105) (368) — (368)
Note:
* No financial instruments have been offset in the Group balance sheet.

The Group is subject to master netting arrangements in force with financial counterparties with whom the Group trades derivatives.
The master netting arrangements determine the proceedings should either party default on their obligations. In case of any event
of default, the non-defaulting party will calculate the sum of the replacement cost of outstanding transactions and amounts owed to
it by the defaulting party. If that sum exceeds the amounts owed to the defaulting party, the defaulting party will pay the balance to the
non-defaulting party. If the sum is less than the amounts owed to the defaulting party, the non-defaulting party will pay the balance to
the defaulting party.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

The hedged items by risk category are presented below:

2023
Accumulated amount
of fair value hedge
adjustments on the
hedged item included Line item in the Changes in fair
in the carrying statement of value used for Cash flow hedge
Carrying amount of amount of the financial position calculating hedge reserve (gross
the hedged item hedged item where the hedged ineffectiveness of tax)
£m £m item is included £m £m
Fair value hedges
Interest rate risk
– borrowings (liabilities) 5,935 110 Borrowings (81)
Cash flow hedges
Interest rate risk
– borrowings (liabilities) 858 Borrowings 26 (362)

2022
Accumulated amount
of fair value hedge
adjustments on the
hedged item included Line item in the Changes in fair
in the carrying statement of value used for Cash flow hedge
Carrying amount of amount of the financial position calculating hedge reserve (gross
the hedged item hedged item where the hedged ineffectiveness of tax)
£m £m item is included £m £m
Fair value hedges
Interest rate risk
– borrowings (liabilities) 9,223 (355) Borrowings 399
Cash flow hedges
Interest rate risk
– borrowings (liabilities) 1,824 Borrowings (55) (464)

£380 million (2022: £389 million) of the Group’s borrowings are designated as net investment hedge instruments of the Group’s net
investments in foreign operations. In line with the Group’s risk management policies, the net investment hedge relationships are
reviewed periodically. The change in the value used for calculating hedge ineffectiveness for hedged items designated under net
investment hedge relationships is £9 million (2022: £21 million).
As at 31 December 2023, the accumulated balance of the cash flow hedge reserve was a loss of £194 million (2022: loss of £327 million)
including an accumulated loss of £362 million (2022: loss of £464 million) in relation to interest rate exposure and foreign currency
exposure arising from borrowings held by the Group, and an accumulated gain of £77 million (2022: gain of £99 million) in relation to
deferred tax arising from cash flow hedges. The remainder related to the Group’s foreign currency exposure on forecasted transactions
and cost of hedging (note 22(c)(ii)).

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

27 Changes in the Group (ii) Other transactions and announcements

(a) Acquisitions In April 2023, the Group announced a strategic joint venture
The Group acquired certain businesses and other tobacco assets agreement between a Group subsidiary, AJNA BioSciences PBC,
as noted below. The financial impact of these transactions to the and Charlotte’s Web. Under the terms of the transaction, a Group
Group were immaterial individually and in aggregate. Except as subsidiary acquired a 20% stake in the new entity, DeFloria LLC,
noted, there were no material differences between the fair value at a cost of £8 million (US$10 million).
and book values of net assets acquired in business combinations. On 24 July 2023, ITC Limited (ITC), an associate of the Group in
On 30 September 2019, the Group acquired control of Twisp India, announced a proposed demerger of its ‘Hotels Business’
Proprietary Limited, a South African e-cigarette/nicotine Vapour under a scheme of arrangement by which 60% of the newly
company for a purchase price of £25 million of which £6 million incorporated entity would be held directly by ITC's shareholders
was deferred and contingent upon future performance in the proportionate to their shareholding in ITC. On 14 August 2023,
market. The final payment of deferred consideration of £3 million ITC’s Board of Directors approved the scheme of arrangement
was paid in 2021. subject to necessary regulatory approvals. The demerger is
expected to complete by the end of 2024.
(b) Non-controlling interests
During 2023, the Group acquired a further 1.31% in Hrvatski On 26 September 2022, the Group announced a £32 million
Duhani d.d., at a cost of less than £1 million, following the investment in exchange for 16% of Sanity Group GmbH (Sanity
acquisitions in 2022 (3.3% at a cost of £1 million) and 2021 Group), a German based cannabis company which has a well-
(2.7% at a cost of £1 million). established product portfolio of CBD consumer brands and medical
cannabis brands and is actively engaged in the research,
In 2021, the Group made a capital contribution to Brascuba
development, and marketing of cannabis products. The Group’s
Cigarrillos S.A. at a cost of £6 million. This contribution was in
investment was part of a series-B investment round. As part of
proportion to a capital contribution made by the non-controlling
the investment agreement, the Group has the right to nominate
interest to the company and as such, the Group’s shareholding
directors to the Sanity Group's board and accounts for the
remains unchanged.
investment as an associate. The Group’s investment was allocated
Also in 2021, as part of a Voluntary Tender Offer for the non- against the Group’s share of Sanity Group’s net assets, including
controlling interests of the Group’s Indonesian subsidiary, the the recognition of £4 million of intangibles, and goodwill of
Group acquired 0.2% additional shares at a cost of £4 million £28 million, which represents a strategic premium in expectation
as explained in note 30. of the legalisation of cannabis in Germany and elsewhere in Europe.
(c) Other transactions In November 2022, the Group announced that it had invested
(i) Organigram in Charlotte’s Web Holdings, Inc. (Charlotte’s Web), via a
On 11 March 2021, the Group announced a strategic collaboration convertible debenture of £48 million. Charlotte's Web is based in
agreement with Organigram Inc., a wholly owned subsidiary of Colorado, USA, listed on the Toronto Stock Exchange, and holds a
publicly traded Organigram Holdings Inc. (collectively, prominent position in innovative hemp extract wellness products
Organigram). Under the terms of the transaction, a Group across major retail channels, including food/drug/mass retail, and
subsidiary acquired a 19.9% equity stake in Organigram Holdings natural grocery and vitamin retailers. Their product formats
Inc. to become its largest shareholder, with the ability to appoint include tinctures, capsules, chews and topicals. The debenture
two directors to Organigram Holdings Inc.’s board of directors and is currently convertible into a non-controlling equity stake in
representation on its investment committee. The Group accounts Charlotte’s Web of approximately 19.9% and is convertible at
for the investment as an associate. BAT’s discretion. Given that the nature of the investment as a
The Group’s initial investment of £129 million was allocated against convertible loan note does not give the Group any current right to
the Group’s share of Organigram’s net assets, including the a share of the earnings or net assets of the investee, despite the
recognition of £49 million of intangibles, and goodwill of ability to appoint directors, the investment will be recognised at
£30 million, which represents a strategic premium to enter the fair value through profit and loss with fair value changes in the
legal cannabis market in North America. investment recognised in net finance costs. On conversion of the
loan note, the Group will equity account for its investment.
As a result of certain acquisitions made by Organigram during
2021, the Group’s shareholding was reduced to 18.8%. In 2022, the During 2022, the Group increased its ownership of a wholesale
Group exercised its top-up rights and invested a further £4 million producer and distributor operating in the agriculture sector based
to maintain its ownership stake. in Uzbekistan, FE 'Samfruit' JSC by 2.8% to 45.4%, for £1 million.
In 2021, the ownership was increased by 4%, for £1 million.
In November 2023, the Group announced the signing of an The Group accounts for the investment as an associate.
agreement for a further investment in Organigram. At 31 December
2023, the proposed investment of CAD$125 million (approximately In addition, during 2022, the Group made a non-controlling
£74 million) was subject to customary conditions, including investment in Steady State LLC (trading as Open Book Extracts),
necessary approvals by the shareholders of Organigram, which was a U.S. based cGMP certified manufacturer and distributor of
given on 18 January 2024. On 24 January 2024, BAT made the first cannabinoid ingredients, food products and nutraceuticals, for
tranche investment of CAD$42 million (£24 million) acquiring a £4 million. A second investment of £4 million was made in
further 12,893,175 common shares of Organigram at a price of May 2023. The Group accounts for the investment as an associate.
CAD$3.22 per share. Subject to certain conditions, the remaining A further investment of £8 million was made in October 2023 by
25,786,350 shares subscribed for shall be issued at the same price way of a convertible loan note, which will be accounted for as an
in two further equal tranches by the end of August 2024 and investment at fair value through profit and loss until such time as
February 2025, respectively. Based on Organigram’s outstanding it is converted into shares and accumulated into the investment
share capital at the end of 2023, this investment will increase the in the associate.
Group’s equity position from c.19% to c.45% (restricted to 30%
voting rights) once all three tranches have been completed.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

(d) Assets held for sale and business disposals Judgement is required to determine whether or not the disposal
(i) BAT Russia and BAT Belarus of any particular product, business or end market from the Group
On 11 March 2022, the Group announced the intention to transfer would be significant enough to be classified as a discontinued
its Russian business in full compliance with international and local operation. The Group has established criteria as to what would
laws. At that time, the Group had two subsidiaries in Russia (BAT meet such a definition, including: the disposal of an entire
Russia), being JSC British American Tobacco-SPb and JSC geographic segment as currently disclosed within note 2;
International Tobacco Marketing Services. In September 2023, the disposal of a significant portion of the same region as part
the Group formally entered into an agreement to sell the Group's of a unified plan; the disposal of any individual business unit
Russian and Belarusian businesses to a consortium led by then representing more than 10% of Group revenue or 10% of Group
members of BAT Russia’s Management team, in compliance with profit from operations; and the withdrawal from a product
local and international laws. As previously announced, due to category. Management have concluded that the disposal of
operational dependencies between BAT Russia and the Group’s the Russian and Belarusian businesses does not qualify to be
subsidiary in Belarus (International Tobacco Marketing Services presented as discontinued operations.
BY) (BAT Belarus), the Belarusian business was included in the sale. (ii) B.A.T. Pars Company PJSC (BAT Pars)
The transaction was completed on 13 September 2023 and, since On 25 June 2021, the Group agreed to dispose of its Iranian
completion, the buyer consortium has wholly owned both subsidiary, BAT Pars to DTM ME FZE LLC. Completion took place
businesses. These businesses are now known as the ITMS Group. on 6 August 2021. £272 million in respect of foreign exchange
In accordance with IFRS, the assets and liabilities of the subsidiaries previously recognised in other comprehensive income was
comprising BAT Russia and BAT Belarus were classified as held- reclassified to the income statement and an impairment charge
for-sale as of 31 December 2022 and presented as such on the and associated costs of £88 million was recognised in the income
balance sheet at an estimated recoverable value. Impairment statement and treated as an adjusting item.
charges of £554 million and associated costs of £58 million were The value of the consideration (€64 million) remains outstanding
recognised in 2022 as adjusting items. at 31 December 2023, and £56 million (2022: £56 million) is
Upon completion, the businesses were deconsolidated from the recognised as a current receivable. Given the ongoing political
Group's balance sheet. This included assets primarily comprised situation, heightened sanctions and other uncertainties coupled
of £177 million of property, plant and equipment and other with the passage of time the receivable has been outstanding,
non-current assets, £342 million of trade and other receivables, the Group has recognised an expected credit loss of £28 million
£266 million of cash and cash equivalents and £211 million of other at 31 December 2023. In 2022, as a result of the unwind of
current assets principally relating to inventories. In addition, discounting on the deferred proceeds and a true-up on the
liabilities primarily composed of £7 million of borrowings and completion of accounts, a credit of £6 million (2021: £2 million)
£219 million of trade creditors and other current liabilities were was recognised. The discount was unwound in full in 2022.
deconsolidated, resulting in a net asset position of £770 million. In addition, in 2021, £24 million of related investments held at fair
Proceeds of £425 million were received in 2023, resulting in value were provided against as a charge to net finance costs given
a partial reversal of £195 million of the previously recognised uncertainties regarding recovery of these funds. During 2023,
impairment. In addition to this, £554 million of foreign exchange £4 million (2022: £17 million) was recovered in respect of these funds.
previously recognised in the statement of other comprehensive
income has been reclassified to the income statement upon
completion of the transaction, which has been treated as a non-cash
adjusting item. This resulted in a net charge to the income statement
of £353 million which includes disposal-related costs of £3 million
and £9 million of foreign exchange gains on proceeds received.
As part of the disposal agreements, the Group holds call options
to reacquire the ITMS Group entities. No value has been ascribed
to these options as they cannot be sold or transferred outside the
BAT Group, they expire within two years of the completion of the
transaction, and current sanctions and counter sanctions would
restrict the ability of the Group to exercise these options. In
addition, no value has been ascribed to the options the Group
holds to reacquire certain trademarks and brands utilised by the
ITMS businesses which only expire after 100 years. The likelihood
of exercise of these options within the foreseeable future is
remote, and assuming the higher returns that any market
participant would require given the perceived risk of investing in
Russia going forwards, and a consequent high discount rate, any
value associated with exercising the options would be immaterial.

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28 Share-based payments
The Group operates a number of share-based payment arrangements of which the three principal ones are:
Performance Share Plan (PSP):
Since 2020, performance-related conditional awards under which shares are released automatically following a three-year vesting period
(five-year period for the Executive Directors). Awards granted up to 2019 are nil-cost options exercisable after three years from date of
grant (five years for Executive Directors) with a contractual life of 10 years.
For awards granted in 2021, 2020 and 2019, vesting is subject to performance conditions measured over a three-year period (for all
awards), based on earnings per share (40% of grant), operating cash flow (20% of grant), total shareholder return (20% of grant) and net
turnover (20% of grant). Total shareholder return combines the share price and dividend performance of the Company by reference to
a comparator group.
For 2022 and 2023 awards, the performance conditions are based on earnings per share (30% of grant), operating cash flow (20% of
grant), total shareholder return (20% of grant), net turnover (15% of the grant) and New Categories revenue growth (15% of the grant).
Participants are not entitled to dividends prior to the vesting or exercise of the awards. A cash equivalent dividend accrues through the
vesting period (other than for the Executive Directors where additional shares are delivered in lieu of cash) and is paid on vesting. Both
equity and cash-settled PSP awards are granted in March each year.
In the U.S., PSP awards are made over BAT American Depository Shares (ADSs).
Restricted Share Plan (RSP):
Introduced in 2020, conditional awards under which shares are released three years from date of grant, subject to a continuous
employment condition during the three-year vesting period. Participants are not entitled to dividends prior to shares vesting. A cash
equivalent dividend accrues through the vesting period and is paid on vesting. Both equity and cash settled RSP awards are granted
in March or September.
In the U.S., RSP awards are made over BAT American Depository Shares (ADSs).
Deferred Share Bonus Scheme (DSBS):
Granted in connection with annual bonuses, conditional awards under which shares are released three years from date of grant subject
to a continuous employment condition during the three-year vesting period. A cash equivalent dividend accrues through the vesting
period and is paid quarterly (other than for the Executive Directors where additional shares are delivered in lieu of cash). Both equity
and cash-settled DSBS awards are granted in March each year.
The Group also has a number of other arrangements which are not material for the Group and these are as follows:
Sharesave Scheme (SAYE)
Options are granted in March each year by invitation at a 20% discount to the market price. Options under this equity-settled scheme
are exercisable at the end of a three-year or five-year savings contract. Participants are not entitled to dividends prior to the exercise
of the options. The maximum amount that can be saved by a participant in this way is £6,000 in any tax year.
Share Reward Scheme (SRS)
Free shares are granted in April each year (up to an equivalent of £3,600 in any year) under the equity-settled schemes and are subject
to a three-year holding period. Participants receive dividends during the holding period which are reinvested to buy further shares.
The shares are held in a UK-based trust and are normally capable of transfer to participants tax-free after a five-year holding period.
International Share Reward Scheme (ISRS)
Conditional shares are granted in April each year (up to an equivalent of £3,600 in any year) subject to a three-year vesting period. Dividend
equivalents accrue through the vesting period and additional shares are delivered at vesting. Awards may be equity or cash-settled.
Partnership Share Scheme
Employees can allocate part of their pre-tax salary to purchase shares in British American Tobacco p.l.c. (maximum £1,800 in any year).
The shares purchased are held in a UK-based trust and are normally capable of transfer to participants tax-free after a five-year
holding period.
The amounts recognised in the income statement in respect of share-based payments were as follows:
2023 2022 2021
Equity- Cash- Equity- Cash- Equity- Cash-
settled settled settled settled settled settled
Notes £m £m £m £m £m £m
PSP & RSP 28(a) 27 2 38 1 30 —
DSBS 28(b) 38 1 36 3 39 2
Other schemes 6 — 7 — 7 —
Total recognised in the income statement 3 71 3 81 4 76 2

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Financial Statements

Notes on Accounts
Continued

Share-based payment liability

The Group issues to certain employees cash-settled share-based payments that require the Group to pay the intrinsic value of these
share-based payments to the employee at the date of exercise. The Group has recorded liabilities in respect of vested and unvested
grants at the end of 2023 and 2022:
2023 2022
Vested Unvested Vested Unvested
£m £m £m* £m
PSP & RSP (0.4) 0.8 (0.3) 1.9
DSBS — 3.1 0.5 6.6
Total liability (0.4) 3.9 0.2 8.5
Note:
* The reduction in the liabilities for vested LTIPs was due to shares being exercised at prices lower than the share price at date of grant.

(a) PSP & RSP

Details of the movements for the equity- and cash-settled LTI schemes during the years ended 31 December 2023 and 31 December
2022, were as follows:
2023 2022
Equity-settled Cash-settled Equity-settled Cash-settled
Number Number Number Number
of options of options of options of options
in thousands in thousands in thousands in thousands
Outstanding at start of year 8,960 196 9,891 243
Granted during the period 3,379 94 2,927 58
Exercised during the period (2,401) (51) (1,606) (58)
Forfeited during the period (2,132) (41) (2,252) (47)
Outstanding at end of year 7,806 198 8,960 196
Exercisable at end of year 513 24 661 40

As at 31 December 2023, the Group has 7,806,000 shares (2022: 8,960,000 shares) outstanding which includes 1,527,898 shares
(2022: 1,749,762 shares) which are related to Reynolds American LTI awards from which nil shares (2022: nil shares) are exercisable at the
end of the year.
The weighted average British American Tobacco p.l.c. share price at the date of exercise for share options exercised during the period
was £27.65 (2022: £32.84; 2021: £27.67) for equity-settled and £25.85 (2022: £33.01; 2021: £27.59) for cash-settled options.
The weighted average British American Tobacco p.l.c. share price for ADS on the New York Stock Exchange at the date of exercise for
share options exercised during the period relating to equity-settled Reynolds American LTIP awards was US$39.39 (2022: US$38.37;
2021: US$35.93).
The outstanding shares for the year ended 31 December 2023 had a weighted average remaining contractual life of 1.5 years
(2022: 1.8 years; 2021: 3.7 years) for the equity-settled scheme, 1.8 years for Reynolds American equity-settled scheme (2022: 1.80 years;
2021: 1.70 years) and 1.5 years (2022: 1.7 years; 2021: 4.1 years) for the cash-settled share-based payment arrangements.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

(b) Deferred Share Bonus Scheme

Details of the movements for the equity- and cash-settled DSBS scheme during the years ended 31 December 2023 and 31 December
2022, were as follows:
2023 2022
Equity-settled Cash-settled Equity-settled Cash-settled
Number Number Number Number
of options of options of options of options
in thousands in thousands in thousands in thousands
Outstanding at start of year 4,015 141 4,141 223
Granted during the period 1,675 211 1,616 85
Exercised during the period (1,743) (81) (1,609) (159)
Forfeited during the period (96) (10) (133) (8)
Outstanding at end of year 3,851 261 4,015 141
Exercisable at end of year — 1 1 14

The weighted average British American Tobacco p.l.c. share price at the date of exercise for share options exercised during the financial
year was £27.39 (2022: £32.20; 2021: £27.58) for equity-settled and £25.56 (2022: £32.50; 2021: £27.70) for cash-settled options.
The outstanding shares for the year ended 31 December 2023 had a weighted average remaining contractual life of 1.3 years
(2022: 1.3 years; 2021: 1.3 years) for the equity-settled scheme and 1.3 years (2022: 1.1 years; 2021: 1.3 years) for the cash-settled scheme.
Valuation assumptions
Assumptions used in the Black-Scholes models to determine the fair value of share options at grant date were as follows:
2023 2022

PSP & RSP DSBS PSP & RSP DSBS

Expected volatility (%) 27.0 27.0 27.0 27.0
Average expected term to exercise (years) 3.0 3.0 3.0 3.0
Risk-free rate (%) 3.5 3.5 1.4 1.4
Expected dividend yield (%) 7.7 7.7 6.8 6.8
Share price at date of grant (£) 29.71 29.71 32.18 32.18
*
Fair value at grant date (£) 23.15 / 23.61 23.61 27.46/26.28 26.28
*
Fair value at grant date (£) - Management Board 20.46 / 23.61 23.61 24.8/26.28 26.28
Note:
* Where two figures have been quoted for the Long-Term Incentive Plan, the numbers relate to PSP and RSP awards, respectively.

Market condition features were incorporated into the Monte-Carlo models for the total shareholder return elements of the PSP,
in determining fair value at grant date. Assumptions used in these models were as follows:
2023 2022
PSP PSP
Average share price volatility FMCG comparator group (%) 24 23
Average correlation FMCG comparator group (%) 29 31

Fair values determined from the Black-Scholes and Monte-Carlo models use assumptions revised at the end of each reporting period
for cash-settled share-based payment arrangements.
The expected British American Tobacco p.l.c. share price volatility was determined taking account of the return index (the share price
index plus the dividend reinvested) over a five-year period. The FMCG share price volatility and correlation was also determined over
the same periods. The average expected term to exercise used in the models has been adjusted, based on management’s best estimate,
for the effects of non-transferability, exercise restrictions and behavioural conditions, forfeiture and historical experience.
The risk-free rate has been determined from market yield curves for government gilts with outstanding terms equal to the average
expected term to exercise for each relevant grant. The expected dividend yield was determined by calculating the yield from the last two
declared dividends divided by the grant share price.
In addition to these valuation assumptions, LTI awards, excluding RSP, contain earnings per share performance conditions. As these are non-
market performance conditions they are not included in the determination of fair value of share options at the grant date, however, they are
used to estimate the number of awards expected to vest. This payout calculation is based on expectations published in analysts’ forecasts.

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Financial Statements

Notes on Accounts
Continued

1
29 Group employees (revised )
The average number of persons employed by the Group and its associates during the year, including Directors, was 75,452 (2022: 77,951).
2023 2022
Number Number
U.S. 3,861 4,274
AME 32,948 34,162
APMEA 13,030 13,641
Subsidiary undertakings 49,839 52,077
Associates 25,613 25,874
75,452 77,951
Note:
1. Effective from 2023, the Group revised its regional structure from four regions to three, with the comparator data provided on this revised basis.

Included within the employee numbers for AME are certain employees in the UK in respect of central functions. Some of the costs
of these employees are allocated or charged to the various regions and markets in the Group.
30 Related party disclosures
The Group has a number of transactions and relationships with related parties, as defined in IAS 24 Related Party Disclosures, all
of which are undertaken in the normal course of business. Transactions with CTBAT International Limited (a joint operation) are not
included in these disclosures as the results are immaterial to the Group.
Intercompany transactions and balances are eliminated on consolidation and therefore are not disclosed.
Transactions and balances with associates relate mainly to the sale and purchase of cigarettes and tobacco leaf. The Group’s share
of dividends from associates, included in other income in the table below, was £559 million (2022: £438 million; 2021: £392 million).
2023 2022 2021
£m £m £m
Transactions
– revenue 523 494 524
– purchases (178) (190) (123)
– other income 560 441 393
– other expenses (6) (1) (6)
Amounts receivable at 31 December 48 51 48
Amounts payable at 31 December (4) (4) (3)

In November 2023, the Group announced the signing of an agreement for a further investment in Organigram. At 31 December 2023,
the proposed investment of CAD$125 million (approximately £74 million) was subject to customary conditions, including necessary
approvals by the shareholders of Organigram, which was given on 18 January 2024. On 24 January 2024, BAT made the first tranche
investment of CAD$42 million (£24 million), acquiring a further 12,893,175 common shares of Organigram at a price of CAD$3.22 per
share. Subject to certain conditions, the remaining 25,786,350 shares subscribed for shall be issued at the same price in two further
equal tranches by the end of August 2024 and February 2025, respectively. Based on Organigram’s outstanding share capital at the end
of 2023, this investment will increase the Group’s equity position from c.19% to c.45% (restricted to 30% voting rights) once all three
tranches have been completed.
In addition, as mentioned in note 27, in 2023, the Group also acquired 20% of DeFloria for £8 million and increased its ownership in Steady
State LLC (trading as Open Book Extracts) from 5.76% to 10.8% for £4 million. In October 2023, a further investment of £8 million was
made in Steady State LLC by way of a convertible loan note.
During 2023, the Group acquired a further 1.31% in Hrvatski Duhani d.d., at a cost of less than £1 million, following the acquisitions in 2022
(3.3% at a cost of £1 million) and 2021 (2.7% at a cost of £1 million).
In 2022, as mentioned in note 27, the Group made a £32 million investment in exchange for 16% of Sanity Group GmbH and made
a non-controlling investment in Steady State LLC for £4 million.
During 2022, the Group increased its ownership of a wholesale producer and distributor operating in the agriculture sector based
in Uzbekistan, FE 'Samfruit' JSC to 45.40% for £1 million. In 2021, the Group increased its ownership to 42.61%, for £1 million.
In November 2022, the Group invested in Charlotte's Web via a convertible debenture of £48 million which is currently convertible into
a non-controlling equity stake of approximately 19.9% (as explained in note 27(c)).
In 2021, the Group made a capital contribution in Brascuba Cigarrillos S.A. at a cost of £6 million. There was a capital reduction in CTBAT
International Limited of approximately US$171 million with funds remitted prorata to investors in 2021.
On 5 October 2021, PT Bentoel Internasional Investama Tbk (Bentoel) announced its intention to delist from the Indonesia Stock
Exchange and go private by conducting a Voluntary Tender Offer (VTO). As part of this, in two phases in November and December 2021,
the Group acquired an additional 0.2% of shares in Bentoel from independent shareholders at a cost of £4 million and terminated the
total return swap (as explained in note 32).
As explained in note 15, in 2022 the Group provided a temporary liquidity facility to the main UK pension fund. As at 31 December 2023
this facility was undrawn.

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The Group and Organigram also entered into a Product Development Collaboration Agreement following which a Centre of Excellence
has been established to focus on developing the next generation of cannabis products with an initial focus on cannabidiol (CBD).
As a result of the implementation of the EU Single-Use Plastic Directive in certain EU countries, the Group, along with other tobacco
manufacturers, established Producer Responsibility Organisations for the management of the Extended Producer Responsibility
obligations relating to tobacco product butt filter waste collection. The costs incurred by the Group in relation to this waste disposal
is included in note 6(l).
The key management personnel of British American Tobacco consist of the members of the Board of Directors of British American
Tobacco p.l.c. and the members of the Management Board. No such person had any material interest during the year in a contract of
significance (other than a service contract) with the Company or any subsidiary company. The term key management personnel in this
context includes their close family members.
2023 2022 2021
£m £m £m
The total compensation for key management personnel, including Directors, was:
– salaries and other short-term employee benefits 17 19 18
– post-employment benefits 1 1 1
– share-based payments 13 17 16
31 37 35

The following table, which is not part of IAS 24 disclosures, shows the aggregate emoluments of the Directors of the Company.

Executive Directors Chair Non-Executive Directors Total

2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Salary; fees; benefits;
incentives
– salary 1,644 2,129 2,119 1,644 2,129 2,119
– fees 688 670 727 1,059 1,027 1,045 1,747 1,697 1,772
– taxable benefits 395 449 420 17 59 55 31 78 2 443 586 477
– short-term incentives 1,650 3,761 4,128 1,650 3,761 4,128
– long-term incentives 1,371 7,888 3,399 1,371 7,888 3,399
Sub-total 5,060 14,227 10,066 705 729 782 1,090 1,105 1,047 6,855 16,061 11,895
Pension; other
emoluments
– pension 248 320 318 248 320 318
– other emoluments 2 6 6 2 6 6
Sub-total 250 326 324 250 326 324
Total emoluments 5,310 14,553 10,390 705 729 782 1,090 1,105 1,047 7,105 16,387 12,219

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Financial Statements

Notes on Accounts
Continued

31 Contingent liabilities and financial commitments

1. The Group is subject to contingencies pursuant to of judgment’ statutes and Filter Cases, as defined below. An
requirements that it complies with relevant laws, regulations ‘offer of judgment,’ if rejected by the plaintiff, preserves the
and standards. Group’s right to recover attorneys’ fees under certain statutes
2. Failure to comply could result in restrictions in operations, in the event of a verdict favourable to the Group. Such offers
damages, fines, increased tax, increased cost of compliance, are sometimes made through court-ordered mediations.
interest charges, reputational damage or other sanctions. Other settlements by Group companies include the State
These matters are inherently difficult to quantify. In cases Settlement Agreements (as defined in paragraph 39 below),
where the Group has an obligation as a result of a past event the funding by various tobacco companies of a US$5.2 billion
existing at the balance sheet date, if it is probable that an (approximately £4.1 billion) trust fund contemplated by the
outflow of economic resources will be required to settle the Master Settlement Agreement (as described in paragraph 39
obligation and if the amount of the obligation can be reliably below) to benefit tobacco growers, the original Broin flight
estimated, a provision will be recognised based on best attendant case (as described in paragraph 38, note 31(o)
estimates and management judgement. below), and most of the Engle progeny cases pending in U.S.
federal court (as described in paragraph 27 et seq. below),
3. There are, however, contingent liabilities in respect of after the initial docket of over 4,000 such cases was reduced
litigation, taxes in some countries and guarantees for which to approximately 400 cases. The Group believes that the
no provisions have been made. circumstances surrounding these claims are readily
General Litigation Overview distinguishable from the current categories of tobacco-
4. There are a number of legal and regulatory actions, related litigation claims involving Group companies.
proceedings and claims against Group companies related to 9. Although the Group intends to defend all pending cases
tobacco and New Category products that are pending in a vigorously, and believes that the Group’s companies have valid
number of jurisdictions. These proceedings include, among bases for appeals of adverse verdicts and valid defences to all
other things, claims for personal injury (both individual claims actions, and that an outflow of resources related to any
and class actions) and claims for economic loss arising from individual case is not considered probable, litigation is subject
the treatment of smoking- and health-related diseases (such to many uncertainties, and, generally, it is not possible to
as medical recoupment claims brought by local governments). predict the outcome of any particular litigation pending against
5. The plaintiffs in these cases seek recovery on a variety of legal Group companies, or to reasonably estimate the amount or
theories, including negligence, strict liability in tort, design range of any possible loss. Furthermore, a number of political,
defect, failure to warn, fraud, misrepresentation, violations of legislative, regulatory and other developments relating to the
unfair and deceptive trade practices statutes, conspiracy, tobacco industry and cigarette smoking have received wide
public nuisance, medical monitoring and violations of media attention. These developments may negatively affect
competition and antitrust laws. The plaintiffs seek various the outcomes of tobacco-related legal actions and encourage
forms of relief, including compensatory and, where available, the commencement of additional similar litigation. Therefore,
punitive damages, treble or multiple damages and statutory the Group does not provide estimates of the financial effect of
damages and penalties, creation of medical monitoring and the contingent liabilities represented by such litigation, as such
smoking cessation funds, disgorgement of profits, attorneys’ estimates are not practicable.
fees, and injunctive and other equitable relief. 10. The following table lists the categories of the tobacco-related
6. Although alleged damages often are not determinable from a actions pending against Group companies as at 31 December
complaint, and the law governing the pleading and calculation of 2023 and the increase or decrease from the number of cases
damages varies from jurisdiction to jurisdiction, compensatory pending against Group companies as at 31 December 2022.
and punitive damages have been specifically pleaded in a Details of the quantum of past judgments awarded against
number of cases, sometimes in amounts ranging into the Group companies, the majority of which are under appeal, are
hundreds of millions and even hundreds of billions of sterling. also identified along with any settlements reached during the
7. The Group has successfully managed tobacco-related relevant period. Given the volume and more active nature of
litigation, and a very high percentage of the tobacco-related the Engle progeny cases and the Filter Cases in the U.S.
litigation claims brought against Group companies, including described below, and the fluctuation in the number of such
Engle progeny cases, continue to be dismissed at or before cases and amounts awarded from year to year, the Group
trial. Based on their experience in tobacco-related litigation presents judgment or settlement figures for these cases on
and the strength of the defences available to them in such a three-year basis. Where no quantum is identified, either
litigation, the Group’s companies believe that their successful no judgment has been awarded against a Group company,
defence of tobacco-related litigation in the past will continue or where a verdict has been reached no quantification of
in the future. damages has been given, or no settlement has been entered
into. Further details on the judgments, damages
8. It is the policy of the Group to defend tobacco-related quantification and settlements are included within the case
litigation claims vigorously; generally, Group companies do not narratives below. For a discussion of the non-tobacco related
settle such claims. However, Group companies may enter into litigation pending against the Group, see note 31,
settlement discussions in certain cases, if they believe it is in paragraph 81, et seq.
their best interests to do so. Exceptions to this approach
include, but are not limited to, actions taken pursuant to ‘offer

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Case Numbers as at Case Numbers as at

31 December 2023 31 December 2022 Change in Number
Case Type Notes (note 31(a)) (note 31(a)) Increase/(decrease)
U.S. tobacco-related actions
Medical reimbursement cases 31(b) 2 2 No change
Class actions 31(c) 19 20 (1)
Individual smoking and health cases 31(d) 202 206 (4)
Engle Progeny Cases 31(e) 305 665 (360)
Broin II Cases 31(f) 1,171 1,183 (12)
Filter Cases 31(g) 35 46 (11)
State Settlement Agreements – Enforcement and Validity 31(h) 4 1 3
Non-U.S. tobacco-related actions
Medical reimbursement cases 18 18 No change
Class actions 31(i) 12 12 No change
Individual smoking and health cases 31(j) 54 51 3

(Note 31(a)) This includes cases to which the Reynolds American Inc. (Reynolds American) group companies were a party at such date.
(Note 31(b)) This category of cases includes the Department of Justice action. See note 31, paragraphs 20-23.
(Note 31(c)) See note 31, paragraphs 24-36.
(Note 31(d)) See note 31, paragraphs 37-38.
(Note 31(e)) See note 31, paragraphs 27-36.
(Note 31(f)) See note 31, paragraph 38.
(Note 31(g)) See note 31, paragraph 38.
(Note 31(h)) See note 31, paragraphs 39-54.
(Note 31(i)) Outside the United States, there were 12 class actions being brought against Group companies as at 31 December 2023.
These include class actions in the following jurisdictions: Canada (11) and Venezuela (one). For a description of the Group companies’
non-U.S. class actions, see note 31, paragraphs 67-79. For a description of the Quebec Class Actions, see note 31, paragraph 73. All of the
class actions in Canada are currently stayed pursuant to a court order. See note 31, paragraph 57.
(Note 31(j)) As at 31 December 2023, the jurisdictions with the most active individual cases against Group companies were, in descending
order: Chile (17), Brazil (15), Italy (eight), Canada (five), Argentina (five) and Ireland (two). There were a further two jurisdictions with one
active case only. For further information, see note 31, paragraph 80.
11. Certain terms and phrases used in this note 31 may require some explanation.
a) ‘Judgment’ or ‘final judgment’ refers to the final decision of the court resolving the dispute and determining the rights and
obligations of the parties. At the trial court level, for example, a final judgment generally is entered by the court after a jury verdict
and after post-verdict motions have been decided. In most cases, the losing party can appeal a verdict only after a final judgment
has been entered by the trial court.
b) ‘Damages’ refers to the amount of money sought by a plaintiff in a complaint, or awarded to a party by a jury or, in some cases,
by a judge. ‘Compensatory damages’ are awarded to compensate the prevailing party for actual losses suffered, if liability is
proved. In cases in which there is a finding that a defendant has acted wilfully, maliciously or fraudulently, generally based on
a higher burden of proof than is required for a finding of liability for compensatory damages, a plaintiff also may be awarded
‘punitive damages’. Although damages may be awarded at the trial court stage, a losing party may be protected from paying
any damages until all appellate avenues have been exhausted by posting a supersedeas bond. The amount of such a bond is
governed by the law of the relevant jurisdiction and generally is set at the amount of damages plus some measure of statutory
interest, modified at the discretion of the appropriate court or subject to limits set by a court or statute.
c) ‘Settlement’ refers to certain types of cases in which cigarette manufacturers, including R. J. Reynolds Tobacco Co. (RJRT),
Brown & Williamson Tobacco Corporation (now known as Brown & Williamson Holdings, Inc.) (B&W), and Lorillard Tobacco
Company (Lorillard Tobacco), have agreed to resolve disputes with certain plaintiffs without resolving the cases through trial.
d) All sums set out in note 31 have been converted to GBP and US$ using the following end closing rates applicable for
31 December 2023, which differ from the rates at the time any related provision was recorded on the balance sheet: GBP 1 to
US$ 1.2748, GBP 1 to CAD$ 1.6810, GBP 1 to EGP (Egyptian Pound) 39.4232, GBP 1 to EUR 1.1540, GBP 1 to BRL 6.1925 (Brazilian
Real), GBP 1 to AOA 1,072.9660 (Angolan Kwanza), GBP 1 to ARS 1,030.6707 (Argentine Peso), GBP 1 to MZN 81.4087
(Mozambican Metical), GBP 1 to NGN 1,144.1330 (Nigerian Naira), GBP 1 to KRW 1,641.8100 (South Korean Won), GBP 1 to HRK
8.6950 (Croatian Kuna), GBP 1 to JPY 179.7213 (Japanese Yen), GBP 1 to SAR 4.7805 (Saudi Riyal), and GBP 1 to TRY 37.6499
(Turkish Lira). In addition, due to the adoption of the euro by the Croatian State, the European Central Bank has set a conversion
rate of EUR to HRK on 1 January 2023 as 1 EUR to HRK 7.5345 (Croatian Kuna).

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Financial Statements

Notes on Accounts
Continued

U.S. Tobacco Litigation (a) Medical Reimbursement Cases

12. Group companies, notably RJRT (individually and as successor 18. These civil actions seek to recover amounts spent by
by merger to Lorillard Tobacco) and B&W as well as other government entities and other third-party providers on
leading cigarette manufacturers, are defendants in a number of healthcare and welfare costs claimed to result from illnesses
product liability cases. In a number of these cases, the amounts associated with smoking.
of compensatory and punitive damages sought are significant. 19. As at 31 December 2023, one U.S. medical reimbursement
13. The total number of U.S. tobacco product liability cases suit (Crow Creek Sioux Tribe v. American Tobacco Co., filed in
pending as at 31 December 2023 involving RJRT, B&W and/or 1997) was pending against RJRT, B&W and Lorillard Tobacco
Lorillard Tobacco was approximately 1,748. in a Native American tribal court in South Dakota. The
14. Since many of these pending cases seek unspecified plaintiffs seek to recover actual and punitive damages,
damages, it is not possible to quantify the total amounts being restitution, funding of a clinical cessation programme,
claimed, but the aggregate amounts involved in such litigation funding of a corrective public education programme, and
are significant, possibly totalling billions of US dollars. The disgorgement of unjust profits from sales to minors. There
cases fall into four broad categories: medical reimbursement has been no recent activity in this case, and no other medical
cases; class actions; individual cases; and other claims. reimbursement suits are pending against these companies
by county or other political subdivisions of the states.
15. RJRT (individually and as successor by merger to Lorillard
Tobacco), American Snuff Co., Santa Fe Natural Tobacco U.S. Department of Justice Action
Company, Inc. (SFNTC), R.J. Reynolds Vapor Company 20. On 22 September 1999, the U.S. Department of Justice (DOJ)
(RJR Vapor), Reynolds American, Lorillard Inc., other Reynolds brought an action in the U.S. District Court for the District of
American affiliates and indemnitees, including but not limited Columbia against various industry members, including RJRT,
to B&W (collectively, the Reynolds Defendants), believe that B&W, Lorillard Tobacco, B.A.T Industries p.l.c. (Industries) and
they have valid defences to the tobacco-related litigation Investments (United States v. Philip Morris USA Inc.). The DOJ
claims against them, as well as valid bases for appeal of initially sought (i) recovery of certain federal funds expended
adverse verdicts against them. The Reynolds Defendants in providing health care to smokers who developed alleged
have, through their counsel, filed pleadings and memoranda smoking-related diseases and (ii) equitable relief under the
in pending tobacco-related litigation that set forth and civil provisions of the Racketeer Influenced and Corrupt
discuss a number of grounds and defences that they and their Organizations Act (RICO), including (a) disgorgement of
counsel believe have a valid basis in law and fact. roughly US$280 billion (approximately £219.6 billion) in profits
allegedly earned from a purported racketeering ‘enterprise’ -
16. Scheduled trials. Trial schedules are subject to change, and a remedy the U.S. Court of Appeals for the DC Circuit ruled in
many cases are dismissed before trial. In the U.S., there are February 2005 was not available - and (b) certain ‘corrective
44 cases, exclusive of Engle progeny cases, scheduled for trial communications’. In September 2000, the district court
as at 31 December 2023 through 31 December 2024, for the dismissed Industries for lack of personal jurisdiction and
Reynolds Defendants: 33 individual smoking and health cases, dismissed the health care cost recovery claims.
nine Filter Cases, one class action case and one other case.
There are also approximately 28 Engle progeny cases against 21. After a roughly nine-month non-jury trial of the remaining
RJRT (individually and as successor to Lorillard Tobacco) and RICO claims, the district court issued its Final Judgment and
B&W scheduled for trial through 31 December 2024. It is not Remedial Order (the Remedial Order) on 17 August 2006.
known how many of these cases will actually be tried. That order found certain defendants, including RJRT, B&W,
Lorillard Tobacco and Investments, had violated RICO,
17. Trial results. From 1 January 2021 through 31 December 2023, imposed financial penalties and enjoined the defendants from
58 trials occurred in individual smoking and health, Engle committing future racketeering acts, participating in certain
progeny, and patent cases in which the Reynolds Defendants trade organisations, making misrepresentations concerning
were defendants, including 11 where mistrials were declared. smoking and health and youth marketing, and using certain
Verdicts in favour of the Reynolds Defendants and, in some brand descriptors such as ‘low tar’, ‘light’, ‘ultra-light’, ‘mild’
cases, other defendants, were returned in 15 cases, tried in and ‘natural’. The Remedial Order also required the
Florida (eight), Oregon (one), Massachusetts (four), Illinois defendants to issue ‘corrective communications’ on five
(one) and District of Columbia (one). Verdicts in favour of subjects, including smoking and health and addiction, and
the plaintiffs were returned in 32 cases, tried in Florida (23), to comply with further undertakings, including maintaining
Massachusetts (three), New Mexico (two), Oregon (two), websites of historical corporate documents and
Virginia (one) and North Carolina (one). Two of the cases disseminating certain marketing information on a confidential
(in Florida) were dismissed during trial. One of the cases basis to the government. In addition, the district court placed
(in Florida) was a punitive damages re-trial that was retried restrictions on the defendants’ ability to dispose of certain
twice (the first retrial resulted in a plaintiff verdict; the second assets for use in the United States, unless the transferee
retrial resulted in a defense verdict). agrees to abide by the terms of the district court’s order.

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22. The parties appealed and cross-appealed and, on 22 May No Additive/Natural/Organic Claim Cases
2009, the DC Circuit affirmed the district court’s RICO 25. A total of 17 pending putative class actions were filed in nine U.S.
liability judgment but vacated the Remedial Order in part federal district courts against Reynolds American, RJRT, and
and remanded for further factual findings and clarification SFNTC, which cases generally allege, in various combinations,
as to whether liability should be imposed against B&W, violations of state deceptive and unfair trade practice statutes,
based on changes in the nature of B&W’s business operations and claim state common law fraud, negligent
(including the extent of B&W’s control over tobacco misrepresentation, and unjust enrichment based on the use of
operations). The DC Circuit also remanded three other descriptors such as ‘natural’, ‘organic’ and ‘100% additive-free’ in
discrete issues relating to the injunctive remedies, including the marketing, labelling, advertising, and promotion of SFNTC’s
for the district court ‘to reformulate’ the injunction on the use NAS brand cigarettes. In these actions, the plaintiffs allege that
of low-tar descriptors ‘to exempt foreign activities that have the use of these terms suggests that NAS brand cigarettes are
no substantial, direct, and foreseeable domestic effects,’ less harmful than other cigarettes and, for that reason, violated
and for the district court to evaluate whether corrective state consumer protection statutes or amounted to fraud or a
communications could be required at point-of-sale displays negligent or intentional misrepresentation. The actions seek
(which requirement the DC Circuit vacated). On 28 June 2010, various categories of recovery, including economic damages,
the U.S. Supreme Court denied the parties' petitions for injunctive relief (including medical monitoring and cessation
further review. programmes), interest, restitution, disgorgement, treble and
23. On 22 December 2010, the district court dismissed B&W from punitive damages, and attorneys’ fees and costs. In April 2016,
the litigation. Due to intervening changes in controlling law, the U.S. Judicial Panel on Multidistrict Litigation (JPML)
on 28 March 2011, the district court ruled that the Remedial consolidated the 16 cases pending at that time for pre-trial
Order no longer applied to Investments prospectively, and for purposes before a federal district court in New Mexico, and a
this reason, Investments would not have to comply with any later-filed case was transferred there for pre-trial purposes in
of the remaining injunctive remedies. In November 2012, 2018. On 21 December 2017, that court granted the defendants’
the district court entered an order setting forth the text of the motion to dismiss in part, dismissing a number of claims with
corrective statements and directed the parties to engage in prejudice, and denied it in part. The district court conducted a
discussions with the Special Master to implement them. five-day hearing on the motion for class certification and on the
After various proceedings and appeals, the district court motion challenging the admissibility of expert opinion testimony
in October 2017 ordered RJRT and the other U.S. tobacco in December 2020. On 1 September 2023, the district court
company defendants to fund the publication of compelled entered an order certifying a subset of the plaintiffs’ proposed
public statements in various U.S. media outlets, including in classes covering purchasers of NAS menthol cigarettes in six
newspapers, on television, on the companies’ websites, and states and declining to certify the other proposed classes. The
in onserts on cigarette packaging. The compelled public defendants and plaintiffs both appealed from that order to the
statements in newspapers and on television were completed U.S. Court of Appeals for the Tenth Circuit. Briefing in that court
in 2018 and in package onserts in mid-2020. The compelled is scheduled to be completed in July 2024.
public statements now also appear on RJRT websites. The Other Putative Class Actions
final issue regarding corrective statements was their display 26. Young v. American Tobacco Co. is a putative class action filed
at retail point of sale. On 6 December 2022, the district court in November 1997 in the Circuit Court, Orleans Parish,
entered a consent order requiring the tobacco company Louisiana against various U.S. cigarette manufacturers,
defendants to have the compelled public statements posted including RJRT, B&W, Lorillard Tobacco and certain parent
at retail point of sale. Installation of the statements began in companies. This action was brought on behalf of a putative
July 2023, and the statements will remain in stores through class of Louisiana residents who, though not themselves
June 2025. cigarette smokers, have been exposed to second-hand smoke
(b) Class Actions from cigarettes manufactured by the defendants, and who
24. As at 31 December 2023, RJRT, B&W and Lorillard Tobacco allegedly suffered injury as a result of that exposure. The
were named as defendants in one action asserting claims action seeks an unspecified amount of compensatory and
on behalf of putative classes of persons allegedly injured or punitive damages. In March 2016, the court entered an order
financially impacted by their smoking, and Reynolds American, staying the case, including all discovery, pending the
RJRT, and SFNTC (a subsidiary of Reynolds American) were completion of an ongoing smoking cessation programme
named in 17 putative class actions relating to the use of the ordered by the court in a now-concluded Louisiana state court
words ‘natural’, ‘100% additive-free’ or ‘organic’ in Natural certified class action, Scott v. American Tobacco Co.
American Spirit (NAS) brand advertising and promotional
materials. If the classes are or remain certified, separate trials
may be needed to assess individual plaintiffs’ damages.
Among the pending class actions, 16 specified the amount of
the claim in the complaint and alleged that the plaintiffs were
seeking in excess of US$5 million (approximately £3.9 million)
and one alleged that the plaintiffs were seeking less than
US$75,000 (approximately £58,823) per class member plus
unspecified punitive damages.

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Financial Statements

Notes on Accounts
Continued

Engle Class Action and Engle Progeny Cases (Florida)

27. In July 1998, trial began in Engle v. R. J. Reynolds Tobacco Co., a then-certified class action filed in Circuit Court, Miami-Dade County,
Florida, against U.S. cigarette manufacturers, including RJRT, B&W, Lorillard Tobacco and Lorillard Inc. The then-certified class
consisted of Florida citizens and residents, and their survivors, who suffered from smoking-related diseases that first manifested
between 5 May 1990, and 21 November 1996, and were caused by an addiction to cigarettes. In July 1999, the jury in this Phase I
found against RJRT, B&W, Lorillard Tobacco, Lorillard Inc. and the other defendants on common issues relating to the defendants’
conduct, general causation, the addictiveness of cigarettes, and entitlement to punitive damages.
28. In July 2000, the jury in Phase II awarded the class a total of approximately US$145 billion (approximately £113.7 billion) in punitive
damages, apportioned US$36.3 billion (approximately £28.5 billion) to RJRT, US$17.6 billion (approximately £13.8 billion) to B&W, and
US$16.3 billion (approximately £12.8 billion) to Lorillard Tobacco and Lorillard Inc. The three class representatives in the Engle class
action were awarded US$13 million (approximately £10.2 million) in compensatory damages.
29. This decision was appealed and ultimately resulted in the Florida Supreme Court in December 2006 decertifying the class and
allowing judgments entered for only two of the three Engle class representatives to stand and setting aside the punitive damages
award. The court preserved certain of the jury’s Phase I findings, including that cigarettes can cause certain diseases, nicotine is
addictive, and defendants placed defective cigarettes on the market, breached duties of care, concealed health-related information
and conspired. Putative Engle class members were permitted to file individual lawsuits, deemed ‘Engle progeny cases’, against
the Engle defendants, within one year of the Supreme Court’s decision (subsequently extended to 11 January 2008).
30. During 2015, RJRT and Lorillard Tobacco, together with Philip Morris USA Inc. (PM USA), settled virtually all of the Engle progeny
cases then pending against them in federal district court. The total amount of the settlement was US$100 million (approximately
£78.4 million) divided as follows: RJRT US$42.5 million (approximately £33.3 million); PM USA US$42.5 million (approximately
£33.3 million); and Lorillard Tobacco US$15 million (approximately £11.8 million). The settlement covered more than 400 federal Engle
progeny cases but did not cover 12 federal progeny cases previously tried to verdict and then pending on post-trial motions or appeal,
and two federal progeny cases filed by different lawyers from the ones who negotiated the settlement for the plaintiffs.
31. As at 31 December 2023, there were approximately 305 Engle progeny cases pending in which RJRT, B&W and/or Lorillard Tobacco
have all been named as defendants and served. These cases include claims by or on behalf of 380 plaintiffs. In addition, as at
31 December 2023, RJRT was aware of five additional Engle progeny cases that have been filed but not served. The number of
pending cases fluctuates for a variety of reasons, including voluntary and involuntary dismissals. Voluntary dismissals include cases
in which a plaintiff accepts an ‘offer of judgment’ from RJRT and/or RJRT’s affiliates and indemnitees. An offer of judgment,
if rejected by the plaintiff, preserves the offering party's right to seek attorneys’ fees under Florida law in the event of a favourable
verdict. Such offers are sometimes made through court-ordered mediations.
32. 35 trials occurred in Engle progeny cases in Florida state and federal courts against RJRT, B&W and/or Lorillard Tobacco from
1 January 2021 through 31 December 2023, and additional state court trials are scheduled for 2024.
33. The following chart identifies the number of trials in Engle progeny cases as at 31 December 2023 and additional information about
the adverse judgments entered:
Trials/verdicts/judgments of individual Engle progeny cases from 1 January 2021 through 31 December 2023:
Total number of trials 35
*
Number of trials resulting in plaintiffs’ verdicts 20
Total damages awarded in final judgments against RJRT US$81,492,000 (approximately £64 million)
Amount of overall damages comprising ‘compensatory
US$58,427,000 (of overall US$81,492,000 )
damages’ (approximately)
(approximately £46 million of £64 million)

Amount of overall damages comprising ‘punitive damages’ (approximately) US$23,065,000 (of overall US$81,492,000)
(approximately £18 million of £64 million)
Note:
* Of the 20 trials resulting in plaintiffs’ verdicts 1 January 2021 to 31 December 2023 (note 31(k)):

Number of adverse judgments appealed by RJRT (note 31(l)) 14

Number of adverse judgments, in which RJRT still has time to file an appeal 0
Number of adverse judgments in which an appeal was not, and can no longer be, sought 6

(Note 31(k)) The 35 trials include two cases that were tried twice (Rutkowski v. R. J. Reynolds Tobacco Co. and Miller v R. J. Reynolds
Tobacco Co.). In each case, the first trial resulted in mistrial, while the second resulted in a verdict for the plaintiff. The 35 trials also
include one trial that resulted in a plaintiff verdict and a new trial was ordered, but the case was resolved and later dismissed (Leidinger
v. R. J. Reynolds Tobacco Co.), and two punitive damages retrials for the same case (Ledo v R. J. Reynolds Tobacco Co.).
(Note 31(l)) Of the 14 adverse verdicts appealed by RJRT as a result of judgments arising in the period 1 January 2021 to 31 December 2023:
a.six appeals remain undecided in the District Courts of Appeal;
b.two judgments were affirmed and paid;
c.one judgment was reversed and remanded for new trial on the plaintiff's entitlement to punitive damages;
d.one judgment was affirmed and review of the Florida Supreme Court not sought; and
e.there were four appeals in which the cases were resolved and the appeals dismissed.

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34. By statute, Florida applies a US$200 million (approximately £156.9 million) bond cap to all Engle progeny cases in the aggregate.
Individual bond caps for any given Engle progeny case vary depending on the number of judgments in effect at a given time. Judicial
attempts by several plaintiffs in the Engle progeny cases to challenge the bond cap as violating the Florida Constitution have failed.
In addition, bills have been introduced in sessions of the Florida legislature that would eliminate the Engle progeny bond cap, but
those bills have not been enacted as at 31 December 2023.
35. In 2023, RJRT paid judgments in eight Engle progeny cases. Those payments totalled approximately US$38.5 million (approximately
£30.2 million) in compensatory or punitive damages. Additional costs were paid in respect of attorneys’ fees and statutory interest.
36. In addition, accruals for damages and attorneys’ fees and statutory interest for three cases (Konzelman v. R. J. Reynolds Tobacco Co.,
Blackwood v. R. J. Reynolds Tobacco Co., Spurlock v. R. J. Reynolds Tobacco Co.), four resolution bundles and interest and attorneys’
fees in the John Long v. R. J. Reynolds Tobacco Co. case were recorded in Reynolds American’s consolidated balance sheet as at
31 December 2023 to the value of approximately US$22.9 million (approximately £18.0 million).
(c) Individual Cases
37. As at 31 December 2023, 202 individual cases were pending in the United States against RJRT, B&W and/or Lorillard Tobacco.
This category of cases includes smoking and health cases alleging personal injuries caused by tobacco use or exposure brought
by or on behalf of individual plaintiffs based on theories of negligence, strict liability in tort, design defect, failure to warn, fraud,
misrepresentation, breach of express or implied warranty, violations of state deceptive trade practices or consumer protection
statutes, and conspiracy. The plaintiffs seek to recover compensatory damages, attorneys’ fees and costs, and punitive damages.
The category does not include the Engle progeny cases, Broin II cases, and Filter Cases discussed above and below. Two of the
individual cases are brought by or on behalf of an individual or his/her survivors alleging personal injury as a result of exposure to
Environmental Tobacco Smoke (ETS).
38. The following chart identifies the number of individual cases pending as at 31 December 2023 as against the number pending as at
31 December 2022, along with the number of Engle progeny cases, Broin II cases, and Filter Cases, which are discussed further below.
U.S. U.S. Change in
Case Numbers Case Numbers Number
31 December 31 December Increase /
Case Type 2023 2022 (Decrease)
Individual Smoking and Health Cases (note 31(m)) 202 206 (4)
Engle Progeny Cases (Number of Plaintiffs) (note 31(n)) 305 (380) 665 (838) (360) (458)
Broin II Cases (note 31(o)) 1,171 1,183 (12)
Filter Cases (note 31(p)) 35 46 (11)

(Note 31(m)) Out of the 202 pending individual smoking and health cases, five have received adverse verdicts or judgments in the court
of first instance or on appeal, and the total amount of those verdicts or judgments is approximately US$248.7 million (approximately
£195.1 million), of which $200 million (approximately £157 million) is the result of the jury’s verdict in the Treniece Jones v. R. J. Reynolds
Tobacco Co. case, from which RJRT will have the right to appeal following post-trial motions.
(Note 31(n)) The number of Engle progeny cases will fluctuate as cases are dismissed or if any of the dismissed cases are appealed.
Please see earlier table in paragraph 33.
(Note 31(o)) Broin v. Philip Morris, Inc. was a class action filed in Circuit Court in Miami-Dade County, Florida in 1991 and brought on behalf
of flight attendants alleged to have suffered from diseases or ailments caused by exposure to ETS in airplane cabins. In October 1997,
RJRT, B&W, Lorillard Tobacco and other cigarette manufacturer defendants settled Broin, agreeing to pay a total of US$300 million
(approximately £235 million) in three annual US$100 million (approximately £78.4 million) instalments, allocated among the companies
by market share, to fund research on the early detection and cure of diseases associated with tobacco smoke. It also required those
companies to pay a total of US$49 million (approximately £38.4 million) for the plaintiffs’ counsel’s fees and expenses. RJRT’s portion of
these payments was approximately US$86 million (approximately £67.5 million); B&W’s was approximately US$57 million (approximately
£44.7 million); and Lorillard Tobacco’s was approximately US$31 million (approximately £24.3 million). The settlement agreement, among
other things, limits the types of claims class members may bring and eliminates claims for punitive damages. The settlement agreement
also provides that, in individual cases by class members that are referred to as Broin II lawsuits, the defendants will bear the burden of
proof with respect to whether ETS can cause certain specifically enumerated diseases, referred to as ‘general causation’. With respect
to all other liability issues, including whether an individual plaintiff’s disease was caused by his or her exposure to ETS in airplane cabins,
referred to as ‘specific causation’, individual plaintiffs will bear the burden of proof. On 7 September 1999, the Florida Supreme Court
approved the settlement. There have been no Broin II trials since 2007. There have been periodic efforts to activate cases and the Group
expects this to continue over time.
(Note 31(p)) Includes claims brought against Lorillard Tobacco and Lorillard Inc. by individuals who seek damages resulting from
their alleged exposure to asbestos fibres that were incorporated into filter material used in one brand of cigarettes manufactured by
a predecessor to Lorillard Tobacco for a limited period of time ending more than 60 years ago. Pursuant to a 1952 agreement between
P. Lorillard Company and H&V Specialties Co., Inc. (the manufacturer of the filter material), Lorillard Tobacco is required to indemnify
Hollingsworth & Vose for legal fees, expenses, judgments and resolutions in cases and claims alleging injury from finished products sold
by P. Lorillard Company that contained the filter material. As at 31 December 2023, Lorillard Tobacco and/or Lorillard Inc. was a
defendant in 35 Filter Cases. Since 1 January 2021, Lorillard Tobacco and RJRT have paid, or have reached agreement to pay, a total
of approximately US$21.5 million (approximately £17 million) in settlements to resolve 88 Filter Cases.

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Financial Statements

Notes on Accounts
Continued

(d) State Settlement Agreements

39. In November 1998, the major U.S. cigarette manufacturers, including RJRT, B&W and Lorillard Tobacco, entered into the Master
Settlement Agreement (MSA) with attorneys general representing 46 U.S. states, the District of Columbia and certain U.S. territories
and possessions. These cigarette manufacturers previously settled four other cases, brought on behalf of Mississippi, Florida, Texas
and Minnesota, by separate agreements with each state (collectively and with the MSA, the ‘State Settlement Agreements’).
40. These State Settlement Agreements settled all health care cost recovery actions brought by, or on behalf of, the settling
jurisdictions; released the defending major U.S. cigarette manufacturers from various additional present and potential future claims;
imposed future payment obligations in perpetuity on RJRT, B&W, Lorillard Tobacco and other major U.S. cigarette manufacturers;
and placed significant restrictions on their ability to market and sell cigarettes and smokeless tobacco products. In accordance with
the MSA, various tobacco companies agreed to fund a US$5.2 billion (approximately £4.1 billion) trust fund to be used to address the
possible adverse economic impact of the MSA on tobacco growers.
41. RJRT and SFNTC are subject to the substantial payment obligations under the State Settlement Agreements. Payments under the
State Settlement Agreements are subject to various adjustments for, among other things, the volume of cigarettes sold, relative
market share, operating profit and inflation. Reynolds American’s operating subsidiaries’ expenses and payments under the State
Settlement Agreements for 2020, 2021, 2022 and 2023 and the projected expenses and payments for 2024 and onwards are set
*
forth below (in millions of US dollars) :

2025 and
2020 2021 2022 2023 2024 thereafter
Settlement expenses $3,572 $3,420 $2,951 $2,516
Settlement cash payments $2,848 $3,744 $3,129 $2,874
Projected settlement expenses >$2,100 >$2,100
Projected settlement cash payments >$2,500 >$2,100
Note:
* Subject to adjustments for changes in sales volume, inflation, operating profit and other factors. Payments are allocated among the companies on the basis of relative market share or
other methods.

42. The State Settlement Agreements have materially adversely affected RJRT’s shipment volumes. Reynolds American believes that
these settlement obligations may materially adversely affect the results of operations, cash flows or financial position of Reynolds
American and RJRT in future periods. The degree of the adverse impact will depend, among other things, on the rate of decline
in U.S. cigarette sales in the premium and value categories, RJRT’s share of the domestic premium and value cigarette categories,
and the effect of any resulting cost advantage of manufacturers not subject to the State Settlement Agreements.
43. In addition, the MSA includes an adjustment that potentially reduces the annual payment obligations of RJRT, Lorillard Tobacco
and the other signatories to the MSA, known as ‘Participating Manufacturers’ (PMs). Certain requirements, collectively referred
to as the ‘Adjustment Requirements’, must be satisfied before the Non-Participating Manufacturers (NPM) Adjustment for a given
year is available: (i) an Independent Auditor must determine that the PMs have experienced a market share loss, beyond a triggering
threshold, to those manufacturers that do not participate in the MSA (such non-participating manufacturers being referred to as
NPMs); and (ii) in a binding arbitration proceeding, a firm of independent economic consultants must find that the disadvantages of
the MSA were a significant factor contributing to the loss of market share. This finding is known as a significant factor determination.
44. When the Adjustment Requirements are satisfied, the MSA provides that the NPM Adjustment applies to reduce the annual
payment obligation of the PMs. However, an individual settling state may avoid its share of the NPM Adjustment if it had in place
and diligently enforced during the entirety of the relevant year a ‘Qualifying Statute’ that imposes escrow obligations on NPMs that
are comparable to what the NPMs would have owed if they had joined the MSA. In such event, the state’s share of the NPM
Adjustment is reallocated to other settling states, if any, that did not have in place and diligently enforce a Qualifying Statute.
45. RJRT, Lorillard Tobacco and SFNTC are or were involved in the NPM Adjustment proceedings concerning the years 2003 to 2020.
In 2012, RJRT, Lorillard Tobacco, and SFNTC entered into an agreement (the Term Sheet) with certain settling states that resolved
accrued and future NPM adjustments. After an arbitration panel ruled in September 2013 that six states had not diligently enforced
their qualifying statutes in the year 2003, additional states joined the Term Sheet. RJRT executed the NPM Adjustment Settlement
Agreement on 25 September 2017 (which incorporated the Term Sheet). Since the NPM Adjustment Settlement Agreement was
executed, an additional 12 states have joined. The arbitration panels ruled in September 2021 that two states had not diligently
enforced their qualifying statutes in the year 2004. In September 2022, a panel ruled that an additional state, New Mexico, had not
diligently enforced its qualifying statute in the year 2004. On 30 August, 2023, the New Mexico District Court vacated this decision.
A notice of appeal was filed on 27 September 2023. In December 2023, a panel ruled that an additional state had not diligently
enforced its qualifying statute in the years 2005, 2006 and 2007. NPM proceedings are ongoing and could result in further reductions
of the companies’ MSA-related payments.
46. On 18 January 2017, the State of Florida filed a motion to join Imperial Tobacco Group, PLC (ITG) as a defendant and to enforce
the Florida State Settlement Agreement, which motion sought payment under the Florida State Settlement Agreement of
approximately US$45 million (approximately £35.3 million) with respect to the four brands (Winston, Salem, Kool and Maverick) that
were sold to ITG in the divestiture of certain assets, on 12 June 2015, by subsidiaries or affiliates of Reynolds American and Lorillard,
to a wholly owned subsidiary of Imperial Brands plc (the Divestiture), referred to as the ‘Acquired Brands’. The motion also claimed
future annual losses of approximately US$30 million per year (approximately £23.5 million) absent the court’s enforcement of the
Florida State Settlement Agreement. The State’s motion sought, among other things, an order declaring that RJRT and ITG are in
breach of the Florida Settlement Agreement and are required, jointly and severally, to make annual payments to the State under
the Florida State Settlement Agreement with respect to the Acquired Brands. By order dated 30 March 2017, ITG was joined into
the enforcement action. In addition, on 18 January 2017, PM USA filed a motion to enforce the Florida State Settlement Agreement
asserting, among other things, that RJRT and ITG breached that agreement by failing to make settlement payments as to the
Acquired Brands, which PM USA asserts improperly shifted settlement payment obligations to PM USA.

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47. After a bench trial, on 27 December 2017 the court entered for how net operating profit adjustment payments would have
an order holding RJRT (not ITG) liable for annual settlement been allocated if ITG had joined the Florida Settlement. Trial is
payments for the Acquired Brands, finding that ITG did not scheduled for 8 to 9 July 2024. ITG has agreed, subsequent to
assume liability for annual settlement payments related to the Chancery Court’s decision on past payments, that it will
the Acquired Brands under the terms of the asset purchase indemnify every settlement payment that RJRT makes in the
agreement relating to the Divestiture. The court declined future to Florida based on ITG’s sales of Acquired Brands
to enter final judgment until after resolution of the dispute cigarettes (subject to the issues reserved for trial and to its
between RJRT and PM USA regarding PM USA's assertion right to appeal).
that the settlement payment obligations have been 49. In June 2015, ITG joined the Mississippi State Settlement
improperly shifted to PM USA. On 15 August 2018, the court Agreement. On 26 December 2018, PM USA filed a motion
entered a final judgment in the action (the Final Judgment). to enforce the settlement agreement against RJRT and ITG
As a result of the Final Judgment, PM USA's challenge to alleging RJRT and ITG failed to act in good faith in calculating
RJRT's accounting assumptions related to the Acquired the base year net operating profits for the Acquired Brands,
Brands was rendered moot, subject to reinstatement if ITG claiming damages of approximately US$6 million
joins the Florida State Settlement Agreement or if the Final (approximately £4.7 million) through 2017. On 21 February
Judgment is reversed. On 29 August 2018, RJRT filed a notice 2019, the Chancery Court of Jackson County, Mississippi
of appeal on the Final Judgment. On 7 September 2018, held a scheduling conference and issued a discovery schedule
PM USA filed a notice of appeal with respect to the court's order. A hearing on PM USA’s motion to enforce, originally
ruling as to ITG. These appeals were consolidated pursuant scheduled for 3-6 May 2021, was adjourned on consent of
to RJRT's motion on 1 October 2018. On 29 July 2020, Florida's the parties to 11-12 August 2021. On 8 June 2021, PM USA
Fourth District Court of Appeal affirmed the Final Judgment. and RJRT entered into a settlement agreement resolving
On 12 August 2020, RJRT filed a motion for rehearing or for the outstanding payment calculation issues. On 11 June 2021,
certification to the Florida Supreme Court of the 29 July 2020 the Mississippi Chancery Court entered an order withdrawing
decision. RJRT posted a total bond in the amount of PM USA’s motion to enforce. On 14 June 2021, RJRT made
US$187.8 million (approximately £147.3 million) for its appeal. a payment of US$5.1 million (approximately £4.0 million)
RJRT’s motion for rehearing or certification to the Florida to PM USA. On 3 December 2019, the State of Mississippi
Supreme Court was denied on 18 September 2020 and its filed a notice of violation and motion to enforce the settlement
motion for review was denied by the Florida Supreme Court agreement in the Chancery Court of Jackson County,
on 18 December 2020. On 5 October 2020, RJRT satisfied the Mississippi against RJRT, PM USA and ITG, seeking a
Final Judgment (approximately US$193 million (approximately declaration that the base year 1997 net operating profit to be
£151 million) and paid approximately US$3.2 million used in calculating the net operating profit adjustment was
(approximately £2.5 million) of Florida’s attorneys’ fees. RJRT's not affected by the change in the federal corporate tax rate
appellate bonds were released to RJRT by order dated in 2018 from 35% to 21%, and an order requiring RJRT to pay
5 November 2020. As explained below, RJRT has secured the approximately US$5 million (approximately £3.9 million)
an order in the Delaware action requiring ITG to indemnify difference in its 2018 payment because of this issue.
it for amounts paid under the Final Judgment. Determination of this issue may affect RJRT’s annual payment
48. On 17 February 2017, ITG filed an action in the Delaware Court thereafter. A hearing on Mississippi’s motion to enforce
of Chancery seeking declaratory relief against Reynolds occurred on 6-7 October 2021. On 10 June 2022, the
American and RJRT on various matters related to its rights Mississippi Chancery Court granted the State's motion to
and obligations under the asset purchase agreement (and enforce, finding that the base year 1997 net operating profit
related documents) relating to the Divestiture with respect to be used in calculating the Net Operating Profit Adjustment
to the subject of the Florida enforcement litigation described was not affected by the change in the federal corporate tax
above. Reynolds American and RJRT filed counterclaims on rate in 2018. RJRT will appeal the motion to enforce. On 29 July
the same issues. As a result of multiple rounds of cross- 2022, the parties each submitted a supplemental briefing on
motions for judgment on the pleadings, the Delaware court damages, including interest and attorneys' fees. A hearing on
ruled (i) that ITG’s obligation to use its reasonable best efforts damages, originally scheduled for 7 December 2022, took
to join the Florida Settlement Agreement did not terminate place on 14 March 2023; a decision is pending.
due to the closing of the asset purchase agreement relating 50. In January 2021, RJRT reached an agreement with several
to the Divestiture; (ii) that the asset purchase agreement does MSA states to waive RJRT’s claims under the MSA in
not entitle ITG to a unique protection from an equity-fee law connection with a settlement between those MSA states
that does not yet exist in a previously settled State; and and a non-participating manufacturer, S&M Brands, Inc.
(iii) that it would defer until after it received evidence related (S&M Brands), under which the states released certain claims
to the parties' intent in the asset purchase agreement, its against S&M Brands in exchange for receiving a portion of
determination of whether, to the extent RJRT is held liable the funds S&M Brands had deposited into escrow accounts
for any settlement payments based on ITG's post-closing in those states pursuant to the states’ escrow statutes.
sales of the Acquired Brands, ITG assumed this liability. After In consideration for waiving claims, RJRT, together with
discovery was completed in March 2022, the parties briefed SFNTC, received approximately US$55.4 million
cross-motions for summary judgment on that third issue. (approximately £43.5 million) from the escrow funds paid to
On 30 September 2022, the court granted summary those MSA states under their settlement with S&M Brands.
judgment for Reynolds American and RJRT, holding that ITG 51. On 27 May 2022, PM USA filed a motion to compel arbitration
assumed the liability that the Final Judgment imposed on under the MSA against RJRT and ITG in North Carolina
RJRT for settlement payments to the State of Florida based Superior Court claiming RJRT and ITG inaccurately calculated
on ITG's post-closing sales of the Acquired Brands. The parties the base year net operating profits for the Acquired Brands
then engaged in a second round of summary judgment and this improperly shifted approximately US$80 million
briefing on the amount of indemnifiable damages. On (approximately £62.7 million) in MSA payment obligations
2 October 2023, the court partially granted summary from RJRT to PM USA, to date. On 7 June 2022, RJRT and
judgment for Reynolds American and RJRT, holding that they PM USA negotiated a resolution of the MSA claims, in which
are entitled to indemnification of the principal amounts that RJRT agreed to, among other things, pay PM USA the sum
RJRT paid to Florida and the interest it paid to Florida on those of approximately US$37 million (approximately £29.0 million).
payments. The court deferred to trial the question whether
ITG’s indemnification obligation should be reduced to account

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Financial Statements

Notes on Accounts
Continued

52. On 28 July 2022, the State of Iowa filed a motion to enforce filed a reply in support of its cross motion to enforce the
the Consent Decree and MSA against the PMs asserting, settlement agreement. On 13 June 2023, PM USA and RJRT
among other things, claims for breach of contract and filed a sur-reply in response to the State’s reply in support
violations of the Iowa False Claims Act. Iowa sought over of cross-motion to enforce the settlement agreement.
US$130 million (approximately £102.0 million) in damages, The motion and cross-motion are fully submitted.
as well as treble damages. The PMs filed their resistance Tobacco-Related Litigation Outside the U.S.
to Iowa’s motion and a motion to compel arbitration on 55. As at 31 December 2023:
26 September 2022. Iowa filed its resistance to the PMs’
motion to compel arbitration on 6 October 2022, and the PMs a) medical reimbursement actions are being brought
filed their reply on 31 October 2022. A hearing on the motion in Angola, Brazil, Canada, Nigeria and South Korea;
was held on 21 December 2022. On 9 February 2023, the Iowa b) class actions are being brought in Canada and Venezuela; and
District Court granted the PMs' motion to compel arbitration, c) active tobacco product liability claims against the Group’s
stayed the State’s motion to enforce pending the arbitration, companies existed in 12 markets outside the U.S. The only
and ordered a status conference for 9 February 2024. On markets with five or more claims were Argentina, Brazil,
7 March 2023, Iowa filed a withdrawal of its motion to enforce. Canada, Chile, Nigeria and Italy.
53. On 29 November 2022, the State of New Mexico filed a (a) Medical reimbursement cases
complaint, or in the alternative, a motion to enforce the Angola
Consent Decree and MSA against the PMs asserting, among
56. In November 2016, BAT Angola affiliate Sociedade Unificada
other things, claims for breach of contract and violations
de Tabacos de Angola (SUT) was served with a collective
of New Mexico’s Unfair Practices Act. New Mexico seeks
action filed in the Provincial Court of Luanda, 2nd Civil Section,
compensatory damages in an amount to be determined
by the consumer association Associação Angolana dos
at trial, as well as treble damages, punitive damages, and
Direitos do Consumidor (AADIC). The lawsuit seeks damages
declaratory and injunctive relief. The PMs’ deadline to answer
of AOA800,000,000 (approximately £745,597) allegedly
or respond was 29 December 2022. On 15 December 2022,
incurred by the Angolan Instituto Nacional do Controlo do
the PMs filed an opposed motion for an extension of deadlines
Cancro (INCC) for the cost of treating tobacco-related
and pages to file their response on 10 February 2023.
disease, non-material damages allegedly suffered by certain
New Mexico filed its response to the motion on 20 December
individual smokers on the rolls of INCC, and the mandating of
2022 and the PMs filed their reply on 30 December 2022.
certain cigarette package warnings. SUT filed its answer to
On 13 January 2023, the court granted the PMs’ motion to
the claim on 5 December 2016. The case remains pending.
extend their deadline to file their response to 10 February
2023. On 10 February 2023, the PMs filed a motion to compel Canada
arbitration or, in the alternative, motion to dismiss New 57. On 1 March 2019, the Quebec Court of Appeal handed down
Mexico’s complaint and alternative motion to enforce. a judgment which largely upheld and endorsed the lower
The State’s response to the PMs’ motion to compel was filed court’s previous decision in two Quebec class actions (the
on 27 March 2023, and the PMs’ reply was filed on 14 April Quebec Class Actions), as further described below. The share
2023; a hearing was held on 30 October 2023. On of the judgment for Imperial, the Group’s operating company
29 December 2023, the New Mexico District Court in Canada, is approximately CAD$9.2 billion (approximately
granted the PMs’ motion to compel arbitration. £5.5 billion). As a result of this judgment, there were attempts
by the Quebec plaintiffs to obtain payment out of the
54. On 2 March 2023, the State of Texas issued a demand letter
CAD$758 million (approximately £451 million) on deposit with
to RJRT, PM USA and ITG, pursuant to the Texas Tobacco
the court. JTI-MacDonald Corp (a co-defendant in the cases)
Settlement Agreement, for underpaid sums owed to Texas for
filed for creditor protection under the Companies’ Creditors
years 2019 through 2022 and a change in the calculation going
Arrangement Act (the CCAA) on 8 March 2019. A court order
forward, asserting that RJRT, PM USA and ITG issued
to stay all tobacco litigation in Canada against all defendants
payments to Texas that were based on unauthorized changes
(including RJRT and its affiliate R.J. Reynolds Tobacco
to the base year 1997 net operating profit by incorporating
International Inc. (collectively, the RJR Companies)) until
into their calculations the lower federal corporate tax rate
4 April 2019 was obtained, and the need for a mediation
enacted in 2018. The State seeks damages in the amount of at
process to resolve all the outstanding litigation across the
least US$114 million (approximately £89.4 million) cumulative
country was recognised. On 12 March 2019 Imperial filed for
for 2019 through 2022 (the last year for which there was a
creditor protection under the CCAA. In its application Imperial
calculation at the time of the demand). In addition, in a letter
asked the Ontario Superior Court to stay all pending or
to the independent accounting firm retained by the parties
contemplated litigation against Imperial, certain of its
to calculate settlement payments due under the previously
subsidiaries and all other Group companies that were
settled State Settlement Agreements,
defendants in the Canadian tobacco litigation, including
PricewaterhouseCoopers LLC (PwC LLC) dated 3 March
British American Tobacco p.l.c. (the Company), Investments,
2023, Texas requested that PwC LLC’s calculation of the net
Industries and Carreras Rothmans Limited (collectively, the
operating profit adjustment due to Texas for 2022 be based
UK Companies). On 22 March 2019, Rothmans, Benson &
on the value fixed in the Mississippi decision (discussed
Hedges Inc. also filed for CCAA protection and obtained a stay
above) that found the base year 1997 net operating profit to
of proceedings (together with the other two stays, the Stays).
be used in calculating the net operating profit adjustment was
The Stays are currently in place until 29 March 2024. While
not affected by the change in the federal corporate tax rate in
the Stays are in place, no steps are to be taken in connection
2018. On 13 March 2023, the parties entered into an
with the Canadian tobacco litigation with respect to Imperial,
agreement tolling the statute of limitations for the State to file
certain of its subsidiaries or any other Group company. The
a motion to enforce on these issues until 15 May 2023. On
parties continue to work towards a plan of arrangement or
24 March 2023, PwC LLC’s calculation of the net operating
compromise in a confidential mediation (by order of the
profit adjustment due to Texas for 2022 did not use the value
Court) as part of the CCAA process. The length and ultimate
fixed in the Mississippi decision. On 8 May 2023, PM USA and
outcome of the CCAA process, including the resolution of the
RJRT filed a motion to enforce the settlement agreement. On
underlying legal proceedings, remain uncertain.
22 May 2023, Texas filed its opposition and cross-motion to
enforce the settlement agreement. On 30 May 2023, PM USA
and RJRT filed a combined opposition to the cross-motion and
reply in further support of the motion. On 6 June 2023, Texas

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The below represents the state of the referenced litigation Canadian province: Ontario
as at the advent of the Stays. Act pursuant to which Claim was brought: Tobacco
58. Following the implementation of legislation enabling provincial Damages and Health Care Costs Recovery Act 2009
governments to recover health-care costs directly from Companies named as Defendants: Imperial, the UK
tobacco manufacturers, 10 actions for recovery of health-care Companies and the RJR Companies have been named as
costs arising from the treatment of smoking- and health- defendants and served.
related diseases have been brought. These proceedings
name various Group companies as defendants, including the Current stage: The defences of Imperial, the UK Companies
UK Companies and Imperial as well as the RJR Companies. and the RJR Companies have been filed. The parties
Pursuant to the terms of the 1999 sale of RJRT’s international completed significant document production in the summer
tobacco business to Japan Tobacco Incorporated (JTI), JTI has of 2017 and discoveries commenced in the autumn of 2018.
agreed to indemnify RJRT for all liabilities and obligations On 15 June 2018, the Province delivered an expert report
(including litigation costs) arising in respect of the Canadian quantifying its damages in the range of CAD$280 billion
recoupment actions. Subject to a reservation of rights, JTI has (approximately £167 billion) – CAD$630 billion (approximately
assumed the defence of the RJR Companies in these actions. £375 billion) in 2016/2017 dollars for the period 1954 – 2060,
and the Province amended the damages sought in its
59. The 10 cases were proceeding in British Columbia, New Statement of Claim to CAD$330 billion (approximately
Brunswick, Newfoundland and Labrador, Ontario, Quebec, £196.3 billion). On 31 January 2019, the Province delivered
Manitoba, Alberta, Saskatchewan, Nova Scotia and Prince a further expert report claiming an additional amount
Edward Island. The enabling legislation is in force in all between CAD$9.4 billion (approximately £5.6 billion)
10 provinces. In addition, legislation has received Royal Assent and CAD$10.9 billion in damages (approximately £6.5 billion)
in two of the three territories in Canada, but has yet to be in respect of ETS. No trial date has been set.
proclaimed into force.
Canadian province: Newfoundland and Labrador
Canadian province: British Columbia
Act pursuant to which Claim was brought: Tobacco Health
Act pursuant to which Claim was brought: Tobacco Care Costs Recovery Act 2001
Damages and Health Care Costs Recovery Act 2000
Companies named as Defendants: Imperial, the UK
Companies named as Defendants: Imperial, Investments, Companies and the RJR Companies have been named
Industries, Carreras Rothmans Limited, the RJR Companies as defendants and served.
and other former Rothmans Group companies have been
named as defendants and served. Current stage: This case is at an early case management
stage. The defences of Imperial, the UK Companies and
Current stage: The defences of Imperial, Investments, the RJR Companies have been filed and the Province began
Industries, Carreras Rothmans Limited and the RJR its document production in March 2018. Damages have not
Companies have been filed, and document production and been quantified by the Province. No trial date has been set.
discoveries were ongoing. On 13 February 2017, the Province
delivered an expert report dated October 2016, quantifying Canadian province: Saskatchewan
its damages in the amount of CAD$118 billion (approximately Act pursuant to which Claim was brought: Tobacco
£70.2 billion). No trial date has been set. The federal Damages and Health Care Costs Recovery Act 2007
government is seeking CAD$5 million (approximately Companies named as Defendants: Imperial, the UK
£3.0 million) jointly from all the defendants in respect of costs Companies and the RJR Companies have been named
pertaining to the third-party claim, now dismissed. as defendants and served.
Canadian province: New Brunswick Current stage: This case is at an early case management
Act pursuant to which Claim was brought: Tobacco stage. The defences of Imperial, the UK Companies and the
Damages and Health Care Costs Recovery Act 2006 RJR Companies have been filed and the Province has delivered
Companies named as Defendants: Imperial, the UK a test shipment of documents. Damages have not been
Companies and the RJR Companies have been named as quantified by the Province. No trial date has been set.
defendants and served. Canadian province: Manitoba
Current stage: The defences of Imperial, the UK Companies Act pursuant to which Claim was brought: Tobacco
and the RJR Companies have been filed and document Damages Health Care Costs Recovery Act 2006
production and discoveries are substantially complete. The Companies named as Defendants: Imperial, the UK
most recent expert report filed by the Province estimated a Companies and the RJR Companies have been named
range of damages between CAD$11.1 billion (approximately as defendants and served.
£6.6 billion) and CAD$23.2 billion (approximately £13.8 billion),
including expected future costs. Following a motion to set a Current stage: This case is at an early case management
trial date, the New Brunswick Court of Queen’s Bench ordered stage. The defences of Imperial, the UK Companies and the
that the trial commence on 4 November 2019. On 7 March RJR Companies have been filed and document production
2019, the New Brunswick Court of Queen’s Bench released a commenced. Damages have not been quantified by the
decision which requires the Province to produce a substantial Province. No trial date has been set.
amount of additional documentation and data to the
defendants. As a result, the original trial date of 4 November
2019 would have been delayed. No new trial date has been set.

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Financial Statements

Notes on Accounts
Continued

Canadian province: Alberta 61. The suits claim that the state and federal government
Act pursuant to which Claim was brought: Crown’s Right plaintiffs incurred costs related to the treatment of smoking-
of Recovery Act 2009 related illnesses resulting from allegedly tortious conduct by
the defendants in the manufacture, marketing, and sale of
Companies named as Defendants: Imperial, the UK tobacco products in Nigeria, and assert that the plaintiffs are
Companies and the RJR Companies have been named as entitled to reimbursement for such costs. The plaintiffs assert
defendants and served. causes of action for negligence, negligent design, fraud and
Current stage: This case is at an early case management deceit, fraudulent concealment, breach of express and implied
stage. The defences of Imperial, the UK Companies and the warranty, public nuisance, conspiracy, strict liability,
RJR Companies have been filed and the Province commenced indemnity, restitution, unjust enrichment, voluntary
its document production. The Province has stated its claim to assumption of a special undertaking, and performance
be worth CAD$10 billion (approximately £5.9 billion). No trial of another’s duty to the public.
date has been set. 62. The Company and Investments have made a number of
Canadian province: Quebec challenges to the jurisdiction of the Nigerian courts. Such
Act pursuant to which Claim was brought: Tobacco Related challenges are still pending (on appeal) against the federal
Damages and Health Care Costs Recovery Act 2009 government and the states of Lagos, Kano, Gombe and Ogun.
The underlying cases are stayed or adjourned pending the
Companies named as Defendants: Imperial, Investments, final outcome of these jurisdictional challenges. In the state of
Industries, the RJR Companies and Carreras Rothmans Oyo, on 13 November 2015, and 24 February 2017, respectively,
Limited have been named as defendants and served. the Company’s and Investments’ jurisdictional challenges
Current stage: This case is at an early case management were successful in the Court of Appeal and the issuance
stage. The defences of Imperial, Investments, Industries, of the writ of summons was set aside.
Carreras Rothmans Limited and the RJR Companies have South Korea
been filed. Motions over admissibility of documents and
63. In April 2014, Korea’s National Health Insurance Service (NHIS)
damages discovery have been filed but not heard. The
filed a healthcare recoupment action against KT&G (a Korean
Province is seeking CAD$60 billion (approximately
tobacco company), PM Korea and BAT Korea (including BAT
£35.7 billion). No trial date has been set.
Korea Manufacturing). The NHIS is seeking damages of
Canadian province: Prince Edward Island roughly KRW54 billion (approximately £32.9 million) in respect
Act pursuant to which Claim was brought: Tobacco of health care costs allegedly incurred by the NHIS treating
Damages and Health Care Costs Recovery Act 2009 patients with lung (small cell and squamous cell) and laryngeal
(squamous cell) cancer between 2003 and 2012. Court
Companies named as Defendants: Imperial, the UK
hearings in the case, which constitute the trial, commenced
Companies and the RJR Companies have been named as
in September 2014. On 20 November 2020, the court issued
defendants and served.
a judgment in favour of the defendants and dismissing all of
Current stage: This case is at an early case management the plaintiff’s claims. The NHIS filed an appeal of the judgment
stage. The defences of Imperial, the UK Companies and the on 11 December 2020. Appellate proceedings commenced
RJR Companies have been filed and the next step was in June 2021 and remain ongoing.
expected to be document production, which the parties
Brazil
deferred for the time being. Damages have not been
quantified by the Province. No trial date has been set. 64. On 21 May 2019, the Federal Attorney’s Office (AGU) in Brazil
filed an action in the Federal Court of Rio Grande do Sul
Canadian province: Nova Scotia against the Company, the BAT Group’s Brazilian subsidiary
Act pursuant to which Claim was brought: Tobacco Health Souza Cruz LTDA (Souza Cruz), Philip Morris International,
Care Costs Recovery Act 2005 Philip Morris Brazil Indústria e Comércio LTDA and Philip
Companies named as Defendants: Imperial, the UK Morris Brasil S/A (collectively, PMB), asserting claims for
Companies and the RJR Companies have been named as medical reimbursement for funds allegedly expended by the
defendants and served. federal government as public health care expenses to treat
26 tobacco-related diseases over the last five years from
Current stage: This case is at an early case management the filing date and that will be expended in perpetuity during
stage. The defences of Imperial, the UK Companies and the future years, including diseases allegedly caused both by
RJR Companies have been filed. The Province provided a test cigarette smoking and exposure to ETS. The action includes
document production in March 2018. Damages have not been a claim for moral damages allegedly suffered by Brazilian
quantified by the Province. No trial date has been set. society to be paid into a public welfare fund. The action is
Nigeria for an unspecified amount of monetary compensation, as
60. British American Tobacco (Nigeria) Limited (BAT Nigeria), the the AGU seeks a bifurcated action in which liability would be
Company and Investments have been named as defendants in determined in the first phase followed by an evidentiary phase
a medical reimbursement action by the federal government of to ascertain damages.
Nigeria, filed on 6 November 2007 in the Federal High Court, 65. On 19 July 2019, the trial court ordered that service of the action
and in similar actions filed by the Nigerian states of Kano on the Company be effected via service on Souza Cruz. On
(9 May 2007), Oyo (30 May 2007), Lagos (13 March 2008), 6 August 2019, Souza Cruz refused to receive service on behalf
Ogun (26 February 2008), and Gombe (17 October 2008) of the Company due to Souza Cruz’s lack of power to do so.
commenced in their respective High Courts. In the five cases On 7 August 2019, Souza Cruz was served with the complaint.
that remain active, the plaintiffs seek a total of approximately Following further proceedings in 2019 and 2020 in both the trial
NGN10.6 trillion (approximately £9.3 billion) in damages, and appellate courts challenging the issue of service on the
including special, anticipatory and punitive damages, Company, the court ruled that service of the Company via its
restitution and disgorgement of profits, as well as declaratory Brazilian subsidiary Souza Cruz constituted proper service, and
and injunctive relief. ordered that defences be filed. Souza Cruz and the Company
filed their respective defences on 12 May 2020.

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66. On 19 February 2021, the Associação de Controle do 71. On appeal, the appellate court confirmed the certification of
Tabagismo, Promoção da Saúde (ACT) filed a petition seeking the class, but limited any financial liability, if proven, to 1997
to intervene in the case as amicus curiae. Souza Cruz, PMB onward. Imperial’s third-party claim against the federal
and the Company filed responses (on 25 March 2021, government was dismissed by the Supreme Court of Canada.
26 March 2021 and 20 August 2021, respectively) asserting The federal government is seeking a cost order of
that ACT's request should be rejected and/or in the alternative CAD$5 million (approximately £3.0 million) from Imperial
that the scope of ACT's intervention rights should be limited. relating to its now dismissed third-party claim. After being
On 13 May 2022, the trial court ordered the AGU to reply to dormant for several years, the plaintiff delivered a Notice of
the defences within 30 business days, and also permitted the Intention to Proceed, and Imperial delivered an application to
ACT to intervene, limiting ACT's rights as amicus curiae to dismiss the action for delay. The application was heard on
presenting technical and scientific opinions and participating 23 June 2017 and was dismissed on 23 August 2017. Notice to
in court hearings. The AGU submitted its reply on 5 July 2022. class members of certification was provided on 14 February
Souza Cruz, PMB and the Company submitted responses to 2018. As at the date of the Stays, the next steps were
the AGU's reply on 26 August 2022. On 19 May 2020, notice expected to include discovery-related ones.
was sent to the Public Prosecutor’s Office (MPF) regarding 72. Growers’ Class Action: in December 2009, Imperial was
the AGU’s request that the MPF join the action as a plaintiff. served with a proposed class action filed by Ontario tobacco
The MPF, via its response filed on 10 July 2020, declined to join farmers and the Ontario Flue-Cured Tobacco Growers’
the action as party, but will act as an ‘inspector of the law’, Marketing Board. The plaintiffs allege that Imperial and the
which enables MPF to express its opinion on case matters. Canadian subsidiaries of Philip Morris International and JTI
On 10 October 2022, the MPF submitted an opinion on failed to pay the agreed domestic contract price to the
preliminary issues and evidence, which called for rejection of growers used in products manufactured for the export market
the defendants’ preliminary defences and the majority of the and which were ultimately smuggled back into Canada. JTI
evidence requested by AGU and defendants. Defendants has sought indemnification pursuant to the JTI Indemnities
Philip Morris International (PMI), PMB, the Company and (discussed below at paragraphs 132-133). The plaintiffs seek
Souza Cruz filed responses to the MPF’s opinion on damages in the amount of CAD$50 million (approximately
14 November 2022, 18 November 2022, 2 March 2023 £29.7 million). Various preliminary challenges have been heard,
and 3 March 2023, respectively. On 6 December 2023, the last being a motion for summary judgment on a limitation
the Fundação Oswaldo Cruz (FIOCRUZ), a research and period. The motion was dismissed and ultimately, leave to
development arm of the Brazilian Ministry of Health, filed appeal to the Ontario Court of Appeal was dismissed in
a petition seeking to intervene in the case as amicus curiae. November 2016. In December 2017, the plaintiffs proposed
PMB and Souza Cruz filed responses on 8 January 2024 and that the action proceed by way of individual actions as
24 January 2024, respectively, asserting that the FIOCRUZ opposed to a class action. The defendants did not consent.
petition should be rejected or in the alternative that any As at the date of the Stays, the claim was in abeyance pending
intervention rights should be limited. further action from the plaintiffs.
(b) Class Actions 73. Quebec Class Actions: there are currently two smoking
Canada and health class actions in Quebec, certified by the Quebec
67. As described in paragraph 57, the Canadian tobacco litigation is Superior Court on 21 February 2005 against Imperial and
currently stayed subject to court-ordered stays of proceeding two other domestic manufacturers. Judgment was rendered
(the Stays). The Stays are currently in place until 29 March 2024. against the defendants on 27 May 2015. Pursuant to the
While the Stays are in place, no steps are to be taken in judgment, the plaintiffs were awarded damages and interest
connection with the Canadian tobacco litigation with respect to against Imperial and the Canadian subsidiaries of Philip Morris
Imperial, certain of its subsidiaries or any other Group company. International and JTI in the amount of CAD$15.6 billion
The parties continue to work towards a plan of arrangement or (approximately £9.3 billion), most of which was on a joint and
compromise in a confidential mediation (by order of the Court) several basis, of which Imperial’s share was CAD$10.4 billion
as part of the CCAA process. The length and ultimate outcome (approximately £6.2 billion). An appeal of the judgment was
of the CCAA process, including the resolution of the underlying filed on 26 June 2015. The court also awarded provisional
legal proceedings, remains uncertain. execution pending appeal of CAD$1,131 million (approximately
68. The below represents the state of the referenced litigation £673 million), of which Imperial’s share was approximately
as at the advent of the Stays. CAD$742 million (approximately £441 million). This order was
subsequently overturned by the Court of Appeal. Following
69. There are 11 class actions being brought in Canada against
the cancellation of the order for provisional execution, the
Group companies.
plaintiffs filed a motion against Imperial and one other
70. Knight Class Action: the Supreme Court of British Columbia manufacturer seeking security in the amount of CAD$5 billion
certified a class of all consumers who purchased Imperial (approximately £3.0 billion) to guarantee, in whole or in part,
cigarettes in British Columbia bearing ‘light’ or ‘mild’ the payment of costs of the appeal and the judgment. On
descriptors since 1974. The plaintiff is seeking compensation 27 October 2015, the Court of Appeal ordered the parties
for amounts spent on ‘light and mild’ products and a to post security for the judgment in the amount of
disgorgement of profits from Imperial on the basis that the CAD$984 million (approximately £585 million), of which
marketing of light and mild cigarettes was deceptive because Imperial’s share was CAD$758 million (approximately
it conveyed a false and misleading message that those £450.9 million) which amounts have been paid into court.
cigarettes are less harmful than regular cigarettes. Imperial's share was later recalculated by the Court of Appeal
as CAD$759 million (approximately £451.5 million). On 1 March
2019, the trial judgment was upheld by a unanimous decision
of the five-member panel of the Court of Appeal, with one
exception being an amendment to the original interest
calculation applied to certain portions of the judgment.
The interest adjustment has resulted in the reduction of
the total maximum award in the two cases to CAD$13.7 billion
(approximately £8.1 billion) as at 1 March 2019, with Imperial’s
share being reduced to approximately CAD$9.2 billion
(approximately £5.5 billion).

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Financial Statements

Notes on Accounts
Continued

74. Other Canadian Smoking and Health Class Actions: seven (c) Individual Tobacco-Related Personal Injury Claims
putative class actions, described below, have been filed against 80. As at 31 December 2023, the jurisdictions with the most active
various Canadian and non-Canadian tobacco-related entities, individual cases against Group companies were, in descending
including the UK Companies, Imperial and the RJR Companies, order: Chile (17), Brazil (15), Italy (eight), Canada (five), Argentina
in various Canadian provinces. In these cases, none of which (five) and Ireland (two). There were a further two jurisdictions
have quantified their asserted damages, the plaintiffs allege with one active case only. Out of these 54 active individual
claims based on fraud, fraudulent concealment, breach of cases, as at 31 December 2023 there were two cases in
warranty of merchantability, and of fitness for a particular Argentina that have resulted in pending unfavourable
purpose, failure to warn, design defects, negligence, breach judgments. In one case, damages were awarded totalling
of a ‘special duty’ to children and adolescents, conspiracy, ARS685,976 (approximately £665) in compensatory damages
concert of action, unjust enrichment, market share liability and and ARS2,500,000 (approximately £2,425) in punitive
violations of various trade practices and competition statutes. damages, plus post-judgment interest. This judgment was
Pursuant to the terms of the 1999 sale of RJRT’s international reversed via an appellate court ruling issued 19 September
tobacco business, and subject to a reservation of rights, JTI has 2023. The plaintiff’s petition for leave to appeal to the
assumed the defence of the RJR Companies in these seven Argentina Supreme Court was denied on 29 November 2023.
actions (Semple, Kunka, Adams, Dorion, Bourassa, McDermid The plaintiff filed an extraordinary appeal to the Argentina
and Jacklin, discussed below). Supreme Court on 7 December 2023, which appeal remains
75. In June 2009, four smoking and health class actions were filed pending. In the other case, compensatory damages were
in Nova Scotia (Semple), Manitoba (Kunka), Saskatchewan awarded totalling ARS2,850,000 (approximately £2,765 ),
(Adams) and Alberta (Dorion) against various Canadian and with post-judgment interest totalling approximately
non-Canadian tobacco-related entities, including the ARS195,588,410 (approximately £189,767). This judgment is
UK Companies, Imperial and the RJR Companies. In currently on appeal. In addition, on 25 August 2023, an adverse
Saskatchewan, the Company, Carreras Rothmans Limited judgment was served in an individual action in Türkiye
and Ryesekks p.l.c. have been released from Adams, and awarding TRY10,000 (approximately £265) in compensatory
the RJR Companies have brought a motion challenging the damages. The judgment is under appeal.
jurisdiction of the court. There are service issues in relation Non-Tobacco-Related Litigation
to Imperial and the UK Companies in Alberta and in relation Vuse Litigation
to the UK Companies in Manitoba. The plaintiffs did not serve 81. On 22 July 2020, Nicholas Bernston filed a personal injury
their certification motion materials and no dates for action in the Northern District of Oklahoma against JUUL Labs
certification motions were set. Inc. (JUUL), Altria Client Services, LLC, RJR Vapor, Reynolds
76. In June 2010, two further smoking and health class actions American, and others. The complaint seeks damages for
were filed in British Columbia (Bourassa and McDermid) against personal injuries (including pneumonia and acute respiratory
various Canadian and non-Canadian tobacco-related entities, failure) allegedly resulting from vaping on several theories,
including Imperial, the UK Companies and the RJR Companies. including strict liability, negligence, and breach of implied
The UK Companies, Imperial, the RJR Companies and other warranty of merchantability. On 5 August 2020, the Judicial
defendants objected to jurisdiction. Subsequently, the Panel on Multidistrict Litigation entered a conditional transfer
Company, Carreras Rothmans Limited and Ryesekks p.l.c. were order transferring the case to the Northern District of
released from the actions. Imperial, Industries, Investments and California for pretrial proceedings as part of the JUUL
the RJR Companies remain as defendants in both actions. The multidistrict litigation (MDL). On 1 December 2023, the
plaintiffs did not serve their certification motion materials and plaintiff dismissed the action against RJR Vapor and Reynolds
no dates for certification motions were set. American with prejudice.
77. In June 2012, a smoking and health class action was filed in 82. On 11 January 2023, Camellia Chastain filed a putative class
Ontario (Jacklin) against various Canadian and non-Canadian action complaint in the Middle District of Florida against
tobacco-related entities, including the UK Companies, Imperial RJR Vapor. The complaint sought damages arising from
and the RJR Companies. The claim has been in abeyance. alleged discoloration and/or a burnt taste in Vuse Alto Golden
Tobacco pods based on several theories, including state
78. A proposed national class action was filed in the British Columbia consumer protection statutes, false and misleading
Supreme Court by Danver Bauman (via his litigation guardian) advertising, breach of warranty, negligent misrepresentation,
on 21 December 2023 against Imperial Tobacco Company fraud, and unjust enrichment. The complaint sought to certify
Ltd., ITCAN, and Nicoventures Trading Limited (Nicoventures) two classes, including a Florida class and a multi-state class
alleging numerous statutory and common law causes of from the states of North Carolina, South Carolina, Georgia,
action in connection with the design, marketing and sale of Alabama, and Mississippi. On 15 March 2023, the court
Zonnic. The action was issued in violation of the CCAA Stay, granted the plaintiff’s notice of voluntary dismissal and
is subject to the CCAA Stay, and has not been served. dismissed the case with prejudice.
Venezuela
79. In April 2008, the Venezuelan Federation of Associations
of Users and Consumers (FEVACU) and Wolfang Cardozo
Espinel and Giorgio Di Muro Di Nunno, acting as individuals,
filed a class action against the Venezuelan government.
The class action seeks regulatory controls on tobacco and
recovery of medical expenses for future expenses of treating
smoking-related illnesses in Venezuela. Both C.A Cigarrera
Bigott Sucs. (Cigarrera Bigott), a Group subsidiary, and
ASUELECTRIC, represented by its president Giorgio Di Muro
Di Nunno (who had previously filed as an individual), have been
admitted as third parties by the Constitutional Chamber of
the Supreme Court of Justice. A hearing date for the action is
yet to be scheduled. On 25 April 2017 and on 23 January 2018,
Cigarrera Bigott requested the court to declare the lapsing of
the class action due to no proceedings taking place in the case
in over a year. A ruling on the matter is yet to be issued.

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Croatian Distributor Dispute 86. On 22 June 2018, an affiliate of PMI commenced proceedings
83. BAT Hrvatska d.o.o u likvidaciji and British American Tobacco against British American Tobacco Japan, Ltd. (BAT Japan) in the
Investments (Central and Eastern Europe) Limited are named Japanese courts challenging the import, export, sale and offer of
as defendants in a claim by Mr Perica received on 22 August sale of the glo device and of the NeoStiks consumable in Japan
2017 and brought before the commercial court of Zagreb, at the time the claim was brought (and earlier models of the glo
Croatia. Mr Perica seeks damages of HRK408,000,000 device), alleging that the glo devices directly infringe certain
(approximately €54 million / £47 million) relating to a BAT claims of two Japanese patents that have been issued to the
Standard Distribution Agreement dating from 2005. BAT PMI affiliate and that the NeoStiks indirectly infringe certain
Hrvatska d.o.o and British American Tobacco Investments claims of those patents. On 17 January 2019, the PMI affiliate
(Central and Eastern Europe) Ltd filed a reply to the statement introduced new grounds of infringement, alleging that the glo
of claim on 6 October 2017. A hearing had been scheduled to device also infringes some other claims in the two PMI affiliate’s
take place on 10 May 2018, but it was postponed due to a Japanese patents. Damages for the glo device and NeoStik are
change of the judge hearing the case. The Commercial Court claimed in the court filing, to the amount of JPY100 million
in Zagreb declared they do not have jurisdiction and that the (approximately £556,418). The PMI affiliate has also filed a
competent court to hear this case is the Municipal Court in request for injunction with respect to the glo device. BAT Japan
Zagreb. TDR d.o.o. is also named as the defendant in a claim denies infringement and is challenging the validity of the two
by Mr Perica received on 30 April 2018 and brought before the PMI affiliate’s Japanese patents. On 30 November 2022, the
commercial court of Zagreb, Croatia. Mr. Perica seeks Tokyo District Court dismissed both of the above claims of the
payment in the amount of HRK408,000,000 (approximately PMI affiliate on the grounds that both of the above two PMI
€54 million / £47 million) claiming that BAT Hrvatska d.o.o. affiliate's Japanese patents lack inventive step and would be
transferred a business unit to TDR d.o.o, thus giving rise to a invalidated by a patent invalidation trial. The PMI affiliate has
liability of TDR d.o.o. for the debts incurred by BAT Hrvatska appealed against this judgment. The Intellectual Property High
d.o.o, on the basis of the provisions of Croatian civil obligations Court upheld this judgment and dismissed the appeal of the
law. A response to the statement of claim was filed on 30 May PMI affiliate on 28 November 2023. The PMI affiliate filed a final
2018. The Commercial Court in Zagreb declared they do not appeal and a petition for acceptance of final appeal against the
have jurisdiction and that the competent court to hear this judgment of the Intellectual Property High Court.
case is the Municipal Court in Pula. Mr Perica filed an appeal 87. On 11 February 2022, Nicoventures commenced an action in
against this decision which was rejected by the High the England and Wales High Court (Patents Court) against Philip
Commercial Court of The Republic of Croatia confirming Morris Products S.A. (PMP) for revocation against one of PMP’s
therewith that the competent court to hear this case is the patents (a further divisional patent in the same family was added
Municipal Court in Pula. The Municipal Court in Zagreb has into the revocation action on 27 May 2022). On 22 August 2022,
decided that the claims by Mr Perica initiated on 22 August PMP counterclaimed for patent infringement against
2017 and 30 April 2018 shall be heard as one case in front of Nicoventures and Investments concerning certain ‘glo’ tobacco
the Municipal Court of Zagreb. After the two hearings have heating devices that comprise two inductive heating coils and
been held, the Municipal Court of Zagreb has appointed the their corresponding consumables. (PMP later abandoned its
court financial and auditing appraisal to determine the value counterclaim in respect of one of the patents but maintained its
of Mr Perica’s claim. counterclaim in respect of the other.) PMP sought an injunction
Florence Proceedings and damages (plus interest thereon). The trial was heard in
84. British American Tobacco Italia SpA has been charged with March 2023. On 18 April 2023 the England and Wales High Court
administrative offences in Florence, Italy in a case against a (Patents Court) handed down its judgment finding that the PMP
large number of individual and corporate defendants. This patents were valid but one of them is not infringed
relates to potential allegations of failure to supervise or take (the counterclaim in respect of the other patent having been
appropriate steps to prevent alleged corruption by two (now abandoned). Thus, PMP's counterclaim for patent
former) employees. Any financial penalty is not thought likely infringement against Nicoventures and Investments failed.
to be material. Both parties have permission to appeal the decision, which
will be heard by the Court of Appeal on 19 and 20 March 2024.
Patents and Trademark Litigation
85. Certain Group companies are party to a number of patent 88. On 28 May 2020, Altria Client Services LLC and U.S. Smokeless
litigation cases and procedural challenges concerning the Tobacco Company LLC commenced proceedings against
validity of patents owned by or licensed to them and/or the RJR Vapor before the U.S. District Court for the Middle District
alleged infringement of third parties’ patents. of North Carolina against the vapour products Vuse Vibe and
Vuse Alto, and the tin used in the modern oral product Velo. Nine
patents in total were asserted: two against Vibe, four against Alto
and three against Velo. On 5 January 2021, Altria filed an Amended
Complaint adding Modoral Brands Inc. as a defendant with respect
to the Velo product claims. A claim construction hearing was held
on 28 April 2021, and the court issued its claim construction ruling
on 12 May 2021. All asserted patent claims against Vibe and Velo as
well as one of the four patents asserted against Alto were dropped
prior to trial, leaving three patents asserted against Alto for trial.
Trial was held from 29 August 2022 to 7 September 2022. The jury
found infringement by all accused products and awarded
approximately US$95 million (approximately £74.5 million)
in damages. On 27 January 2023, the court rejected Altria's request
to double the jury's awarded royalty rate for post-trial sales
and set the royalty rate applicable to post-trial sales to the jury's
awarded rate of 5.25%. Altria did not request entry of an
injunction and has stipulated it will not enforce the monetary
judgment until appeals are exhausted. On 10 February 2023, RJR
Vapor noticed its appeal to the United States Court of Appeals
for the Federal Circuit. Appellate briefing has been completed.
The Federal Circuit has not scheduled a date for oral argument.

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Financial Statements

Notes on Accounts
Continued

89. On 9 April 2020, RAI Strategic Holdings, Inc. and RJR Vapor 91. On 11 December 2020 Philip Morris filed a complaint before the
commenced an action in the U.S. District Court for the Regional Court Dusseldorf in Germany against BAT Germany
Eastern District of Virginia against Altria Client Services LLC, alleging that the sale, offer for sale and importation of the glo
PM USA, Altria Group, Inc., Philip Morris International, Inc., TABAK HEATER and neo STICK products infringe a patent.
and Philip Morris Products S.A. (collectively, Philip Morris) Philip Morris is seeking an injunction, a recall of product from
for infringement of six patents based on the importation commercial customers and a declaratory judgment for
and commercialization within the United States of IQOS. On damages. The trial of this action took place on 30 November
8 May 2020 and 12 June 2020, Philip Morris filed Inter Partes 2021. The court promulgated its decision on 21 December 2021
Review (IPR) petitions in the U.S. Patent Office challenging the and decided that the above-mentioned products infringe the
validity of each of the six patents asserted. On 29 June 2020, patent. The decision was appealed by BAT Germany on
Philip Morris asserted counterclaims alleging that RJR Vapor 21 December 2021 to the Higher Regional Court Dusseldorf.
infringes five patents. On 24 November 2020, the court issued The oral hearing of these appeal proceedings took place on
a claim construction order that determined that each 24 November 2022. On 15 December 2022, the Higher
disputed term would have its plain and ordinary meaning. Regional Court Dusseldorf reversed the trial court decision
On 4 December 2020, the magistrate judge issued an order and dismissed Philip Morris’s complaint in its entirety.
staying RJR Vapor and Philip Morris’s patent claims pending In addition, the Higher Regional Court Dusseldorf did not grant
a decision by the U.S. Patent Office regarding whether to a further appeal to the German Supreme Court
proceed with the IPRs. Trial on the Altria and Philip Morris (Bundesgerichtshof (BGH)). PMI filed a motion for leave of
patents began on 8 June 2022. Shortly before trial, Philip appeal with the BGH, which is why the decision of the Higher
Morris dropped its claims to one patent and the Altria entities Regional Court Dusseldorf is not yet final. Pursuant to a global
dismissed their claims relating to two patents, which left two settlement agreement between Nicoventures and PMP dated
Philip Morris patents at issue in the trial. On 15 June 2022, the 1 February 2024 that resolves all ongoing patent infringement
jury found that RJR Vapor's Alto product infringed two claims litigation between the parties related to the Group's Heated
in one patent and that its Solo product infringed three claims Tobacco and Vapour products, the parties will cause the
of the other patent. The jury awarded damages of proceedings set out in this item 91 and at paragraphs 86, 87,
US$10,759,755 (approximately £8,439,023), which was 89, and 90 to be dismissed.
supplemented by the Court to a total of US$14,062,742 92. On 14 December 2020, Modoral Brands Inc. (Modoral) filed
(approximately £11,029,601) to account for additional sales a complaint in the U.S. District Court for the District of
of Solo and Alto through the date of judgment and interest. Delaware against Pinkerton Tobacco Co., LP, Swedish Match
Philip Morris requested entry of a permanent injunction North America LLC, and NYZ AB (collectively Swedish Match)
barring sale of the Alto and Solo products. On 30 March 2023, seeking a declaratory judgment that the importation,
the court denied Philip Morris's request for a permanent manufacture, use, and/or sale of certain Modoral Velo
injunction and ordered ongoing royalty rates of 1.8% of net products that Modoral acquired from Dryft Sciences does
sales of Alto cartridges and 2.2% of net sales of Solo G2 not infringe a Swedish Match patent or its trade secrets.
cartridges. On 1 May 2023, the court granted RJR Vapor’s On 3 June 2021, the case was transferred to the U.S. District
motion for entry of judgment under Fed. R. Civ. P. 54(b) and Court for the Central District of California. On 13 July 2021,
denied Philip Morris’s cross motion to lift the stay as to Swedish Match and Helix Innovations GmbH filed
RJR Vapor’s offensive patent case. The RJR Vapor offensive counterclaims against Modoral for infringement of the patent
patent case remains stayed pending (i) an appeal by Philip and misappropriation of trade secrets arising out of the
Morris to the Federal Circuit in relation an exclusion order manufacture, use, and sale of Modoral’s Velo product. On
granted against Philip Morris by the International Trade 15 December 2021, the court entered a Markman Order
Commission based on the relevant patents, which exclusion finding that the patent distinguishes a nicotine complex from
order was affirmed by the United States Court of Appeals the claimed ‘nicotine salt,’ and more specifically, affirmatively
for the Federal Circuit on 31 March 2023, and (ii) the decisions excluding the nicotine polacrilex complex used in the accused
in IPRs commenced by Philip Morris against the relevant Velo product from the claimed invention because it is 'not a
patents at the U.S. Patent Office. On 1 May 2023, RJR Vapor nicotine salt'. Swedish Match agreed to a joint stipulation and
noticed an appeal to the United States Court of Appeals for request for entry of judgment of non-infringement for all of
the Federal Circuit. On 10 May 2023, Philip Morris noticed the asserted claims of the '908 patent, which the Court
a cross-appeal relating to the denial of its request for a granted on 19 January 2022. The case has been resolved,
permanent injunction and the 17 August 2023 amended and the court entered an order granting the parties’ joint
judgment on the verdict. RJR Vapor and Philip Morris’s stipulation of dismissal on 9 February 2023.
appeals have been consolidated. Briefing is ongoing.
93. On 20 September 2023, Healthier Choices Management Corp.
90. On 27 November 2020 Philip Morris filed a complaint before (HCMC) commenced proceedings against RJR Vapor before
the Regional Court Mannheim in Germany against British the U.S. District Court for the Middle District of North Carolina
American Tobacco (Germany) GmbH (BAT Germany) alleging against the Vapour product Vuse Alto alleging infringement of
that the sale, offer for sale and importation of Vype ePod U.S. Patent 9,538,788. On 17 November 2023, RJR Vapor filed
products infringes a patent. Philip Morris is seeking an a motion to dismiss the action in its entirety. Briefing on that
injunction, a recall of product from commercial customers motion is complete, and it is pending a decision.
and a declaratory judgment for damages. The trials of this
action took place on 15 June 2021 and 9 November 2021.
A decision on the matter was promulgated on 30 November
2021. The decision dismissed the complaint in its entirety. On
28 December 2021, Philip Morris lodged an appeal against this
decision before the Higher Regional Court Karlsruhe. A date
has not yet been set for the appeal hearing.

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Mozambican IP Litigation Middle East Litigation

94. On 19 April 2017, Sociedade Agrícola de Tabacos, Limitada 96. On 25 January 2021, Walid Ahmed Mohammed Al Naghi for
(SAT) (a BAT Group company in Mozambique) filed a complaint Trading Establishment (Al Naghi), a former distributor for the
to the National Inspectorate for Economic Activities (INAE), Group’s operating companies in the Middle East, filed a claim
the government body under the Ministry of Industry and in the Commercial Court in Jeddah, Saudi Arabia, seeking
Trade, regarding alleged infringements of its registered SAR2,105,356,121 (approximately £440.4 million) for
trademark (GT) by GS Tobacco SA (GST). INAE subsequently reimbursement of funds allegedly due under contract. Al Naghi did
seized the allegedly infringing products (GS cigarettes) and not formally name any Group entity as a defendant in the claim.
fined and ordered GST to discontinue manufacturing products The claim was dismissed orally by the Court on 9 February
that could infringe SAT’s intellectual property rights. Following 2021. On 20 April 2021, Al Naghi filed a new claim in the Jeddah
INAE’s decision, in July 2017 and March 2018, SAT sought Commercial Court against B.A.T (U.K. and Export) Limited
damages via the Judicial Court of Nampula, from GST in the (BAT UKE) demanding that BAT UKE reimburse Al Naghi in the
amount of MZN46,811,700 (approximately £575,018) as well amount of SAR2,105,356,121 allegedly paid by Al Naghi to the
as a permanent restraint order in connection with the customs authorities in customs dues. On 16 June 2021, the
manufacturing and selling of the allegedly infringing products. Court of First Instance issued a judgment dismissing the claim
The Judicial Court of Nampula (Tribunal Judicial de Nampula) against BAT UKE on the ground that BAT UKE lacks legal
granted the order on an interim basis on 7 August 2017. After standing to be sued. On 22 August 2021, Al Naghi filed an appeal
hearing the parties, on 5 September 2017, the court found that against the Court of First Instance judgment. On 15 November
no alleged infringement by GST had occurred and removed the 2021, the Appellate Court remanded the case to the lower Court
interim restraint order, this decision was appealed by SAT and in order for the lower Court to join BAT entities in Bahrain and
is currently pending a decision. GST filed an application for UAE, which Al Naghi had wrongly claimed on appeal to be
review against INAE’s initial decision directly to the Minister branches of BAT UKE. The lower Court tried to summon the
of Trade and Industry, which reversed the decision of INAE. Bahrain and UAE BAT entities to obtain clarifications about their
On 31 December 2018, SAT was notified of GST’s counterclaim status; however, said entities were not properly notified and did
against SAT at the Judicial Court of Nampula for damages not appear. On 2 August 2022, the Court reversed its decision to
allegedly sustained as a result of SAT’s complaint to INAE seek clarifications from the BAT entities in Bahrain and UAE and
(and INAE’s decision). GST is seeking damages in the amount dismissed the claim against BAT UKE for lack of legal capacity.
of approximately MZN14.5 billion (approximately £178 million). On 29 August 2022, Al Naghi filed an appeal against the Court of
On 31 January 2019 SAT filed a formal response to the First Instance judgment. On 5 December 2022, the Court of
counterclaim. GST was notified on 28 February 2019 to file a Appeal issued a judgment affirming the preliminary court's
response to SAT's formal response to the counterclaim and ruling dismissing Al Naghi's claim against BAT UKE. On
the judge scheduled the preliminary hearing for 14 March 2019. 27 December 2022, Al Naghi filed an appeal before the
This hearing was adjourned and was held on 2 April 2019, when Supreme Court. On 15 May 2023, the Supreme Court issued
the court heard arguments on the validity of GST’s a judgment dismissing Al Naghi's appeal. The dismissal is final
counterclaim. On 2 September 2019, SAT received notification in respect of Al Naghi's claim against BAT UKE.
of an order which provided that (i) SAT’s claim had been 97. On 6 November 2023, Al Naghi filed a claim in the Commercial
dismissed by the court; and (ii) the GST counterclaim would Court in Jeddah, Saudi Arabia, seeking SAR2,105,356,121
proceed to trial. On 9 September 2019 SAT responded to the (approximately £440.4 million) for reimbursement of funds
order by appealing the dismissal of the SAT claim. Additionally, allegedly due under contract. The claim named British
SAT made an interlocutory application in the counterclaim American Tobacco Middle East W.L.L. as the defendant.
proceedings to challenge certain questions posed by the The court has ordered the exchange of memoranda.
judge, on the basis that the responses may be used as The next hearing is scheduled for 21 February 2024.
evidence at trial. SAT was notified in December 2021 that the
trial of the counterclaim was to take place on 24 February 98. In late December 2023, BAT UKE received a request for
2022. SAT subsequently submitted a complaint related to that arbitration proceedings from a customer/distributor
trial to the court, on the basis that prior to any further step in the Middle East, seeking damages of approximately
being taken in relation to the trial the process should be US$116 million (approximately £91 million). BAT UKE has
submitted to the superior court for analysis, as per the appeals submitted its response to the claim.
previously submitted in the proceedings. SAT’s complaint has Asbestos Litigation
been appreciated favourably and the process will be remitted 99. As at 31 December 2022, there were four active asbestos
to the superior court. Trial has not taken place. personal injury cases against BATUS Holdings Inc. and various
Malawi Group Action other defendants. During the financial year 2023, BATUS
95. In December 2020, the Company and British American Holdings Inc. was served with 17 new asbestos personal injury
Tobacco (GLP) Limited ("GLP") were named as defendants cases, and BATUS Holdings Inc. was dismissed from eight
in a claim made in the English High Court by around asbestos personal injury cases (including Stuck and
7,500 Malawian tobacco farmers and their family members. Mannooch) by court order for lack of personal jurisdiction or by
The claim also names Imperial Brands plc and five affiliates voluntary dismissal. Consequently, as of 31 December 2023,
as defendants. The claimants allege they were subjected to there are 13 active cases. The plaintiffs in each case allege
unlawful and exploitative working conditions on tobacco farms exposure to the defendants’ asbestos and asbestos-
from which it is alleged that the defendants indirectly acquire containing talcum powder and cosmetics products, and assert
tobacco. They seek unquantified damages (including claims under state law, including for negligence, breach of
aggravated and exemplary damages) for the torts of warranty, strict liability, conspiracy, fraud and wrongful death.
negligence and conversion and unquantified personal and The plaintiffs seek unspecified compensatory and punitive
proprietary remedies for restitution of unjust enrichment. They damages. Of the 13 active cases, 10 cases (Lowis, Phillips,
also seek an injunction to restrain the commission of further Cooke, Dove, Gibbs, Westropp, Knight, Steggles, Doonan, and
torts of conversion or negligence by the defendants. The Oakenfold) are filed in the Supreme Court of the State of New
defendants had an application to strike out the claims York (New York County), two cases (Weber and Redgewell) are
dismissed in a judgment dated 25 June 2021. In January 2022, filed in the Circuit Court of the 17th Judicial Circuit in and for
the Company and GLP were served with a similar claim by Broward County, Florida, and one case (Caswell) is filed in the
around a further 3,500 claimants. The Company and GLP Superior Court of the State of California (Alameda County). In
intend vigorously to defend the claims. all of these pending cases, BATUS Holdings Inc. has filed
motions to dismiss for lack of personal jurisdiction.

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Financial Statements

Notes on Accounts
Continued

Cigarette Filter Litter Litigation 105. A cost breakdown filed in support of the motion to approve
100. On 21 November 2022, the Mayor and City Council of the Consent Decree estimates the total Fox River clean-up
Baltimore, Maryland, filed a lawsuit in the Circuit Court for costs (including natural resource damages) to be
Baltimore City naming the Company and RJRT, as well as US$1,346 million (approximately £1,055.6 million).
PM USA, Altria Group, Liggett Group LLC and a Maryland- 106. A further Consent Decree between the U.S. Government,
based distributor, as defendants. RJRT was served on P.H. Glatfelter Company and Georgia-Pacific Consumer
13 December 2022, and the Company received the complaint Products LP (Georgia-Pacific), approved by the Wisconsin
on 18 January 2023. The plaintiff, a municipality, alleges that District Court on 14 March 2019, concluded all remaining
the defendants manufactured, distributed and sold non- litigation relating to the Fox River. In November 2019,
biodegradable cigarette filters with knowledge that an arbitral tribunal awarded approximately US$10 million
consumers would discard used filters on public property (approximately £7.8 million) to the remediation contractor
owned by the plaintiff, and further alleges that the defendants engaged by a limited liability company formed by NCR and
failed to warn consumers of the alleged environmental Appvion to perform the Fox River clean-up operation. NCR
impacts of littered filters. The plaintiff asserts causes of action has stated (in its 2021 Annual Report on Form 10-K) that its
for alleged violation of state and municipal civil and criminal indemnitors and co-obligors were responsible for the majority
anti-littering and dumping laws, trespass, strict liability and of the award, with its own share being approximately 25%.
negligent design defect, public nuisance, and strict liability and
negligent failure to warn. The plaintiff seeks, among other 107. On 3 October 2022, the United States Environmental
relief, unspecified damages (including punitive damages) for Protection Agency issued a Certificate of Completion in
costs allegedly incurred removing discarded cigarette filters respect of remedial action for the Lower Fox River.
from public property, and for alleged damage to land and Industries’ involvement with environmental liabilities arising
natural resources and property value diminution, along with out of the contamination of the Fox River:
fines under state and municipal laws. On 3 February 2023, 108. NCR's position is that, under the terms of a 1998 Settlement
PM USA filed a notice of removal of the litigation to the Federal Agreement between it, Appvion and Industries, and a 2005
District Court in Baltimore, Maryland. The plaintiff moved to arbitration award, Industries and Appvion had a joint and
remand the action back to the Circuit Court for Baltimore City several obligation to bear 60% of the Fox River environmental
on 20 March 2023. The federal court, following briefing on the remediation costs imposed on NCR and of any amounts NCR
motion, issued an order on 19 January 2024 remanding the has to pay in respect of other PRPs’ contribution claims. BAT
action back to the Circuit Court for Baltimore City. has not acknowledged any such liability to NCR and has
U.S. Securities Putative Class Action defences to such claims.
101. On 24 January 2024, Gary David, a purported holder of 109. Until May 2012, Appvion and Windward Prospects Limited
Company securities, initiated a putative class action in the (Windward) (another former Group subsidiary) paid a 60%
United States District Court for the Eastern District of New share of the clean-up costs incurred by NCR. Industries was
York on behalf of all purchasers of publicly traded Company never required to contribute. Around that time, Appvion
securities between 9 February 2023 and 6 December 2023. refused to continue to pay clean-up costs, NCR therefore
The complaint names the Company and certain of its current demanded that Industries pay a 60% share of those costs.
and former officers as defendants, and alleges that during the Industries resisted NCR's demand and commenced
class period the defendants made false or misleading public proceedings against Windward and Appvion seeking
statements regarding the risks and potential likelihood of an confirmation of indemnities provided to Industries in respect
impairment charge to the value of the Reynolds cash- of any liability it might have to NCR (the English Indemnity
generating units or its brand intangibles. The complaint Proceedings) pursuant to a 1990 de-merger agreement
does not quantify the claimed damages. between those parties.
Fox River Funding Agreement of 30 September 2014
Background to environmental liabilities arising out of 110. On 30 September 2014, Industries entered into a Funding
contamination of the Fox River: Agreement with Windward, Appvion, NCR and BTI 2014 LLC
102. U.S. authorities identified potentially responsible parties (BTI) (a wholly owned subsidiary of Industries). Pursuant to
(PRPs), including NCR Corporation (NCR), to fund the clean- the Funding Agreement:
up of polluted sediments in the Lower Fox River, Wisconsin. a.the English Indemnity Proceedings (and a related counterclaim)
Discharges of Polychlorinated Biphenyls (PCBs) from paper and NCR-Appvion arbitration were discontinued;
mills and other facilities operating close to the river caused b.the parties agreed a framework through which they would
that pollution. Industries’ involvement with the environmental together fund the ongoing costs of the Fox River clean-up; and
liabilities arises out of (i) indemnity arrangements which it
became party to due to various transactions that took place c.NCR agreed to accept funding by Industries at the lower level
from the late-1970s onwards and (ii) subsequent litigation of 50% of the ongoing clean-up related costs of the Fox River
brought by NCR against Industries and Appvion Inc. (Appvion) (rather than the 60% referenced above). This remains subject
(a former Group subsidiary) in relation to those arrangements. to an ability to litigate at a later stage the extent of Industries’
liability (if any) in relation to Fox River clean-up-related costs
103. Following substantial litigation in the United States regarding (including in respect of the 50% of costs that Industries has paid
the responsibility for the costs of the clean-up operations, and under the Funding Agreement to date).
enforcement proceedings brought by the U.S. Government
against NCR and Appvion to ensure compliance with 111. Additionally, Windward has contributed US$10 million
regulatory orders made relating to the Fox River clean-up, (approximately £7.8 million) of funding. Appvion has
the District Court of Wisconsin approved (on 23 August 2017) contributed US$25 million (approximately £19.6 million)
a form of settlement with the U.S. Government known as a for Fox River and agreed to contribute US$25 million
Consent Decree. (approximately £19.6 million) for the Kalamazoo River
(see further below). Appvion entered Chapter 11 bankruptcy
104. A key term of that Consent Decree is that NCR was obliged protection on 1 October 2017.
to perform and fund all of the remaining Fox River remediation
work by itself.

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112. The parties also agreed to cooperate in order to maximise 120. Following further litigation, on 11 December 2019, NCR
recoveries from certain claims made against third parties, announced that it had entered into a Consent Decree with
including (i) a claim commenced by Windward in the High the U.S. Government and the State of Michigan (subsequently
Court of England & Wales (the High Court) against Sequana approved by the Michigan Court on 2 December 2020),
S.A. (Sequana) and the former Windward directors (the pursuant to which it assumed liability for certain remediation
Windward Dividend Claim), assigned to BTI under the Funding work at the Kalamazoo River. The payments to be made on
Agreement, and which relates to dividend payments made by the face of the Consent Decree in respect of such work total
Windward to Sequana of around €443 million (approximately approximately US$245 million (approximately £192 million).
£384 million) in 2008 and €135 million (approximately The Consent Decree also provides for the payment by NCR
£117.0 million) in 2009 (the Dividend Payments) and (ii) a claim of an outstanding judgment against it of approximately
commenced by Industries directly against Sequana to recover US$20 million (approximately £15.7 million) to Georgia-Pacific.
the value of the Dividend Payments alleging that the dividends 121. The quantum of the clean-up costs for the Kalamazoo River
were paid for the purpose of putting assets beyond the reach is presently unclear. It seems likely to exceed the amounts
of Windward’s creditors (including Industries) (the BAT payable on the face of the Consent Decree.
section 423 Claim) (together, the Sequana Proceedings).
122. On 10 February 2023, NCR filed a complaint in the United
113. Pursuant to a judgment of the High Court handed down on States District Court for the Southern District of New York
11 July 2016, the court upheld the BAT section 423 Claim. By against Industries, seeking a declaration that Industries must
way of a consequential judgment dated 10 February 2017, the compensate NCR for 60% of costs NCR incurred and incurs
High Court ordered that Sequana pay to BTI an amount up to relating to the Kalamazoo River site on the asserted basis that
the full value of the 2009 Dividend plus interest, equating to the Kalamazoo River constitutes a ‘Future Site’ for the
around US$185 million (approximately £145.1 million). The Court purposes of the Settlement Agreement. The Funding
dismissed the Windward Dividend Claim. Agreement described above does not resolve any such claims.
114. The parties pursued cross-appeals on the judgment On 23 June 2023, Industries filed its defence and
and payments in respect of the judgment were stayed. On counterclaims in the proceedings. On 2 October 2023,
6 February 2019 the Court of Appeal gave judgment upholding NCR filed a motion for declaratory judgment on its complaint
the High Court’s findings, with one immaterial change to and to strike out Industries’ defences and counterclaims.
the method of calculating the damages awarded. Sequana Industries has filed its reply to this motion. The motion is
remains liable to pay approximately US$185 million expected to be heard in February 2024.
(approximately £145.1 million) and around £10 million in costs 123. Industries also anticipates that NCR will seek to recover from
to Industries. Appvion (subject to a cap of US$25 million (approximately
115. On 15 May 2019, the Nanterre Commercial Court made an £19.6 million)) for ‘Future Sites’ under the Funding Agreement.
order placing Sequana into formal liquidation proceedings. The effect of Appvion's Chapter 11 bankruptcy proceedings
To date, Sequana has made no payments to Industries. on its liability for Future Sites payments under the Funding
Because of Sequana’s ongoing insolvency process, Agreement is currently uncertain. NCR has indicated that if
execution of that judgment is stayed. it is unable to obtain recovery from Appvion then it will seek
116. BTI subsequently appealed to the Supreme Court in respect to recover such from Industries as part of the 60% referred
of the Windward Dividend Claims. On 5 October 2022, to in paragraph 122 above.
the Supreme Court handed down its judgment, dismissing 124. In summary, Industries is and has been taking active steps
BTI's appeal. to protect its interests. These include preparation of all its
117. BTI has brought claims against certain of Windward’s former defences and counterclaims, seeking to procure the
advisers, including Windward’s auditors at the time of the repayment of the Windward dividends, pursuing the other
dividend payments, PricewaterhouseCoopers LLP (PwC) valuable claims that are now within its control, and working
(which claims were also assigned to BTI under the Funding with the other parties to the Funding Agreement to maximise
Agreement). BTI's claim against PwC is progressing in the High recoveries from third parties with a view to ensuring that
Court and the trial is scheduled to take place in the summer of amounts funded towards clean-up related costs are later
2024. An agreed stay is in place in respect of BTI’s separate recouped under the agreed repayment mechanisms under
assigned claim against Freshfields Bruckhaus Deringer. the Funding Agreement.
118. The sums Industries has paid under the Funding Agreement Other environmental matters
are subject to the reservation as set out in paragraphs 110-111 125. Reynolds American and its subsidiaries are subject to federal,
above and ongoing adjustment. Clean-up costs can only be state and local environmental laws and regulations
estimated in advance of the work being carried out and concerning the discharge, storage, handling and disposal of
certain sums payable are the subject of ongoing U.S. litigation. hazardous or toxic substances. Such laws and regulations
In 2019, Industries paid £32 million in respect of clean-up provide for significant fines, penalties and liabilities,
costs. In 2020, Industries paid £2 million in respect of clean-up sometimes without regard to whether the owner or operator
costs. In 2021, Industries paid a further £2 million in respect of of the property or facility knew of, or was responsible for,
clean-up costs. In 2022, Industries has paid an additional the release or presence of hazardous or toxic substances.
£1 million in respect of clean-up costs. Industries is potentially In addition, third parties may make claims against owners
liable for further costs associated with the clean-up. Industries or operators of properties for personal injuries and property
has a provision of £44 million which represents the current damage associated with releases of hazardous or toxic
best estimate of its exposure – see note 24. substances. In the past, RJRT has been named a PRP with
third parties under CERCLA with respect to several superfund
Kalamazoo sites. Reynolds American and its subsidiaries are not aware of
119. Georgia-Pacific, a designated PRP in respect of the any current environmental matters that are expected to have
Kalamazoo River in Michigan, also pursued NCR in relation a material adverse effect on the business, results of
to remediation costs caused by PCBs released into that river. operations or financial position of Reynolds American or its
On 26 September 2013, the United States District Court, subsidiaries.
Michigan held that NCR was liable as a PRP on the basis that
it had arranged for the disposal of hazardous material for the
purposes of the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA).

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Financial Statements

Notes on Accounts
Continued

Investigations
126. From time to time, the Group investigates, and becomes aware of governmental authorities’ investigations into allegations of
misconduct, including alleged breaches of sanctions and allegations of corruption at Group companies. Some of these allegations
are currently being investigated. The Group cooperates with the authorities, where appropriate.
127. On 25 April 2023, the Group announced that it had reached agreement with DOJ and the United States Department of the
Treasury’s Office of Foreign Assets Controls (OFAC) to resolve previously disclosed investigations into suspicions of sanctions
breaches. These concerned business activities relating to the Democratic People’s Republic of Korea between 2007 and 2017. British
American Tobacco p.l.c. entered into a three-year deferred prosecution agreement (DPA) with DOJ and a civil settlement agreement
with OFAC. DOJ’s charges against the Company—one count of conspiring to commit bank fraud and one count of conspiring to
violate sanctions laws—were filed and will later be dismissed if the Company abides by the terms of the DPA. In addition, a BAT
subsidiary in Singapore, British-American Tobacco Marketing (Singapore) Private Limited, pleaded guilty to the same charges.
The total amount payable to the U.S. authorities is approximately US$635 million plus interest, which is being paid by British
American Tobacco p.l.c.
Closed litigation matters
128. The following matters on which the Company reported in the contingent liabilities and financial commitments note 31 to the
Company’s 2022 financial statements have been dismissed, concluded or resolved as noted below:
Matter Jurisdiction Companies named as Defendants Description Disposition
Distributor Customs Qatar British American Tobacco Indemnity Litigation Resolved
Dispute Middle East S.P.C.
Carlson/Alloway/Wolfe U.S. BATUS Holdings Inc Personal Injury Voluntary dismissal by
asbestos litigation plaintiffs
Philip Morris Products UK Nicoventures Trading IP Court judgment of
S.A. EP (UK) patent Limited, British American dismissal in favour of
counterclaim ('Glo' Tobacco (Investments) Defendants
tobacco heating devices) Limited
Jones v American Missouri RJRT, B&W, Lorillard Tobacco Class action Closed by court as an
Tobacco Co and certain parent companies inactive file

General Litigation Conclusion

129. While it is impossible to be certain of the outcome of any particular case or of the amount of any possible adverse verdict, the Group
believes that the defences of the Group’s companies to all these various claims are meritorious on both the law and the facts, and
a vigorous defence is being made everywhere.
130. As indicated above, on 1 March 2019 the Quebec Court of Appeal released its appeal judgment. The trial judgment was largely upheld
by a unanimous decision of the five-member panel , and did not displace the order of the Court that previously required the
defendants to post security deposits in the amount of CAD$1.1 billion (approximately £654.4 million). This is the only executory aspect
of the judgment. In these circumstances the Board of Directors of Imperial reassessed the recoverability of the litigation-related
deposit, and accordingly, the Group recognised a charge against the income statement of CAD$758 million (approximately
£450.9 million), the amount of the initial deposit paid into court, and reflecting the amount of the judgment that is considered to be
probable and estimable in line with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Consequently, the Group utilised
the litigation-related deposit which was shown as a receivable at 31 December 2018 (within trade and receivables) against the current
estimate of the liability and both the provision and litigation-related deposit were reduced accordingly. If further adverse judgments
are entered against any of the Group’s companies in any case, avenues of appeal will be pursued. Such appeals could require the
appellants to post appeal bonds or substitute security (as has been necessary in Quebec) in amounts which could in some cases
equal or exceed the amount of the judgment. At least in the aggregate, and despite the quality of defences available to the Group,
it is not impossible that the Group’s results of operations or cash flows in any particular period could be materially adversely affected
by the impact of a significant increase in litigation, difficulties in obtaining the bonding required to stay execution of judgments
on appeal, or any final outcome of any particular litigation.

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131. Having regard to all these matters, with the exception of 134. ITG Indemnity. In the purchase agreement relating to the
the Quebec Class Actions and Fox River, the Group does not Divestiture as amended, Reynolds American agreed to defend
consider it appropriate to make any provision in respect of and indemnify, subject to certain conditions and limitations, ITG
any pending litigation because the likelihood of any resulting in connection with claims relating to the purchase or use of one
material loss, on an individual case basis, is not considered or more of the Winston, Kool, Salem or Maverick cigarette
probable and/or the amount of any such loss cannot be brands on or before 12 June 2015, as well as in actions filed
reasonably estimated. Notwithstanding the negative decision before 13 June 2025, relating to the purchase or use of one or
in the Quebec Class Actions, the Group does not believe that more of the Winston, Kool, Salem or Maverick cigarette brands.
the ultimate outcome of this litigation will significantly impair In the purchase agreement relating to the Divestiture, ITG
the Group’s financial condition. If the facts and circumstances agreed to defend and indemnify, subject to certain conditions
change and result in further unfavourable outcomes in the and limitations, Reynolds American and its affiliates in
pending litigation, then there could be a material impact on connection with claims relating to the purchase or use of ‘blu’
the financial statements of the Group. In addition, the Group brand e-cigarettes. ITG also agreed to defend and indemnify,
accrues for damages, attorneys' fees and/or statutory subject to certain conditions and limitations, Reynolds
interest, including in respect of certain Engle Progeny cases, American and its affiliates in actions filed after 12 June 2025,
certain U.S. individual smoking and health cases, the DOJ relating to the purchase or use of one or more of the Winston,
medical reimbursement/corrective statement case and the Kool, Salem or Maverick cigarette brands after 12 June 2015. ITG
DOJ and OFAC investigations. has tendered a number of actions to Reynolds American under
Other contingencies the terms of this indemnity, and Reynolds American has,
132. JTI Indemnities. By a purchase agreement dated 9 March subject to a reservation of rights, agreed to defend and
1999, amended and restated as at 11 May 1999, referred to indemnify ITG pursuant to the terms of the indemnity. Reynolds
as the 1999 Purchase Agreement, R.J. Reynolds Tobacco American has tendered an action to ITG under the terms of this
Holdings, Inc. (RJR) and RJRT sold their international tobacco indemnity, and ITG has, subject to a reservation of rights,
business to JTI. Under the 1999 Purchase Agreement, RJR and agreed to defend and indemnify Reynolds American and its
RJRT retained certain liabilities relating to the international affiliates pursuant to the terms of the indemnity. These claims
tobacco business sold to JTI, and agreed to indemnify JTI are substantially similar in nature and extent to claims asserted
against: (i) any liabilities, costs and expenses arising out of directly against RJRT in similar actions.
the imposition or assessment of any tax with respect to the 135. Loews Indemnity. In 2008, Loews Corporation (Loews),
international tobacco business arising prior to the sale, other entered into an agreement with Lorillard Inc., Lorillard
than as reflected on the closing balance sheet; (ii) any Tobacco, and certain of their affiliates, which agreement is
liabilities, costs and expenses that JTI or any of its affiliates, referred to as the ‘Separation Agreement’. In the Separation
including the acquired entities, may incur after the sale with Agreement, Lorillard agreed to indemnify Loews and its
respect to any of RJR’s or RJRT’s employee benefit and officers, directors, employees and agents against all costs and
welfare plans; and (iii) any liabilities, costs and expenses expenses arising out of third-party claims (including, without
incurred by JTI or any of its affiliates arising out of certain limitation, attorneys’ fees, interest, penalties and costs of
activities of Northern Brands. investigation or preparation of defence), judgments, fines,
133. RJRT has received claims for indemnification from JTI, and losses, claims, damages, liabilities, taxes, demands,
several of these have been resolved. Although RJR and RJRT assessments, and amounts paid in settlement based on,
recognise that, under certain circumstances, they may have arising out of or resulting from, among other things, Loews’
other unresolved indemnification obligations to JTI under ownership of or the operation of Lorillard and its assets and
the 1999 Purchase Agreement, RJR and RJRT disagree what properties, and its operation or conduct of its businesses at
circumstances described in such claims give rise to any any time prior to or following the separation of Lorillard and
indemnification obligations by RJR and RJRT and the nature Loews (including with respect to any product liability claims).
and extent of any such obligation. RJR and RJRT have Loews is a defendant in three pending product liability actions,
conveyed their position to JTI, and the parties have agreed each of which is a putative class action. Pursuant to the
to resolve their differences at a later date. Separation Agreement, Lorillard is required to indemnify
Loews for the amount of any losses and any legal or other fees
with respect to such cases. Following the closing of the
Lorillard merger, RJRT assumed Lorillard’s obligations under
the Separation Agreement as was required under the
Separation Agreement.

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Financial Statements

Notes on Accounts
Continued

136. SFRTI Indemnity. In connection with the 13 January 2016 sale Tax disputes
by Reynolds American of the international rights to the NAS The Group has exposures in respect of the payment or recovery of
brand name and associated trademarks, along with SFR a number of taxes. The Group is and has been subject to a number
Tobacco International GmbH (SFRTI) and other international of tax audits covering, amongst others, excise tax, value added
companies that distributed and marketed the brand outside taxes, sales taxes, corporate taxes, withholding taxes and
the United States, to JT International Holding BV (JTI Holding), payroll taxes.
each of SFNTC, R. J. Reynolds Global Products, Inc., and The estimated costs of known tax obligations have been provided
R. J. Reynolds Tobacco B.V. agreed to indemnify JTI Holding in these accounts in accordance with the Group’s accounting
against, among other things, any liabilities, costs, and policies. In some countries, tax law requires that full or part
expenses relating to actions (i) commenced on or before payment of disputed tax assessments be made pending resolution
(a) 13 January 2019, to the extent relating to alleged personal of the dispute. To the extent that such payments exceed the
injuries, and (b) in all other cases, 13 January 2021; (ii) brought estimated obligation, they would not be recognised as an expense.
by (a) a governmental authority to enforce legislation While the amounts that may be payable or receivable in relation to
implementing European Union Directive 2001/37/EC tax disputes could be material to the results or cash flows of the
or European Directive 2014/40/EU or (b) consumers or a Group in the period in which they are recognised, the Board does
consumer association; and (iii) arising out of any statement not expect these amounts to have a material effect on the Group’s
or claim (a) made on or before 13 January 2016, (b) by any financial condition.
company sold to JTI Holding in the transaction, (c) concerning
NAS brand products consumed or intended to be consumed The following matters are in or may proceed to litigation:
outside of the United States and (d) that the NAS brand Corporate taxes
product is natural, organic, or additive-free. Under the terms Brazil
of this indemnity, JTI Holding requested indemnification from Profits of overseas subsidiaries. The Brazilian Federal Tax Authority
Santa Fe Natural Tobacco Company Germany GmbH has filed claims against Souza Cruz seeking to reassess the profits
(SFNTCG) in connection with an audit of SFNTCG relating of overseas subsidiaries to corporate income tax and social
to transfer pricing for the tax years 2007 to 2010 and 2012 contribution tax. The reassessments are for the years 2004 until
to 2015. These claims settled for a total of US$4,653,009 and including 2012 for a total amount of BRL1,750 million
(approximately £3,649,418) in taxes and interest. (£283 million) to cover tax, interest and penalties.
137. Indemnification of Distributors and Retailers. RJRT, Lorillard
Souza Cruz appealed all reassessments. Regarding the first
Tobacco, SFNTC, American Snuff Co. and RJR Vapor have
assessments (2004-2006), Souza Cruz’s appeals were rejected by
entered into agreements to indemnify certain distributors and
the ultimate Administrative Court after which Souza Cruz filed two
retailers from liability and related defence costs arising out of
lawsuits with the Judicial Court to appeal the reassessments. The
the sale or distribution of their products. Additionally, SFNTC
judgment in respect of the reassessment of corporate income tax
has entered into an agreement to indemnify a supplier from
has been decided in favour of Souza Cruz by the first level of the
liability and related defence costs arising out of the sale or use
Judicial Court and Souza Cruz is waiting to see whether the
of SFNTC’s products. The cost has been, and is expected to be,
Brazilian Tax Authorities will appeal the judgment. The lawsuit
insignificant. RJRT, SFNTC, American Snuff Co. and RJR Vapor
appealing the social contribution tax is pending judgment in the
believe that the indemnified claims are substantially similar in
first level of the Judicial Court. The appeal against the second
nature and extent to the claims that they are already exposed
assessments (2007 and 2008) was upheld at the second tier
to by virtue of their having manufactured those products.
tribunal and was closed. In 2015, a further reassessment for the
138. Except as otherwise noted above, Reynolds American is not same period (2007 and 2008) was raised after the five-year statute
able to estimate the maximum potential of future payments, of limitation which has been appealed against. Souza Cruz received
if any, related to these indemnification obligations. further reassessments in 2014 for the 2009 calendar year and in
139. Competition Investigations. There are instances where Group 2015 an assessment for the 2010 calendar year. Souza Cruz
companies are cooperating with relevant national competition appealed both the reassessments in full. In December 2016,
authorities in relation to ongoing competition law assessments were received for the calendar years 2011 and 2012
investigations and/or engaged in legal proceedings at the which have also been appealed. In October 2023, the
appellate level, including (amongst others) in the Netherlands administrative courts issued their judgments on all of the
and Nigeria. In regards to the previously disclosed remaining cases from 2007 to 2012. In three of the four cases
investigation by the Nigerian Federal Competition and (2009-2012) the court decision was tied, with five judges each
Consumer Protection Commission (FCCPC) into alleged siding for the tax authority and for the taxpayer. In these
violations of the Nigerian Competition and Consumer circumstances the tax authorities are presumed to prevail but
Protection Act and National Tobacco Control Act, a consent potential penalties are reduced. The procedural appeal regarding
order was entered into between the FCCPC and British 2007 and 2008 was rejected. All judgments will be appealed to the
American Tobacco (Holdings) Limited, British American judicial courts.
Tobacco (Nigeria) Limited and British American Tobacco Rio de Janeiro VAT Incentives. The Brazilian Federal Tax authority
Marketing (Nigeria) Limited in December 2022 terminating has challenged the treatment of Rio de Janeiro VAT incentives. In
the investigation and associated proceedings, replacing the October 2021, in respect of the 2016-2021 calendar years, the
previous final order. Amongst other measures, the final order authorities position was upheld at the lower Judicial Court. Souza
includes provision for the payment in Naira of a penalty Cruz has appealed in full against the Judgment. The maximum
equivalent to US$110 million and the Group's Nigerian exposure from 2016-2023 is BRL1,152 million (£186 million)
subsidiaries will be subject to a two-year period including potential interest and penalties, and reflecting a recent
of monitorship. binding Supreme Court decision which reduces the value of these
incentives by 10% (as described in note 6(k)).

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Netherlands
The Dutch tax authority has issued a number of assessments on various issues across the years 2003-2016 in relation to various intra-
group transactions. The assessments amount to an aggregate net potential liability across these periods of £1,148 million covering tax,
interest and penalties. The Group appealed against the assessments in full.
In relation to the periods from 2003-2007 (with an aggregate potential net liability of £7 million), the District Court of North Holland
issued judgments on 3rd March 2021. The appeal against the assessments was upheld, with the court finding for the Group. The Dutch
tax authority have appealed to the High Court.
In relation to the periods from 2008-2013 (with an aggregate potential net liability of £182 million), the District Court of North Holland
issued judgments on 17th October 2022, resulting in findings against the Group on a number of issues. These judgments have been
appealed to the High Court.
On the 15th December 2023 the Dutch District Court issued its judgement covering the period 2014-2016 (with an aggregate potential
net liability of £959 million). On the issue of mark to market losses on external bonds of British American Tobacco Holdings (The
Netherlands) B.V., the appeal against the assessments was upheld in full, with the court finding for the Group. In relation to other
intra-group transactions, including the termination of licence rights, the court found against the Group. Both the Group and Dutch tax
authorities have appealed items lost to the High Court.
Having considered the judgment and the Dutch judicial and international proceedings available to it, the Group has recognised a further
adjusting charge of £70 million in 2023, with a total provision of £145 million recognised at 31 December 2023.
As part of the 15th December 2023 judgement the assessed fine of £108 million for the filing of an intentionally incorrect tax return was
upheld but reduced to £92 million. The Group has appealed in full to the High Court and considers no provision is appropriate.
The Group believes that its companies have meritorious defences in law and fact in each of the above matters and intends to pursue
each dispute through the judicial system as necessary. With the exception of the Netherlands, the Group does not consider it
appropriate to make provision for these amounts nor for any potential further amounts which may be assessed in relation to these
matters in subsequent years.
Indirect and other taxes
Bangladesh
In January 2019, a competitor filed a writ petition against the government and the National Board of Revenue (NBR) by which it initially
challenged the failure of Government to implement the closing budget speech of the Honourable Finance Minister dated 27 June 2018
and reserving low segment for local brands. Thereafter, the competitor instead challenged the exclusion of protection given to local
brands of cigarette manufactured by local manufacturers and sought a direction to continue the protection so granted to the local
manufacturers of cigarettes in pursuance of a 2017 Special Order. The competitor further challenged the legality of a 2018 Special Order
of the NBR through which the said protection was revoked. British American Tobacco Bangladesh Company Limited (BAT Bangladesh)
was initially not a party to the writ petition, subsequently it became a party through an addition of party application. Upon hearing on
multiple occasions, the High Court passed judgment in the matter on 21 September 2020. BAT Bangladesh filed an appeal against the
High Court order and obtained a stay on 4 October 2020. By holding the prospective portion of the 2018 Special Order legal, the Court did
not allow the discriminatory regime to continue. However, by holding illegal the retrospective portion of the 2018 Special Order, the Court
revived the discriminatory regime for only one year, that is from 1 June 2017 to 6 June 2018 and held that any shortfall of revenue under
the 2017 Special Order may be recovered from any party or manufacturer during the period of 1 June 2017 to 6 June 2018. Subsequently,
the Large Taxpayers’ Unit (LTU) VAT issued a show cause notice dated 24 September 2020 following the High Court judgment claiming
unpaid VAT & Supplementary Duty (SD) of BDT24,371 million (£174 million) from 1 June 2017 to 6 June 2018. BAT Bangladesh appealed
against the High Court judgment before the Appellate Division and obtained an order of stay. Since the High Court judgment is stayed,
the LTU proceeding shall also be deemed to have been stayed.
In addition, BAT Bangladesh has received a memo from the NBR claiming BDT20,540 million (£147 million). This claim is related to VAT
and SD allegedly owed by BAT Bangladesh due to the production of an extra 18 billion cigarettes. The allegation is based on an
undisclosed purchase of local leaf, which is apparently inferred from a discrepancy found in BAT Bangladesh's 2016 Annual Report and
VAT-1 records. NBR has reopened the matter and sent a memo to LTU cancelling the earlier order of the LTU Commissioner which was
in favour of BAT Bangladesh and directing LTU to make the demand to BAT Bangladesh claiming the above-mentioned VAT and SD.
Subsequently, BAT Bangladesh has received an official demand for payment related to this claim from LTU. BAT Bangladesh has
challenged the memo of NBR and obtained a Rule in this regard. It has also challenged the demand letter of LTU and prayed for issuance
of a supplementary rule and stayed the demand letter. The matter is currently pending before the High Court.
South Korea
In 2016, the Board of Audit and Inspection of Korea (BAI) concluded its tax assessment in relation to the 2014 year-end tobacco inventory,
and imposed additional national excise, local excise, VAT taxes and penalties. This resulted in the recognition of a KRW80.7 billion
(approximately £49 million) charge by Group subsidiaries, Rothmans Far East B.V. Korea Branch Office and BAT Korea Manufacturing
Ltd. Management deems the tax and penalties to be unfounded and has appealed to the tax tribunal against the assessment. On
grounds of materiality and the likelihood of the tax and penalties being reversed in future, the Group classified the tax and penalties
charge as an adjusting item in 2016.
On 23 August 2019, the trial court ruled in favour of Rothmans Far East B.V. Korea Branch Office on KRW6.7 billion (approximately
£4 million), the VAT portion of the assessment. The Korean government appealed the ruling on 16 September 2019. On 16 April 2021 the
Court of Appeals affirmed the ruling of the Trial Court. The government immediately appealed to the Supreme Court and the Supreme
Court also affirmed the ruling of the Appeals Court on 26 August 2021. On 16 September 2021, Rothmans Far East B.V. Korea Branch
Office duly received the amount litigated (VAT portion) including statutory interests (note 6(g)).
On 9 September 2023, the trial court ruled in favour of the Korean government on national excise and local excise portion of the
assessment. The Management of the British American Tobacco Korea Manufacturing Ltd. lodged an appeal to the Supreme Court
on 30 October 2023.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

Closed cases
In the contingent liabilities and financial commitments note 31 to the Company’s 2022 financial statements, an indirect and other taxes
case in Egypt was disclosed. This case was closed in 2022.
Commitments in relation to service contracts, non-capitalised leases
The total future minimum payments under non-cancellable service contracts based on when payments fall due:
2023 2022
£m £m
Service contracts
Within one year 41 45
Between one and five years 46 66
Beyond five years — —
87 111

Financial commitments arising from short-term leases and leases of low-value assets that are not capitalised under IFRS 16 Leases are
£26 million (2022: £30 million) for property and £9 million (2022: £50 million) for plant, equipment and other assets.
32 Interests in subsidiaries
Subsidiaries with material non-controlling interests
Non-controlling interests principally arise from the Group’s listed investment in Bangladesh (British American Tobacco Bangladesh
Company Limited) where the Group held 72.91% in 2023, 2022 and 2021. Summarised financial information for Bangladesh is shown
below as required by IFRS 12 Disclosure of interest in other entities. No adjustments have been made to the information below for the
elimination of intercompany transactions and balances with the rest of the Group.
2023 2022 2021
Summarised financial information £m £m £m
Revenue 680 732 640
Profit for the year 133 153 127
– Attributable to non-controlling interests 36 41 34
Total comprehensive income 91 132 127
– Attributable to non-controlling interests 25 36 34
Dividends paid and other appropriations made to non-controlling interests (11) (32) (28)
Summary net assets:
Non-current assets 299 322 303
Current assets 437 253 345
Non-current liabilities 71 78 70
Current liabilities 284 166 262
Total equity at the end of the year 381 331 316
– Attributable to non-controlling interests 103 90 86
Net cash generated from operating activities 167 164 52
Net cash used in investing activities (51) (46) (26)
Net cash used in financing activities (41) (147) (55)
Differences on exchange 1 4 —
Increase/(decrease) in net cash and cash equivalents 76 (25) (29)
Net cash and cash equivalents at 1 January (24) 1 30
Net cash and cash equivalents at 31 December 52 (24) 1

Subsidiaries subject to restrictions:

As a result of the Group’s Canadian subsidiary, Imperial Tobacco Canada (ITCAN), entering CCAA protection, the assets of ITCAN
are subject to restrictions. The table below summarises the assets and liabilities of ITCAN:
2023 2022
Summarised financial information £m £m
Non-current assets 2,471 2,554
Current assets 2,621 2,193
Non-current liabilities (103) (114)
Current liabilities (494) (526)
4,495 4,107

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Under the terms of CCAA, the court has appointed FTI Consulting Canada Inc. to act as a monitor. This monitor has no operational input
and is not involved in the management of the business. The Group considers that ITCAN continues to meet the requirements of IFRS 10
Consolidated Financial Statements, and, until such requirements are not met, the Group will continue to consolidate the results of ITCAN.
Whilst the Group continues to control the operations of its Canadian subsidiary, there are restrictions over the ability to access or use
certain assets including the ability to remit dividends. Included in non-current assets for 2023 and 2022 is goodwill of £2.4 billion subject
to impairment reviews (note 12). Included in current liabilities are trade and other payables of £333 million (2022: £391 million), the
majority of which are amounts payable in respect of duties and excise and accrued charges. A breakdown of current assets has been
provided below.
2023 2022
£m £m
*
Cash and cash equivalents 2,042 1,569
Inventory 103 182
Investments held at fair value 446 396
Other 30 46
2,621 2,193
Note:
* Cash and cash equivalents above include £1,904 million (2022: £1,411 million) of restricted cash and cash equivalents. The Group defines restricted cash and cash equivalents as where
there are significant restrictions on its ability to access or use the assets and settle the liabilities of the Group, but excludes cash and cash equivalents where there are also outstanding
local currency borrowings or where there is an outstanding excise liability. In addition, dividends payable would also be excluded from restricted cash and cash equivalents if the dividend
has been approved by the necessary regulatory channels.

Refer to note 31 for information on the Quebec Class Actions.

Other shareholdings
At 31 December 2023, the Group holds almost 100% (2022: almost 100%; 2021: 99%) of the equity shares of PT Bentoel Internasional
Investama Tbk (Bentoel). Between 2011 and 2021, the Group was party to a total return swap on approximately 7% of Bentoel’s issued
capital. While the Group did not have legal ownership of these shares in this period, it retained the risks and rewards associated with
them which resulted in the Group continuing to recognise an effective interest in 99% of Bentoel’s net assets and results. In 2021, the
Group terminated the total return swap as part of its intention to delist from the Indonesia Stock Exchange and go private by conducting
a Voluntary Tender Offer (VTO), as a result of which the Group acquired 0.2% additional shares at a cost of £4 million. Shares from over
one thousand individual shareholders who could not be contacted were transferred to a courts-approved Public Trustee during 2023
and the company was subsequently delisted on 16 January 2024.
33 Summarised financial information
The following summarised financial information is required by the rules of the Securities and Exchange Commission and has been
prepared as a requirement of the Regulation S-X 3-10 in respect of the guarantees of:
– US$9.10 billion of outstanding bonds issued by B.A.T Capital Corporation (BATCAP) in connection with the acquisition of Reynolds
American Inc. (Reynolds American), including registered bonds issued in exchange for the initially issued bonds (the 2017 Bonds);
– US$12.15 billion of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on July 17, 2019,
and US$4.6 billion of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on July 1,
2022 pursuant to which BATCAP, BATIF or the Company may issue an indefinite amount of debt securities; and
– US$2.50 billion of outstanding bonds issued by BATIF pursuant to the Shelf Registration Statement on Form F-3 filed on July 17, 2019,
and US$1 billion of outstanding bonds issued by BATIF pursuant to the Shelf Registration Statement on Form F-3 filed on July 1, 2022
pursuant to which BATCAP, BATIF or the Company may issue an indefinite amount of debt securities.
As of July 28, 2020, all relevant Group entities suspended their reporting obligations with respect to the US$6.7 billion (2022: US$7.7 billion)
of Reynolds American unsecured notes and US$22.1 million (2022: US$40.9 million) of Lorillard unsecured notes. As such, no summarised
financial information is provided with respect to these securities.
As described below, Reynolds American is a subsidiary guarantor of all outstanding series of BATCAP and BATIF bonds. Under the terms
of the indentures governing such notes, any subsidiary guarantor (including Reynolds American) other than BATCAP or BATIF, as
applicable, BATNF and BATHTN, will automatically and unconditionally be released from all obligations under its guarantee, and such
guarantee shall thereupon terminate and be discharged and of no further force or effect, in the event that (1) its guarantee of all then
outstanding notes issued under the Group’s EMTN Programme is released or (2) at substantially the same time its guarantee of the debt
securities is terminated, such subsidiary guarantor is released from all obligations in respect of indebtedness for borrowed money for
which such subsidiary guarantor is an obligor (as a guarantor or borrower). Under the EMTN Programme, Reynolds American’s guarantee
is released if at any time the aggregate amount of indebtedness for borrowed money, subject to certain exceptions, for which Reynolds
American is an obligor does not exceed 10% of the outstanding long-term debt of BAT as reflected in the balance sheet included in BAT’s
most recent publicly released interim or annual consolidated financial statements.
Reynolds American’s guarantee may be released notwithstanding Reynolds American guaranteeing other indebtedness, provided
Reynolds American’s guarantee of outstanding notes issued under the EMTN Programme is released. If Reynolds American’s guarantee
is released, BAT is not required to replace such guarantee, and the debt securities will have the benefit of fewer subsidiary guarantees for
the remaining maturity of the debt securities.

Note:
The following summarised financial information report the unconsolidated contribution of each applicable company to the Group’s consolidated results and not the separate financial
statements for each applicable company as local financial statements are prepared in accordance with local legislative requirements and may differ from the financial information provided
below. In particular, in respect of the U.S. region, all financial statements and financial information provided by or with respect to the U.S. business or RAI (and/or RAI and its subsidiaries
(collectively, the Reynolds Group)) are prepared on the basis of U.S. GAAP and constitute the primary financial statements or financial information of the U.S. business or RAI (and/or the
Reynolds Group). Solely for the purpose of consolidation within the results of BAT p.l.c. and the BAT Group, this financial information is then converted to IFRS. To the extent any such
financial information provided in these financial statements relates to the U.S. business or RAI (and/or the Reynolds Group), it is provided as an explanation of the U.S. business’s or RAI’s
(and/or the Reynolds Group’s) primary U.S. GAAP based financial statements and information.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Notes on Accounts
Continued

The subsidiaries disclosed below are wholly-owned and the guarantees provided are full and unconditional, and joint and several:
a.British American Tobacco p.l.c. (as the parent guarantor), referred to as ‘BAT p.l.c.’ in the financials below;
b.B.A.T Capital Corporation (as an issuer or a subsidiary guarantor, as the case may be), referred to as ‘BATCAP’ in the financials below;
c.B.A.T. International Finance p.l.c. (as an issuer or a subsidiary guarantor, as the case may be), referred to as ‘BATIF’ in the financials
below;
d.B.A.T. Netherlands Finance B.V. (as a subsidiary guarantor), referred to as ‘BATNF’ in the financials below;
e.Reynolds American Inc. (as a subsidiary guarantor), referred to as ‘RAI’ in the financials below; and
f. British American Tobacco Holdings (The Netherlands) B.V. (as a subsidiary guarantor of the 2017 Bonds only), referred to as ‘BATHTN’
in the financials below.
In accordance with Regulation S-X 13-01, information in respect of investments in subsidiaries that are not issuers or guarantors has
been excluded from non-current assets as shown in the balance sheet table below. The ‘BATHTN’ column in the summarised financial
information is only applicable in the context of the 2017 Bonds. British American Tobacco Holdings (The Netherlands) B.V. (BATHTN)
is not an issuer nor guarantor of any of the other securities referenced in this note. None of the issuers or other guarantors has material
balances with or an investment in BATHTN. Investments in subsidiaries represents share capital acquired in relation to or issued by
subsidiary undertakings.
Summarised Financial Information
BAT p.l.c. BATCAP BATIF BATNF RAI BATHTN
Year ended 31 December 2023 £m £m £m £m £m £m
Income Statement
Revenue — — — — — —
(Loss)/profit from operations (642) 3 4 — — 5
Dividend income 4,950 — 1 — 5,234 424
Net finance income/(costs) 488 (204) 857 1 (538) —
Profit/(loss) before taxation 4,796 (201) 862 1 4,696 429
Taxation on ordinary activities (25) 22 17 — 127 (1)
Profit/(loss) for the year 4,771 (179) 879 1 4,823 428
Intercompany Transactions – Income Statement
Transactions with non-issuer/non-guarantor subsidiaries
(expense)/income (120) (1) — — 30 —
Transactions with non-issuer/non-guarantor subsidiaries net
finance income 293 768 1,445 — 26 —
Dividend income from non-issuer/non-guarantor subsidiaries 4,950 — — — 5,234 424

Summarised Financial Information

BAT p.l.c. BATCAP BATIF BATNF RAI BATHTN
Year ended 31 December 2022 £m £m £m £m £m £m
Income Statement
Revenue — — — — — —
(Loss)/profit from operations (115) (1) (2) — 5 1
Dividend income 7,515 — — — 4,835 148
Net finance income/(costs) 264 (52) 187 — (500) —
Profit/(loss) before taxation 7,664 (53) 185 — 4,340 149
Taxation on ordinary activities (10) (9) (21) — 110 —
Profit/(loss) for the year 7,654 (62) 164 — 4,450 149
Intercompany Transactions – Income Statement
Transactions with non-issuer/non-guarantor subsidiaries
(expense)/income (116) (1) (2) — 47 —
Transactions with non-issuer/non-guarantor subsidiaries net
finance income 52 815 732 — 25 —
Dividend income from non-issuer/non-guarantor subsidiaries 7,515 — — — 4,835 148

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Summarised Financial Information

BAT p.l.c. BATCAP BATIF BATNF RAI BATHTN
As at 31 December 2023 £m £m £m £m £m £m
Balance Sheet
Non-current assets 1,917 20,691 2,238 1,422 318 43
Current assets 9,128 12,739 43,431 790 942 10
Non-current liabilities 1,580 18,266 12,901 1,422 9,163 11
Non-current borrowings 1,571 18,101 12,662 1,422 9,113 —
Other non-current liabilities 9 165 239 — 50 11
Current liabilities 339 15,137 30,091 789 1,301 4
Current borrowings 39 15,102 29,512 788 597 2
Other current liabilities 300 35 579 1 704 2
Intercompany Transactions – Balance Sheet
Amounts due from non-issuer/non-guarantor
subsidiaries 9,074 16,837 43,279 — 1,229 10
Amounts due to non-issuer/non-guarantor
subsidiaries — 3,735 25,686 — 18 1
Investment in subsidiaries (that are not issuers
or guarantors) 27,234 — 718 — 25,185 1,537

Summarised Financial Information

BAT p.l.c. BATCAP BATIF BATNF RAI BATHTN
As at 31 December 2022 £m £m £m £m £m £m
Balance Sheet
Non-current assets 1,917 20,962 2,480 1,500 405 45
Current assets 9,166 7,947 42,748 22 1,135 8
Non-current liabilities 1,580 20,018 14,058 1,500 10,094 12
Non-current borrowings 1,572 19,762 13,510 1,500 10,033 —
Other non-current liabilities 8 256 548 — 61 12
Current liabilities 55 8,749 29,379 21 1,011 1
Current borrowings 23 8,657 28,525 21 568 1
Other current liabilities 32 92 854 — 443 —
Intercompany Transactions - Balance Sheet
Amounts due from non-issuer/non-guarantor
subsidiaries 9,117 17,003 42,752 — 700 8
Amounts due to non-issuer/non-guarantor
subsidiaries 5 3,890 22,702 — 34 1
Investment in subsidiaries (that are not issuers
or guarantors) 27,234 — 718 — 26,690 1,573

Perpetual hybrid bonds

BAT p.l.c. has issued two €1 billion of perpetual hybrid bonds which have been classified as equity as there is no contractual obligation
to either repay the principal or make payments of interest (note 22(d)).
BAT p.l.c.’s unconsolidated contribution to the Group’s consolidated equity results is shown below:
BAT p.l.c.
2023 2022
As at 31 December £m £m
Total equity 36,360 36,682
Share capital 614 614
Share premium 112 113
Perpetual hybrid bonds 1,685 1,685
Other equity 33,949 34,270

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Companies and Undertakings

This disclosure is made in accordance with Section 409 of the Companies Act 2006 and The Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008, as amended by The Companies, Partnerships and Groups (Accounts and Reports)
Regulations 2015. A full list of subsidiary undertakings, associates and joint ventures and joint operations as defined by IFRS (showing
the country of incorporation, effective percentage of equity shares held and full registered office addresses) as at 31 December 2023
is disclosed below.
The subsidiary undertakings that are held directly by British American Tobacco p.l.c. (the ultimate Parent Company) are indicated thus *;
all others are held by sub-holding companies.
#
Unless otherwise stated, the equity shares held are in the form of ordinary shares or common stock, except for those indicated thus ,
which include preference shares. The effective percentage of equity shares held in subsidiary undertakings is 100% unless otherwise
stated. Further, where the effective percentage of equity shares held by the sub-holding company is different from that held by British
American Tobacco p.l.c., the percentage of equity shares held by British American Tobacco p.l.c. is indicated thus ^ and is shown after
the percentage interest held by the sub-holding company.
The results of a number of these subsidiary undertakings principally affect the financial statements of the Group. These principal
subsidiary undertakings are highlighted in grey and are considered to be the main corporate entities in those countries which,
in aggregate, contributed 91% of the Group revenue in 2023.

Subsidiary Undertaking Barbados

Albania Chancery Chambers, Chancery House, High Street, Bridgetown,
Rruga e Kavajes, Ish Kombinati Ushqimor, Tirana, Albania Barbados
British American Tobacco - Albania SH.P.K. Southward Insurance Ltd.

Algeria Belgium

Zone d’activité El Omran, Route de Ouled Fayet, Ilot 789- Lot 04, Globe House, 4 Temple Place, London, WC2R 2PG, United
Cheraga, Alger, Algeria Kingdom
British American Tobacco (Algérie) S.P.A. (51%)
4 British American Tobacco Holdings Belgium N.V.
Nieuwe Gentsesteenweg 21, 1702 Groot-Bijgaarden, Belgium
Angola
British American Tobacco Belgium N.V.
Viana Park, Polo Industrial, Viana, Luanda, Angola
Benin
British American Tobacco - B.A.T. Angola, Limitada
Sociedade Industrial Tabacos Angola LDA (71.60%) Ilot: 202, Quartier: Sèdjro St Michel, Parcelle: D, Maison: COMTEL
IMMEUBLE
Sociedade Unificada Tabacos Angola LDA (62.67%)
British American Tobacco Benin SA (In Liquidation)
Argentina
Bolivia
San Martín 140, Floor 14, City of Buenos Aires, Argentina
Av. Ballivián entre calles 11 y 12 No. 555, Edificio El Dorial, Piso 19,
BAT Operaciones S.A.U. Oficina E, zona de Calacoto, La Paz, Bolivia
British American Tobacco Argentina S.A.I.C.y F. (99.43%)
BAT Bolivia S.R.L.
Australia
Bosnia and Herzegovina
Level 25, 210 George Street, Sydney, NSW 2000
Fra Dominka Mandića 24A, 88220 Široki Brijeg, Bosnia and
BAT Australasia Ltd Herzegovina
BAT Australia Ltd IPRESS d.o.o.
BAT Australia Overseas Pty Ltd Ul. Fra Andela Zvizdovica 1, 71000 Sarajevo-Novo Sarajevo, Bosnia
BAT Australia Services Ltd and Herzegovina
BAT South Pty Ltd TDR d.o.o. Sarajevo
#
Rothmans Asia Pacific Limited ul. Kolodvorska 12, 71000 Sarajevo-Novo Sarajevo, Bosnia and
The Benson & Hedges Company Pty. Limited Herzegovina
W.D. & H.O. Wills Holdings Limited iNovine BH d.o.o.
Austria Botswana
Dr.-Karl-Lueger-Platz 5, 1010, Wien, Austria Plot 20774 Broadhurst Industrial Estate, Gaborone, Botswana
British American Tobacco (Austria) GmbH British American Tobacco Botswana (Pty) Limited
Bahrain Business Venture Investments Botswana 6773 (Pty) Ltd. (In
Liquidation)
Flat 2115, Building 2504, Road 2832, Block 428 Al Seef Area,
Kingdom of Bahrain Brazil
British American Tobacco Middle East W.L.L. Avenida República do Chile, nº 330, Bloco 1, Torre Leste, 30º
andar, Centro, Rio de Janeiro/RJ - CEP 20.031-170, Brazil
Bangladesh # 11
Instituto Souza Cruz
New DOHS Road, Mohakhali, Dhaka 1206, Bangladesh
Souza Cruz LTDA
British American Tobacco Bangladesh Company Limited (72.91%)
Yolanda Participacoes S.A.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Bulgaria China (People's Republic of)

115 M, Tsarigradsko Shose Blvd., Building D, Floor 5, Sofia, Room 3101, Tower A, Gemdale Viseen Tower, No. 16, Gaoxin
Mladost Municipality, 1784, Bulgaria South 10th Road, High-tech Park, Nanshan District, Shenzhen,
British American Tobacco Trading EOOD People's Republic of China
Nicoventures Technical (Shenzhen) Co., Ltd.
Cambodia
Room 436, No. 1000, Zhenchen Road, Baoshan District, Shanghai,
1121 National Road 2, Prek Tanou Village, Sangkat Chak Ang Re
People's Republic of China
Leu, Khan Mean Chey, Phnom Penh, Kingdom of Cambodia
British American (Shanghai) Enterprise Development Co., Ltd
British American Tobacco (Cambodge) International Limited
British American Nico Business Consulting (Shanghai) Co., Ltd
516, National Road No. 2, Phum Prek Ta Nu, Sangkat Chak Ang Re
Leu, Khan Mean Chey, Phnom Penh, Kingdom of Cambodia Unit 1001 in 901, 9/F, Building 3, No.8 Guanghuadongli, Chaoyang
District Beijing, People’s Republic of China
British American Tobacco (Cambodia) Limited (71%) 8
British American Consulting (Beijing) Co., Ltd
Cameroon
Colombia
BP 259 Douala 620, Rue du Gouverneur Carras (1064), Immeubles
Grassfield 9ème Etage, Douala- Bonanjo Av. Cra. 72 # 80-94 Piso 10. Bogotá, Colombia
British American Tobacco Cameroun S.A. (99.76%) British American Tobacco Colombia S.A.S.
Canada Congo (Democratic Republic of)
30 Pedigree Court, Brampton, Ontario, L6T 5T8, Canada 1er étage, Immeuble du Centenaire, Gombe, Kinshasa,
Democratic Republic of Congo
Imperial Tobacco Canada Limited
British American Tobacco Congo SARL (In Liquidation)
Imperial Tobacco Company Limited
1st floor Immeuble L’horizon sis avenue Colonel Lukusa n°50,
3711 St-Antoine West, Montreal, Quebec, H4C 3P6, Canada
Gombe, Kinshasa, Democratic Republic of Congo
Allan Ramsay and Company Limited
British American Tobacco Import SARL
Cameo Inc.
#2
British American Tobacco Services Congo SARL
Genstar Corporation
Costa Rica
Imperial Brands Limited
325 Metros este del Puente de la Firestone, Llorente, Flores,
Imperial Tobacco Products Limited Heredia, Costa Rica
Imperial Tobacco Services Inc.
BASS Americas S.A.
John Player & Sons Ltd
BATCCA Park Inversiones Immobiliarias, S.A.
3
Liggett & Myers Tobacco Company of Canada Limited (70%) (50%) ^ BATCCA Servicios S.A.
Marlboro Canada Limited Croatia
Medaillon Inc.
Avenija Dubrovnik 16, 10000 Zagreb, Croatia
45 O'Connor Street, Suite 1500, Ottawa, Ontario, K1P 1A4, Canada
BAT HRVATSKA d.o.o. u likvidaciji (In Liquidation)
2004969 Ontario Inc.
Draškovićeva 27, 10000 Zagreb, Croatia
Cayman Islands iNovine d.d. (93.42%)
Trident Trust Company (Cayman) Ltd., One Capital Place, PO Box Obala V. Nazora 1, 52210 Rovinj, Croatia
847, Grand Cayman KY1-1103, Cayman Islands
TDR d.o.o.
R.J. Reynolds Tobacco (CI), Co.
Osječka 2, 33000 Virovitica, Croatia
Chile
Hrvatski Duhani d.d.
Avenida Isidora Goyenechea 3000, Piso 19, Las Condes, Santiago, Chile
Cuba
British American Tobacco Chile Operaciones S.A. (99.51%)
Parcela nº 2 a noroeste do terminal de contêineres de Mariel, a
Inversiones Casablanca S.A. 2,2 km do vértice nº 4, Município de Mariel, Província de
Avenida Suiza 244, Cerrillos, Santiago, Chile Artemisa, Republic of Cuba
BAT Chile S.A. Brascuba Cigarrillos S.A. (50%)
Cyprus
Photiades Business Centre, 5th Floor, 8 Stasinou Avenue, Nicosia,
CY-1060, Cyprus
B.A.T (Cyprus) Limited
Rothmans (Middle East) Limited
Czech Republic
Karolinská 654/2, Prague 8 – Karlín, 186 00, Czech Republic
British American Tobacco (Czech Republic), s.r.o.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Companies and Undertakings

Continued

Subsidiary Undertaking continued Guernsey

Denmark P.O. Box 155, Mill Court, La Charroterie, St Peter Port,
Bernstorffsgade 50, 1577 Copenhagen, Denmark Guernsey GY1 4ET, Guernsey
British American Tobacco Denmark A/S (House of Prince A/S) Belaire Insurance Company Limited
Precis (1789) Denmark A/S Guyana
Djibouti Lot 122 Parade Street, Kingston, Georgetown, Guyana
Rue de Magadiscio, Lot No. 133, Djibouti City, Djibouti Demerara Tobacco Company Limited (70.25%)
British American Tobacco Djibouti SARL (In Liquidation) Honduras
Egypt Boulevard del Sur, Zona El Cacao, San Pedro Sula, Depart. de
Cortés, Honduras
Administrative unit no.1 , 5th Floor, Building S2B, Sector A,
Downtown Mall Katameya, 5th settlement, New Cairo, Egypt Tabacalera Hondureña S.A. (83.64%)
BETCO for General Services and Marketing LLC Hong Kong
BETCO for Trade and Distribution LLC 11/F, One Pacific Place, 88 Queensway, Hong Kong, China
British American Tobacco Egypt LLC British American Tobacco China Investments Limited
British American Tobacco North Africa LLC (In Liquidation) Lehman, Lee & XU Corporate Services, Suite 3313, Tower One,
Times Square, 1 Matheson Street, Causeway Bay, Hong Kong,
English American Company for Importation and Trade L.L.C (In China
Liquidation)
Reynolds Asia-Pacific Limited
Eritrea
Level 30, 3 Pacific Place, 1 Queen's Road East, Wanchai, Hong
P.O. Box 749, 62 Fel Ket Street, Asmara, Eritrea Kong, China
#
British American Tobacco (Eritrea) Share Company BAT Global Travel Retail Limited
Estonia British American Tobacco Asia-Pacific Region Limited
Tornimäe 7-10, 10145 Tallinn, Estonia British-American Tobacco Company (Hong Kong) Limited
British American Tobacco Estonia AS Nicoventures Business Consulting (Hong Kong) Co., Ltd.
Fiji Hungary
Lady Maria Road, Nabua, Suva, Fiji HU 1117 Budapest, Alíz utca 3. 6. floor
British American Tobacco (Fiji) Marketing Pte Limited (In Liquidation) BAT Pécsi Dohánygyár Korlátolt Felelosségu Társaság
Central Manufacturing Company Pte Limited Indonesia
Rothmans of Pall Mall (Fiji) Pte Limited Capital Place Office Tower, 6th Floor, Jl. Gatot Subroto Kav.
Finland 18, Jakarta 12710, Indonesia
c/o Retail24, Olarinluoma 7, 02200 Espoo, Finland PT Bentoel Internasional Investama, Tbk (99.96%)
British American Tobacco Finland Oy Jl. Raya Karanglo, 1 Desa Banjararum, Kecamatan Singosari,
France Jawa Timur 65153, Indonesia
4
111 Avenue Victor Hugo, 75016 Paris, France PT Bentoel Prima (99.99%)(99.96%) ^
Carreras France SAS Jl. Susanto No. 2B, Ciptomulyo, Sukun, Malang, Jawa Timur
65148, Indonesia
Tour Légende, 20 place de la Défense, CS 80289, 92050 Paris La
Défense Cedex, France PT Bentoel Distribusi Utama (100%) (99.96%) ^
British American Tobacco France SAS Iraq

Germany Empire Business Tower, Building C5, 2nd floor, Erbil, Kurdistan
Region of Iraq
Alsterufer 4, 20354 Hamburg, Germany
B.A.T. Iraqia Company for Tobacco Trading Limited
BATIG Gesellschaft fur Beteiligungen m.b.H.
Ireland
British American Tobacco (Germany) GmbH
Suite D, 2nd Floor, The Apex Building, Blackthorn Road, Sandyford
British American Tobacco (Industrie) GmbH Industrial Estate, Dublin 18, Republic of Ireland
Schutterwälder Straße. 23, 01458 Ottendorf-Okrilla, Germany
Carroll Group Distributors Limited
Quantus Beteiligungs-und Beratungsgesellschaft mbH i.L (In
Liquidation) P.J. Carroll & Company Limited
#5
Rothmans of Pall Mall (Ireland) Limited
Ghana
Isle of Man
4th Floor, Volta Place, Airport Residential Area, Patrice Lumumba
Street, Accra, Ghana 2nd Floor, St Mary’s Court, 20 Hill Street, Douglas, IM1 1EU,
Isle of Man
British American Tobacco (Ghana) Limited (97.09%)
Abbey Investment Company Limited
Greece
The Raleigh Investment Company Limited
27, Ag. Thoma Street, Maroussi, 151 24, Greece
Tobacco Manufacturers (India) Limited
British American Tobacco Hellas S.A.

314
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Italy Kosovo, Republic of

Località Bagnoli della Rosandra, snc, 34018 San Dorligo della Valle Llapllaselle p.n., 10500 Gracanicë, Republic of Kosovo
(TS), Italy British American Tobacco Kosovo SH.P.K.
BAT Trieste S.p.A. Kuwait
Via Amsterdam 147, 00144 Rome, Italy Unit 21, 35th Floor, Al Hamra Tower, Al Shuhada St. Kuwait City,
British American Tobacco Italia S.p.A. Kuwait
Ivory Coast BAT Kuwait for Wholesale and Retail Trading Company (S.P.C)
Rue des Jardins -Immeuble Sayegh-Mezzanine, Abidjan, Cocody Latvia
2 plateaux, Côte d'Ivoire Mukusalas iela 101, Riga LV-1004, Latvia
British American Tobacco RCI SARL British American Tobacco Latvia SIA
Jamaica Lesotho
13A Ripon Road, Kingston 5, Jamaica Mohokare Industrial Estate, Florida Area Extention, Ha Hoohle,
13
Carreras Limited (50.40%) Maseru, 100, Lesotho
13
Sans Souci Development Limited (100%) (50.40%) (In Liquidation) ^ British American Tobacco Lesotho (Pty) Ltd
13
Sans Souci Limited (100%) (50.40%) (In Liquidation) ^ Lithuania
Japan J. Galvydžio g. 11-7, LT-08236 Vilnius, Lithuania
Midtown Tower 20F, 9-7-1 Akasaka, Minato-ku, Tokyo, Japan UAB British American Tobacco Lietuva
10
British American Tobacco Japan, Ltd. Luxembourg
Jersey 1, Rue Jean Piret, 2350 Luxembourg, Grand Duchy of Luxembourg
22 Grenville Street, St Helier, JE4 8PX, Jersey British American Tobacco Brands (Switzerland) Limited
Pathway 5 (Jersey) Limited Malawi
Jordan Northgate Arcade Complex, Masauko Chipembere Highway,
Airport Road, Al Qastal Industrial Area, Air Cargo Road, Amman, Blantyre, Malawi.
Jordan British American Tobacco (Malawi) Limited
British American Tobacco – Jordan Private Shareholding Malaysia
Company Limited
12th Floor, Menara Symphony, No. 5, Jalan Prof Khoo Kay Kim,
Kazakhstan Seksyen 13, 46200, Petaling Jaya, Selangor Darul Ehsan, Malaysia
240G, Nursultan Nazarbayev Avenue, A26F8D4 Almaty, Republic British American Tobacco GSD (Kuala Lumpur) Sdn Bhd
of Kazakhstan
1 Level 11, Sunway Geo Tower, Jalan Lagoon Selatan, Sunway South
British American Tobacco Kazakhstan Trading LLP Quay, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan,
Kenya Malaysia
8 Likoni Road, Industrial Area, P.O. Box 30000-00100, Nairobi, BAT Aspac Service Centre Sdn Bhd
Kenya Level 19, Guoco Tower, Damansara City, No. 6 Jalan Damanlela,
BAT Kenya Tobacco Company Limited (100%) (60%) ^ Bukit Damansara, 50490 Kuala Lumpur, Malaysia
British American Tobacco Area Limited British American Tobacco (Malaysia) Berhad (50%)
11
British American Tobacco Kenya plc (60%) British American Tobacco Malaysia Foundation
East African Tobacco Company (Kenya) Limited (60%) (In Commercial Marketers and Distributors Sdn. Bhd. (100%) (50%) ^
Liquidation) Tobacco Importers and Manufacturers Sdn. Bhd. (100%) (50%) ^
Korea, Republic of Mali
141, Gongdan1-ro, Sanam-Myun, Sacheon City, Kyungsangnamdo, Djelibougoud-Immeuble Bassaro BP 2065, Bamako, Mali
Korea (the Republic of) British American Tobacco (Mali) Sarl
British American Tobacco Korea Manufacturing Limited Malta
22nd FL. West Tower, MiraeAssetCENTER1, 26, Eulji-ro 5-gil, PM Building, Level 2, Bone Street, Zone 1, Central Business
Jung-gu, Seoul, Korea (the Republic of) District, Birkirkara, CBD 1060, Malta
British American Tobacco Korea Limited British American Tobacco (Malta) Limited
Central Cigarette Company Limited
Rothmans of Pall Mall (Malta) Limited

315
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Companies and Undertakings

Continued

Subsidiary Undertaking continued New Zealand

Mexico 2 Watt Street, Parnell, Auckland, 1052, New Zealand
Constitucion 411, piso 22, 23 y 24, Colonia Centro, Monterrey, BAT (New Zealand) Limited
Nuevo Leon, C.P. 64000, Mexico BAT Holdings (New Zealand) Limited
4
BAT DBS Mexico S.A De C.V. Mint Advisory Limited, Suite 6, 8 Turua Street, St Heliers,
Francisco I Madero 2750 Poniente, Colonia Centro, Monterrey, Auckland, 1071, New Zealand
#
Nuevo León, C.P. 64000, Mexico New Zealand (UK Finance) Limited
British American Tobacco Mexico Comercial, S.A. de C.V. Nigeria
British American Tobacco Mexico, S.A. de C.V. 1, Tobacco Road, Oluyole Local Government Area, Ibadan, Oyo
Cigarrera La Moderna, S.A. de C.V. State, Nigeria
Predio Los Sauces Sin número, Colonia Los Sauces, C.P. 63197, British American Tobacco (Nigeria) Limited
Tepic, Nayarit, Mexico 2 Olumegbon Road, Ikoyi, Lagos, Nigeria
Procesadora de Tabacos de Mexico, S.A. de C.V. (93%) British American Tobacco Marketing Nigeria Limited (80%)
Rio Missouri 555, Colonia del Valle, San Pedro Garza García, British American Tobacco Nigeria Foundation (Limited by
11
Nuevo León, C.P. 66220, México Guarantee)
British American Tobacco Servicios S.A. de C.V. North Macedonia, Republic of
Mozambique Blvd. 8-mi SEPTEMVRI No. 18, 1000 Skopje, Republic of North
2289 Avenida de Angola, Maputo, Mozambique Macedonia
British American Tobacco Mozambique Limitada (95%) TDR SKOPJE DOOEL Skopje
Myanmar Norway
Min Aye Yar Street, Plot No. (55, 56), Survey Ward No. (14) Shwe Dronning Eufemias gate 42. 0191 Oslo, Norway
Than Lwin Industrial Zone, Hlaing Tharyar Township Yangon British American Tobacco Norway AS
Region, Myanmar
Pakistan
British American Tobacco Myanmar Limited (95%) (In
Liquidation)
13 Bun Khurma Chichian Road, Mirpur Azad Jammu & Kashmir,
Pakistan
British American Tobacco Myanmar Services Limited (In
Liquidation)
13 Phoenix (Private) Limited (100%) (94.65%) ^
Namibia First Floor, 26-FCC, Syed Maratab Ali Road, Gulberg IV, Lahore,
Pakistan
Shop 48, Second Floor Old Power Station Complex, Armstrong
Street, Windhoek, Namibia British American Tobacco SAA Services (Private) Limited
British American Tobacco Namibia (Pty) Limited Serena Business Complex. Khayaban-e-Suhrwardy, Islamabad,
Pakistan
Netherlands
Pakistan Tobacco Company Limited (94.65%)
Handelsweg 53 A, 1181 ZA, Amstelveen, Netherlands
Panama
Aruba Properties B.V.
Calle 54, Obarrio, PH Twist Tower, Piso 22, Oficina E-22,
B.A.T. Nederland B.V. Corregimiento Bella Vista, Ciudad de Panamá, Panama
B.A.T. Netherlands Finance B.V. British American Tobacco Central America S.A. (87.65%)
British American Tobacco European Operations Centre B.V. British American Tobacco Panama S.A.
British American Tobacco Exports B.V. Tabacalera Istmeña S.A.
British American Tobacco Holdings (Australia) B.V.
Vía Fernández de Córdoba, Corregimiento of Pueblo Nuevo,
British American Tobacco Holdings (Malaysia) B.V. Panama City, Panama
British American Tobacco Holdings (South Africa) B.V. BAT Caribbean, S.A.
British American Tobacco Holdings (The Netherlands) B.V. Papua New Guinea
British American Tobacco Holdings (Venezuela) B.V. Ashurst Png, Level 11 Mrdc Haus, Cnr Of Musgrave Street And
British American Tobacco Holdings (Vietnam) B.V. Champion Parade, Port Moresby, National Capital District, Papua
British American Tobacco International (Holdings) B.V. New Guinea
Molensteegh Invest B.V. British American Tobacco (PNG) Limited
Precis (1790) B.V. Rothmans of Pall Mall (P.N.G.) Limited
Rothmans Far East B.V. Paraguay
Rothmans International Holdings B.V. Roque Centurion Miranda 1635, AYMAC II, Piso 2, Asunción,
Paraguay
Rothmans Tobacco Investments B.V.
British American Tobacco Productora de Cigarrillos S.A.
Rothmans UK Holdings B.V.

316
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Peru Rwanda
Av. El Derby N° 055, Torre 3, Oficinas 405-406-407-408, Urb. SORAS Building, Boulevard de la Revolution P.O Box 650 Kigali,
Lima Polo and Hunt Club, Santiago de Surco, Lima, Peru Rwanda
British American Tobacco del Peru Holdings S.A. (98.55%)
#6
British American Tobacco Rwanda Limited
British American Tobacco del Peru, S.A.C. Saint Lucia
Philippines c/o ADCO Incorporated, 10 Manoel Street, Castries, Saint Lucia
31 Tayuman Street, Tonda, Manila, Philippines Carisma Marketing Services Ltd
Alhambra Industries Inc.
#
Pointe Seraphine, Castries, Saint Lucia
Poland Rothmans Holdings (Caricom) Ltd.
Aleja Wojska Polskiego 23c, 63-500, Ostrzeszow, Poland Samoa
CHIC sp. z o.o Vaitele Estate, Vaitele, Samoa
ESMOKING LIQUIDS SP. Z O.O British American Tobacco Company (Samoa) Limited
Krakowiakow 48, 02-255, Warszawa, Poland Saudi Arabia, Kingdom of
British American Tobacco Polska Trading sp. zo.o. Building No:7051 Al Amir Sultan-Al Salamah District, Zahran
Business Cente 13th Floor, Unit 1302. Jeddah 23525 - 2661, Saudi
Puławska 180, 02-670, Warszawa, Poland Arabia
BAT DBS Poland sp. Z.o.o. BAT Arabia for Trading
Rubiez 46, 61-612, Poznan, Poland BAT Saudia for Trading
eSMOKING INSTITUTE sp. z o.o.
Office Pending
ul. IŁŻECKA 26E, 02-135WARSZAWA, Poland
Regional HQ of British American Tobacco Middle East - Single
Nicoventures Poland sp. Z.o.o. (In Liquidation) Person Company
Ul. Tytoniowa 16, 16-300, Augustow, Poland Serbia
British-American Tobacco Polska S.A. Bulevar Milutina Milankovića 1ž, Belgrade, 11070, Serbia
Portugal British American Tobacco South-East Europe d.o.o. Beograd
Edificio Amoreiras Square, Rua Carlos Alberto da Mota Pinto 17, Kralja Stefana Provenčanog 209, Vranje, 17500, Serbia
3e A, 1070-313, Amoreiras, Lisboa, Portugal
British American Tobacco Vranje a.d. Vranje
COTAPO Empreendimentos Commerciais e Industriais S.A.
Singapore
Sociedade Unificada de Tabacos Limitada (76.40%)
15 Senoko Loop, 758168, Singapore
Qatar
British-American Tobacco (Singapore) Private Limited
61 Al Funduq St., Al Dafna, 8th floor – AL Fardan Office Tower,
P.O Box 31316, Doha, Qatar 8 Marina Boulevard, #10-01 Marina Bay Financial Centre Tower 1,
Singapore 018981
BAT Gulf for Trading LLC
British American Tobacco Sales & Marketing Singapore Pte. Ltd.
P.O. Box 6689, 41 Floor, Tornado Tower, West Bay, Doha, Qatar
British-American Tobacco Marketing (Singapore) Private Limited
British American Tobacco Q LLC
Shenton Way, #33-00 OUE Downtown, 068809, Singapore
Réunion #
RHL Investments Pte Limited (In Liquidation)
5, Immeuble Cap, Avenue Théodore Drouhet, ZAC Horizon 2000,
Le Port, 97420, IIe de la Réunion Solomon Islands
B.A.T. La Réunion SAS Kukum Highway, Ranadi, Honiara, Honiara, Solomon Islands
Romania Solomon Islands Tobacco Company Limited
319 Splaiul Independentei, Sema Parc “City Building”, 1st Floor,
6th Sector, Bucharest, Romania
British American Shared Services (Europe) S.R.L.
319 Splaiul Independentei, Sema Parc “City Building”, 6th Floor,
6th Sector, Bucharest, Romania
British American GBS Recruitment S.R.L.
Bucharest Business Park, Building A (3rd floor) and Building B2
( floors 3-4), 1A Bucuresti - Ploiesti (DN1) Road, Sector 1,
Bucharest 013681, Romania
British American Tobacco (Romania) Trading SRL
Ploiesti, 17-19 Laboratorului Street, Prahova County, Romania
British-American Tobacco (Romania) Investment S.R.L.

317
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Companies and Undertakings

Continued

Subsidiary Undertaking continued Switzerland

South Africa c/o Bright Law AG, Bundesplatz 9, 6302 Zug, Switzerland
Waterway House South, 3 Dock Road, V&A Waterfront, Cape British American Tobacco International Limited (In Liquidation)
Town, Western Cape 8002, South Africa c/o British American Tobacco Switzerland S.A., Route de France
Agrega EEMEA (Pty) Ltd (In Liquidation) 17, 2926 Boncourt, Switzerland
Amalgamated Tobacco Corporation (South Africa) (Pty) Ltd (In American-Cigarette Company (Overseas) Limited
Liquidation) BAT Switzerland Vending SA
American Cigarette Company (Overseas) (Pty) Ltd Rothmans of Pall Mall Limited
Benson and Hedges (Pty) Ltd (In Liquidation) c/o NBA Fiduciaire S.A., Route de la Glâne 107, 1752 Villars-sur-
British American Shared Services Africa Middle East (Pty) Ltd (In Glâne, Switzerland
Liquidation) Intertab S.A. (50%)
British American Tobacco GSD (South Africa) (Pty) Ltd (In Liquidation) Route de France 17, 2926 Boncourt, Switzerland
#
British American Tobacco Holdings South Africa (Pty) Ltd British American Tobacco Switzerland S.A.
British American Tobacco Properties South Africa (Pty) Ltd. Nicoventures Communications (Switzerland) SA
British American Tobacco Services South Africa (Pty) Ltd Tanzania
British American Tobacco South Africa (Pty) Ltd Acacia Estate Building, Kinondoni Road, P.O Box 288, Dar es
British American Tobacco Sub-Saharan Africa (Pty) Ltd Salaam, Tanzania
Brown & Williamson Tobacco Corporation (Pty) Ltd (In Liquidation) BAT Distribution Tanzania Limited
Business Venture Investments No 216 (Pty) Ltd (In Liquidation) British American Tobacco (Tanzania) Limited (In Liquidation)
Rothmans of Pall Mall London (Pty) Ltd (In Liquidation) International Cigarette Distributors Limited (99%) (In Liquidation)
St Regis Tobacco Corporation (Pty) Ltd (In Liquidation) Zanzibar Distribution Company Limited (99%) (In Liquidation)
Tobacco Research and Development Institute (Pty) Ltd Trinidad and Tobago
Twisp (Pty) Ltd Corner Eastern Main Road and Mt. D’or Road, Champs Fleurs,
Trinidad and Tobago
Westminster Tobacco Company (Cape Town and London) (Pty)
Ltd (In Liquidation) The West Indian Tobacco Company Limited (50.13%)
Winfield Tobacco Corporation (Pty) Ltd (In Liquidation) Türkiye
Spain Orjin Maslak İş Merkezi, Eski Büyükdere Caddesi, Kat 9-10,
Maslak, Sarıyer, İstanbul
Torreo Espacio, Paseo de la Castellana, 259D, 28046 Madrid,
Spain British American Tobacco Tütün Mamulleri Sanayi ve Ticaret
Anonim Sirketi
British American Tobacco España, S.A.
Uganda
Sri Lanka
10th Floor, Lotis Towers, Plot 16 Mackinnon Road, Nakasero,
178 Srimath Ramanathan Mawatha, Colombo, 15, Sri Lanka
Kampala, Uganda
Ceylon Tobacco Company Plc (84.13%)
British American Tobacco Uganda Limited (90%)
Sudan
Ukraine
Byblos Tower, Al-Muk Nemer Street, Postal Code 11111, P.O Box
1381, Khartoum, Sudan 13-15 Bolsunovska Str, Kyiv, 01014, Ukraine
#1
Blue Nile Cigarette Company Limited LLC “British American Tobacco Sales and Marketing Ukraine”
Swaziland 21 Nezalezhnosti Str, Chernihiv Oblast, Prylucky, 17502, Ukraine
213 King Mswati III Avenue West, Matsapha Industrial Site, PJSC “A/T B.A.T. – Prilucky Tobacco Company”
Matsapha, Swaziland
United Arab Emirates
British American Tobacco Swaziland (Pty) Limited
2302-08, Smart Heights, Al Thanyah First, Dubai, United Arab
Sweden Emirates
Hyllie Boulevard 32, 215 32 Malmö, Sweden
BAT Middle East For Trading L.L.C.
Niconovum AB
Jumeirah Business Centre 3, 37th Floor, Jumeirah Lake Towers,
Stenåldersgatan 23, 213 76 Malmö, Sweden Dubai, P.O. Box 337222, United Arab Emirates
Fiedler & Lundgren AB British American Tobacco GCC DMCC
Västra Trädgårdsgatan 15, 11153 Stockholm, Sweden Jumeirah Business Centre 3, 38th Floor, Jumeirah Lake Towers,
British American Tobacco Sweden AB Dubai, P.O. Box 337222, United Arab Emirates
British American Tobacco ME DMCC
Unit # 2680, DMCC Business Center- Level # 1, Jewellery &
Gemplex 3, Dubai, United Arab Emirates
British American Tobacco International DMCC

318
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

United Kingdom Lord Extra Limited (In Liquidation)

212-218 Upper Newtownards Road, Belfast, BT4 3ET, Northern Ireland Myddleton Investment Company Limited
Murray, Sons & Company, Limited Nicovations Limited
7 More London, Riverside, London, SE1 2RT, United Kingdom Nicoventures Holdings Limited
Ryesekks P.L.C. (50%) (In Liquidation) Nicoventures Trading Limited
Building 7, Chiswick Business Park, 566 Chiswick High Road, Powhattan Limited
London, W4 5YG, United Kingdom Precis (2396) Limited (In Liquidation)
10 Motives Limited Ridirectors Limited
British American Tobacco UK Limited Rothmans Exports Limited
Nicoventures Retail (UK) Limited Rothmans International Limited
Ten Motives Limited Rothmans International Services Limited (In Liquidation)
Globe House, 1 Water Street, London, WC2R 3LA, United Kingdom Rothmans International Tobacco (UK) Limited
Advanced Technologies (Cambridge) Limited (In Liquidation) Rothmans of Pall Mall (Overseas) Limited (In Liquidation)
Allen & Ginter (UK) Limited Rothmans Trading Limited (In Liquidation)
B.A.T (U.K. and Export) Limited Ryservs (1995) Limited
B.A.T Cambodia (Investments) Limited Ryservs (No.3) Limited
B.A.T Far East Holding Limited (In Liquidation) The Water Street Collective Limited
B.A.T Far East Leaf Limited (In Liquidation) Tobacco Exporters International Limited
B.A.T Services Limited Tobacco Marketing Consultants Limited
B.A.T Uzbekistan (Investments) Limited Venezuela Property Company Limited
B.A.T Vietnam Limited Westanley Trading & Investment Company Limited
B.A.T. (Westminster House) Limited (In Liquidation) Westminster Tobacco Company Limited
B.A.T. China Limited Globe House, 2 Milford Lane, London, WC2R 3LN, United Kingdom
BAT Finance COP Limited World Investment Company Limited (In Liquidation)
BATIF Dollar Limited Globe House, 4 Temple Place, London, WC2R 2PG, United Kingdom
BATUS Limited Amalgamated Tobacco Company Limited
Big Ben Tobacco Company Limited American Cigarette Company (Overseas) Limited
British American Shared Services (GSD) Limited Ardath Tobacco Company Limited
British American Shared Services Limited B.A.T Additional Retirement Benefit Scheme Trustee Limited
British American Tobacco (AIT) Limited B.A.T Industries p.l.c.
British American Tobacco (GLP) Limited B.A.T. International Finance p.l.c. *
British American Tobacco (Investments) Limited B.A.T. Operating Finance Limited
British American Tobacco (Philippines) Limited BATMark Limited *
British American Tobacco (Serbia) Limited (In Liquidation) BATLaw Limited
British American Tobacco (South America) Limited BATS Limited
British American Tobacco China Holdings Limited Benson & Hedges (Overseas) Limited
British American Tobacco Exports Limited British American Global Shared Services Limited
British American Tobacco Georgia Limited British American Tobacco (1998) Limited *
British American Tobacco Global Travel Retail Limited British American Tobacco (2009 PCA) Limited
British American Tobacco International Holdings (UK) Limited British American Tobacco (2009) Limited
#

British American Tobacco Investments (Central & Eastern British American Tobacco (2012) Limited
Europe) Limited
British American Tobacco (Brands) Limited
British American Tobacco Italy Investments Limited (In Liquidation)
British American Tobacco (Corby) Limited
British American Tobacco Italy Limited (In Liquidation)
British American Tobacco (NGP) Limited
British American Tobacco Korea (Investments) Limited
British American Tobacco Healthcare Trustee Limited
British American Tobacco Malaysia (Investments) Limited (In British American Tobacco Taiwan Logistics Limited
Liquidation)
British-American Tobacco (Holdings) Limited
British American Tobacco Peru Holdings Limited
13 Brown & Williamson Tobacco Corporation (Export) Limited
British American Tobacco UK Pension Fund Trustee Limited
Btomorrow Ventures Limited
British-American Tobacco (Mauritius) p.l.c.
# Carreras Limited
Carreras Rothmans Limited
Courtleigh of London Limited
Chelwood Trading & Investment Company Limited
Dunhill Tobacco of London Limited
East African Tobacco Company (U.K.) Limited (In Liquidation)
John Sinclair Limited
KBio Holdings Limited

319
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Financial Statements

Group Companies and Undertakings

Continued

Subsidiary Undertaking continued Reynolds Technologies, Inc.

United Kingdom continued RJR Realty Relocation Services, Inc.
#1
Louisville Securities Limited RJR Vapor Co., LLC
#1
Moorgate Tobacco Co. Limited Rosswil LLC
Peter Jackson (Overseas) Limited S.F. Imports, Inc.
Precis (1789) Limited Santa Fe Natural Tobacco Company, Inc.
Precis (1814) Limited
# Spot You More, Inc.
#1
Rothmans International Enterprises Limited The Water Street Collective LLC
#1
Rothmans of Pall Mall Limited Vuse Stores LLC
Senior Service (Overseas) Limited 4583 Guthrie Hwy, Clarksville, TN 37040, United States
#1
South Western Nominees Limited (In Liquidation) American Snuff Company, LLC
The London Tobacco Company Limited CSC-Lawyers Incorporating Service, 2710 Gateway Oaks Drive,
Suite 150N, Sacramento CA 95833-3505, United States
Tobacco Insurance Company Limited (In Liquidation)
Genstar Pacific Corporation
Weston (2009) Limited
# Farmers Bank Building, Suite 1402, 301 N. Market Street,
Weston Investment Company Limited
Wilmington, DE 19801, United States
United States
Reynolds Finance Company
251 Little Falls Drive, Wilmington, DE 19808, United States
Uruguay
B.A.T Capital Corporation
Juncal 1392, Montevideo, Uruguay
BATUS Holdings Inc.
Kellian S.A.
BATUS Japan, Inc.
Uzbekistan
BATUS Retail Services, Inc.
77 Minor Passage, Tashkent, 100084, Uzbekistan
British American Tobacco (Brands), Inc.
JSC JV “UZBAT A.O.” (97.38%)
Brown & Williamson Holdings, Inc.
Venezuela
BT DE Investments Inc. Avenida Francisco de Miranda, Edif. Torre Chacao 1902, Piso PB,
#1
BTI 2014 LLC Of. PB, Urb. Chacao, Caracas - Estado Miranda, 1060, Venezuela
BTomorrow Services Inc. Proyectos de Inversion BAT 1902 C.A.
Imasco Holdings Group, Inc. Avenida Francisco de Miranda, Edificio Bigott, Los Ruices,
Imasco Holdings, Inc. Caracas – Estado Miranda, 1070, Venezuela
ITL (USA) Limited Agrobigott, C.A.
Louisville Corporate Services, Inc. Compania Anonima Cigarrera Bigott Sucesores
Nicoventures U.S. Limited Distribuidora Bigott, C.A.
3700 Airpark Dr., Owensboro, KY 42301, United States Fundacion Bigott
# 11

KBio Inc. Calle del Centro, Edif. Torre Mega IV, Piso 9, Of. A y B, Urb. Los
401 N. Main Street, Winston-Salem, NC 27101, United States Dos Caminos, Caracas - Estado Miranda, 1071, Venezuela.
Conwood Holdings, Inc. Agrega de Venezuela, Agreven, C.A. (50%) (In Liquidation)
#1
EXP Homes, LLC Vietnam
#1
Lorillard Licensing Company LLC 20/F MPlaza Saigon, 39 Le Duan Street, Ben Nghe ward,
Lorillard, LLC
#1 District 1, Ho Chi Minh City, Vietnam
8
Modoral Brands Inc. East Asia Area Services Company Limited
Northern Brands International, Inc. Area 8, Long Binh Ward, Bien Hoa City, Dong Nai Province, Vietnam
R. J. Reynolds Global Products, Inc. British American Tobacco – Vinataba (JV) (70%)
R. J. Reynolds Tobacco Company Lot 45C/I, Road #7, Vinh Loc Industrial Park, Binh Chanh District,
Ho Chi Minh City, Vietnam
R. J. Reynolds Tobacco International, Inc.
VINA-BAT Joint Venture Company Limited (49%)
R. J. Reynolds Vapor Company
Zambia
R.J. Reynolds Tobacco Co.
Plot No. PH1 IND & 53 & 54, LS-MFEZ, Chifwema Road, Lusaka, Zambia
R.J. Reynolds Tobacco Holdings, Inc.
British American Tobacco (Zambia) plc (75%)
RAI Innovations Company
Zimbabwe
RAI International, Inc.
Manchester Road 1, Southerton, Harare, Zimbabwe
RAI Services Company
American-Cigarette Company (Overseas) (Private) Ltd
RAI Strategic Holdings, Inc.
British American Tobacco Zimbabwe (Holdings) Limited (42.98%)
Reynolds American Inc.
Reynolds Brands Inc. Rothmans Limited (In Liquidation)
Reynolds Marketing Services Company

320
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Associated Undertakings and Joint Ventures Sweden

Canada c/o JTI Sweden AB Sveavägen 53 113 60 Stockholm
9, 18
2800 Park Place, 666 Burrard Street, Vancouver, BC, V6C 2Z7, SUP Filter Producentansvar Sverige AB (33%)
Canada United Kingdom
17, 18
Charlotte's Web Holdings, Inc. (19.90%) 4a Station Parade, Uxbridge Road, London, W5 3LD, United
35 English Drive, Moncton, New Brunswick, E1E 3X3, Canada Kingdom
14
Organigram Holdings Inc. (18.79%)
15
AYR Limited (13.14%)
Czech Republic United States
Na strži 1702/65, Nusle, 140 00 Praha 4, Czech Republic 12 Timber Creek Land, Newark, Delaware, 19711, United States
4, 9, 18 # 12
NEVAJGLUJ a.s. (28%) Steady State LLC (10.80%)
Finland 11760 Sorrento Valley Road, Suite A, San Diego, CA 92121
#7
c/o YTL-Palvelu Oy Eteläranta 10 00130 Helsinki ZabBio, Inc (49%)
Suomen SUP-Tuottajayhteisö Oy (Finnish SUP Producer Group 8022 Southpark Circle Suite 500, Littleton, CO 80120, United
9, 18
Ltd) (20%) States
# 12
DeFloria LLC (20%)
88 Avenue des Ternes, 75017, Paris, France Uzbekistan
9, 18
Alcome SAS (24%) Gulobod Village, Samarkand Region, 140100, Uzbekistan
Germany FE "Samfruit" JSC (45.40%)
Jägerstraße 28-31, 10117 Berlin, Germany Yemen
# 12
Sanity Group GmbH (16.30%) P.O. Box 14, Sanna, Yemen
17
Greece Kamaran Industry and Investment Company (31%)
Vrana 25, 115 25, Athens, Greece P.O. Box 5302, Hoban, Taiz, Yemen
17
Alternative Management of Tobacco Products Filters Societe United Industries Company Limited (32%)
9, 15, 18
Anonyme (17.50%)
Hungary Joint Operations
H-6800 Hódmezóvásárhely, Erzsébeti út 5/b, Hungary Hong Kong
9
Országos Dohányboltellátó Korlátolt Felelosségu Társaság (49%) 29/F, Oxford House, 979 King’s Road, Taikoo Place, Quarry Bay,
India Hong Kong, China
1-7-1063/1065, Azamabad, Andhra Pradesh, Hyderabad, 500 020, CTBAT International Co. Limited (50%)
India Notes:
13
VST Industries Limited (32.16%) 1. Ownership held in Membership Interest.
2. Ownership held in the class of Series F and 2nd Preferred Shares.
Virginia House, 37, J.L. Nehru Road, Kolkata, 700071, India 3. Ownership held in the class of A Shares (50%) and class of B Shares (100%).
13 4. Ownership held in class of A Shares and B Shares.
ITC Limited (29.01%)
5. Ownership held solely in class of Preference Shares.
Italy 6. Ownership held in class of Ordinary and Investment Shares.
7. Ownership held in 49% Share Sapital and 39% Voting Rights.
Via Messina 38 20154 Milano (MI), Italy
8. Ownership held in Registered Capital.
9, 15, 18
Erion Care (25%) 9. Ownership held in Voting Shares.
10. Ownership held in Equity Units.
Slovakia 11. Entity type: Foundation, Non-Profit or Limited by Guarantee.
Vajnorská 10645/100, 831 04 Bratislava - mestská časť -Nové 12. Ownership held in Preferred shares.
Mesto, Slovenská republika 13. 31 March year-end.
14. 31 May year-end.
9, 18
SPAK-EKO, a.s. 15. 30 September year-end.
16. 16 July year-end.
17. Refer to Accounting Note 14: Investments in associates and joint ventures.
18. Accounted for as an investment at fair value through profit and loss.

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Other Information

Additional Disclosures

Additional Disclosures
Information on the Group .......................................................................................................................................................................................................................…. 331
Selected Financial Information ............................................................................................................................................................................................................…. 332
Non-Financial Measures ...............................................................................................................................................................................................................….......…. 333
Non-GAAP Measures ...............................................................................................................................................................................................................….............…. 335
Employees ...............................................................................................................................................................................................................….............…......................... 350
Additional Disclosures on Liquidity and Capital Resources ..................................................................................................................................................... 351
Summary of Group Risk Factors .............................................................................................................................................................................................................. 353
Group Risk Factors ...............................................................................................................................................................................................................….............…....... 354
Regulation of the Group’s Business ...................................................................................................................................................................................................… 375
Material Contracts ...............................................................................................................................................................................................................….............…....... 380
Property, Plant and Equipment ............................................................................................................................................................................................................... 382
Raw Materials ...............................................................................................................................................................................................................….............…................. 382
U.S. Corporate Governance Practices ..................................................................................................................................................................................................383
Controls and Procedures ...............................................................................................................................................................................................................…......…. 384
Statements Regarding Competitive Position ................................................................................................................................................................................. 384
Directors’ Report Information ...............................................................................................................................................................................................................… 385
Cautionary Statement ...............................................................................................................................................................................................................….............… 386
Shareholder Information
Share Prices and Listings ...............................................................................................................................................................................................................….......... 387
Dividends ...............................................................................................................................................................................................................….............…............................ 388
Shareholder Taxation Information ......................................................................................................................................................................................................... 390
Share Capital and Security Ownership ............................................................................................................................................................................................... 394
Articles of Association ...............................................................................................................................................................................................................….............… 396
Purchase of Shares ...............................................................................................................................................................................................................….............…....... 399
Group Employee Trust ...............................................................................................................................................................................................................…................ 400
American Depositary Shares ...............................................................................................................................................................................................................….. 401
Shareholding Administration and Services ....................................................................................................................................................................................... 402
Exhibits ...............................................................................................................................................................................................................….............…................................ 403
Other Information
Glossary ...............................................................................................................................................................................................................….............….............................. 406
Cross-Reference to Form-20F ............................................................................................................................................................................................................…. 407

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Information on the Group

Overview – 2015 – acquisition of the shares not already owned by the Group
British American Tobacco p.l.c. is the parent holding company of in Souza Cruz in Brazil, the acquisition of the CHIC Group in
the Group, a leading multi-category consumer goods business that Poland, the acquisition of TDR d.o.o., a cigarette manufacturer in
provides tobacco and nicotine products to millions of consumers Central Europe. Also in 2015, the Group increased its investment
around the world. in Reynolds American Inc. by US$4.7 billion to maintain the
Group’s approximate 42% equity position following Reynolds
The Group, excluding the Group’s associated undertakings,
American Inc.’s purchase of Lorillard Inc.;
is organised into three regions:
– 2016 – acquisition of Ten Motives in the UK;
– the United States of America (Reynolds American Inc.);
– 2017 – acquisition of the remaining 57.8% of Reynolds American
– Americas and Europe (AME); and
Inc. the Group did not already own. Following completion of the
– Asia-Pacific, the Middle East and Africa (APMEA). acquisition, Reynolds American Inc. became an indirect, wholly-
The Group’s range of combustible products covers all segments, owned subsidiary of BAT and is no longer a publicly-held
from value-for-money to premium, with a portfolio of international, corporation. In 2017, the Group also acquired certain tobacco
regional and local tobacco brands to meet a broad array of adult assets from Bulgartabac Holding AD in Bulgaria and Fabrika
tobacco consumer preferences wherever the Group operates. Duhana Sarajevo (FDS) in Bosnia, acquired Winnington Holdings
The Group has also built a portfolio of smokeless tobacco and AB in Sweden and acquired certain assets from Must Have
nicotine products – including Vapour products, Heated Products Limited in the UK, including the electronic cigarette brand ViP;
(HPs) and Modern Oral products, which are collectively termed – 2018 – acquisition of Quantus Beteiligungs-und
the New Categories, as well as Traditional Oral products. Beratungsgesellschaft mbH in Germany;
The Group manages a globally-integrated supply chain and its – 2019 – acquisition of Twisp Proprietary Limited in South Africa
products are distributed to retail outlets worldwide. and 60% of VapeWild Holdings LLC in the U.S.;
History and development of BAT – 2020 – acquisition of the nicotine pouch product assets of Dryft
The Group has had a significant global presence in the tobacco Sciences, LLC (Dryft) in the U.S. and the acquisition of Eastern
industry for over 100 years. BAT Ltd. was incorporated in 1902, Tobacco Company for Trading in Saudi Arabia;
when the Imperial Tobacco Company and the American Tobacco – 2021 – entry into a strategic research and product development
Company agreed to form a joint venture company. BAT Ltd. collaboration agreement with Organigram Inc., a licensed
inherited companies and quickly expanded into major markets, producer of cannabis and cannabis-derived products in Canada
including India and Ceylon, Egypt, Malaya, Northern Europe and and a wholly-owned subsidiary of publicly-traded Organigram
East Africa. In 1927, BAT Ltd. expanded into the U.S. market Holdings Inc. and acquisition of a 19.9% equity stake in
through its acquisition of B&W. Organigram Holdings Inc.. Also in 2021, the Group disposed of its
During the 1960s, 1970s and 1980s, the Group diversified its Iranian subsidiary, BAT Pars Company PJSC;
business under the umbrella of B.A.T Industries p.l.c., with – 2022 – acquisition of a 16% equity stake in Sanity Group
acquisitions in the paper, cosmetics, retail and financial services GmbH, a German cannabis company. In 2022, the Group also
industries, among others. Various business reorganisations made an investment, via a convertible debenture in the amount
followed as the business was eventually refocused on the Group’s of c.£48 million, into Charlotte’s Web Holdings, Inc., a U.S.-based
core cigarette, cigars and tobacco products businesses with BAT hemp extract wellness products business; and
becoming a separately listed entity on the LSE in 1998. – 2023 - disposal of the Group's businesses in Russia and Belarus.
The following is a summary of the significant mergers, acquisitions British American Tobacco p.l.c. was incorporated in July 1997 under
and disposals undertaken since 1998: the laws of England and Wales as a public limited company and is
domiciled in the United Kingdom.
– 1999 – global merger with Rothmans International;
Seasonality
– 2000 – acquisition of Imperial Tobacco Canada;
The Group’s business segments are not significantly affected
– 2003 – acquisition of Ente Tabacchi Italiani S.p.A., Italy’s state- by seasonality although in certain markets cigarette consumption
owned tobacco company, Tabacalera Nacional in Peru and trends rise during summer months due to longer daylight time
Duvanska Industrija Vranje in Serbia; and tourism.
– 2004 - the U.S. assets, liabilities and operations, other than Patents and trademarks
certain specified assets and liabilities, of BAT’s wholly-owned Our trademarks, which include the brand names under which our
subsidiary, B&W, were combined with RJR Tobacco Company products are sold, are key assets which we consider, in the
to form Reynolds American Inc. As a result of the B&W business aggregate, to be important to the business as a whole. As well as
combination, B&W acquired beneficial ownership of protecting our brand names by way of trademark registration, we
approximately 42% of the Reynolds American Inc. shares; also protect our innovations by means of patents and designs in
– 2008 – acquisition of Tekel, the Turkish state-owned tobacco key global jurisdictions.
company and the cigarette and snus business of Skandinavisk Board oversight of M&A transactions
Tobakskompagni A/S; The Company’s Board has strategic oversight of significant
– 2009 - acquisition of an effective 99% interest in Bentoel M&A transactions (determined by value or strategic nature of
in Indonesia; transaction), which are referred to it for noting under the Group
– 2011 – acquisition of Protabaco in Colombia; Statement of Delegated Authorities (SoDA).
– 2012 – acquisition of CN Creative Limited in the UK; Other M&A transactions are referred for strategic oversight to the
Management Board or other applicable senior forum or persons,
– 2013 – entered into joint operations in China;
under the Group SoDA. Those referral requirements under the
Group SoDA apply alongside any requirement for corporate
approval of M&A transactions by or within a Group company.

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Other Information

Selected Financial Information

This information set out below has been derived from, in part, the audited consolidated financial statements of the Group commencing
on page 208. This selected financial information should be read in conjunction with the consolidated financial statements and the
Strategic Report.
As of and for the Year Ended 31 December
All items shown in £m except per share information 2023 2022 2021 2020 2019
Income statement data
2
Revenue 27,283 27,655 25,684 25,776 25,877
Raw materials and consumables used (4,545) (4,781) (4,542) (4,583) (4,599)
Changes in inventories of finished goods and work in progress (96) 227 160 445 162
Employee benefit costs (2,664) (2,972) (2,717) (2,744) (3,221)
Depreciation, amortisation and impairment costs (28,614) (1,305) (1,076) (1,450) (1,512)
Other operating income 432 722 196 188 163
Loss on reclassification from amortised cost to fair value (9) (5) (3) (3) (3)
Other operating expenses (7,538) (9,018) (7,468) (7,667) (7,851)
(Loss)profit from operations (15,751) 10,523 10,234 9,962 9,016
Net finance costs (1,895) (1,641) (1,486) (1,745) (1,602)
Share of post-tax results of associates and joint ventures 585 442 415 455 498
(Loss)/profit before taxation (17,061) 9,324 9,163 8,672 7,912
Taxation on ordinary activities 2,872 (2,478) (2,189) (2,108) (2,063)
(Loss)/profit for the year (14,189) 6,846 6,974 6,564 5,849
Per share data
Basic weighted average number of ordinary shares, in millions 2,229 2,256 2,287 2,286 2,284
3
Diluted weighted average number of ordinary shares, in millions 2,237 2,267 2,297 2,295 2,291
(Loss)/earnings per share-basic (pence) (646.6)p 293.3p 296.9p 280.0p 249.7p
3
(Loss)/earnings per share-diluted (pence) (646.6)p 291.9p 295.6p 278.9p 249.0p
4
Dividends per share (pence) 235.5p 230.9p 217.8p 215.6p 210.4p
Balance sheet data
Assets
Non-current assets 104,530 138,137 124,558 124,078 127,731
Current assets 14,186 15,409 12,807 13,612 13,274
Total assets 118,716 153,546 137,365 137,690 141,005
Liabilities
Non-current liabilities 50,109 59,983 54,820 59,257 58,022
Current liabilities 15,673 17,853 15,144 15,478 18,823
Total borrowings 39,730 43,139 39,658 43,968 45,366
Equity
Share capital 614 614 614 614 614
Total equity 52,934 75,710 67,401 62,955 64,160
Cash flow data
Net cash generated from operating activities 10,714 10,394 9,717 9,786 8,996
Net cash used in investing activities (296) (705) (1,140) (783) (639)
Net cash used in financing activities (9,314) (8,878) (8,749) (7,897) (8,593)
Notes:
1. All of the information above is in respect of continuing operations, revised for the fully retrospective adoption of IFRS 15.
2. Revenue is net of duty, excise and other taxes of £36,917 million, £38,527 million, £38,595 million, £39,172 million and £39,826 million for the years ended 31 December 2023, 2022, 2021,
2020, and 2019, respectively.
3. In 2023, the Group reported a loss for the year. Following the requirements of IAS 33, the impact of share options would be antidilutive and are therefore excluded, for 2023, from the
calculation of diluted earnings per share, calculated in accordance with IFRS, for that year. However, for consistency across periods, the presentation of the diluted weighted number of
ordinary shares above includes those that are potentially dilutive. The diluted number of shares, less those that are deemed to be anti-dilutive under IAS33, used in the calculation of
diluted earnings per share in compliance with IFRS was 2,229 million.
4. In February 2024, the BAT Directors declared an interim dividend of 235.5 pence per share for the year ended 31 December 2023, payable in four equal instalments of 58.88 pence per
ordinary share. The interim dividend will be paid to BAT shareholders in May 2024, August 2024, November 2024 and February 2025. The equivalent quarterly dividends receivable by
holders of ADSs in US dollars will be calculated based on the exchange rate on the applicable payment date.

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Volume
Volume is defined as the number of units sold. Units may vary between categories. This can be summarised for the principal metrics
as follows:
– Factory-made cigarettes (FMC) – sticks, regardless of weight or dimensions;
– Roll-Your-Own/Make-Your-Own – kilos, converted to a stick equivalent based upon 0.8 grams (per stick equivalent) for Roll-Your-Own
and between 0.5 and 0.7 grams (per stick equivalent) for Make-Your-Own;
– Traditional Oral – pouches (being 1:1 conversion to stick equivalent) and kilos, converted to a stick equivalent based upon 2.8 grams
(per stick equivalent) for Moist Snuff, 2.0 grams (per stick equivalent) for Dry Snuff and 7.1 grams (per stick equivalent) for other oral;
– Modern Oral – pouches, being 1:1 conversion to stick equivalent;
– Heat/Heated sticks – sticks, being 1:1 conversion to stick equivalent; and
– Vapour – pods and 10 millilitre bottles. There is no conversion to a stick equivalent.
Volume is recognised in line with IFRS 15 Revenue from Contracts with Customers, based upon transfer of control. It is assumed that
there is no material difference, in line with the Group’s recognition of revenue, between the transfer of control and shipment date.
Volume is used by management and investors to assess the relative performance of the Group and its brands within categories, given
volume is a principal determinant of revenue.
Volume Share
Volume share is the number of units bought by consumers of a specific brand or combination of brands, as a proportion of the total units
bought by consumers in the industry, category or other sub-categorisation. Sub-categories include, but are not limited to, the HP
category, Modern Oral, Vapour, Traditional Oral, Total Oral or Cigarette. Except when referencing particular markets, volume share is
based on our key markets (representing around 60% of the Group’s cigarette and HP volume).
Where possible, the Group utilises data provided by third-party organisations, including NielsenIQ, based upon retail audit of sales to
consumers. In certain markets, where such data is not available, other measures are employed which assess volume share based upon
other movements within the supply chain, such as sales to retailers. This may depend on the provision of data to the industry by the
customers including distributors/wholesalers.
Volume share is used by management to assess the relative performance to the Group and its brands against the performance of its
competitors in the categories and geographies in which the Group operates. This measure is also useful to understand the Group’s
performance when seeking to grow scale within a market or category from which future financial returns can be realised. The Group’s
management believes that this measure is useful to investors to understand the relative performance of the Group and its brands
against the performance of its competitors in the categories and geographies in which the Group operates.
Volume share in each year compares the average volume share in the year with the average volume share in the prior year. This is a more
robust measure of performance, removing short-term volatility that may arise at a point in time.
However, in certain circumstances, in order to illustrate the latest performance, data may be provided as at the end of the period rather
than the average in that period. In these instances, the Group indicates that these are at a specific date (for instance, December 2023).
Value Share
Value share is the retail value of units bought by consumers of a particular brand or combination of brands, as a proportion of the total
retail value of units bought by consumers in the industry, category or other sub-categorisation in discussion. Except when referencing
particular markets, value share is based on our key markets (representing around 85% of the Group’s cigarette and HP value).
Where possible, the Group utilises data provided by third-party organisations, including NielsenIQ, based upon retail audit of sales to
consumers. In certain markets, where such data is not available, other measures are employed which assess value share based upon
other movements within the supply chain, such as sales to retailers. This may depend on the provision of data to the industry by the
customers (including distributors and wholesalers).
Value share is used by management to assess the relative performance of the Group and its brands against the performance of its
competitors in the categories and geographies in which the Group operates, specifically indicating the Group’s ability to realise value
relative to the market. The Group’s management believes that this measure is useful to investors to apprehend the relative performance
of the Group and its brands against the performance of its competitors in the categories and geographies in which the Group operates,
specifically indicating the Group’s ability to realise value relative to the market.
Value share in each year compares the average value share in the year with the average value share in the prior period. This is a more robust
measure of performance, removing short-term volatility that may arise at a point of time.
However, in certain circumstances, in order to illustrate the latest performance, data may be provided that is as at the end of the period
rather than the average in that period. In these instances the Group indicates that these are at a specific date (for instance, December 2023).

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Other Information

Non-Financial Measures

Price Mix
Price mix is a term used by management and investors to explain the movement in revenue between periods. Revenue is affected by
the volume (how many units are sold) and the value (how much is each unit sold for). Price mix is used to explain the value component
of the sales as the Group sells each unit for a value (price) but may also achieve a movement in revenue due to the relative proportions
of higher value volume sold compared to lower value volume sold (mix).
This term is used to explain the Group’s relative performance between periods only. It is calculated as the difference between the
movement in revenue (between periods) and volume (between periods). For instance, the decline in combustibles revenue (excluding
translational foreign exchange movements) of 0.8% in 2023, with a decline in combustibles volume of 8.3% in 2023, leads to a price mix
of 7.5% in 2023. No assumptions underlie this metric as it utilises the Group’s own data.
Consumers of Non-Combustible Products
The number of consumers of Non-Combustible products is defined as the estimated number of Legal Age (minimum 18 years)
consumers of the Group’s Non-Combustible products. In markets where regular consumer tracking is in place, this estimate is obtained
from adult consumer tracking studies conducted by third parties (including Kantar). In markets where regular consumer tracking is not
in place, the number of consumers of Non-Combustible products is derived from volume sales of consumables and devices in such
markets, using consumption patterns obtained from other similar markets with consumer tracking (utilising studies conducted by third
parties, including Kantar).
The number of Non-Combustible products consumers is used by management to assess the number of consumers regularly using
the Group’s New Categories products as the increase in Non-Combustible products is a key pillar of the Group’s sustainability ambition
and is integral to the sustainability of our business.
The Group’s management believes that this measure is useful to investors given the Group’s sustainability ambition and alignment to the
sustainability of the business with respect to the Non-Combustibles portfolio.
% of farms monitored for child labour; % of farms with incidents of child labour identified; Number of child labour
incidents identified; % reported as resolved by end of the growing season
Our definition of child labour is aligned to how International Labour Organization (ILO) defines the term, namely that the work that
deprives children of their childhood, their potential and their dignity, and that is harmful to their physical and mental development
(https://www.ilo.org/ipec/facts/lang--en/index.htm).
Reported via our Thrive annual reports covering all BAT-contracted farmers and farmers supplying our third-party suppliers, representing
more than 94% of total tobacco grown or purchased by BAT in 2023. As tobacco-growing seasons vary around the world, data is based
on the most recent crop cycle at the time of reporting, instead of the crop grown in the calendar year.
Data in relation to our contracted farmers is collected by BAT field technicians (FTs) who visit our contracted farmers approximately
once a month during the growing season. Details of each visit are recorded in our Farmer Sustainability Management (FSM) digital app
by the FT and are formally acknowledged by the farmer. If any child labour case is identified, it is reported in the system and treated as a
critical prompt action. For the case to be resolved, this is followed by an unannounced visit shortly after to observe whether this is
repeated and a remediation plan agreed with the farmer. The remediation plan varies from case to case, considering the individual
circumstances.
Our third-party suppliers collect data for Thrive via their own FTs, in their own farm monitoring systems.
Once the data is collected in the field, the country team analyse the data and approve it or reopen the questions for discussion with the
farmers. After that, the data is reported in Thrive and made available to the Global Leaf ESG team. The data is also reviewed by an
independent third party.
Ethnically Diverse Group
For the purposes of D&I Reporting, the following definitions are used. Ethnically diverse groups includes global ethnic groups Hispanic/
Latin American, Black, Asian, Indigenous, Mixed, Other (Arabs/Middle Eastern and Turkish). In 2022, we expanded the scope of our
confidential voluntary ethnicity identity collection and reporting beyond the UK to six additional markets (Australia, Brazil, Canada,
Malaysia, South Africa and the U.S.).
Senior Leadership Teams
Members of senior leadership teams are defined as any employee who is either a direct report of a Management Board member
or a direct report of a Management Board’s direct report.
Some MB-1 and MB-2 employees are double-counted in this calculation to account for those who feature on one or more senior
leadership teams, given their dual accountability.
% Women in Management Roles
The number of female management-grade employees, as a percentage of the total number of management-grade employees.
Management-grade employees include all global graduates and all employees at job grade 34 to grade 41, being the highest grade
immediately prior to the Management Board. The gender of each employee is typically recorded at the point of hire.
% of Key Leadership teams with at least a 50% spread of distinct nationalities: The number of Management Board members
that have at least a 50% spread of nationalities within their Key Leadership teams (MB-1 members only), as a percentage of the total
number of Management Board members. A Key Leadership team is categorised as the group of direct reports that report into a
Management Board member.
The 50% spread of distinct nationalities is satisfied if at least half of a given MB's Key Leadership team members are of distinct
nationalities. The nationality of each employee is typically recorded at the point of hire. U.S. employees hired by Reynolds prior to its
merger with BAT did not disclose nationality at point of hire and therefore these employees are excluded from the calculation.
Some MB-1 Key Leadership team members are double-counted in this calculation to account for those who feature on one or more MB
leadership teams, given their dual accountability.

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Non-GAAP Measures

To supplement the presentation of the Group’s results of operations and financial condition in accordance with IFRS, we also present
several non-GAAP measures used by management to monitor the Group’s performance. The Group’s management regularly reviews
the measures used to assess and present the financial performance of the Group and, as relevant, its geographic segments.
Changes to Non-GAAP measures in 2023
In 2023, the Group finalised the sale of its Russian and Belarusian businesses. The 2023 STI targets were set excluding the Russian and
Belarusian businesses (organic basis), and the results were assessed on the same basis. The following measures used by Management
within the Group's STI, as reported within the Remuneration report beginning on page 170, were measured on an organic basis in 2023:
New Categories revenue growth, change in New Categories contribution and adjusted profit from operations - with all the
aforementioned measures continuing to be presented at constant rates of exchange. The adjusted cash generated from operations
performance have also been measured on an organic basis at constant rates of exchange.
For the 2021 LTI with the performance period ending in 2023, performance measures and targets have remained unchanged during the
three-year performance period. In assessing performance results for the 2021 LTIP award against the targets set at the start of the
performance period, performance has been assessed excluding the Russian and Belarusian businesses from the 2023 results. For the
purpose of LTI performance, 2021 and 2022 will remain as previously reported. The following LTI performance measures were measured
on an organic basis in 2023: revenue growth (at constant rates of exchange), adjusted diluted EPS (at constant rates of exchange),
adjusted diluted EPS (at current rates of exchange), operating cash flow conversion ratio.
The following tables include, where relevant, reconciliations to the relevant measures referred to above, from the most comparable
IFRS equivalent.
Revenue at Constant Rates of Exchange and Organic Revenue at Current and Constant Rates of Exchange
Definition – revenue before the impact of foreign exchange and also presented excluding the inorganic performance of certain
businesses bought or sold in the period.
To supplement BAT’s revenue presented in accordance with IFRS, the Group’s Management Board, as the chief operating decision-
maker, reviews revenue at constant rates of exchange to evaluate the underlying business performance of the Group and its geographic
segments. The Group’s Management Board defines this measure as revenue retranslated at the prior periods rate of exchange.
The Group’s Management Board believes that revenue at constant rates of exchange provides information that enables investors to
compare the Group’s business performance across periods without the impacts of translational foreign exchange. This measure has
limitations as an analytical tool. The most directly comparable IFRS measure to revenue at constant rates of exchange is revenue.
Revenue at constant rates of exchange is not a presentation made in accordance with IFRS, and is not a measure of financial condition
or liquidity and should not be considered as an alternative to revenue as determined in accordance with IFRS. Revenue at constant rates
of exchange is not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider this
performance measure in isolation from, or as a substitute analysis for, BAT’s results as determined in accordance with IFRS.
As Management assesses revenue at constant rates also on an organic basis within the Group's incentive schemes, as reported within
the Remuneration Report beginning in page 170, these measures are also presented excluding the inorganic performance of certain
businesses bought or sold in the period.
Refer to note 2 in the Notes on the Accounts for further discussion of the segmental results and for the reconciliation of revenue
at current and constant rates of exchange to segmental revenue and to Group revenue for the years ended 31 December 2023, 2022
and 2021.
For the year ended 31 December (£m)
2023 2022 2021
Revenue 27,283 27,655 25,684
Impact of translational foreign exchange 813 (1,382) 1,877
2023 revenue re-translated at 2022 exchange rates 28,096
2022 revenue re-translated at 2021 exchange rates 26,273
2021 revenue re-translated at 2020 exchange rates 27,561
Change in revenue at prior year’s exchange rates (constant rates) 1.6% 2.3% 6.9%
Inorganic adjustments re-translated at prior year's exchange rates (constant rates) (550) (813)
Organic revenue re-translated at prior year's exchange rates (constant rates) 27,546 25,460

For the year ended 31 December (£m)

2023 2022
Revenue 27,283 27,655
Inorganic adjustments (479) (935)
Organic revenue 26,804 26,720

Organic revenue in 2022, translated at 2022 rates was £26,720 million. Organic revenue in 2023, translated at the prior year's exchange
rate was £27,546 million. Accordingly, the movement in organic revenue, at constant rates of exchange in 2023 was an increase of 3.1%.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Non-GAAP Measures
Continued

Revenue by Product Category or Geographic Segment – Including Revenue from New Categories, at Constant
Rates of Exchange and on an Organic Basis
Definition – revenue by product category, and at the prior year’s prevailing exchange rate and also presented excluding the
inorganic performance of certain businesses bought or sold in the period, derived from the principal product categories of
Combustibles, New Categories (being comprised of revenue from Vapour, HP and Modern Oral), and Traditional Oral, including
by the geographic segments of the United States, Americas and Europe, and Asia-Pacific, Middle East and Africa.
To supplement BAT’s revenue presented in accordance with IFRS, the Group’s Management Board, as the chief operating decision-
maker, reviews revenue growth from the principal product categories of combustibles, New Categories and Traditional Oral, including
from the geographic segments of the United States, Americas and Europe, and Asia-Pacific, Middle East and Africa, to evaluate the
underlying business performance of the Group reflecting the focus of the Group’s investment activity. The Group’s Management Board
assesses revenue by product category, including by geographic segment, at constant rates of exchange, translated to the Group’s
reporting currency at the prior period’s prevailing exchange rate, derived from the Group’s combustible portfolio (including but not
limited to Kent, Dunhill, Lucky Strike, Pall Mall, Rothmans, Camel (U.S.), Newport (U.S.), Natural American Spirit (U.S.)), the Group’s New
Category portfolio (being Vapour, HP and Modern Oral) and the Group’s Traditional Oral portfolio and the Group’s operations in the
United States, Americas and Europe, and Asia-Pacific, Middle East and Africa.
The Group’s Management Board also believes that the revenue performance by product category, including by geographic segment, provides
information that enables investors to compare the Group’s business performance across periods and by reference to the Group’s
investment activity. Revenue by product category, including by geographic segment, have limitations as analytical tools. The most directly
comparable IFRS measure to revenue by product category, including by geographic segment, is revenue. Revenue by product category,
including by geographic segment, are not presentations made in accordance with IFRS, are not measures of financial condition or liquidity
and should not be considered as alternatives to revenue as determined in accordance with IFRS. Revenue by product category, including by
geographic segment, are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider
these performance measures in isolation from, or as a substitute analysis for, BAT’s results as determined in accordance with IFRS.
As Management assesses New Categories revenue growth on an organic basis within the Group's incentive schemes, as reported within the
Remuneration Report beginning in page 170, this measure is also presented excluding the inorganic performance of certain businesses bought
or sold in the period. The organic figures shown for the relevant product categories are provided to show the build-up towards revenue from
New Categories and what Management is working towards.
Reconciliation of revenue by product category to revenue by product category at constant rates of exchange
and on an organic basis (2023 - 2022)
2023
Impact of Reported Reported at Inorganic Organic Organic at
Reported vs 2022 exchange at cc cc vs 2022 adjustments at cc cc vs 2022
£m % £m £m % £m £m %
New Categories:
Vapour 1,812 +26.2% 11 1,823 +26.9% (2) 1,821 +26.8%
HP 996 -6.0% 37 1,033 -2.5% (89) 944 +4.1%
Modern Oral 539 +35.3% 15 554 +39.0% (7) 547 +38.9%
Total New Categories 3,347 +15.6% 63 3,410 +17.8% (98) 3,312 +21.0%
Traditional Oral 1,163 -3.8% 9 1,172 -3.1% — 1,172 -3.1%
Combustibles 22,108 -4.0% 738 22,846 -0.8% (450) 22,396 +0.6%
Other 665 +27.6% 3 668 +28.4% (2) 666 +29.6%
Revenue 27,283 -1.3% 813 28,096 +1.6% (550) 27,546 +3.1%
Inorganic adjustments (479) (550)
Organic revenue 26,804 +0.3% 27,546 +3.1%

Reconciliation of revenue by product category to revenue by product category at constant rates of exchange (2022 - 2021)
and on an organic basis – 2022
2022 2021
Inorganic
Impact of Reported Reported adjustments Organic
Reported vs 2021 exchange at cc at cc vs 2021 at cc at cc Reported
£m % £m £m % £m £m £m
New Categories:
Vapour 1,436 +54.9% (103) 1,333 +43.8% — 1,333 927
HP 1,060 +24.3% 21 1,081 +26.7% (133) 948 853
Modern Oral 398 +45.3% 1 399 +45.6% (5) 394 274
Total New Categories 2,894 +40.9% (81) 2,813 +37.0% (138) 2,675 2,054
Traditional Oral 1,209 +8.2% (117) 1,092 -2.3% — 1,092 1,118
Combustibles 23,030 +4.5% (1,142) 21,888 -0.6% (669) 21,219 22,029
Other 522 +7.6% (42) 480 -0.8% (6) 474 483
Revenue 27,655 +7.7% (1,382) 26,273 +2.3% (813) 25,460 25,684
Inorganic adjustments (935) (813)
Organic revenue 26,720 +6.8% 25,460

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Reconciliation of revenue by product category to revenue by product category at constant rates of exchange
2023 2022
Impact of Reported Reported at
Reported vs 2022 exchange at cc cc vs 2022 Reported
U.S. £m % £m £m % £m
New Categories:
Vapour 1,033 +13.1% 6 1,039 +13.8% 913
HP — — — — — —
Modern Oral 25 -32.2% — 25 -31.8% 36
Total New Categories 1,058 +11.3% 6 1,064 +12.0% 949
Traditional Oral 1,127 -4.0% 7 1,134 -3.4% 1,174
Combustibles 9,744 -6.9% 58 9,802 -6.4% 10,470
Other 65 +44.1% — 65 +45.2% 46
Revenue 11,994 -5.1% 71 12,065 -4.5% 12,639

2022 2021
Impact of Reported Reported
Reported vs 2021 exchange at cc at cc vs 2021 Reported
U.S. £m % £m £m % £m
New Categories:
Vapour 913 +62.9% (92) 821 +46.4% 561
HP — -69.1% — — -72.3% 1
Modern Oral 36 n/m (3) 33 n/m 2
Total New Categories 949 +68.7% (95) 854 +51.6% 564
Traditional Oral 1,174 +8.9% (119) 1,055 -2.1% 1,077
Combustibles 10,470 +4.5% (1,061) 9,409 -6.1% 10,015
Other 46 +27.9% (6) 40 +14.9% 35
Revenue 12,639 +8.1% (1,281) 11,358 -2.8% 11,691
Note:
cc: constant currency – measures are calculated based on a re-translation of the current year’s results of the Group at the prior year’s exchange rates and, where applicable,
its geographical segments or product categories.

Reconciliation of revenue by product category to revenue by product category at constant rates of exchange
2023 2022
Impact of Reported Reported at
Reported vs 2022 exchange at cc cc vs 2022 Reported
AME £m % £m £m % £m
New Categories:
Vapour 686 +47.6% (4) 682 +46.9% 465
HP 505 +2.3% 3 508 +3.0% 494
Modern Oral 482 +41.5% 11 493 +44.6% 341
Total New Categories 1,673 +28.8% 10 1,683 +29.6% 1,300
Traditional Oral 36 +1.7% 2 38 +7.9% 35
Combustibles 7,614 +0.3% 196 7,810 +2.9% 7,588
Other 468 +28.2% (10) 458 +25.2% 364
Revenue 9,791 +5.4% 198 9,989 +7.6% 9,287

2022 2021
Impact of Reported Reported
Reported vs 2021 exchange at cc at cc vs 2021 Reported
AME £m % £m £m % £m
New Categories:
Vapour 465 +41.4% (10) 455 +38.4% 328
HP 494 +68.8% (12) 482 +65% 292
Modern Oral 341 +29.9% 4 345 +31.6% 262
Total New Categories 1,300 +47.0% (18) 1,282 +45.1% 882
Traditional Oral 35 -12.3% 2 37 -7.7% 41
Combustibles 7,588 +5.7% (125) 7,463 +4.0% 7,179
Other 364 +7.0% (27) 337 -1.3% 342
Revenue 9,287 +10.0% (168) 9,119 +8.0% 8,444

337
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Non-GAAP Measures
Continued

2023 2022
Impact of Reported Reported at
Reported vs 2022 exchange at cc cc vs 2022 Reported
APMEA £m % £m £m % £m
New Categories:
Vapour 93 +60.5% 9 102 +74.6% 58
HP 491 -13.2% 34 525 -7.3% 566
Modern Oral 32 +50.3% 4 36 +70.8% 21
Total New Categories 616 -4.5% 47 663 +2.6% 645
Traditional Oral — —% — — —% —
Combustibles 4,750 -4.5% 484 5,234 +5.2% 4,972
Other 132 +18.9% 13 145 +32.0% 112
Revenue 5,498 -4.0% 544 6,042 +5.5% 5,729

2022 2021
Impact of Reported Reported
Reported vs 2021 exchange at cc at cc vs 2021 Reported
APMEA £m % £m £m % £m
New Categories:
Vapour 58 +55.1% (1) 57 +53.0% 38
HP 566 +1.1% 33 599 +7.0% 560
Modern Oral 21 +114% — 21 +112% 10
Total New Categories 645 +6.3% 32 677 +11.5% 608
Traditional Oral — — — — — —
Combustibles 4,972 +2.8% 44 5,016 +3.8% 4,835
Other 112 +2.8% (9) 103 -4.3% 106
Revenue 5,729 +3.2% 67 5,796 +4.4% 5,549
Note:
cc: constant currency – measures are calculated based on a re-translation of the current year’s results of the Group at the prior year’s exchange rates and, where applicable,
its geographical segments or product categories.

338
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Adjusted Profit From Operations, Adjusted Operating Margin and Adjusted Organic Profit From Operations
Definition – profit from operations before the impact of adjusting items and adjusted profit from operations as a percentage
of revenue, and also presented excluding the inorganic performance of certain businesses bought or sold in the period.
To supplement BAT’s results from operations presented in accordance with IFRS, the Group’s Management Board, as the chief operating
decision‑maker, reviews adjusted profit from operations to evaluate the underlying business performance of the Group and its geographic segments,
to allocate resources to the overall business and to communicate financial performance to investors. The Group also presents adjusted operating
margin, which is defined as adjusted profit from operations as a percentage of revenue. Adjusted profit from operations and adjusted operating
margin are not measures defined by IFRS. The most directly comparable IFRS measure to adjusted profit from operations is profit from operations.
Adjusting items, as identified in accordance with the Group’s accounting policies, represent certain items of income and expense which
the Group considers distinctive based on their size, nature or incidence. In identifying and quantifying adjusting items, the Group
consistently applies a policy that defines criteria that are required to be met for an item to be classified as adjusting and provides details
of items that are specifically excluded from being classified as adjusting items. Adjusting items in profit from operations include
restructuring and integration costs, amortisation of trademarks and similar intangibles, impairment of goodwill and charges in respect
of certain litigation. The definition of adjusting items is explained in note 1 in the Notes on the Accounts.
The Group’s Management Board believes that these additional measures are useful to investors and are used by the Group’s
Management Board as described above, because they exclude the impact of adjusting items which have less bearing on the routine
ongoing operating activities of the Group, thereby enhancing users’ understanding of underlying business performance. The Group’s
Management Board also believes that adjusted profit from operations provides information that enables investors to compare the Group’s
business performance across periods. Additionally, the Group’s Management Board believes that similar measures are frequently used by
securities analysts, investors and other interested parties in their evaluation of companies comparable to the Group, many of which
present an adjusted operating profit-related performance measure when reporting their results. Adjusted profit from operations and
adjusted operating margin have limitations as analytical tools. They are not presentations made in accordance with IFRS, are not measures
of financial condition or liquidity and should not be considered as alternatives to profit for the year, profit from operations or operating
margin as determined in accordance with IFRS. Adjusted profit from operations and adjusted operating margin are not necessarily
comparable to similarly titled measures used by other companies. As a result, you should not consider these performance measures in
isolation from, or as a substitute analysis for, BAT’s results of operations as determined in accordance with IFRS.
As Management assesses adjusted profit from operations at constant rates also on an organic basis within the Group's incentive
schemes, as reported within the Remuneration Report beginning in page 170, this measure is also presented excluding the inorganic
performance of certain businesses bought or sold in the period.
The table below reconciles the Group’s profit from operations to adjusted profit from operations, and to adjusted profit from operations
at constant rates based on a re-translation of adjusted profit from operations for each year, at the previous year’s exchange rates, and
provides adjusted operating margin for the periods presented. Refer to note 2 in the Notes on the Accounts for further discussion of the
segmental results and for the reconciliation of adjusted profit from operations at current and constant rates of exchange to segmental
profit from operations and to Group profit for the years ended 31 December 2023, 2022 and 2021.
For the year ended 31 December (£m)
2023 2022 2021
(Loss)/profit from operations (15,751) 10,523 10,234
Add:
Restructuring and integration costs (2) 771 150
Amortisation and impairment of trademarks and similar intangibles 23,202 285 306
Impairment of Goodwill 4,614 — 57
Credit in respect of calculation of excise on social contributions in Brazil (148) — —
Credit in respect of partial buy-out of the pension fund in the U.S. — (16) (35)
Charges in connection with planned disposal of subsidiaries — 612 —
Charges/(credit) in connection with disposal of subsidiaries 351 (6) 358
Charges in respect of contributions on investment grants in Brazil 47 — —
Credit in respect of recovery of VAT on social contributions in Brazil (19) (460) —
Charges in respect of DOJ and OFAC investigation 75 450 —
Charges in respect of Nigeria Federal Competition and Consumer Protection Commission
— 79 —
(FCCPC) case
Other adjusting items (including Engle) 96 170 80
Adjusted profit from operations 12,465 12,408 11,150
Operating margin -57.7% 38.1% 39.8%
Adjusted operating margin 45.7% 44.9% 43.4%
Impact of translational foreign exchange 324 (782) 802
Adjusted profit from operations re-translated at constant rates 12,789 11,626 11,952
Change in adjusted profit from operations re-translated at constant rates +3.1% +4.3% +5.2%
Inorganic adjustments retranslated at constant rates (223) (276)
Adjusted organic profit from operations re-translated at constant rates 12,566 11,350
Adjusted organic measures above are re-translated at constant rates. Adjusted organic profit from operations in 2022, translated at
2022 rates was £12,089 million. Accordingly, the movement in adjusted organic profit from operations, at constant rates of exchange in
2023 was up 3.9%.

339
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Non-GAAP Measures
Continued

Category Contribution at Constant Rates of Exchange and Organic Category Contribution at Constant
Rates of Exchange
Definition – Profit from operations before the impact of adjusting items and translational foreign exchange, having allocated
costs that are directly attributable to New Categories, and also presented excluding the inorganic performance of certain
businesses bought or sold in the period.
Category contribution is assessed by management within the Group's incentive schemes, as reported within the Remuneration Report
beginning on page 170.
Category contribution by products as a measure of Group performance has limitations as an analytical tool. They are not presentations
made in accordance with IFRS, are not measures of financial condition or liquidity and should not be considered as alternatives to profit
from operations as determined in accordance with IFRS. Category contribution is not necessarily comparable to similarly titled measures
used by other companies.
The table below reflects the marginal contribution of the New Categories products to the Group’s financial performance. This measure
includes all directly attributable revenue and costs. This measure is provided in aggregate as certain costs are incurred across all New
Categories and are not product specific. However, other overhead costs that are shared between New Categories and Rest of Business
are borne by the Rest of Business as they are deemed to be incurred regardless of the performance of New Categories.
For the year ended 31 December (£m)
2023
Inorganic Adjusted
Adjusting Adjusted Adjustments Organic
Reported Items Adjusted Exchange at cc at cc at cc
(Loss)/profit from Operations (15,751) 28,216 12,465 324 12,789 (223) 12,566
As delivered through:
New Categories contribution 32 (16) 16
Rest of Group contribution 12,757 (207) 12,550

For the year ended 31 December (£m)

2022
Inorganic Adjusted
Adjusting Adjusted Adjustments Organic
Reported Items Adjusted Exchange at cc at cc at cc
Profit from Operations 10,523 1,885 12,408 (782) 11,626 (276) 11,350
As delivered through:
New Categories contribution (375) 15 (360)
Rest of Group contribution 12,001 (291) 11,710
For the year ended 31 December (£m)
2021
Adjusting Inorganic Adjusted
Reported Items Adjusted Adjustments Organic
Profit from Operations 10,234 916 11,150 (139) 11,011
As delivered through:
New Categories contribution (953) 92 (861)
Rest of Group contribution 12,103 (231) 11,872
Note:
cc: constant currency – measures are calculated based on a re-translation, at the prior year’s exchange rates, of the current year’s results of the Group and, where applicable,
its geographical segments or product categories.

340
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Adjusted Net Finance Costs and adjusted net finance costs, at constant rates of exchange
Definition – Net finance costs before the impact of adjusting items and translational foreign exchange.
To supplement BAT’s performance presented in accordance with IFRS, the Group’s net finance costs are also presented before adjusting
items (as defined in note 1 in the Notes on the Accounts) and before the impact of translational foreign exchange. The Group’s
Management Board believes that adjusted net finance costs provides information that enables investors to compare the Group’s
business performance across periods. The Group’s Management Board uses adjusted net finance costs as part of the total assessment
of the underlying performance of all the Group’s business interests. Adjusted net finance costs has limitations as an analytical tool. It is
not a presentation made in accordance with IFRS, is not a measure of financial condition or liquidity, and should not be considered as an
alternative to the Group’s net finance costs as determined in accordance with IFRS. Adjusted net finance costs is not necessarily
comparable to similarly titled measures used by other companies. As a result, you should not consider this performance measure
in isolation from, or as a substitute analysis for, BAT’s results of operations as determined in accordance with IFRS.
The most directly comparable IFRS measure to adjusted net finance costs is net finance costs.
The table below reconciles the Group’s net finance costs to adjusted net finance costs, and to adjusted net finance costs at constant
rates based on a re-translation of adjusted net finance costs for each year, at the previous year’s exchange rates.
For the year ended 31 December (£m)
2023 2022 2021
Finance costs (2,081) (1,733) (1,521)
Finance income 186 92 35
Net finance costs (1,895) (1,641) (1,486)
Less: Adjusting items in net finance costs 96 34 55
Adjusted net finance costs (1,799) (1,607) (1,431)
Comprising:
Interest payable (1,835) (1,648) (1,493)
Interest and dividend income 186 92 35
Fair value changes - derivatives (599) 473 (252)
Exchange differences 449 (524) 279
Adjusted net finance costs (1,799) (1,607) (1,431)
Impact of translation foreign exchange 5 140
Adjusted net finance costs, at prior year’s exchange rates (constant rates) (1,794) (1,467)

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Non-GAAP Measures
Continued

Adjusted Share of Post-Tax Results of Associates and Joint Ventures

Definition – share of post-tax results of associates and joint ventures before the impact of adjusting items.
To supplement BAT’s performance presented in accordance with IFRS, the Group’s share of post-tax results of associates and joint
ventures is also presented before adjusting items (as defined in note 1 in the Notes on the Accounts). The Group’s Management Board
believes that adjusted share of post-tax results of associates and joint ventures provides information that enables investors to compare
the Group’s business performance across periods. The Group’s Management Board uses adjusted share of post-tax results from
associates and joint ventures as part of the total assessment of the underlying performance of all the Group’s business interests.
Adjusted share of post-tax results of associates and joint ventures has limitations as an analytical tool. It is not a presentation made in
accordance with IFRS, is not a measure of financial condition or liquidity, and should not be considered as an alternative to the Group’s
share of post-tax results of associates and joint ventures as determined in accordance with IFRS. Adjusted share of post-tax results of
associates and joint ventures is not necessarily comparable to similarly titled measures used by other companies. As a result, you should
not consider this performance measure in isolation from, or as a substitute analysis for, BAT’s results of operations as determined in
accordance with IFRS.
The most directly comparable IFRS measure to adjusted share of post-tax results of associates and joint ventures is share of post-tax
results of associates and joint ventures.
For the year ended 31 December (£m)
2023 2022 2021
Group’s share of post-tax results of associates and joint ventures 585 442 415
Issue of shares and changes in shareholding (40) 3 (6)
Other exceptional items in ITC (2) — —
Impairment of the Group’s associate in Yemen — 18 18
Impairment in relation to Organigram (net of tax) 34 59 —
Other — 12 —
Adjusted Group’s share of post-tax results of associates and joint ventures 577 534 427

Adjusted Taxation
Definition – Taxation before the impact of adjusting items.
BAT management monitors the Group’s adjusted taxation to assess BAT’s underlying tax (as defined in note 1 in the Notes on the
Accounts). Adjusted taxation is not a measure defined by IFRS. The table below provides the calculation of the Group’s adjusted taxation.
The Group’s Management Board believes that this additional measure is useful to investors, and is used by BAT management as
described above, because it excludes the tax on adjusting items and adjusting tax, thereby enhancing users’ understanding of underlying
business performance.
Adjusted taxation has limitations as an analytical tool. It is not a presentation made in accordance with IFRS and should not be
considered as an alternative to the taxation as determined in accordance with IFRS. Adjusted taxation is not necessarily comparable to
similarly titled measures used by other companies. As a result, you should not consider this measure in isolation from, or as a substitute
analysis for, the Group’s taxation as determined in accordance with IFRS. The table below provides the calculation of the Group’s
adjusted taxation for the periods presented.
For the year ended 31 December (£m)
2023 2022 2021
UK corporation tax
– current year tax expense 20 2 1
– adjustments in respect of prior periods 12 (5) (26)
Overseas tax
– current year tax expense 2,804 2,675 2,418
– adjustments in respect of prior periods (25) 46 (17)
Total current tax 2,811 2,718 2,376
Deferred tax (5,683) (240) (187)
Taxation on ordinary activities (2,872) 2,478 2,189
Adjusting items in taxation 73 27 91
Taxation on adjusting items 5,415 176 119
Adjusted tax charge 2,616 2,681 2,399

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Underlying Tax Rate and Underlying Tax Rate at constant rates of exchange
Definition – Tax rate incurred before the impact of adjusting items and translational foreign exchange and to adjust for
the inclusion of the Group’s share of post-tax results of associates and joint ventures within the Group’s pre-tax results.
BAT management monitors the Group’s underlying tax rate to assess the tax rate applicable to the Group’s underlying operations,
excluding the Group’s share of post-tax results of associates and joint ventures in BAT’s pre-tax results and adjusting items (as defined
in note 1 in the Notes on the Accounts). Underlying tax rate is not a measure defined by IFRS. The table below provides the calculation
of the Group’s effective tax rate as determined in accordance with IFRS with underlying tax rate for the periods presented. The Group’s
Management Board believes that this additional measure is useful to investors, and is used by BAT management as described above,
because it excludes the contribution from the Group’s associates, recognised after tax but within the Group’s pre-tax profits, and
adjusting items, thereby enhancing users’ understanding of underlying business performance.
Underlying tax rate has limitations as an analytical tool. It is not a presentation made in accordance with IFRS and should not be
considered as an alternative to the effective tax rate as determined in accordance with IFRS. Underlying tax rate is not necessarily
comparable to similarly titled measures used by other companies. As a result, you should not consider this measure in isolation from,
or as a substitute analysis for, the Group’s effective tax rate as determined in accordance with IFRS. The table below shows the
computation of the Group’s underlying tax rate for the periods presented and underlying tax rate at constant rates based on a
re-translation of underlying tax rate for each year, at the previous year’s exchange rates and the related reconciliation of profit before
taxation to adjusted profit before taxation, excluding associates and joint ventures, and taxation on ordinary activities to adjusted
taxation and adjusted taxation at constant rates of exchange.
For the year ended 31 December (£m)
2023 2022 2021
(Loss)/profit before taxation (17,061) 9,324 9,163
Less:
Share of post-tax results of associates and joint ventures (585) (442) (415)
Adjusting items within profit from operations 28,216 1,885 916
Adjusting items within finance costs 96 34 55
Adjusted profit before taxation, excluding associates and joint ventures 10,666 10,801 9,719
Impact of translational foreign exchange 329 (642) 714
Adjusted PBT, excluding associates and joint ventures at constant rates of exchange 10,995 10,159 10,433

Taxation on ordinary activities 2,872 (2,478) (2,189)

Adjusting items within taxation and taxation on adjusting items (5,488) (203) (210)
Adjusted taxation (2,616) (2,681) (2,399)
Impact of translational foreign exchange on adjusted taxation (109) 131 (164)
Adjusted taxation at constant rates of exchange (2,725) (2,550) (2,563)

Effective tax rate 16.8% 26.6% 23.9%

Underlying tax rate 24.5% 24.8% 24.7%
Underlying tax rate (at constant rates) 24.8% 25.1% 24.6%

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Non-GAAP Measures
Continued

Adjusted Diluted Earnings Per Share and Adjusted Organic Diluted Earnings Per Share, presented at both current
and constant rates of exchange
Definition – earnings per share before the impact of adjusting items and inorganic adjustments, after adjustments to the number
of shares outstanding for the impact of share option schemes whether they would be dilutive or not under statutory measures,
presented at the prior year’s rate of exchange.
BAT management monitors adjusted diluted EPS, a measure which removes the impact of adjusting items (as defined in note 1 in the
Notes on the Accounts) from diluted earnings per share. Adjusted diluted EPS is considered by the Group’s Management Board to be
useful to investors and is used by management within the Group’s incentive schemes, as reported within the Remuneration Report
beginning on page 170 and reported in note 11 in the Notes on the Accounts, as an indicator of diluted EPS before adjusting items.
Adjusted Diluted EPS is not necessarily comparable to similarly titled measures used by other companies. Adjusted diluted EPS has
limitations as an analytical tool and should not be used in isolation from, or as a substitute for, diluted EPS as determined in accordance
with IFRS. The most directly comparable IFRS measure to adjusted diluted EPS is diluted EPS.
As Management assesses adjusted diluted earnings per share (at both current and constant ates of exchange) on an organic basis
within the Group's incentive schemes, as reported within the Remuneration Report beginning in page 170, this measure is also presented
excluding the inorganic performance of certain businesses bought or sold in the period.
The table below shows the computation of adjusted diluted EPS and adjusted diluted EPS at constant exchange rates for the periods presented.
For the year ended 31 December (pence)
2023 2022 2021
Diluted (loss)/earnings per share (646.6) 291.9 295.6
Effect of amortisation and impairment of goodwill, trademarks and similar intangibles 1,006.1 9.6 12.7
Net effect of excise and VAT cases (5.7) (17.1) 1.0
Effect of disposal of subsidiaries 24.5 (0.3) 15.6
Effect of Brazil other taxes 1.4 — —
Effect of charges in respect of DOJ and OFAC investigations 3.4 19.9 —
Effect of charges in respect of Nigerian FCCPC case — 3.5 —
Effect of planned disposal of subsidiaries (8.7) 26.4 —
Effect of restructuring and integration costs (0.2) 28.9 4.9
Effect of other adjusting items 3.3 5.2 0.6
Effect of adjusting items in net finance costs 3.1 1.2 2.4
Effect of associates’ adjusting items (0.4) 4.1 0.5
Effect of adjusting items in respect of deferred taxation (4.4) (1.9) (4.3)
Adjusting items in tax 1.2 — —
Impact of dilution* (1.4)
Adjusted diluted earnings per share 375.6 371.4 329.0
Impact of translational foreign exchange 10.8 (23.3) 12.4
Adjusted diluted earnings per share, at constant exchange rates 386.4 348.1 341.4
Inorganic adjustments, at constant rates (8.3) (10.2)
Adjusted organic diluted earnings per share, at constant exchange rates 378.1 337.9

For the year ended 31 December (pence)

2023 2022
Adjusted diluted earnings per share (see above) 375.6 371.4
Inorganic adjustments (7.1) (12.1)
Adjusted organic diluted earnings per share 368.5 359.3

Adjusted organic diluted earnings per share in 2022, translated at 2022 rates was 359.3p. Adjusted organic diluted earnings per share
revenue in 2023, translated at the prior year's exchange rate was 378.1p. Accordingly, the movement in adjusted organic diluted earnings
per share, at constant rates of exchange in 2023 was an increase of 5.2%.
Note:
* In 2023, the Group reported a loss for the year. Following the requirements of IAS 33, the impact of share options would be antidilutive and is therefore excluded, for 2023, from the
calculation of diluted earnings per share, calculated in accordance with IFRS, for that year. For remuneration purposes, and reflective of the Group's positive earnings on an adjusted
basis, management have included the dilutive effect of share options in calculating adjusted diluted earnings per share.

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Operating Cash Flow Conversion Ratio and Organic Operating Cash Flow Conversion Ratio
Definition – net cash generated from operating activities before the impact of adjusting items and dividends from associates
and excluding taxes paid and net capital expenditure, as a proportion of adjusted profit from operations. It is also presented
excluding the inorganic performance of certain businesses bought or sold in the period.
Operating cash flow conversion ratio is used by Management within the Group’s incentive schemes as reported within the
Remuneration Report beginning on page 170. Operating cash flow conversion ratio has limitations as an analytical tool. It is not a
presentation made in accordance with IFRS and should not be considered as an alternative to measures of liquidity or financial position
as determined in accordance with IFRS. Operating cash flow conversion ratio is not necessarily comparable to similarly titled measures
used by other companies.
As Management assesses operating cash flow conversion ratio on an organic basis within the Group's incentive schemes, as reported
within the Remuneration Report beginning in page 170, this measure is also presented excluding the inorganic performance of certain
businesses bought or sold in the period.
The table below shows the computation of operating cash flow conversion ratio for the periods presented.
For the year ended 31 December (£m)
2023 2022 2021
Net cash generated from operating activities 10,714 10,394 9,717
Cash related to adjusting items 156 466 501
– Non-tobacco litigation costs (509) 60 —
– Tobacco litigation 460 171 248
– Other adjusting cash items 205 235 253
Dividends from associates (506) (394) (353)
Tax paid 2,622 2,537 2,314
Net capital expenditure (487) (599) (632)
Other — (1) —
Operating cash flow 12,499 12,403 11,547
Adjusted profit from operations* 12,465 12,408 11,150
Cash conversion ratio** -68% 99% 95%
Operating cash flow conversion ratio 100% 100% 104%

Operating cash flow 12,499 12,403 11,547

Inorganic adjustments (72)
Organic operating cash flow 12,427

Adjusted profit from operations 12,465 12,408 11,150

Inorganic adjustments (193)
Adjusted organic profit from operations 12,272
Organic operating cash flow conversion ratio 101%
Notes:
* See page 339 for a reconciliation of profit from operations to adjusted profit from operations.
** Net cash generated from operating activities as a percentage of profit from operations.

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Other Information

Non-GAAP Measures
Continued

Adjusted Cash Generated from Operations (at Current and Constant Rates of Exchange) and Adjusted Organic Cash
Generated from Operations (at constant rates of exchange)
Definition – net cash generated from operating activities before the impact of adjusting items (litigation), excluding dividends
received from associates, and after dividends paid to non-controlling interests, net interest paid and net capital expenditure,
and translational foreign exchange. It is also presented excluding the inorganic performance of certain businesses bought
or sold in the period.
Adjusted cash generated from operations is a measure of cash flow which is used within the Group’s incentive schemes as reported
within the Remuneration Report beginning on page 170. Adjusted cash generated from operations has limitations as an analytical tool.
It is not a presentation made in accordance with IFRS and should not be considered as an alternative to measures of liquidity or financial
position as determined in accordance with IFRS. Adjusted cash generated from operations is not necessarily comparable to similarly
titled measures used by other companies.
As Management assesses adjusted cash generated from operations (at constant rates of exchange) these measures also on an organic
basis within the Group's incentive schemes, as reported within the Remuneration Report beginning in page 170, this measure is also
presented excluding the inorganic performance of certain businesses bought or sold in the period.
The table below shows the computation of adjusted cash generated from operations for the periods presented.
For the year ended 31 December (£m)
2023 2022 2021
Net cash generated from operating activities 10,714 10,394 9,717
Dividends paid to non-controlling interests (105) (158) (150)
Net interest paid (1,763) (1,588) (1,488)
Net capital expenditure (487) (599) (632)
Other 1 — —
Cash related to adjusting items within adjusted cash generated from operations (49) 231 248
– Non-tobacco litigation costs (509) 60 —
– Tobacco litigation 460 171 248
Other costs excluding litigation and restructuring costs 19 3 —
Dividends from associates (506) (394) (353)
Adjusted cash generated from operations 7,824 7,889 7,342
Impact of translational foreign exchange 97 (484) 482
Adjusted cash generated from operations, at constant exchange rates 7,921 7,405 7,824
Inorganic adjustments, at constant exchange rates (2)
Adjusted organic cash generated from operations, at constant exchange rates 7,919

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Net Debt
Definition – total borrowings, including related derivatives, less cash and cash equivalents and current investments
held at fair value.
The Group uses net debt to assess its financial capacity. Net debt is not a measure defined by IFRS. The most directly comparable IFRS
measure to net debt is total borrowings. The Group’s Management Board believes that this additional measure, which is used internally
to assess the Group’s financial capacity, is useful to the users of the financial statements in helping them to see how business financing
has changed over the year. Net debt has limitations as an analytical tool. It is not a presentation made in accordance with IFRS and
should not be considered as an alternative to total borrowings or total liabilities determined in accordance with IFRS. Net debt is not
necessarily comparable to similarly titled measures used by other companies. In addition, it does not exclude restricted cash (as set
out in note 21 in the Notes on the Accounts) in the calculation. As a result, you should not consider this measure in isolation from, or as
a substitute analysis for, the Group’s measures of financial position or liquidity as determined in accordance with IFRS. A reconciliation
of borrowings to net debt is provided in note 23 in the Notes on the Accounts.

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Other Information

Non-GAAP Measures
Continued

This page is intentionally left blank

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Results on a Constant Translational Currency Basis

Movements in foreign exchange rates have impacted the Group’s financial results. The Group’s Management Board reviews certain
of its results, including revenue, revenue growth from New Categories, adjusted profit from operations and adjusted diluted earnings
per share, at constant rates of exchange. The Group calculates these financial measures at constant rates of exchange based on a
re-translation, at prior year exchange rates, of the current year’s results of the Group and, where applicable, its geographic segments.
The Group does not adjust for the normal transactional gains and losses in profit from operations that are generated by exchange
movements. Although the Group does not believe that these measures are a substitute for IFRS measures, the Group’s Management
Board does believe that such results excluding the impact of currency fluctuations year-on-year provide additional useful information to
investors regarding the Group’s operating performance on a local currency basis. Accordingly, the constant rates of exchange financial
measures appearing in the discussion of the Group results of operations (beginning on page 50) should be read in conjunction with the
information provided in note 2 in the Notes on the Accounts.
In 2023, 2022 and 2021, results were affected by translational exchange rate movements. In 2023, at the prevailing exchange rates,
reported revenue declined by 1.3%, revenue from New Categories increased by 15.6% and adjusted profit from operations increased by
0.5% versus 2022. At constant rates of exchange, reported revenue would have increased by 1.6%, revenue from New Categories would
have increased by 17.8% and adjusted profit from operations would have increased by 3.1%. This lower growth rate at prevailing exchange
rates reflects the negative translational impact as a result of the relative strength of the pound sterling. In 2022, at the prevailing
exchange rates, revenue increased by 7.7%, revenue from New Categories increased by 40.9% and adjusted profit from operations
decreased by 11.3% versus 2021. At constant rates of exchange, revenue would have increased by 2.3%, revenue from New Categories
would have increased by 37.0% and adjusted profit from operations would have increased by 4.3%. This higher growth rate at prevailing
exchange rates reflects the positive translational impact as a result of the relative weakening of the pound sterling.
In 2023, 2022 and 2021, adjusted diluted earnings per share was affected by translational exchange rate movements. In 2023, the
adjusted diluted earnings per share of 375.6p, an increase of 1.1%, would, when translated at 2022 exchange rates, have been 386.4p,
an increase of 4.0%. This lower growth rate, in 2023, at prevailing exchange rates, reflects the negative translational impact as a result
of the relative strength of the pound sterling. In 2022, the adjusted diluted earnings per share of 371.4p, an increase of 12.9%, would, when
translated at 2021 exchange rates, have been 348.1p, an increase of 5.8%. This higher growth rate, in 2022, at prevailing exchange rates,
reflects the positive translational impact as a result of the relative weakness of the pound sterling.

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Other Information

Employees

As at 31 December 2023, the number of persons employed by the Group was 46,725 worldwide. The Group believes that its labour
relations are good.
Certain temporary employees are included in the below figures. The number of such temporary employees is approximately 199 in 2023
and largely relates to seasonal workers within operations.
The following table sets forth the number of Group employees by region in 2023, 2022 and 2021.
As of 31 December
Region (number of employees worldwide) 2023 2022 2021
U.S. 3,763 4,152 4,405
AME 30,100 33,175 33,782
APMEA 12,862 13,070 13,863
Total employees 46,725 50,397 52,050
Note:
1. Included within the employee numbers for AME are certain employees in different locations in respect of central functions. Some of the costs of these employees are allocated
or charged to the various regions and markets in the Group.

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Additional Disclosures on
Liquidity and Capital Resources
Additional Disclosures on Liquidity and Capital Resources
The Group’s cash inflows derive principally from its operating activities. They are supplemented when required by cash flows from
financing activities, typically to support general corporate requirements but also, from time to time, to support acquisitions. The principal
sources of liquidity for the Group are cash flows generated from the operating business and proceeds from issuances of debt securities
described below under ‘capital resources’.
The Board reviews and agrees the overall treasury policies and procedures, delegating appropriate oversight to the Interim Finance
Director and the treasury function. The treasury policies include a set of financing principles and key performance indicators. The Group’s
treasury position is monitored by a Corporate Finance Committee chaired by the Interim Finance Director. Treasury operations are
subject to periodic independent reviews and audits, both internal and external.
Capital Expenditure
Gross capital expenditures include purchases of property, plant and equipment and purchases of certain intangibles. The Group’s gross
capital expenditures for 2023, 2022 and 2021 were £541 million, £630 million and £664 million, respectively, representing investment in
the Group’s global operational infrastructure (including, but not limited to, the manufacturing network, trade marketing and IT systems).
The Group expects gross capital expenditures in 2024 of approximately £550 million, representing the ongoing investment in the Group’s
operational infrastructure, including the continued investment in New Categories. This is expected to be funded by the Group’s cash
flows and existing facilities.
Hedging Instruments
As discussed in note 19 in the Notes on the Accounts, the Group hedges its exposure to interest rate movements and currency
movements. BAT’s cash flow hedges are principally in respect of sales or purchases of inventory and certain debt instruments. A certain
number of forward foreign currency contracts were used to manage the currency profile of external borrowings. Interest rate swaps
have been used to manage the interest rate profile of external borrowings, while cross-currency swaps have been used to manage the
currency profile of external borrowings.
Capital Resources
Policy
The Group utilises cash pooling and zero balancing bank account structures in addition to intercompany loans and borrowings to ensure
that there is the maximum mobilisation of cash within the Group. The key objectives of treasury in respect of cash and cash equivalents
are to protect the principal value of the Group’s cash and cash equivalents, to concentrate cash at the centre to minimise the required
long-term debt issuance, including perpetual hybrid debt treated as an equity instrument, and to optimise the yield earned. The amount
of debt the Group issues is determined by forecasting the net debt requirement after the mobilisation of cash. Subsidiary companies are
funded by share capital and retained earnings, loans from the central finance companies on commercial terms or through local
borrowings by the subsidiaries in appropriate currencies. All contractual borrowing covenants have been met and none are expected
to inhibit the Group’s operations or funding plans.
Borrowings
The following table sets out the Group’s long- and short-term borrowings as of the dates indicated:
1
As of 31 December (£m)
Currency Maturity dates Interest rates at 31 December 2023 2023 2022 2021
2
Eurobonds Euro 2024 to 2045 1.3% to 5.4% 5,569 7,149 7,316
UK sterling 2024 to 2055 2.1% to 7.3% 3,097 3,884 4,086
Swiss franc 2026 1.4% 234 226 203
Bonds issued pursuant US dollar 2024 to 2053 1.7% to 8.1% 29,913 30,152 25,625
to rules under the U.S.
Securities Act
2
(as amended)
US dollar 2022 US$3m LIBOR + 0.88 bps — — 554
2
Commercial paper — 27 269
Other loans 100 875 500
Bank loans 216 203 313
Bank overdrafts 103 106 346
Finance leases 498 517 446
Total 39,730 43,139 39,658
Notes:
1. The financial data above has been extracted from the Group’s consolidated financial statements.
2. The issuers of these debt securities are B.A.T. International Finance p.l.c., B.A.T Capital Corporation, Reynolds American Inc., or R.J. Reynolds Tobacco Company, as applicable. British
American Tobacco p.l.c. is the ultimate guarantor in each case.
Perpetual hybrid bonds issued by the Company have been classified as equity and therefore excluded from borrowings.
* Eurobond with a maturity date in 2021 that was repaid in 2021.

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Other Information

Additional Disclosures on Liquidity and Capital Resources

Continued

Off-Balance Sheet Arrangements and Contractual Obligations

The Group has no significant off-balance sheet arrangements. The Group has contractual obligations to make future payments on debt
agreements. In the normal course of business, the Group enters into contractual arrangements where the Group commits to future
purchases of services from unaffiliated parties and related parties.
The Group’s undiscounted contractual obligations as of 31 December 2023 were as follows:
Payments due by period (£m)
Less than
Total 1 Year 1–3 Years 3–5 Years Thereafter
1
Long-term notes and other borrowings, exclusive of interest 39,157 3,751 5,877 6,357 23,172
1
Interest payments related to long-term notes 573 573 — — —
Lease liabilities 498 131 180 88 99
2
Purchase obligations 1,023 947 76 — —
Total cash obligations 41,251 5,402 6,133 6,445 23,271
Notes:
1. For more information about the Group’s long-term debt, see note 23 in the Notes on the Accounts.
2. Purchase obligations primarily include commitments to acquire tobacco leaf. Purchase orders for the purchase of other raw materials and other goods and services are not included
in the table, as the Group’s operating subsidiaries are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders
typically represent authorisations to purchase rather than binding agreements.

The table above does not include any amounts that the Group may pay to fund its retirement benefit plans as the timing and amount
of any such future funding are unknown and dependent on, among other things, the future performance of defined benefit pension plan
assets, interest rate assumptions and other factors. The net retirement benefit scheme assets totalled £75 million as of 31 December
2023, which is net of pension assets of £7,317 million. The Group expects to be required to contribute £48 million to its defined benefit
plans during 2024. See note 15 in the Notes on the Accounts for further information.
The above table also excludes any amounts in relation to service contracts which are disclosed in note 31 in the Notes on the Accounts.
The Group has £60 million of future contractual commitments (2022: £80 million) related to property, plant and equipment and £2 million
of future contractual commitments (2022: £1 million) related to intangible assets.

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Summary of Group Risk Factors

The following is a summary of some of the risks and uncertainties, the occurrence of any one of which, alone or in combination with other
events or circumstances, may materially adversely affect the Group’s results of operations and financial condition. You should read this
summary together with the ‘Group Principal Risks’ section from pages 121 to 128 and the more detailed description of each risk factor
contained below. One of the principal risks "Inability to develop, commercialise and deliver the New Categories strategy" is an
amalgamation of various risk factors across all four Group Risk Factor categories of Business execution and supply chain, Legal,
regulatory and compliance, Economic and financial and Product pipeline, commercialisation and intellectual property.
Business execution and supply chain risks
– Competition from illicit trade.
– Geopolitical tensions that have the potential to disrupt the Group’s business in multiple markets.
– Injury, illness or death in the workplace.
– Disruption to the Group’s data and information technology systems, including by cyber attack or the malicious manipulation
or disclosure of confidential or sensitive information.
– Failure to meet current or future New Categories demand.
– Failure of a financial counterparty.
– Exposure to unavailability of, and price volatility, in raw materials and increased costs of employment.
– Failure to retain key personnel or to attract and retain skilled talent.
– Disruption to the supply chain and distribution channels.
– Failure to uphold the high standard of sustainability management, performance and reporting.
– Failure to successfully design, implement and sustain an integrated framework and operating model for Artificial Intelligence (AI).
– Inability to obtain adequate supplies of tobacco leaf.
– Exposure to product contamination.
– Failure to successfully design, implement and sustain an integrated technical landscape and ERP strategy.
– Failure to manage the Group’s climate change and circular economy risks.
– Impact of a pandemic on the performance of the Group.
Legal, regulatory and compliance risks
– Exposure to, the enactment of, proposals for, or expectations of regulation that significantly impairs the Group’s ability to
communicate, differentiate, market or launch its products and/or the lack of appropriate regulation for New Categories.
– Adverse implications of EU legislation on single-use plastics that will result in on-pack environmental warnings and financial
implications relating to Extended Producer Responsibility (EPR).
– Exposure to litigation, regulatory action or criminal investigations on tobacco, nicotine, New Categories and other issues.
– Significant and/or unexpected increases or structural changes in tobacco and nicotine-related taxes.
– Failure to comply with health and safety and environmental laws.
– Exposure to unfavourable tax rulings.
– Unexpected legislative changes to corporate income tax laws.
– Exposure to potential liability under competition or antitrust laws.
– Failure to establish and maintain adequate controls and procedures to comply with applicable securities, corporate governance
and compliance regulations.
– Lack of external recognition and acceptance of the foundational science and inability to effectively communicate to stakeholders
about the potential health impact of our New Category products.
– Insufficient product stewardship and failure to comply with product regulations.
– Failure to uphold high standards of corporate behaviour, including through unintended or malicious breach of anti-bribery and anti-
corruption and other anti-financial crime laws.
– Imposition of sanctions under sanctions regimes or similar international, regional or national measures.
– Failure to uphold New Categories marketing practices.
– Loss or misuse of personal data through a failure to comply with the European General Data Protection Regulation, the UK Data
Protection Act 2018, e-Privacy laws and other privacy legislation governing the processing of personal data.
Economic and financial risks
– Foreign exchange rate exposures.
– Inability to obtain price increases and exposure to risks from excessive price increases and value chain erosion.
– Effects of declining consumption of legitimate tobacco products and a tough competitive environment.
– Funding, liquidity and interest rate risks.
– Failure to achieve growth through mergers, acquisitions, joint ventures, investments and other transactions.
– Unforeseen underperformance in key global markets.
– Increases in net liabilities under the Group’s retirement benefit schemes.
Product pipeline, commercialisation and Intellectual Property risks
– Inability to predict consumers’ changing behaviours and launch innovative products that offer adult tobacco and nicotine consumers
meaningful value-added differentiation.
– Exposure to risks associated with intellectual property rights, including the failure to identify, protect and prevent infringement of
the Group’s intellectual property rights and potential infringement of, or the failure to retain licences to use, third-party intellectual
property rights.

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Other Information

Group Risk Factors

Business Execution and Supply Chain Risks

Risk: Competition from illicit trade
Description
Illicit trade in the form of counterfeit products, diversion of genuine Group products, and locally manufactured products, which do not
comply with applicable regulations and/or in which applicable taxes are evaded, represent a significant and growing threat to the
legitimate tobacco industry, including New Categories products. Factors such as increasing levels of taxation and inflation, economic
downturn and increased cost of living, lack of law enforcement, appropriate penalties and weak border control are encouraging more
adult tobacco and New Categories consumers to switch to illegal cheaper tobacco and New Categories products and are providing
greater rewards for counterfeiters and smugglers. Regulatory restrictions such as plain packaging or graphic health warnings, display
bans, flavour or ingredient restrictions and increased compliance costs further disadvantage legitimate industry participants by
providing competitive advantages to illicit manufacturers and distributors of illicit tobacco and New Categories products.
Impact
Illicit trade has an overall negative impact on society, deprives governments of revenues and encourages various forms of crime such
as terrorism and human trafficking. Above all, illicit trade has an adverse effect on the Group’s overall business and reputation. Illicit
trade can damage brand equity, which could undermine the Group’s investment in Trade Marketing and Distribution, increase
operational costs where products may become commoditised, make it more difficult to adhere to underage prevention and decrease
volumes sold. Although our AIT policy is an integral part of our SoBC, representing our internal commitment in the fight against illicit
trade and sets out the controls all Group companies must have in place and adhere to, it cannot prevent all instances of illicit trade.
Furthermore, counterfeit products (especially New Categories) and other illicit products could harm consumers, damages goodwill
and/or the category (with lower volumes and reduced profits), and could potentially lead to misplaced claims against BAT, further
regulation and a failure to deliver our corporate harm reduction objective.
Finally, as the Group has contractual and legislative obligations to prevent the diversion of our products into illicit channels, actual
and perceived breaches of the obligations to prevent product diversion into illicit channels can lead to substantial fines in the forms
of seizure payments and legislative penalties (including financial penalties), as well as the risk of reputational damage (including
negative perceptions of our governance and our ESG credentials) from Group products being found in illicit channels.

Risk: Geopolitical tensions that have the potential to disrupt the Group’s business in multiple markets
Description
The Group’s operations and financial condition are influenced by the economic and political situations in the markets and regions in
which it has operations, which are often unpredictable and outside of its control. Some markets in which the Group operates face the
threat of civil unrest and can be subject to frequent changes in regime. In others, there is a risk of terrorism, conflict, global health crisis,
war, organised crime or other criminal activity. The Group is also exposed to economic policy changes in jurisdictions in which it operates. In
addition, some markets maintain trade barriers or adopt policies that favour domestic producers, preventing or restricting the Group’s sales.
Impact
Deterioration of socio-economic or political conditions could lead to injury or loss of life, restricted mobility, loss of assets and/or denial
of access to BAT sites that reduce the Group’s access to particular markets or may disrupt the Group’s operations, such as supply
chain, or manufacturing or distribution capabilities. Such disruptions, including recent attacks on shipping routes in the Red Sea, may
result in increased taxes and/or other costs due to the requirement for more complex supply chain and security arrangements, the
need to build new facilities or to maintain inefficient facilities, or in a reduction of the Group’s sales volume. Further, there may be
reputational damage, including negative perceptions of our governance and protection of our people and our ESG credentials.

Risk: Injury, illness or death in the workplace

Description
The Group considers the safety of its employees and other individuals working with it as of utmost importance and fundamental
concern. Loss of life, serious injury, disability or illness to employees or individuals due to accident, geopolitical tension or other events
may occur during the research, manufacturing, distribution or retail of the Group’s products.
Impact
Past events have, and future events may led to serious injuries, ill health, disability or loss of life to employees and individuals who work
with the Group. This may result in reputational damage, difficulties in recruiting and retaining staff, exposure to civil and criminal
liability, prosecution and fines and penalties. These impacts could have an adverse effect on the Group’s results of operations and
financial condition and have a negative impact on its ESG credentials.

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Risk: Disruption to the Group’s data and information technology systems, including by cyber attack or the malicious
manipulation or disclosure of confidential or sensitive information
Description
The Group relies on information and digital technology (IDT) systems and networks to conduct core activities, such as manufacturing,
distribution, marketing, customer service, R&D and financial and management reporting, amongst other core activities. There is a risk
that these systems may be disrupted by intentional or unintentional actions that may compromise the integrity of information, result
in the inappropriate disclosure of confidential information, disrupt the operations of the Group, or may lead to false or misleading
statements being made about the Group.
Impact
The Management recognises that cyber security threats could pose significant risks to the Group’s business, reputation, financial
condition, and competitive position, and to the safety and privacy of our consumers, employees and other stakeholders.
Any disruption to technology systems related to the Group’s operations could adversely affect its business and result in financial, legal
and reputational impacts. Any delays or failure to detect or respond to attempts to gain unauthorised access to the Group’s information
technology systems can lead to a loss in confidentiality, integrity or availability of systems and/or data.
A security incident may result in:
– Loss or theft of confidential business information, when used alone or in conjunction with any other available information that
reduces the impact of BAT business strategy, investments and commercial operations.
– Personal data breach incidents that result in the disclosure of personally identifiable data resulting in legal, reputational,
and regulatory compliance impacts.
– Disruption to BAT’s business operations that impacts R&D facilities, manufacturing, distribution or technology services resulting
in business interruption and/or impacts to health and safety.
– Inappropriate use of technology systems to enable fraud, or theft of product, technology, or monetary resources.
– Loss of digital trust resulting in brand damage and a loss of consumer trust.
– A cyber incident experienced by a third party partner or supplier resulting in business interruption, supply chain disruption, loss
of company data or provides access or transmission of malicious activity from the supplier to BAT.

Risk: Failure to meet current or future New Categories demand

Description
The New Categories supply chain is a multi-tiered and complex environment with reliance on multiple factors, such as third-party
suppliers’ ability to upscale production in order to meet demand while maintaining product quality, dependency on single suppliers at
various points in the chain and the Group’s ability to build adequate consumables production capacity in line with product demand.
The geographical spread of suppliers and customers exposes the Group to political and economic issues such as Brexit and trade wars
which may compromise the New Categories supply chain. Given the developing nature of the New Categories portfolio, there is also an
enhanced risk that some products may not meet product quality and safety standards or may be subject to regulatory changes, leading
to product recalls, which we have experienced in the past, or bans of certain ingredients or products. In addition, the New Categories
supply chain may be vulnerable to changes in local legislation related to liquid nicotine that could increase import duties. Furthermore,
the New Categories supply chain includes the development of sensitive trade secrets jointly with external design partners, which
carries the risk of exposure of innovations to competitors.
Impact
Vulnerabilities in the New Categories supply chain may impact the Group’s ability to maintain supply and meet the current and future
demand requirements across the New Categories portfolio, potentially resulting in significant reputational harm and financial impact
that may negatively affect the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic
growth plans. Over-forecasting may also lead to write-offs and negatively impact working capital. The design of New Categories
devices may also prevent the scaling of commercial manufacturing, which will either restrict supply or increase the costs of production.
Further, there may be loss of investors’ confidence in ESG performance, including failure to deliver our corporate purpose of
harm reduction.
In addition, changes in local legislation related to liquid nicotine import duties may increase New Categories production costs, which
may increase end market pricing and reduce demand. Furthermore, the exposure of sensitive trade secrets can lead to competitive
disadvantages and further negatively impact the Group’s results of operations and financial condition and cause the Group to fail to
deliver on its strategic growth plans.

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Other Information

Group Risk Factors

Continued

Business Execution and Supply Chain Risks continued

Risk: Failure of a financial counterparty
Description
The Group relies on transactions with a variety of financial counterparties to manage the Group’s business and financial risks. In the
event that any of these counterparties fails, payments due from such counterparties, such as under hedging or insurance contracts,
may not be recovered. In addition, failure of a transactional banking party may lead to the loss of cash balances and disruption to
payment systems involving such counterparty.
Impact
The inability to recover payments due from one or more failed financial counterparties or the loss of cash balances may cause
significant financial loss and have an adverse impact on the Group’s results of operations, financial condition and financial risk profile.
In addition, the loss of cash balances or a disruption to payment systems may cause disruption to the Group’s ongoing operations
and ability to pay its creditors and suppliers.

Risk: Exposure to unavailability of, and price volatility in, raw materials and increased costs of employment
Description
The availability and price of various commodities required in the manufacture of the Group’s products fluctuate. Raw materials and
other inputs used in the Group’s business, such as wood pulp and energy, are commodities that are subject to price volatility caused
by numerous factors, including inflation, political influence, market fluctuations and natural disasters.
Similarly, the Group is exposed to the risk of an increase above inflation in employment costs, including due to governmental action
to introduce or increase minimum wages. Employment and health care law changes and the increase in inflation may also increase
the cost of provided health care and other employment benefits expenses.
Impact
Restricted availability and price volatility of commodities may result in supply shortages and unexpected increases in costs for raw
materials and packaging for the Group’s products, which may affect the Group’s results of operations and financial condition.
The Group experienced some of these effects during 2023, including higher cost of direct materials due to energy scarcity, increase in
transportation rates and commodity prices, as well as increases in utility costs resulting from the conflict in Ukraine, all of which have
led to increases in overall cost. While inflation also caused an increase in employment costs, this did not have a material adverse effect
to the Group's profitability. However, we cannot assure that this will not be materially affecting the Group's profitability in the future.
The Group has not always been able to, and in the future may not be able to, increase prices to offset increased costs without suffering
reduced sales volume and revenue. In the absence of compensating for increased costs through pricing, significant increases in raw
material, packaging and employment costs above inflation will impact product margins, leading to lower profits and negatively affecting
the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

Risk: Failure to retain key personnel or to attract and retain skilled talent
Description
The Group relies on a number of highly experienced employees with detailed knowledge of the tobacco and nicotine industry, other
areas of focus for the Group (including New Categories and Beyond Nicotine) and the Group’s business. Similarly, the Group is
dependent on its ability to identify, attract, develop and retain such qualified personnel in the future. The Group is also dependent on
external hires to ensure we are equipped with the right new business-critical capabilities and knowledge to accelerate transformation.
BAT anticipates that this trend will continue and therefore the ability to continue to build awareness, increase reach and ultimately
attract the new target audience remains a primary focus.
The shift in employees' preferences and societal expectations post COVID-19 are leading to shorter tenures. Furthermore, broader
economic and ESG trends may impact the Group’s ability to retain key employees and may increase competition for highly talented
employees. Whilst the Group is enhancing its effort on retaining critical capabilities and knowledge, building the right leadership
behaviour and organisational culture, and focusing on employee development and engagement, the retention risk of experienced
employees remains an area requiring management attention.
Impact
If the Group is unable to retain its existing key employees or to attract and retain skilled talent in the future, critical positions may be
left vacant, resulting in a failure to retain critical business knowledge required for our transformation, as well as adversely impacting the Group’s
results of operations, financial condition and achieving broader business objectives, such as its sustainability ambitions.
High voluntary employee turnover may also reduce organisational performance and productivity, leading to further adverse impact
on the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

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Risk: Disruption to the supply chain and distribution channels

Description
The Group has adopted an increasingly global approach to managing its supply chain, including distribution channels. Disruption to the
Group's supply chain may be caused by various factors, including, but not limited to, disruption to suppliers’ operations or to distribution
channels, and the deterioration in the financial condition of a trading partner. The Group foresees a heightened level of risk of disruption
in our New Categories supply chain because it is multi-tiered and complex in sourcing and distribution. Such disruption may be caused
by a cyber event, a global health crisis, political tensions, strikes, riots, civil commotion, a major fire, severe weather conditions or other
natural disasters which affect manufacturing or other facilities of the Group’s operating subsidiaries or those of their suppliers and
distributors. In certain geographic areas where the Group operates, insurance coverage may not be obtainable on commercially
reasonable terms, if at all. Coverage may be subject to limitations, or the Group may be unable to recover damages from its insurers.
Disruption may also be caused by spread of infectious disease (such as the COVID-19 pandemic) or by a deterioration/shortage in labour
or union relations, disputes or work stoppages or other labour-related developments within the Group or its suppliers and distributors.
In addition, the Group’s operating subsidiaries may not be able to establish or maintain relationships on favourable commercial terms
with their suppliers and distributors. In some markets, distribution of the Group’s products occurs through third-party monopoly
channels, often licensed by governments. The Group may be unable to renew these third-party supplier and distribution agreements
on satisfactory terms for many different reasons, including government regulations or sustainability considerations. There are also some
product categories for which the Group does not have surplus production capacity or where substitution between different production
plants is impractical - this may cause further disruption to our supply chain. Consolidation of global suppliers and certain distributors that
control large geographies may reduce the Group’s availability of alternatives and negatively impact the Group’s negotiating power with
key suppliers and distributors. These risks are particularly relevant in jurisdictions where the Group’s manufacturing facilities are more
concentrated or for certain product categories where production is more centralised.
Impact
Any disruption to the Group’s supply chain and distribution channels could have an adverse effect on the results of operations and
financial conditions of the Group through failures to meet shipment demand, contract disputes, increased costs, loss of market share
and inability to reinvest into New Category and support harm reduction agenda and cause the Group to fail to deliver on its strategic
growth plans.

Risk: Failure to uphold the high standard of sustainability management, performance and reporting
Description
Stakeholder expectations of, and regulatory requirements for, the Group’s sustainability management, ESG performance and reporting are
continually evolving: for example, the EU Corporate Sustainability Reporting Directive (CSRD) recently introduced a number of new reporting
obligations. The Group may fail to have the appropriate internal standards, strategic plans and governance, compliance, monitoring and
reporting mechanisms in place to ensure it can identify emerging issues, meet external expectations and comply with applicable
requirements. In addition, the Group relies on third-parties for certain ESG performance monitoring, measurement and other sustainability-
related services. Such service providers may fail to perform these services to the specified or required standards or timeframes.
Impact
Failure to uphold high standards of sustainability management and ESG performance or provide transparent and consistent reporting,
in line with applicable requirements, could significantly impact Group reputation or compliance and reduce investor confidence. In
addition, poor performance across any aspect of ESG, such as a failure to sufficiently address climate change mitigations, expectations
and requirements or human rights impacts across the Group’s business and supply chain, could result in increased costs and
regulation, difficulty in attracting and retaining talent, criminal or civil prosecution, or decreases in consumer demand for our products.
Poor performance could also result in our failure to deliver our ESG targets.
Failure to responsibly and transparently market our products and communicate our achievements and position, such that we are
accused of greenwashing, could potentially cause reputational damage and litigation impacts. In addition, the Group's association
with any provider of sustainability-related services that fails to perform its services for the Group or third-parties to the specified or
required standard or is alleged to have done so could also result in reputational damage and litigation impacts.

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Other Information

Group Risk Factors

Continued

Business Execution and Supply Chain Risks continued

Risk: Failure to successfully design, implement and sustain an integrated framework and operating model for Artificial
Intelligence (AI).
Description
Inability to effectively establish and maintain a cohesive and functional AI framework and operating model within the Group could result
in suboptimal utilisation of available AI technology, reduced efficiency and effectiveness, missed opportunities for innovation and value
creation, potentially harmful use of AI technology and violation of laws and regulations. Further, improper use of AI technology could
cause potential exposure regarding consumer privacy breaches. Additionally, we might be non-compliant regarding the implementation
of new technologies, including as a result of ambiguous legal requirements. The Group may also fail to ensure that the design,
implementation and ongoing management of the AI framework and operating model are well-planned, properly resourced and effectively
executed.
Impact
Without a well-designed and properly functioning AI framework and operating model, the organisation may not be able to fully leverage
the potential of AI technology and improve operational efficiency and effectiveness, which could result in missed opportunities for
innovation and value creation, potentially putting the organisation at a competitive disadvantage. The lack of a cohesive and functional
AI framework and operating model could result in increased costs associated with suboptimal utilization of AI technology, as well as the
potential need for additional resources to address issues and inefficiencies. Inability to adapt and adopt the technology in an effective
and compliant manner could result in reputational damage if the organisation is perceived as being unable to effectively leverage
emerging technologies and using data in a manner inconsistent with consumers' ethical expectations and company values. In addition,
use of discriminatory or unexplainable algorithms for decision making could potentially result in fines for BAT and increased attention
from regulatory authorities, consumers and other stakeholders.

Risk: Inability to obtain adequate supplies of tobacco leaf

Description
The Group purchases significant volumes of packed leaf each year. Tobacco leaf, as any other agricultural commodity, can be impacted
by a variety of external factors. Like any other agricultural supply chain, it can be particularly vulnerable to a range of challenges,
including climate change, weather-related events, such as drought, flood and other natural disasters, increasing demand for land and
natural resources, rural poverty, social inequality, child labour and ageing farmer populations. Tobacco production in certain countries
is also subject to a variety of controls, including regulation affecting farming and production control programmes, and competition for
land use from other agriculture commodities. Such controls and competition can further constrain the production of tobacco leaf,
raising prices and reducing supply.
The Group recognises the above and any combination of those, including topics like child labour, as a risk to our tobacco leaf supply chain.
Impact
Restricted availability of tobacco leaf may prevent the Group accessing sufficient tobacco leaf that meets its volume, quality and
sustainability requirements. This could lead to an impact in the quality of the Group's products to a level that may be perceptible by
consumers and may impact the Group's ability to deliver on consumer needs. The Group’s Sustainability commitments may restrict the
sources we can buy from, which would result in an imbalance in supply and demand potentially causing incremental tobacco prices.
Higher tobacco leaf prices would result in increased raw material costs and have an adverse effect on the Group's financial condition.
The Group may also experience reputational damage from not adequately managing its sustainability priorities like climate change,
protection of natural resources, including forests, and human rights in our leaf supply chain, which may restrict suppliers willing to do
business with us.

Risk: Exposure to product contamination

Description
The Group may experience product contamination, whether by accident or deliberate malicious intent, during supply chain or manufacturing
processes, or may otherwise fail to comply with the Group’s quality standards. The Group may also receive threats of malicious tampering.
Impact
Product contamination or threats of contamination may expose the Group to significant costs associated with recalling products from
the market or temporarily ceasing production. In addition, adult tobacco consumers may lose confidence in the specific brand affected
by the contamination, resulting in reputational damage and a loss of sales volume and market share. The Group could be subject to
liability and costs associated with civil and criminal actions as well as regulatory sanctions brought in connection with a contamination
of the Group’s products. Each of these results may in turn have an adverse effect on the Group’s results of operations, financial
condition and reputation and cause the Group to fail to deliver on its strategic growth plans.

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Risk: Failure to successfully design, implement and sustain an integrated technical landscape and ERP strategy
Description
The Group aims to improve profitability and productivity through supply chain improvements and the implementation of an integrated
operating model and organisational structure, including standardisation of processes, centralised back-office services and a common
IT platform. The Group undertakes transformation initiatives periodically which aim to enhance the organisation and facilitate growth,
including the Group's focus on New Categories and Beyond Nicotine. The Group’s efforts to achieve these goals are driven and enabled
through use of our TaO (central SAP ERP system) global template – a standardised process used by the Group with the use of a central
SAP instance common for the Group's subsidiaries. These processes include, among others, core back-office global processes,
procurement, warehouse management, accounting and controlling.
Impact
Failure by the Group to successfully evolve the TaO system to support a multi-category business model or not having a clear future-
fit ERP strategy, could lead to the Group's inability to support BAT's strategy and transformation, and realise anticipated benefits.
Additionally, this could lead to increased costs, disruption to operations, decreased trading performance, disgruntled employees, loss
of institutional knowledge and reduced market share. These results could in turn reduce profitability and funds available for investment
by the Group in long-term growth opportunities. Inability to develop governance process models in line with BAT's evolving business
strategy may result in the failure to achieve sustainable multi-category growth including capturing additional productivity gains and
achieving ESG goals which may in turn have an adverse effect on the Group’s results of operations and financial condition and cause
the Group to fail to deliver on its strategic growth plans.

Risk: Failure to manage the Group’s climate change and circular economy risks
Description
The Group is exposed to physical risks associated with climate change from severe weather events such as flooding, drought and
storms across its global operations and supply chain. Climate change may cause acute physical risks such as more frequent and severe
weather events, or chronic risks such as those related to longer-term shifts in climate patterns and temperatures. These, alongside
their direct impact on Group operations, could lead to reductions in the supply and quality of tobacco leaf and other physical goods
and cause transport and logistics disruptions in our supply chains.
The Group may also experience transition risks associated with the move to a low carbon economy, such as emissions-related
regulations and additional taxes applicable to its operations and its supply chain. The Group is exposed to risks associated with
the move towards a circular economy, including product-related regulatory risks, such as product design/disassembly requirements
and Extended Producer Responsibility (EPR) requirements. As climate change and circular economy-related legislation and reporting
requirements further evolve, companies need to effectively identify, assess, monitor and mitigate associated transition risks; failure
to do so adequately or less well than others could lead to BAT scoring lower in ESG ratings and indices used by financial actors in
making investment decisions.
As consumer and customer behaviours and expectations further evolve, the Group may fail to sufficiently adapt its product portfolio
and marketing strategy in response to stakeholders' increasing sustainability expectations. Climate change and circular economy-
related considerations, including relevant aspects of products and value chains, may result in a potential reduced demand for or
rejection of the Group’s products as well as reputational risk in relation to sustainability matters.
Impact
Disruption to the Group's agricultural and/or non-agricultural supply chain or product distribution channels, including logistics, could
have an adverse effect on its operations and financial condition through failures to meet product demand, contract disputes, increased
costs and loss of market share.
Consumer and customer behaviours and expectations may influence their purchasing decisions and may lead them to seek alternative
product offerings. An inability to develop and commercialise products, packaging or value chain sustainability innovations in-line with
demand or less well than competitors, including failures to adequately predict changes in consumer and societal behaviour and
expectations and reflect them in the product portfolio, could lead to missed commercial opportunities, under- or over-supply, loss
of competitive advantage, loss of market share, unrecoverable costs and the erosion of the Group's consumer base or brand equity.
This includes potential impacts from a failure to adequately manage product-related ESG performance and EPR requirements. In
addition, consumers failing to engage in product recycling and/or Take-Back schemes could also have an impact on the Group’s
product-related and EPR risks and requirements.
Material non-compliance with climate change and/or circular economy-related legislation or reporting requirements could reduce
BAT's ability to attract investors, result in reputational damage and potentially regulatory sanctions. Poor results in ESG ratings and
indices used by financial actors may negatively impact their investment decisions, and thereby increase the cost of capital or negatively
impact share price.
Failure to meet current and future employees’ expectations concerning the Group’s actions to mitigate and adapt to climate change
or address circular economy matters may negatively impact the retention and/or attraction of high-quality employees.

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Other Information

Group Risk Factors

Continued

Business Execution and Supply Chain Risks continued

Risk: Impact of a pandemic on the performance of the Group
Description
The Group continues to closely monitor the potential for disruption arising from pandemics, the most recent having been coronavirus
(COVID-19). Consequences may include significant logistical challenges for employees and their ability to perform their duties, potential
loss of lives or significant level of illness in the workforce, inability to deliver revenue stream and market share targets impacting profits
and cash flows, and disruption to the supply chain and third parties being unable to deliver contractual goods and services. In addition,
some countries in which the Group operates have adopted regulations restricting the ability to manufacture, distribute, market and
sell products.
Impact
The influence of COVID-19, future variants and other pandemics on the Group's operations and financial condition is difficult to predict given
the wide range of determining factors, not least the nature of the pandemic/virus, its speed of infection, geographical scope and duration.
The impact of a pandemic on global economic activity and the nature and severity of measures adopted by governments are numerous.
The impact on the Group is not limited to:
– Reductions or volatility in consumer demand for one or more of our products due to illness, retail closures, quarantine or other travel
restrictions, health consciousness (quitting use of tobacco and nicotine products), government restrictions, the deterioration
of socio-economic conditions, economic hardship and customer-downtrading (switching to a cheaper brand), which may impact
the Group’s market share.
– Disruptions to the Group’s operations, such as its supply chain, or manufacturing or distribution capabilities, which may result in
increased costs due to the need for more complex supply chain arrangements, to expand existing facilities or to maintain inefficient
facilities, a reduction of the Group’s sales volumes or an increase in bad debts from customers.
– Disruption to the Group’s operations resulting from a significant number of the Group’s employees, including employees performing
key functions, working remotely for extended periods of time or becoming ill, which may reduce the employees’ efficiency and productivity
and cause product development delays, hamper new product innovation and have other adverse effects on the Group’s business.
– Significant volatility in financial markets (including exchange rate volatility) and measures adopted by governments and central banks
that further restrict liquidity, which may limit the Group’s access to funds, lead to shortages of cash and cash equivalents needed
to operate the Group’s business, and impact the Group’s ability to refinance its existing debt.
– Regulations restricting the ability to manufacture, distribute, market and sell products, and potentially increasing illicit trade.
– Governments seeking to increase revenues through increased corporate taxes and excise in combustible and/or New Category
products, increasing the cost and prices of our products – which could reduce volumes and margins, and/or increase illicit trade.
While some negative effects caused by COVID-19 have taken place in several End Markets over the last few years, including reduced
demand due to temporary smoking bans, lockdown restrictions, increased border checks and change in consumer behaviours, none of
these have had a material effect on the Group’s overall profitability. However, all of the above factors may have material adverse effects
on the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans. The
difficulty in predicting future pandemics exacerbates this risk.

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Legal, Regulatory and Compliance Risks

Risk: Exposure to, the enactment of, proposals for, or expectations of regulation that significantly impairs the Group’s ability to
communicate, differentiate, market or launch its products and/or the lack of appropriate regulation for New Categories
Description
Tobacco control measures are in place in nearly all markets in which we operate. Regulation for Vapour and THP is now widespread,
while regulation of nicotine pouches is appearing in a growing number of markets. Such restrictions are introduced by legislation,
regulations and/or voluntary agreements. Most tobacco and nicotine control measures can be categorised as follows:
– Category Bans: including regulations that ban the sale, import, possession, or use of certain product categories, including entire bans
on New Category or novel products;
– Place: including regulations restricting consumption in private and public spaces (e.g. public place smoking or vaping bans, including
restaurants and bars);
– Product: including regulations on the use of or testing for ingredients, product design and attributes (e.g. tar/ nicotine / carbon
monoxide ceilings, format restrictions, filter bans); flavours bans (including menthol); nicotine levels and low nicotine cigarettes;
product safety (e.g. reduced cigarette ignition propensity standards); product disclosure (e.g. ingredients and emissions) and
environmental impact (e.g. Extended Producer Responsibility requirements for cigarette filters or biodegradable filter requirements);
– Packaging and labelling: including regulations on health warnings, dissuasive packaging, and other government-mandated messages;
restrictions on the use of certain descriptors and brand names; requirements on pack shape, size, weight and colour; and mandatory
plain packaging;
– Advertising, promotion and sponsorship: including partial or total bans on advertising, promotions, corporate communications
and sponsorship, and online and direct engagement communication;
– Purchase: including regulations on where the products are sold, such as type of outlet (e.g. supermarkets, online and vending
machines), radius or distance restrictions (e.g. 300 meters from a school), online sales bans, regulation regarding how they are sold and
displayed (e.g. above the counter or under the counter) and minimum purchase age and increases thereto, including generational bans;
– Price: including regulations that have implications on prices and margins (e.g. excise taxes, minimum prices and import/export duties); and
– Responsibility: including regulations introducing Extended Producer Responsibility schemes on cigarette manufacturers to cover
the cost to clean up cigarette waste (Single Use Plastics Directive (EU) 2019/904) and equipment-related cost sharing obligations to
fight illicit trade (Article 15.7 of EU Tobacco Products Directive 2014).
The Group believes that further tobacco control and nicotine regulation (including regulation for both nicotine and non-nicotine Herbal
Heated Products) is expected over the medium term in many of the Group’s markets. Irresponsible behaviour or marketing practices
of competitors (for example where there is a lack of appropriate regulation) or actions contrary to the regulations in certain markets,
may cause reputational harm to the industry as a whole and may result in additional regulation or bans. Further, there is pressure
on governments from international organisations and agencies, tobacco control NGOs, influential national regulators and the private
sector (including philanthropists, pharmaceutical and security technology companies and social justice groups) to pursue regulatory
policies and implement tobacco or nicotine product-related regulation which limit the commercial viability of tobacco and nicotine
products or prohibit products completely. Regulators may be lacking in understanding of New Categories products and their role
in tobacco harm reduction due to their novelty. These factors can lead to a lack of adequate or existing regulatory regimes or clear
and appropriate product classifications.
In addition, the Group may fail to implement the right level of control measures or to maintain adequate standards of compliance
with regulatory measures. For example, the Group’s marketing activities may fail to comply with the relevant law and regulations
or with the Group’s International Marketing Principles.
Insufficient information, instruction and training in the relevant areas and a lack of knowledge of the existence and/or requirements
of relevant regulations including tobacco and nicotine as well as other relevant regulations, such as battery or environmental regulation,
or a failure to monitor, assess and implement the requirements of new or modified regulation, may increase these risks.
There may also be negative and disproportionate societal responses to consumer abuse or misuse of tobacco and/or nicotine products
(e.g. in New Categories) or to certain categories of products.
With respect to Modern Oral and other New Categories, regulatory frameworks currently follow divergent approaches. In certain
markets, where there is an absence of adequate regulation, actions of irresponsible competitors may cause reputational harm to the
category and result in outright bans or adverse regulation. In markets where there is a likelihood of tobacco, pharmaceutical or food
regulatory classification, the category can be at risk of severe regulation or total ban.
The Group believes that there is a risk Tobacco Heated Products could be regulated as traditional tobacco products, driven by the
decision of WHO’s 8th Conference of Parties to the Framework Convention on Tobacco Control, and Reports from the WHO submitted
to the COP10, to apply tobacco control regulations to these products including recommendations for plain packaging and flavour bans.

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Other Information

Group Risk Factors

Continued

Legal, Regulatory and Compliance Risks continued

Risk: Exposure to, the enactment of, proposals for, or expectations of regulation that significantly impairs the Group’s ability to
communicate, differentiate, market or launch its products and/or the lack of appropriate regulation for New Categories continued
Description continued
Traditional Tobacco Products
With respect to tobacco and combustible products, many of the measures outlined in the FCTC have been or are in the process of being
implemented through national legislation in many markets in which the Group operates, including recommendations for plain packaging
and flavour bans (e.g. menthol bans – in effect in the European Union since 20 May 2020). In April 2022, the U.S. Food and Drug
Administration (FDA) announced its intention to ban menthol as a characterising flavour in cigarettes in the U.S. In December 2023, the
Biden administration released its latest unified agenda, indicating that the administration expects to issue the final menthol rule in March
2024; however, the administration is not bound by this timeline. In December 2022, the sale of all tobacco products with characterising
flavours (including menthol) other than tobacco were banned in the state of California, which is the most populated state in the U.S.
Subsequent to the FDA announcement on 28 April 2022 of a proposed product standard to prohibit menthol as a characterising flavour
in cigarettes, the FDA formally submitted the final product standard to the Office of Management and Budget on 18 October 2023.
Further, various national or international regulatory regimes may seek to require the reduction of nicotine levels in tobacco products.
In March 2018, the FDA published its Advanced Notice of Proposed Rulemaking titled “Tobacco Product Standard for Nicotine Level
of Combusted Cigarettes” and invited interested parties to submit comments on, among other issues, maximum nicotine limits and
whether any maximum nicotine level should apply to combustible tobacco products. In October 2019, the FDA withdrew the Advanced
Notice of Proposed Rulemaking without explanation. With the Spring Unified Agenda (released June 2022), the FDA announced a plan to
move forward with the proposed rule reducing nicotine levels in cigarettes, indicating that the rule would be published in December
2023, which did not occur. With the Fall Unified Agenda (released December 2023), the agenda anticipates a proposed nicotine rule in
April 2024; however, the FDA has clarified that there is no precise date on which is plans to issue the proposed rule.
In the U.S., subject to the FDA's enforcement discretion, manufacturers of all tobacco products, which include nicotine derived from
tobacco or any other source, must submit information to the FDA seeking formal marketing authorisation of such products.
Although the new government from New Zealand recently announced that the relevant act would be repealed, New Zealand had
approved legislation banning anyone born after 1 January 2009 from buying tobacco products, imposing a retail limit of 600 retailers
across New Zealand from 1 July 2024, and implement a nicotine limit in smoked tobacco to 0.8 mg/g (~5% of current levels) from 1 April
2025. In the meantime, the UK government has announced its intention to impose a similar generational ban preventing people born
after 1 January 2009 from buying tobacco products, including THPs, when they come of age (18 years old). The consultation process
is ongoing and a regulatory impact assessment should be published in due course.
Finally, the preparations of a revised EU Tobacco Products Directive are progressing, with estimated adoption in 2026. The current
Directive might be replaced with a directly applicable regulation, following which transposition in Member States would no longer be
required. It is anticipated that this new regulation could include plain packaging for combustibles and/or greater regulation of tobacco
and nicotine product ingredients (including Herbal Heated Products).
New Categories
With respect to New Categories, regulation is still evolving and frameworks for regulation and taxation vary from country to country.
Some regulators have applied or are considering applying combustible tobacco products’ restrictive regulatory framework to New
Categories. Some jurisdictions have banned or are considering banning certain New Category products altogether.
Following reports of individuals experiencing acute respiratory injury in suspected association with vaping certain e-liquids (EVALI)
and reports regarding vaping youth usage in the U.S., stricter regulatory views gained momentum and were publicly supported by the
World Health Organization (WHO) which continues to call on countries to ban or regulate novel nicotine products as tobacco. The U.S.,
the EU and Canada are playing a leading role across all identified regulatory risks, including: flavour regulations, advertising restrictions
and nicotine limits, among others.
On 12 October 2021, the FDA issued its first vapour product Marketing Granted Orders (MGOs) for tobacco flavoured Vuse Solo and Vuse
Solo power units. On the same date, Reynolds American companies received Marketing Denial Orders (MDOs) for the flavoured (non-
menthol and non-tobacco) Vuse Solo products. Reynolds American companies filed an internal agency appeal against these MDOs,
which remains pending. On 12 May 2022, the FDA issued MGOs for Vuse Vibe and Vuse Ciro power units and “Original” (tobacco)
flavours. On the same date, Reynolds American companies received MDOs for the flavoured (non-menthol and non-tobacco) Vuse Vibe
and Ciro products. Reynolds American companies filed an internal agency appeal against these MDOs, which remains pending. On
24 January 2023, the FDA issued MDOs for Vuse Vibe and Ciro menthol products. Reynolds American companies filed a court challenge
in the U.S. Court of Appeals for the Fifth Circuit. On 17 March 2023, the FDA issued MDOs for Vuse Solo menthol products. Reynolds
American companies filed a court challenge in the Fifth Circuit. The Court issued a stay in these cases pending a decision on the merits of
Reynolds’ legal challenges to the underlying MDOs. On 12 October 2023, the FDA issued MDOs for Vuse Alto menthol and mixed-berry
products. Reynolds American companies immediately filed a lawsuit in the U.S. Court of Appeals for the Fifth Circuit challenging these
MDOs and obtained a temporary administrative stay pending resolution of Reynolds’ motion for stay pending judicial review, which was
filed on 20 October 2023. Briefing on the motion continues. Vuse Alto tobacco flavours remain under FDA review.
The Group’s Velo products remain on the market in the U.S., again pending FDA decisions on their marketing authorisations, and there
can be no assurance these will be granted. If the FDA denies a marketing authorisation then the relevant product(s) would need to be
withdrawn from the market (unless a court or the FDA intervenes).
Beyond Nicotine
As the Group also looks to Beyond Nicotine products including CBD and cannabis (in connection with its investments in Organigram,
Sanity Group and Charlotte's Web), it may be subject to additional regulation and these products might not be scalable on a global basis
given varying degrees of regulation.
Please refer to the discussion of tobacco and nicotine regulatory regimes under which the Group’s businesses operate set out from page
375.

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Impact
Existing and future regulatory measures impacting one or more New Categories and/or Beyond Nicotine and/or traditional tobacco
products could adversely affect volume, revenue and profits, as a result of: restrictions on the Group’s ability to sell and differentiate
its products or brands, leverage price, innovate, make scientific claims, compete in future product categories and make new market
entries; regulations (e.g. pharma or food) or total bans of tobacco and/or New Categories products in certain markets; reduced margins
due to increased operating costs; impediments to building or maintaining brand equity; and restrictions on the Group’s ability to deliver,
market and sell existing or new products responding to consumers’ preferences. In addition, new (and changes to existing) regulation
could lead to greater complexity, as well as higher production and compliance costs.
As an example, through the acquisition of Reynolds American Inc., the Group acquired the Newport brand, the leading menthol
cigarette brand in the U.S., the Group’s largest single market. The sales of Newport, together with the other menthol brands of
the Group’s operating subsidiaries, represent a significant portion of the Group’s total net sales. Any action by the FDA or any other
governmental authority banning or materially restricting the use of menthol in tobacco products (such as the proposed FDA ban on
menthol cigarettes) could have a significant negative impact on sales volumes which would, in turn, have an adverse effect on the
results of operations and financial position of the Group.
Regulations can also have an adverse impact on the Group’s ability to compete within the legitimate tobacco, nicotine or New
Categories industry and with illicit traders or legal operators exploiting legal and regulatory loop holes. Regulations could also lead
to reduced consumer acceptability of new product specifications, leading to consumers seeking alternatives in illicit markets, especially
where enforcement is lacking, such as in the case of the increase in illicit single-use devices in the U.S. market.
Unclear or inadequate regulations can lead to legal uncertainty, impacting the Group’s position in the marketplace.
In the specific case of New Categories, our corporate harm reduction ambition, including of New Categories revenue of £5 billion
by 2025 and 50 million consumers of Non-Combustible products by 2030 could be at risk if stricter regulatory views are imposed at a
global scale, or if appropriate regulation is lacking or there is a lack of acceptance of tobacco harm reduction as a tobacco control policy
(preventing a balanced regulatory framework for New Categories). Any action by the FDA or any government authority restricting the
use of New Category products could also have an adverse effect on the operation and financial position of the Group and the possible
failure of the Group’s harm reduction objective and loss of confidence in the Group’s ESG performance.
As a reflection of the real or perceived impact of stricter regulation in our business, the Group’s share price has also experienced, and
could in the future experience, shocks upon the announcement, expectation or enactment of restrictive regulation. All these effects
may have an adverse effect on the Group’s results of operations and financial conditions and cause the Group to fail to deliver on its
strategic growth plans.
In addition, considering the significant number of regulations that may apply to the Group’s businesses across the world, the Group is
and may in the future be subject to claims for breach of such regulations. Government authorities (such as the FDA), organisations or
even individuals may allege that our marketing activities do not comply with the relevant law s and regulations, or with our International
Marketing Principles. As such, the Group could be subject to liability and costs associated with civil and criminal actions as well as
regulatory sanctions, fines and penalties brought in connection with these allegations. Even when proven untrue, there are often
financial costs and reputational impacts in defending against such claims and allegations (including potential adverse impact on the
treatment by the FDA of the Group ‘s PMTAs in the U.S.). Each of these results may in turn have an adverse effect on the Group’s
results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

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Other Information

Group Risk Factors

Continued

Legal, Regulatory and Compliance Risks continued

Risk: Adverse implications of EU legislation on single-use plastics that will result in on-pack environmental warnings and
financial implications relating to the Extended Producer Responsibility (EPR)
Description
The EU adopted a Directive on single-use plastics in July 2019 (the "SUP Directive") which, among other products, targets tobacco
products with filters containing plastic. The Cellulose Acetate in our filters is defined as a single-use plastic under the Directive and,
as such, the Directive will have an impact on the Group’s cigarettes, filters for other tobacco products and consumables for THPs.
Under the SUP Directive, the Group will be subject to (and in some cases already is subject to) Extended Producer Responsibility
(“EPR”) schemes, requiring the Group to cover the costs of collecting, transporting, treating and cleaning-up of filters containing plastic.
The SUP Directive also imposes on tobacco manufacturers the obligation to finance consumer awareness campaigns and to place
environmental markings on packs of products with filters containing plastic.
Member States had to transpose the SUP Directive into national law by 3 July 2021, with an implementation deadline of 5 January 2023
for EPR schemes. In practice, most Member States are late on transposition and implementation, with the practical consequence that
EPR schemes will go live with several months delays on average. The European Commission is also late in its issuance of guidelines on
the criteria for the costs of cleaning up litter, which should have been issued prior to the anticipated implementation deadline for EPR
schemes. This introduces further difficulties and uncertainty in the design and setting-up of EPR schemes. When transposing the SUP
Directive into national law, EU member states could decide to expand the scope of EPR systems under their respective national laws,
which may expose the Group to additional regulations and financial obligations. This is the case in France, where EPR implementation
has already occurred with an expansion of the scope to include non-plastic filters for RYO products. Although Sweden’s government
has abandoned plans to extend its national EPR system to Snus and Modern Oral pouches, other markets are still at risk of extension,
such as in Spain (tobacco manufacturers would be mandated to financially contribute to the cost of cleaning of parts of the general
sewage system), the Czech Republic (tobacco manufacturers would be mandated to contribute to the cost of managing household
waste costs), and Poland and Romania (manufacturers’ financial contribution would also cover paper filters, although they are not
plastic items). Proposed regulations are still being discussed in these countries.
It is noted that there is a growing level of scrutiny on the use of single-use plastic across the world and a number of other markets in
which the Group operates are considering ways to restrict (or ban) the use of filters made of plastic and/or introduce EPR schemes
covering other plastic elements in our products beyond filters for traditional products and/or New Categories products.
Impact
The financial implications of existing and future EPR schemes will increase administrative burdens and operating costs and may have
an adverse effect on the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic
growth plans. If significant space is appropriated on the packaging of some of the Group’s products, this may also be an impediment
to maintaining or building brand equity of the Group’s products which may, in turn, have a negative impact on the Group’s sales volume.
Failure to deliver appropriate EPR schemes may lead to imposition of the schemes by the local authorities at a higher cost to the Group,
adversely impacting the Group’s results of operations, financial condition and reputation.

Risk: Exposure to litigation, regulatory action or criminal investigations on tobacco, nicotine, New Categories
and other issues
Description
The Group is involved in litigation related to its tobacco and nicotine products, including legal, regulatory and patent actions,
proceedings and claims, brought against it in a number of jurisdictions. Claims brought against the Group may be based on personal
injury (both individual claims and class actions), economic loss arising from the treatment of smoking and health-related diseases
(such as medical recoupment claims brought by local governments), patent infringement (please refer to the risk factor under
“Product pipeline, commercialisation and Intellectual Property risks, Exposure to risks associated with intellectual property rights,
including the failure to identify, protect and prevent infringement of the Group’s intellectual property rights and potential infringement
of, or the failure to retain licences to use, third-party intellectual property rights” below), negligence, strict tort liability, design defect,
failure to warn, fraud, misrepresentation, deceptive/unfair trade practices, conspiracy, medical monitoring and violations of antitrust/
racketeering laws. Sustainability-related litigation and regulatory action may also be brought against the Group.
Certain actions, such as those in the U.S. and Canada, involve claims in the tens or hundreds of billions of pounds sterling. The Group
is also involved in proceedings that are not directly related to its tobacco and nicotine products, including proceedings based
on environmental pollution claims.
Additional legal and regulatory actions and investigations, proceedings and claims may be brought against the Group in the future.
Impact
The Group’s consolidated results of operations and financial position could be materially affected by any unfavourable outcome of
certain pending or future litigation. The Group could be exposed to substantial liability, which may take the form of ongoing payments,
such as is the case with the State Settlement Agreements in the U.S. that require substantial ongoing payments by Group subsidiary,
RJRT. Whether successful or not, the costs of the Group’s involvement in litigation could materially increase due to costs associated
with bringing proceedings and defending claims, which may also cause operational and strategic disruption by diverting management
time away from business matters. Liabilities and costs in connection with litigation could result in bankruptcy of one or more Group
entities, for example, following a judgement in Canada, certain of the Group's Canadian subsidiaries filed for protection under the CCAA.
Any negative publicity resulting from these claims may also adversely affect the Group’s reputation.
The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial
condition and cause the Group to fail to deliver on its strategic growth plans.
Please refer to note 31 on page 286 in the Notes on the Accounts for details of contingent liabilities applicable to the Group.

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Risk: Significant and/or unexpected increases or structural changes in tobacco and nicotine-related taxes
Description
Tobacco and nicotine products are subject to high levels of taxation, including excise taxes, sales taxes, import duties and levies in most
markets in which the Group operates. In many of these markets, taxes are generally increasing, but the rate of increase varies between
markets and between different types of tobacco and nicotine products. Increases in, or the introduction of new, tobacco and nicotine-
related taxes may be caused by a number of factors, including fiscal pressures, health policy objectives and increased lobbying pressure
from anti-tobacco advocates.
With respect to New Categories, although a common framework for regulation and taxation has yet to emerge, the manufacture, sale,
packaging and advertising of such products are increasingly being regulated and taxed.
Impact
Significant or unexpected increases in, or the introduction of new, tobacco-related taxes or minimum retail selling prices, changes in
relative tax rates for different tobacco and nicotine products or adjustments to excise have in the past resulted, and may in the future
result, in the need for the Group to absorb such tax increases due to limits in its ability to increase prices, an alteration in the sales mix
in favour of value-for-money brands or products, or growth in illicit trade, each of which could impact pricing, sales volume and profit
for the Group’s products. Significant or unexpected increases of tobacco-related taxes could also impact the Group's ability to deliver
the corporate purpose of harm reduction.

Risk: Failure to comply with health and safety and environmental laws
Description
The Group is subject to a variety of laws, regulations and operational standards relating to health and safety and the environment.
The Group may fail to assess certain risks and implement the right level of control measures or to maintain adequate standards of
health and safety or environmental compliance, which could cause injury, ill health , disability or loss of life to employees, contractors
or members of the public, or harm to the natural environment and local communities in which the Group operates. As a result of the
outcomes of the COP26, further future regulation is anticipated as governments look to meet their climate change ambitions.
Insufficient information, instruction and training in the relevant areas and a lack of knowledge of the existence and/or requirements
of relevant regulations, or a failure to monitor, assess and implement the requirements of new or modified legislation, may increase
these risks.
Impact
Any failure by the Group to comply with applicable health and safety or environmental laws, or the exposure to the consequences of
a perceived failure, could result in business disruption, reputational damage, difficulties in recruiting and retaining staff, increased
insurance costs, consequential losses, the obligation to install or upgrade costly pollution control equipment, loss of value of the Group’s
assets, remedial costs and damages, fines and penalties as well as civil or criminal liability. Each of these results could in turn adversely
impact the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

Risk: Exposure to unfavourable tax rulings

Description
The Group is subject to tax laws in a variety of jurisdictions. The Group‘s interpretation and application of the tax laws could differ from
those of the relevant tax authority, which may subject the Group to claims for breach of such laws, including for late or incorrect filings
or for misinterpretation of rules. Tax authorities in a variety of jurisdictions, such as the Netherlands and Russia, have assessed, and
may in the future assess, the Group for historical tax claims, including interest and penalties, arising from disputed areas of tax law.
The Group is currently party to tax disputes in a number of jurisdictions, some of which involve claims for amounts in the hundreds
of millions of pounds sterling.
Please refer to note 31 on page 286 in the Notes on the Accounts for details of contingent liabilities applicable to the Group.
Impact
The Group’s failure to comply with the relevant tax authority’s interpretation and application of the tax laws could result in significant
financial and legal penalties, including the payment of additional taxes, fines and interest in the event of an unfavourable ruling by a tax
authority in a disputed area, as well as the payment of dispute costs. Disruption to the business could occur as a result of
management’s time being diverted away from business matters. Each of these results could negatively affect the Group’s results
of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

Risk: Unexpected legislative changes to corporate income tax laws

Description
The Group is subject to corporate income tax laws in the jurisdictions in which it operates. These laws frequently change on a
prospective or retroactive basis.
Impact
Legislative changes to corporate income tax laws and regulations may have an adverse impact on the Group’s corporate income tax
liabilities and may lead to a material increase of the Group’s overall tax rate. This could, in turn, negatively affect the Group’s results of
operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

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Other Information

Group Risk Factors

Continued

Legal, Regulatory and Compliance Risks continued

Risk: Exposure to potential liability under competition or antitrust laws
Description
According to the Group’s internal estimates, the Group is a market leader by volume and/or value in certain categories in a number
of countries in which it operates and/or is one of a small number of tobacco and/or New Categories companies in certain other markets
in which it operates. The Group has had antitrust infringement decisions imposed against it in the past and is subject to ongoing
investigations (please refer to note 31 on page 286 in the Notes on the Accounts for details of contingent liabilities applicable to the
Group). The Group may fail to comply with competition or antitrust laws and may be subject to investigation and/or litigation for alleged
abuse of its position in markets in which it has significant market share or for alleged collusion/anti-competitive arrangements with
other market participants. Competition/antitrust laws continue to evolve globally with increasingly aggressive enforcement.
Impact
Failure by the Group to comply with competition or antitrust laws and investigations (and/or litigation) for violation of such laws may
result in significant legal liability, fines, penalties and/or damages actions; criminal sanctions against the Group, its officers and
employees; increased costs, prohibitions on conduct of the Group’s business; forced changes in business practices, forced divestment
of brands and businesses (or parts of businesses) to competitors or other buyers; director disqualifications; commercial agreements
being held void; and operational and strategic disruption (including by diverting management time away from business matters).
The Group may face increased public scrutiny and the investigation or imposition of sanctions by antitrust regulation agencies and/or
courts for violations of competition regimes which may subject the Group to reputational damage and loss of goodwill, including
negative perceptions of the Group’s governance and our ESG credentials.
The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial
condition and cause the Group to fail to deliver on its strategic growth plans.

Risk: Failure to establish and maintain adequate controls and procedures to comply with applicable securities, corporate
governance and compliance regulations
Description
The Group’s operations are subject to a range of rules and regulations around the world. These include U.S. securities, corporate
governance and compliance laws and regulations, such as the Sarbanes-Oxley Act of 2002 and the U.S. Foreign Corrupt Practices Act
of 1977, and expanding ESG reporting and disclosure requirements which apply to the Group’s worldwide activities. While the Group
continuously seeks to improve its systems of internal controls and to remedy any weaknesses identified, there can be no assurance
that the policies and procedures will be followed at all times or effectively detect and prevent violations of applicable laws. In addition,
the Group is subject to increasingly stringent reporting obligations under UK corporate reporting regulations.
Impact
The increased scope and complexity of applicable regulations to which the Group is subject may lead to higher costs for compliance.
Failure to comply with laws and regulations may result in significant legal liability, fines, penalties, class action suits and/or damages
actions, criminal sanctions against the Group, its officers and employees, and damage to the Group’s reputation. Non-compliance with
such regulations could also lead to a loss of the Group’s listing on one or more stock exchanges or a loss of investor confidence with a
subsequent reduction in share price.

Risk: Lack of external recognition and acceptance of the foundational science and inability to effectively communicate to
stakeholders about the potential health impact of our New Category products.
Description
Scientific evidence to support the harm reduction potential of New Category products is essential for demonstrating and
communicating the risk reduction potential of these products to adult smokers. BAT conducts rigorous science to demonstrate the
potential reduced risk outcomes when smokers switch to New Category products, and in the longer-term, epidemiological data will be
required to demonstrate the health impact at population levels. Consumer expectations and the rapid pace of innovation necessitate
the evolution of the product portfolio, which requires the Group to regularly re-assess and update the associated scientific evidence base.
Long-term epidemiological data requires decades to acquire. Therefore, the scientific data available today is by necessity shorter-term
data that provides a strong indication of the reduced-risk potential of New Category products relative to cigarettes. In terms of the
wider tobacco harm reduction strategy, there is a risk that the long-term health impact of New Category products is not fully
understood at this time. There is also a risk of failure to communicate the scientific findings in a timely or effective manner.
Furthermore, there are challenges on the choice of standards, controls and/or experimental design and methodology used for
demonstrating the robustness of scientific research, together with regulation limiting risk communication to consumers.
Impact
Inability to fully demonstrate and communicate the tobacco harm reduction abilities of New Category products in a timely manner may
lead to greater regulatory restrictions or outright bans, market share reduction, fines and penalties, reputational damage, and inability
to sustain our quality growth and sustainability strategy. These potential impacts could cause the Group to fail to deliver on its strategic
growth plans and objectives.

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Risk: Insufficient product stewardship and failure to comply with product regulations
Description
We are subject to risks of safety incidents in pre-market testing or in market due to, for example, a lack of due caution and appropriate
response paid to pre-market product data, or toxicology information, inaccurate and unreliable information from suppliers and/or
compromise of data or other information through cybersecurity attacks.
The interpretation and application of regulations concerning the Group’s products, such as the Tobacco and Related Products Directive
(TPD2), may be subject to debate and uncertainty. This includes uncertainty over product classifications and restrictions on advertising.
In particular, with respect to the developing category of New Categories, which has grown in size and complexity in a relatively short
period of time, a consensus framework for the interpretation and application of existing regulation has yet to emerge.
The continuously changing and evolving landscape of regulation concerning the Group’s products contributes to the uncertainty
surrounding interpretation and application and creates a risk that the Group may misinterpret or fail to comply with developing
regulations in the various jurisdictions in which it operates, or becomes subject to enforcement actions from regulators. With the
continuous changing of product cycle plans and expansion to new markets and innovations, there is a risk that such changes and
launches fail to comply with the relevant regulations, including pre-approval and/or pre-registration requirements. For example, some
governments have intentionally banned or are seeking to ban novel tobacco products and products containing nicotine, while others
would need to amend their existing legislation to permit their sale. Even in countries where the sale of such products is currently
permitted, some governments have adopted, or are seeking to adopt, bans on New Categories or restrictions on certain flavours.
Impact
The significant number of emerging regulations and the uncertainty surrounding their interpretation and application may subject the
Group to claims for breach of such regulations. Financial costs of such enforcement actions include financial penalties, product recalls
and litigation costs, and entail a significant risk of adverse publicity and damage to the Group’s reputation and goodwill. In cases of
consumer injury or fatality due to a consumer product safety issue, this could also cause significant Group reputational damage, leading
to a negative impact on stakeholder confidence, including consumers, retailers, investors, and regulatory and public health organisations.

Risk: Failure to uphold high standards of corporate behaviour, including through unintended or malicious breach of anti-
bribery and anti-corruption and other anti-financial crime laws
Description
The Group is subject to various anti-corruption laws and regulations and other anti-financial crime laws including but not limited to
those relating to tax evasion, money laundering, terrorist financing and bribery (Anti-Corruption Laws, including the UK Proceeds of
Crime Acts (POCA)). All employees of BAT, its subsidiaries and joint ventures which it controls are expected to uphold a high standard
of corporate behaviour and comply with the Group Standards of Business Conduct (SoBC) which includes a requirement to comply
with Anti-Corruption Laws. Employees, associates, suppliers, distributors and agents are prohibited from engaging in improper
conduct to obtain or retain business or to improperly influence (directly or indirectly) a person working in an official capacity to decide
in the Group’s favour. The Group’s employees, contractors and service providers may fail to comply with our SoBC and/or may violate
applicable Anti-Corruption Laws.
From time to time, the Group investigates, and becomes aware of governmental authorities’ investigations into, allegations of
misconduct, including allegations of corruption at Group companies. Some of these allegations are currently being investigated.
The Group cooperates with the authorities where appropriate. Please refer to note 24 on page 272 in the Notes on the Accounts.
Please refer to note 31 on page 286 in the Notes on the Accounts for details of contingent liabilities applicable to the Group.
Impact
Failure of the Group to comply with anti-corruption laws and regulations and other anti-financial crime laws, or to deploy and maintain
robust internal policies, procedures and controls may and have resulted in significant fines and penalties (reducing the Group’s ability to
reinvest in the future), a share price impact, criminal and/or civil sanctions against the Group and its officers and employees, increased
costs, prohibitions or other limitations or requirements (e.g. compliance requirements) on the conduct of the Group’s business and
reputational harm (including negative perceptions of the Group’s governance and our ESG credentials), and may subject the Group to
claims for breach of such regulations.
The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial condition
and cause the Group to fail to deliver on its strategic growth plans. Even when proven untrue, there are often financial costs, time
demands and reputational impacts associated with investigating and defending against such claims.

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Other Information

Group Risk Factors

Continued

Legal, Regulatory and Compliance Risks continued

Risk: Imposition of sanctions under sanctions regimes or similar international, regional or national measures
Description
National, international and supra-national sanctions regimes or similar international, regional or national measures are complex and
dynamic and may affect territories in which the Group operates or third parties with which it may have commercial relationships. There
may be unintended or malicious breaches of sanctions due to inappropriate or negligent behaviour by BAT employees, contractors,
customers, suppliers or service providers.
Operations in countries and territories subject to sanctions expose the Group to the risk of significant financial costs and disruption
in operations that may be difficult or impossible to predict or avoid or the activities could become commercially and/or operationally
unviable. In particular, the Group has operations in Cuba, which is subject to various sanctions in the United States.
From time to time, the Group investigates, and becomes aware of governmental authorities’ investigations into, allegations of
misconduct, including alleged breaches of sanctions at Group companies. Some of these allegations are currently being investigated.
The Group cooperates with the authorities, where appropriate.
In 2023, the Group reached settlement agreements with the DOJ and OFAC in the United States related to breaches of sanctions
related to North Korea, which resulted in the imposition of fines against the Group totalling US$635 million. Sanctions can be imposed
quickly with the possibility of further territories the Group operates in becoming subject to sanctions at short notice.
National, international and supra-national sanctions regimes may also affect third parties with which the Group has commercial
relationships, e.g. through their banks (including possible risk aversion to being associated with a sanctioned territory), and could lead
to supply and payment chain disruptions.
Please refer to note 31 on page 286 in the Notes on the Accounts for details of contingent liabilities applicable to the Group.
Impact
As a result of the limitations imposed by sanctions, it may become commercially and/or operationally unviable for the Group and/or
its critical business partners to operate in certain territories or execute transactions related to them and the Group may be required
to exit existing operations in such territories. The Group may also experience difficulty in sourcing materials or importing products,
repatriating currency from a sanctioned country and finding financial institutions willing to transact with it, any of which may expose
the Group to increased costs. In addition, the costs of complying with sanctions may increase as a result of new, or changes to existing,
sanctions regimes.
In addition to the settlement agreements reached by the Group with the DOJ and OFAC in the United States, as detailed above,
any future failure of the Group to comply with sanctions regimes or similar international, regional, national or supra-national measures,
or to deploy and maintain robust internal policies, procedures and controls, could result in additional fines and penalties (reducing
the Group’s ability to reinvest in the future), a share price impact, criminal and/or civil sanctions against the Group and its officers
and employees, increased costs, prohibitions or other limitations or requirements (e.g. compliance requirements) on the conduct
of the Group’s business, reputational harm (including negative perceptions of the Group’s governance or our ESG credentials),
and damage to commercial or banking relationships, and may subject the Group to claims for breach of such regimes or measures.
Reputational harm (including negative perceptions of the Group’s governance and our ESG credentials) may result regardless
of whether the Group complies with imposed sanctions.
The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial
condition and cause the Group to fail to deliver on its strategic growth plans. Even when proven untrue, there are often financial costs,
time demands and reputational impacts associated with investigating and defending against such claims.

Risk: Failure to uphold New Categories marketing practices

Description
The regulatory landscape is constantly evolving with marketing practices being different in key New Categories markets. The Group’s
marketing activities may be found to be, or alleged (including in the media) to be, non-compliant with laws and regulations, or with
the International Marketing Principles (IMPs) on the marketing and sale of tobacco and nicotine products to consumers such as age
verification measures. On-line activities can also be found to be, or alleged to be, aimed at consumers in a country where such activities
are not permitted.
Impact
The Group is and may in the future be subject to claims for breach of marketing practices. In particular, national authorities (such
as the FDA), organisations or even individuals may allege that our marketing activities do not comply with the relevant laws and
regulations, or with our IMPs. As such, the Group could be subject to liability and costs as well as regulatory sanctions, fines and
penalties brought in connection with these allegations. Even when proven untrue, there are often financial costs and reputational
impacts in defending against such claims and allegations.
Future breaches may lead to a loss of investor confidence in ESG performance and inability to meet our responsible marketing focus
area if our IMPs are not followed, impacting our corporate purpose of delivering harm reduction.

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Risk: Loss or misuse of personal data through a failure to comply with the European General Data Protection Regulation,
the UK Data Protection Act 2018, e-Privacy Laws and other privacy legislation governing the processing of personal data.
Description
Personal data is a subset of data (which is likely to be confidential) which attracts different risks and treatment under applicable law.
Breaches of data privacy laws include misuse of information which may not be confidential in nature. These include, for example,
unsolicited marketing calls to a publicly available number, or using an individual’s personal data in a way which was not authorised
or in a way that the individual did not reasonably expect through technologies such as online tracking or monitoring.
Various privacy laws, including the European General Data Protection Regulation (GDPR), UK Data Protection Act 2018 (UKDPA)
and e-Privacy Directive, including EU and UK Regulatory guidances (e-Privacy Laws), govern the way in which organisations (such
as employees, contractors, service provider colleagues and other authorised persons) handle individuals’ personal data including
how such organisations, including the Group, track or monitor their online behaviour.
Unintended or malicious breaches of data privacy laws may occur through inappropriate or negligent behaviour by BAT employees,
contractors, service providers or others.
Depending on the risk to the individuals concerned, such breaches of data privacy laws (including mass personal data unavailability)
could trigger a formal notification to a local data protection supervisory authority. This, in turn, could subject Group companies to not
only regulatory scrutiny but also individual claims or even class action suits; and
ePrivacy Laws state that any misuse of consumer personal data or lack of transparency provided to consumers on how we use their
data or track their online behaviours are subject to regulatory scrutiny.
Legal requirements relating to the collection, storage, handling, and transfer of personal data continue to evolve. Following the entry
into force of the GDPR in May 2018, other jurisdictions in which the Group operates have enacted similar local legislation such as the
California Consumer Privacy Act U.S. and the “LGPD” in Brazil which further increases the risks surrounding the processing of personal
data especially in the consumer space. As part of the Group's digital transformation, initiatives, in particular related to New Categories,
could further increase these risks as the expectation is that the exposure to consumer data volumes will increase as well. With the
emergence of AI technologies, these risks (particularly, personal data misuse in the context of automated decision making by leveraging
AI) may even be exacerbated.
Impact
Failure to comply with existing or future e-Privacy Laws and privacy legislation governing the processing of personal data may
adversely impact the Group’s results of operations and financial condition.
Loss or unlawful use of personal data may result in civil or criminal legal liability and prosecution by enforcement bodies, which may
subject the Group to the imposition of material fines (currently up to 4% of Group worldwide turnover in the context of the EU GDPR
and/or the UK Data Protection Act) and/or penalties and/or claims and costs associated with defending these claims (which could
include class action suits brought by consumers). The Group’s officers and employees may also be subject to personal criminal
sanctions in certain jurisdictions.
Reputational damage could also potentially cause significant harm to the Group, including negative perceptions of the Group’s
governance and our ESG credentials.
Relevant data protection supervisory authority could also order certain Group legal entities to cease processing activities, which could
result in a significant operational disruption. Regulatory interest may also prompt interest from other compliance authorities/
governments, leading to further regulation or proceedings.
The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial
condition and cause the Group to fail to deliver on its strategic growth plans.

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Other Information

Group Risk Factors

Continued

Economic and Financial Risks

Risk: Foreign exchange rate exposures
Description
The Group’s reporting currency is the pound sterling. The Group is exposed to the risk of fluctuations in exchange rates affecting the
translation of net assets and earned profits of overseas subsidiaries into the Group’s reporting currency. These translational exposures
are not normally hedged.
Exposures also arise from the foreign currency denominated trading transactions undertaken by subsidiaries and dividend flows.
Where not offset by opposing flows, these exposures are generally hedged according to internal policies, but hedging of exposure
to certain currencies might not be possible due to exchange controls, limited currency availability or prohibitive costs, and errors
in hedging may occur. Monetary policy divergence in relation to interest rates between key markets may also increase these risks.
Impact
During periods of exchange rate volatility, the impact of exchange rates on the Group’s results of operations and financial condition can
be significant. Fluctuations in exchange rates of key currencies against the pound sterling may result in volatility in the Group’s reported
earnings per share, cash flow and balance sheet. Furthermore, the dividend paid by the Group may be impacted if the payout ratio is
not adjusted. Differences in translation between earnings and net debt may also affect key ratios used by credit rating agencies, which
may have an adverse effect on the Group’s credit ratings.
In addition, volatility and/or increased costs in the Group’s business due to transactional foreign exchange rate exposures may
adversely affect operating margins and profitability and attempts to increase prices to offset such increases could adversely impact
sales volumes.
The increased volatility observed in recent years in commodity and hydrocarbon prices has contributed to additional volatility of
exchange rates, impacting the financial performance of the Group's subsidiaries. The global dynamic backdrop of monetary tightening,
inflation cycle and economic performance may also increase the exchange rate risk in short term.

Risk: Inability to obtain price increases and exposure to risks from excessive price increases and value chain erosion
Description
Annual price increases by the Group are among the key drivers in increasing market profitability. However, the Group has in the past
been, and may in the future be, unable to obtain such price increases as a result of increased regulation; increased competition from
illicit trade; stretched consumer affordability arising from deteriorating political and economic conditions and rising prices; sharp
increases or changes in excise structures; and competitors’ pricing.
As the New Categories market continues to develop, the Group may face erosion in the value chain for New Categories through lower
market prices, excise taxes, high retail trade margins or high production costs that make New Categories less competitive versus
combustible tobacco products. As an example, excise on Tobacco Heated Products in Japan increased and aligned closer to FMC
following a five-year (2018-2022) phased excise plan. This led to a decrease in our profitability in Japan.
In addition, the Group faces the risk that price increases it has conducted in the past, and may conduct in the future, may be excessive
and not find adequate adult tobacco consumer acceptance.
Impact
If the Group is unable to obtain price increases or is adversely affected by impacts of excessive price increases, it may be unable to
achieve its strategic growth metrics, have fewer funds to invest in growth opportunities, and, in the case of excessive price increases,
be faced with quicker reductions in sales volumes than anticipated due to accelerated market decline, down-trading (switching to a
cheaper brand) and increased illicit trade. These in turn impact the Group’s market share, results of operations and financial condition
and cause the Group to fail to deliver on its strategic growth plans.
In addition, erosion in the value chain for New Categories could have a negative impact on the Group’s sales volume or pricing for these
products. High excise could dampen demand for New Categories or result in lower profit margins. Lower market prices, high retail
trade margins or increases in production costs could also negatively impact profit margins or lead to uncompetitive pricing.

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Risk: Effects of declining consumption of legitimate tobacco products and a tough competitive environment
Description
Evidence of market contraction and the growth of illicit trade of tobacco products is apparent in several key global markets in which the
Group operates. This decline is due to multiple factors, including increases in excise taxes leading to continuous above-inflation price
rises, changes in the regulatory environment, the continuing difficult economic environment in many countries impacting consumers’
disposable incomes, the increase in the trade of illicit tobacco products, rising health concerns, a decline in the social acceptability of
smoking and an increase in New Category uptake.
The Group competes based on the strength of its strategic brand portfolio, product quality and taste, brand recognition, brand loyalty,
taste, innovation, packaging, service, marketing, advertising and price. The Group is subject to highly competitive environments in all
aspects of its business, and its competitive position can be significantly influenced by the prevailing economic climate, consumers’
disposable income, regulation, competitors’ introduction of lower-price or innovative products, higher tobacco product taxes, higher
absolute prices, governmental action to increase minimum wages, employment costs, interest rates and increase in raw material costs.
Furthermore, the Group is subject to substantial payment obligations under the State Settlement Agreements, which adversely
affect the ability of the Group to compete in the U.S. with manufacturers of deep-discount cigarettes that are not subject to such
substantial obligations.
Impact
Any future decline in the demand for legitimate tobacco products could have an adverse effect on the Group’s results of operations
and financial conditions and cause the Group to fail to deliver on its strategic growth plans.
In a tough competitive environment, factors such as market size reduction, customer down-trading, illicit trade and competitors
aggressively taking market share through price re-positioning or price wars generally reduce the overall profit pool of the market
and may impact delivery of the Group’s profits. This may also lead to a decline in sales volume, loss of market share, impact delivery
of the Group’s ESG agenda, erosion of its portfolio mix and reduction of funds available for investment in growth opportunities.

Risk: Funding, liquidity and interest rate risks

Description
The Group cannot be certain that it will have access to bank financing or to the debt and equity capital markets at all times and is
therefore subject to funding and liquidity risks. In addition, the Group’s access to funding may be affected by restrictive covenants
to which it is subject under some of its credit facilities. Furthermore, failure to appropriately engage with investors’ and lenders’
sustainability criteria and concerns may impact BAT’s credit ratings, access to funding, or may result in an increase in the cost of funding.
The Group is also exposed to increases in interest rates in connection with both existing floating rate debt and future debt refinancings.
Recently, after an extended period with historically low interest rates, interest rates have increased substantially and may further
increase in the future.
Furthermore, the Group operates in several markets closely regulated by governmental bodies that intervene in foreign exchange
markets by imposing limitations on the ability to transfer local currency into foreign currency and introducing other currency controls
that expose cash balances to devaluation risks or that increase costs to obtain hard currency. As a result, the Group’s operational
entities in these markets may be restricted from using End Market cash resources to pay for imported goods, dividend remittances,
interest payments and royalties. The inability to access End Market cash resources in certain markets contributes to the Group’s
funding and liquidity risks.
Compliance with sanctions and the restrictive policies of banks to facilitate transactions that are sanctions sensitive, can also restrict
the ability to transfer and use cash that is sanctions sensitive. Anti-money laundering legislation can lead to additional restrictions
relating to the payment and receipt of funds for both BAT as well as its business partners.
In addition, the Group's further development into the cannabis sector may lead to inaccessible proceeds from this activity, and such
activity may expose the Group to further regulatory and legal risks due to different local and international laws. The Group may also face
reputation and compliance issues due to various levels of acceptance of the cannabis sector by stakeholders which may restrict bank
and/or investor access.
Impact
Adverse developments in the Group’s funding, liquidity and interest rate environment may lead to shortages of cash and cash
equivalents needed to operate the Group’s business and to refinance its existing debt. Inability to fund the business under the Group’s
current capital structure, failure to access funding and foreign exchange or increases in interest rates may also have an adverse effect
on the Group’s credit rating, which would in turn result in further increased funding costs and may require the Group to issue equity or
seek new sources of capital. Although the Group currently benefits from investment grade ratings from Moody's, S&P and Fitch in
2022, S&P revised its outlook from stable to negative and maintained this outlook for 2023 as well. Any downgrade of the Group's credit
ratings or loss of investment grade status could materially increase the Group's financing costs. Non-compliance with the Group’s
covenants under certain credit facilities could lead to an acceleration of its debt.
All these factors may have material adverse effects on the Group’s results of operations and financial conditions and cause the Group
to fail to deliver on its strategic growth plans. These conditions could also lead to underperforming bond prices and increased yields.
In the case of funding or liquidity constraints, the Group may also suffer reputational damage due to its perceived failure to manage
the financial risk profile of its business, which may result in an erosion of shareholder value reflected in an underperforming share price,
and/or underperforming bond prices and higher yields. In addition, the Group’s ability to finance strategic opportunities or respond
to threats may be impacted by limited access to funds.

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Other Information

Group Risk Factors

Continued

Economic and Financial Risks continued

Risk: Failure to achieve growth through mergers, acquisitions, joint ventures, investments and other transactions
Description
The Group’s growth strategy includes a combination of organic growth as well as mergers, acquisitions, joint ventures and
investments. The Group may be unable to acquire or invest in attractive businesses on favourable terms and may inappropriately value
or otherwise fail to identify or capitalise on growth opportunities. The Group may not be able to deliver strategic objectives and revenue
improvements from business combinations, successfully integrate businesses it acquires or establishes, or obtain appropriate
regulatory approvals for business combinations. Risks from integration of businesses also include the risk that the integration may
divert the Group’s focus and resources from its other strategic goals. Furthermore, transactions may include risks associated with an
unpredictable regulatory landscape, such as bans or more restrictive regulations which come into force after the acquisition.
Additionally, the Group could be exposed to financial, legal or reputational risks if it fails to appropriately consider and address any
compliance, antitrust or sustainability aspects of a transaction or planned transaction. Further, the Group has certain uncapped
indemnification obligations in connection with divestitures and could incur similar obligations in the future.
Impact
Any of the foregoing risks could result in increased costs, decreased revenues or a loss of opportunities and have an adverse effect
on the Group’s results of operations and financial condition, and in the case of a breach of compliance, product regulation or antitrust
regulation, could lead to reputational damage, fines and potentially criminal sanctions and an adverse impact on the Group's
sustainability priorities. This may impact the Group's ability to compete in the long-term.
Inability to execute planned divestments, or poorly executed divestments, may not deliver fair value, or may result in loss of potential
sale proceeds resulting in fewer resources to drive quality growth or meet other corporate targets.
The Group may become liable for claims arising in respect of conduct prior to any merger or acquisition of businesses if deemed to
be a successor to the liabilities of the acquired company or indemnification claims relating to divestitures, and any resulting adverse
judgment against the Group may adversely affect its results of operations and financial condition and cause the Group to fail to deliver
on its strategic growth plans.
Please refer to note 31 on page 286 in the Notes on the Accounts for details of contingent liabilities applicable to the Group.

Risk: Unforeseen underperformance in key global markets

Description
A substantial majority of the Group’s profit from operations is based on its operations in certain key markets, including the U.S. A
number of these markets are declining for a variety of factors, including price increases, restrictions on advertising and promotions,
smoking prevention campaigns, increased pressure from anti-tobacco groups, accelerated migration to reduced risk products,
increasing prevalence of non-compliant New Categories competitors, and private businesses adopting policies that prohibit or restrict,
or are intended to discourage, smoking and tobacco use.
Economic and political factors affecting the Group’s key markets include the prevailing economic climate, governmental austerity
measures, levels of employment, inflation, governmental action to increase minimum wages, employment costs, interest rates, raw
material costs, consumer confidence and consumer pricing.
Impact
Any change to the economic and political factors in any of the key markets in which the Group operates could affect consumer
behaviour and have an impact on the Group’s results of operations and financial condition and cause the Group to fail to deliver
on its strategic growth plans.

Risk: Increases in net liabilities under the Group’s retirement benefit schemes
Description
The Group currently maintains and contributes to defined benefit pension plans and other post-retirement benefit plans that cover
various categories of employees and retirees worldwide. The Group’s obligations to make contributions under these arrangements may
increase in the case of increases in pension liabilities, decreases in asset returns, salary increases, inflation, decreases in long-term
interest rates, increases in life expectancies, changes in population trends and other actuarial assumptions.
Please refer to the information under the caption ‘Retirement benefit schemes’ on page 217 and to note 15 on page 248 in the Notes on
the Accounts for details of the Group’s retirement benefit schemes.
Impact
Higher contributions to the Group’s retirement benefit schemes could have an adverse impact on the Group’s results of operations,
financial condition and ability to raise funds and cause the Group to fail to deliver on its strategic growth plans.

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Product pipeline, commercialisation and Intellectual Property risks

Risk: Inability to predict consumers’ changing behaviours and launch innovative products that offer adult tobacco and
nicotine consumers meaningful value-added differentiation
Description
The Group focuses its research and development activities on both creating new products, including New Categories and Beyond
Nicotine products, whilst maintaining and improving the quality of its existing products. In a competitive market, the Group believes
that innovation is key to growth. The Group considers that one of its key challenges in the medium and long term is to provide adult
tobacco and nicotine consumers with high-quality products that take into account their changing preferences and expectations,
including those in relation to sustainability, while complying with evolving regulation.
Predicting consumers’ changing needs and behaviours across categories is a critical requirement for the Group's development. The
Group may fail to predict consumers' changing needs and behaviours across categories and fail to deliver its strategy effectively.
The Group continues to develop and roll-out its New Categories portfolio which requires significant investment. The Group may be
unsuccessful in developing and launching innovative products or maintaining and improving the quality of existing products across
Combustibles, New Categories and Beyond Nicotine that offer consumers meaningful value-added differentiation. The Group may fail
to keep pace with innovation in its sector or changes in consumer expectations and is also exposed to the risk of an inability to build
a sufficiently strong brand equity through social media and other digital tools to successfully compete. There are potential bans and
restrictions in key markets on using social media to advertise and communicate. Competitors may be more successful in predicting
changing consumer behaviour or better able to develop and roll-out consumer-relevant products and may be able to do so more quickly
and at a lower cost.
In addition, the Group devotes considerable resources to the research and development of innovative products that may have the
potential to reduce the risks of smoking-related diseases. The complex nature of research and development programmes necessary
to satisfy emerging regulatory and scientific requirements creates a substantial risk that these programmes will fail to demonstrate
health-related claims regarding New Categories and Beyond Nicotine or to achieve adult tobacco consumer, regulatory and
scientific acceptance.
Furthermore, the regulatory environment impacting Non-Combustible tobacco products, Vapour products and other non-tobacco
nicotine products and Beyond Nicotine, including classification of products for regulatory and excise purposes, is still developing and
it cannot be predicted whether regulations will permit the marketing of such products in any given market in the future. Categorisation
as medicines, for example, and restrictions on advertising could stifle innovation, increase complexity and costs and significantly
undermine the commercial viability of these products. Alternatively, categorisation of any New Categories, as tobacco products for
instance, could result in the application of onerous regulation, which could further stifle uptake.
Impact
The inability to timely develop and roll out innovations or products in line with consumer demand, including any failure to predict
changes in adult tobacco consumer and societal behaviour and expectations and to fill gaps in the product portfolio, as well as the risk
of poor product quality, could lead to missed opportunities, under- or over-supply, loss of competitive advantage, unrecoverable costs
and/or the erosion of the Group’s consumer base or brand equity.
Restrictions on packaging and labelling or on promotion and advertising could impact the Group’s ability to communicate its
innovations and product differences to adult tobacco consumers, leading to unsuccessful product launches. An inability to provide
robust scientific results sufficient to substantiate health-related product claims poses a significant threat to the ability to launch
innovative products and comply with emerging regulatory and legal regimes.
The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial
condition and cause the Group to fail to deliver on its strategic growth plans.
In addition, there may be loss of investors’ confidence in ESG performance, including failure to deliver our corporate purpose of
harm reduction.

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Other Information

Group Risk Factors

Continued

Product pipeline, commercialisation and Intellectual Property risks continued

Risk: Exposure to risks associated with intellectual property rights, including the failure to identify, protect and prevent
infringement of the Group’s intellectual property rights and potential infringement of, or the failure to retain licences to use,
third-party intellectual property rights
Description
The Group relies on trademarks, patents, registered designs, copyrights, domain names and trade secrets. The brand names under
which the Group’s products are sold are key assets of its business. The protection and maintenance of these brand names and of the
reputation of these brands is important to the Group’s success. Protection of intellectual property rights is also important in connection
with the Group’s innovative products, including New Categories.
The Group is exposed to the risk of infringements of its intellectual property rights by third parties due to limitations in judicial
protection, failure to identify, protect and register its innovations and/or inadequate enforceability of these rights in some markets
in which the Group operates.
The Group currently is involved in various patent infringement litigation proceedings in several countries related to the Group’s New
Categories inventions and products. This litigation involves both claims by the Group that competitors are infringing the Group’s
patents and claims by competitors that the Group is infringing competitors’ patents. From time to time, the Group settles such
litigation. In February 2024, a Group subsidiary entered into a settlement agreement with an indirect wholly-owned subsidiary of Philip
Morris International Inc. (PMI). Pursuant to this agreement (the Settlement Agreement), among other things, both parties agreed to
take all actions, as necessary, to dismiss certain pending legal proceedings between the parties and certain of their affiliates concerning
certain Vapour and Heated Products (HP) with prejudice and without admission of liability, to fully and finally discharge without
admission of liability any injunctions granted to the parties and their respective affiliates in such proceedings, and mutually release each
other from presently known and past, present and future claims arising out of or relating to, among other things, such proceedings, the
infringement of the patents at issue in the proceedings and certain intellectual property rights relating to certain products existing on
or before a specified date. The parties have also agreed to covenants not to sue, on a perpetual, royalty-bearing or royalty-free basis, as
the case may be, in respect of patents associated with certain existing or changed Vapour or HP products. The parties have also agreed
to covenants not to sue on a perpetual, royalty free basis and in respect of, among other things, the manufacture of products,
accessories, replacement parts and upgrade parts, or their respective components, and research and development of such products,
accessories and parts, or their respective components. Please refer to note 31 on page 286 in the Notes on the Accounts for details of
contingent liabilities relating to patent litigation and related settlements applicable to the Group.
Some brands and trademarks under which the Group’s products are sold are licensed for a fixed period of time in certain markets.
If any of these licences are terminated or not renewed after the end of the applicable term, the Group would no longer have the right
to use, and to sell products under, those brand(s) and trademark(s).
In addition, as third party rights are not always identifiable, the Group may be subject to claims for infringement of third party
intellectual property rights.
Impact
Any erosion in the value of the Group’s brands or innovations, or failure to obtain or maintain adequate protection of intellectual
property rights for any reason, or the loss of brands, trademarks or other intellectual property rights under licence to Group companies,
may have a material adverse effect on the Group‘s market share, results of operations and financial condition. Any inability to
appropriately protect the Group’s products and key innovations will also limit its growth and affect competitiveness and return
on innovation investment.
Any infringement of third-party intellectual property rights could result in interim or final injunctions, product recalls, legal liability
and the payment of damages, any of which may disrupt operations, negatively impact the Group’s reputation and have an adverse
effect on its results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plan. Litigation
(even where successful) results in an intensive use of resources and management time leading to potential disruption. In addition,
although intellectual property-related settlements, such as the Settlement Agreement, allow the Group to focus on developing
innovative product solutions, they could also have an adverse effect on the Group’s results of operations and financial condition. For
example, the payment of royalties would create higher costs for the Group, whereas the grant of licenses and/or covenants not to sue
could result in a competitive advantage of the Group’s competitors which, in turn, could result in lower demand for the Group’s own
products and cause the Group to fail to deliver on its strategic growth plans.

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Regulation of the Group’s Business

Overview World Health Organization Framework Convention

The Group’s businesses operate under increasingly stringent on Tobacco Control
regulatory regimes worldwide. The tobacco and nicotine industry Much of the recent development in regulation at a global level
is one of the most highly regulated in the world, with has been driven by the World Health Organization Framework
manufacturers required to comply with a variety of different Convention on Tobacco Control (FCTC). The FCTC came into force
regulatory regimes across the globe. The Group continues to in 2005 and contains provisions aimed at, among other things,
respond to these regimes and engages with governments and reducing tobacco consumption and exposure to tobacco smoke.
other regulatory bodies to find solutions to changing regulatory The original treaty is supplemented by one protocol (on illicit trade)
landscapes. Restrictions on the manufacture, sale, marketing and and guidelines on the implementation of several of the treaty
packaging of tobacco and non-tobacco nicotine products are in obligations. While the guidelines are not legally binding, they
place in nearly all countries and markets. provide recommendations for Parties on the implementation
Regulation can typically be categorised as follows: of specific provisions of the FCTC.
Category Bans: including regulations that ban the sale, import, To date, the FCTC has been ratified by 183 countries, not including
possession, or use of certain product categories, including entire the U.S. The FCTC has led to increased efforts by tobacco control
bans on New Category or novel products; advocates and public health organisations to encourage
governments to further regulate the tobacco and nicotine industry.
Place: including regulations restricting smoking and vaping in
As national regulations increasingly reflect global influences, the
private, public and work places (e.g. public place smoking and
scope of areas regulated will likely further expand. The guidelines
vaping bans);
on advertising, promotion, and sponsorship, for example, seek to
Product: including regulations on the use of ingredients, product broaden the definition of tobacco advertising to include product
design and attributes (e.g. machine measured ceilings regarding display, the use of vending machines as well as the design of the
tar, nicotine and carbon monoxide yields for cigarettes and pack itself. Where adopted by the Parties, a number of the
restrictions on nicotine strength for non-tobacco nicotine measures referred to in the guidelines may result in either
products, as well as restrictions on flavours); product safety additional costs for the tobacco industry or restrictions on a
regulations (e.g. the EU’s General Product Safety Directive manufacturer’s ability to differentiate its products and
(2001/95/EC), electrical safety regulations and reduced ignition communicate those differences to adult smokers. The World
propensity standards for cigarettes); regulatory product disclosure Health Organization and other public health organisations have
requirements (e.g. in relation to ingredients and emissions); and recently focused their efforts on attempting to widen the scope
bans of entire product categories (e.g. bans on the manufacture, of the FCTC beyond the text of the Convention to include Reduced
import, and sale, of Non-Combustible tobacco products or non- 1
Risk Products (RRPs ), including adopting a decision that tobacco
tobacco nicotine products); heated products (THPs) should be subject to the FCTC;
Packaging and labelling: including regulations on health warnings recommending that governments adopt stricter regulations
and other government-mandated messages (e.g. in respect of of RRPs; and applying existing cigarette regulations to RRPs.
content, positioning, size and rotation); restrictions on the use of All engagement efforts of the tobacco industry are being closely
certain descriptors and brand names; requirements on pack shape, monitored by these organisations and are often (incorrectly)
size, weight and colour and plain packaging of products; and labelled as unlawful industry interference. In turn, this has an
marking requirements relating to single-use plastics; impact on the willingness of Parties to engage with the industry,
Sponsorship, promotion and advertising: including partial which limits the opportunity for the industry to provide input
or total bans on tobacco and/or non-tobacco nicotine product into the development of regulation.
advertising, marketing, promotions and sponsorship and The last biannual session of the Conference of the Parties to
restrictions on brand sharing and stretching (the latter refers the FCTC took place in November 2021 (COP9). Due to the virtual
to the creation of an association between a tobacco product nature of the meetings most substantive discussions have
and a non-tobacco product by the use of tobacco branding however been postponed to COP10, which was scheduled to take
on the non-tobacco product); place in November 2023 in Panama, but was postponed until
Purchase: including regulations on the manner in which tobacco February 2024 due to internal security and organisational concerns
products and non-tobacco nicotine products are sold, such as type in Panama (save for a de minimis budget focused meeting).
of outlet (e.g. supermarkets and vending machines); how they are EU Tobacco and Related Products Directive (2014/40/EU)
sold (e.g. above-the-counter versus beneath-the-counter); and A revised EU Tobacco and Related Products Directive (2014/40/
restrictions on adult purchase (e.g. generational bans which EU) (TPD2) was adopted in April 2014 for transposition into EU
preclude the sale and supply of tobacco products to individuals Member States’ law by May 2016. Provisions of TPD2 include: large
born after a certain year); combined pictorial and textual health warnings covering 65% of
Price: including regulations which have implications for the prices the two main pack surfaces (front and back) for cigarettes;
that manufacturers can charge for their tobacco products and restrictions on pack shape and size, including minimum pack sizes
non-tobacco nicotine products (e.g. excise taxes and minimum of 20 sticks for cigarettes and 30g for roll-your-own and make-
prices); and your-own tobacco; ingredients reporting; “tracking and tracing”
requirements; and for e-cigarettes: nicotine limits, pre-market
Responsibility: including regulations introducing Extended notification, ingredients reporting and advertising restrictions.
Producer Responsibility schemes on cigarette manufacturers to Among other things, TPD2 bans the sale of cigarettes and roll-
cover the cost to clean up cigarette waste (see Single Use Plastics your-own tobacco with a characterising flavour. Enforcement of
Directive (EU) 2019/904); and equipment-related cost sharing the ban in relation to menthol-flavoured cigarettes was delayed
obligations to fight illicit trade (see Article 15.7 of EU Tobacco until May 2020, but those products are now also banned (see
Products Directive 2014). “Regulation of Ingredients, Including Flavoured Tobacco Products
In addition, the Group operates a number of global policies, and and RRPs”).
in some cases its businesses have also entered into voluntary TPD2 seeks to ensure that the same rules apply in the same way
agreements, which may impose more onerous obligations or across all EU Member States, but it leaves open to individual
standards than those imposed by local legislation. Member States the possibility of further standardising the
packaging of tobacco products and applying other requirements
not regulated by TPD2, provided these are compatible with EU law.

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Other Information

Regulation of the Group’s Business

Continued

The European Commission published its Article 28 report on the Regulators in Europe are increasingly seeking to ban the use
application of TPD2 on 20 May 2021. The report concluded that TPD2 of flavours in Vapour products and other RRPs, except for non-
1
helped decrease smoking rates and tobacco use but that more efforts tobacco and menthol (see “Reduced Risk Products” ). For example,
are needed, particularly in relation to enforcement at national level and Hungary, Finland, the Netherlands, Denmark and Norway have
new market developments, such as novel tobacco products. Currently, adopted, or are considering adopting, bills banning flavours in
the preparations of a revised EU Tobacco Products Directive are Vapour products. BAT is exploring its legal options in relation
progressing, with estimated adoption in 2025. TPD2 might be replaced to these new regulations.
with a directly applicable regulation instead of a directive, following The European Commission has also produced a Commission
which transposition in Member States would no longer be required. Delegated Directive (the "Delegated Directive") amending TPD2
It is anticipated that this new directive or regulation will include the to withdraw certain exemptions in respect of THPs. The Delegated
following provisions: plain packaging for combustibles; more regulation Directive, which has now been transposed into national law in a
of ingredients, including a ban on the use of any menthol for number of Member States, extends the prohibition of tobacco
combustibles at the EU level; regulation of flavours and nicotine-free products with a characterising flavour (which currently applies to
liquids for e-cigarettes at the EU level; more stringent advertising cigarettes and hand rolling tobacco) to THPs. BAT is challenging the
restrictions for e-cigarettes; stricter regulations for THPs; and validity of the Delegated Directive in the High Court of Ireland which
regulation of oral nicotine pouches at the EU level. has determined to refer questions regarding the legality of the
Single-Use Plastics Delegated Directive to the Court of Justice of the European Union.
The Single Use Plastics Directive (EU) 2019/904 (the SUP Further legislation on ingredients, both for factory made cigarettes
Directive) entered into force on 2 July 2019. The SUP Directive 1
and RRPs , is expected. The Conference of Parties to the FCTC
requires that EU Member States introduce Extended Producer tasked a working group to further elaborate the partial guidelines
Responsibility (EPR) schemes covering the cost to clean up litter on the regulation of the contents of tobacco products and tobacco
and the application of on-pack marking requirements for tobacco product disclosures (see Articles 9 and 10 of the FCTC). The work
product filters. Member States had to transpose the SUP Directive of this group was suspended in 2018 and an expert group was
into national law by 3 July 2021, with an implementation deadline of created to examine the reasons for low implementation of Articles
3 July 2021 for pack marking requirements and of 5 January 2023 9 and 10, and related partial guidelines. This expert group
for EPR schemes. Member States are late on transposition presented its report in 2021, but the substantive discussions by
and implementation, with the practical consequence that EPR the Conference of Parties of this report have been postponed to
schemes will go live with several months delays on average. COP10 (see “World Health Organization Framework Convention on
The European Commission is also late in its issuance of guidelines Tobacco Control”). Furthermore, several regulators in EU Member
on the criteria for the costs of cleaning up litter, which should have States have also taken action, or are considering taking action,
been issued prior to the anticipated implementation deadline to ban low menthol products, or products using other coolants,
for EPR schemes. France was the only Member State to not await from the market. For example, in Belgium, the regulator banned all
the 5 January 2023 deadline and, in December 2020 and February cigarettes and other tobacco products that include components
2021, it implemented EPR schemes for, among others, cigarette with cooling and/or alleged analgesic effects.
manufacturers. These regulations are currently being challenged
before the French Council of State. Other governments have
Plain and Standardised Packaging
passed or are considering similar legislation including Canada, Plain (or “standardised”) packaging generally refers to a ban on
Russia, South Korea, and various levels of government in the U.S. the use of trademarks, logos and colours on packaging other than
the use of a single colour and the presentation of brand name and
Restrictions on Smoking in Private, Public and Workplaces variant in a specified font, size and location(s). The presentation of
The Group operates in a number of markets which have in place individual cigarettes may be similarly restricted. Plain packaging is
restrictions on smoking and vaping in certain private, public and high on the agenda of tobacco control groups, and the non-binding
workplaces, including restaurants, bars, beaches and nightclubs. FCTC guidelines recommend that the Parties consider introducing
While these restrictions vary in scope, extensive public and plain packaging.
workplace smoking and vaping bans have been enacted in markets
As of 5 January 2024, 26 countries have implemented plain
including the U.S., Canada, the UK, France, Spain, New Zealand and
packaging (including Australia, Belgium, Canada, Denmark, France,
Australia. Restrictions on smoking and vaping in private have also
Ireland, New Zealand, the Netherlands, Saudi Arabia, Singapore,
been adopted or proposed, and typically take the form of prohibitions
Türkiye, and the UK), with a further nine countries examining
on smoking and vaping in cars or residential homes when children
legislation to introduce the measure. Countries, territories and
are present, and/or smoking and vaping within a certain distance
states that are currently considering adopting plain packaging
from specified public places (such as primary schools).
legislation include, but are not limited to, Argentina, India, Ecuador,
Regulation of Ingredients, Including Panama, Brazil, Chile, Spain and South Africa. Others, such as
Flavoured Tobacco Products South Korea and Colombia, are considering implementing
A number of countries have restricted or banned, and others are increased graphic health warnings. Also, RRPs are increasingly
1
seeking to restrict or ban, the use of certain flavours or ingredients facing plain packaging regulations (see “Reduced Risk Products” ).
in cigarettes and other tobacco products, on the basis that such Denmark fully implemented plain packaging for Vapour Products
flavoured products are alleged to appeal disproportionally to and Heated Products in 2022, followed by Finland in 2023, while
minors, act as a catalyst for young people taking up smoking and/ legislation introducing plain packaging for Vapour Products is due
or increase the addictiveness or toxicity of the relevant product. to come into effect in Norway in 2024. Other countries which
To the extent flavours are permitted, this is often restricted to already require plain packaging for Heated Products include
tobacco and/or menthol flavours only. Canada and Israel.
Such restrictions have been enacted in markets including the U.S.,
Canada, Australia and Türkiye. An ingredients ban in Brazil, which
would ban the use of certain ingredients with flavouring or
aromatic properties, including menthol, is not currently in force
due to ongoing legal challenges. TPD2 similarly bans in the EU
the manufacture and sale of cigarettes and roll-your-own tobacco
with a characterising flavour other than tobacco. A number of
the above regulations are subject to ongoing legal challenges
(see “The U.S.” for information pertaining to the regulation of
menthol in that market).

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Product Display Bans at Point Also, other RRPs, such as nicotine pouches and THPs, are facing
of Sale and Licensing Regimes increasing scrutiny by regulators. In countries such as Belgium,
Product display bans at point of sale and licensing regimes have Germany, and the Netherlands, regulators have sought to classify
become relatively commonplace for combustible tobacco oral nicotine pouch products as food stuff, tobacco substitutes
products and have been implemented for several years in a or medicinal products and ban these products from the market.
number of countries both at national and state levels, including in The Belgian authorities, for example, first clarified that oral nicotine
Norway, Iceland, Finland, New Zealand, Thailand, Canada, Australia, pouches should not be classified as medicinal products. However,
and the UK. The Danish bill (referenced above) also introduced a nicotine pouches have now been banned in Belgium as
1
product display ban for RRPs . A large number of countries, such as impermissible tobacco substitutes. We expect tobacco-free
Hungary, Finland and Spain, have also sought to restrict the supply nicotine pouches to be regulated at a European level as part of
of tobacco products, including through the adoption of licensing the next revision of the Tobacco Products Directive. In Germany
regimes limiting the number of retail outlets from which it is and Hungary, THPs have faced being classified in the same way
possible to purchase tobacco products and/or by prohibiting the as traditional combustible tobacco products, with the potential
sale of tobacco products within a certain distance of specified consequence of facing the same restrictions and excise
public places. categories. However, in 2021, the Administrative Court of
Braunschweig (Germany) concluded that THPs are smokeless
Illicit Trade because they do not involve a combustion process (Judgment of
The illegal market for tobacco products is an increasingly important 2
23 September 2021 ). The federal German regulator did not appeal
issue for governments and the industry across the world. this judgment.
Euromonitor International estimates that, in 2021, approximately Generational Bans
350 billion cigarettes (excl. China) were smuggled, manufactured A recent regulatory measure that some countries (such as the
illegally or counterfeited. A number of governments, regulators United Kingdom, Denmark, New Zealand and Malaysia) have
and organisations have or are considering adopting regulation considered or are currently considering involves the prohibition
to support anti-illicit trade activities. Among other forms, such on sales and supply of tobacco and/or nicotine products to
regulation may comprise mandatory “tracking and tracing” persons of a certain age that will follow them throughout their
requirements, enabling regulators to identify the point at which lifetime. This regulatory measure is referred to as a “generational
any seized product left the legal supply chain, security features ban” and entails that persons born on or after a certain date would
to combat counterfeiting and inspection and authentication never be able to lawfully be sold tobacco products. Over time, as
obligations in respect of seized product. The TPD2, for example, more and more persons become subject to the ban, the pool of
requires that all unit packets of tobacco are marked with a unique consumers for tobacco products would grow ever smaller. BAT
and irremovable identifier, which when scanned provides various is continuing to monitor this situation and whether other
information about that product’s route-to-market. governments will follow suit with similar measures. Although
In November 2012, the FCTC Parties adopted the Protocol to the new government from New Zealand recently announced that
Eliminate Illicit Trade in Tobacco Products which includes a raft the relevant act would be repealed, New Zealand had approved
of supply chain control measures, including the implementation legislation banning anyone born after 1 January 2009 from buying
of “tracking and tracing” technologies. The Protocol entered into tobacco products, imposing a retail limit of 600 retailers across
force on 25 September 2018 and was considered at the first New Zealand from 1 July 2024, and implement a nicotine limit in
session of the Meeting of the Parties to the Protocol in October smoked tobacco to 0.8 mg/g (~5% of current levels) from 1 April
2018. The second session of the Meeting of the Parties to the 2025. In the meantime, the UK government has announced its
Protocol took place in November 2021, and the third session is intention to impose a similar generational ban preventing people
scheduled to take place in 2024 in Panama. As of 8 January 2024, born after 1 January 2009 from buying tobacco products, including
68 parties, including the EU, have ratified the Protocol. THPs, when they come of age (18 years old). The consultation
1
Reduced-Risk Products (“RRPs”) process is ongoing and a regulatory impact assessment should
As the Vapour category has grown in size and complexity in be published in due course.
a relatively short period of time, a consensus framework for The U.S.
regulation and taxation has yet to emerge. The TPD2, for example, Through the Reynolds American Inc. (RAI) subsidiaries, the Group
establishes frameworks for the regulation of novel tobacco is subject to U.S. federal, state, and local laws and regulations.
products and e-cigarettes, introducing nicotine limits, health The Family Smoking Prevention and Tobacco Control Act
warnings requirements, advertising bans and pre-market (FSPTCA), which was enacted in 2009, grants the U.S. Food & Drug
notification and post-market disclosure obligations. As noted Administration (FDA) broad authority over the manufacture, sale,
above, the World Health Organization and other public health marketing, and packaging of tobacco products but limited the
organisations have recently focused their efforts on attempting Agency’s authority to cigarettes, smokeless tobacco products,
to widen the scope of the FCTC beyond the text of the Convention cigarette tobacco and roll-your-own tobacco products. Key
to include RRPs (see “World Health Organization Framework elements of the FSPTCA include: filing of facility registrations,
Convention on Tobacco Control”). product listing, constituent testing and ingredient information;
In countries where the sale of Vapour products is permitted, obtaining the FDA's clearance for all new products and product
governments are increasingly seeking to more strictly regulate modifications; banning all characterising flavours other than
these products, including by adopting or seeking to adopt bans tobacco or menthol in cigarettes; establishing “user fees” to fund
on vaping in public places, bans or restrictions on flavours or other the FDA’s regulation of tobacco products; increasing the health
restrictions such as plain packaging and retail display and warning size on cigarette packs with the option to introduce
advertising bans. A number of governments have also announced pictorial health warnings; implementing good manufacturing
plans to restrict the sale of single-use e-cigarettes. Conversely, practices; revising the labelling and advertising requirements for
some governments have expressly banned or are seeking to ban smokeless tobacco products; and requiring the study of menthol.
RRPs (such as Hong Kong), while others restrict their sale The U.S. Congress did limit the FDA’s authority in two areas,
as medicinal products (such as Australia). prohibiting it from:
Mexico has issued a series of decrees and more recently a law – Banning categories of tobacco products; and
to ban the importation and sale of vaping products, including – Requiring the reduction of nicotine yields of a tobacco product
e-cigarettes, but legal challenges have been successful as to zero.
tribunals found the absolute ban to be unconstitutional. Appeals
by the government are ongoing.

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Other Information

Regulation of the Group’s Business

Continued

On 10 May 2016, the FDA issued a final regulation, referred to as Comprehensive plan for tobacco and nicotine regulation
the Deeming Rule, deeming all remaining products that are “made On 28 July 2017, the FDA announced its intent to develop a
or derived from tobacco” to be subject to the FDA’s regulatory comprehensive plan for tobacco and nicotine regulation that
authority under the FSPTCA. The Deeming Rule became effective recognises the continuum of risk for nicotine delivery. As part
as of 8 August 2016, though each requirement of the Deeming of that plan, the FDA planned to publish an Advance Notice of
Rule had its own compliance date. Such “deemed” tobacco Proposed Rulemaking (ANPRM) to seek public input regarding the
products subject to the FSPTCA include, among others, electronic potential health benefits and possible adverse effects of lowering
nicotine delivery systems (including e-cigarettes, e-hookah, the level of nicotine in combustible cigarettes. The FDA also
e-cigars, vape pens, advanced refillable personal vapourisers, announced its intent to issue ANPRMs requesting public
electronic pipes and e-liquids mixed in vape shops), certain stakeholder input on the impact of flavours (including menthol)
dissolvable tobacco products, cigars, and pipe tobacco. in increased initiation among youth and young adults as well as
The “grandfathered” (now called "pre-existing products") date assisting adult smokers to switch to potentially less harmful forms
under the Final Rule for newly deemed products remained the of nicotine delivery, and the patterns of use and public health
same as the “grandfathered” date for those tobacco products impact of premium cigars.
already subject to the FSPTCA – 15 February 2007 (known as This follows on from the FDA’s decision to issue its own
“Pre-Existing Tobacco Products”). Any tobacco product that was preliminary scientific evaluation regarding menthol cigarettes in
not legally marketed as of 15 February 2007 is considered a new 2013, which concluded that menthol cigarettes adversely affect
tobacco product subject to premarket review by the FDA. The initiation, addiction and cessation compared to non-menthol
FDA established a compliance policy allowing all newly deemed cigarettes. In January 2018, the FDA held a public hearing to obtain
tobacco products that were on the market as of 8 August 2016 input from a broad group of stakeholders on ways to streamline
to remain on the market so long as the manufacturer filed a the regulatory process for the issuance of therapeutic claims for
Premarket Tobacco Product Application (PMTA) by a specific nicotine products. In March 2018, the Agency issued three
deadline (9 September 2020). ANPRMs, seeking information on (1) the lowering of nicotine levels
In October 2019, R. J. Reynolds Vapour Company filed PMTAs for to non-addictive or minimally addictive levels, (2) the impact of
Vuse Solo. Based upon requirements of the FSPTCA that must be flavours (including menthol) in increased initiation among youth
addressed in PMTAs, and the FDA’s Guidance regarding the type and young adults as well as assisting adult smokers to switch to
of evidence required for such applications, the costs of preparing potentially less harmful forms of nicotine delivery, and (3) the
a PMTA are significant. R. J. Reynolds Vapor Company thereafter patterns of use and public health impact of premium cigars. In
filed PMTAs for the remaining Vuse products (Vibe, Ciro, and Alto) April 2022, the FDA published a proposed product standard that
and the Velo products (pouch and lozenge) by the September would ban menthol as a characterising flavour in cigarettes.
2020 deadline. Certain additional data from ongoing research The FDA accepted public comment on this proposed rule through
relevant to the Alto and Velo applications were submitted as to August 2022. RAI Services Company submitted a detailed
amendments to the PMTAs during the FDA review process. comment to the FDA (available on the U.S. Government's
Regulations website) opposing the proposed rule as unsupported
The FDA issued marketing granted orders for the Vuse Solo device
by existing scientific evidence and with the potential for negative
and its tobacco (‘original’) flavour in October 2021, but issued a
unintended consequences. In December 2022, the sale of all
marketing denial order for Vuse Solo flavours other than menthol
tobacco products with characterising flavours other than tobacco
(which were not on the market). That denial is being appealed with
(including menthol) were banned in the state of California.
the FDA. In May 2022, the FDA issued marketing granted orders
for tobacco flavoured Vuse Vibe and Ciro but issued a marketing Additional regulation
denial order for flavours other than menthol (which were not on In addition to the ANPRMs on reduced nicotine products
the market). R. J. Reynolds Vapor Company has appealed the and flavours, in April 2019, the FDA issued a proposed rule on
denials issued for the relevant Vuse Vibe and Ciro products by the format and content of reports to demonstrate substantial
requesting further Agency review. We have received and are equivalence. This follows on from the FDA’s previous statements
challenging the FDA's marketing denial orders dated January 2023 regarding the development of foundational rules so as to provide
related to Vibe and Ciro (menthol variants). In October 2023, the clarity and predictability to the tobacco product submission
FDA issued a marketing denial order for Vuse Alto menthol. We process, including not only substantial equivalence applications
have received court-ordered stays of enforcement of the FDA’s but new product applications as well as MRTP applications. In
denial orders for menthol Vuse Alto, Ciro, and Vibe products, which September 2019, the FDA published a proposed rule on the format
means these Vuse menthol products can continue to be marketed and content of PMTAs. The final foundational rules for substantial
and sold while the judicial review process continues. There can be equivalence and PMTAs were published on 5 October 2021 and
no assurance that the Vuse menthol or other flavours appeals will became effective on 4 November 2021. The FDA has not yet
succeed. The Vuse Alto device as well as Vuse Alto Rich Tobacco promulgated its proposed rule for MRTP applications.
and Golden Tobacco products remain under the FDA's review.
There can be no assurance that that these authorisations will be
granted. Similarly, the Group’s Velo products remain on the market
in the U.S., again pending the FDA's decisions on their premarket
tobacco product applications and there can be no assurance these
applications will be granted. If the FDA denies a marketing
authorisation, then the relevant product(s) would need to be
withdrawn from the market (unless a court, or the agency
via supervisory review, intervenes).
Legislation granting the FDA authority over synthetic nicotine products
(products containing nicotine not “made or derived from tobacco”)
went into effect in April 2022, which required manufacturers of
such products to file PMTAs by a May 2022 deadline.

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Under the FSPTCA, for a manufacturer to launch a new tobacco On 6 December 2023, the Biden Administration released the Fall
product or modify an existing tobacco product after 22 March 2023 Unified Agenda. This is an outline of the Administration’s
2011, the manufacturer must obtain an order from the FDA upcoming regulatory priorities. As a part of this agenda, the FDA
authorising the new or modified product to be marketed. Similarly, announced a plan to move forward with, among other proposals,
a manufacturer that introduced a cigarette or smokeless tobacco a proposed rule reducing nicotine levels in cigarettes to “minimally
product between 15 February 2007 and 22 March 2011 was required or non-addictive” levels. The regulatory agenda anticipates a
to file a substantial equivalence report with the FDA demonstrating proposed nicotine rule in April 2024; however, the FDA has clarified
either (1) that the new or modified product had the same that there is no precise date on which it plans to issue the
characteristics as a product commercially available as at proposed rule. The regulatory agenda also anticipates issuance
15 February 2007, referred to as a predicate product, or (2) if the new in March 2024 of a final rule to ban menthol as a characterising
or modified product had different characteristics than the predicate flavour in cigarettes; however, the administration is not bound
product, that it did not raise different questions of public health. by this timeline.
A product subject to such report is referred to as a provisional Cigarettes and other tobacco products are subject to substantial
product. A manufacturer may continue to market a provisional taxes in the U.S. All states and the District of Columbia currently
product unless and until the FDA issues an order that the provisional impose cigarette excise taxes. Certain city and county
product is not substantially equivalent, in which case the FDA could governments, such as those of New York City, Philadelphia, and
then require the manufacturer to remove the provisional product Chicago, also impose substantial excise taxes on cigarettes sold
from the market. Many of the RAI subsidiaries’ cigarette and in those jurisdictions. Also, all states and the District of Columbia
smokeless tobacco products currently on the market are provisional currently subject smokeless tobacco products to excise taxes.
products. In January 2017, the FDA issued its first proposed product Various states and the District of Columbia impose a tax on
standard whereby the Agency would require the reduction, over a Vapour products, such as e-cigarettes, and many other states
three-year period, of the levels of N-nitrosonornicotine (NNN) have proposed taxes on Vapour products. Currently, there is no
contained in smokeless tobacco products. federal tax on Vapour products.
Since issuing this proposal, the Agency has simply stated that State and local governments also consider and implement other
it is evaluating submitted comments. The FDA’s semi-annual legislation and regulation regarding the sale of tobacco products.
regulatory agenda has not listed the NNN proposal since its Measures include, among others, limiting or prohibiting the sale of
publication. Thus, it is not known whether or when this proposed flavours in tobacco products, restricting where tobacco products
rule will be finalised, and, if adopted, whether the final rule will be may be sold and increasing the minimum age to purchase tobacco
the same as or similar to the proposed rule. On 18 December 2017, products.
the FDA accepted for review MRTP applications for six Camel
Snus smokeless tobacco products. In 2018, the FDA began its The Group believes that, as a responsible business, it can
review of these applications, which included facility inspections contribute through information, ideas and practical steps, to help
and a public meeting held 13-14 September 2018 before the regulators address the key issues regarding its products, including
Tobacco Product Scientific Advisory Committee to obtain its underage access, illicit trade, product information, product design,
review and recommendation. These applications were withdrawn involuntary exposure to smoke and the development of potentially
in Q4 2022. less harmful products, while maintaining a competitive market
that accommodates the significant percentage of adults who
On 18 March 2020, the FDA issued a rule mandating the choose to be tobacco consumers. The Group is committed to
incorporation on cigarettes packages of graphic health warnings. working with national governments and multilateral organisations
The rule required eleven new textual warnings, each accompanied by and welcomes opportunities to participate in good faith to achieve
a specific graphic image, on the top 50% of the front and back of all sensible and balanced regulation of traditional tobacco and
cigarette packages, on the left 50% of the front and back of cigarette potentially RRPs .
1
cartons, and the top 20% of all cigarette advertising, beginning
18 June 2021. On 3 April 2020, RAI subsidiaries R. J. Reynolds Tobacco
Company and Santa Fe Natural Tobacco Company, in conjunction
with several cigarette manufacturers and retailers, filed a lawsuit
seeking to permanently enjoin implementation of the rule. The court,
following multiple orders to delay the implementation of the rule,
invalidated it as unconstitutional in December 2022. In February
2023, the FDA appealed this decision to U.S. Court of Appeals for
the Fifth Circuit. Briefing concluded and oral argument took place
on 5 December 2023.

Notes:
1. Based on the weight of evidence and assuming a complete switch from cigarette
smoking. These products are not risk free and are addictive. Our Vapour product Vuse
(including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak,
and Camel Snus, which are sold in the U.S., are subject to FDA regulation and no
reduced-risk claims will be made as to these products without agency clearance.
2. Administrative Court Braunschweig - 4th Chamber, case No. 4 A 23/19, British American
Tobacco (Germany) GmbH v. Federal Republic of Germany, represented by the Federal
Office of Consumer Protection and Food Safety, 23 September 2021.

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Other Information

Material Contracts

The Master Settlement Agreement & State expenses and US$3,129 million in respect of settlement cash
Settlement Agreements payments; for 2021 amounted to US$3,420 million in respect of
In 1998, the major U.S. cigarette manufacturers (including settlement expenses and US$3,744 million in respect of settlement
R.J. Reynolds Tobacco Company, Lorillard and Brown & cash payments; for 2020 amounted to US$3,572 million in respect
Williamson, businesses which are now part of Reynolds American) of settlement expenses and US$2,848 million in respect of
entered into the Master Settlement Agreement (“MSA”) with settlement cash payments; and for 2019 amounted to
attorneys general representing most U.S. states and territories. US$2,762 million in respect of settlement expenses and
The MSA imposes a perpetual stream of future payment US$2,918 million in respect of settlement cash payments.
obligations on the major U.S. cigarette manufacturers. The R.J. Reynolds Tobacco Company divested certain brands to
amounts of money that the participating manufacturers are Imperial Tobacco Group (ITG) in 2015. In 2020, R.J. Reynolds
required to annually contribute are based upon, among other Tobacco Company recognised additional expenses, included
things, the volume of cigarettes sold and market share (based above, under the State Settlement Agreements in the states of
on cigarette shipments in that year). Mississippi, Florida, Texas and Minnesota related to these divested
During 2012, R.J. Reynolds Tobacco Company, various other brands. R.J. Reynolds Tobacco Company recognised
tobacco manufacturers, 17 states, the District of Columbia and US$241 million of expense for payment obligations to the state of
Puerto Rico reached a final agreement related to Reynolds Florida for the ITG acquired brands from the date of divestiture,
American’s 2003 MSA activities, and three more states joined the 12 June 2015, as a result of an unfavourable judgment. In addition,
agreement in 2013. Under this agreement, R.J. Reynolds Tobacco R.J. Reynolds Tobacco Company recognised US$264 million
Company has received credits of more than US$1 billion in respect related to the resolution of claims against it in the states of Texas,
of its Non-Participating Manufacturer (“NPM”) Adjustment claims Minnesota and Mississippi for payment obligations to those states
related to the period from 2003 to 2012. These credits have been for the ITG acquired brands from the date of divestiture.
applied against the company’s MSA payments over a period of five R.J. Reynolds Tobacco Company settled certain related claims
years from 2013, subject to, and dependent upon, meeting the with Phillip Morris USA under the State Settlement Agreements
various ongoing performance obligations. During 2014, two in the states of Mississippi, Texas and Minnesota for US$8 million.
additional states agreed to settle NPM disputes related to claims Finally, in June 2022, R.J. Reynolds Tobacco Company settled
for the period 2003 to 2012. R.J. Reynolds Tobacco Company PM USA's claims relating to the calculation of the base-year net
received US$170 million in credits, which have been applied over operating profits for the ITG acquired brands for US$37 million.
a five-year period from 2014. During 2015, another state agreed to Reynolds American Inc.: Transfer of Pension Obligations
settle NPM disputes related to claims for the period 2004 to 2014. On 7 June 2022, Reynolds American Inc. entered into a transaction
R.J. Reynolds Tobacco Company received US$285 million in with Metropolitan Tower Life Insurance Company to transfer
credits, which have been applied over a four-year period from 2016. approximately $1.6 billion of pension obligations through the
During 2016, no additional states agreed to settle NPM disputes. purchase of annuities for retirees receiving benefit payments from
During 2017, two more states agreed to settle NPM disputes one pension plan and less than a threshold amount per month
related to claims for the period 2004 to 2014. R.J. Reynolds from another pension plan. The transaction was funded with plan
Tobacco Company received US$61 million in credits, which have assets and resulted in an increase in the funded status of the
been applied over a five-year period from 2017. During 2018, nine retirement plan.
more states agreed to settle NPM disputes related to claims for
the period 2004 to 2019, with an option through 2022, subject to Other Agreements
certain conditions. R.J. Reynolds Tobacco Company received Settlement Agreement between Nicoventures Trading
US$182 million in credits for settled periods through 2017, which Limited and Philip Morris Products S.A.
have been applied over a five-year period from 2018. Also in 2018,
On 1 February 2024, Nicoventures Trading Limited, an indirect,
a 10th additional state agreed to settle NPM disputes related to
wholly-owned subsidiary of British American Tobacco p.l.c.,
claims for the period 2004 to 2024, subject to certain conditions.
entered into a settlement agreement with Philip Morris Products
R.J. Reynolds Tobacco Company received US$205 million in credits
S.A., an indirect, wholly-owned subsidiary of Philip Morris
for settled periods through 2017, which have been applied over a
International Inc. (the Settlement Agreement).
five-year period from 2019. In the first quarter of 2020, certain
conditions set forth in the 2018 agreements were met for those Pursuant to this Settlement Agreement, among other things, both
10 states. In addition, in August 2020, 24 states, the District of parties have agreed to take all actions, as necessary, to dismiss
Columbia and Puerto Rico agreed to settle NPM disputes related with prejudice, subject to certain limited exceptions, certain
to claims for the period 2018-2022. In 2022, an additional state pending legal proceedings between the parties and their
settled NPM disputes related to claims for the period 2005 to respective affiliates concerning certain Vapour products and
2028. It is estimated that R.J. Reynolds Tobacco Company will Heated Products (HP) (including devices and consumables)
receive US$130 million in credits for settled periods through 2018, without admission of liability, and to fully and finally discharge
which will be applied over a five-year period from 2022. In 2023, without admission of liability any injunctions granted to the parties
an additional state settled NPM disputes related to claims for the and their respective affiliates in such proceedings. The parties
period 2005 to 2029. It is estimated that R.J. Reynolds Tobacco have also agreed to a mutual release of presently known and past,
Company will receive a credit of US$29 million for settled periods present and future claims arising out of or relating to, among other
through 2018, which will be applied over a five-year period from things, such proceedings, the infringement of the patents at issue
2024. Credits in respect of future years’ payments and the NPM in the proceedings and certain intellectual property rights relating
Adjustment claims would be accounted for in the applicable year to certain products existing on or before a specified date.
and will not be treated as adjusting items. Only credits in respect Additionally, the parties have agreed to covenants not to sue, on a
of prior year payments are included as adjusting items. perpetual, royalty-bearing or royalty-free basis, as the case may be,
The BAT Group is subject to substantial payment obligations under in respect of patents associated with certain existing or changed
the MSA and the state settlement agreements with the states of Vapour or HP products. The parties have also agreed to covenants
Mississippi, Florida, Texas and Minnesota (such settlement not to sue on a perpetual, royalty-free basis in respect of, among
agreements, collectively “State Settlement Agreements”). Reynolds other things, the manufacture of products, accessories,
American Inc.'s operating subsidiaries' expenses and payments replacement parts and upgrade parts, or their respective
under the MSA and the State Settlement Agreements for 2023 components, and research and development of such products,
amounted to US$2,516 million in respect of settlement expenses accessories, replacement parts, upgrade parts and components.
and US$2,874 million in respect of settlement cash payments; The Settlement Agreement is for a term of eight years from
for 2022 amounted to US$2,951 million in respect of settlement 1 February 2024 and is substantially worldwide in scope.

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Significant agreements
Change of Control Provisions as at 31 December 2023
Nature of agreement Key provisions
The revolving credit facilities agreement, effective 12 March 2020 – should a borrower (other than the Company) cease to be a direct
and 6 March 2023, entered into between the Company, B.A.T. or indirect subsidiary of the Company, such borrower shall
International Finance p.l.c., B.A.T. Netherlands Finance B.V. and immediately repay any outstanding advances made to it and shall
B.A.T Capital Corporation (as borrowers and, in the case of the cease to be a borrower under the Facility; and
Company, as a guarantor) and HSBC Bank plc (as agent) and – where there is a change of control in respect of the Company,
certain financial institutions (as lenders), pursuant to which the the lenders can require all amounts outstanding under the Facility
lenders have agreed to make available to the borrowers £5.4 billion to be repaid.
for general corporate purposes (the Facility).
During 2023, the Group arranged, extended and/or renewed – should the borrower cease to be a direct or indirect subsidiary
short-term bilateral facilities with core relationship banks for of the Company, the borrower shall immediately repay any
a total amount of £2.7 billion. B.A.T. International Finance p.l.c. outstanding advances made to it under these facilities; and
is the borrower under these facilities and the Company is the – where there is a change of control in respect of the Company,
guarantor. As at 31 December 2023, £100 million was drawn the lenders can require all amounts outstanding under these
on a short-term basis. facilities to be repaid.
On 25 July 2017, the Company acceded as a guarantor under – with respect to each series of debt securities issued under the
the indenture of its indirect, wholly-owned subsidiary Reynolds indenture, upon a change of control event, combined with a credit
American Inc.. The securities issued under the indenture include ratings downgrade of the series to below investment-grade level
approximately US$6.7 billion aggregate principal amount of (such downgrade occurring on any date from the date of the
unsecured Reynolds American Inc. debt securities. public notice of an arrangement that could result in a change of
control event until the end of the 60-day period following public
notice of the occurrence of a change of control event), Reynolds
American Inc. is obligated to make an offer to repurchase all debt
securities from each holder of debt securities. As a guarantor
under the indenture, the Company guarantees such payments.
Rules for the awards under the long-term incentive plans 2007 – in the event of a change of control of the Company as a result
and 2016 (“LTIPs”), Restricted Share Plan (“RSP"), 2019 Deferred of a takeover, reconstruction or winding-up of the Company (not
Annual Share Bonus Scheme ("DSBS") and 2016 Sharesave being an internal reorganisation), LTIP, RSP, DSBS and Sharesave
Scheme ("Sharesave"). awards will vest (and in the case of an option, become exercisable
for a limited period) based on the period of time that has elapsed
since the date of the award and the achievement of the
performance conditions (if applicable) at that date (performance
conditions are applicable to LTIP only), unless the Remuneration
Committee determines this not to be appropriate in the
circumstances; and
– the rules of the LTIPs, RSP, DSBS and Sharesave allow (as an
alternative to early release) that participants may, if permitted,
exchange their existing awards for new awards of shares
in the acquiring company on a comparable basis.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Property, Plant and Equipment

The Group uses a combination of in-house and contract manufacturers to manufacture its products.
1
BAT-owned manufacturing facilities
United States AME APMEA Total
Fully integrated manufacturing 1 15 22 38
Other processing sites (including leaf threshing and OTP) 1 9 6 16
Sites manufacturing other products (including Snus, Modern Oral and Liquids) 3 4 — 7
Research and development facilities 2 2 3 7
Total 7 30 31 68
Note:
1. As of 31 December 2023.

The plants and properties owned or leased and operated by the Group’s subsidiaries are maintained in good condition and are believed
to be suitable and adequate for the Group’s present needs.
The technology employed in the Group’s factories is sophisticated, especially in the area of cigarette-making and packing where
throughputs can reach between 500 and 1,000 packs per minute. The Group can produce many different pack formats (e.g., the number
of cigarettes per packet) and configurations (e.g., bevel edge, round corner, international) to suit marketing and consumer requirements.
New technology machines are sourced from the leading machinery suppliers to the industry. Close cooperation with these organisations
helps the Group support its marketing strategy by driving its product innovations, which are brought to the market on a regular basis.
The Group utilises quality standards, processes and procedures covering the entire end-to-end value chain to help to ensure quality
products are provided to its customers and adult tobacco consumers according to the Group’s requirements and End Market
regulatory requirements.
In 2023, the Group manufactured cigarettes in 38 cigarette factories in 36 countries. These plants and properties are owned or leased
and operated by the Group’s subsidiaries. The Group’s factory outputs and establishments vary significantly in size and production
capacity. In line with our corporate commitment to fight climate change, our factories have decarbonisation, water usage and waste
optimisation programmes.
Also in 2023, the Group used third-party manufacturers to manufacture the components required, including the devices, related
to New Categories. The Group also used third-party manufacturers to supplement the Group’s own production facilities in the U.S.
and Poland to bottle the liquids used in Vapour products.
For more information on property, plant and equipment, see note 13 in the Notes on the Accounts.

Raw Materials
While the Group does not own tobacco farms or directly employ farmers, it sources tobacco leaf directly from circa 91,000 contracted
farmers and third-party suppliers, primarily in emerging markets. We are committed to enhancing the sustainability and viability of our
contracted farmers by focusing on improving quality, distributing more resistant hybrid seeds and implementing tailored mechanisation
to reduce costs of production and increased yield. We hold our third-party suppliers to similar expectations regarding their farmer
contracts. We review our contracts on an annual basis, taking into account Group requirements over the medium term (2-3 years)
to ensure stability of demand and supply on production volumes. Our third-party suppliers also conduct annual reviews. The Group also
purchases a small amount of tobacco leaf from India via our associate ITC Ltd, where the tobacco is bought over an auction floor.
ITC maintains full traceability and monitors farmers to ensure the sustainable provenance of the tobacco procured via the auction floor.
Like any global agricultural commodity, the international price of tobacco fluctuates yearly. This is influenced by various factors including
changes in production costs such as labour and agricultural inputs, local inflationary pressures, economic and political conditions,
as well as climatic conditions that affect the supply, demand and quality of grown tobacco.
While COVID-19 impacted tobacco supply chains (in 2020 and 2021) across most markets and required process enhancements to
minimise transmission risks within communities, prices and availability of tobacco were not significantly impacted. The Group believes
there is an adequate supply of tobacco leaf in the world markets to satisfy its current and anticipated production requirements.
We also source a number of other materials required as part of our production requirements, covering areas that include wrapping
materials and filters for our combustibles business and liquids and batteries for our New Categories products. We work closely with our
suppliers to ensure a robust supply chain, with contingency sourcing in place. Contracts and sourcing agreements are reviewed regularly,
to ensure competitive trading terms while recognising that prices may be impacted by external factors that affect our third-party supply
partners. COVID-19 has led to some short-term disruption in the supply of certain materials (due to local lockdowns and travel
restrictions), yet this has been proactively managed to mitigate the impact.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

U.S. Corporate Governance Practices

Principles One of the NYSE’s additional requirements for the audit

In the U.S., ADSs of the Company are listed on the New York Stock committee states that at least one member of the audit
Exchange (NYSE). The significant differences between the committee is to have ‘accounting or related financial management
Company’s corporate governance practices as a UK company expertise’. The Board has determined that Holly Keller Koeppel,
and those required by NYSE listing standards for U.S. companies Véronique Laury and Darrell Thomas possess such expertise and
are discussed below. also possess the financial and audit committee experience set
forth in both the UK Corporate Governance Code 2018 and SEC
The Company has applied a robust set of board governance
rules (see the Audit Committee report on page 159). Holly Keller
principles, which reflect the UK Corporate Governance Code 2018
Koeppel and Darrell Thomas have also each been designated as an
and its principles-based approach to corporate governance.
Audit Committee financial expert as defined in Item 16.A. of Form
NYSE rules require U.S. companies to adopt and disclose on
20-F. The Board has also determined that each Audit Committee
their websites corporate governance guidelines. The Company
member meets the financial literacy requirements applicable
complies with UK requirements, including a statement in this
under NYSE listing standards.
report of how the Company has applied the principles of the
UK Corporate Governance Code 2018 and that the Company has Shareholder Approval of Equity Compensation Plans
complied with the provisions of the UK Corporate Governance The NYSE rules for U.S. companies require that shareholders must
Code 2018. be given the opportunity to vote on all equity-compensation plans
Independence and material revisions to those plans. The Company complies with
UK requirements that are similar to the NYSE rules. The Board,
The Company’s Board governance principles require that all
however, does not explicitly take into consideration the NYSE’s
Non-Executive Directors be determined by the Board to be
detailed definition of what are considered ‘material revisions’.
independent in character and judgement and free from any
business or other relationships that could interfere materially with, Codes of Business Conduct and Ethics
or appear to affect, their judgement. The Board also has formal The NYSE rules require U.S. companies to adopt and disclose
procedures for managing conflicts of interest. The Board has a code of business conduct and ethics for all directors, officers
determined that, in its judgement, the Chair of the Board and all and employees and promptly disclose any waivers of the code for
of the Non-Executive Directors are independent. In doing so, the directors or executive officers. The Group Standards of Business
Board has taken into consideration the independence requirements Conduct (the SoBC) described on pages 98 and 99 apply to all staff
outlined in the NYSE’s listing standards and considers these to in the Group, including senior Management and the Board, and
be met by the Chair and all of its Non-Executive Directors. satisfy the NYSE requirements. All Group companies have adopted
Committees the SoBC (or localised versions). The SoBC also set out the Group’s
whistleblowing policy, enabling staff, in confidence and
The Company has a number of Board Committees that are broadly
anonymously, to raise concerns without fear of reprisal, including
comparable in purpose and composition to those required by
concerns regarding questionable accounting or auditing matters.
NYSE rules for domestic U.S. companies. For instance, the
The SoBC is available at bat.com/sobc.
Company has a Nominations (rather than nominating/corporate
governance) Committee and a Remuneration (rather than The Company has also adopted a code of ethics for its Chief
compensation) Committee. The Company also has an Audit Executive, Chief Financial Officer, Group Financial Controller and
Committee, which NYSE rules require for both U.S. companies Group Chief Accountant as required by the provisions of Section
and foreign private issuers. 406 of the Sarbanes-Oxley Act of 2002 and the rules issued by the
SEC. No waivers or exceptions to the Code of Ethics were granted
These Committees are composed solely of Non-Executive
in 2023. The Code of Ethics includes requirements in relation to
Directors and, in the case of the Nominations Committee,
confidentiality, conflicts of interest and corporate opportunities,
the Chair of the Board whom the Board has determined
and obligations for those senior financial officers to act with
to be independent in the manner described above.
honesty and integrity in the performance of their duties and to
Each Board Committee has its own terms of reference, which promote full, fair, accurate, timely and understandable disclosures
prescribe the composition, main tasks and requirements of each in all reports and other documents submitted to the SEC, the UK
of the Committees (see the Board Committee reports on Financial Conduct Authority, and any other regulatory agency.
pages 154, 159 and 170).
The Company considers that these codes and policies address
Under U.S. securities laws and the listing standards of the NYSE, the matters specified in the NYSE rules for U.S. companies.
the Company is required to have an audit committee that satisfies
the requirements of Rule 10A-3 under the Exchange Act and Independent Director Contact
Section 303A.06 of the NYSE Listed Company Manual. The Interested parties may communicate directly with the independent
Company’s Audit Committee complies with these requirements. Directors, individually or as a group, by sending written
The Company’s Audit Committee does not have direct correspondence addressed to the independent Director(s) to the
responsibility for the appointment, reappointment or removal of attention of the Company Secretary at the following address: c/o
the independent auditors. Instead, it follows the UK Companies Caroline Ferland, Company Secretary, British American Tobacco
Act 2006 by making recommendations to the Board on these p.l.c., Globe House, 4 Temple Place, London WC2R 2PG.
matters for it to put forward for shareholder approval at the AGM.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Controls and Procedures

Evaluation of Disclosure Controls and Procedures assurance regarding the reliability of financial reporting and
Disclosure controls and procedures the preparation of the Group’s financial statements for external
The Group maintains ‘disclosure controls and procedures’ (as such reporting purposes in accordance with IFRS as issued by the IASB
term is defined in Exchange Act Rule 13a-15(e)), that are designed and UK-adopted international accounting standards; provide
to ensure that information required to be disclosed in reports reasonable assurance that receipts and expenditure are made only
the Group files or submits under the Exchange Act is recorded, in accordance with the authorisation of Management; and provide
processed, summarised and reported within the time periods reasonable assurance regarding the prevention or timely detection
specified in the SEC rules and forms, and that such information of any unauthorised acquisition, use or disposal of assets that
is accumulated and communicated to Management, including could have a material effect on the consolidated
the Chief Executive and Interim Finance Director, as appropriate, financial statements.
to allow timely decisions regarding required disclosure. As required by Section 404 of the Sarbanes-Oxley Act of 2002,
In designing and evaluating our disclosure controls and procedures, Management has assessed the effectiveness of the internal
our Management, including the Chief Executive and Interim control over financial reporting (as defined in Rules 13(a)-13(f) and
Finance Director, recognise that any controls and procedures, 15(d)-15(f) under the U.S. Securities Exchange Act of 1934) based
no matter how well designed and operated, can provide only on the updated Internal Control‑Integrated Framework issued
reasonable, not absolute, assurance that the objectives of the by the Committee of Sponsoring Organisations of the Treadway
disclosure controls and procedures are met. Due to the inherent Commission (COSO) (2013). Based on that assessment,
limitations in all control systems, no evaluation of controls can Management has determined that the Group’s internal control
provide absolute assurance that all control issues and instances over financial reporting was effective as at 31 December 2023.
of fraud, if any, within the Group have been detected. The Group’s Any internal control framework, no matter how well designed,
disclosure controls and procedures have been designed to meet, has inherent limitations, including the possibility of human error
and Management believes that they meet, reasonable and the circumvention or overriding of controls and procedures
assurance standards. and may not prevent or detect misstatements. Also, projections
Management, with the participation of the Chief Executive and of any evaluation of effectiveness to future periods are subject
Interim Finance Director, has evaluated the effectiveness of the to the risk that controls may become inadequate because of
Group disclosure controls and procedures pursuant to Exchange changes in conditions or because the degree of compliance
Act Rule 13a-15(b) as of the end of the period covered by this with the policies or procedures may deteriorate.
annual report. Based on that evaluation, the Chief Executive and »KPMG LLP, an independent registered public accounting firm,
Interim Finance Director have concluded that the Group disclosure who also audit the Group’s consolidated financial statements,
controls and procedures were effective at a reasonable has audited the effectiveness of the Group’s internal control over
assurance level. financial reporting as at 31 December 2023, which is included
Management’s report on internal in this document.»
control over financial reporting Changes in internal control over financial reporting
Management, under the oversight of the Chief Executive and During the period covered by this report, there were no changes
the Interim Finance Director, is responsible for establishing and in the Group’s internal control over financial reporting that have
maintaining adequate internal control over financial reporting for materially affected or are reasonably likely to materially affect
the Group. The Group’s internal control over financial reporting the effectiveness of internal control over financial reporting.
consists of processes which are designed to: provide reasonable

Statements Regarding Competitive Position

Statements referring to the competitive position of BAT and its subsidiaries are based on the Group’s belief and best estimates.
In certain cases, such statements and figures rely on a range of sources, including investment analyst reports, independent market
surveys, and the Group’s own internal assessments of market share.

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Directors’ Report Information

This Other Information section of the British American Tobacco Annual Report and Form 20-F, which includes Additional Disclosures and
Shareholder Information, forms part of, and includes certain disclosures which are required by law to be included in, the Directors’ Report.
Strategic Report Disclosures
Section 414C(11) of the Companies Act 2006 allows the Board to include in the Strategic Report information that it considers to be of
strategic importance that would otherwise need to be disclosed in the Directors’ Report. The Board has chosen to take advantage of
this provision and accordingly, the information set out below, which would otherwise be required to be contained in the Directors’
Report, has been included in the Strategic Report.

Information required in the Directors’ Report Section in the Strategic Report

Information on dividends Financial Performance Summary
Certain risk information about the use of financial instruments Treasury and Cash Flow
An indication of likely future developments in the business of the Group Strategic Pillar Overview
Our Markets and Megatrends
An indication of the activities of the Group in the field of research and development Harm Reduction
Beyond Nicotine
A statement describing the Group’s policy regarding the hiring, continuing employment Employees, Diversity and Culture
and training, career development and promotion of disabled persons
Details of employee engagement: information, consultation, regard to employee interests, Engaging with our stakeholders
share scheme participation and the achievement of a common awareness of the financial Employees, Diversity and Culture
and economic factors affecting the performance of the Group
Details of business relationships: Directors’ regard to business relationships with Engaging with our stakeholders
customers, suppliers and other external stakeholders
Disclosures concerning greenhouse gas emissions and energy consumption TCFD Reporting

Shareholder Information Disclosures

Information required in the Directors’ Report Section in Other Information
Change of control provisions Material contracts
Information on dividends Dividends
Share capital – structure and voting rights; restrictions on transfers of shares Articles of Association
Directors – appointment and retirement Articles of Association
Amendment of Articles of Association Articles of Association
Branch outside of the UK - Representative Office in South Africa Inside page of the back cover
Major shareholders Share capital and security ownership
Directors – share issuance and buy-back powers Share capital and security ownership
Purchases of shares

Listing Rules (LRs) Disclosures

For the purpose of LR 9.8.4C R the applicable information required to be disclosed by LR 9.8.4 R Section in Other Information
Section (12) – shareholder waivers of dividends Group Employee Trust
Section (13) – shareholder waivers of future dividends Group Employee Trust

Directors: Interests and Indemnities

Interests – details of Directors’ remuneration and emoluments, and their interests in the Company’s shares (including share
options and deferred shares) as at 31 December 2023 are given in the Remuneration Report; and
– no Director had any material interest in a contract of significance (other than a service contract) with the Company
or any subsidiary company during the year.
Insurance – appropriate cover provided in the event of legal action against the Company’s Directors.
Indemnities – provision of indemnities to Directors in accordance with the Company’s Articles of Association and to the maximum
extent permitted by law; and
– as at the date of this report, such indemnities are in force covering any costs, charges, expenses or liabilities that they
may incur in or about the execution of their duties to the Company or to any entity which is an associated company
(as defined in Section 256 of the Companies Act 2006), or as a result of duties performed by them on behalf of the
Company or any such associated company.

Directors’ Report Approval and Signature

The Directors’ Report comprises the information on pages 130 to 169 and pages 330 to 402. The Directors’ Report was approved by the
Board of Directors on 7 February 2024 and signed on its behalf by Caroline Ferland, Company Secretary.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Cautionary Statement

This document contains certain forward-looking statements, Among the key factors that could cause actual results to differ
including “forward-looking” statements made within the meaning materially from those projected in the forward-looking statements
of the U.S. Private Securities Litigation Reform Act of 1995. These are uncertainties related to the following: the impact of
statements are often, but not always, made through the use of competition from illicit trade; the impact of adverse domestic
words or phrases such as “believe,” “anticipate,” “could,” “may,” or international legislation and regulation; the inability to develop,
“would,” “should,” “intend,” “plan,” “potential,” “predict,” “will,” commercialise and deliver the Group’s New Categories strategy;
“expect,” “estimate,” “project,” “positioned,” “strategy,” “outlook”, the impact of Supply chain disruptions; adverse litigation and
“target” and similar expressions. These include statements dispute outcomes and the effect of such outcomes on the Group’s
regarding our intentions, beliefs or current expectations financial condition; the impact of significant increases or structural
concerning, amongst other things, our results of operations, changes in tobacco, nicotine and New Categories related taxes;
financial condition, liquidity, prospects, growth, strategies and translational and transactional foreign exchange rate exposure;
the economic and business circumstances occurring from time changes or differences in domestic or international economic
to time in the countries and markets in which the Group operates. or political conditions; the ability to maintain credit ratings and to
In particular, these forward-looking statements include, among fund the business under the current capital structure; the impact
other statements, statements regarding the Group’s future of serious injury, illness or death in the workplace; adverse
financial performance, planned product launches and future decisions by domestic or international regulatory bodies; changes
regulatory developments, as well as: (i) certain statements in the in the market position, businesses, financial condition, results
Overview section (pages 2 to 13), including the Our Global Business of operations or prospects of the Group; direct and indirect
section, the Chair’s Introduction, Chief Executive’s Review and adverse impacts associated with Climate Change and the move
Interim Finance Director’s Overview; (ii) certain statements in the towards a Circular Economy; and Cyber Security risks caused by
Our Strategy section (pages 14 to 27), including the Our Strategic the heightened cyber-threat landscape and increased digital
Navigator section, the Strategic Summary section and the interactions with consumers, and changes to regulation. Further
Investment Case section; (iii) certain statements in the Quality details on the principal risks that may affect the Group can be
Growth section (pages 28 to 39), including the Strategic Pillar found in the ‘Group Principal Risks’ section of the Strategic Report
overview; (iv) certain statements in the Dynamic Business section on pages 121 to 128 of this document. A summary of all the risk
(pages 40 to 59), including certain statements in the Strategic Pillar factors (including the principal risks) which are monitored by the
Overview section, the Financial Performance Summary section, the Board through the Group’s risk register is set out in the Additional
Treasury and Cash Flow section and the going concern discussions; Disclosures section under the heading ‘Group Risk Factors’ on
(v) certain statements in the Sustainable Future section (pages 60 pages 353 to 374.
to 129), including the Leading in Sustainability & Integrity section, Past performance is no guide to future performance and persons
Sustainability highlights section, our material topics, TCFD needing advice should consult an independent financial adviser.
reporting and Our approach to Taskforce on Nature-related The forward-looking statements reflect knowledge and
Financial Disclosures (TNFD) section; (vi) certain statements in the information available at the date of preparation of this document
Notes on Accounts (page 240), including the Group's ability to and the Group undertakes no obligation to update or revise these
navigate regulatory change; and (vii) certain statements in the forward-looking statements, whether as a result of new
Other Information section (pages 330 to 406), including information, future events or otherwise. Readers are cautioned
the Additional Disclosures and Shareholder Information sections. not to place undue reliance on such forward-looking statements.
All such forward-looking statements involve estimates and No statement in this document is intended to be a profit forecast
assumptions that are subject to risks, uncertainties and other and no statement in this document should be interpreted to mean
factors. It is believed that the expectations reflected in this that earnings per share of BAT for the current or future financial
document are reasonable but they may be affected by a wide years would necessarily match or exceed the historical published
range of variables that could cause actual results to differ earnings per share of BAT.
materially from those currently anticipated. Although financial materiality has been considered in the
development of our Double Materiality Assessment (DMA), our
DMA and any conclusions in this document as to the materiality or
significance of sustainability or ESG matters do not imply that all
topics discussed therein are financially material to our business
taken as a whole, and such topics may not significantly alter the
total mix of information available about our securities.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Shareholder Information

Premium Listing – London Stock Exchange (LSE)

The primary market for BAT’s ordinary shares is the LSE (Share Code: BATS; ISIN: GB0002875804). BAT’s ordinary shares have been
listed on the LSE main market since 8 September 1998 and are a constituent element of the FTSE 100 Index.
Secondary Listing – Johannesburg Stock Exchange (JSE Limited), South Africa
BAT’s ordinary shares have a secondary listing and are traded in South African rand on the Main Board of the JSE in South Africa
(Abbreviated name: BATS; Trading code: BTI). BAT’s ordinary shares have been listed on the JSE since 28 October 2008 and are
a constituent element of the JSE Top 40 Index.
American Depositary Shares (ADSs) – New York Stock Exchange (NYSE)
BAT ordinary shares trade in the form of BAT ADSs in the United States under the symbol BTI (CUSIP Number: 110448107). The BAT
ADSs have been listed on the NYSE since 25 July 2017 as a Sponsored Level III ADS programme for which Citibank, N.A. is the depositary
(the ‘Depositary’) and transfer agent. Each ADS represents one ordinary share. ADSs are evidenced by American Depositary Receipts (ADRs).
Share Prices
The high and low prices at which the Company’s ordinary shares and ADSs are recorded as having traded during the year on each
of the LSE, JSE and NYSE are as follows:

High Low
LSE £33.49 £22.79
JSE R709.00 R529.09
NYSE US$40.69 US$28.86

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Dividends

Policy
The Group’s policy is to pay dividends of 65% of long-term sustainable earnings, calculated with reference to adjusted diluted earnings
per share, as defined on page 344, and reconciled from earnings per share in note 11 in the Notes on the Accounts. Please see page 55
of this Annual Report and Form 20-F 2023 for further discussion on the Group’s dividend.
Currencies and Exchange Rates
Details of foreign exchange rates are set out in the Financial Review section of the Strategic Report on page 59 of this Annual Report
and Form 20-F 2023. There are currently no UK foreign exchange controls or restrictions on remittance of dividends on the ordinary
shares other than restrictions applicable to certain countries and persons subject to UK economic sanctions.
American Depositary Shares – Dividends
The following table shows the dividends paid by British American Tobacco p.l.c. in the years ended 31 December 2023 to 31 December
2021 inclusive.
Dividend Per BAT Dividend Per BAT ADS
Announcement Ordinary Share ADS ratio 1:1
1
Year Payment Dividend Period GBP US$
2023 May Quarterly Interim 2023 0.5772 0.723866
August Quarterly Interim 2023 0.5772 0.734400
November Quarterly Interim 2023 0.5772 0.713880
February 2024 Quarterly Interim 2023 0.5772 0.7318030
Total 2.3088 2.903949
2022 May Quarterly Interim 2022 0.5445 0.680434
August Quarterly Interim 2022 0.5445 0.655523
November Quarterly Interim 2022 0.5445 0.635540
February 2023 Quarterly Interim 2022 0.5445 0.669190
Total 2.1780 2.640687
2021 May Quarterly Interim 2021 0.5390 0.757618
August Quarterly Interim 2021 0.5390 0.734530
November Quarterly Interim 2021 0.5390 0.721721
February 2022 Quarterly Interim 2021 0.5390 0.729886
Total 2.1560 2.943755
Note:
1. Holders of BAT ADSs: dividends are receivable in US dollars based on the £ sterling/US dollar exchange rate on the applicable ADS payment date, being three business days after
the payment date for the BAT ordinary shares.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Quarterly Dividends for the Year Ended 31 December 2023

The Group pays quarterly dividends. The Board has declared an interim dividend of 235.52p per ordinary share of 25p which is payable
in four equal quarterly instalments of 58.88p per ordinary share in May 2024, August 2024, November 2024 and February 2025. This
represents an increase of 2.0% on 2022 (2022: 230.9p per share), and a payout ratio, on 2023 adjusted diluted earnings per share, of 62.7%.
The quarterly dividends will be paid to shareholders registered on either the UK main register or the South Africa branch register
and to ADS holders, each on the applicable record dates set out under the heading ‘Key dates’ below.
Holders of American Depositary Shares (ADSs)
For holders of ADSs listed on the NYSE, the record dates and payment dates are set out below. The equivalent quarterly dividends
receivable by holders of ADSs in US dollars will be calculated based on the exchange rate on the applicable payment date.
South Africa branch register
In accordance with the JSE Listing Requirements, the finalisation information relating to shareholders registered on the South Africa
branch register (comprising the amount of the dividend in South African rand, the exchange rate and the associated conversion date)
will be published on the dates stated below, together with South Africa dividends tax information.
The quarterly dividends are regarded as ‘foreign dividends’ for the purposes of the South Africa Dividends Tax. For the purposes
of South Africa Dividends Tax reporting, the source of income for the payment of the quarterly dividends is the United Kingdom.
Key dates
In compliance with the requirements of the LSE, the NYSE and Strate, the electronic settlement and custody system used by the JSE, the following are the
salient dates for the quarterly dividend payments. All dates are 2024 unless otherwise stated.
Event Payment No. 1 Payment No. 2 Payment No. 3 Payment No. 4
Preliminary announcement (includes declaration
8 February
data required for JSE purposes)
Publication of finalisation information (JSE) 11 March 18 June 16 September 9 December
No removal requests permitted (in either 11 March– 18 June– 17 September– 10 December–
direction) between the UK main register and the 25 March 1 July 30 September 23 December
South Africa branch register
Last Day to Trade (LDT) cum-dividend (JSE) 18 March 25 June 23 September 17 December
Shares commence trading ex-dividend (JSE) 19 March 26 June 25 September 18 December
No transfers permitted between the UK main 19 March– 26 June– 25 September– 18 December–
register and the South Africa branch register 25 March 1 July 30 September 23 December
No shares may be dematerialised or 19 March– 26 June– 25 September– 18 December–
rematerialised on the South Africa branch register 25 March 1 July 30 September 23 December
Shares commence trading ex-dividend (LSE) 21 March 27 June 26 September 19 December
Shares commence trading ex-dividend (NYSE) 21 March 27 June 26 September 19 December
Record date (JSE, LSE and NYSE) 22 March 28 June 27 September 20 December
Last date for receipt of Dividend Reinvestment 11 April 12 July 11 October 13 January 2025
Plan (DRIP) elections (LSE)
Payment date (LSE and JSE) 2 May 2 August 1 November 3 February 2025
ADS payment date (NYSE) 7 May 7 August 6 November 6 February 2025

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Other Information

Shareholder Taxation Information

The following discussion summarises material U.S. federal income For purposes of this discussion, the term U.S. holder means a
tax consequences and UK taxation consequences to U.S. holders beneficial owner of ordinary shares or ADSs (as the case may be)
of owning and disposing of ordinary shares or ADSs, this that:
information is accurate as at 5 February 2024. This discussion – is for U.S. federal income tax purposes: (i) an individual citizen or
does not address any tax consequences arising under the laws of resident of the United States; (ii) a corporation, including any
any state, local or foreign jurisdiction or under any U.S. federal laws entity treated as a corporation for U.S. federal income tax
other than those pertaining to income tax. This discussion is based purposes, created or organised in or under the laws of the United
upon the U.S. Internal Revenue Code of 1986 (the ‘U.S. Tax Code’), States, any state thereof or the District of Columbia; (iii) a trust if
the Treasury regulations promulgated under the U.S. Tax Code and a U.S. court is able to exercise primary supervision over the
court and administrative rulings and decisions, all as in effect on trust’s administration and one or more U.S. persons are
the date hereof. These laws may change, possibly retroactively, authorised to control all substantial decisions of the trust or it
and any change could affect the accuracy of the statements has a valid election in effect under applicable Treasury
and conclusions set forth in this discussion. regulations to be treated as a U.S. person; or (iv) an estate that is
This discussion addresses only those U.S. holders of ordinary subject to U.S. federal income tax on its income regardless of its
shares or ADSs who hold such equity interests as capital assets source; and
within the meaning of Section 1221 of the U.S. Tax Code. Further, – is not resident in the UK for UK tax purposes.
this discussion does not address all aspects of U.S. federal income
taxation that may be relevant to U.S. holders in light of their The U.S. federal income tax consequences to a partner in an entity
particular circumstances or that may be applicable to them if they or arrangement treated as a partnership for U.S. federal income
are subject to special treatment under the U.S. federal income tax tax purposes that holds ordinary shares or ADSs generally will
laws, including, without limitation: depend on the status of the partner and the activities of the
partnership. Partners in a partnership holding any such equity
– a bank or other financial institution; interest should consult their own tax advisers.
– a tax-exempt organisation; Material U.S. Federal Income Tax Consequences
– an S corporation or other pass-through entity and an Relating to the Ownership and Disposition of Ordinary
investor therein; Shares or ADSs
– an insurance company; The following is a discussion of the material U.S. federal income tax
– a mutual fund; consequences of the ownership and disposition by U.S. holders of
ordinary shares or ADSs. This discussion assumes that BAT is not,
– a regulated investment company or real estate investment trust;
and will not become, a passive foreign investment company for
– a dealer or broker in stocks and securities, or currencies; U.S. federal income tax purposes, as described below.
– a trader in securities that elects mark-to-market treatment; ADSs
– a U.S. holder subject to the alternative minimum tax provisions A U.S. holder of ADSs, for U.S. federal income tax purposes,
of the U.S. Tax Code; generally will be treated as the owner of the underlying ordinary
– a U.S. holder that received ordinary shares or ADSs through the shares that are represented by such ADSs. Accordingly, deposits
exercise of an employee stock option, pursuant to a tax qualified or withdrawals of ordinary shares for or from ADSs will not be
retirement plan or otherwise as compensation; subject to U.S. federal income tax.
– a U.S. holder that is a tax-qualified retirement plan Taxation of Dividends
or a participant or a beneficiary under such a plan; The gross amount of distributions on the ordinary shares or ADSs
will be taxable as dividends to the extent paid out of BAT’s current
– a person that is not a U.S. holder (as defined below); or accumulated earnings and profits, as determined under U.S.
– a person that has a functional currency other than the US dollar; federal income tax principles. Such income will be includable in a
– a person required to recognise any item of gross income U.S. holder’s gross income as ordinary income on the day actually
as a result of such income being recognised on an applicable or constructively received by the U.S. holder. Such dividends will be
financial statement; treated as foreign source income and will not be eligible for the
dividends received deduction allowed to corporations under the
– a U.S. holder of ordinary shares or ADSs that holds such equity U.S. Tax Code.
interest as part of a hedge, straddle, constructive sale,
conversion or other integrated transaction;
– a U.S. holder that owns (directly, indirectly or constructively) 10%
or more of ordinary shares or ADSs by vote or by value; or
– a U.S. expatriate.
The determination of the actual tax consequences to a U.S. holder
will depend on the U.S. holder’s specific situation. U.S. holders of
ordinary shares or ADSs should consult their own tax advisers as
to the tax consequences of owning and disposing of ordinary
shares or ADSs, in each case, including the applicability and effect
of the alternative minimum tax and any state, local, foreign or
other tax laws and of changes in those laws.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

With respect to non-corporate U.S. investors, certain dividends Passive foreign investment company
received from a qualified foreign corporation may be subject to A passive foreign investment company (“PFIC”), is any foreign
reduced rates of taxation. A qualified foreign corporation includes corporation if, after the application of certain ‘look-through’ rules:
a foreign corporation that is eligible for the benefits of a (1) at least 75% of its gross income is ‘passive income’ as that term
comprehensive income tax treaty with the United States that the is defined in the relevant provisions of the U.S. Tax Code;
Treasury determines to be satisfactory for these purposes and or (2) at least 50% of the average value of its assets produce
that includes an exchange of information provision. The Treasury ‘passive income’ or are held for the production of ‘passive income.’
has determined that the treaty between the United States and the The determination as to PFIC status is made annually.
United Kingdom meets these requirements, and BAT believes that BAT does not believe that it is, for U.S. federal income tax
it is eligible for the benefits of the treaty. However, non-corporate purposes, a PFIC, and BAT expects to operate in such a manner
holders that do not meet a minimum holding period requirement so as not to become a PFIC. If, however, BAT is or becomes a PFIC,
during which they are not protected from the risk of loss or that U.S. holders could be subject to additional U.S. federal income
elect to treat the dividend income as ‘investment income’ pursuant taxes on gain recognised with respect to the ordinary shares or
to Section 163(d)(4) of the U.S. Tax Code will not be eligible for the ADSs and on certain distributions, plus an interest charge on
reduced rates of taxation. In addition, the rate reduction will not certain taxes treated as having been deferred under the PFIC rules.
apply to dividends if the recipient of a dividend is obligated to make Non-corporate U.S. holders will not be eligible for reduced rates of
related payments with respect to positions in substantially similar taxation on any dividends received from BAT if it is a PFIC in the
or related property. This disallowance applies even if the minimum taxable year in which such dividends are paid or in the preceding
holding period has been met. U.S. holders should consult their own taxable year. BAT’s U.S. counsel expresses no opinion with respect
tax advisers regarding the application of these rules to their to BAT’s PFIC status.
particular circumstances.
Taxation of capital gains
The amount of any dividend paid by BAT in £ sterling (including any
Upon a sale, exchange or other taxable disposition of ordinary
such amount in respect of ADSs that is converted into US dollars
shares or ADSs, a U.S. holder will generally recognise capital gain
by the depositary bank) will equal the US dollar value of the
or loss for U.S. federal income tax purposes in an amount equal to
£ sterling actually or constructively received, calculated by
the difference between the US dollar value of the amount realised
reference to the exchange rate in effect on the date the dividend is
on the disposition and the U.S. holder’s adjusted tax basis in the
so received by the U.S. holder, regardless of whether the £ sterling
ordinary shares or ADSs as determined in US dollars. Such gain or
are converted into US dollars. If the £ sterling received as a
loss generally will be U.S. source gain or loss, and will be long-term
dividend are converted into US dollars on the date received, the
capital gain or loss if the U.S. holder has held the ordinary shares or
U.S. holder generally will not be required to recognise foreign
ADSs for more than one year. Certain non-corporate U.S. holders
currency exchange gain or loss in respect of the dividend income.
may be eligible for preferential rates of U.S. federal income tax in
If the £ sterling received as a dividend are not converted into
respect of net long-term capital gains. The deductibility of capital
US dollars on the date of receipt, the U.S. holder will have a basis
losses is subject to limitations.
in £ sterling equal to their US dollar value on the date of receipt.
Any gain or loss realised on a subsequent conversion or other The amount realised on a sale, exchange or other taxable
disposition of £ sterling will be treated as U.S. source ordinary disposition of ordinary shares for an amount in foreign currency
income or loss. U.S. holders of ADSs should consult their own tax will be the US dollar value of that amount on the date of sale or
advisers regarding the application of these rules to the amount of disposition. On the settlement date, the U.S. holder will recognise
any dividend paid by BAT in £ sterling that is converted into U.S. source foreign currency exchange gain or loss (taxable as
US dollars by the depositary bank. ordinary income or loss) equal to the difference (if any) between
the US dollar value of the amount received based on the exchange
To the extent that the amount of any distribution exceeds BAT’s
rates in effect on the date of sale, exchange or other disposition
current and accumulated earnings and profits for a taxable year,
and the settlement date. However, in the case of ordinary shares
as determined under U.S. federal income tax principles, the
traded on an established securities market that are sold by a cash-
distribution will first be treated as a tax-free return of capital,
basis U.S. holder (or an accrual-basis U.S. holder that so elects),
causing a reduction in the U.S. holder’s adjusted basis of the
the amount realised will be based on the exchange rate in effect
ordinary shares or ADSs, and to the extent the amount of the
on the settlement date for the sale, and no foreign currency
distribution exceeds the U.S. holder’s tax basis, the excess will
exchange gain or loss will be recognised at that time.
be taxed as capital gain recognised on a sale or exchange, as
described below. BAT does not expect to determine earnings A U.S. holder’s tax basis in ordinary shares or ADSs will generally
and profits in accordance with U.S. federal income tax principles. equal the US dollar cost of the ordinary shares or ADSs. The
Therefore, notwithstanding the foregoing, U.S. holders should US dollar cost of ordinary shares purchased with foreign currency
expect that distributions generally will be reported as dividend will generally be the US dollar value of the purchase price on the
income for U.S. information reporting purposes. date of purchase, or the settlement date for the purchase in the
case of ordinary shares traded on an established securities market
Distributions by BAT of additional ordinary shares (which may be
that are purchased by a cash-basis U.S. holder (or an accrual-basis
distributed by the depositary bank to a holder of ADSs in the form
U.S. holder that so elects).
of ADSs) to a U.S. holder that is made as part of a pro rata
distribution to all holders of ordinary shares and ADSs in respect
of their ordinary shares or ADSs, and for which there is no option
to receive other property (not including ADSs), generally will not be
subject to U.S. federal income tax. The basis of any new ordinary
shares (or ADSs representing new ordinary shares) so received will
be determined by allocating the U.S. holder’s basis in the previously
held ordinary shares or ADSs between the previously held ordinary
shares or ADSs and the new ordinary shares or ADSs, based on
their relative fair market values on the date of distribution.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Shareholder Taxation Information

Continued

Information with respect to foreign financial assets Information reporting and backup withholding
Individuals and certain entities that own ‘specified foreign financial Information reporting and backup withholding may apply to
assets’ with an aggregate value in excess of US$50,000 are dividend payments and proceeds from the sale, exchange or other
generally required to file information reports with respect to such taxable disposition of ordinary shares or ADSs. Backup withholding
assets with their U.S. federal income tax returns. Depending on the will not apply, however, to a U.S. holder that: (1) furnishes a correct
individual’s circumstances, higher threshold amounts may apply. taxpayer identification number (TIN), certifies that such holder is
Specified foreign financial assets include any financial accounts not subject to backup withholding on Internal Revenue Service
maintained by foreign financial institutions, as well as any of the Form W-9 (or appropriate successor form) and otherwise
following, but only if they are not held in accounts maintained by complies with all applicable requirements of the backup
financial institutions: (1) stocks and securities issued by non-U.S. withholding rules; or (2) provides proof that such holder is
persons; (2) financial instruments and contracts held for otherwise exempt from backup withholding. Backup withholding is
investment that have non-U.S. issuers or counterparties; and not an additional tax, and any amounts withheld under the backup
(3) interests in non‑U.S. entities. If a U.S. holder is subject to this withholding rules may be refunded or credited against a holder’s
information reporting regime, the failure to file information reports U.S. federal income tax liability, if any, provided that such holder
may subject the U.S. holder to penalties. U.S. holders are urged to furnishes the required information to the Internal Revenue Service
consult their own tax advisers regarding their obligations to file in a timely manner. The Internal Revenue Service may impose a
information reports with respect to ordinary shares or ADSs. penalty upon any taxpayer that fails to provide the correct TIN.
Medicare net investment tax This summary of material U.S. federal income tax
Certain persons who are individuals (other than non-resident consequences is not tax advice. The determination of the
aliens), estates or trusts are required to pay an additional 3.8% tax actual tax consequences for a U.S. holder will depend on the
on the lesser of (1) their ‘net investment income’ (in the case of U.S. holder’s specific situation. U.S. holders of ordinary shares
individuals) or ‘undistributed net investment income’ (in the case of or ADSs, in each case, should consult their own tax advisers as
estates and trusts) (which includes dividend income in respect of, to the tax consequences of owning and disposing of ordinary
and gain recognised on the disposition of, ordinary shares or ADSs) shares or ADSs, including the applicability and effect of the
for the relevant taxable year; and (2) the excess of their modified alternative minimum tax and any state, local, foreign or other
adjusted gross income (in the case of individuals) or adjusted tax laws and of changes in those laws.
gross income (in the case of estates and trusts) for the taxable
year over specified dollar amounts. U.S. holders are urged to
consult their tax advisers regarding the applicability of this
provision to their ownership of ordinary shares or ADSs.
Credits or deductions for UK taxes
As indicated under ‘Material UK tax consequences’ below,
dividends in respect of, and gains on the disposition of, ordinary
shares or ADSs may be subject to UK taxation in certain
circumstances. A U.S. holder may be eligible to claim a credit
or deduction in respect of UK taxes attributable to such income
or gain for purposes of computing the U.S. holder’s U.S. federal
income tax liability, subject to certain limitations. The U.S. foreign
tax credit rules are complex, and U.S. holders should consult their
own tax advisers regarding the availability of U.S. foreign tax
credits and the application of the U.S. foreign tax credit rules
to their particular situation.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Material UK Tax Consequences Tax on dividends

The following paragraphs summarise material aspects of the UK BAT is not required to withhold UK tax at source from dividends
tax treatment of U.S. holders of ordinary shares or ADSs and do paid on ordinary shares or ADSs.
not purport to be either a complete analysis of all tax U.S. holders will not generally be subject to UK tax on dividends
considerations relating to holding ordinary shares or ADSs or an received from BAT provided that they do not carry on a trade,
analysis of the tax position of BAT. They are based on current UK profession or vocation in the United Kingdom through a branch,
legislation and what is understood to be current HMRC practice, agency or permanent establishment in connection with which
both of which are subject to change, possibly with the ordinary shares or ADSs are held.
retrospective effect.
Stamp duty and stamp duty reserve tax (SDRT)
The comments are intended as a general guide and (otherwise Based on current published HMRC practice and recent case law,
than where expressly stated to the contrary) apply only to U.S. transfers of ADSs should not be subject to SDRT or stamp duty.
holders of ordinary shares or ADSs (other than under a personal The transfer of an underlying ordinary share to the ADS holder
equity plan or individual savings account) and who are the absolute in exchange for the cancellation of an ADS should also not give
beneficial owners of such shares. These comments do not deal rise to a stamp duty or SDRT charge.
with certain types of shareholders such as charities, dealers in
securities, persons holding or acquiring shares in the course of a Transfers of ordinary shares outside of the depositary bank,
trade, persons who have or could be treated for tax purposes as including the repurchase of ordinary shares by BAT, will generally
having acquired their ordinary shares or ADSs by reason of their be subject to stamp duty or SDRT at the rate of 0.5% of the
employment, collective investment schemes, persons subject to amount or value of the consideration given, except as described
UK tax on the remittance basis and insurance companies. You are above in connection with the cancellation of an ADS. If ordinary
encouraged to consult an appropriate independent professional shares are redeposited into a clearance service or depositary
tax adviser with respect to your tax position. system, the redeposit will attract stamp duty or SDRT at the
higher rate of 1.5%.
Tax on chargeable gains as a result of
disposals of ordinary shares or ADSs The purchaser or the transferee of the ordinary shares or ADSs
will generally be responsible for paying any stamp duty or SDRT
Subject to the below, U.S. holders will not generally be subject
payable. Where stamp duty or SDRT is payable, it is payable
to UK tax on chargeable gains on a disposal of ordinary shares
regardless of the residence position of the purchaser.
or ADSs provided that they do not carry on a trade, profession
or vocation in the United Kingdom through a branch, agency or Inheritance tax
permanent establishment in connection with which the ordinary A gift or settlement of ordinary shares or ADSs by, or on the
shares or ADSs are held. death of, an individual shareholder may give rise to a liability to
A U.S. holder who is an individual, who has ceased to be resident UK inheritance tax even if the shareholder is not a resident of,
for tax purposes in the United Kingdom for a period of less than or domiciled in, the United Kingdom.
five years and who disposes of ordinary shares or ADSs during that A charge to inheritance tax may arise in certain circumstances
period may be liable for UK tax on capital gains (in the absence of where ordinary shares or ADSs are held by close companies
any available exemptions or reliefs). If applicable, the tax charge will and trustees of settlements.
arise in the tax year that the individual returns to the However, pursuant to the Estate and Gift Tax Treaty 1980
United Kingdom. (the “Treaty”) entered into between the United Kingdom and the
United States, a gift or settlement of ordinary shares or ADSs
by shareholders who are domiciled in the United States for the
purposes of the Treaty may be exempt from any liability to UK
inheritance tax.

393
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Share Capital and Security Ownership

Share Capital Combined registers

Ordinary shares of 25p each 31 December 2023 Number of % of issued ordinary
holders share capital
Issued ordinary shares (excluding treasury
2,236,408,054 1-1,999 90,622 90.29
shares)
Treasury shares 220,533,855 2,000-9,999 6,775 6.75
10,000-199,999 2,458 2.45
Total allotted and fully paid ordinary shares 2,456,941,909
200,000-499,999 215 0.21
Aggregated nominal value £m 614.23
500,000 and over 296 0.30
Note: Treasury shares (UK) 1 0.00
1. Includes treasury shares and shares owned by employee share trusts.
Total 100,367 100
Authority to allot shares
This authority (granted at the 2023 AGM) will expire at the 2024 American Depositary Shares (ADSs)
AGM and provides the Company authority to allot relevant At 31 December 2023, there was a total of 293,974,788 ADSs
securities up to the amount representing one-third of the outstanding held by 8,222 registered holders. The ADS register
Company’s then issued ordinary share capital (excluding treasury is analysed by size of shareholding as at 31 December 2023
shares). Although the Directors have no present intention of as follows:
exercising this authority, it provides them with an appropriate level Number of holders % of total ADSs
of authority for on-going purposes and the Directors consider it 1-1,999 8,058 0.51
appropriate to maintain the flexibility that this authority provides.
2,000-9,999 147 0.17
Analyses of Shareholders
10,000-199,999 15 0.09
Ordinary Shares
At 31 December 2023, there was a total of 2,456,941,909 ordinary 200,000-499,999 1 0.08
shares in issue held by 100,367 shareholders. These shareholdings 500,000 and over 1 99.15
are analysed as follows: Total 8,222 100.00
(a) by listing as at 31 December 2023:
Note:
Total number Number of % of issued 1. One registered holder of ADSs represents 582,124 underlying shareholders.
Register of shares holders share capital
UK 2,186,315,960 31,464 88.99 Security Ownership of Ordinary Shares
South Africa 270,625,949 68,903 11.01 As at 1 February 2024, there were 31,360 record holders of ordinary
shares listed on the LSE (including Citibank as the depositary bank
Total 2,456,941,909 100,367 100.00
for the ADSs) and 2,190,627,718 of such ordinary shares
(b) by size of shareholding as at 31 December 2023: outstanding. As at that date, to BAT’s knowledge, 302 record
holders, representing 0% of the ordinary shares listed on the LSE,
UK Register
had a registered address in the U.S. As at 1 February 2024, there
% of UK
Number of ordinary
were 1,132 record holders of ordinary shares listed on the JSE
holders share capital (including PLC Nominees (Proprietary) Limited as the nominee for
the dematerialised ordinary shares listed on the JSE) and
1-1,999 27,079 86.06
266,315,378 of such ordinary shares outstanding. As at such date,
2,000-9,999 3,147 10.00 to BAT’s knowledge, 7 record holders, representing 0% of the
10,000-199,999 883 2.81 ordinary shares listed on the JSE had a registered address in the
200,000-499,999 115 0.37 U.S. As at 1 February 2024, based on information received from
Citibank, there were 8,187 record holders of ADSs and 303,045,297
500,000 and over 239 0.76 ADSs outstanding. As at that date, based on information received
Treasury shares (UK) 1 0.00 from Citibank, 8,128 record holders, representing 99.99% of ADSs
Total 31,464 100 representing ordinary shares, had a registered address in the U.S.
Security Ownership – Major Shareholders
South Africa Register
All shares held by the significant shareholders represent the
% of SA
Number of ordinary
Company's ordinary shares. These significant shareholders have
holders share capital no special voting rights compared with other holders of the
Company's ordinary shares.
1-1,999 63,543 92.22
2,000-9,999 3,628 5.27 At 31 December 2023, the following substantial interests (3% or more) in the
Company’s ordinary share capital (voting securities) had been notified to the
10,000-199,999 1,575 2.29 Company in accordance with Section 5.1.2 of the Disclosure Guidance and
200,000-499,999 100 0.14 Transparency Rules (DTRs). The Company has not received any notifications
in accordance with DTR 5.1.2 from 1 January 2024 to the date of this report.
500,000 and over 57 0.08
Total 68,903 100 Number of % of issued
ordinary share
1
Name shares capital
2
The Capital Group Companies, Inc. 290,195,446 12.98
3
Spring Mountain Investments Ltd. 231,975,495 10.37
BlackRock, Inc 132,891,526 5.94
Notes:
1. The percentage of issued share capital as at 31 December 2023, excluding treasury shares.
2. Includes 37,136,888 ordinary shares represented by ADRs.
3. Includes 5,902,088 ordinary shares represented by ADRs.

394
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Additional Significant Shareholding Disclosure

The Company is aware of the following interests from filings by shareholders made under the U.S. Securities Exchange Act of 1934 as at
the date of this report:
Percentage of ordinary
1 2
Holder Schedule 13G Filing Date Date of holding Ordinary shares held share capital held
3
Portfolio Services Ltd 26 January 2024 31 December 2023 234,328,476 10.5 %
8 December 2023 7 December 2023 225,064,318 10.1 %
10 February 2023 31 December 2022 198,285,158 8.9 %
10 February 2022 31 December 2021 187,023,731 8.2 %
BlackRock, Inc. 6 February 2024 31 December 2023 173,760,660 7.8 %
31 January 2023 31 December 2022 172,502,866 7.7 %
3 February 2022 31 December 2021 184,921,039 8.1 %
Capital International Investors, a 13 February 2023 30 December 2022 115,107,720 5.1 %
division of Capital Research and 11 February 2022 31 December 2021 110,680,543 4.8 %
4
Management Company
Capital Research Global Investors, a 13 February 2023 30 December 2022 126,794,516 5.7 %
division of Capital Research and
4
Management Company
Notes:
1. In addition to the Schedule 13G filings made with the SEC, in accordance with the DTRs, shareholders must notify the Company if their shareholding reaches, exceeds or falls below 3%
of total voting rights and each 1% threshold thereafter. The notifications received by the Company during the past three years to the best of the Company’s knowledge are set out in the
notes below.
2. The percentage of issued share capital excludes treasury shares.
3. Kenneth B. Dart is beneficial owner of all outstanding shares of Portfolio Services Ltd. and Spring Mountain Investments Ltd.. Spring Mountain Investments Ltd notified the Company on:
– 14 January 2021 that on 12 January 2021 it had: a direct interest in ordinary shares of 110,534,713; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 5,062,024 voting
rights, representing 4.8179% and 0.2206%, respectively, of the total voting rights at that date;
– 23 February 2021 that on 19 February 2021 it had: a direct interest in ordinary shares of 133,280,068; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 5,062,024
voting rights, representing 5.8093% and 0.2206%, respectively, of the total voting rights at that date;
– 22 April 2021 that on 20 April 2021 it had: a direct interest in ordinary shares of 156,915,707; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 5,062,024 voting rights,
representing 6.838441% and 0.220605%, respectively, of the total voting rights at that date;
– 17 August 2021 that on 16 August 2021 it had a direct interest in ordinary shares of 179,298,707; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 5,062,024 voting
rights, representing 7.813836% and 0.220603%, respectively, of the total voting rights at that date;
– 12 November 2021 that on 11 November 2021 it had a direct interest in 187,023,731 ordinary shares, representing 8.150403% of the total voting rights at that date;
– 18 May 2023 that on 16 May 2023 it had a direct interest in 201,404,985 ordinary shares, representing 9.006076% of the total voting rights at that date;
– 8 December 2023 that on 7 December 2023 it had a direct interest in 224,329,318 ordinary shares representing 10.030787% of the total voting rights at that date; and
– 18 December 2023 that on 15 December 2023 it had a direct interest in 231,975,495 ordinary shares representing 10.372682% of the total voting rights at that date.
4. The notifications regarding the holdings by The Capital Group Companies, Inc., listed below, indicate that Capital Research and Management Company is part of a chain of controlled
undertakings with The Capital Group Companies, Inc.. The Capital Group Companies, Inc. notified the Company on:
– 29 March 2021 that on 26 March 2021 it had: an indirect interest in ordinary shares of 251,963,680; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 408,500 voting
rights, representing 10.9807% and 0.0178%, respectively, of the total voting rights at that date;
– 20 April 2021 that on 19 April 2021 it had: an indirect interest in ordinary shares of 253,737,508; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 143,900 voting rights,
representing 11.06% and 0.01%, respectively, of the total voting rights at that date;
– 15 October 2021 that on 14 October 2021 it had: an indirect interest in ordinary shares of 251,653,679; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 175,551 voting
rights, representing 10.96% and 0.01%, respectively, of the total voting rights at that date;
– 25 January 2022 that on 24 January 2022 it had: an indirect interest in ordinary shares of 249,908,259; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 3,972,871
voting rights, representing 10.89% and 0.17%, respectively, of the total voting rights at that date;
– 26 January 2022 that on 25 January 2022 it had: an indirect interest in ordinary shares of 253,762,060; and financial instruments pursuant to DTR 5.3.1 R (1)(b) which refer to 4,365,071
voting rights, representing 11.06% and 0.19%, respectively, of the total voting rights at that date;
– 24 February 2022 that on 23 February 2022 it had an indirect interest in 275,311,725 ordinary shares, representing 12.01% of the total voting rights at that date;
– 9 June 2022 that on 8 June 2022 it had an indirect interest in 295,342,819 ordinary shares, representing 13.04% of the total voting rights at that date;
– 17 June 2022 that on 16 June 2022 it had an indirect interest in 293,149,711 ordinary shares, representing 12.96% of the total voting rights at that date;
– 14 July 2022 that on 13 July 2022 it had an indirect interest in 293,899,574 ordinary shares, representing 13.03% of the total voting rights at that date;
– 28 July 2022 that on 27 July 2022 it had an indirect interest in 292,880,152 ordinary shares, representing 12.99% of the total voting rights at that date;
– 11 August 2022 that on 9 August 2022 it had an indirect interest in 292,841,616 ordinary shares, representing 13.00% of the total voting rights at that date; and
– 11 May 2023 that on 10 May 2023 it had an indirect interest in 290,195,446 ordinary shares, representing 12.98% of the total voting rights at that date.

To the extent known by BAT, BAT is not directly or indirectly owned or controlled by another corporation, any foreign government or by
any other natural or legal person, severally or jointly. BAT is not aware of any arrangements, the operation of which may at a subsequent
date result in a change of control of the Group.

395
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Articles of Association

The Company is a public limited company incorporated under the name of British American Tobacco p.l.c. and is registered in England
and Wales under registered number 3407696. Under the Companies Act 2006 (the “Companies Act”), the Company’s objects are
unrestricted. The following descriptions summarise certain provisions of the Company’s current Articles of Association (the “Articles”)
(as adopted by special resolution at the AGM on 19 April 2023), applicable English and Welsh law and the Companies Act. This
summary is qualified in its entirety by reference to the Companies Act and the Articles, available on bat.com. The Articles may be
altered or added to, or completely new articles may be adopted, by a special resolution of the shareholders of the Company, subject
to the provisions of the Companies Act.

Share capital – structure

Ordinary shares
– all of the Company’s ordinary shares are fully paid
– no further contribution of capital may be required by the Company from the holders of such shares
Alteration of share capital – the Company by ordinary resolution may:
– consolidate and divide all or any of its shares into shares of a larger nominal amount than its existing shares
– divide or sub-divide any of its shares into shares of a smaller nominal amount than its existing shares
– determine that, as between the shares resulting from such a sub-division, any of them may have any preference or advantage
as compared with the others
Alteration of share capital – the Company, subject to the provisions of the Companies Act, may:
– reduce its share capital, its capital redemption reserve and any share premium account in any way
– purchase its own shares, including redeemable shares, and may hold such shares as treasury shares or cancel them
Dividend rights
– shareholders may, by ordinary resolution, declare dividends but not in excess of the amount recommended by the Directors
– the Directors may pay interim dividends out of distributable profits
– no dividend shall be paid otherwise than out of the profits available for distribution as specified under the provisions of the
Companies Act
– the Directors may, with the authority of an ordinary resolution of the shareholders, pay scrip dividends or satisfy the payment
of a dividend by the distribution of specific assets
– unclaimed dividends for a period of 12 years shall be forfeited and cease to be owed by the Company
– specific provisions enable the Directors to elect to pay dividends by bank or electronic transfer only

Share capital – voting rights

Voting at general meetings
– at a general meeting which has been convened as a hybrid meeting, on a poll, or otherwise by a show of hands, unless a poll
is demanded
– on a poll, every shareholder who is present in person or by proxy has one vote for every share held by the shareholder
– on a show of hands, every shareholder who is present in person has one vote regardless of the number of shares held
by that shareholder
– every proxy appointed by a shareholder and present at a general meeting has one vote except that if the proxy has been duly
appointed by more than one shareholder entitled to vote on the resolution and is instructed by one or more of those shareholders to
vote for the resolution and by one or more others to vote against it, or is instructed by one or more of those shareholders to vote in
one way and is given discretion as to how to vote by one or more others (and wishes to use that discretion to vote in the other way),
they have one vote for and one vote against the resolution
– a shareholder (or their duly appointed proxy) entitled to more than one vote need not use all their votes or cast all the votes they use
in the same way
– a poll may be demanded by any of the following:
a.the Chair of the meeting;
b.the Directors;
c.not less than five shareholders having the right to vote at the meeting;
d. a shareholder or shareholders representing not less than one-tenth of the total voting rights of all shareholders having the right
to vote at the meeting (excluding any voting rights attached to treasury shares); or
e.a shareholder or shareholders holding shares which confer a right to vote on the resolution at the meeting being shares on which
an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right
(excluding any voting rights attached to treasury shares)

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Share capital – voting rights continued

Matters transacted at general meetings
– ordinary resolutions can include resolutions for the appointment, reappointment and removal of Directors, the receiving of the Annual
Report, the declaration of final dividends, the appointment and reappointment of the external auditor, the authority for the Company
to purchase its own shares and the grant of authority to allot shares
– an ordinary resolution is passed when a simple majority of the votes cast at a meeting at which there is a quorum vote in favour
of the resolution
– special resolutions can include resolutions amending the Company’s Articles and resolutions relating to certain matters concerning
a winding‑up of the Company
– a special resolution is passed when not less than three-quarters of the votes cast at a meeting at which there is a quorum vote
in favour of the resolution
– quorum for a meeting of the Company is a minimum of two shareholders present in person or by proxy or by a duly authorised
representative(s) of a corporation which is a shareholder and entitled to vote
– convening a meeting: the Company may specify a time not more than 48 hours before the time of the meeting (excluding any part
of a day that is not a working day) by which a person must be entered on the register of members in order to have the right to attend
or vote at the meeting
– postponement of a meeting: the Directors may postpone the time at which the meeting is held and/or change the place(s)
of a meeting any number of times before the meeting is held
– form of general meetings: the Directors may decide in relation to any general meeting (including a postponed or adjourned meeting)
whether it is to be held as a physical meeting or a hybrid meeting, and may make such arrangements as they may decide
in connection with the facilities for participation by electronic means (but may not convene a purely electronic meeting)

Share capital – pre-emptive rights and new issues of shares

– holders of ordinary shares have no pre-emptive rights under the Articles – the ability of the Directors to cause the Company to issue
shares, securities convertible into shares or rights to shares, otherwise than pursuant to an employee share scheme, is restricted
– under the Companies Act, the Directors of a company are, with certain exceptions, unable to allot any equity securities without
express authorisation, which may be contained in a company’s articles of association or given by its shareholders in a general
meeting, but which in either event cannot last for more than five years
– under the Companies Act, a company may also not allot shares for cash (otherwise than pursuant to an employee share scheme)
without first making an offer to existing shareholders to allot such shares to them on the same or more favourable terms in
proportion to their respective shareholdings, unless this requirement is waived by a special resolution of the shareholders

Restrictions on transfers of shares

– Directors may, in their absolute discretion, refuse to register the transfer of a share in certificated form which is not fully paid,
provided that such a refusal would not prevent dealings in shares in certificated form which are not fully paid from taking place
on an open and proper basis
– the Directors may also refuse to register a transfer of a share in certificated form (whether fully paid or not) unless the instrument
of transfer: (1) is lodged, duly stamped, and is deposited at the registered office of the Company or such other place as the Directors
may appoint and is accompanied by a certificate for the shares to which it relates and such other evidence as the Directors may
reasonably require to show the right of the transferor to make the transfer; (2) is in respect of only one class of share; and (3) is in
favour of not more than four transferees
– for uncertificated shares, transfers shall be registered only in accordance with the terms of the Uncertificated Securities Regulations
2001 so that Directors may refuse to register a transfer which would require shares to be held jointly by more than four persons
– if the Directors refuse to register a share transfer, they must give the transferee notice of this refusal as soon as practicable and
in any event within two months of the instrument of transfer being lodged with the Company

Repurchase of shares
– subject to authorisation by shareholder resolution, the Company may purchase its own shares in accordance with the Companies Act
– any shares which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon
completion of the purchase, thereby reducing the amount of the Company’s issued share capital

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Articles of Association
Continued

Directors
Appointment and retirement
– a Board of Directors of not fewer than five Directors and not subject to any maximum (unless otherwise determined by ordinary
resolution of shareholders)
– Directors and the Company (by ordinary resolution) may appoint a person who is willing to act as a Director
– all Directors must retire from office at each annual general meeting and seek re-election, except any Director appointed by the Board
after notice of that annual general meeting has been given and before the annual general meeting has been held. All of the Directors
of the Company will be subject to re-election at the forthcoming annual general meeting to be held on 24 April 2024 in accordance
with the Articles
– fees for Non-Executive Directors and the Chair are determined by the Directors but cannot currently exceed in aggregate an annual
sum of £2,500,000, unless determined otherwise by ordinary resolution of the shareholders. This is subject to the provision that any
Director who holds any other office in the Company (including for this purpose, the office of Chair of the Board), serves on any
committee of the Board, or performs services that the Directors consider go beyond the ordinary duties of a Director may be paid
such additional remuneration as the Directors may determine
– the remuneration of the Executive Directors is determined by the Remuneration Committee, which comprises independent
Non‑Executive Directors
Disclosure of interests
– the Articles require disclosure, subject to certain limited exceptions, of Directors’ interests in transactions that may result in a conflict
of interest, including those which may arise as a result of the Director’s office or employment or persons connected with such
Director, and identify procedures to resolve such conflicts of interest
Meetings and voting
– the quorum for a meeting of Directors is two Directors
– the Directors may delegate any of their powers to a person or a committee
– the Articles place a general prohibition on a Director voting at a Board meeting on any matter in which they have an interest other
than by virtue of their interest in shares in the Company
– the Articles restrict a Director’s ability to vote on any resolution concerning a matter in which such Director has a material interest,
unless such Director’s interest arises only because the resolution relates to the giving of guarantees; the provision of indemnities;
insurance proposals; retirement benefits; and other specified transactions or arrangements with a company in which the Director
may have an indirect interest
Borrowing powers
– the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property,
assets (present and future) and uncalled capital
– the Directors may also issue debentures, debenture stock and other securities

Additional disclosures
Disclosure of ownership of shares
– there are no provisions in the Articles whereby persons acquiring, holding or disposing of a certain percentage of the Company’s
ordinary shares are required to make disclosure of their ownership percentage, although there are such requirements under statute
and regulation
Director retirement
– there is no requirement for a Director to retire on reaching any age
Sinking funds
– there is no sinking fund provision in the Articles applicable to the Company’s ordinary shares
Limitations on voting and shareholding
– there are no limitations under the Articles restricting the right of non-resident or foreign owners to hold or vote ordinary shares
in the Company
Distribution of assets on a winding up
– if the Company is wound up, the liquidator may, with the sanction of a special resolution and any other sanction required by law,
divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets
and determine how the division shall be carried out as between the members or different classes of members
– the liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members
as he may with the like sanction determine, but no member shall be compelled to accept any assets upon which there is a liability
Anti-takeover devices and change of control
– there are no provisions in the Articles that would have the effect of delaying, deferring or preventing a takeover, or change of control,
of the Company
– under English law, the Company’s Directors have a fiduciary duty to take only those actions that are in the interests of the Company
and any anti-takeover devices employed by the Directors in the future, if any, must accordingly be in the interests of the Company
– the Company is also subject to the City Code on Takeovers and Mergers (the “City Code”), which governs the conduct of mergers
and takeovers in the UK. Any takeover of the Company would have to be in accordance with the City Code

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Purchase of Shares

Renewal of Authority for Company to Purchase Own Shares

Current authority – this authority (granted at the 2023 AGM) will expire at the 2024 AGM; and
to purchase shares – renewed authority to purchase the Company’s ordinary shares in order that the appropriate mechanisms
are in place to enable the share buy-back programme to be reinstated at any time and authority would be
exercised when, in the opinion of the Directors, the exercise of the authority would result in an increase
in the Company’s earnings per share and would be in the interest of its shareholders generally.
Proposed authority – the minimum price that may be paid for such shares is 25p, and the maximum price is the higher of: (i) an
to purchase shares amount equal to 105% of the average of the middle-market prices shown in the quotation for an ordinary
share as derived from the LSE Daily Official List for the five business days immediately preceding the day
on which the ordinary share is contracted to be purchased; and (ii) the higher of the price of the last
independent trade and the highest current independent bid for an ordinary share in the Company on
the trading venues where the market purchases by the Company will be carried out;
– in the absence of the necessary practical arrangements, the proposed authority has not been extended to
enable BAT to purchase its own ordinary shares on the JSE in South Africa or the NYSE in the form of ADSs; and
– further details are set out in the Notice of Annual General Meeting 2024 which is made available
to all shareholders and is published on bat.com.
Treasury shares – at 31 December 2023, the number of treasury shares was 220,533,855 (2022: 221,000,192); no dividends
are paid on treasury shares; treasury shares have no voting rights; and treasury shares may be resold at
a later date.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

At the AGM on 19 April 2023, authorisation was given to the Company to repurchase up to 223.5 million ordinary shares for the period
until the next AGM in 2024. This authorisation is renewed annually at the AGM. No ordinary shares were repurchased by the Company
during 2023.
The following table provides details of ordinary share purchases made by the trustees of employee share ownership plans (“ESOPs”)
and other purchases of ordinary shares made to satisfy the commitments to deliver shares under certain employee share-based
payment plans.
Purchases of Shares
Total number of Total number The maximum number
ordinary shares of ordinary shares of ordinary shares that
purchased by ESOP or Average price purchased as part may yet be purchased
certain employee paid per of a publicly as part of a publicly
1 2
share-based plans ordinary share £ announced plan announced plan
2023
04-January 2,826 33.539298 — —
01-February 2,933 31.116953 — —
02-February 20,931 31.268100 — —
01-March 3,052 31.432500 — —
03-April 190,706 28.729770 — —
05-April 3,648 28.122500 — —
11-April 1,039 28.330000 — —
11-April 655,937 28.500572 — —
12-April 975,509 28.553707 — —
13-April 463,147 28.142100 — —
26-April 158,024 30.163800 — —
03-May 3,432 28.685000 — —
03-May 23,409 28.835500 — —
07-June 3,788 26.229688 — —
05-July 3,838 26.307510 — —
02-August 3,843 25.755000 — —
18-August 30,130 25.160438 — —
06-September 3,887 25.690000 — —
04-October 4,004 25.135579 — —
01-November 4,113 24.737645 — —
03-November 30,021 25.267326 — —
06-December 4,446 23.089550 — —
Notes:
1. All share purchases were of ordinary shares of 25p each and were open market transactions. No purchase of ADSs took place during the year ended 31 December 2023.
2. There was no publicly announced plan for BAT to purchase its own ordinary shares or ADSs during the year ended 31 December 2023.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Group Employee Trust

The British American Tobacco Group Employee Trust (BATGET)

Function – used to satisfy the vesting and exercise of awards of ordinary shares under the BAT Deferred Share Bonus
Scheme and Long-Term Incentive Plans; and
– a committee of senior management reporting to the Board’s Share Schemes Committee monitors the
number of ordinary shares held in BATGET to satisfy outstanding awards.
Funding – funded by interest-free loan facilities from the Company totalling £1 billion;
– this enables BATGET to facilitate the purchase of ordinary shares to satisfy the future vesting or exercise
of options and awards;
– loan to BATGET: £470.65 million at 31 December 2023 (2022: £370.51 million);
– the loan is either repaid from the proceeds of the exercise of options or, in the case where ordinary shares
acquired by BATGET are used to satisfy the vesting and exercise of awards, the Company will subsequently
waive the loan provided over the life of the awards; and
– if any options or awards lapse, ordinary shares may be sold by BATGET to cover the loan repayment.

1 Jan 2023 31 Dec 2023

Ordinary shares Number of ordinary shares 5,621,012 5,613,369
held in BATGET Market value of ordinary shares £184.5m £128.85m
% of issued share capital of Company 0.23 0.23
Dividends paid – BATGET currently waives dividends on the ordinary shares held by it; and
in 2023 – quarterly interim dividends waived: £12.91 million across 2023.
Voting rights – the trustee does not exercise any voting rights while ordinary shares are held in BATGET; and
– share scheme participants may exercise the voting rights attaching to those ordinary shares once the ordinary
shares have been transferred out of BATGET.
Notes:
1. Company share–based payment arrangements: details of the material equity share-based and cash-settled share-based arrangements are set out in note 28 in the Notes on the Accounts.
2. The values of ordinary shares shown are based on the closing mid-market share price on 29 December 2023: 2,296p (30 December 2022: 3,282p).
3. No ADSs are held by BATGET.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

American Depositary Shares

Fees and Charges Payable by ADS Holders

Citibank, N.A. (Citibank) was appointed as the depositary bank (the “Depositary”) for BAT’s ADS programme pursuant to the Amended
and Restated Deposit Agreement dated 1 December 2008 and amended as of 14 February 2017 and 14 June 2017 between BAT,
the Depositary and the owners and holders of ADSs (the “Deposit Agreement”). Citibank was reappointed as the Depositary pursuant
to the Second Amended and Restated Deposit Agreement dated 26 November 2018 (the “Restated Deposit Agreement”) and pursuant
to a Letter Agreement effective from 1 December 2023 (the "Letter Agreement").
The Restated Deposit Agreement provides that ADS holders may be required to pay various fees to the Depositary, and the Depositary
may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.
Service Fees
Issuance of ADSs upon deposit of ordinary shares (excluding issuances as a result
1
of distributions of shares described below) Up to US$0.05 per ADS issued
1
Cancellation of ADSs Up to US$0.05 per ADS surrendered
Distribution of cash dividends or other cash distributions (i.e., sale of rights and
2
other entitlements) Up to US$0.05 per ADS held
Distribution of ADSs pursuant to: (1) stock dividends or other free stock
distributions; or (2) exercise of rights to purchase additional BAT ADSs Up to US$0.05 per ADS held
Distribution of securities other than ADSs or rights to purchase additional ADSs
(i.e., spinoff shares) Up to US$0.05 per ADS held
Depositary bank services Up to US$0.05 per ADS held
Notes:
1. Under the terms of a separate agreement between BAT and the Depositary, the Depositary has agreed to waive the fees that would otherwise be payable in connection with the
issuance of ADSs upon deposit of ordinary shares and the cancellation of ADSs and corresponding withdrawal of ordinary shares, in each case by BAT or any of its affiliates, officers,
directors or employees. The terms of this separate agreement may be amended at any time by BAT and the Depositary.
2. While under the Restated Deposit Agreement cash dividends paid in respect of ADSs are subject to a fee of up to US$0.05 per ADS payable to the Depositary, currently, under the terms
of the separate agreement between BAT and the Depositary referred to above, such dividends are instead subject to a fee of up to US$0.02 per ADS per year (a fee of US$0.005 per
dividend based on the distribution of four quarterly cash dividends per year). Under the terms of the Letter Agreement, with effect from 1 May 2024, such dividends are subject to a fee
of up to US$0.04 per ADR per year (a fee of US$0.01 per dividend based on the distribution of four quarterly cash dividends per year). Under the Letter Agreement, this dividend fee may
not be varied by the Depositary without the consent of BAT.

Contact details for Citibank Shareholder Services are on page 402.

In addition, ADS holders may be required under the Restated Deposit Agreement to pay the Depositary: (a) taxes (including applicable
interest and penalties) and other governmental charges; (b) registration fees; (c) certain cable, telex and facsimile transmission and
delivery expenses; (d) the expenses and charges incurred by the Depositary in the conversion of foreign currency; (e) such fees and
expenses as are incurred by the Depositary in connection with compliance with applicable exchange control regulations and other
regulatory requirements; and (f) the fees and expenses incurred by the Depositary, the custodian or any nominee in connection with the
servicing or delivery of deposited securities. The Depositary may: (a) withhold dividends or other distributions or sell for the account of any
ADS holder any or all of the shares underlying the ADSs in order to satisfy any tax or governmental charge; and (b) deduct from any cash
distribution the applicable fees and charges of, and expenses incurred by, the Depositary and any taxes, duties or other governmental
charges on account.
Fees and Payments Made by the Depositary to BAT
Under the terms of the contractual arrangements set out in the separate agreement between BAT and the Depositary referred to above,
BAT received a total of approximately US$6.6 million from the Depositary, comprising fees charged in respect of dividends and a
contribution to BAT’s ADS programme administration costs for the year ended 31 December 2023.
In 2023, these programme administration costs principally included those associated with AGM proxy mailings, exchange listing and
regulatory fees, foreign private issuer analysis, legal fees, share registration fees and other expenses incurred by BAT in relation to the
ADS programme.
Under these contractual arrangements, the Depositary has also agreed to waive certain standard fees associated with the
administration of the ADS programme.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Shareholding Administration and Services

Ordinary Shareholder Enquiries If you suspect that you have been approached by fraudsters,
United Kingdom Registrar please tell the FCA using the share fraud reporting form at
Computershare Investor Services PLC www.fca.org.uk/scamsmart, where you can find out more about
The Pavilions, Bridgwater Road, Bristol BS99 6ZZ investment scams. You can also call the FCA Consumer Helpline
tel: 0800 408 0094 or +44 370 889 3159 on 0800 111 6768. If you have lost money to investment fraud,
online: www.investorcentre.co.uk/contactus you should report it to Action Fraud on 0300 123 2040 or online
at www.actionfraud.police.uk.
South African Registrar
Computershare Investor Services Proprietary Limited Documents on Display and Publications
Private Bag X9000, Saxonwold, 2132, South Africa This Annual Report and Form 20-F 2023 is available online at
tel: 0861 100 634; +27 11 870 8216 bat.com/annualreport. Copies of current and past Annual Reports
email: web.queries@computershare.co.za are available on request from:
American Depositary Shares Enquiries British American Tobacco Publications
All enquiries regarding ADS holder accounts and payment Unit 80, London Industrial Park, Roding Road, London E6 6LS
of dividends should be addressed to: tel: +44 20 7511 7797 email: bat@team365.co.uk
Citibank Shareholder Services Holders of shares held on the South Africa register can contact the
PO Box 43077, Providence, Rhode Island 02940-3077, USA Company’s Representative office in South Africa using the contact
tel: +1 888 985 2055 (toll-free) or +1 781 575 4555 details shown at the end of this Annual Report and Form 20-F 2023.
email: citibank@shareholders-online.com ADS holders can contact Citibank Shareholder Services in the
website: www.citi.com/dr United States using the contact details shown opposite.
Manage Your Shareholding Online Highlights from the current and past Annual Reports can
Computershare Investor Services PLC (Computershare) operates be produced in alternative formats such as Braille, audio tape
an online service, Investor Centre, for holders of shares on the and large print.
Company’s UK share register. Investor Centre allows shareholders Documents referred to in this Annual Report and Form 20-F 2023
to manage their shareholding online, enabling shareholders to: do not form part of this Annual Report unless specifically
– update personal details and provide address changes; incorporated by reference.
– update dividend bank mandate instructions and review dividend The Company is subject to the information requirements of the
payment history; U.S. Securities Exchange Act of 1934 applicable to foreign private
– register for the Dividend Reinvestment Plan (“DRIP”); and issuers. In accordance with these requirements, the Company files
its Annual Report on Form 20-F and other documents with the
– register to receive Company communications electronically. SEC. BAT’s SEC filings are available to the public, together with the
To register for Investor Centre, go to public filings of other issuers, at the SEC’s website, www.sec.gov.
www.computershare.com/uk/investor/bri. The Company’s agent for service in the United States for the
Shareholders with any queries regarding their holding should purposes of the registration statement on Form F-3 (333-265958)
contact Computershare using the above contact details or at is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, DE
www.investorcentre.co.uk/contactus 19711 U.S.A..
Share dealing Our Website
Computershare also offers a share dealing service to existing Comprehensive information about British American Tobacco is
shareholders. For full details on how to trade British American available from our website: bat.com. Within the Investors section
Tobacco shares traded on the London Stock Exchange, go to you will find valuation and charting tools, dividend and share price
www.computershare.com/dealing/uk. Please note that this data and you can download shareholder publications and
service is only available in certain countries. subscribe for email alert services. You can also download our
Dividends Investor Relations app to access all the latest financial information
Comprehensive information on dividend payments is available on your iPad, iPhone or Android device.
on pages 388 and 389. Calendar 2024
DRIP Wed 24 April Annual General Meeting
We offer a DRIP to our UK shareholders. The DRIP allows eligible at 11:30am Details of the venue and business to be
shareholders to use their cash dividends to acquire additional proposed at the meeting are set out in the
shares in the Company. The DRIP shares are purchased by Notice of Annual General Meeting, which is
Computershare through a low-cost dealing arrangement. Contact made available to all shareholders and is
Computershare in the UK for details and exclusions of this service. published on bat.com.
Taxation of dividends BAT provides for the vote on each resolution to
See pages 390 and 393 for details on dividend taxation. be by poll rather than by a show of hands. This
A fact sheet detailing historical UK capital gains tax information provides for greater transparency and allows
is available at bat.com/cgt. Alternatively, contact the British the votes of all shareholders to be counted,
American Tobacco Company Secretarial Department on including those cast by proxy. The voting results
+44 20 7845 1000. will be released on the same day in accordance
Share Fraud with regulatory requirements and made
The practice of share fraud (also known as ‘boiler room’ scams) available on bat.com.
unfortunately continues with many companies’ shareholders Thurs 25 July Half-Year Report
receiving unsolicited phone calls or mail from people offering to
sell them what often turn out to be worthless or high risk shares
in U.S. or UK investments, or to buy shares at an inflated price in
return for an upfront payment.

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BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Exhibits

The following documents are filed in the SEC EDGAR system, as part of this Annual Report on Form 20-F, and can be viewed on the
SEC’s website, www.sec.gov:
Exhibit
Number Description
1
1 Articles of Association of British American Tobacco p.l.c.
2.1 Second Amended and Restated Deposit Agreement, dated as of 26 November 2018, by and among British American Tobacco
p.l.c., Citibank, N.A., as depositary bank, and all holders and beneficial owners of American Depositary Shares issued
2
thereunder .
2.2 Indenture, dated as of 15 August 2017, among British American Tobacco p.l.c. and certain of its subsidiaries as guarantors,
3
and Wilmington Trust, National Association, as Trustee.
2.3 Supplemental Indenture No. 1, dated as of 28 September 2018, among British American Tobacco p.l.c. and certain of its
4
subsidiaries as guarantors, and Wilmington Trust, National Association, as Trustee.
2.4 Indenture, dated as of 6 September 2019, by and among B.A.T Capital Corporation, the Guarantors party thereto and Citibank,
5
N.A., as trustee, authentication agent, transfer agent, registrar, calculation agent and initial paying agent.
2.5 Supplemental Indenture No. 1, dated as of 6 September 2019, by and among B.A.T Capital Corporation, the Guarantors party
6
thereto and Citibank, N.A., as Trustee.
2.6 Supplemental Indenture No. 2, dated as of 6 September 2019, by and among B.A.T Capital Corporation, the Guarantors party
7
thereto and Citibank, N.A., as Trustee.
2.7 Supplemental Indenture No. 3, dated as of 6 September 2019, by and among B.A.T Capital Corporation, the Guarantors party
8
thereto and Citibank, N.A., as Trustee.
2.8 Supplemental Indenture No. 4, dated as of 6 September 2019, by and among B.A.T Capital Corporation, the Guarantors party
9
thereto and Citibank, N.A., as Trustee.
2.9 Supplemental Indenture No. 5, dated as of 2 April 2020, by and among B.A.T Capital Corporation, the Guarantors party thereto
10
and Citibank, N.A., as Trustee.
2.10 Supplemental Indenture No. 6, dated as of 2 April 2020, by and among B.A.T Capital Corporation, the Guarantors party thereto
11
and Citibank, N.A., as Trustee.
2.11 Supplemental Indenture No. 7, dated as of 2 April 2020, by and among B.A.T Capital Corporation, the Guarantors party thereto
12
and Citibank, N.A., as Trustee.
2.12 Supplemental Indenture No. 8, dated as of 25 September 2020, by and among B.A.T Capital Corporation, the Guarantors party
13
thereto and Citibank, N.A., as Trustee.
2.13 Supplemental Indenture No. 9, dated as of 25 September 2020, by and among B.A.T Capital Corporation, the Guarantors party
14
thereto and Citibank, N.A., as Trustee.
2.14 Supplemental Indenture No. 10, dated as of 25 September 2020, by and among B.A.T Capital Corporation, the Guarantors party
15
thereto and Citibank, N.A., as Trustee.
2.15 Supplemental Indenture No. 11, dated as of 25 September 2020, by and among B.A.T Capital Corporation, the Guarantors party
16
thereto and Citibank, N.A., as Trustee.
2.16 Supplemental Indenture No. 12, dated as of 16 March 2022, by and among B.A.T Capital Corporation, the Guarantors party
17
thereto and Citibank, N.A., as Trustee.
2.17 Supplemental Indenture No. 13, dated as of 16 March 2022, by and among B.A.T Capital Corporation, the Guarantors party
18
thereto and Citibank, N.A., as Trustee.
2.18 Supplemental Indenture No. 14, dated as of 24 March 2022, by and among B.A.T Capital Corporation, the Guarantors party
19
thereto and Citibank, N.A., as Trustee.
2.19 Supplemental Indenture No. 15, dated as of 19 October 2022, by and among B.A.T Capital Corporation, the Guarantors party
20
thereto and Citibank, N.A., as Trustee.
2.20 Supplemental Indenture No. 16, dated as of 2 August 2023, by and among B.A.T Capital Corporation, the Guarantors party
21
thereto and Citibank, N.A., as Trustee.
2.21 Supplemental Indenture No. 17, dated as of 2 August 2023, by and among B.A.T Capital Corporation, the Guarantors party
22
thereto and Citibank, N.A., as Trustee.
2.22 Supplemental Indenture No. 18, dated as of 2 August 2023, by and among B.A.T Capital Corporation, the Guarantors party
23
thereto and Citibank, N.A., as Trustee.
2.23 Supplemental Indenture No. 19, dated as of 2 August 2023, by and among B.A.T Capital Corporation, the Guarantors party
24
thereto and Citibank, N.A., as Trustee.
2.24 Indenture, dated as of 25 September 2020, by and among B.A.T. International Finance p.l.c., the Guarantors party thereto
25
and Citibank, N.A., as trustee, authentication agent, transfer agent, registrar, calculation agent and initial paying agent.
2.25 Supplemental Indenture No. 1, dated as of 25 September 2020, by and among B.A.T. International Finance p.l.c., the Guarantors
26
party thereto and Citibank, N.A., as Trustee.
2.26 Supplemental Indenture No. 2, dated as of 16 March 2022, by and among B.A.T. International Finance p.l.c., the Guarantors
27
party thereto and Citibank, N.A., as Trustee.

403
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Exhibits
Continued

2.27 Supplemental Indenture No. 3, dated as of 2 August 2023, by and among B.A.T. International Finance p.l.c., the Guarantors
28
party thereto and Citibank, N.A., as Trustee.
2.28 Thirty-fourth Supplemental Trust Deed, dated 17 March 2022, by and among B.A.T. International Finance p.l.c., B.A.T Capital
Corporation, B.A.T. Netherlands Finance B.V., British American Tobacco p.l.c. and the Law Debenture Trust Corporation p.l.c.,
further modifying the Trust Deed, dated as of 6 July 1998 (as previously modified and restated) relating to the
29
US$3,000,000,000 (now £25,000,000,000) Euro Medium Term Note Programme.
2.29 Description of Securities registered under Section 12 of the Exchange Act.
30
4.1 Rules of the British American Tobacco 2007 Long-Term Incentive Plan.
4.2 Rules of the British American Tobacco 2016 Long-Term Incentive Plan (Amended and Restated as of 20 March 2023).
31
4.3 British American Tobacco p.l.c. Deferred Annual Share Bonus Scheme.
32
4.4 Annex to British American Tobacco p.l.c. Deferred Annual Share Bonus Scheme.
4.5 British American Tobacco p.l.c. 2019 Deferred Annual Share Bonus Scheme (Amended and Restated as of 20 March 2023).
4.6 Rules of the British American Tobacco Restricted Share Plan (Amended and Restated as of 20 March 2023).
33
4.7 Deferred Compensation Plan for Directors of Reynolds American Inc. (Amended and Restated Effective 30 November 2007).
4.8 Service Contract between British American Tobacco p.l.c. and Tadeu Marroco, dated as of 14 May 2023.
4.9 Master Settlement Agreement, referred to as the MSA, dated 23 November 1998, between the Settling States named
34
in the MSA and the Participating Manufacturers also named therein.
4.10 Settlement Agreement dated 25 August 1997, between the State of Florida and settling defendants in The State of Florida
35
v. American Tobacco Co.
4.11 Comprehensive Settlement Agreement and Release dated 16 January 1998, between the State of Texas and settling
36
defendants in The State of Texas v. American Tobacco Co.
4.12 Settlement Agreement and Release in re: The State of Minnesota v. Philip Morris, Inc., by and among the State of Minnesota,
Blue Cross and Blue Shield of Minnesota and the various tobacco company defendants named therein, dated as of 8 May
37
1998.
4.13 Settlement Agreement and Stipulation for Entry of Consent Judgment in re: The State of Minnesota v. Philip Morris, Inc., by and
among the State of Minnesota, Blue Cross and Blue Shield of Minnesota and the various tobacco company defendants named
38
therein, dated as of 8 May 1998.
4.14 Form of Consent Judgment by Judge Kenneth J. Fitzpatrick, Judge of District Court in re: The State of Minnesota v. Philip
39
Morris, Inc.
4.15 Stipulation of Amendment to Settlement Agreement and for Entry of Agreed Order dated 2 July 1998, by and among
40
the Mississippi Defendants, Mississippi and the Mississippi Counsel in connection with the Mississippi Action.
4.16 Stipulation of Amendment to Settlement Agreement and for Entry of Consent Decree dated 24 July 1998, by and among
41
the Texas Defendants, Texas and the Texas Counsel in connection with the Texas Action.
4.17 Stipulation of Amendment to Settlement Agreement and for Entry of Consent Decree dated 11 September 1998, by and among
42
the State of Florida and the tobacco companies named therein.
4.18 Term Sheet agreed to by R. J. Reynolds Tobacco Company, an indirect subsidiary of Reynolds American Inc., certain other
43
Participating Manufacturers, 17 states, the District of Columbia and Puerto Rico.
4.19 Revolving credit facilities agreement, dated as of 6 March 2023, among British American Tobacco p.l.c., B.A.T. International
Finance p.l.c., B.A.T. Netherlands Finance B.V. and B.A.T Capital Corporation, as borrowers, British American Tobacco p.l.c., as
guarantor, HSBC Bank plc, as agent and euro swingline agent, HSBC Bank USA, National Association, as U.S. agent and US$
swingline agent, and the banks and financial institutions party thereto.
44
4.20* Settlement Agreement dated February 1, 2024 between Nicoventures Trading Limited and Philip Morris Products S.A.
8 List of Subsidiaries included on pages 312 to 321 in this report.
45
11 Code of Ethics.
12 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
46
13 Certification under Section 906 of the Sarbanes-Oxley Act of 2002.
15 Consent of KPMG LLP, independent registered public accounting firm.
17 Guarantor Subsidiaries of the Registrant (included as part of Exhibit 2.29).
97 BAT Group Malus and Clawback Policy for Senior Executives.
101 Interactive Data Files (formatted in XBRL (Extensible Business Reporting Language) and furnished electronically).

404
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Notes:
1. Incorporated by reference to Exhibit 99.1 to British American Tobacco p.l.c.’s Form 6-K filed on 19 April 2023.
2. Incorporated by reference to Exhibit 4.1 to BAT’s Registration Statement on Form S-8 (Reg. No. 333-237186) filed on 16 March 2020.
3. Incorporated by reference to Exhibit 2.4 to BAT’s Annual Report on Form 20-F for the year ended 31 December 2017 filed on 15 March 2018.
4. Incorporated by reference to Exhibit 4.2 to BAT’s Registration Statement on Form F-4 (Reg. No. 333-227658) filed on 2 October 2018.
5. Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.’s Form 6-K filed on 6 September 2019.
6. Incorporated by reference to Exhibit 4.2 to British American Tobacco p.l.c.’s Form 6-K filed on 6 September 2019.
7. Incorporated by reference to Exhibit 4.3 to British American Tobacco p.l.c.’s Form 6-K filed on 6 September 2019.
8. Incorporated by reference to Exhibit 4.4 to British American Tobacco p.l.c.’s Form 6-K filed on 6 September 2019.
9. Incorporated by reference to Exhibit 4.5 to British American Tobacco p.l.c.’s Form 6-K filed on 6 September 2019.
10. Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.’s Form 6-K filed on 2 April 2020.
11. Incorporated by reference to Exhibit 4.2 to British American Tobacco p.l.c.’s Form 6-K filed on 2 April 2020.
12. Incorporated by reference to Exhibit 4.3 to British American Tobacco p.l.c.’s Form 6-K filed on 2 April 2020.
13. Incorporated by reference to Exhibit 4.2 to British American Tobacco p.l.c.’s Form 6-K filed on 25 September 2020.
14. Incorporated by reference to Exhibit 4.3 to British American Tobacco p.l.c.’s Form 6-K filed on 25 September 2020.
15. Incorporated by reference to Exhibit 4.4 to British American Tobacco p.l.c.’s Form 6-K filed on 25 September 2020.
16. Incorporated by reference to Exhibit 4.5 to British American Tobacco p.l.c.’s Form 6-K filed on 25 September 2020.
17. Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.’s Form 6-K filed on 16 March 2022.
18. Incorporated by reference to Exhibit 4.2 to British American Tobacco p.l.c.’s Form 6-K filed on 16 March 2022.
19. Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.’s Form 6-K filed on 24 March 2022.
20. Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.’s Form 6-K filed on 19 October 2022.
21. Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.'s Form 6-K filed on 2 August 2023.
22.Incorporated by reference to Exhibit 4.2 to British American Tobacco p.l.c.'s Form 6-K filed on 2 August 2023.
23.Incorporated by reference to Exhibit 4.3 to British American Tobacco p.l.c.'s Form 6-K filed on 2 August 2023.
24.Incorporated by reference to Exhibit 4.4 to British American Tobacco p.l.c.'s Form 6-K filed on 2 August 2023.
25.Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.’s Form 6-K filed on 25 September 2020.
26. Incorporated by reference to Exhibit 4.6 to British American Tobacco p.l.c.’s Form 6-K filed on 25 September 2020.
27. Incorporated by reference to Exhibit 4.3 to British American Tobacco p.l.c.’s Form 6-K filed on 16 March 2022.
28.Incorporated by reference to Exhibit 4.5 to British American Tobacco p.l.c.’s Form 6-K filed on 2 August 2023.
29. Incorporated by reference to Exhibit 4.1 to British American Tobacco p.l.c.’s Registration Statement on Form F-3 (Reg. No. 333-265958) filed on 1 July 2022.
30.Incorporated by reference to Exhibit 10.6 to BAT’s Registration Statement on Form F-4 (Reg. No. 333-217939) filed on 12 May 2017.
31. Incorporated by reference to Exhibit 10.8 to BAT’s Registration Statement on Form F-4 (Reg. No. 333-217939) filed on 12 May 2017.
32. Incorporated by reference to Exhibit 4.6 to BAT’s Annual Report on Form 20-F for the year ended 31 December 2018 filed on 15 March 2019.
33. Incorporated by reference to Exhibit 10.43 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended 31 December 2007 filed on 27 February 2008.
34. Incorporated by reference to Exhibit 4 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated 24 November 1998.
35. Incorporated by reference to Exhibit 2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated 5 September 1997.
36. Incorporated by reference to Exhibit 2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated 27 January 1998.
37. Incorporated by reference to Exhibit 99.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended 30 March 1998 filed on 15 May 1998.
38. Incorporated by reference to Exhibit 99.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended 30 March 1998 filed on 15 May 1998.
39. Incorporated by reference to Exhibit 99.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended 30 March 1998 filed on 15 May 1998.
40.Incorporated by reference to Exhibit 99.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended 30 June 1998 filed on 14 August 1998.
41. Incorporated by reference to Exhibit 99.4 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended 30 June 1998 filed on 14 August 1998.
42. Incorporated by reference to Exhibit 99.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended 30 September 1998 filed on 12 November 1998.
43. Incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated 12 March 2013.
44. Incorporated by reference to Exhibit 99.1 to British American Tobacco p.l.c.’s Form 6-K filed on 8 February 2024.
45. Incorporated by reference to Exhibit 11 to BAT’s Annual Report on Form 20-F for the year ended 31 December 2021 filed on 8 March 2022.
46.These certifications are furnished only and are not filed as part of BAT’s Annual Report on Form 20-F for the year ended 31 December 2023.

Certain instruments which define the rights of holders of long-term debt issued by BAT and its subsidiaries are not being filed because the total amount of
securities authorised under each such instrument does not exceed 10% of the total consolidated assets of BAT and its subsidiaries. BAT agrees to furnish copies
of any or all such instruments to the SEC on request.
* Portions of the exhibit have been omitted because they are both (i) not material and (ii) is the type of information that the Company treats as private or
confidential.

405
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Glossary

Abbreviation
ADR American Depositary Receipt KPI Key performance indicator
ADS American Depositary Share – 1 ADS is LIBOR London Interbank Offered Rate
equivalent to 1 BAT ordinary share LSE London Stock Exchange
AGM Annual General Meeting LR Listing Rules
AME Americas (excluding U.S.) and Europe LTIP Long-Term Incentive Plan
AmSSA Americas (excluding U.S.) and Sub-Saharan MCE Million cigarettes equivalent
Africa
MSA Master Settlement Agreement
APFO Adjusted profit from operations
NTO Net turnover or revenue
APME Asia-Pacific and Middle East
NYSE New York Stock Exchange
APMEA Asia-Pacific, Middle East and Africa
OCF Operating cash flow
bps Basis points
OECD Organisation for Economic Co-operation
cc Constant currency and Development
CDP Formerly the Carbon Disclosure Project OFAC The United States Department of the
CGFO Cash generated from operations Treasury's Office of Foreign Assets Control
2
CO e Carbon dioxide equivalent OTP Other tobacco products, including but not
Code UK Corporate Governance Code, July 2018 limited to roll-your-own, make-your-own
version and cigars
CSR Corporate Social Responsibility Parker Report The Parker Review Committee’s final report
on ethnic diversity in UK boards published
CSRD EU Corporate Sustainability Reporting
on 12 October 2017
Directive
PCAOB Public Company Accounting Oversight Board
DOJ The United States Department of Justice
ppts Percentage points
DSBS Deferred share bonus scheme
Reynolds American Reynolds American Inc.
EMTN European Medium Term Notes
Reynolds American Reynolds American Inc. and its subsidiary
ENA Europe and North Africa
Companies companies
EPS Earnings per share
ESG Environmental, Social and Governance
ERP Enterprise Resource Planning RRPs Reduced-risk Products
ESRS European Sustainability Reporting Standards SAFL Sustainable Agriculture and Farmer Livelihoods
EU European Union SEC United States Securities and Exchange
Commission
EURIBOR Euro Interbank Offered Rate
SIP Share incentive plan
FII GLO Franked Investment Income Group
Litigation Order SoBC Group Standards of Business Conduct
FCTC Framework Convention on Tobacco Control SOFR Secured Overnight Financing Rate
FMCG Fast Moving Consumer Goods SONIA Sterling Overnight Index Average
FRC UK Financial Reporting Council SOx United States Sarbanes-Oxley Act of 2002
GAAP Generally Accepted Accounting Practice SRS Share reward scheme
GDB Global Drive Brands, being Kent, Dunhill, Pall TaO Programme to implement the new
Mall, Lucky Strike and Rothmans operating model, including one instance of
SAP
GDPR EU General Data Protection Regulation
TCFD Taskforce on Climate-related Financial
GDSB Global Drive and Key Strategic Brands, being Disclosures
the GDBs, plus Shuang Xi and State Express
555 TDR TDR d.o.o
GJ Gigajoules (of energy use) THP Tobacco Heated Product
HP Heated Products (i.e., the devices, which THR Tobacco Harm Reduction
include glo and our hybrid products). TPD1 European Tobacco Products Directive
Heated Products are used to heat our (directive 2001/37/EC)
Tobacco Heated Products or Herbal Heated TPD2 European Tobacco and Related Products
Products Directive
IASB International Accounting Standards Board (directive 2014/40/EU)
IEIS International Executive Incentive Scheme TSR Total shareholder return
IFRS International Financial Reporting Standards as U.S. United States of America
issued by the IASB and as adopted by the EU UURBS Unfunded unapproved retirement benefit
ISA International Standards on Auditing scheme
JSE Johannesburg Stock Exchange WHO World Health Organization

406
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Cross-Reference to Form 20-F

Item Form 20-F caption Location in this document

1 Identity of Directors, Senior Management and Advisers N/A
2 Offer Statistics and Expected Timetable N/A
3 Key Information
A Selected financial data N/A
B Capitalization and indebtedness N/A
C Reasons for the offer and use of proceeds N/A
D Risk factors 121-128, 353-374
4 Information on the Company
A History and development of the Company 42, 57, 105, 245-248, 279-280, 331, 351, 396, 402, Inside
back cover page (409)
B Business overview 2-5, 12-39, 41, 44-49, 51, 94, 96-97, 108-109, 123, 127,
146-147, 149, 220-223, 331, 333, 356-358, 361-369, 375-379,
381, 382, 384
C Organizational structure 312-321, 331
D Property, plants and equipment 245-246, 382
4a Unresolved staff comments N/A
5 Operating and Financial Review and Prospects
A Operating results 10, 12-14, 26-28, 31, 33, 35-38, 44-49, 50-55, 58-59, 108, 123,
124, 126, 220-223, 240-243, 259-261, 275, 349, 351, 361-369,
375-379
B Liquidity and capital resources 56-57, 59, 214, 262, 269-271, 274-278, 308, 351-352, 371
C Research and development, patents and licenses 19, 28-35, 39, 52, 60-62, 78-79, 82-83, 226, 331, 373
D Trend information 6-9, 10, 12-39, 44-49, 50-59, 60-62, 102-116, 121-128,
375-379
E Critical Accounting Estimates N/A
6 Directors, Senior Management and Employees
A Directors and senior management 132-137, 150
B Compensation 170-189, 248-255, 284-285, 335-336, 339-340, 344-346
C Board practices 132-137, 156, 159-169, 170-172, 174, 184, 190-192, 284-285,
385, 398
D Employees 284, 350
E Share ownership 177-179, 188-189, 281-283, 400
F Disclosure of a registrant’s action to recover erroneously N/A
awarded compensation
7 Major Shareholders and Related Party Transactions
A Major shareholders 394-395
B Related party transactions 284-285
C Interests of experts and counsel N/A
8 Financial Information
A Consolidated statements and other financial information 55, 124, 161, 206-311, 364-368, 388-389
B Significant changes N/A
9 The Offer and Listing
A Offer and listing details 387
B Plan of distribution N/A
C Markets 387
D Selling shareholders N/A
E Dilution N/A
F Expenses of the issue N/A
10 Additional Information
A Share capital N/A
B Memorandum and Articles of Association 178, 396-398
C Material contracts 248-255, 380-381
D Exchange controls 388
E Taxation 390-393

407
BAT Annual Report and Form 20-F 2023 Strategic Report Governance Report Financial Statements Other Information

Other Information

Cross-Reference to Form 20–F

Continued

Item Form 20-F caption Location in this document

F Dividends and paying agents N/A
G Statements by experts N/A
H Documents on display 402
I Subsidiary information N/A
J Annual Report to Security Holders N/A
11 Quantitative and Qualitative Disclosures about Market Risk 274-278
12 Description of Securities Other Than Equity Securities
A Debt securities N/A
B Warrants and rights N/A
C Other securities N/A
D American Depositary Shares 401
13 Defaults, Dividend Arrearages and Delinquencies N/A
14 Material Modifications to the Rights of Security Holders N/A
and Use of Proceeds
15 Controls and Procedures 206-207, 384
16A Audit Committee Financial Expert 160, 383
16B Code of Ethics 169, 383, 404
16C Principal Accountant Fees and Services 166, 228
16D Exemptions from the Listing Standards for Audit N/A
Committees
16E Purchases of Equity Securities by the Issuer and 399
Affiliated Purchasers
16F Change in Registrant’s Certifying Accountant N/A
16G Corporate Governance 383
16H Mine Safety Disclosure N/A
16I Disclosure Regarding Foreign Jurisdictions that Prevent N/A
Inspections
16J Insider Trading Policies N/A
16K Cybersecurity 128, 163-164, 355, 367
17 Financial Statements N/A
18 Financial Statements 206-311
19 Exhibits 403-405

408
409
 SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign this annual
report on its behalf.

Date: 9 February 2024

British American Tobacco p.l.c.

(Registrant)

By: /s/ Caroline Ferland

Caroline Ferland
Company Secretary
 EXHIBIT 2.29

Description of Securities Registered under Section 12 of the Securities Exchange Act of

1934 (the “Exchange Act”)

As of December 31, 2023, British American Tobacco p.l.c. (“BAT”, the “Company”, “we”, “us”
and “our”) had the following series of securities registered pursuant to Section 12(b) of the
Exchange Act:

Name of exchange on
Title of each class Trading Symbol(s) which registered
American Depositary Shares BTI New York Stock Exchange
(evidenced by American
Depositary Receipts) each
representing one ordinary share
Ordinary shares, nominal value BTI New York Stock Exchange*
25 pence per share
5.931% Notes due 2029 BTI29A New York Stock Exchange
6.343% Notes due 2030 BTI30A New York Stock Exchange
6.421% Notes due 2033 BTI33 New York Stock Exchange
7.079% Notes due 2043 BTI43 New York Stock Exchange
7.081% Notes due 2053 BTI53 New York Stock Exchange
7.750% Notes due 2032 BTI32A New York Stock Exchange
4.742% Notes due 2032 BTI32 New York Stock Exchange
5.650% Notes due 2052 BTI52 New York Stock Exchange
4.448% Notes due 2028 BTI28A New York Stock Exchange
2.259% Notes due 2028 BTI28 New York Stock Exchange
2.726% Notes due 2031 BTI31 New York Stock Exchange
3.734% Notes due 2040 BTI40 New York Stock Exchange
3.984% Notes due 2050 BTI50A New York Stock Exchange
1.668% Notes due 2026 BTI26A New York Stock Exchange
4.700% Notes due 2027 BTI27A New York Stock Exchange
4.906% Notes due 2030 BTI30 New York Stock Exchange
5.282% Notes due 2050 BTI50 New York Stock Exchange
2.789% Notes due 2024 BTI24 New York Stock Exchange
3.215% Notes due 2026 BTI26 New York Stock Exchange
3.462% Notes due 2029 BTI29 New York Stock Exchange
4.758% Notes due 2049 BTI49 New York Stock Exchange
3.222% Notes due 2024 BTI24A New York Stock Exchange
3.557% Notes due 2027 BTI27 New York Stock Exchange
4.390% Notes due 2037 BTI37 New York Stock Exchange
4.540% Notes due 2047 BTI47 New York Stock Exchange
* Listed, not for trading, but only in connection with the listing of the applicable Registrant’s
American Depositary Shares issued in respect thereof.
BAT is the issuer of the ordinary shares and the ordinary shares represented by the American
Depositary Shares, as described below. The rest of the securities registered pursuant to Section
12(b) of the Exchange Act described herein were issued by either B.A.T. International Finance
p.l.c. (“BATIF”) or B.A.T Capital Corporation (“BATCAP”), wholly-owned finance subsidiaries
of BAT. BAT is a guarantor and co-registrant of the securities issued by each of BATIF and
BATCAP described herein.

BAT’s ordinary shares and American Depositary Shares are described below under “Description
of BAT Ordinary Shares and American Depositary Shares”. BATIF’s 5.931% Notes due 2029,
4.448% Notes due 2028 and 1.668% Notes due 2026 are described below under “Description of
the Notes Issued Under the BATIF Indenture”. BATCAP’s 6.343% Notes due 2030, 6.421%
Notes due 2033, 7.079% Notes due 2043, 7.081% Notes due 2053, 7.750% Notes due 2032,
4.742% Notes due 2032, 5.650% Notes due 2052, 2.259% Notes due 2028, 2.726% Notes due
2031, 3.734% Notes due 2040, 3.984% Notes due 2050, 4.700% Notes due 2027, 4.906% Notes
due 2030, 5.282% Notes due 2050, 2.789% Notes due 2024, 3.215% Notes due 2026, 3.462%
Notes due 2029 and 4.758% Notes due 2049 are described below under “Description of the
Notes Issued Under the 2019 BATCAP Indenture”. BATCAP’s 3.222% Notes due 2024, 3.557%
Notes due 2027, 4.390% Notes due 2037 and 4.540% Notes due 2047 are described below under
“Description of the Notes Issued Under the 2017 BATCAP Indenture”.
Capital terms used but not defined herein have the meanings given to them in BAT’s Annual
Report on Form 20-F for the fiscal year ended December 31, 2023. Terms that are defined below
retain such definitions solely for purposes of the relevant description of securities.
A. Guarantor Subsidiaries of the Registrant

BATCAP, B.A.T. Netherlands Finance B.V. (“BATNF”) and, unless its guarantee is released in
accordance with the BATIF Indenture (as defined below), Reynolds American Inc. (“RAI”), each
of which is an indirect 100% owned subsidiary of BAT, have fully and unconditionally
guaranteed (along with BAT) BATIF’s obligations under the following senior unsecured notes
issued by BATIF, which is a direct 100% owned subsidiary of BAT, under the BATIF Indenture:

• 5.931% Notes due 2029;

• 4.448% Notes due 2028; and

• 1.668% Notes due 2026.

BATIF, BATNF and, unless its guarantee is released in accordance with the 2019 BATCAP
Indenture (as defined below), RAI have fully and unconditionally guaranteed (along with BAT)
BATCAP’s obligations under the following senior unsecured notes issued by BATCAP, under
the 2019 BATCAP Indenture:

• 6.343% Notes due 2030;

• 6.421% Notes due 2033;

• 7.079% Notes due 2043;

• 7.081% Notes due 2053;

• 7.750% Notes due 2032;

2
 • 4.742% Notes due 2032;

• 5.650% Notes due 2052;

• 2.259% Notes due 2028;

• 2.726% Notes due 2031;

• 3.734% Notes due 2040;

• 3.984% Notes due 2050;

• 4.700% Notes due 2027;

• 4.906% Notes due 2030;

• 5.282% Notes due 2050;

• 2.789% Notes due 2024;

• 3.215% Notes due 2026;

• 3.462% Notes due 2029; and

• 4.758% Notes due 2049.

BATIF, BATNF, British American Tobacco Holdings (The Netherlands) B.V. (“BATHTN”),
which is an indirect 100% owned subsidiary of BAT, and, unless its guarantee is released in
accordance with the 2017 BATCAP Indenture (as defined below), RAI have fully and
unconditionally guaranteed (along with BAT) BATCAP’s obligations under the following senior
unsecured notes issued by BATCAP, under the 2017 BATCAP Indenture:

• 3.222% Notes due 2024;

• 3.557% Notes due 2027;

• 4.390% Notes due 2037; and

• 4.540% Notes due 2047.

B. Description of BAT Ordinary Shares and American Depositary Shares

DESCRIPTION OF BAT ORDINARY SHARES

The following is a summary of the material terms of (1) the BAT ordinary shares as set forth in
the BAT articles of association; (2) English law insofar as it applies to the BAT ordinary shares;
and (3) the BAT articles of association, which were adopted pursuant to a special resolution (as
defined below) on April 19, 2023. Please note that this is only a summary, and may not contain
all of the relevant information.

3
BAT Articles of Association

BAT is registered in England and Wales under the UK Companies Act 2006 with company
registration number 3407696. BAT’s purposes and objects are not restricted.
Share Capital

As at December 31, 2023, the issued and fully paid share capital of BAT was 2,456,941,909
ordinary shares, each with a nominal value of 25 pence. Of this number, 220,533,855 ordinary
shares were registered as treasury shares. There are no acquisition rights or obligations in relation
to the issue of BAT ordinary shares in the capital of BAT or an undertaking to increase the
capital of BAT. There are no convertible securities, exchangeable securities or securities with
warrants in BAT.

BAT ordinary shares are fully paid and, accordingly, no further contribution of capital may be
required by BAT from the holders of BAT ordinary shares.
Further Issuances of Share Capital and Preemptive Rights

Pursuant to the UK Companies Act 2006, BAT’s directors are, with certain exceptions, not
permitted to allot any equity securities without express authorization from BAT’s shareholders.
Further, under the UK Companies Act 2006, BAT may not issue shares for cash (other than
pursuant to an employee share scheme) without first making an offer to existing shareholders to
allot such shares to them on the same or more favorable terms in proportion to their respective
shareholdings, unless this requirement is waived by a special resolution of the shareholders. See
“—Voting Rights” for an explanation of the requirements for approval of a special resolution.
Subject to receipt of authorization from BAT’s shareholders, the directors may issue shares with
such rights or restrictions, including shares that are redeemable at the option of BAT or the
shareholder, as the directors or BAT by ordinary resolution may determine. In the event that
rights and restrictions attaching to shares are determined by the directors or ordinary resolution,
as set out in the preceding sentence, those rights and restrictions shall apply, in particular in place
of any rights or restrictions that would otherwise apply by virtue of the Companies Act 2006 in
the absence of any provisions in the BAT articles of associations, as if those rights and
restrictions were set out therein. See “—Voting Rights” for an explanation of the requirements
for approval of an ordinary resolution.
Throughout this section, references to shares of BAT refer to any shares that may be issued out
of the capital of BAT, including BAT ordinary shares.
Changes to the Share Capital

Shareholder approval by ordinary resolution is required for BAT to:

• consolidate and divide all or any of its share capital into shares of a larger nominal
amount than its existing shares;

• sub-divide its shares, or any of them, into shares of a smaller nominal amount than its
existing shares; and

• determine that, as between the shares resulting from such a sub-division, any of the
shares may have any preference or advantage as compared with the other classes of share.

4
The UK Companies Act 2006 contains the procedural requirements for a reduction of capital.
The reduction of capital must be approved by shareholders by special resolution, and must be
approved by a court. The decision to approve the reduction is at the court’s discretion, and it will
consider whether (a) the reduction is for a discernible purpose, (b) all shareholders are treated
equally, (c) the reduction has been properly explained to shareholders and (d) the company’s
creditors are safeguarded. Subject to these requirements, BAT may reduce its share capital, its
capital redemption reserve and any share premium account in any way.
Repurchase of Shares

Once approved by BAT shareholders by ordinary resolution and subject to certain procedural
requirements of the UK Companies Act 2006, BAT may repurchase its own shares, including
any BAT ordinary shares and any redeemable shares that may be issued. Any shares which have
been repurchased may be held as treasury shares or, if not so held, must be canceled immediately
upon the completion of the purchase, thereby reducing the amount of BAT’s issued share capital.
Dividends

BAT shareholders may by ordinary resolution declare dividends in accordance with the
respective rights of the shareholders but no dividends shall exceed the amount recommended by
the directors. No dividend shall be paid other than out of profits available for distribution as
specified in the UK Companies Act 2006. The directors may pay interim dividends or dividends
payable at a fixed rate, if it appears to them that they are justified by the profits of BAT available
for distribution. If the directors act in good faith, they shall not incur any liability to the holders
of shares conferring preferred rights for any loss they may suffer by the lawful payment of an
interim dividend on any shares having deferred or non- preferred rights, including the BAT
ordinary shares.

BAT ordinary shares carry the right to receive dividends and distributions that have been
declared by BAT on a pro rata basis but have no other right to share in the profits of BAT and are
not entitled to any fixed income. BAT may issue shares that rank prior to the BAT ordinary
shares in respect of payment of dividends.

BAT shareholders may, at a general meeting declaring a dividend, upon the recommendation of
the directors and by ordinary resolution, direct that the payment of all or any part of the dividend
be satisfied by the distribution of specific assets and, where any difficulty arises in regard to the
distribution, the directors may settle the same as they think fit.

The directors may, with the approval of BAT shareholders by ordinary resolution, offer any
holders of BAT ordinary shares the right to elect to receive BAT ordinary shares, credited as
fully paid, instead of cash in respect of the whole (or some part, to be determined by the
directors) of any dividend. BAT or the directors may fix a date and time as the record date by
reference to which persons registered as holders of shares or other securities shall be entitled to
receipt of any dividend, distribution, allotment or issue made, and that date may be before, on or
after the date on which the dividend, distribution, allotment or issue is declared.

No dividend or other money payable in respect of a share shall bear interest against BAT, unless
otherwise provided by the rights attached to the share. Dividends or other distributions paid in
respect of BAT ordinary shares do not bear interest.

The directors may elect to pay dividends solely by means of electronic transfer, or such other
method as the directors deem appropriate and which method may be different for different
holders or groups of holders of shares, to an account nominated in writing by the holder of the

5
shares. Amounts due to shareholders who provide no, or invalid, account details may be held in
an account in BAT’s name until such shareholders nominate a valid account.

BAT may cease sending dividend payments in respect of any shares if

• in respect of at least two consecutive dividends payable on that share, the cheque or
warrant has been returned undelivered or remains uncashed by the shareholder, or another
method of payment has failed; or

• in respect of one dividend payable on that share, the cheque or warrant has been returned
undelivered or remains uncashed by the shareholder, or another method of payment has
failed, and reasonable inquiries have failed to establish a shareholder’s new address or
account; or

• a shareholder does not specify an address, or does not specify an account of a type
prescribed by the directors, or other details necessary in order to make a payment of a
dividend by the means by which the directors have decided in accordance with BAT’s
Articles of Association that a payment is to be made, or by which the shareholder has
elected to receive payment, and such address or details are necessary in order for BAT to
make the relevant payment in accordance with such decision or election.

BAT must recommence sending payments for dividends payable on that share if the person(s)
entitled so request and have supplied in writing a new address or account to be used for that
purpose.

Any dividend which has remained unclaimed for 12 years from the date when it became due for
payment will be forfeited and cease to remain owing by BAT and BAT will not be obliged to
account to, or be liable in any respect to, the recipient or person who would have been entitled to
the amount.
Voting Rights

All BAT ordinary shares have equal voting rights and are entitled to attend and vote at all general
meetings of BAT. BAT may issue, subject to the restrictions discussed above under the caption
“—Share Capital—Further Issuances of Share Capital and Preemptive Rights” shares with
preferential voting rights. This section assumes that all shares have equal voting rights and that
no preferential shares are issued. Shareholders do not have cumulative voting rights.

Under English law, resolutions to be voted on by shareholders at a general meeting can be either
an ordinary resolution, which means that the resolution must be passed by a simple majority of
shareholders or holders of a simple majority of the shares (depending on whether the vote is by a
show of hands or by a poll) present in person or by proxy and entitled to vote at the general
meeting, or a special resolution, which means that the resolution must be passed by a majority of
not less than 75% of the shareholders or holders of 75% of the shares (depending on whether the
vote is by a show of hands or by a poll) present in person or by proxy and entitled to vote at the
general meeting. For a resolution to be regarded as a special resolution, the notice of the general
meeting must specify the intention to propose the resolution as a special resolution.

A resolution put to the vote of a general meeting must be decided on a show of hands unless a
poll is validly demanded. A poll on a resolution may be demanded either before a vote on a show
of hands on that resolution or immediately after the result of a show of hands on that resolution is
declared.

A poll on a resolution may be demanded by:

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 • the chair of the meeting;

• a majority of the directors present at the meeting;

• not less than five shareholders having the right to vote at the meeting;

• a shareholder or shareholders representing not less than one-tenth of the total voting
rights of all the shareholders having the right to vote at the meeting (excluding any voting
rights attached to any shares in BAT held as treasury shares); or

• a shareholder or shareholders holding shares conferring a right to vote on the resolution

on which an aggregate sum has been paid up equal to not less than one-tenth of the total
sum paid up on all the shares conferring that right (excluding any shares in BAT
conferring a right to vote at the meeting which are held as treasury shares).

On a show of hands, every shareholder who is present in person has one vote regardless of the
number of shares held by such shareholder. Every proxy duly appointed by one or more
shareholders entitled to vote on the resolution and present has one vote, except that if the proxy
has been duly appointed by more than one shareholder entitled to vote and is instructed by one or
more of those shareholders to vote for the resolution and by one or more others to vote against it,
or is instructed by one or more of those shareholders to vote in one way and is given discretion as
to how to vote by one or more others (and wishes to use that discretion to vote in the other way)
they have one vote for and one vote against the resolution.

On a poll every shareholder present in person or by duly appointed proxy has one vote for every
share held by the shareholder. A shareholder or their duly appointed proxy entitled to more than
one vote need not use all their votes or cast all the votes they use the same way.

For the purposes of determining which persons are entitled to attend or vote at a general meeting,
BAT may specify in the notice convening the meeting a time, not more than 48 hours before the
time fixed for the meeting (not including any part of a day that is not a working day), by which a
person must be entered on the register in order to have the right to attend or vote at the meeting.

In the case of joint holders, the vote of the joint holder whose name appears first on the register
of shareholders in respect of the joint holding shall be accepted to the exclusion of the votes of
the other joint holders.
If any shares are issued by BAT that are not fully paid, holders of those shares will not be
permitted to vote at any general meeting or at any separate meeting of the holders of that class of
shares, either in person or by proxy, unless all amounts presently payable by such holder in
respect of that share have been paid.

There are no limitations under BAT’s articles of association restricting the right of non-UK
resident or foreign owners to hold or vote ordinary shares in BAT.
Transfer of the Shares

A share in certificated form may be transferred by an instrument of transfer which may be in any
usual form or in any other form approved by the directors, executed by or on behalf of the
transferor and, where the share is not fully paid, by or on behalf of the transferee. A share in
uncertificated form may be transferred by means of the relevant system concerned. The transfer
may not be in favor of more than four transferees.

7
In their absolute discretion, the directors may refuse to register the transfer of a share in
certificated form which is not fully paid provided that if the share is listed on the Official List of
the Financial Conduct Authority such refusal does not prevent dealings in the shares from taking
place on an open and proper basis. The directors may also refuse to register a transfer of a share
in certificated form (whether fully paid or not) unless the instrument of transfer:

• is lodged, duly stamped, at the registered office of BAT or such other place as the
directors may appoint and is accompanied by the certificate for the share to which it
relates and such other evidence as the directors may reasonably require to show the right
of the transferor to make the transfer;

• is in respect of only one class of share; and

• is not in favor of more than four transferees.

The directors may refuse to register a transfer of a share in uncertificated form to a person who is
to hold it thereafter in certificated form in any case where BAT is entitled to refuse to register the
transfer under the Uncertificated Securities Regulations 2001.

If the directors refuse to register a transfer of a share, they shall as soon as practicable and in any
event within two months after the date on which the transfer was lodged with BAT (in the case
of a transfer of a share in certificated form) or the date on which the operator-instruction was
received by BAT (in the case of a transfer of a share in uncertificated form which will be held
thereafter in certificated form) send to the transferee notice of the refusal together with reasons
for the refusal. The directors shall send to the transferee such further information about the
reasons for the refusal to the transferee as the transferee may reasonably request.

No fee shall be charged for the registration of any instrument of transfer or other document or
instruction relating to or affecting the title to any share.

For uncertificated shares, transfers shall be registered only in accordance with the terms of the
Uncertificated Securities Regulations 2001.
Distribution of Assets on a Winding-up

If BAT is wound up, the liquidator may, with the sanction of a special resolution and any other
sanction required by law, divide among the shareholders in specie the whole or any part of the
assets of BAT and may, for that purpose, value any assets and determine how the division shall
be carried out as between the shareholders or different classes of shareholders. The liquidator
may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts
for the benefit of the shareholders as they may with the like sanction determine, but no
shareholder shall be compelled to accept any assets upon which there is a liability.
Disclosure of Shareholding Ownership

There are no provisions in BAT’s articles of association whereby persons acquiring, holding or
disposing of a certain percentage of BAT’s ordinary shares are required to make disclosure of
their ownership percentage, although there are such requirements under statute and regulation.
Untraced Shareholders

BAT is entitled to sell (at any time after becoming entitled to do so) any share held by a
shareholder, or any share to which a person is entitled by transmission of the title of such share

8
(including in consequence of the death or bankruptcy of the shareholder or otherwise by
operation of law) if:

• for a period of 12 years, no payment for amounts payable in respect of the share sent and
payable in a manner authorized by the articles of association has been cashed or effected
and no communication has been received by BAT from the shareholder or person
concerned;

• during that period at least three cash dividends (whether interim or final) have become
payable on the share and no such dividend has been claimed by the shareholder or person
concerned;

• BAT has at any time after the expiration of that period sent a notice to the registered
address or last known address of the shareholder or person concerned of its intention to
sell such share and, before sending such notice, BAT has taken such steps as it considers
reasonable in the circumstances to trace the shareholder or other person entitled,
including engaging, if considered appropriate, in relation to such share, a professional
asset reunification company or other tracing agent; and

• BAT has not, during the further period of three months following the date of publication
of sending of the notice referred to above and prior to the sale of the share received any
communication from the member or person concerned.

The net proceeds of sale of any shares as described above shall be forfeited and shall belong to
BAT and BAT will not be obliged to account to the former shareholder or other person
previously entitled to the share, or be liable to such persons in relation to, the proceeds of sale. If
BAT sells a share pursuant to the above, any dividend or other money payable in respect of the
share outstanding at the time of sale shall be forfeited and BAT shall not be obliged to account
to, or be liable in any respect to, the recipient or person who would have been entitled to the
amount.

If, on three consecutive occasions, notices, documents or information sent or supplied to a

shareholder have been returned undelivered, the shareholder shall not be entitled to receive any
subsequent notice, document or information until they have supplied to BAT (or its agent) a new
registered address, or a postal address within the United Kingdom or the Republic of South
Africa, or shall have informed BAT of an electronic address.
Variation of Rights

If at any time the capital of BAT is divided into different classes of shares, the rights attached to
any class may be varied, either while BAT is a going concern or during or in contemplation of a
winding up in such manner (if any) as may be provided by those rights (depending on the
drafting of those rights, they may be more significant than is required by law) or if there are no
such provisions either with the consent in writing of the holders of three-quarters in nominal
value of the issued shares of that class (not including any treasury shares), or with the approval
of shareholders by a special resolution passed at a separate meeting of the holders of such shares,
but not otherwise.

To every such separate meeting the provisions of the articles of association relating to general
meetings shall apply, except that the quorum for any such meeting shall be two persons together
holding or representing by proxy at least one-third in nominal value of the issued shares of the
class in question (excluding treasury shares). At an adjourned meeting, the quorum shall be one
person holding shares of the class in question (excluding treasury shares) or their proxy.

9
Unless otherwise expressly provided by the rights attached to any class of shares, those rights
shall be deemed not to be varied by the purchase by BAT of any of its own shares or the holding
of such shares in treasury.
Change of Control and Takeovers

BAT is subject to the City Code on Takeovers and Mergers, which governs the conduct of
mergers and takeovers in the UK.

An English public limited company such as BAT may be acquired in a number of ways,
including by means of a scheme of arrangement (as defined below) between the company and its
shareholders or by means of a takeover offer.

A scheme of arrangement is a statutory procedure under the UK Companies Act 2006 pursuant to
which the English courts may approve an arrangement between an English company and some or
all of its shareholders. In a scheme of arrangement, the company would make an initial
application to the court to convene a meeting or meetings of its shareholders at which a majority
in number of shareholders representing 75% of the voting rights of the shareholders present and
voting either in person or by proxy at the meeting must agree to the arrangement by which they
will sell their shares in exchange for the consideration being offered by the bidder. If the
shareholders so agree, the company will return to court to request the court to sanction the
arrangement. Upon such a scheme of arrangement becoming effective in accordance with its
terms and the UK Companies Act 2006, it will bind the company and such shareholders.

A takeover offer is an offer to acquire all of the outstanding shares of a company (other than
shares which at the date of the offer are already held by the bidder). Under the City Code on
Takeovers and Mergers and in order to squeeze out dissenting shareholders, the offer must be
made on identical terms to all holders of shares to which the offer relates. If the bidder, by virtue
of acceptances of the offer, acquires or contracts to acquire not less than 90% in value of the
shares to which the offer relates representing not less than 90% of the voting rights owned by the
shares, the UK Companies Act 2006 allows the bidder to give notice to any non-accepting
shareholder that the bidder intends to acquire his, her or its shares through a compulsory
acquisition (also referred to as a squeeze out), and the shares of such nonaccepting shareholders
will be acquired by the bidder six weeks later on the same terms as the offer, unless the
shareholder objects to the English court and the court enters an order that the bidder is not
entitled to acquire the shares or specifying terms of the acquisition different from those of the
offer.

The UK Companies Act 2006 permits a scheme of arrangement or takeover offer to be made
relating only to a particular class or classes of a company’s shares.

As BAT is a UK premium listed company, if it were subject to a takeover bid and the takeover
were structured as a contractual takeover offer, under the UK Listing Rules a bidder would have
to, by virtue of its shareholdings and acceptances of its takeover offer, acquire or agree to acquire
shares carrying 75% of the voting rights of BAT before it could cancel BAT’s listing on the
Main Market of the LSE.

Where the takeover is by way of a scheme of arrangement, the UK Listing Rules do not impose
any additional rules as regards shareholder approval or the level of acceptances required before
BAT could be delisted, as the scheme procedure provides sufficient protection for shareholders.

There are no provisions in BAT’s articles of association that would have the effect of delaying,
deferring or preventing a takeover, or change of control, of BAT.

10
Under English law, BAT’s directors have a fiduciary duty to take only those actions that are in
the interests of BAT and any anti-takeover devices employed by the directors in the future, if
any, must accordingly be in the interests of BAT.

However, under the City Code on Takeovers and Mergers, if an acquisition of BAT ordinary
shares increases the aggregate holding of an acquirer and persons acting in concert with the
acquirer (i.e., persons who, pursuant to an agreement or understanding, cooperate to obtain or
consolidate control of a company or to frustrate the successful outcome of an offer for a
company) to shares carrying 30% or more of the voting rights in BAT, the acquirer and,
depending on the circumstances, its concert parties, would be required (except with the consent
of the Panel on Takeovers and Mergers) to make a cash offer for the outstanding BAT ordinary
shares at a price not less than the highest price paid for the BAT ordinary shares by the acquirer
or its concert parties during the previous 12 months. This requirement would also be triggered by
any acquisition of shares by a person holding (together with its concert parties) shares carrying
between 30 and 50% of the voting rights in BAT if the effect of such acquisition were to increase
that person’s percentage of the voting rights.
General Meetings

An annual general meeting of shareholders must be held every year within a period of six months
of the day following BAT’s financial year end (which is December 31), at such place or places,
date and time as may be decided by the directors.
Ability to Call General Meetings

The directors may call general meetings. If there are not sufficient directors to form a quorum in
order to call a general meeting, any director may call a general meeting. If there is no director,
any shareholder of BAT may call a general meeting.

The directors are required to call a general meeting if requested by shareholders representing at
least 5% of the paid-up capital of BAT as carries the right of voting at general meetings
(excluding any paid-up capital held as treasury shares). Such meeting must be called within 21
days from the date on which the directors become subject to the requirement, and held on a date
not more than 28 days after the date of the notice calling the meeting. A meeting called upon the
request of shareholders may only deal with the business stated in the request by shareholders, or
as proposed by the directors. If the directors fail to call the general meeting requested by the
shareholders, the shareholders who requested the meeting, or any of them representing more than
one half of the total voting rights of all of them, may themselves call a general meeting. Such
meeting must be called for a date not more than three months after the date on which the
directors become subject to the requirement to call a meeting. Any reasonable expenses incurred
by the shareholders requesting the meeting by reason of the failure of the directors duly to call a
meeting must be reimbursed by the company.
Notice of General Meetings

Pursuant to the UK Companies Act 2006, an annual general meeting and all other general
meetings of BAT must be called by at least 21 clear days’ written notice (the “clear days” rule is
set out in section 360 of the UK Companies Act 2006 and excludes the day of the meeting and
the day that the notice is given). However, the UK Companies Act 2006 allows for this period of
notice for meetings other than annual general meetings to be reduced to 14 clear days’ notice
provided that: (1) the company allows its shareholders to make proxy appointments via a website
(such as one hosted by its share registrars); and (2) shareholders must pass a special resolution at
the annual general meeting every year approving the shortening of the notice period to 14 days.

11
A special resolution enabling BAT to hold general meetings (other than annual general meetings)
on 14 clear days’ notice was approved at the last annual general meeting held on April 19, 2023.

The notice shall specify the place, the date and the time of meeting and the general nature of the
business to be transacted, and in the case of an annual general meeting shall specify the meeting
as such. Where BAT has given an electronic address in any notice of meeting, any document or
information relating to proceedings at the meeting may be sent by electronic means to that
address, subject to any conditions or limitations specified in the relevant notice of meeting.
Subject to the provisions of the articles of association described above under “—Untraced
shareholders” and to any rights or restrictions attached to any shares, notices shall be given to all
shareholders, to all persons entitled to a share in consequence of the death or bankruptcy of a
shareholder or otherwise by operation of law and to the BAT directors and to the BAT Group’s
auditors. Any notice to be given to a shareholder may be given by reference to the register of
shareholders as it stands at any time within the period of 21 days before the notice is given; and
no change in the register after that time shall invalidate the giving of the notice.

A shareholder whose registered address is not within the United Kingdom or the Republic of
South Africa shall be entitled to receive any notice, document or information from BAT if they
give BAT an address (not being an electronic address) within the United Kingdom or the
Republic of South Africa at which notices, documents or information may be sent or if the
directors are satisfied that the sending or supplying of such notices, documents or information by
BAT to such address outside of the United Kingdom or the Republic of South Africa would not
result in BAT breaching any applicable law (whether in the United Kingdom, Republic of South
Africa, or elsewhere) or result, directly or indirectly, in BAT being required to comply with
additional filing or other regulatory requirements in the United Kingdom, the Republic of South
Africa, or any other jurisdiction.

Where, by reason of any suspension or curtailment of postal services, BAT is unable effectively
to give notice of a general meeting or any meeting of the holders of any class of shares, the
directors may decide that the only persons to whom notice of the affected general meeting must
be sent are: the directors; BAT’s auditors; those shareholders to whom notice to convene the
general meeting can validly be sent by electronic means and those shareholders to whom
notification as to the availability of the notice of meeting on a website can validly be sent by
electronic means. In any case, BAT shall also: (a) advertise the general meeting in at least two
national newspapers published in the United Kingdom; and (b) if at least seven clear days before
the meeting the posting of notices again becomes practicable, send or supply a confirmatory copy
of the notice to shareholders who were not sent the notice but would (but for this provision) have
been entitled to receive the notice.
Quorum

No business shall be transacted at any general meeting unless a quorum is present. Two persons
entitled to vote upon the business to be transacted, each being a shareholder or a proxy for a
shareholder or a duly authorized representative of the corporation which is a shareholder
(including for this purpose two persons who are proxies or corporate representatives of the same
shareholder), shall be a quorum.
Attendance at General Meetings

All shareholders may attend, speak and vote at BAT general meetings (including annual general
meetings). A shareholder is entitled to appoint another person as their proxy to exercise all or any
of their rights to attend and to speak and vote at a meeting of BAT. The appointment of a proxy
shall be deemed also to confer authority to demand or join in demanding a poll. Delivery of an
appointment of proxy shall not preclude a shareholder from attending and voting at the meeting

12
or at any adjournment of it. A proxy need not be a shareholder. A shareholder may appoint more
than one proxy in relation to a meeting, provided that each proxy is appointed to exercise the
rights attached to a different share or shares held by them. An appointment of proxy shall be in
writing in any usual form or in any other form which the directors may approve and shall be
executed by or on behalf of the appointor which in the case of a corporation may be either under
its common seal or under the hand of a duly authorized officer or attorney or other person duly
authorized for that purpose. Subject to the provisions of the UK Companies Act 2006, any
corporation (other than BAT itself) which is a shareholder of BAT may, by resolution of its
directors or other governing body, authorize such person(s) to act as its representative(s) at any
meeting of BAT, or at any separate meeting of the holders of any class of shares. BAT may
require such person(s) to produce a certified copy of the resolution before permitting them to
exercise their powers. The directors may (and shall if and to the extent that BAT is required to do
so by the UK Companies Act 2006) allow an appointment of proxy to be sent or supplied in
electronic form subject to any conditions or limitations as the directors may specify.

The directors or the chair of the meeting may direct that any person wishing to attend any general
meeting should submit to and comply with such searches or other security arrangements as they
or the chair of the meeting consider appropriate in the circumstances. The directors or the chair
of the meeting may in their absolute discretion refuse entry to, or eject from, any general meeting
any person who refuses to submit to a search or otherwise comply with such security
arrangements.

The directors or the chair of the meeting may take such action, give such direction or put in place
such checks or arrangements as they or the chair of the meeting consider appropriate to secure
the health and safety of the people attending the meeting or to promote the orderly conduct of the
business of the meeting. Any decision of the chair of the meeting on matters of procedure or
matters arising incidentally from the business of the meeting, and any determination by the chair
of the meeting as to whether a matter is of such a nature, shall be final.

The directors may make arrangements for simultaneous attendance and participation, by
electronic means or otherwise, allowing persons not present together at the same place to attend,
participate and vote at the meeting by using a satellite meeting place or places, including in
particular if the place of meeting specified in the notice of meeting appears to the chair to be
inadequate to accommodate all persons entitled and wishing to attend. The arrangements for
simultaneous attendance and participation at any place at which persons are participating may
include arrangements for controlling or regulating the level of attendance at any particular venue
provided that such arrangements shall operate so that all shareholders and proxies wishing to
attend the meeting are able to attend at one or other of the venues.
DESCRIPTION OF BAT AMERICAN DEPOSITARY SHARES

Citibank, N.A. is the depositary bank for the BAT ADSs. Citibank’s depositary offices are
located at 388 Greenwich Street, New York, New York 10013. American Depositary Shares are
frequently referred to as ADSs and represent ownership interests in securities that are on deposit
with the depositary bank. ADSs may be represented by certificates that are commonly known as
“American Depositary Receipts” or “ADRs.” The depositary bank typically appoints a custodian
to safekeep the securities on deposit. In this case, the custodian is Citibank, N.A., London
Branch, located at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB England.

BAT has appointed Citibank as depositary bank pursuant to the deposit agreement. A copy of the
second amended and restated deposit agreement is on file with the SEC under cover of a
Registration Statement on Form F-6EF. A copy of the deposit agreement and each amendment
thereto may be obtained from the SEC’s Public Reference Room at 100 F Street, N.E.,

13
Washington, D.C. 20549 and from the SEC’s website at www.sec.gov. Please refer to
Registration Numbers 333-221983 and 333-266484 when retrieving such copy.

The following summarizes the material terms of the BAT ADSs and the material rights of
owners of BAT ADSs. This summary does not purport to be complete and may not contain all of
the important information about the BAT ADSs. The rights and obligations of an owner of BAT
ADSs will be determined by reference to the terms of the deposit agreement and not by this
summary. The portions of this summary description that are italicized describe matters that may
be relevant to the ownership of BAT ADSs but that may not be contained in the deposit
agreement.

Each BAT ADS represents the right to receive, and to exercise the beneficial ownership interests
in, one BAT ordinary share that is on deposit with the depositary bank and/or custodian. A BAT
ADS also represents the right to receive, and to exercise the beneficial interests in, any other
property (including cash) received by the depositary bank or the custodian on behalf of the
owners of BAT ADSs but that has not been distributed to the owners of BAT ADSs because of
legal restrictions or practical considerations. The BAT ordinary shares deposited with the
depositary bank and/or the custodian and any and all other securities, property and cash held by
the depositary bank and/or custodian in respect thereof are referred to as the deposited securities.
BAT and the depositary bank may agree to change the ADS-to-BAT ordinary share ratio by
amending the deposit agreement. This amendment may give rise to, or change, the depositary
bank services fees payable by BAT ADS owners. The custodian, the depositary bank and their
respective nominees will hold all deposited securities for the benefit of the holders (i.e., the
persons in whose name the BAT ADSs are registered on the books of the depositary bank) and
beneficial owners of BAT ADSs. The deposited securities do not constitute the proprietary assets
of the depositary bank, the custodian or their nominees. Beneficial ownership in the deposited
securities will under the terms of the deposit agreement be vested in the beneficial owners of the
BAT ADSs. The depositary bank, the custodian and their respective nominees will be the record
holders of the deposited securities represented by the BAT ADSs for the benefit of the holders
and beneficial owners of the corresponding BAT ADSs. A beneficial owner of BAT ADSs may
or may not be the holder of BAT ADSs. Beneficial owners of BAT ADSs will be able to receive
any benefit in, and to exercise beneficial ownership interests in, the deposited securities only
through the registered holders of the BAT ADSs, the registered holders of the BAT ADSs (on
behalf of the applicable BAT ADS owners) only through the depositary bank, and the depositary
bank (on behalf of the owners of the corresponding BAT ADSs) directly, or indirectly, through
the custodian or their respective nominees, in each case upon the terms of the deposit agreement.
The depositary bank and BAT may deem and treat the registered holder of an ADS as the
absolute owner of such ADS for all purposes and neither the depositary bank nor BAT will have
any obligation or be subject to any liability under the deposit agreement or any ADR to any
holder or beneficial owner of ADSs unless, in the case of a holder of ADSs, such holder is the
registered holder or, in the case of a beneficial owner, such beneficial owner or its representative
is the registered holder.

Owners of BAT ADSs become party to the deposit agreement and therefore are bound to its
terms and to the terms of any ADR that represents such BAT ADSs. The deposit agreement and
the ADRs specify the rights and obligations of BAT as well as the rights and obligations of
owners of BAT ADSs and those of the depositary bank. BAT ADS holders appoint the
depositary bank to act on their behalf in certain circumstances.

In addition, applicable laws and regulations may require BAT ADS holders to satisfy reporting
requirements and obtain regulatory approvals in certain circumstances. BAT ADS holders are
solely responsible for complying with such reporting requirements and obtaining such approvals.
None of the depositary bank, the custodian, BAT or any of their respective agents or affiliates
shall be required to take any actions whatsoever on behalf of BAT ADS holders to satisfy such

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reporting requirements or obtain such regulatory approvals under applicable laws and
regulations.

BAT will not treat an owner of BAT ADSs as one of its shareholders, and BAT ADS holders
will not have direct shareholder rights. The depositary bank will hold the shareholder rights
attached to the BAT ordinary shares underlying the BAT ADSs. Owners of BAT ADSs will be
able to exercise the shareholders rights for the BAT ordinary shares represented by the BAT
ADSs through the depositary bank only to the extent contemplated in the deposit agreement. To
exercise any shareholder rights not contemplated in the deposit agreement a BAT ADS owner
must arrange for the cancellation of their BAT ADSs and become a direct shareholder of BAT.

An Owner of BAT ADSs may hold its BAT ADSs either by means of an ADR registered in its
name, through a brokerage or safekeeping account, or through an account established by the
depositary bank in its name reflecting the registration of uncertificated BAT ADSs directly on
the books of the depositary bank (commonly referred to as the direct registration system or
DRS). The direct registration system reflects the uncertificated (book-entry) registration of
ownership of BAT ADSs by the depositary bank. Under the direct registration system, ownership
of BAT ADSs is evidenced by periodic statements issued by the depositary bank to the holders
of the BAT ADSs. The direct registration system includes automated transfers between the
depositary bank and the Depository Trust Company, referred to as DTC. If a BAT ADS holder
decides to hold BAT ADSs through a brokerage or safekeeping account, the holder must rely on
the procedures of the broker or bank to assert its rights as BAT ADS owner. Banks and brokers
typically hold securities such as the BAT ADSs through clearing and settlement systems such as
DTC. The procedures of such clearing and settlement systems may limit a BAT ADS holder’s
ability to exercise its rights as an owner of BAT ADSs. All BAT ADSs held through DTC will
be registered in the name of a nominee of DTC.

The registration of the BAT ordinary shares in the name of the depositary bank or the custodian
shall, to the maximum extent permitted by applicable law, vest in the depositary bank or the
custodian the record ownership in the applicable BAT ordinary shares with the beneficial
ownership rights and interests in such BAT ordinary shares being at all times vested with the
beneficial owners of the BAT ADSs representing the BAT ordinary shares. The depositary bank
or the custodian shall at all times be entitled to exercise the beneficial ownership rights in all
deposited securities, in each case only on behalf of the holders and beneficial owners of the BAT
ADSs representing the deposited securities.
Dividends and Distributions

Holders of BAT ADSs generally have the right to receive the distributions, including dividends,
BAT makes on the deposited securities. Receipt of these distributions may be limited, however,
by practical considerations and legal limitations. Holders of BAT ADSs will receive such
distributions under the terms of the deposit agreement in proportion to the number of BAT ADSs
held as of the specified record date, after deduction of the applicable fees, taxes and expenses.
Distributions of Cash

Whenever BAT makes a cash distribution, including any cash dividend, on any deposited
securities, it will deposit the funds with the custodian. Upon receipt of confirmation of the
deposit of the requisite funds, the depositary bank will arrange for the funds received in a
currency other than U.S. dollars to be converted into U.S. dollars and for the distribution of the
U.S. dollars to the holders, subject to the laws and regulations of England and Wales.

The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are
transferable to the United States. The depositary bank will apply the same method for

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distributing the proceeds of the sale of any property (such as undistributed rights) held by the
custodian in respect of any deposited securities. For further information regarding the conversion
of funds into U.S. dollars, see “—Foreign Currency Conversion”.
The distribution of cash will be made net of the fees, expenses, taxes and governmental charges
payable by holders under the terms of the deposit agreement. The depositary bank will hold any
cash amounts it is unable to distribute in a non-interest bearing account for the benefit of the
applicable holders and beneficial owners of BAT ADSs until the distribution can be effected or
the funds that the depositary bank holds must be escheated as unclaimed property in accordance
with the laws of the relevant states of the United States.
Distributions of BAT Ordinary Shares

Whenever BAT makes a free distribution, including any dividend, of BAT ordinary shares on the
deposited securities, it will deposit the applicable number of BAT ordinary shares with the
custodian. Upon receipt of confirmation of such deposit, the depositary bank will either distribute
to holders new BAT ADSs representing the BAT ordinary shares deposited or modify the ADS-
to-BAT ordinary share ratio, in which case each BAT ADS held will represent rights and
interests in the additional BAT ordinary shares so deposited. Only whole new BAT ADSs will be
distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed
as in the case of a cash distribution.

The distribution of new BAT ADSs or the modification of the ADS-to-BAT ordinary share ratio
upon a distribution of BAT ordinary shares will be made net of the fees, expenses, taxes and
governmental charges payable by holders under the terms of the deposit agreement. In order to
pay such taxes or governmental charges, the depositary bank may sell all or a portion of the new
BAT ordinary shares so distributed.

No such distribution of new BAT ADSs will be made if it would violate a law (e.g., the U.S.
securities laws). If the depositary bank does not distribute new BAT ADSs as described above, it
may sell the BAT ordinary shares received upon the terms described in the deposit agreement
and will distribute the proceeds of the sale as in the case of a distribution of cash.
Distributions of Rights

Whenever BAT intends to distribute to the holders of BAT ordinary shares rights to subscribe for
additional BAT ordinary shares, it will give prior notice to the depositary bank and will assist the
depositary bank in determining whether it is lawful and reasonably practicable to distribute rights
to subscribe for additional BAT ADSs to holders.

The depositary bank will establish procedures to distribute rights to subscribe for additional BAT
ADSs to holders and to enable such holders to exercise such rights if it is lawful and reasonably
practicable to make the rights available to holders of BAT ADSs, and if BAT provides all of the
documentation contemplated in the deposit agreement (such as opinions to address the
lawfulness of the transaction). BAT ADS holders may have to pay fees, expenses, taxes and
other governmental charges to subscribe for the new BAT ADSs upon the exercise of their
rights. The depositary bank is not obligated to establish procedures to facilitate the distribution
and exercise by holders of rights to subscribe for new BAT ordinary shares other than in the form
of BAT ADSs.

The depositary bank will not distribute the rights to BAT ADS holders if:

• BAT does not timely request that the rights be distributed to BAT ADS holders;

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 • BAT requests that the rights not be distributed to BAT ADS holders;

• BAT fails to deliver satisfactory documents to the depositary bank; or

• it is not reasonably practicable to distribute the rights.

The depositary bank, upon consultation with BAT, will sell the rights that are not exercised or
not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale, net of
fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit
agreement, will be distributed to holders as in the case of a cash distribution. If the depositary
bank is unable to sell the rights, it will allow the rights to lapse.
Elective Distributions

Whenever BAT intends to make a distribution, including any dividend, on BAT ordinary shares
payable at the election of shareholders either in cash or in additional BAT ordinary shares, it will
give prior notice thereof to the depositary bank and will indicate whether it wishes the elective
distribution to be made available to BAT ADS holders. In such case, BAT will assist the
depositary bank in determining whether such distribution is lawful and reasonably practicable.

The depositary bank will make the election available to BAT ADS holders only if it is
reasonably practicable and if BAT has provided all of the documentation contemplated in the
deposit agreement. In such case, the depositary bank will establish procedures to enable BAT
ADS holders to elect to receive either cash or additional BAT ADSs, in each case as described in
the deposit agreement.

If the election is not made available to BAT ADS holders, they will receive either cash or
additional BAT ADSs, depending on what a shareholder in England and Wales would receive
upon failing to make an election, as more fully described in the deposit agreement.
Other Distributions

Whenever BAT intends to distribute to the holders of BAT ordinary shares property other than
cash, BAT ordinary shares or rights to subscribe for additional BAT ordinary shares, it will
notify the depositary bank in advance and will indicate whether it wishes such distribution to be
made to BAT ADS holders. If so, BAT will assist the depositary bank in determining whether
such distribution to holders is lawful and reasonably practicable.

If it is reasonably practicable to distribute such property to BAT ADS holders and if BAT
provides to the depositary bank all of the documentation contemplated in the deposit agreement,
the depositary bank will distribute the property to the holders in a manner it deems practicable.

The distribution will be made net of fees, expenses, taxes and governmental charges payable by
holders under the terms of the deposit agreement. In order to pay such taxes and governmental
charges, the depositary bank may sell all or a portion of the property received.

The depositary bank will not distribute the property to BAT ADS holders and will sell the
property if:

• BAT does not request that the property be distributed to BAT ADS holders or if BAT
requests that the property not be distributed to BAT ADS holders;

• BAT does not deliver satisfactory documents to the depositary bank; or

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 • the depositary bank determines that all or a portion of the distribution to BAT ADS
holders is not reasonably practicable.

The proceeds of such a sale will be distributed to holders as in the case of a cash distribution.
Redemption

Whenever BAT decides to redeem any of the deposited securities held by the custodian, it will
notify the depositary bank in advance. If it is practicable and if BAT provides all of the
documentation contemplated in the deposit agreement, the depositary bank will provide notice of
the redemption to the holders.

The custodian will be instructed to surrender the shares being redeemed against payment of the
applicable redemption price for deposited securities. The depositary bank will convert any
redemption funds received in a currency other than U.S. dollars into U.S. dollars upon the terms
of the deposit agreement and will establish procedures to enable holders to receive the net
proceeds from the redemption upon surrender of their BAT ADSs to the depositary bank. BAT
ADS holders may have to pay fees, expenses, taxes and other governmental charges upon the
redemption of their BAT ADSs. If less than all BAT ADSs are being redeemed, the BAT ADSs
to be retired will be selected by lot or on a pro rata basis, as the depositary bank may determine.
Changes Affecting Deposited Securities

The deposited securities represented by BAT ADSs may change from time to time. For example,
there may be a change in nominal or par value, split-up, cancellation, consolidation or any other
reclassification of such deposited securities or a recapitalization, reorganization, merger,
consolidation or sale of assets of BAT.

If any such change were to occur, BAT ADSs would, to the extent permitted by law and the
deposit agreement, represent the right to receive the property received or exchanged in respect of
the deposited securities. In such circumstances, the depositary bank may, with BAT’s approval
and if BAT requests, deliver new BAT ADSs, amend the deposit agreement, the ADRs and the
applicable Registration Statement(s) on Form F-6, call for the exchange of existing BAT ADSs
for new BAT ADSs and take any other actions that are appropriate to reflect as to the BAT ADSs
the change affecting the BAT ordinary shares. If the depositary bank may not lawfully distribute
such property, the depositary bank may, with BAT’s approval and if BAT requests, sell such
property and distribute the net proceeds as in the case of a cash distribution.
Issuance of BAT ADSs upon Deposit of BAT Ordinary Shares

The depositary bank may create BAT ADSs on behalf of a BAT ADS holder if it or its broker
deposits BAT ordinary shares with the custodian. The depositary bank will deliver these BAT
ADSs to the person indicated by the BAT ADS holder only after any applicable issuance fees
and any charges and taxes payable for the transfer of the BAT ordinary shares to the custodian
are paid. A BAT ADS holder’s ability to deposit BAT ordinary shares and receive BAT ADSs
may be limited by U.S. and England and Wales legal considerations applicable at the time of
deposit.

The issuance of BAT ADSs may be delayed until the depositary bank or the custodian receives
confirmation that all required approvals have been given and that the BAT ordinary shares have
been duly transferred to the custodian. The depositary bank will only issue BAT ADSs in whole
numbers.

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When BAT ADS holders make a deposit of BAT ordinary shares, they will be responsible for
transferring good and valid title to the depositary bank. As such, they will be deemed to represent
and warrant that:

• the BAT ordinary shares are duly authorized, validly issued, fully paid, non-assessable
and legally obtained;

• all preemptive (and similar) rights, if any, with respect to such BAT ordinary shares have
been validly waived or exercised;

• they are duly authorized to deposit the BAT ordinary shares;

• the BAT ordinary shares presented for deposit are free and clear of any lien,
encumbrance, security interest, charge, mortgage or adverse claim, and are not, and the
BAT ADSs issuable upon such deposit will not be, “restricted securities” (as defined in
the deposit agreement); and

• the BAT ordinary shares presented for deposit have not been stripped of any rights or
entitlements.

If any of the representations or warranties are incorrect in any way, BAT and the depositary bank
may, at the holder’s cost and expense, take any and all actions necessary to correct the
consequences of the misrepresentations.
Transfer, Combination and Split Up of ADRs

ADR holders will be entitled to transfer, combine or split up their ADRs and the BAT ADSs
evidenced thereby. For transfers of ADRs, they will have to surrender the ADRs to be transferred
to the depositary bank and also must:

• ensure that the surrendered ADR is properly endorsed or otherwise in proper form for
transfer;

• provide any transfer stamps required by the State of New York or the United States; and

• pay all applicable fees, charges, expenses, taxes and other government charges payable
by ADR holders pursuant to the terms of the deposit agreement and applicable law, upon
the transfer of ADRs.

To have ADRs either combined or split up, BAT ADS holders must surrender the ADRs in
question to the depositary bank with a request to have them combined or split up, and they must
pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR
holders pursuant to the terms of the deposit agreement and applicable law, upon a combination or
split up of ADRs.

The depositary bank may require a holder to provide proof of identity and genuineness of any
signature and such other documents as the depositary bank may deem appropriate before it will
transfer, combine or split up ADRs and the BAT ADSs evidenced thereby.

BAT may restrict transfers of BAT ordinary shares where such transfer might result in ownership
of BAT ordinary shares exceeding limits imposed by applicable law or the articles of association
of BAT. BAT may also restrict, in such manner as it deems appropriate, transfers of BAT ADSs
where such transfer may result in the total number of BAT ordinary shares represented by BAT
ADSs owned by a single holder or beneficial owner to exceed any such limits. BAT may, in its

19
sole discretion but subject to applicable law, instruct the depositary bank to take action with
respect to the ownership interest of any holder or beneficial owner in excess of such limits,
including the imposition of restrictions on the transfer of BAT ADSs, the removal or limitation
of voting rights or mandatory sale or disposition on behalf of a holder or beneficial owner of the
BAT ordinary shares represented by the BAT ADSs held by such holder or beneficial owner in
excess of such limitations, if and to the extent such disposition is permitted by applicable law and
the articles of association of BAT.
Withdrawal of Deposited Securities upon Cancellation of BAT ADSs

Holders will be entitled to present their BAT ADSs to the depositary bank for cancellation and
then receive the corresponding number of underlying deposited securities at the custodian’s
offices. The ability to withdraw the deposited securities held in respect of the BAT ADSs may be
limited by U.S. and England and Wales legal considerations applicable at the time of withdrawal.
In order to withdraw the deposited securities represented by BAT ADSs, holders will be required
to pay to the depositary bank the fees for cancellation of BAT ADSs and any charges and taxes
payable upon the transfer of the deposited securities. BAT ADS holders assume the risk for
delivery of all funds and securities upon withdrawal. Once canceled, the BAT ADSs will not
have any rights under the deposit agreement.

If holders hold BAT ADSs registered in their name, the depositary bank may ask them to provide
proof of identity and genuineness of any signature and such other documents as the depositary
bank may deem appropriate before it will cancel their BAT ADSs. The withdrawal of the
deposited securities represented by BAT ADSs may be delayed until the depositary bank
receives satisfactory evidence of compliance with all applicable laws and regulations. Please
keep in mind that the depositary bank will only accept BAT ADSs for cancellation that represent
a whole number of deposited securities.

BAT ADS holders will have the right to withdraw the deposited securities represented by their
BAT ADSs at any time except for:

• temporary delays that may arise because (1) the transfer books for the BAT ordinary
shares or BAT ADSs are closed, or (2) the deposit of BAT ordinary shares in connection
with voting at a shareholders’ meeting or a payment of dividends;

• obligations to pay fees, taxes and similar charges; and

• restrictions imposed because of laws or regulations applicable to BAT ADSs or the
withdrawal of the deposited securities.

The deposit agreement may not be modified to impair the right to withdraw the securities
represented by BAT ADSs except to comply with mandatory provisions of law.
Voting Rights

Holders generally have the right under the deposit agreement to instruct the depositary bank to
exercise the voting rights for the BAT ordinary shares represented by their BAT ADSs. For more
information on the voting rights of holders of BAT ordinary shares see “Description of BAT
Ordinary Shares—Voting Rights”.
At BAT’s request, the depositary bank will distribute to BAT ADS holders any notice of
shareholders’ meeting (or solicitation of consent or proxy) timely received from BAT together
with information explaining how to instruct the depositary bank to exercise the voting rights of

20
the deposited securities. In lieu of distributing such materials, the depositary bank may distribute
to holders of BAT ADSs instructions on how to retrieve such materials upon request.

If the depositary bank timely receives voting instructions from a holder of BAT ADSs, it will, to
the extent practicable and permitted under applicable law, the deposit agreement and the BAT
articles of association, endeavor to vote the deposited securities (in person or by proxy)
represented by the holder’s BAT ADSs in accordance with such voting instructions as follows:

• in the event of voting by show of hands, the depositary bank will vote or cause the
custodian to vote all BAT ordinary shares held on deposit at that time in accordance with
the voting instructions received from a majority of holders of BAT ADSs who provide
timely voting instructions; or

Deposited securities for which no voting instructions have been received will not be voted. The
ability of the depositary bank to carry out voting instructions may be limited by practical and
legal limitations and the terms of the deposited securities. BAT cannot assure holders that they
will receive voting materials in time to enable them to return voting instructions to the depositary
bank in a timely manner.

• in the event of voting by poll, the depositary bank will vote or cause the custodian to vote
the BAT ordinary shares held on deposit in accordance with the voting instructions
received from the holders of BAT ADSs giving instructions.
Reports

The depositary bank will make available for inspection by BAT ADS holders at its principal
office any reports and communications, including any proxy soliciting materials, received from
BAT which are both (a) received by the depositary bank, the custodian, or the nominee of either
of them as the holder of the deposited securities and (b) made generally available to the holders
of such deposited securities by BAT.
Fees and Charges

BAT ADS holders will be required to pay the following fees to the depositary bank under the
terms of the deposit agreement:

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Service Fees
Up to U.S. $0.05 per BAT ADS issued(1)

• Issuance of BAT ADSs upon deposit of

BAT ordinary shares (excluding issuances
as a result of distributions of shares
described below)
Up to U.S. $0.05 per BAT ADS surrendered(1)
• Cancellation of BAT ADSs
Up to U.S. $0.05 per BAT ADS held[(2)]
• Distribution of cash dividends or other cash
distributions (i.e., sale of rights and other
entitlements)
Up to U.S. $0.05 per BAT ADS held

• Distribution of BAT ADSs pursuant to (1)

stock dividends or other free stock
distributions, or (2) exercise of rights to
purchase additional BAT ADSs
Up to U.S. $0.05 per BAT ADS held
• Depositary bank services

(1) Under the terms of a separate agreement between BAT and the depositary bank, the
depositary bank has agreed to waive the fees that would otherwise be payable in connection
with the issuance of BAT ADSs upon deposit of BAT ordinary shares and the cancellation
of BAT ADSs and corresponding withdrawal of BAT ordinary shares, in each case by BAT
or any of its affiliates, officers, directors or employees. The terms of this separate
agreement may be amended at any time by BAT and the depositary bank.1
(2) While under the deposit agreement cash dividends paid in respect of BAT ADSs are subject
to a fee of up to $0.05 per BAT ADS payable to the depositary bank, under the terms of the
separate agreement between BAT and the depositary bank referred to above, such
dividends are instead subject to a fee of up to $0.04 per BAT ADS per year (a fee of $0.01
per dividend based on the current distribution of four quarterly cash dividends per year).
Under such separate agreement, this dividend fee may not be varied by the depositary bank
without the consent of BAT.

BAT ADS holders will also be responsible to pay certain charges such as:

• taxes (including applicable interest and penalties) and other governmental charges;

• the registration fees as may from time to time be in effect for the registration of BAT
ordinary shares or other deposited securities on the share register and applicable to
transfers of BAT ordinary shares or other deposited securities to or from the name of the
custodian, the depositary bank or any nominees upon the making of deposits and
withdrawals, respectively;

• certain cable, telex and facsimile transmission and delivery expenses;

22
 • the expenses and charges incurred by the depositary bank in the conversion of foreign
currency;

• the fees and expenses incurred by the depositary bank in connection with compliance
with exchange control regulations and other regulatory requirements applicable to BAT
ordinary shares, or other deposited securities, BAT ADSs and ADRs; and

• the fees and expenses incurred by the depositary bank, the custodian, or any nominee in
connection with the servicing or delivery of deposited securities.

ADS fees and charges payable upon (1) the issuance of BAT ADSs, and (2) the cancellation of
BAT ADSs are charged to the person to whom the BAT ADSs are issued (in the case of BAT
ADS issuances) and to the person whose BAT ADSs are canceled (in the case of BAT ADS
cancellations). In the case of BAT ADSs issued by the depositary bank into DTC, the BAT ADS
issuance and cancellation fees and charges may be deducted from distributions made through
DTC, and may be charged to the DTC participant(s) receiving the BAT ADSs being issued or the
DTC participant(s) holding the BAT ADSs being canceled, as the case may be, on behalf of the
beneficial owner(s) and will be charged by the DTC participant(s) to the account of the
applicable beneficial owner(s) in accordance with the procedures and practices of the DTC
participants as in effect at the time. ADS fees and charges in respect of distributions and the
depositary bank services fee are charged to the holders as of the applicable ADS record date. In
the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted
from the funds being distributed. In the case of (1) distributions other than cash and (2) the
depositary bank services fee, holders as of the ADS record date will be invoiced for the amount
of the ADS fees and charges and such ADS fees and charges may be deducted from distributions
made to holders of BAT ADSs. For BAT ADSs held through DTC, the ADS fees and charges for
distributions other than cash and the depositary bank services fee may be deducted from
distributions made through DTC, and may be charged to the DTC participants in accordance with
the procedures and practices prescribed by DTC and the DTC participants in turn charge the
amount of such ADS fees and charges to the beneficial owners for whom they hold BAT ADSs.

In the event of refusal to pay the depositary bank’s fees and charges, the depositary bank may,
under the terms of the deposit agreement, refuse the requested service until payment is received
or may set off the amount of the depositary bank’s fees and charges from any distribution to be
made to the BAT ADS holder. Note that the fees and charges holders may be required to pay
may vary over time and may be changed by BAT and by the depositary bank (as described in “—
Amendments and Termination” below). Prior notice of such changes will be provided. The
depositary bank may reimburse BAT for certain expenses incurred by it in respect of the ADR
program, by making available a portion of the ADS fees charged in respect of the ADR program
or otherwise, upon such terms and conditions as BAT and the depositary bank agree from time to
time.
Amendments and Termination

BAT may agree with the depositary bank to modify the deposit agreement at any time without
consent of BAT ADS holders. BAT must give holders 30 days’ prior notice of any modifications
that would materially prejudice any of their substantial rights under the deposit agreement. BAT
will not consider to be materially prejudicial to holders’ substantial rights any modifications or
supplements that are reasonably necessary for the BAT ADSs to be registered under the
Securities Act or to be eligible for book-entry settlement, in each case without imposing or
increasing the fees and charges they are required to pay. In addition, BAT may not be able to
provide holders with prior notice of any modifications or supplements that are required to
accommodate compliance with applicable provisions of law.

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BAT ADS holders will be bound by the modifications to the deposit agreement if they continue
to hold their ADSs after the modifications to the deposit agreement become effective. The
deposit agreement cannot be amended to prevent holders from withdrawing the deposited
securities represented by their BAT ADSs (except as permitted by law).

BAT has the right to direct the depositary bank to terminate the deposit agreement. Similarly, the
depositary bank may in certain circumstances on its own initiative terminate the deposit
agreement. In either case, the depositary bank must give notice to the holders at least 30 days
before termination. Until termination, BAT ADS holders’ rights under the deposit agreement will
be unaffected.

After termination, the depositary bank will continue to collect distributions received (but will not
distribute any such property until a holder requests the cancellation of BAT ADSs) and may sell
deposited securities. After the sale, the depositary bank will hold the proceeds from such sale and
any other funds then held for the holders of BAT ADSs in a non-interest bearing account. At that
point, the depositary bank will have no further obligations to holders other than to account for the
funds then held for the holders of BAT ADSs still outstanding (after deduction of applicable
fees, taxes and expenses).
Books of Depositary

The depositary bank will maintain BAT ADS holder records at its depositary office. BAT ADS
holders may inspect such records at such office during regular business hours but solely for the
purpose of communicating with other holders in the interest of business matters relating to the
BAT ADSs and the deposit agreement.

The depositary bank will maintain in New York facilities to record and process the issuance,
cancellation, combination, split-up and transfer of BAT ADSs. These facilities may be closed
from time to time, to the extent not prohibited by law.
Limitations on Obligations and Liabilities

The deposit agreement limits the obligations of BAT and the depositary bank’s obligations to
BAT ADS holders. In particular:

• BAT and the depositary bank are obligated only to take the actions specifically stated in
the deposit agreement and to do so without negligence or bad faith;

• the depositary bank disclaims any liability for any failure to carry out voting instructions,
for any manner in which a vote is cast or for the effect of any vote, provided it acts in
good faith and in accordance with the terms of the deposit agreement;

• the depositary bank disclaims any liability for any failure to determine the lawfulness or
practicality of any action, for the content of any document forwarded to you on BAT’s
behalf or for the accuracy of any translation of such a document, for the investment risks
associated with investing in BAT ordinary shares, for the validity or worth of the BAT
ordinary shares, for any tax consequences that result from the ownership of BAT ADSs,
for the creditworthiness of any third party, for allowing any rights to lapse under the
terms of the deposit agreement, for the timeliness of any notices from BAT or for BAT’s
failure to give notice;

• BAT and the depositary bank will not be obligated to perform any act that is inconsistent
with the terms of the deposit agreement;

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 • BAT and the depositary bank disclaim any liability if BAT or the depositary bank are
prevented or forbidden from or subject to any civil or criminal penalty or restraint on
account of, or delayed in, doing or performing any act or thing required by the terms of
the deposit agreement, by reason of any provision, present or future of any law or
regulation, or by reason of present or future provision of any provision of the BAT
articles of association, or any provision of or governing the deposited securities, or by
reason of any act of God or war or other circumstances beyond their control;

• BAT and the depositary bank disclaim any liability by reason of any exercise of, or
failure to exercise, any discretion provided for in the deposit agreement or in the BAT
articles of association or in any provisions of or governing deposited securities;

• BAT and the depositary bank further disclaim any liability for any action or inaction in
reliance on the advice or information received from legal counsel, accountants, any
person presenting ordinary shares for deposit, any holder of BAT ADSs or authorized
representatives thereof, or any other person believed by either BAT or the depositary
bank in good faith to be competent to give such advice or information;

• BAT and the depositary bank also disclaim liability for the inability by a holder to benefit
from any distribution, offering, right or other benefit that is made available to holders of
deposited securities but is not, under the terms of the deposit agreement, made available
to BAT ADS holders;

• BAT and the depositary bank may rely without any liability upon any written notice,
request or other document believed to be genuine and to have been signed or presented by
the proper parties;

• BAT and the depositary bank also disclaim liability for any consequential or punitive
damages for any breach of the terms of the deposit agreement; and

• no disclaimer of any Securities Act liability is intended by any provision of the deposit
agreement.
Taxes

BAT ADS holders are responsible for the taxes and other governmental charges payable on the
BAT ADSs and other deposited securities represented by the BAT ADSs. BAT, the depositary
bank and the custodian may deduct from any distribution the taxes and governmental charges
payable by holders and may sell any and all property on deposit to pay the taxes and
governmental charges payable by holders. Holders will be liable for any deficiency if the sale
proceeds do not cover the taxes that are due.

The depositary bank may refuse to issue BAT ADSs, to deliver, transfer, split and combine
ADRs or to release deposited securities until all taxes and charges are paid by the applicable
holder. The depositary bank and the custodian may take reasonable administrative actions to
obtain tax refunds and reduced tax withholding for any distributions on behalf of a BAT ADS
holder. However, holders may be required to provide to the depositary bank and to the custodian
proof of taxpayer status and residence and such other information as the depositary bank and the
custodian may require to fulfill legal obligations. BAT ADS holders are required to indemnify
BAT, the depositary bank and the custodian for any claims with respect to taxes based on any tax
benefit obtained for them.

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Foreign Currency Conversion

The depositary bank will arrange for the conversion of all foreign currency received into U.S.
dollars if such conversion is practical, and it will distribute the U.S. dollars in accordance with
the terms of the deposit agreement. BAT ADS holders may have to pay fees and expenses
incurred in converting foreign currency, such as fees and expenses incurred in complying with
currency exchange controls and other governmental requirements.

If the conversion of foreign currency is not practical or lawful, or if any required approvals are
denied or not obtainable at a reasonable cost or within a reasonable period, the depositary bank
may take the following actions in its discretion:

• convert the foreign currency to the extent practical and lawful and distribute the U.S.
dollars to the holders for whom the conversion and distribution is lawful and practical;

• distribute the foreign currency to holders for whom the distribution is lawful and
practical; or

• hold the foreign currency (without liability for interest) for the applicable holders.
Governing Law

The deposit agreement and the ADRs are governed by the laws of the State of New York. The
rights of holders of BAT ordinary shares (including BAT ordinary shares represented by BAT
ADSs) are governed by the laws of England and Wales and the BAT articles of association. For
further information regarding the material terms of the BAT ordinary shares, see “Description of
BAT Ordinary Shares”.
C. Description of the Notes Issued Under the BATIF Indenture

The following is a summary of the material provisions of the BATIF Indenture (as described
below), the applicable supplemental indenture and the BATIF Notes. Any capitalized term used
herein but not defined shall have the meaning assigned to such term in the BATIF Indenture, the
applicable supplemental indenture or under “—Certain Definitions”. The following summary
does not purport to be complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the BATIF Indenture, the applicable supplemental indenture and those
terms made a part of the BATIF Indenture and/or applicable supplemental indenture by
reference to the Trust Indenture Act of 1939, as amended (the “TIA”).
GENERAL

The 5.931% Notes due 2029 (the “2029 5.931% Notes”), the 4.448% Notes due 2028 (the “2028
4.448% Notes”) and the 1.668% Notes due 2026 (the “2026 1.668% Notes” and, together with
the 2029 5.931% Notes and the 2028 4.448% Notes, the “BATIF Notes”) were issued by B.A.T.
International Finance p.l.c. (“BATIF” or the “Issuer”).

The 2029 5.931% Notes will mature on February 2, 2029. The 2028 4.448% Notes will mature
on March 16, 2028. The 2026 1.668% Notes will mature on March 25, 2026. The BATIF Notes
were issued in registered form and treated as three separate series of debt securities and were
each issued under a supplemental indenture to the indenture dated as of September 25, 2020 (as
amended or supplemented from time to time, the “BATIF Indenture”) by and among BATIF, as
Issuer, British American Tobacco p.l.c. (“BAT” or the “Parent”), B.A.T Capital Corporation
(“BATCAP”), B.A.T. Netherlands Finance B.V. (“BATNF”) and, unless its guarantee is released
in accordance with the BATIF Indenture, Reynolds American Inc. (“RAI”), each as a guarantor,

26
Citibank, N.A., as trustee (the “Trustee”), registrar, transfer agent, calculation agent and initial
paying agent (in such several capacities under the BATIF Indenture, the “Registrar”, “Transfer
Agent”, “Calculation Agent”, and “Paying Agent”, respectively).

Each guarantee in respect of the BATIF Notes is referred to herein as a “Guarantee” and each
entity that provides a Guarantee is referred to herein as a “Guarantor”. In this “Description of the
Notes Issued Under the BATIF Indenture”, the terms “holder”, “Noteholder” and other similar
terms refer to a “registered holder” of BATIF Notes, and not to a beneficial owner of a book-
entry interest in any BATIF Notes.
PRINCIPAL, MATURITY AND INTEREST

The obligations of the Issuer under the BATIF Notes and BATIF Indenture are fully and
unconditionally guaranteed on a joint and several, and senior and unsecured basis by each of the
Parent, BATCAP, BATNF and, unless its guarantee is released in accordance with the BATIF
Indenture, RAI.

The BATIF Notes were issued in the following aggregate principal amounts, with outstanding
aggregate principal amounts as of December 31, 2023 and maturity dates as follows:

Series of BATIF Initial aggregate Outstanding aggregate

Notes principal amount principal amount Maturity date
2029 5.931% Notes $1,000,000,000 $1,000,000,000 February 2, 2029
2028 4.448% Notes $1,000,000,000 $1,000,000,000 March 16, 2028
2026 1.668% Notes $1,500,000,000 $1,500,000,000 March 25, 2026
Interest

The BATIF Notes bear interest per annum as follows:

Series of BATIF Notes Interest rate per annum

2029 5.931% Notes 5.931%
2028 4.448% Notes 4.448%
2026 1.668% Notes 1.668%

The BATIF Notes will bear interest from the date of the initial issuance of such BATIF Notes or
from the most recent interest payment date to which interest has been paid or provided for,
payable semi-annually in arrear on each series’ respective Interest Payment Dates (as defined in
the table below) of each year, commencing on each series’ respective Initial Interest Payment
Date (as defined in the table below) until each series’ respective maturity date, unless previously
purchased and cancelled or redeemed by the Issuer, to the person in whose name any such
BATIF Note is registered at the close of business on the 15th calendar day preceding each
Interest Payment Date, whether or not such day is a Business Day (each, a “Record Date”)
notwithstanding any transfer or exchange of such BATIF Notes subsequent to the Record Date
and prior to such Interest Payment Date, except that, if and to the extent the Issuer shall default
in the payment of the interest due on such Interest Payment Date, and the applicable grace period
shall have expired, such defaulted interest may at the option of the Issuer be paid to the persons
in whose names such outstanding BATIF Notes are registered at the close of business on a
subsequent Record Date (which shall not be less than five Business Days prior to the date of

27
payment of such defaulted interest) established by notice sent by or on behalf of the Issuer to the
holders of such BATIF Notes, not less than 15 days preceding such subsequent Record Date.

Initial Interest Payment

Series of BATIF Notes Interest Payment Dates Date
2029 5.931% Notes February 2 and
August 2 February 2, 2024
2028 4.448% Notes March 16 and
September 16 September 16, 2022
2026 1.668% Notes March 25 and
September 25 March 25, 2021

Interest is computed on the basis of a 360-day year consisting of twelve 30-day months, or in the
case of an incomplete month, the number of days elapsed. If the date on which any interest
payment or principal payment is to be made is not a Business Day, such payment will be made
on the next day which is a Business Day, without any further interest or other amounts being
paid or payable in connection therewith. A “Business Day” refers to any day which is not, in
London or New York City, or any other place of payment, a Saturday, Sunday, legal holiday or a
day on which banking institutions are authorized or obligated by law or regulation to close.
Form and Denomination

The BATIF Notes were issued in fully registered form and only in minimum denominations of
$2,000 and integral multiples of $1,000 in excess thereof, and were issued initially as global
notes representing the BATIF Notes (collectively, the “BATIF Global Notes”). The BATIF
Global Notes were (i) registered in the name of the Depository or the nominee of such
Depository, in each case for the credit to an account of a member of, or direct or indirect
participant in, the Depository; and (ii) delivered to Citibank, N.A. as custodian for such
Depository.
Further Issues

The aggregate principal amount of notes (including the BATIF Notes) issuable under the BATIF
Indenture (the “Notes”) is unlimited. The Issuer may, from time to time, without notice to or the
consent of the holders of the BATIF Notes, issue Notes of a new series or “reopen” any series of
the Notes (including the BATIF Notes) and create and issue additional notes having substantially
identical terms and conditions as the then-outstanding Notes of a series (including the BATIF
Notes) (or in all respects except as to issue date, issue price, denomination, rate of interest,
maturity date and the date from which interest, if any, shall accrue and except as may otherwise
be provided in or pursuant to an officer’s certificate or any supplemental indenture relating
thereto) so that the additional Notes are consolidated and form a single series of Notes with the
outstanding Notes of such series, as the case may be; provided that if the additional Notes are not
fungible with the outstanding Notes of the relevant series for United States Federal income tax
purposes, the additional Notes will have separate CUSIPs, ISINs, or other identifying numbers.
Status of the BATIF Notes and Guarantees

The BATIF Notes are unsecured and unsubordinated obligations of the Issuer and rank pari
passu in right of payment among themselves and with all other direct, unsecured and
unsubordinated obligations of the Issuer (except those obligations preferred by statute or
operation of law). Each Guarantor fully and unconditionally guarantees, on a senior, unsecured

28
basis, the due and punctual payment (and not collectability) of the principal of and interest on the
BATIF Notes (and the payment of additional amounts described under “—Additional Amounts”
below) and other obligations under the BATIF Indenture when and as the same shall become due
and payable, whether at stated maturity, by declaration of acceleration, call for redemption or
otherwise. Each Guarantee is an unsecured and unsubordinated obligation of the respective
Guarantor and rank pari passu in right of payment with all other direct, unsecured and
unsubordinated obligations of such Guarantor (except those obligations preferred by statute or
operation of law). The Issuer and each Guarantor are subject to a negative pledge with respect to
certain types of indebtedness, which are discussed below under “—Covenants of the Issuer and
the Guarantors—Negative Pledge”.
Guarantees

Release
The BATIF Indenture and the applicable supplemental indenture provide that, without the
consent of the Trustee or the Noteholders, any Guarantor that is a subsidiary of the Parent (a
“Subsidiary Guarantor”), other than BATCAP and BATNF, will automatically and
unconditionally be released from all obligations under its Guarantee, and such Guarantee shall
thereupon terminate and be discharged and of no further force or effect, in the event that (1) its
guarantee of all then outstanding notes issued under the EMTN Programme is released or (2) at
substantially the same time its Guarantee is terminated, the Subsidiary Guarantor is released
from all obligations in respect of indebtedness for borrowed money for which such Subsidiary
Guarantor is an obligor (as a guarantor or borrower). For purposes of this paragraph, the amount
of a Subsidiary Guarantor’s indebtedness for borrowed money shall not include (A) the Notes
(including the BATIF Notes) issued pursuant to the BATIF Indenture, (B) any other debt the
terms of which permit the termination of such Subsidiary Guarantor’s guarantee of such debt
under similar circumstances, as long as such Subsidiary Guarantor’s obligations in respect of
such other debt are terminated at substantially the same time as its Guarantee of the Notes
(including the BATIF Notes), (C) any debt that is being refinanced at substantially the same time
that the Guarantee of the Notes (including the BATIF Notes) is being released, provided that any
obligations of the relevant Subsidiary Guarantor in respect of the debt that is incurred in the
refinancing shall be included in the calculation of the relevant Subsidiary Guarantor’s
indebtedness for borrowed money and (D) for the avoidance of doubt, any debt in respect of
which such Subsidiary Guarantor is an obligor (as a guarantor or borrower) (i) between or among
the Parent and any subsidiary or subsidiaries thereof or (ii) between or among any subsidiaries of
the Parent.

As of the date of this summary, RAI is the only Subsidiary Guarantor to which the above
provision is relevant. Under the EMTN Programme, a Subsidiary Guarantor’s guarantee is
released if at any time the aggregate amount of indebtedness for borrowed money for which the
Subsidiary Guarantor is an obligor does not exceed 10% of the outstanding long-term debt of
BAT as reflected in the balance sheet included in BAT’s most recent publicly released interim or
annual consolidated financial statements, as evidenced by a certificate to such effect addressed to
the trustee under the EMTN Programme and signed by a director of BAT.
Additional Amounts

The Issuer or, if applicable, each Guarantor will make payments of, or in respect of, principal,
premium (if any) and interest on the BATIF Notes, or any payment pursuant to the applicable
Guarantee, as the case may be, without withholding or deduction for or on account of any present
or future tax, levy, impost or other similar governmental charge (“Taxes”) imposed, assessed,
levied or collected by or for the account of the United Kingdom, The Netherlands (in the case of
a payment by BATNF) or the United States (in the case of a payment by BATCAP or RAI),

29
including in each case any political subdivision thereof or any authority thereof having the power
to tax (a “Relevant Taxing Jurisdiction”), unless such withholding or deduction is required by
law.

If the Issuer or, if applicable, any such Guarantor is required by a Relevant Taxing Jurisdiction to
so withhold or deduct such Taxes, the Issuer or, if applicable, such Guarantor will pay to the
Holder such additional amounts (“Additional Amounts”) as will result in the receipt by the
Holder of such amounts as would have been received by it if no such withholding or deduction of
Taxes had been required; provided, however, that amounts with respect to any United States Tax
shall be payable only to Holders that are not United States persons (within the meaning of the
Code) and provided further, that neither the Issuer nor such Guarantor shall be required to pay
any Additional Amounts for or on account of:

(a) any Taxes that would not have been so imposed, assessed, levied or collected but
for the Holder or beneficial owner of the applicable Note or Guarantee (or a
fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power
over, such Holder, if such Holder is an estate, trust, partnership or corporation)
being or having been a domiciliary, national or resident of, or engaging or having
been engaged in a trade or business, maintaining or having maintained a
permanent establishment or being or having been physically present in, a Relevant
Taxing Jurisdiction or otherwise having or having had some connection with a
Relevant Taxing Jurisdiction other than the holding or ownership of, or the
collection of principal of, and premium (if any) or interest on, a Note or the
enforcement of the applicable Guarantee, as the case may be;

(b) any Taxes that would not have been so imposed, assessed, levied or collected but
for the fact that, where presentation is required in order to receive payment, the
applicable Note or Guarantee was presented more than 30 days after the date on
which such payment became due and payable or was provided for, whichever is
later, except to the extent that the Holder or beneficial owner thereof would have
been entitled to Additional Amounts had the applicable Note or Guarantee been
presented for payment on any day during such 30-day period;

(c) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes;

(d) any Taxes that are payable otherwise than by withholding or deduction from
payments on or in respect of the applicable Note or Guarantee;

(e) any Taxes that would not have been so imposed, assessed, levied or collected but
for the failure by the Holder or the beneficial owner of the applicable Note or
Guarantee to (i) provide any certification, identification, information, documents
or other evidence concerning the nationality, residence or identity of the Holder or
the beneficial owner or its connection with a Relevant Taxing Jurisdiction; or (ii)
make any valid or timely declaration or claim or satisfy any other reporting,
information or procedural requirements relating to such matters if, in either case,
compliance is required by statute, regulation, relevant income tax treaty or
administrative practice of a Relevant Taxing Jurisdiction as a condition to relief or
exemption from such Taxes;

(f) any Taxes imposed by reason of the Holder or the beneficial owner of the
applicable Note or Guarantee being or having been considered a bank receiving
payments on an extension of credit made pursuant to a loan agreement entered
into in the ordinary course of its trade or business, as described in Section
881(c)(3)(A) of the Code (or any amended or successor provisions);

30
 (g) any Taxes imposed on interest received by a 10-percent shareholder of the Issuer
or any Guarantor within the meaning of Section 871(h)(3)(B) or Section
881(c)(3)(B) of the Code (or any amended or successor provisions);

(h) any backup withholding imposed pursuant to Section 3406 of the Code (or any
amended or successor provisions);

(i) any Taxes imposed pursuant to Section 871(h)(6) or Section 881(c)(6) of the
Code (or any amended or successor provisions);

(j) any Taxes imposed by reason of the Holder or the beneficial owner of the
applicable Note or Guarantee being or having been a personal holding company,
passive foreign investment company or controlled foreign corporation for U.S.
Federal income tax purposes or a corporation that has accumulated earnings to
avoid U.S. Federal income tax;

(k) any Taxes imposed or withheld pursuant to Sections 1471 through 1474 of the
Code (or any amended or successor provisions), any U.S. Treasury regulations
promulgated thereunder, any official interpretations thereof or any agreements
entered into in connection with the implementation thereof (“FATCA
Withholding”);

(l) any Taxes imposed or to be withheld pursuant to the Dutch Withholding Tax Act
2021 (Wet bronbelasting 2021); or
(m) any combination of the Taxes described in clauses (a) through (l) above.

In addition, Additional Amounts will not be paid with respect to any payment of the principal of,
or premium (if any) or interest on, any BATIF Note or any payment pursuant to the applicable
Guarantee to any Holder that is a fiduciary, a partnership, a limited liability company or any
person other than the sole beneficial owner of such payment to the extent a beneficiary or settlor
with respect to such fiduciary, a member of such partnership, an interest holder in such limited
liability company or a beneficial owner that would not have been entitled to such amounts had
such beneficiary, settlor, member, interest holder or beneficial owner been the Holder of the
applicable BATIF Note or Guarantee.
Unless otherwise stated, references in any context to the payment of principal of, and premium
(if any) or interest on, any BATIF Note, or any payment pursuant to a Guarantee, will be deemed
to include payment of Additional Amounts to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof.
Redemption

The BATIF Notes are subject to optional redemption by the Issuer as described below under “—
Optional Redemption”. The BATIF Notes are subject to optional redemption by the Issuer in the
event of certain changes in tax laws applicable to payments in respect of the BATIF Notes as
described below under “—Redemption for Tax Reasons”.
Optional Redemption of the 2029 5.931% Notes and the 2028 4.448% Notes (the “post-2021
BATIF Notes”)

The Issuer may redeem the post-2021 BATIF Notes, in whole or in part, at the Issuer’s option, at
any time and from time to time before the applicable Par Call Date (as defined below), at a
redemption price equal to the greater of (x) 100% of the principal amount of the series of

31
post-2021 BATIF Notes to be redeemed and (y) the sum of the present values of the applicable
Remaining Scheduled Payments (as defined below) discounted to the date of redemption (the
“Redemption Date”) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-
day months or, in the case of an incomplete month, the number of days elapsed) at the Treasury
Rate (as defined below) plus, in the case of each respective series of post-2021 BATIF Notes as
follows:

2029 5.931% Notes 30 basis points

2028 4.448% Notes 40 basis points

together with, in each case, accrued and unpaid interest on the principal amount of the post-2021
BATIF Notes to be redeemed to, but excluding, the Redemption Date.

If the Issuer elects to redeem a series of post-2021 BATIF Notes on or after the applicable Par
Call Date, the Issuer will pay an amount equal to 100% of the principal amount of the post-2021
BATIF Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the
Redemption Date.

In connection with such optional redemption the following defined terms apply:

• Par Call Date means (i) January 2, 2029 with respect to any 2029 5.931% Notes (one
month prior to the maturity date of the 2029 5.931% Notes) and (ii) February 16, 2028
with respect to any 2028 4.448% Notes (one month prior to the maturity date of the 2028
4.448% Notes).

• Remaining Scheduled Payments means, with respect to each post-2021 BATIF Note to be
redeemed, the remaining scheduled payments of the principal thereof and interest thereon
that would be due from and including the related Redemption Date, but for such
redemption, to but excluding the relevant Par Call Date; provided, however, that if that
Redemption Date is not an Interest Payment Date with respect to such post-2021 BATIF
Notes, the amount of the next succeeding scheduled interest payment thereon will be
reduced by the amount of interest accrued thereon to, but excluding, that Redemption
Date.
• Treasury Rate means, with respect to any Redemption Date, the yield determined by the
Issuer in accordance with the following two paragraphs:

(1) The Treasury Rate shall be determined by the Issuer after 4:15 p.m., New York
City time (or after such time as yields on U.S. government securities are posted
daily by the Board of Governors of the Federal Reserve System), on the third
Business Day preceding the Redemption Date based upon the yield or yields for
the most recent day that appear after such time on such day in the most recent
statistical release published by the Board of Governors of the Federal Reserve
System designated as “Selected Interest Rates (Daily)—H.15” (or any successor
designation or publication) (“H.15”) under the caption “U.S. government
securities—Treasury constant maturities—Nominal” (or any successor caption or
heading) (“H.15 TCM”). In determining the Treasury Rate, the Issuer shall select,
as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly
equal to the period from the redemption date to the Par Call Date (the “Remaining
Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal
to the Remaining Life, the two yields—one yield corresponding to the Treasury
constant maturity on H.15 immediately shorter than and one yield corresponding

32
 to the Treasury constant maturity on H.15 immediately longer than the Remaining
Life—and shall interpolate to the Par Call Date on a straight-line basis (using the
actual number of days) using such yields and rounding the result to three decimal
places; or (3) if there is no such Treasury constant maturity on H.15 shorter than
or longer than the Remaining Life, the yield for the single Treasury constant
maturity on H.15 closest to the Remaining Life. For purposes of this paragraph,
the applicable Treasury constant maturity or maturities on H.15 shall be deemed
to have a maturity date equal to the relevant number of months or years, as
applicable, of such Treasury constant maturity from the Redemption Date.

(2) If on the third Business Day preceding the Redemption Date H.15 TCM is no
longer published, the Issuer shall calculate the Treasury Rate based on the rate per
annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New
York City time, on the second business day preceding such Redemption Date of
the United States Treasury security maturing on, or with a maturity that is closest
to, the Par Call Date, as applicable. If there is no United States Treasury security
maturing on the Par Call Date but there are two or more United States Treasury
securities with a maturity date equally distant from the Par Call Date, one with a
maturity date preceding the Par Call Date and one with a maturity date following
the Par Call Date, the Issuer shall select the United States Treasury security with a
maturity date preceding the Par Call Date. If there are two or more United States
Treasury securities maturing on the Par Call Date or two or more United States
Treasury securities meeting the criteria of the preceding sentence, the Issuer shall
select from among these two or more United States Treasury securities the United
States Treasury security that is trading closest to par based upon the average of
the bid and asked prices for such United States Treasury securities at 11:00 a.m.,
New York City time. In determining the Treasury Rate in accordance with the
terms of this paragraph, the semi-annual yield to maturity of the applicable United
States Treasury security shall be based upon the average of the bid and asked
prices (expressed as a percentage of principal amount) at 11:00 a.m., New York
City time, of such United States Treasury security, and rounded to three decimal
places.

Notice of any optional redemption will be given in accordance with the BATIF Indenture (as
supplemented by the supplemental indentures pursuant to which the post-2021 BATIF Notes
were issued) at least 10 days but not more than 60 days before the Redemption Date to each
holder of the post-2021 BATIF Notes to be redeemed. Any redemption may, at the Issuer’s sole
discretion, be subject to the satisfaction of one or more conditions precedent. In the event of a
conditional redemption, the notice of conditional redemption shall reflect and specify the
conditions to the redemption. Once the notice of redemption is delivered, post-2021 BATIF
Notes called for redemption shall, subject to the satisfaction of any applicable conditions,
become irrevocably due and payable on the Redemption Date.
If less than all the post-2021 BATIF Notes of a series are to be redeemed, in the case of a
redemption at the Issuer’s option as discussed in this section, the post-2021 BATIF Notes to be
redeemed shall be selected in accordance with applicable procedures of DTC.

Upon presentation of any post-2021 BATIF Note redeemed in part only, the Issuer will execute
and upon receipt of a written direction from the Issuer, the Paying Agent will authenticate and
deliver (or cause to be transferred by book-entry) to, or on, the order of the holder thereof, at the
expense of the Issuer, a new post-2021 BATIF Note of authorized denominations in principal
amount equal to the unredeemed portion of the post-2021 BATIF Note so presented.

33
The Issuer’s actions and determinations in determining the redemption price shall be conclusive
and binding for all purposes, absent manifest error.
Optional Redemption of the 2026 1.668% Notes

The Issuer may redeem the 2026 1.668% Notes, in whole or in part, at the Issuer’s option, at any
time and from time to time before the Par Call Date (as defined below), at a redemption price
equal to the greater of (x) 100% of the principal amount of the 2026 1.668% Notes to be
redeemed and (y) as determined by the Independent Investment Banker (as defined below), the
sum of the present values of the applicable Remaining Scheduled Payments (as defined below)
discounted to the date of redemption (the “Redemption Date”) on a semi-annual basis (assuming
a 360-day year consisting of twelve 30-day months or, in the case of an incomplete month, the
number of days elapsed) at the Treasury Rate (as defined below) plus 25 basis points, together
with accrued and unpaid interest on the principal amount of the 2026 1.668% Notes to be
redeemed to, but excluding, the Redemption Date.

If the Issuer elects to redeem a series of the 2026 1.668% Notes on or after the Par Call Date, the
Issuer will pay an amount equal to 100% of the principal amount of the 2026 1.668% Notes
redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

In connection with such optional redemption the following defined terms apply:

• Comparable Treasury Issue means the United States Treasury security selected by the
Independent Investment Banker that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the 2026 1.668% Notes to the
Par Call Date.

• Comparable Treasury Price means, with respect to any Redemption Date, (A) the average
of the Reference Treasury Dealer Quotations for that Redemption Date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations or (B) if the
Independent Investment Banker for the 2026 1.668% Notes obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Quotations.

• Independent Investment Banker means one of the Reference Treasury Dealers (as defined
below) appointed by the Issuer to act as the “Independent Investment Banker”.
• Par Call Date means February 25, 2026 (one month prior to the maturity date of the 2026
1.668% Notes).

• Reference Treasury Dealer means each of BofA Securities, Inc., Deutsche Bank
Securities Inc., Goldman Sachs & Co. LLC, NatWest Markets Securities Inc., SG
Americas Securities, LLC and Wells Fargo Securities, LLC and their respective
successors and two other nationally recognized investment banking firms that are Primary
Treasury Dealers specified from time to time by the Issuer; provided, however, that if any
of the foregoing shall cease to be a primary U.S. Government securities dealer in New
York City (a “Primary Treasury Dealer”), the Issuer shall substitute therefor another
nationally recognized investment banking firm that is a Primary Treasury Dealer.

• Reference Treasury Dealer Quotation means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average, as determined by the Independent
Investment Banker, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in writing to the

34
 Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third Business Day immediately preceding that Redemption Date.

• Remaining Scheduled Payments means, with respect to each BATIF Note to be

redeemed, the remaining scheduled payments of the principal thereof and interest thereon
that would be due from and including the related Redemption Date, but for such
redemption, to but excluding the Par Call Date; provided, however, that if that
Redemption Date is not an Interest Payment Date with respect to such 2026 1.668%
Notes, the amount of the next succeeding scheduled interest payment thereon will be
reduced by the amount of interest accrued thereon to that Redemption Date.

• Treasury Rate means, with respect to any Redemption Date, the rate per annum equal to
the semi-annual equivalent yield to maturity (computed as of the third Business Day
immediately preceding that Redemption Date) of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for that Redemption Date.

Notice of any optional redemption will be given in accordance with the BATIF Indenture at least
10 days but not more than 30 days before the Redemption Date to each holder of the 2026
1.668% Notes to be redeemed. Any redemption may, at the Issuer’s sole discretion, be subject to
the satisfaction of one or more conditions precedent. In the event of a conditional redemption, the
notice of conditional redemption shall reflect and specify the conditions to the redemption. Once
the notice of redemption is delivered, 2026 1.668% Notes called for redemption shall, subject to
the satisfaction of any applicable conditions, become irrevocably due and payable on the
Redemption Date.

If less than all the 2026 1.668% Notes are to be redeemed, in the case of a redemption at the
Issuer’s option as discussed in this section, the 2026 1.668% Notes to be redeemed shall be
selected in accordance with applicable procedures of DTC.

Upon presentation of any 2026 1.668% Note redeemed in part only, the Issuer will execute and
upon receipt of a written direction from the Issuer, the Paying Agent will authenticate and deliver
(or cause to be transferred by book-entry) to, or on, the order of the holder thereof, at the expense
of the Issuer, a new 2026 1.668% Note of authorized denominations in principal amount equal to
the unredeemed portion of the 2026 1.668% Note so presented.
The redemption price shall be calculated by the Independent Investment Banker and the Issuer,
and the Trustee and any agent shall be entitled to rely on such calculation.
Redemption for Tax Reasons

Each series of Notes (including the BATIF Notes) is also redeemable by the Issuer, in whole but
not in part, at 100% of the principal amount of such Notes plus any accrued and unpaid interest
(including any Additional Amounts) to the applicable date fixed for such redemption pursuant to
the terms of the BATIF Indenture or such series of Notes (the “Redemption Date”) at the Issuer’s
option at any time prior to their maturity if, due to a Change in Tax Law (as defined below): (i)
the Issuer or any Guarantor, in accordance with the terms of the applicable Notes or applicable
Guarantee, has, or would, become obligated to pay any Additional Amounts to the Holders of the
Notes of that series; (ii) in the case of any Guarantor, (A) the Parent would be unable, for reasons
outside its control, to procure payment by the Issuer or any other Guarantor or (B) the procuring
of such payment by the Issuer and each such other Guarantor would be subject to withholding
Taxes imposed by a Relevant Taxing Jurisdiction; and (iii) such obligation cannot otherwise be
avoided by such Guarantor, the Parent or the Issuer, taking reasonable measures available to it.
In such case, the Issuer may redeem the applicable Notes upon not less than 30 nor more than 60

35
days’ notice as provided in “ —Notice” below, at 100% of the principal amount of such Notes
plus accrued and unpaid interest to the Redemption Date (including Additional Amounts);
provided that (a) no such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Issuer or such Guarantor, as the case may be, would be obligated to
pay any such Additional Amounts in respect of the applicable Notes or applicable Guarantee, as
applicable, then due; and (b) at the time such notice is given, such obligation to pay such
Additional Amounts remains in effect. The Issuer’s right to redeem the applicable Notes shall
continue as long as the Issuer or any Guarantor is obligated to pay such Additional Amounts,
notwithstanding that the Issuer or such Guarantor, as the case may be, shall have made payments
of Additional Amounts. Prior to the giving of any such notice of redemption, the Issuer must
deliver to the Trustee: (i) an officer’s certificate stating that the Issuer is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions precedent to the
right of the Issuer to so redeem have occurred; and (ii) an opinion of independent counsel or an
independent accountant of recognized standing, selected by the Issuer or any Guarantor, as
applicable, with respect to tax matters of the Relevant Taxing Jurisdiction to the effect that the
Issuer or such Guarantor has, or would, become obligated to pay such Additional Amounts as a
result of such Change in Tax Law.

For the purposes hereof, “Change in Tax Law” shall mean: (i) any changes in, or amendment to,
any law of a Relevant Taxing Jurisdiction (including any regulations or rulings promulgated
thereunder and including, for this purpose, any treaty entered into by the Relevant Taxing
Jurisdiction) or any amendment to or change in the application or official interpretation
(including judicial or administrative interpretation) of such law, which change or amendment
becomes effective or, in the case of an official interpretation, is announced, on or after the first
date of issuance of Notes of such series; or (ii) if the Issuer or any Guarantor consolidates,
merges, amalgamates or combines with, or transfers or leases its assets substantially as an
entirety to, any person that is incorporated or tax resident under the laws of any jurisdiction other
than a Relevant Taxing Jurisdiction (a “successor”) and as a consequence thereof such person
becomes the successor obligor to the Issuer or such Guarantor in respect of Additional Amounts
that may become payable (in which case, for purposes of this redemption provision, all
references to the Issuer or such Guarantor shall be deemed to be and include references to such
person), any change in, or amendment to, any law of the jurisdiction of organization or tax
residence of such successor, or the jurisdiction through which payments will be made by the
successor, or any political subdivision or taxing authority thereof or thereon for purposes of
taxation (including any regulations or rulings promulgated thereunder and including, for this
purpose, any treaty entered into by such jurisdiction) or any amendment to or change in the
application or official interpretation (including judicial or administrative interpretation) of such
law, which change or amendment becomes effective or, in the case of an official interpretation, is
announced, on or after the date of such consolidation, merger, amalgamation, combination or
other transaction.
General

On or before any Redemption Date (as defined above), the Issuer shall deposit with the Paying
Agent money sufficient to pay the redemption price of and accrued and unpaid interest on the
BATIF Notes to be redeemed on such date.

On and after any Redemption Date, interest will cease to accrue on the BATIF Notes or any
portion thereof called for redemption.
Maturity

Unless previously purchased or redeemed by the Issuer, and cancelled, the principal amount of
each respective series of BATIF Notes shall mature on

36
 Series of BATIF Notes Maturity date
2029 5.931% Notes February 2, 2029
2028 4.448% Notes March 16, 2028
2026 1.668% Notes March 25, 2026

in an amount equal, in each case, to their principal amount, with accrued and unpaid interest to,
but excluding, such date.
Covenants of the Issuer and the Guarantors

Reacquisition

There is no restriction on the ability of the Issuer to purchase or repurchase Notes (including the
BATIF Notes), provided, that any Notes so repurchased shall be cancelled and not reissued.
Sinking Fund

There is no provision for a sinking fund for any of the Notes (including the BATIF Notes).
Certain Definitions

Set forth below is a summary of certain of the defined terms used in the BATIF Notes, the
BATIF Indenture and the applicable supplemental indenture. You should refer to the BATIF
Notes, the BATIF Indenture and applicable supplemental indenture for the full definition of all
defined terms as well as any other terms used herein for which no definition is provided.

“Dollar” or “$” means United States Dollars, or such other money of the United States that at the
time of payment is legal tender for payment of public and private debts.

“EMTN Programme” means the Euro Medium Term Note Programme to which BATCAP,
BATIF and BATNF are parties as the issuers under the programme and notes issued thereunder
are guaranteed by the Parent, each of the issuers thereunder (except when it is the relevant issuer)
and RAI, as amended from time to time.

“Original Issue Discount Note” means any Note that is issued with “original issue discount”
within the meaning of Section 1273(a) of the Code and Treasury Regulations promulgated
thereunder and any other Note designated by the Company as issued with original issue discount
for United States federal income tax purposes.

“Person” means any individual, corporation, partnership, joint venture, association, limited
liability company, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.

“Quoted Borrowing” means any indebtedness which: (i) is represented by notes, debentures or
other securities issued otherwise than to constitute or represent advances made by banks and/or
other lending institutions; (ii) is denominated, or confers any right to payment of principal and/or
interest, in or by reference to any currency other than the currency of the country in which the
issuer of the indebtedness has its principal place of business or is denominated, or confers any
right to payment of principal and/or interest, in or by reference to the currency of such country
but is sold or subscribed by or on behalf of, or by agreement with, the issuer of such
indebtedness as to over 20% outside such country; and (iii) at its date of issue is, or is intended

37
by the issuer of such indebtedness to become, quoted, listed, traded or dealt in on any stock
exchange or other organized and regulated securities market in any part of the world.
Covenants of the Issuer and the Guarantors

Negative Pledge

The BATIF Indenture provides that so long as any of the Notes (including the BATIF Notes)
remains outstanding, neither the Issuer nor any Guarantor will secure or allow to be secured any
Quoted Borrowing issued by the Issuer or any Guarantor or any payment under any guarantee by
any of them of any such Quoted Borrowing by any mortgage, charge, pledge or lien (other than
arising by operation of law) upon any of its undertaking or assets, whether present or future,
unless at the same time the same mortgage, charge, pledge or lien is extended, or security which
is not materially less beneficial to the holders of the Notes than the security given as aforesaid or
which shall be approved by consent of the holders of not less than 75% in aggregate principal
amount of the Notes at the time outstanding is extended or created (as the case may be), to secure
equally and ratably the principal of, and interest on, and all other payments (if any) in respect of
the Notes.
Limitation on Mergers, Consolidations, Amalgamations and Combinations

Under the BATIF Indenture, so long as any of the Notes (including the BATIF Notes) remains
outstanding thereunder, neither the Issuer nor any Guarantor may consolidate with or merge into
any other person or sell, convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to any person (other than any sale or conveyance by way of a lease in
the ordinary course of business), unless: (i) in the case of the Issuer, any successor person
assumes the Issuer’s obligations on the Notes (including the BATIF Notes) and under the BATIF
Indenture and, in the case of any Guarantor, any successor person assumes such Guarantor’s
obligations on the Guarantee and under the BATIF Indenture; (ii) immediately after giving effect
to such transaction, no Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be continuing; (iii) such
successor person is organized under the laws of the United States or any State thereof, the United
Kingdom, The Netherlands or any other country that is a member of the Organization for
Economic Cooperation and Development as of the date of such succession; (iv) such successor
person agrees to pay any Additional Amounts with respect to any withholding or deduction of
Taxes or any payment on the Notes (including the BATIF Notes) or Guarantees (as applicable)
imposed by the jurisdiction (other than the United States, unless otherwise required by clause (i)
of this paragraph) in which such successor person is incorporated or otherwise a resident for tax
purposes subject to the exceptions described under “—Additional Amounts” (for the avoidance of
doubt, solely to the extent such successor person is the Issuer, changes will be made to the
BATIF Indenture as are necessary to obligate the Issuer to pay such Additional Amount); and (v)
if as a result of such consolidation or merger or such sale, conveyance, transfer or lease,
properties or assets of the Issuer or any Guarantor would become subject to a mortgage, pledge,
security interest, lien or similar encumbrance to secure payment of any indebtedness for
borrowed money of the Issuer or any Guarantor which would not be permitted by the Notes of a
series or under the BATIF Indenture, the Issuer or any Guarantor or such successor person, as the
case may be, shall take such steps as shall be necessary to effectively secure the Notes of such
series equally and ratably with (or prior to) all indebtedness for borrowed money secured
thereby.

The limitation on mergers, consolidations, amalgamations and combinations described in this

section “—Limitation on Mergers, Consolidations, Amalgamations and Combinations” shall not
apply to any consolidation, merger, amalgamation or combination in which the Issuer or any
Guarantor is the surviving corporation except that, in such case, the provisions of (ii) and (v)

38
above shall apply such that: (x) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing; and (y) if as a result of such consolidation or
merger or such sale, conveyance, transfer or lease, properties or assets of the Issuer or any
Guarantor would become subject to a mortgage, pledge, security interest, lien or similar
encumbrance to secure payment of any indebtedness for borrowed money of the Issuer or any
Guarantor which would not be permitted by the Notes or under the BATIF Indenture, the Issuer
or any Guarantor, as the case may be, shall take such steps as shall be necessary to effectively
secure the Notes equally and ratably with (or prior to) all indebtedness for borrowed money
secured thereby.

The BATIF Indenture does not contain covenants or other provisions to afford protection to
holders of the Notes in the event of a highly leveraged transaction or a change in control of the
Issuer or any Guarantor except as provided above.

Upon certain mergers or consolidations involving the Issuer or any Guarantor, or upon certain
sales or conveyances of all or substantially all of the assets of the Issuer or any Guarantor, the
obligations of the Issuer or such Guarantor, under the applicable Notes or the applicable
Guarantee, shall be assumed by the person formed by such merger or consolidation or which
shall have acquired such assets and upon such assumptions such person shall succeed to and be
substituted for the Issuer or such Guarantor, as the case may be, and then the Issuer or such
Guarantor will (except in the case of a lease) be relieved of all obligations and covenants under
the BATIF Indenture, the Notes and the applicable Guarantee, as the case may be. The terms
“Issuer” and “Guarantor”, as used in the Notes and the BATIF Indenture, also refer to any such
successors or assigns so substituted.

Although there is a limited body of case law interpreting the phrase “entirety or substantially as
an entirety”, there is no precise established definition of the phrase under applicable law.
Accordingly, in certain circumstances, there may be a degree of uncertainty as to whether a
particular transaction would involve a disposition of “entirety or substantially as an entirety” of
the Issuer’s assets and its subsidiaries taken as a whole.
Events of Default

Each of the following events shall be an “Event of Default” with respect to any series of the
Notes (including the BATIF Notes):

(i) Non-Payment: default is made in the payment of: (a) any installment of interest
(excluding Additional Amounts) upon any applicable Note as and when the same
shall become due and payable, and there is a continuance of such default for a
period of 14 days or more; (b) applicable Additional Amounts as and when the
same shall become due and payable, and there is a continuance of such default for
a period of 14 days; or (c) all or any part of the principal or premium, if any, of
any applicable Note as and when the same shall become due and payable either at
maturity, upon any redemption, by declaration or otherwise, and there is a
continuance of such default for a period of three days;

(ii) Breach of Other Obligations: the Issuer or any Guarantor does not perform or
comply with any one or more of its other obligations under the applicable Notes
or the BATIF Indenture (other than those described in paragraph (i) above) which
is not remedied within 30 days (unless a longer period is specified in the BATIF
Indenture) after written notice of such default shall have been given to the Issuer
by the Trustee or to the Issuer and the Trustee by the holders of at least 25% of
the outstanding principal amount of the Notes;

39
(iii) Cross-Default: (a) any other present or future indebtedness for borrowed money
of the Issuer or any Guarantor, other than the Notes issued by the Issuer, becomes
due and payable prior to its stated maturity by reason of any default or event of
default in respect thereof by the Issuer or any Guarantor and remains unpaid; or
(b) any such indebtedness for borrowed money is not paid when due or, as the
case may be, within any applicable grace period; or (c) the Issuer or any
Guarantor fails to pay when due and called upon (after the expiry of any
applicable grace period) any amount payable by it under any present or future
guarantee for, or indemnity in respect of, any indebtedness for borrowed money
and which remains unpaid; provided that (x) payment of the indebtedness for
borrowed money is not being contested in good faith and in accordance with legal
advice or (y) the aggregate amount of the indebtedness for borrowed money,
guarantees and indemnities in respect of which one or more of the events
mentioned above in clauses (a), (b) and (c) of this paragraph (iii) has or have
occurred and is or are continuing, equals or exceeds £750 million or its equivalent
in any other currency of the indebtedness for borrowed money or, if greater,
1.25% of the Total Equity of the Parent, as set out in the “Total Equity” line item
in the most recent consolidated group balance sheet of the Parent and its
subsidiaries in the Parent’s most recent annual report;

(iv) Cessation of Guarantees: any Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the BATIF Indenture, including as
described above under “—Guarantees—Release”) or any Guarantor denies or
disaffirms in writing its obligations under the BATIF Indenture or Guarantee;

(v) Enforcement Proceedings: a distress or execution or other legal process is levied

or enforced against or an encumbrancer takes possession of or a receiver,
administrative receiver or other similar officer is appointed of the whole or a part
of the assets of the Issuer or any Guarantor which is substantial in relation to the
BAT Group taken as a whole and is not discharged, stayed, removed or paid out
within 45 days after such execution or appointment;

(vi) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance,
present or future, created or assumed by the Issuer or any Guarantor becomes
enforceable against all or substantially all of the assets of the Issuer or any
Guarantor, and any step is taken to enforce it (including the taking of possession
or the appointment of a receiver, administrative receiver, manager or other similar
person) and is not discharged within 45 days;

(vii) Insolvency: the Issuer or any Guarantor is insolvent or bankrupt or unable to pay
its debts (in respect of companies incorporated in England and Wales, within the
meaning of Section 123(1)(b) or (e) or Section 123(2) of the UK Insolvency Act
1986), stops, suspends or threatens to stop or suspend payment of all or a material
part of its debts, proposes or makes a general assignment or an arrangement or
composition (otherwise than for the purposes of reconstruction, amalgamation,
reorganization, merger or consolidation or other similar arrangement) with or for
the benefit of its creditors in respect of any of such debts or a moratorium is
agreed or declared in respect of or affecting all or a material part of the debts of
the Issuer;

(viii) Winding-up: an order is made or an effective resolution passed for the winding-up
or dissolution or administration of the Issuer or any Guarantor, or the Issuer or
any Guarantor shall apply or petition for a winding-up or administration order in
respect of itself or ceases or threatens to cease to carry on all or substantially all of

40
 its business or operations, in each case except for the purpose of and followed by
a reconstruction, amalgamation, reorganization, merger or consolidation or other
similar arrangement; or

(ix) Analogous Events: any event occurs that under the laws of any relevant
jurisdiction has an analogous effect to any of the events referred to in any of the
foregoing paragraphs (vii) and (viii).

The BATIF Indenture provides that if an Event of Default occurs and is continuing with respect
to the Notes of any series then outstanding, then and in each and every such case (other than
certain Events of Default specified in paragraphs (vii), (viii) and (ix) above with respect to the
Issuer or any Guarantor), unless the principal of all the Notes of such series shall have already
become due and payable, the holders of not less than 25% in aggregate principal amount of the
Notes of such affected series then outstanding, by notice in writing to the Issuer, each Guarantor
and the Trustee, may declare the entire principal amount of all Notes of such series and interest
accrued and unpaid thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable, without any further declaration
or other act on the part of any holder. If certain Events of Default described in paragraph (vii),
(viii) or (ix) above occur with respect to the Issuer or any Guarantor and are continuing with
respect to a series of Notes, the principal amount of and accrued and unpaid interest on all the
Notes of such series issued pursuant to the BATIF Indenture shall become immediately due and
payable, without any declaration or other act on the part of the Trustee or any holder. Under
certain circumstances, the holders of a majority in aggregate principal amount of the then
outstanding Notes of such series, by written notice to the Issuer, each Guarantor and the Trustee,
may waive defaults and rescind and annul declarations of acceleration and its consequences, but
no such waiver or rescission and annulment shall extend to or shall affect any subsequent default
or shall impart any right consequent thereon.

The holders of a majority in aggregate principal amount of any series of Notes then outstanding
will have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with
respect to the Notes of such series, subject to certain limitations to be specified in the BATIF
Indenture, including providing to the Trustee indemnity satisfactory to it.

An Event of Default with respect to any series of Notes would not necessarily constitute an event
of default with respect to the other series of Notes.
The BATIF Indenture provides that notwithstanding the foregoing provisions described under
“—Events of Default”, if the principal of, premium (if any) or interest on or Additional Amounts
with respect to any Note is payable in a currency or currencies other than Dollars and such
currency or currencies are not available to the Issuer or any Guarantor for making payment
thereof due to the imposition of exchange controls or other circumstances beyond the control of
the Issuer or such Guarantor (a “Conversion Event”), the Issuer and the Guarantor will be
entitled to satisfy its obligations to Holders of the Notes by making such payment in Dollars in
an amount equal to the Dollar equivalent of the amount payable in such other currency, as
determined by the Issuer or the Guarantor making such payment, as the case may be, based on
the Exchange Rate on the date of such payment, or, if such rate is not then available, on the basis
of the most recently available Exchange Rate. Notwithstanding the foregoing provisions, any
payment made under such circumstances in Dollars where the required payment is in a currency
other than Dollars will not constitute an Event of Default under the BATIF Indenture.

Promptly after the occurrence of a Conversion Event, the Issuer or the relevant Guarantor shall
give written notice thereof to the Trustee and to the Paying Agent; and the Trustee, promptly
after receipt of such notice, shall give notice thereof in the manner provided in the BATIF

41
Indenture to the Holders of the relevant series of Notes. Promptly after the making of any
payment in Dollars as a result of a Conversion Event, the Issuer or the Guarantor making such
payment, as the case may be, shall give notice in the manner provided in the BATIF Indenture to
the Holders, setting forth the applicable Exchange Rate and describing the calculation of such
payments.

No holder of the Notes of a series will have any right to institute any action or proceeding at law
or in equity or in bankruptcy or otherwise upon or under or with respect to the BATIF Indenture,
or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for
any other remedy under the BATIF Indenture (except suits for the enforcement of payment of
overdue principal or interest) unless (1) the holder of a Note gives to the Trustee written notice of
a continuing Event of Default, (2) the holders of at least 25% in principal amount of the
outstanding Notes of such series have made a written request to the Trustee to institute such
proceeding as Trustee, (3) the holder or holders of Notes offer, and if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or expense, (4) the
Trustee does not comply with the request within 60 days after receipt of the request and the offer
of indemnity and (5) during such 60-day period the holders of a majority in aggregate principal
amount of the outstanding Notes of such series have not given the Trustee a direction
inconsistent with the request. The holder of a Note may not use the BATIF Indenture to prejudice
the rights of another holder of a Note or to obtain a preference or priority over another holder of
a Note (it being understood that the Trustee does not have an affirmative duty to ascertain
whether or not such actions or forbearances are unduly prejudicial to such holders).
Satisfaction and Discharge

The BATIF Indenture provides that BAT may, subject to satisfying certain conditions, discharge
certain obligations to the holders of Notes of any series of Notes that have not already been
delivered to the Trustee for cancellation and that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one year) by
depositing with the Trustee or Paying Agent, in trust, funds in an amount sufficient to pay the
entire indebtedness on such series of Notes in respect of principal and premium, if any, and
interest, if any, to the date of such deposit (if such Notes have become due and payable) or to the
maturity thereof or redemption date, as the case may be, along with an officer’s certificate and an
opinion of counsel stating that all conditions precedent relating to the satisfaction and discharge
of the BATIF Indenture have been complied with.
Legal Defeasance and Covenant Defeasance

The BATIF Indenture provides that the Issuer will have the option either (a) to be deemed
(together with each Guarantor) to have paid and discharged the entire indebtedness represented
by, and obligations under, a series of Notes and the applicable Guarantees and to have satisfied
all the obligations under the BATIF Indenture relating to the series of Notes (except for certain
obligations, including those relating to the defeasance trust and obligations to register the transfer
or exchange of Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain
paying agencies) on the 91st day after the applicable conditions described below have been
satisfied or (b) to cease (together with each Guarantor) to be under any obligation to comply with
the covenants described above under “ —Covenants of the Issuer and the Guarantors—Negative
Pledge”, “—Covenants of the Issuer and the Guarantors—Limitation on Mergers,
Consolidations, Amalgamations and Combinations”, and non-compliance with such covenants
and the occurrence of all events described above under “—Events of Default” will not give rise
to any Event of Default under the BATIF Indenture, at any time after the applicable conditions
described below have been satisfied.

42
In order to exercise either defeasance option, the Issuer must (i) deposit with the Trustee,
irrevocably in money or Government Obligations (as defined in the BATIF Indenture), funds
sufficient in the opinion of a certified public accounting firm of national reputation for the
payment of principal of and interest on the applicable outstanding Notes of any series to and
including the Redemption Date irrevocably designated by the Issuer on or prior to the date of
deposit of such money or Government Obligations, and must (ii) comply with certain other
conditions, including delivering to the Trustee an opinion of U.S. counsel to the effect that
beneficial owners of the applicable Notes will not recognize income, gain or loss for United
States Federal income tax purposes as a result of the exercise of such option and will be subject
to United States Federal income tax on the same amount and in the same manner and at the same
time as would have been the case if such option had not been exercised and, in the case of clause
(a) in the previous paragraph, which opinion must state that such opinion is based on a ruling
received from or published by the United States Internal Revenue Service or on a change in the
applicable U.S. Federal income tax laws after the date of issuance of the relevant Notes.
Modification and Waiver

Without Consent of Noteholders

The BATIF Indenture contains provisions permitting the Issuer, the Guarantors and the Trustee,
without the consent of the holders of any of the applicable Notes at any time outstanding, from
time to time and at any time, to enter into a supplemental indenture amending or supplementing
such BATIF Indenture, the Notes or the Guarantees in order to:

• convey, transfer, assign, mortgage or pledge to the holders of the applicable Notes or any
person acting on their behalf as security for the applicable Notes any property or assets;

• evidence the succession of another person to the Issuer or any Guarantor, as the case may
be, or successive successions, and the assumption by the successor person(s) of the
covenants, agreements and obligations of the Issuer or any Guarantor, as the case may be,
pursuant to the BATIF Indenture;

• evidence and provide for the acceptance of appointment of a successor or successors to

the Trustee and/or the Paying Agent, Transfer Agent, Calculation Agent and Registrar, as
applicable;
• add to the covenants of, or the restrictions, conditions or provisions applicable to, the
Issuer and any Guarantor, as the case may be, such further covenants, restrictions,
conditions or provisions as the Issuer and any Guarantor, as the case may be, shall
consider to be for the protection of the holders of the applicable Notes issued pursuant to
the BATIF Indenture, including to eliminate one or both prongs of the release provision
under “—Guarantees—Release”, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants, restrictions, conditions or
provisions an Event of Default under the BATIF Indenture permitting the enforcement of
all or any of the several remedies provided in the BATIF Indenture; provided that, in
respect of any such additional covenant, restriction, condition or provision, such
supplemental indenture may provide for a particular period of grace after default (which
may be shorter or longer than that allowed in the case of other defaults) or may limit the
remedies available to the Trustee upon such an Event of Default;

• modify the restrictions on, and procedures for, resale and other transfers of the applicable
Notes pursuant to law, regulation or practice relating to the resale or transfer of restricted
securities generally;

43
 • cure any ambiguity or to correct or supplement any provision contained in the BATIF
Indenture, the Notes, or the Guarantees which may be defective or inconsistent with any
other provision contained therein or to make such other provision in regard to matters or
questions arising under the BATIF Indenture, the Notes or the Guarantees as the Issuer,
any Guarantor or the Trustee may deem necessary or desirable and which will not, in the
opinion of the Issuer, adversely affect the interests of the holders of the applicable Notes
in any material respect;

• issue an unlimited aggregate principal amount of Notes under the BATIF Indenture or to
“reopen” the applicable series of Notes and create and issue additional notes having
substantially identical terms and conditions as the applicable Notes (or in all respects
except as to issue price, denomination, rate of interest, Maturity Date and the date from
which interest, if any, shall accrue, and except as may otherwise be provided in or
pursuant to such officer’s certificate or supplemental indenture relating thereto) so that
the additional notes are consolidated and form a single series with the outstanding
applicable Notes; and

• evidence the addition of any new Guarantor of the Notes and the BATIF Indenture, or the
release of any Guarantor from its obligations with respect to the Notes and the BATIF
Indenture, pursuant to the terms of the BATIF Indenture.
With Consent of Noteholders

The BATIF Indenture contains provisions permitting the Issuer, each Guarantor and the Trustee,
with the consent of the holders of not less than a majority in aggregate principal amount of all
series of the Notes affected by such supplemental indenture (voting as one class) at the time
outstanding under the BATIF Indenture (including consents obtained in connection with a tender
offer or exchange offer for the applicable Notes), from time to time and at any time, to enter into
a supplemental indenture for the purpose of amending, waiving or otherwise modifying the
provisions of the BATIF Indenture, the Notes and the Guarantees, or adding any provisions to or
changing in any manner or eliminating any of the provisions of the applicable Notes or of
modifying in any manner the rights of the holders of the applicable Notes; provided, that no such
supplemental indenture may, without the consent of the holder of each of the Notes so affected:

• change the stated maturity of the applicable Note of, or the date for payment of any
principal of, or installment of interest on, any applicable Note, or reduce the amount of
principal of an Original Issue Discount Note that would be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to the provisions of the
BATIF Indenture; or

• reduce the principal amount of or the rate or amount of interest on any applicable Note or
Additional Amounts payable with respect thereto or reduce the amount payable thereon
in the event of redemption or default or change the method for determining the interest
rate thereon; or

• change the currency of payment of principal of or interest on any applicable Note or

Additional Amounts payable with respect thereto; or change the obligation of the Issuer
or any Guarantor, as the case may be, to pay Additional Amounts (except as otherwise
permitted by such applicable Note); or

• impair the right to institute suit for the enforcement of any such payment on or with
respect to any applicable Note; or

44
 • reduce the percentage of the aggregate principal amount of the applicable Notes
outstanding the consent of whose holders is required for any such supplemental
indenture; or

• reduce the aggregate principal amount of any applicable Note outstanding necessary to
modify or amend the BATIF Indenture or any such Note or to waive any future
compliance or past default or reduce the quorum requirements or the percentage of
aggregate principal amount of any applicable Notes outstanding required for the adoption
of any action at any meeting of holders of such Notes or to reduce the percentage of the
aggregate principal amount of such Notes outstanding necessary to rescind or annul any
declaration of the principal of, or all accrued and unpaid interest on, any Note to be due
and payable,

provided that no consent of any holder of any applicable Note shall be necessary to permit the
Trustee, the Issuer and each Guarantor to execute supplemental indentures as described under
“—Without Consent of Noteholders” above.
Any modifications, amendments or waivers to the BATIF Indenture or to the conditions of the
applicable Notes will be conclusive and binding on all holders of the applicable Notes, whether
or not they have consented to such action or were present at the meeting at which such action
was taken, and on all future holders of the applicable Notes, whether or not notation of such
modifications, amendments or waivers is made upon such Notes. Any instrument given by or on
behalf of any holder of such a Note in connection with any consent to any such modification,
amendment or waiver will be irrevocable once given and will be conclusive and binding on all
subsequent registered holders of such Note.
Prescription

Under New York’s statute of limitations, any legal action upon the Notes in respect of interest or
principal must be commenced within six years after the payment thereof is due.
Notice

Notices to holders of Notes will be given by first-class mail postage prepaid to the last addresses
of such holders as they appear in the Notes register; provided, no such mailing will be required
so long as any Global Notes representing the Notes are held in their entirety on behalf of the
Depositary or a clearing system, or any of its participants, as there may be substituted for the
mailing of notice to holders of Notes described above the delivery of the relevant. Such notices
will be deemed to have been given on the date of such mailing; notices to the Depositary or a
clearing system, and (if applicable) its participants, for communication by them to the entitled
accountholders. Any such notice shall be deemed to have been given on the day on which the
said notice was given to the Depositary or a clearing system, and (if applicable) its participants.
Listing

The BATIF Notes are listed on the New York Stock Exchange.
Consent to Service

Each of the Issuer and the non-U.S. Guarantors has initially designated BATCAP as its
authorized agent for service of process in any legal suit, action or proceeding arising out of or
relating to the performance of its obligations under the BATIF Indenture, the supplemental
indenture and the BATIF Notes brought in any state or federal court in the Borough of
Manhattan, the City of New York, and the Guarantors will irrevocably submit (but for these

45
purposes only) to the non-exclusive jurisdiction of any such court in any such suit, action or
proceeding.
Governing Law

The BATIF Indenture, the Notes and the Guarantees are, and any applicable supplemental
indentures shall be, governed by and construed in accordance with the laws of the State of New
York, without regard to principles of conflicts of laws thereof.
Regarding the Trustee and Agents

Citibank, N.A. is the trustee under the BATIF Indenture. Citibank, N.A. is appointed by the
Issuer to act as registrar, transfer agent, calculation agent and initial paying agent for the BATIF
Notes. The Issuer can change the registrar, transfer agent, calculation agent or paying agent
without prior notice to the holders of the BATIF Notes. The address of Citibank, N.A., as paying
agent, is Citibank, N.A., Agency & Trust, 388 Greenwich Street, New York, NY 10013. From
time to time, Citibank, N.A. and its respective affiliates perform various other services for the
BAT Group and its affiliates (including acting as a lender under one or more of the BAT Group’s
lending facilities from time to time).

The BATIF Indenture contains limitations on the rights of the trustee, if it becomes a creditor of
the Issuer or any Guarantor, to obtain payment of claims in some cases, or to realize on property
received in respect of any of these claims as security or otherwise. The Trustee is permitted to
engage in other transactions. However, if the Trustee acquires any conflicting interest (as defined
in the TIA), it must either eliminate its conflict within 90 days or resign.

The BATIF Indenture provides that except during the continuance of an Event of Default, the
Trustee will perform only such duties as are specifically set forth in such BATIF Indenture.
During the continuance of an Event of Default of which the Trustee has received written notice,
the Trustee will exercise such of the rights and powers vested in it under the BATIF Indenture,
and use the same degree of care and skill in their exercise, as a prudent person would exercise or
use under the circumstances in the conduct of such person’s own affairs.
D. Description of the Notes Issued Under the 2019 BATCAP Indenture

The following is a summary of the material provisions of the 2019 BATCAP Indenture (as
described below), the applicable supplemental indentures and the Notes. Any capitalized term
used herein but not defined shall have the meaning assigned to such term in the 2019 BATCAP
Indenture, the applicable supplemental indenture or under “—Certain Definitions”. The
following summary does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all of the provisions of the 2019 BATCAP Indenture, the applicable
supplemental indentures and those terms made a part of the 2019 BATCAP Indenture and/or
applicable supplemental indentures by reference to the Trust Indenture Act of 1939, as amended
(the “TIA”).
GENERAL

The 6.343% Notes due 2030 (the “2030 6.343% Notes”), the 6.421% Notes due 2033 (the “2033
Notes”), the 7.079% Notes due 2043 (the “2043 Notes”), the 7.081% Notes due 2053 (the “2053
Notes”), the 7.750% Notes due 2032 (the “2032 7.750% Notes”), the 4.742% Notes due 2032
(the “2032 4.742% Notes”), the 5.650% Notes due 2052 (the “2052 Notes”), the 2.259% Notes
due 2028 (the “2028 Notes”), the 2.726% Notes due 2031 (the “2031 Notes”), the 3.734% Notes
due 2040 (the “2040 Notes”), the 3.984% Notes due 2050 (the “2050 3.984% Notes”), the
4.700% Notes due 2027 (the “2027 4.700% Notes”), the 4.906% Notes due 2030 (the “2030

46
4.906% Notes”), the 5.282% Notes due 2050 (the “2050 5.282% Notes”), the 2.789% Notes due
2024 (the “2024 Notes”), the 3.215% Notes due 2026 (the “2026 Notes”), the 3.462% Notes due
2029 (the “2029 3.462% Notes”) and the 4.758% Notes due 2049 (the “2049 Notes” and,
together with the 2030 6.343% Notes, the 2033 Notes, the 2043 Notes, the 2053 Notes, the 2032
7.750% Notes, the 2032 4.742% Notes, the 2052 Notes, the 2028 Notes, the 2031 Notes, the
2040 Notes, the 2050 3.984% Notes, the 2027 4.700% Notes, the 2030 4.906% Notes, the 2050
5.282% Notes, 2024 Notes, the 2026 Notes and the 2029 3.462% Notes, the “BATCAP Notes”)
were issued by B.A.T Capital Corporation (“BATCAP” or the “Issuer”).

In this “Description of the Notes Issued Under the 2019 BATCAP Indenture”, we refer to each
series of the BATCAP Notes as a “series” of BATCAP Notes.

The 2030 6.343% Notes will mature on August 2, 2030. The 2033 Notes will mature on August
2, 2033. The 2043 Notes will mature on August 2, 2043. The 2053 Notes will mature on August
2, 2053. The 2032 7.750% Notes will mature on October 19, 2032. The 2032 4.742% Notes will
mature on March 16, 2032. The 2052 Notes will mature on March 16, 2052. The 2028 Notes will
mature on March 25, 2028. The 2031 Notes will mature on March 25, 2031. The 2040 Notes will
mature on September 25, 2040. The 2050 3.984% Notes will mature on September 25, 2050. The
2027 4.700% Notes will mature on April 2, 2027. The 2030 4.906% Notes will mature on April
2, 2030. The 2050 5.282% Notes will mature on April 2, 2050. The 2024 Notes will mature on
September 6, 2024. The 2026 Notes will mature on September 6, 2026. The 2029 3.462% Notes
will mature on September 6, 2029. The 2049 Notes will mature on September 6, 2049.

The BATCAP Notes were issued in registered form and treated as fourteen separate series of
debt securities and were each issued under a separate supplemental indenture to the indenture
dated as of September 6, 2019 (as amended or supplemented from time to time, the “2019
BATCAP Indenture”) by and among BATCAP, as Issuer, British American Tobacco p.l.c.
(“BAT” or the “Parent”), B.A.T. International Finance p.l.c. (“BATIF”), B.A.T. Netherlands
Finance B.V. (“BATNF”) and, unless its guarantee is released in accordance with the 2019
BATCAP Indenture, Reynolds American Inc. (“RAI”), each as a guarantor, Citibank, N.A., as
trustee (the “Trustee”), registrar, transfer agent, calculation agent and initial paying agent (in
such several capacities under the 2019 BATCAP Indenture, the “Registrar”, “Transfer Agent”,
“Calculation Agent”, and “Paying Agent”, respectively).

Each guarantee in respect of the BATCAP Notes is referred to herein as a “Guarantee” and each
entity that provides a Guarantee is referred to herein as a “Guarantor”. In this “Description of the
Notes Issued Under the 2019 BATCAP Indenture”, the terms “holder”, “Noteholder” and other
similar terms refer to a “registered holder” of Notes, and not to a beneficial owner of a book-
entry interest in any BATCAP Notes.
PRINCIPAL, MATURITY AND INTEREST

The obligations of the Issuer under the BATCAP Notes and 2019 BATCAP Indenture are fully
and unconditionally guaranteed on a joint and several and senior and unsecured basis by each of
the Parent, BATIF, BATNF and, unless its guarantee is released in accordance with the 2019
BATCAP Indenture, RAI.

The BATCAP Notes were issued in the following aggregate principal amounts, with outstanding
aggregate principal amounts as of December 31, 2023 and maturity dates as follows:

47
 Series of Initial aggregate Outstanding aggregate
BATCAP Notes principal amount principal amount Maturity date
2030 6.343% $1,000,000,000 $1,000,000,000 August 2, 2030
Notes
2033 Notes $1,250,000,000 $1,250,000,000 August 2, 2033
2043 Notes $750,000,000 $750,000,000 August 2, 2043
2053 Notes $1,000,000,000 $1,000,000,000 August 2, 2053
2032 7.750% $600,000,000 $600,000,000 October 19, 2032
Notes
2032 4.742% $900,000,000 $900,000,000 March 16, 2032
Notes
2052 Notes $600,000,000 $600,000,000 March 16, 2052
2028 Notes $1,750,000,000 $1,750,000,000 March 25, 2028
2031 Notes $1,250,000,000 $1,250,000,000 March 25, 2031
2040 Notes $750,000,000 $750,000,000 September 25,
2040
2050 3.984% $1,000,000,000 $1,000,000,000 September 25,
Notes 2050
2027 4.700% $900,000,000 $900,000,000 April 2, 2027
Notes
2030 4.906% $1,000,000,000 $1,000,000,000 April 2, 2030
Notes
2050 5.282% $500,000,000 $500,000,000 April 2, 2050
Notes
2024 Notes $1,000,000,000 $1,000,000,000 September 6, 2024
2026 Notes $1,000,000,000 $1,000,000,000 September 6, 2026
2029 3.462% $500,000,000 $500,000,000 September 6, 2029
Notes
2049 Notes $1,000,000,000 $1,000,000,000 September 6, 2049

Interest

The Notes bear interest per annum as follows:

48
 Series of BATCAP Notes Interest rate per annum
2030 6.343% Notes 6.343%
2033 Notes 6.421%
2043 Notes 7.079%
2053 Notes 7.081%
2032 7.750% Notes 7.750%
2032 4.742% Notes 4.742%
2052 Notes 5.650%
2028 Notes 2.259%
2031 Notes 2.726%
2040 Notes 3.734%
2050 3.984% Notes 3.984%
2027 4.700% Notes 4.700%
2030 4.906% Notes 4.906%
2050 5.282% Notes 5.282%
2024 Notes 2.789%
2026 Notes 3.215%
2029 3.462% Notes 3.462%
2049 Notes 4.758%

The BATCAP Notes will bear interest from the date of the initial issuance of such BATCAP
Notes or from the most recent interest payment date to which interest has been paid or provided
for, payable semi-annually in arrear on each series’ respective Interest Payment Dates (as defined
in the table below) of each year, commencing on each series’ respective Initial Interest Payment
Date (as defined in the table below) until each series’ respective maturity date, unless previously
purchased and cancelled or redeemed by the Issuer, to the person in whose name any such
BATCAP Note is registered at the close of business on the 15th calendar day preceding each
Interest Payment Date, whether or not such day is a Business Day (each, a “Record Date”)
notwithstanding any transfer or exchange of such BATCAP Notes subsequent to the Record Date
and prior to such Interest Payment Date, except that, if and to the extent the Issuer shall default
in the payment of the interest due on such Interest Payment Date, and the applicable grace period
shall have expired, such defaulted interest may at the option of the Issuer be paid to the persons
in whose names such outstanding BATCAP Notes are registered at the close of business on a
subsequent Record Date (which shall not be less than five Business Days prior to the date of
payment of such defaulted interest) established by notice sent by or on behalf of the Issuer to the
holders of such BATCAP Notes, not less than 15 days preceding such subsequent Record Date.

49
 Series of BATCAP Initial Interest Payment
Notes Interest Payment Dates Date
2030 6.343% Notes February 2 and August 2 February 2, 2024
2033 Notes February 2 and August 2 February 2, 2024
2043 Notes February 2 and August 2 February 2, 2024
2053 Notes February 2 and August 2 February 2, 2024
2032 7.750% Notes April 19 and October 19 April 19, 2023
2032 4.742% Notes March 16 and
September 16 September 16, 2022
2052 Notes March 16 and September 16, 2022
September 16
2028 Notes March 25 and
September 25 March 25, 2021
2031 Notes March 25 and March 25, 2021
September 25
2040 Notes March 25 and March 25, 2021
September 25
2050 3.984% Notes March 25 and March 25, 2021
September 25
2027 4.700% Notes April 2 and October 2 October 2, 2020
2030 4.906% Notes April 2 and October 2 October 2, 2020
2050 5.282% Notes April 2 and October 2 October 2, 2020
2024 Notes March 6 and September 6 March 6, 2020
2026 Notes March 6 and September 6 March 6, 2020
2029 3.462% Notes March 6 and September 6 March 6, 2020
2049 Notes March 6 and September 6 March 6, 2020

Interest is computed on the basis of a 360-day year consisting of twelve 30-day months, or in the
case of an incomplete month, the number of days elapsed. If the date on which any interest
payment or principal payment is to be made is not a Business Day, such payment will be made
on the next day which is a Business Day, without any further interest or other amounts being
paid or payable in connection therewith. A “Business Day” refers to any day which is not, in
London or New York City, or any other place of payment, a Saturday, Sunday, legal holiday or a
day on which banking institutions are authorized or obligated by law or regulation to close.
Form and Denomination

The BATCAP Notes of each series were issued in fully registered form and only in minimum
denominations of $2,000 and integral multiples of $1,000 in excess thereof, and were issued
initially as global notes representing the BATCAP Notes of each series (collectively, the “Global
Notes”). The Global Notes were (i) registered in the name of the Depository or the nominee of
such Depository, in each case for the credit to an account of a member of, or direct or indirect
participant in, the Depository; and (ii) delivered to Citibank, N.A. as custodian for such
Depository.

50
Further Issues

The aggregate principal amount of notes (including each series of BATCAP Notes) issuable
under the 2019 BATCAP Indenture (the “Notes”) is unlimited. The Issuer may, from time to
time, without notice to or the consent of the holders of the Notes, issue Notes of a new series or
“reopen” any series of the Notes (including any series of BATCAP Notes) and create and issue
additional Notes having substantially identical terms and conditions as the then-outstanding
Notes of a series (or in all respects except as to issue date, issue price, denomination, rate of
interest, maturity date and the date from which interest, if any, shall accrue and except as may
otherwise be provided in or pursuant to an officer’s certificate or any supplemental indenture
relating thereto) so that the additional Notes are consolidated and form a single series of Notes
with the outstanding Notes of such series, as the case may be, provided that if the additional
Notes are not fungible with the outstanding Notes of the relevant series for United States Federal
income tax purposes, the additional Notes will have separate CUSIPs, ISINs, or other identifying
numbers.
Status of the Notes and Guarantees

The BATCAP Notes are unsecured and unsubordinated obligations of the Issuer and rank pari
passu in right of payment among themselves and with all other direct, unsecured and
unsubordinated obligations of the Issuer (except those obligations preferred by statute or
operation of law). Each Guarantor fully and unconditionally guarantees, on a senior, unsecured
basis, the due and punctual payment (and not collectability) of the principal of and interest on the
BATCAP Notes (and the payment of additional amounts described under “ —Additional
Amounts” below) and other obligations under the 2019 BATCAP Indenture when and as the
same shall become due and payable, whether at stated maturity, by declaration of acceleration,
call for redemption or otherwise. Each Guarantee is an unsecured and unsubordinated obligation
of the respective Guarantor and rank pari passu in right of payment with all other direct,
unsecured and unsubordinated obligations of such Guarantor (except those obligations preferred
by statute or operation of law). The Issuer and each Guarantor are subject to a negative pledge
with respect to certain types of indebtedness, which are discussed in “ —Covenants of the Issuer
and the Guarantors—Negative Pledge”.
Guarantees

Release

The 2019 BATCAP Indenture and the applicable supplemental indentures provide, that, without
the consent of the Trustee or the Noteholders, any Guarantor that is a subsidiary of the Parent (a
“Subsidiary Guarantor”), other than BATIF and BATNF, will automatically and unconditionally
be released from all obligations under its Guarantee, and such Guarantee shall thereupon
terminate and be discharged and of no further force or effect, in the event that (1) its guarantee of
all then outstanding notes issued under the EMTN Programme is released or (2) at substantially
the same time its Guarantee of the Notes is terminated, the Subsidiary Guarantor is released from
all obligations in respect of indebtedness for borrowed money for which such Subsidiary
Guarantor is an obligor (as a guarantor or borrower). For purposes of this paragraph, the amount
of a Subsidiary Guarantor’s indebtedness for borrowed money shall not include (A) the Notes
issued pursuant to the 2019 BATCAP Indenture (including the BATCAP Notes), (B) any other
debt the terms of which permit the termination of such Subsidiary Guarantor’s guarantee of such
debt under similar circumstances, as long as such Subsidiary Guarantor’s obligations in respect
of such other debt are terminated at substantially the same time as its Guarantee of the Notes
(including the BATCAP Notes), (C) any debt that is being refinanced at substantially the same
time that the Guarantee of the Notes (including the BATCAP Notes) is being released, provided
that any obligations of the relevant Subsidiary Guarantor in respect of the debt that is incurred in

51
the refinancing shall be included in the calculation of the relevant Subsidiary Guarantor’s
indebtedness for borrowed money and (D) for the avoidance of doubt, any debt in respect of
which such Subsidiary Guarantor is an obligor (as a guarantor or borrower) (i) between or among
the Parent and any subsidiary or subsidiaries thereof or (ii) between or among any subsidiaries of
the Parent.

As of the date of this summary, RAI is the only Subsidiary Guarantor to which the above
provision is relevant. Under the EMTN Programme, RAI’s guarantee is released if at any time
the aggregate amount of indebtedness for borrowed money for which the Subsidiary Guarantor is
an obligor does not exceed 10% of the outstanding long-term debt of BAT as reflected in the
balance sheet included in BAT’s most recent publicly released interim or annual consolidated
financial statements, as evidenced by a certificate to such effect addressed to the trustee under
the EMTN Programme and signed by a director of BAT.
Additional Amounts

Each of the Parent, BATIF and BATNF will make payments pursuant to the applicable
Guarantee without withholding or deduction for or on account of any present or future tax, levy,
impost or other similar governmental charge (“Taxes”) imposed, assessed, levied or collected by
or for the account of the United Kingdom (in the case of a payment by the Parent or BATIF) or
The Netherlands (in the case of a payment by BATNF), including in each case any political
subdivision thereof or any authority thereof having the power to tax (a “Relevant Taxing
Jurisdiction”), unless such withholding or deduction is required by law.

If any such Guarantor is required by a Relevant Taxing Jurisdiction to so withhold or deduct

such Taxes, such Guarantor will pay to the holder such additional amounts (“Additional
Amounts”) as will result in the receipt by the holder of such amounts as would have been
received by it if no such withholding or deduction of Taxes had been required; provided,
however, that no Guarantor shall be required to pay any Additional Amounts for or on account
of:

(a) any Taxes that would not have been so imposed, assessed, levied or collected but
for the Holder or beneficial owner of the applicable Note or Guarantee (or a
fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power
over, such Holder, if such Holder is an estate, trust, partnership or corporation)
being or having been a domiciliary, national or resident of, or engaging or having
been engaged in a trade or business or maintaining or having maintained a
permanent establishment or being or having been physically present in, a Relevant
Taxing Jurisdiction or otherwise having or having had some connection with a
Relevant Taxing Jurisdiction other than the holding or ownership of, or the
collection of principal of, and premium (if any) or interest on, a Note or the
enforcement of the applicable Note or Guarantee, as the case may be;

(b) any Taxes that would not have been so imposed, assessed, levied or collected but
for the fact that, where presentation is required in order to receive payment, the
applicable Note or Guarantee was presented more than 30 days after the date on
which such payment became due and payable or was provided for, whichever is
later, except to the extent that the Holder or beneficial owner thereof would have
been entitled to Additional Amounts had the applicable Note or Guarantee been
presented for payment on any day during such 30-day period;

(c) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes;

52
 (d) any Taxes that are payable otherwise than by withholding or deduction from
payments on or in respect of the applicable Note or Guarantee;

(e) any Taxes that would not have been so imposed, assessed, levied or collected but
for the failure by the Holder or the beneficial owner of the applicable Guarantee
to (i) provide any certification, identification, information, documents or other
evidence concerning the nationality, residence or identity of the Holder or the
beneficial owner or its connection with a Relevant Taxing Jurisdiction; or (ii)
make any valid or timely declaration or claim or satisfy any other reporting,
information or procedural requirements relating to such matters if, in either case,
compliance is required by statute, regulation, relevant income tax treaty or
administrative practice of a Relevant Taxing Jurisdiction as a condition to relief or
exemption from such Taxes;

(f) any Taxes imposed or withheld pursuant to Sections 1471 through 1474 of the
Code (or any amended or successor provisions), any U.S. Treasury regulations
promulgated thereunder, any official interpretations thereof or any agreements
entered into in connection with the implementation thereof (“FATCA
Withholding”); or

(g) any combination of the Taxes described in clauses (a) through (f) above.

In addition, in the case of the 2030 6.343% Notes, the 2033 Notes, the 2043 Notes, the 2053
Notes, the 2032 7.750% Notes, the 2032 4.742% Notes, the 2052 Notes, the 2028 Notes, the
2031 Notes, the 2040 Notes, the 2050 3.984% Notes, the 2027 4.700% Notes, the 2030 4.906%
Notes, and the 2050 5.282% Notes, no Guarantor shall be required to pay any Additional
Amounts for or on account of any taxes imposed or to be withheld pursuant to the Dutch
Withholding Tax Act 2021 (Wet bronbelasting 2021). In addition, Additional Amounts will not
be paid with respect to any payment of the principal of, or premium (if any) or interest on, any
Note or any payment pursuant to the applicable Guarantee to any Holder that is a fiduciary, a
partnership, a limited liability company or any person other than the sole beneficial owner of
such payment to the extent a beneficiary or settlor with respect to such fiduciary, a member of
such partnership, an interest holder in such limited liability company or a beneficial owner that
would not have been entitled to such amounts had such beneficiary, settlor, member, interest
holder or beneficial owner been the Holder of the applicable Note or Guarantee.
Unless otherwise stated, references in any context to the payment of principal of, and premium
(if any) or interest on, any Note, or to any payment pursuant to a Guarantee will be deemed to
include payment of Additional Amounts to the extent that, in such context, Additional Amounts
are, were or would be payable in respect thereof.
Redemption

The Notes are subject to optional redemption by the Issuer as described below under “—
Optional Redemption”. The Notes are also subject to optional redemption by the Issuer in the
event of certain changes in tax laws applicable to payments in respect of the Notes as described
below under “—Redemption for Tax Reasons”.
Optional Redemption of the 2030 6.343% Notes, 2033 Notes, 2043 Notes, 2053 Notes, 2032
7.750% Notes, 2032 4.742% Notes and 2052 Notes (the “post-2021 BATCAP Notes”)

The Issuer may redeem the post-2021 BATCAP Notes, in whole or in part, at the Issuer’s option,
at any time and from time to time before the applicable Par Call Date (as defined below), at a
redemption price equal to the greater of (x) 100% of the principal amount of the series of

53
post-2021 BATCAP Notes to be redeemed and (y) the sum of the present values of the
applicable Remaining Scheduled Payments (as defined below) discounted to the date of
redemption (the “Redemption Date”) on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months or, in the case of an incomplete month, the number of days
elapsed) at the Treasury Rate (as defined below) plus, in the case of each respective series of
post-2021 BATCAP Notes as follows:

2030 6.343% Notes 35 basis points

2033 Notes 40 basis points
2043 Notes 45 basis points
2053 Notes 50 basis points
2032 7.750% Notes 50 basis points
2032 4.742% Notes 40 basis points
2052 Notes 50 basis points

together with, in each case, accrued and unpaid interest on the principal amount of the post-2021
BATCAP Notes to be redeemed to, but excluding, the Redemption Date.

If the Issuer elects to redeem a series of post-2021 BATCAP Notes on or after the applicable Par
Call Date, the Issuer will pay an amount equal to 100% of the principal amount of the post-2021
BATCAP Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the
Redemption Date.

In connection with such optional redemption the following defined terms apply:

• Par Call Date means (i) June 2, 2030 with respect to any 2030 6.343% Notes (two months
prior to the maturity date of the 2030 6.343% Notes), (ii) May 2, 2033 with respect to any
2033 Notes (three months prior to the maturity date of the 2033 Notes), (iii) February 2,
2043 with respect to any 2043 Notes (six months prior to the maturity date of the 2043
Notes), (iv) February 2, 2053 with respect to any 2053 Notes (six months prior to the
maturity date of the 2053 Notes), (v) July 19, 2032 with respect to any 2032 7.750%
Notes (three months prior to the maturity date of the 2032 7.750% Notes), (vi) December
16, 2031 with respect to any 2032 4.742% Notes (three months prior to the maturity date
of the 2032 4.742% Notes) and (vii) September 16, 2051 with respect to any 2052 Notes
(six months prior to the maturity date of the 2052 Notes).

• Remaining Scheduled Payments means, with respect to each post-2021 BATCAP Note to
be redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due from and including the related Redemption Date, but for such
redemption, to but excluding the relevant Par Call Date; provided, however, that if that
Redemption Date is not an Interest Payment Date with respect to such post-2021
BATCAP Notes, the amount of the next succeeding scheduled interest payment thereon
will be reduced by the amount of interest accrued thereon to, but excluding, that
Redemption Date.

• Treasury Rate means, with respect to any Redemption Date, the yield determined by the
Issuer in accordance with the following two paragraphs:

(1) The Treasury Rate shall be determined by the Issuer after 4:15 p.m., New York
City time (or after such time as yields on U.S. government securities are posted
daily by the Board of Governors of the Federal Reserve System), on the third

54
 Business Day preceding the Redemption Date based upon the yield or yields for
the most recent day that appear after such time on such day in the most recent
statistical release published by the Board of Governors of the Federal Reserve
System designated as “Selected Interest Rates (Daily)—H.15” (or any successor
designation or publication) (“H.15”) under the caption “U.S. government
securities—Treasury constant maturities—Nominal” (or any successor caption or
heading) (“H.15 TCM”). In determining the Treasury Rate, the Issuer shall select,
as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly
equal to the period from the redemption date to the Par Call Date (the “Remaining
Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal
to the Remaining Life, the two yields—one yield corresponding to the Treasury
constant maturity on H.15 immediately shorter than and one yield corresponding
to the Treasury constant maturity on H.15 immediately longer than the Remaining
Life—and shall interpolate to the Par Call Date on a straight-line basis (using the
actual number of days) using such yields and rounding the result to three decimal
places; or (3) if there is no such Treasury constant maturity on H.15 shorter than
or longer than the Remaining Life, the yield for the single Treasury constant
maturity on H.15 closest to the Remaining Life. For purposes of this paragraph,
the applicable Treasury constant maturity or maturities on H.15 shall be deemed
to have a maturity date equal to the relevant number of months or years, as
applicable, of such Treasury constant maturity from the Redemption Date.

(2) If on the third Business Day preceding the Redemption Date H.15 TCM is no
longer published, the Issuer shall calculate the Treasury Rate based on the rate per
annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New
York City time, on the second business day preceding such Redemption Date of
the United States Treasury security maturing on, or with a maturity that is closest
to, the Par Call Date, as applicable. If there is no United States Treasury security
maturing on the Par Call Date but there are two or more United States Treasury
securities with a maturity date equally distant from the Par Call Date, one with a
maturity date preceding the Par Call Date and one with a maturity date following
the Par Call Date, the Issuer shall select the United States Treasury security with a
maturity date preceding the Par Call Date. If there are two or more United States
Treasury securities maturing on the Par Call Date or two or more United States
Treasury securities meeting the criteria of the preceding sentence, the Issuer shall
select from among these two or more United States Treasury securities the United
States Treasury security that is trading closest to par based upon the average of
the bid and asked prices for such United States Treasury securities at 11:00 a.m.,
New York City time. In determining the Treasury Rate in accordance with the
terms of this paragraph, the semi-annual yield to maturity of the applicable United
States Treasury security shall be based upon the average of the bid and asked
prices (expressed as a percentage of principal amount) at 11:00 a.m., New York
City time, of such United States Treasury security, and rounded to three decimal
places.

Notice of any optional redemption will be given in accordance with the 2019 BATCAP
Indenture (as supplemented by the supplemental indentures pursuant to which the post-2021
BATCAP Notes were issued) at least 10 days but not more than 60 days before the Redemption
Date to each holder of the post-2021 BATCAP Notes to be redeemed. Any redemption may, at
the Issuer’s sole discretion, be subject to the satisfaction of one or more conditions precedent. In
the event of a conditional redemption, the notice of conditional redemption shall reflect and
specify the conditions to the redemption. Once the notice of redemption is delivered, post-2021
BATCAP Notes called for redemption shall, subject to the satisfaction of any applicable
conditions, become irrevocably due and payable on the Redemption Date.

55
If less than all the post-2021 BATCAP Notes of a series are to be redeemed, in the case of a
redemption at the Issuer’s option as discussed in this section, the post-2021 BATCAP Notes to
be redeemed shall be selected in accordance with applicable procedures of DTC.

Upon presentation of any post-2021 BATCAP Note redeemed in part only, the Issuer will
execute and upon receipt of a written direction from the Issuer, the Paying Agent will
authenticate and deliver (or cause to be transferred by book-entry) to, or on, the order of the
holder thereof, at the expense of the Issuer, a new post-2021 BATCAP Note of authorized
denominations in principal amount equal to the unredeemed portion of the post-2021 BATCAP
Note so presented.

The Issuer’s actions and determinations in determining the redemption price shall be conclusive
and binding for all purposes, absent manifest error.
Optional Redemption of the 2028 Notes, 2031 Notes, 2040 Notes, 20150 3.984% Notes, 2027
4.700% Notes, 2030 4.906% Notes, 2050 5.382% Notes, 2024 Notes, 2026 Notes, 2029 3.462%
Notes and 2049 Notes (the “pre-2022 BATCAP Notes”)

The Issuer may redeem the pre-2022 BATCAP Notes, in whole or in part, at the Issuer’s option,
at any time and from time to time before the applicable Par Call Date (as defined below), at a
redemption price equal to the greater of (x) 100% of the principal amount of the series of
pre-2022 BATCAP Notes to be redeemed and (y) as determined by the Independent Investment
Banker (as defined below), the sum of the present values of the applicable Remaining Scheduled
Payments (as defined below) discounted to the date of redemption (the “Redemption Date”) on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months or, in the case
of an incomplete month, the number of days elapsed) at the Treasury Rate (as defined below)
plus, in the case of each respective series of pre-2022 BATCAP Notes as follows:

2028 Notes 30 basis points

2031 Notes 35 basis points
2040 Notes 35 basis points
2050 3.984% Notes 40 basis points
2027 4.700% Notes 50 basis points
2030 4.906% Notes 50 basis points
2050 5.282% Notes 50 basis points
2024 Notes 25 basis points
2026 Notes 30 basis points
2029 3.462% Notes 30 basis points
2049 Notes 45 basis points

together with, in each case, accrued and unpaid interest on the principal amount of the pre-2022
BATCAP Notes to be redeemed to, but excluding, the Redemption Date.

If the Issuer elects to redeem a series of the pre-2022 BATCAP Notes on or after the applicable
Par Call Date, the Issuer will pay an amount equal to 100% of the principal amount of the
pre-2022 BATCAP Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding,
the date of redemption.

In connection with such optional redemption the following defined terms apply:

56
• Comparable Treasury Issue means the United States Treasury security selected by the
Independent Investment Banker that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the applicable pre-2022
BATCAP Notes to the relevant Par Call Date.

• Comparable Treasury Price means, with respect to any Redemption Date, (A) the
average of the Reference Treasury Dealer Quotations for that Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations or (B) if
the Independent Investment Banker for the applicable pre-2022 BATCAP Notes obtains
fewer than four such Reference Treasury Dealer Quotations, the average of all such
Quotations.

• Independent Investment Banker means one of the Reference Treasury Dealers (as defined
below) appointed by the Issuer to act as the “Independent Investment Banker”.

• Par Call Date means (i) January 25, 2028, with respect to any 2028 Notes (two months
prior to the maturity date of the 2028 Notes), (ii) December 25, 2030, with respect to any
2031 Notes (three months prior to the maturity date of the 2031 Notes), (iii) March 25,
2040, with respect to any 2040 Notes (six months prior to the maturity date of the 2040
Notes) and (iv) March 25, 2050, with respect to any 2050 3.984% Notes (six months
prior to the maturity date of the 2050 3.984% Notes), (v) February 2, 2027 with respect to
any 2027 4.700% Notes (two months prior to the maturity date of the 2027 4.700%
Notes), (vi) January 2, 2030 with respect to any 2030 4.906% Notes (three months prior
to the maturity date of the 2030 4.906% Notes) and (vii) October 2, 2049 with respect to
any 2050 5.282% Notes (six months prior to the maturity date of the 2050 5.282% Notes)
(viii) August 6, 2024 with respect to any 2024 Notes (one month prior to the maturity
date of the 2024 Notes), (ix) July 6, 2026 with respect to any 2026 Notes (two months
prior to the maturity date of the 2026 Notes), (x) June 6, 2029 with respect to any 2029
3.462% Notes (three months prior to the maturity date of the 2029 3.462% Notes) and
(xi) March 6, 2049 with respect to any 2049 Notes (six months prior to the maturity date
of the 2049 Notes).

• Reference Treasury Dealer means, in case of the 2028 Notes, the 2031 Notes, the 2040
Notes and the 2050 3.984% Notes, each of BofA Securities, Inc., Deutsche Bank
Securities Inc., Goldman Sachs & Co. LLC, Wells Fargo Securities, LLC, NatWest
Markets Securities Inc. and SG Americas Securities, LLC and their respective successors
and two other nationally recognized investment banking firms that are Primary Treasury
Dealers specified from time to time by the Issuer, in case of the 2027 4.700% Notes, the
2030 4.906% Notes and the 2050 5.282% Notes, each of Barclays Capital Inc., BofA
Securities, Inc., Citigroup Global Markets Inc. and Mizuho Securities USA LLC and their
respective successors and two other nationally recognized investment banking firms that
are Primary Treasury Dealers specified from time to time by the Issuer, and in case of the
2024 Notes, the 2026 Notes, the 2029 3.462% Notes, and the 2049 Notes, each of BofA
Securities, Inc., Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank
Securities Inc. and HSBC Securities (USA) Inc. and their respective successors and two
other nationally recognized investment banking firms that are Primary Treasury Dealers
specified from time to time by the Issuer; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City (a
“Primary Treasury Dealer”), the Issuer shall substitute therefor another nationally
recognized investment banking firm that is a Primary Treasury Dealer.

• Reference Treasury Dealer Quotation means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average, as determined by the Independent

57
 Investment Banker, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in writing to the
Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third Business Day immediately preceding that Redemption Date.

• Remaining Scheduled Payments means, with respect to each pre-2022 BATCAP Note to
be redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due from and including the related Redemption Date, but for such
redemption, to but excluding the relevant Par Call Date; provided, however, that if that
Redemption Date is not an Interest Payment Date with respect to such pre-2022
BATCAP Notes, the amount of the next succeeding scheduled interest payment thereon
will be reduced by the amount of interest accrued thereon to that Redemption Date.

• Treasury Rate means, with respect to any Redemption Date, the rate per annum equal to
the semi-annual equivalent yield to maturity (computed as of the third Business Day
immediately preceding that Redemption Date) of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for that Redemption Date.

Notice of any optional redemption will be given in accordance with the 2019 BATCAP
Indenture at least 10 days but not more than 30 days before the Redemption Date to each holder
of the Notes to be redeemed. Any redemption may, at the Issuer’s sole discretion, be subject to
the satisfaction of one or more conditions precedent. In the event of a conditional redemption, the
notice of conditional redemption shall reflect and specify the conditions to the redemption. Once
the notice of redemption is delivered, pre-2022 BATCAP Notes called for redemption shall,
subject to the satisfaction of any applicable conditions, become irrevocably due and payable on
the Redemption Date.

If less than all the pre-2022 BATCAP Notes of a series are to be redeemed, in the case of a
redemption at the Issuer’s option as discussed in this section, the pre-2022 BATCAP Notes to be
redeemed shall be selected in accordance with applicable procedures of DTC.

Upon presentation of any pre-2022 BATCAP Note redeemed in part only, the Issuer will execute
and upon receipt of a written direction from the Issuer, the Paying Agent will authenticate and
deliver (or cause to be transferred by book-entry) to, or on, the order of the holder thereof, at the
expense of the Issuer, a new pre-2022 BATCAP Note of authorized denominations in principal
amount equal to the unredeemed portion of the pre-2022 BATCAP Note so presented.

The redemption price shall be calculated by the Independent Investment Banker and the Issuer,
and the Trustee and any agent shall be entitled to rely on such calculation.
Redemption for Tax Reasons

Each series of Notes (including each series of BATCAP Notes) is also redeemable by the Issuer,
in whole but not in part, at 100% of the principal amount of such Notes plus any accrued and
unpaid interest (including any Additional Amounts) to the applicable date fixed for such
redemption pursuant to the terms of the 2019 BATCAP Indenture or such series of Notes (the
“Redemption Date”) at the Issuer’s option at any time prior to their maturity if, due to a Change
in Tax Law (as defined below): (i) the Issuer or any Guarantor, in accordance with the terms of
the applicable Notes or applicable Guarantee, has, or would, become obligated to pay any
Additional Amounts to the Holders of the Notes of that series; (ii) in the case of any Guarantor,
(A) the Parent would be unable, for reasons outside its control, to procure payment by the Issuer
or any other Guarantor or (B) the procuring of such payment by the Issuer and each such other
Guarantor would be subject to withholding Taxes imposed by a Relevant Taxing Jurisdiction;

58
and (iii) such obligation cannot otherwise be avoided by such Guarantor, the Parent or the Issuer,
taking reasonable measures available to it. In such case, the Issuer may redeem the applicable
Notes upon not less than 30 nor more than 60 days’ notice as provided in “ —Notice” below, at
100% of the principal amount of such Notes plus accrued and unpaid interest to the Redemption
Date (including Additional Amounts); provided that (a) no such notice of redemption shall be
given earlier than 90 days prior to the earliest date on which the Issuer or such Guarantor, as the
case may be, would be obligated to pay any such Additional Amounts in respect of the applicable
Notes or applicable Guarantee, as applicable, then due; and (b) at the time such notice is given,
such obligation to pay such Additional Amounts remains in effect. The Issuer’s right to redeem
the applicable Notes shall continue as long as the Issuer or any Guarantor is obligated to pay
such Additional Amounts, notwithstanding that the Issuer or such Guarantor, as the case may be,
shall have made payments of Additional Amounts. Prior to the giving of any such notice of
redemption, the Issuer must deliver to the Trustee: (i) an officer’s certificate stating that the
Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer to so redeem have occurred; and (ii) an opinion of
independent counsel or an independent accountant of recognized standing, selected by the Issuer
or any Guarantor, as applicable, with respect to tax matters of the Relevant Taxing Jurisdiction to
the effect that the Issuer or such Guarantor has, or would, become obligated to pay such
Additional Amounts as a result of such Change in Tax Law.

For the purposes hereof, “Change in Tax Law” shall mean: (i) any changes in, or amendment to,
any law of a Relevant Taxing Jurisdiction (including any regulations or rulings promulgated
thereunder and including, for this purpose, any treaty entered into by the Relevant Taxing
Jurisdiction) or any amendment to or change in the application or official interpretation
(including judicial or administrative interpretation) of such law, which change or amendment
becomes effective or, in the case of an official interpretation, is announced, on or after the first
date of issuance of Notes of such series; or (ii) if the Issuer or any Guarantor consolidates,
merges, amalgamates or combines with, or transfers or leases its assets substantially as an
entirety to, any person that is incorporated or tax resident under the laws of any jurisdiction other
than a Relevant Taxing Jurisdiction (a “successor”) and as a consequence thereof such person
becomes the successor obligor to the Issuer or such Guarantor in respect of Additional Amounts
that may become payable (in which case, for purposes of this redemption provision, all
references to the Issuer or such Guarantor shall be deemed to be and include references to such
person), any change in, or amendment to, any law of the jurisdiction of organization or tax
residence of such successor, or the jurisdiction through which payments will be made by the
successor, or any political subdivision or taxing authority thereof or thereon for purposes of
taxation (including any regulations or rulings promulgated thereunder and including, for this
purpose, any treaty entered into by such jurisdiction) or any amendment to or change in the
application or official interpretation (including judicial or administrative interpretation) of such
law, which change or amendment becomes effective or, in the case of an official interpretation, is
announced, on or after the date of such consolidation, merger, amalgamation, combination or
other transaction.
General

On or before any Redemption Date (as defined above), the Issuer shall deposit with the Paying
Agent money sufficient to pay the redemption price of and accrued and unpaid interest on the
BATCAP Notes to be redeemed on such date.

On and after any Redemption Date, interest will cease to accrue on the BATCAP Notes or any
portion thereof called for redemption.

59
Maturity

Unless previously purchased or redeemed by the Issuer, and cancelled, the principal amount of
each respective series of BATCAP Notes shall mature on:

Series of BATCAP Notes Maturity date

2030 6.343% Notes August 2, 2030
2033 Notes August 2, 2033
2043 Notes August 2, 2043
2053 Notes August 2, 2053
2032 7.750% Notes October 19, 2032
2032 4.742% Notes March 16, 2032
2052 Notes March 16, 2052
2028 Notes March 25, 2028
2031 Notes March 25, 2031
2040 Notes September 25, 2040
2050 3.984% Notes September 25, 2050
2027 4.700% Notes April 2, 2027
2030 4.906% Notes April 2, 2030
2050 5.282% Notes April 2, 2050
2024 Notes September 6, 2024
2026 Notes September 6, 2026
2029 3.462% Notes September 6, 2029
2049 Notes September 6, 2049

in an amount equal, in each case, to their principal amount, with accrued and unpaid interest to,
but excluding, such date.
Covenants of the Issuer and the Guarantors

Reacquisition

There is no restriction on the ability of the Issuer to purchase or repurchase BATCAP Notes,
provided, that any BATCAP Notes so repurchased shall be cancelled and not reissued.
Sinking Fund

There is no provision for a sinking fund for any of the Notes.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the BATCAP Notes, the
2019 BATCAP Indenture and the applicable supplemental indentures. You should refer to the
BATCAP Notes, the 2019 BATCAP Indenture and applicable supplemental indentures for the
full definition of all defined terms as well as any other terms used herein for which no definition
is provided.

60
“Dollar” or “$” means United States Dollars, or such other money of the United States that at the
time of payment is legal tender for payment of public and private debts.

“EMTN Programme” means the Euro Medium Term Note Programme to which BATCAP,
BATIF and BATNF are parties as the issuers under the programme and notes issued thereunder
are guaranteed by the Parent, each of the issuers thereunder (except when it is the relevant issuer)
and RAI, as amended from time to time.

“Original Issue Discount Note” means any Note that is issued with “original issue discount”
within the meaning of Section 1273(a) of the Code and Treasury Regulations promulgated
thereunder and any other Note designated by the Company as issued with original issue discount
for United States federal income tax purposes.

“Person” means any individual, corporation, partnership, joint venture, association, limited
liability company, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.

“Quoted Borrowing” means any indebtedness which: (i) is represented by notes, debentures or
other securities issued otherwise than to constitute or represent advances made by banks and/or
other lending institutions; (ii) is denominated, or confers any right to payment of principal and/or
interest, in or by reference to any currency other than the currency of the country in which the
issuer of the indebtedness has its principal place of business or is denominated, or confers any
right to payment of principal and/or interest, in or by reference to the currency of such country
but is sold or subscribed by or on behalf of, or by agreement with, the issuer of such
indebtedness as to over 20% outside such country; and (iii) at its date of issue is, or is intended
by the issuer of such indebtedness to become, quoted, listed, traded or dealt in on any stock
exchange or other organized and regulated securities market in any part of the world.
Covenants of the Issuer and the Guarantors

Negative Pledge

The 2019 BATCAP Indenture provides that so long as any of the Notes (including any of the
BATCAP Notes) remains outstanding, neither the Issuer nor any Guarantor will secure or allow
to be secured any Quoted Borrowing issued by the Issuer or any Guarantor or any payment under
any guarantee by any of them of any such Quoted Borrowing by any mortgage, charge, pledge or
lien (other than arising by operation of law) upon any of its undertaking or assets, whether
present or future, unless at the same time the same mortgage, charge, pledge or lien is extended,
or security which is not materially less beneficial to the holders of the Notes than the security
given as aforesaid or which shall be approved by consent of the holders of not less than 75% in
aggregate principal amount of the Notes at the time outstanding is extended or created (as the
case may be), to secure equally and ratably the principal of, and interest on, and all other
payments (if any) in respect of the Notes.
Limitation on Mergers, Consolidations, Amalgamations and Combinations

Under the 2019 BATCAP Indenture, so long as any of the Notes (including any of the BATCAP
Notes) remains outstanding thereunder, neither the Issuer nor any Guarantor may consolidate
with or merge into any other person or sell, convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any person (other than any sale or conveyance by
way of a lease in the ordinary course of business), unless: (i) in the case of the Issuer, any
successor person assumes the Issuer’s obligations on the Notes (including the BATCAP Notes)
and under the 2019 BATCAP Indenture and, in the case of any Guarantor, any successor person
assumes such Guarantor’s obligations on the Guarantee and under the 2019 BATCAP Indenture;

61
(ii) immediately after giving effect to such transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall have occurred and
be continuing; (iii) such successor person is organized under the laws of the United States or any
State thereof, the United Kingdom, The Netherlands or any other country that is a member of the
Organization for Economic Cooperation and Development as of the date of such succession; (iv)
such successor person agrees to pay any Additional Amounts with respect to any withholding or
deduction of Taxes or any payment on the Notes (including the BATCAP Notes) or Guarantees
(as applicable) imposed by the jurisdiction (other than the United States, unless otherwise
required by clause (i) of this paragraph) in which such successor person is incorporated or
otherwise a resident for tax purposes subject to the exceptions described under “—Additional
Amounts” (for the avoidance of doubt, solely to the extent such successor person is the Issuer,
changes will be made to the 2019 BATCAP Indenture as are necessary to obligate the Issuer to
pay such Additional Amount); and (v) if as a result of such consolidation or merger or such sale,
conveyance, transfer or lease, properties or assets of the Issuer or any Guarantor would become
subject to a mortgage, pledge, security interest, lien or similar encumbrance to secure payment of
any indebtedness for borrowed money of the Issuer or any Guarantor which would not be
permitted by the Notes of a series or under the 2019 BATCAP Indenture, the Issuer or any
Guarantor or such successor person, as the case may be, shall take such steps as shall be
necessary to effectively secure the Notes of such series equally and ratably with (or prior to) all
indebtedness for borrowed money secured thereby.

The limitation on mergers, consolidations, amalgamations and combinations described in this

section “—Limitation on Mergers, Consolidations, Amalgamations and Combinations” shall not
apply to any consolidation, merger, amalgamation or combination in which the Issuer or any
Guarantor is the surviving corporation except that, in such case, the provisions of (ii) and (v)
above shall apply such that: (x) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing; and (y) if as a result of such consolidation or
merger or such sale, conveyance, transfer or lease, properties or assets of the Issuer or any
Guarantor would become subject to a mortgage, pledge, security interest, lien or similar
encumbrance to secure payment of any indebtedness for borrowed money of the Issuer or any
Guarantor which would not be permitted by the Notes or under the 2019 BATCAP Indenture, the
Issuer or any Guarantor, as the case may be, shall take such steps as shall be necessary to
effectively secure the Notes equally and ratably with (or prior to) all indebtedness for borrowed
money secured thereby.
The 2019 BATCAP Indenture does not contain covenants or other provisions to afford protection
to holders of the Notes in the event of a highly leveraged transaction or a change in control of the
Issuer or any Guarantor except as provided above.

Upon certain mergers or consolidations involving the Issuer or any Guarantor, or upon certain
sales or conveyances of all or substantially all of the assets of the Issuer or any Guarantor, the
obligations of the Issuer or such Guarantor, under the applicable Notes or the applicable
Guarantee, shall be assumed by the person formed by such merger or consolidation or which
shall have acquired such assets and upon such assumptions such person shall succeed to and be
substituted for the Issuer or such Guarantor, as the case may be, and then the Issuer or such
Guarantor will (except in the case of a lease) be relieved of all obligations and covenants under
the 2019 BATCAP Indenture, the Notes and the applicable Guarantee, as the case may be. The
terms “Issuer” and “Guarantor”, as used in the Notes and the 2019 BATCAP Indenture, also
refer to any such successors or assigns so substituted.

Although there is a limited body of case law interpreting the phrase “entirety or substantially as
an entirety”, there is no precise established definition of the phrase under applicable law.
Accordingly, in certain circumstances, there may be a degree of uncertainty as to whether a

62
particular transaction would involve a disposition of “entirety or substantially as an entirety” of
the Issuer’s assets and its subsidiaries taken as a whole.
Events of Default

Each of the following events shall be an “Event of Default” with respect to any series of the
Notes (including any series of the BATCAP Notes):

(i) Non-Payment: default is made in the payment of: (a) any installment of interest
(excluding Additional Amounts) upon any applicable Note as and when the same
shall become due and payable, and there is a continuance of such default for a
period of 14 days or more; (b) applicable Additional Amounts as and when the
same shall become due and payable, and there is a continuance of such default for
a period of 14 days; or (c) all or any part of the principal or premium, if any, of
any applicable Note as and when the same shall become due and payable either at
maturity, upon any redemption, by declaration or otherwise, and there is a
continuance of such default for a period of three days;

(ii) Breach of Other Obligations: the Issuer or any Guarantor does not perform or
comply with any one or more of its other obligations under the applicable Notes
or the 2019 BATCAP Indenture (other than those described in paragraph (i)
above) which is not remedied within 30 days (unless a longer period is specified
in the 2019 BATCAP Indenture) after written notice of such default shall have
been given to the Issuer by the Trustee or to the Issuer and the Trustee by the
holders of at least 25% of the outstanding principal amount of the Notes;

(iii) Cross-Default: (a) any other present or future indebtedness for borrowed money
of the Issuer or any Guarantor, other than the Notes issued by the Issuer, becomes
due and payable prior to its stated maturity by reason of any default or event of
default in respect thereof by the Issuer or any Guarantor and remains unpaid; or
(b) any such indebtedness for borrowed money is not paid when due or, as the
case may be, within any applicable grace period; or (c) the Issuer or any
Guarantor fails to pay when due and called upon (after the expiry of any
applicable grace period) any amount payable by it under any present or future
guarantee for, or indemnity in respect of, any indebtedness for borrowed money
and which remains unpaid; provided that (x) payment of the indebtedness for
borrowed money is not being contested in good faith and in accordance with legal
advice or (y) the aggregate amount of the indebtedness for borrowed money,
guarantees and indemnities in respect of which one or more of the events
mentioned above in clauses (a), (b) and (c) of this paragraph (iii) has or have
occurred and is or are continuing, equals or exceeds £750 million or its equivalent
in any other currency of the indebtedness for borrowed money or, if greater,
1.25% of the Total Equity of the Parent, as set out in the “Total Equity” line item
in the most recent consolidated group balance sheet of the Parent and its
subsidiaries in the Parent’s most recent annual report;

(iv) Cessation of Guarantees: any Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the 2019 BATCAP Indenture, including
as described above under “—Guarantees—Release”) or any Guarantor denies or
disaffirms in writing its obligations under the 2019 BATCAP Indenture or
Guarantee;

(v) Enforcement Proceedings: a distress or execution or other legal process is levied

or enforced against or an encumbrancer takes possession of or a receiver,

63
 administrative receiver or other similar officer is appointed of the whole or a part
of the assets of the Issuer or any Guarantor which is substantial in relation to the
BAT Group taken as a whole and is not discharged, stayed, removed or paid out
within 45 days after such execution or appointment;

(vi) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance,
present or future, created or assumed by the Issuer or any Guarantor becomes
enforceable against all or substantially all of the assets of the Issuer or any
Guarantor, and any step is taken to enforce it (including the taking of possession
or the appointment of a receiver, administrative receiver, manager or other similar
person) and is not discharged within 45 days;

(vii) Insolvency: the Issuer or any Guarantor is insolvent or bankrupt or unable to pay
its debts (in respect of companies incorporated in England and Wales, within the
meaning of Section 123(1)(b) or (e) or Section 123(2) of the UK Insolvency Act
1986), stops, suspends or threatens to stop or suspend payment of all or a material
part of its debts, proposes or makes a general assignment or an arrangement or
composition (otherwise than for the purposes of reconstruction, amalgamation,
reorganization, merger or consolidation or other similar arrangement) with or for
the benefit of its creditors in respect of any of such debts or a moratorium is
agreed or declared in respect of or affecting all or a material part of the debts of
the Issuer;

(viii) Winding-up: an order is made or an effective resolution passed for the winding-up
or dissolution or administration of the Issuer or any Guarantor, or the Issuer or
any Guarantor shall apply or petition for a winding-up or administration order in
respect of itself or ceases or threatens to cease to carry on all or substantially all of
its business or operations, in each case except for the purpose of and followed by
a reconstruction, amalgamation, reorganization, merger or consolidation or other
similar arrangement; or

(ix) Analogous Events: any event occurs that under the laws of any relevant
jurisdiction has an analogous effect to any of the events referred to in any of the
foregoing paragraphs (vii) and (viii).

The 2019 BATCAP Indenture provides that if an Event of Default occurs and is continuing with
respect to the Notes of any series then outstanding, then and in each and every such case (other
than certain Events of Default specified in paragraphs (vii), (viii) and (ix) above with respect to
the Issuer or any Guarantor), unless the principal of all the Notes of such series shall have
already become due and payable, the holders of not less than 25% in aggregate principal amount
of the Notes of such affected series then outstanding, by notice in writing to the Issuer, each
Guarantor and the Trustee, may declare the entire principal amount of all Notes of such series
and interest accrued and unpaid thereon, if any, to be due and payable immediately, and upon
any such declaration the same shall become immediately due and payable, without any further
declaration or other act on the part of any holder. If certain Events of Default described in
paragraph (vii), (viii) or (ix) above occur with respect to the Issuer or any Guarantor and are
continuing with respect to a series of Notes, the principal amount of and accrued and unpaid
interest on all the Notes of such series issued pursuant to the 2019 BATCAP Indenture shall
become immediately due and payable, without any declaration or other act on the part of the
Trustee or any holder. Under certain circumstances, the holders of a majority in aggregate
principal amount of the then outstanding Notes of such series, by written notice to the Issuer,
each Guarantor and the Trustee, may waive defaults and rescind and annul declarations of
acceleration and its consequences, but no such waiver or rescission and annulment shall extend
to or shall affect any subsequent default or shall impart any right consequent thereon.

64
The holders of a majority in aggregate principal amount of any series of Notes then outstanding
will have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with
respect to the Notes of such series, subject to certain limitations to be specified in the 2019
BATCAP Indenture, including providing to the Trustee indemnity satisfactory to it.

An Event of Default with respect to any series of Notes would not necessarily constitute an event
of default with respect to the other series of Notes.

The 2019 BATCAP Indenture provides that notwithstanding the foregoing provisions described
under “—Events of Default”, if the principal of, premium (if any) or interest on or Additional
Amounts with respect to any Note is payable in a currency or currencies other than Dollars and
such currency or currencies are not available to the Issuer or any Guarantor for making payment
thereof due to the imposition of exchange controls or other circumstances beyond the control of
the Issuer or such Guarantor (a “Conversion Event”), the Issuer and the Guarantor will be
entitled to satisfy its obligations to Holders of the Notes by making such payment in Dollars in
an amount equal to the Dollar equivalent of the amount payable in such other currency, as
determined by the Issuer or the Guarantor making such payment, as the case may be, based on
the Exchange Rate on the date of such payment, or, if such rate is not then available, on the basis
of the most recently available Exchange Rate. Notwithstanding the foregoing provisions, any
payment made under such circumstances in Dollars where the required payment is in a currency
other than Dollars will not constitute an Event of Default under the 2019 BATCAP Indenture.

Promptly after the occurrence of a Conversion Event, the Issuer or the relevant Guarantor shall
give written notice thereof to the Trustee and to the Paying Agent; and the Trustee, promptly
after receipt of such notice, shall give notice thereof in the manner provided in the 2019
BATCAP Indenture to the Holders of the relevant series of Notes. Promptly after the making of
any payment in Dollars as a result of a Conversion Event, the Issuer or the Guarantor making
such payment, as the case may be, shall give notice in the manner provided in the 2019 BATCAP
Indenture to the Holders, setting forth the applicable Exchange Rate and describing the
calculation of such payments.

No holder of the Notes of a series will have any right to institute any action or proceeding at law
or in equity or in bankruptcy or otherwise upon or under or with respect to the 2019 BATCAP
Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy under the 2019 BATCAP Indenture (except suits for the
enforcement of payment of overdue principal or interest) unless (1) the holder of a Note gives to
the Trustee written notice of a continuing Event of Default, (2) the holders of at least 25% in
principal amount of the outstanding Notes of such series have made a written request to the
Trustee to institute such proceeding as Trustee, (3) the holder or holders of Notes offer, and if
requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense, (4) the Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity and (5) during such 60-day period the holders of a majority in
aggregate principal amount of the outstanding Notes of such series have not given the Trustee a
direction inconsistent with the request. The holder of a Note may not use the 2019 BATCAP
Indenture to prejudice the rights of another holder of a Note or to obtain a preference or priority
over another holder of a Note (it being understood that the Trustee does not have an affirmative
duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such
holders).
Satisfaction and Discharge

The 2019 BATCAP Indenture provides that BAT may, subject to satisfying certain conditions,
discharge certain obligations to the holders of Notes of any series of Notes that have not already

65
been delivered to the Trustee for cancellation and that either have become due and payable or
will become due and payable within one year (or scheduled for redemption within one year) by
depositing with the Trustee or Paying Agent, in trust, funds in an amount sufficient to pay the
entire indebtedness on such series of Notes in respect of principal and premium, if any, and
interest, if any, to the date of such deposit (if such Notes have become due and payable) or to the
maturity thereof or redemption date, as the case may be, along with an officer’s certificate and an
opinion of counsel stating that all conditions precedent relating to the satisfaction and discharge
of the 2019 BATCAP Indenture have been complied with.
Legal Defeasance and Covenant Defeasance

The 2019 BATCAP Indenture provides that the Issuer will have the option either (a) to be
deemed (together with each Guarantor) to have paid and discharged the entire indebtedness
represented by, and obligations under, a series of Notes and the applicable Guarantees and to
have satisfied all the obligations under the 2019 BATCAP Indenture relating to the series of
Notes (except for certain obligations, including those relating to the defeasance trust and
obligations to register the transfer or exchange of Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain paying agencies) on the 91st day after the applicable conditions
described below have been satisfied or (b) to cease (together with each Guarantor) to be under
any obligation to comply with the covenants described above under “ —Covenants of the Issuer
and the Guarantors—Negative Pledge”, “—Covenants of the Issuer and the Guarantors—
Limitation on Mergers, Consolidations, Amalgamations and Combinations”, and non-
compliance with such covenants and the occurrence of all events described above under “—
Events of Default” will not give rise to any Event of Default under the 2019 BATCAP Indenture,
at any time after the applicable conditions described below have been satisfied.

In order to exercise either defeasance option, the Issuer must (i) deposit with the Trustee,
irrevocably in money or Government Obligations (as defined in the 2019 BATCAP Indenture),
funds sufficient in the opinion of a certified public accounting firm of national reputation for the
payment of principal of and interest on the applicable outstanding Notes of any series to and
including the Redemption Date irrevocably designated by the Issuer on or prior to the date of
deposit of such money or Government Obligations, and must (ii) comply with certain other
conditions, including delivering to the Trustee an opinion of U.S. counsel to the effect that
beneficial owners of the applicable Notes will not recognize income, gain or loss for United
States Federal income tax purposes as a result of the exercise of such option and will be subject
to United States Federal income tax on the same amount and in the same manner and at the same
time as would have been the case if such option had not been exercised and, in the case of clause
(a) in the previous paragraph, which opinion must state that such opinion is based on a ruling
received from or published by the United States Internal Revenue Service or on a change in the
applicable U.S. Federal income tax laws after the date of issuance of the relevant Notes.
Modification and Waiver

Without Consent of Noteholders

The 2019 BATCAP Indenture contains provisions permitting the Issuer, the Guarantors and the
Trustee, without the consent of the holders of any of the applicable Notes at any time
outstanding, from time to time and at any time, to enter into a supplemental indenture amending
or supplementing such 2019 BATCAP Indenture, the Notes or the Guarantees in order to:

• convey, transfer, assign, mortgage or pledge to the holders of the applicable Notes or any
person acting on their behalf as security for the applicable Notes any property or assets;

66
 • evidence the succession of another person to the Issuer or any Guarantor, as the case may
be, or successive successions, and the assumption by the successor person(s) of the
covenants, agreements and obligations of the Issuer or any Guarantor, as the case may be,
pursuant to the 2019 BATCAP Indenture;

• evidence and provide for the acceptance of appointment of a successor or successors to

the Trustee and/or the Paying Agent, Transfer Agent, Calculation Agent and Registrar, as
applicable;

• add to the covenants of, or the restrictions, conditions or provisions applicable to, the
Issuer and any Guarantor, as the case may be, such further covenants, restrictions,
conditions or provisions as the Issuer and any Guarantor, as the case may be, shall
consider to be for the protection of the holders of the applicable Notes issued pursuant to
the 2019 BATCAP Indenture, including to eliminate one or both prongs of the release
provision under “—Guarantees—Release”, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an Event of Default under the 2019 BATCAP Indenture
permitting the enforcement of all or any of the several remedies provided in the 2019
BATCAP Indenture; provided that, in respect of any such additional covenant, restriction,
condition or provision, such supplemental indenture may provide for a particular period
of grace after default (which may be shorter or longer than that allowed in the case of
other defaults) or may limit the remedies available to the Trustee upon such an Event of
Default;

• modify the restrictions on, and procedures for, resale and other transfers of the applicable
Notes pursuant to law, regulation or practice relating to the resale or transfer of restricted
securities generally;

• cure any ambiguity or to correct or supplement any provision contained in the 2019
BATCAP Indenture, the Notes, or the Guarantees which may be defective or inconsistent
with any other provision contained therein or to make such other provision in regard to
matters or questions arising under the 2019 BATCAP Indenture, the Notes or the
Guarantees as the Issuer, any Guarantor or the Trustee may deem necessary or desirable
and which will not, in the opinion of the Issuer, adversely affect the interests of the
holders of the applicable Notes in any material respect;
• issue an unlimited aggregate principal amount of Notes under the 2019 BATCAP
Indenture or to “reopen” the applicable series of Notes and create and issue additional
notes having substantially identical terms and conditions as the applicable Notes (or in all
respects except as to issue price, denomination, rate of interest, Maturity Date and the
date from which interest, if any, shall accrue, and except as may otherwise be provided in
or pursuant to such officer’s certificate or supplemental indenture relating thereto) so that
the additional notes are consolidated and form a single series with the outstanding
applicable Notes; and

• evidence the addition of any new Guarantor of the Notes and the 2019 BATCAP
Indenture, or the release of any Guarantor from its obligations with respect to the Notes
and the 2019 BATCAP Indenture, pursuant to the terms of the 2019 BATCAP Indenture.
With Consent of Noteholders

The 2019 BATCAP Indenture contains provisions permitting the Issuer, each Guarantor and the
Trustee, with the consent of the holders of not less than a majority in aggregate principal amount
of all series of the Notes affected by such supplemental indenture (voting as one class) at the

67
time outstanding under the 2019 BATCAP Indenture (including consents obtained in connection
with a tender offer or exchange offer for the applicable Notes), from time to time and at any
time, to enter into a supplemental indenture for the purpose of amending, waiving or otherwise
modifying the provisions of the 2019 BATCAP Indenture, the Notes and the Guarantees, or
adding any provisions to or changing in any manner or eliminating any of the provisions of the
applicable Notes or of modifying in any manner the rights of the holders of the applicable Notes;
provided, that no such supplemental indenture may, without the consent of the holder of each of
the Notes so affected:

• change the stated maturity of the applicable Note of, or the date for payment of any
principal of, or installment of interest on, any applicable Note, or reduce the amount of
principal of an Original Issue Discount Note that would be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to the provisions of the 2019
BATCAP Indenture; or

• reduce the principal amount of or the rate or amount of interest on any applicable Note or
Additional Amounts payable with respect thereto or reduce the amount payable thereon
in the event of redemption or default or change the method for determining the interest
rate thereon; or

• change the currency of payment of principal of or interest on any applicable Note or

Additional Amounts payable with respect thereto; or change the obligation of the Issuer
or any Guarantor, as the case may be, to pay Additional Amounts (except as otherwise
permitted by such applicable Note); or

• impair the right to institute suit for the enforcement of any such payment on or with
respect to any applicable Note; or

• reduce the percentage of the aggregate principal amount of the applicable Notes
outstanding the consent of whose holders is required for any such supplemental
indenture; or

• reduce the aggregate principal amount of any applicable Note outstanding necessary to
modify or amend the 2019 BATCAP Indenture or any such Note or to waive any future
compliance or past default or reduce the quorum requirements or the percentage of
aggregate principal amount of any applicable Notes outstanding required for the adoption
of any action at any meeting of holders of such Notes or to reduce the percentage of the
aggregate principal amount of such Notes outstanding necessary to rescind or annul any
declaration of the principal of, or all accrued and unpaid interest on, any Note to be due
and payable,

provided that no consent of any holder of any applicable Note shall be necessary to permit the
Trustee, the Issuer and each Guarantor to execute supplemental indentures as described under
“—Without Consent of Noteholders” above.
Any modifications, amendments or waivers to the 2019 BATCAP Indenture or to the conditions
of the applicable Notes will be conclusive and binding on all holders of the applicable Notes,
whether or not they have consented to such action or were present at the meeting at which such
action was taken, and on all future holders of the applicable Notes, whether or not notation of
such modifications, amendments or waivers is made upon such Notes. Any instrument given by
or on behalf of any holder of such a Note in connection with any consent to any such
modification, amendment or waiver will be irrevocable once given and will be conclusive and
binding on all subsequent registered holders of such Note.

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Prescription

Under New York’s statute of limitations, any legal action upon the Notes in respect of interest or
principal must be commenced within six years after the payment thereof is due.
Notice

Notices to holders of Notes will be given by first-class mail postage prepaid to the last addresses
of such holders as they appear in the Notes register; provided, no such mailing will be required
so long as any Global Notes representing the Notes are held in their entirety on behalf of the
Depositary or a clearing system, or any of its participants, as there may be substituted for the
mailing of notice to holders of Notes described above the delivery of the relevant. Such notices
will be deemed to have been given on the date of such mailing; notices to the Depositary or a
clearing system, and (if applicable) its participants, for communication by them to the entitled
accountholders. Any such notice shall be deemed to have been given on the day on which the
said notice was given to the Depositary or a clearing system, and (if applicable) its participants.
Listing

The BATCAP Notes are listed on the New York Stock Exchange.
Consent to Service

Each of the non-U.S. Guarantors has initially designated BATCAP as its authorized agent for
service of process in any legal suit, action or proceeding arising out of or relating to the
performance of its obligations under the 2019 BATCAP Indenture, the supplemental indentures
and the Notes brought in any state or federal court in the Borough of Manhattan, the City of New
York, and the Guarantors will irrevocably submit (but for these purposes only) to the non-
exclusive jurisdiction of any such court in any such suit, action or proceeding.
Governing Law

The 2019 BATCAP Indenture, the Notes and the Guarantees are, and any applicable
supplemental indentures shall be, governed by and construed in accordance with the laws of the
State of New York, without regard to principles of conflicts of laws thereof.
Regarding the Trustee and Agents

Citibank, N.A. is the trustee under the 2019 BATCAP Indenture. Citibank, N.A. is appointed by
the Issuer to act as registrar, transfer agent, calculation agent and initial paying agent for the
Notes. The address of Citibank, N.A., as paying agent, is Citibank, N.A., Agency & Trust, 388
Greenwich Street, New York, NY 10013. From time to time, Citibank, N.A. and its respective
affiliates perform various other services for the BAT Group and its affiliates (including acting as
a lender under one or more of the BAT Group’s lending facilities from time to time).

The 2019 BATCAP Indenture contains limitations on the rights of the trustee, if it becomes a
creditor of Issuer or any Guarantor, to obtain payment of claims in some cases, or to realize on
property received in respect of any of these claims as security or otherwise. The Trustee is
permitted to engage in other transactions. However, if the Trustee acquires any conflicting
interest (as defined in the TIA), it must either eliminate its conflict within 90 days or resign.

The 2019 BATCAP Indenture provides that except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth in such 2019
BATCAP Indenture. During the continuance of an Event of Default of which the Trustee has

69
received written notice, the Trustee will exercise such of the rights and powers vested in it under
the 2019 BATCAP Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of such person’s
own affairs.
E. Description of the Notes Issued Under the 2017 BATCAP Indenture

The following is a summary of the material provisions of the 2017 BATCAP Indenture (as
described below) and the Notes. Any capitalized term used herein but not defined shall have the
meaning assigned to such term in the 2017 BATCAP Indenture or under “—Certain
Definitions”. The following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the 2017 BATCAP Indenture and
those terms made a part of the 2017 BATCAP Indenture by reference to the Trust Indenture Act
of 1939, as amended (the “TIA”).
GENERAL

The 3.222% Notes due 2024 (the “3.222% Notes”), the 3.557% Notes due 2027 (the “3.557%
Notes”), the 4.390% Notes due 2037 (the “4.390% Notes”), the 4.540% Notes due 2047 (the
“4.540% Notes” and, together with the 3.222% Notes, the 3.557% Notes and the 4.390% Notes,
the “Notes”) were issued by B.A.T Capital Corporation (“BATCAP” or the “Issuer”).

In this “Description of the Notes Issued Under the 2017 BATCAP Indenture”, we refer to each
series of the Notes as a “series” of Notes.

The 3.222% Notes will mature on August 15, 2024. The 3.557% Notes will mature on August
15, 2027. The 4.390% Notes will mature on August 15, 2037. The 4.540% Notes will mature on
August 15, 2047.

The Notes were issued in registered form and treated as four separate series of debt securities
under an indenture dated as of August 15, 2017 (as supplemented by the supplemental indenture
no. 1, dated as of September 28, 2018, and as further amended or supplemented from time to
time, the “2017 BATCAP Indenture”). The 2017 BATCAP Indenture is by and among
BATCAP, as Issuer, British American Tobacco p.l.c. (“BAT” or the “Parent Guarantor”), B.A.T.
International Finance p.l.c. (“BATIF”), British American Tobacco Holdings (The Netherlands)
B.V. (“BATHTN”), B.A.T. Netherlands Finance B.V. (“BATNF” and, together with BATHTN,
the “Dutch Guarantors”), and, unless its guarantee is released in accordance with the 2017
BATCAP Indenture, Reynolds American Inc. (“RAI”), each as a guarantor,

Wilmington Trust, National Association, as trustee (the “Trustee”), and Citibank, N.A., London
Branch as paying agent, registrar, transfer agent and calculation agent (in such capacity, “Paying
Agent”, “Registrar”, “Transfer Agent” or “Calculation Agent”, respectively). Citibank, N.A.,
New York Branch replaced Citibank, N.A., London Branch as paying agent, registrar, transfer
agent and calculation agent on October 16, 2018.

Each entity that provides a guarantee in respect of the Notes is referred to herein as a
“Guarantor”. In this “Description of the Notes Issued Under the 2017 BATCAP Indenture”, the
terms “holder”, “Noteholder” and other similar terms refer to a “registered holder” of Notes, and
not to a beneficial owner of a book-entry interest in any Notes.

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PRINCIPAL, MATURITY AND INTEREST

The obligations of the Issuer under the Notes and 2017 BATCAP Indenture are fully and
unconditionally guaranteed on a senior and unsecured basis by each of the Parent Guarantor, the
Dutch Guarantors, BATIF and RAI.

The Notes were issued in the following aggregate principal amounts, with outstanding aggregate
principal amounts as of December 31, 2023 and maturity dates as follows:

Initial aggregate Outstanding aggregate

Series of Notes principal amount principal amount Maturity date
3.222% Notes $2,500,000,000 $1,865,000,000 August 15, 2024
3.557% Notes $3,500,000,000 $2,273,000,000 August 15, 2027
4.390% Notes $2,500,000,000 $2,500,000,000 August 15, 2037
4.540% Notes $2,500,000,000 $2,500,000,000 August 15, 2047

Interest

The Notes bear interest per annum and have maturity dates as follows:

Series of Notes Interest rate per annum Maturity date

3.222% Notes 3.222% August 15, 2024

3.557% Notes 3.557% August 15, 2027
4.390% Notes 4.390% August 15, 2037
4.540% Notes 4.540% August 15, 2047

The 3.222% Notes, the 3.557% Notes, the 4.390% Notes and the 4.540% Notes bear interest
from the most recent interest payment date to which interest has been paid or provided, payable
semi-annually in arrear on February 15 and August 15 of each year (each, an “Interest Payment
Date”) until their respective maturity date, unless previously purchased or redeemed by
BATCAP, to the person in whose name any, 3.222% Note, 3.557% Note, 4.390% Note or
4.540% Note, as applicable, is registered at the close of business on the 15th calendar day
preceding each Interest Payment Date, whether or not such day is a Business Day (each, a
“Record Date”) notwithstanding any transfer or exchange of such Notes subsequent to the
Record Date and prior to such Interest Payment Date, except that, if and to the extent BATCAP
shall default in the payment of the interest due on such Interest Payment Date, and the applicable
grace period shall have expired, such defaulted interest may at the option of BATCAP be paid to
the persons in whose names the outstanding Notes are registered at the close of business on a
subsequent Record Date (which shall not be less than five Business Days prior to the date of
payment of such defaulted interest) established by notice sent by or on behalf of the Issuer to the
holders (which term means registered holders) of the 3.222% Notes, 3.557% Notes, 4.390%
Notes or 4.540% Notes, as applicable, not less than 15 days preceding such subsequent Record
Date. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months, or
in the case of an incomplete month, the number of days elapsed. If the date on which any interest
payment or principal payment is to be made is not a Business Day, such payment will be made
on the next day which is a Business Day, without any further interest or other amounts being

71
paid or payable in connection therewith. A “Business Day” refers to any day which is not, in
London or New York City, or any other place of payment, a Saturday, Sunday, legal holiday or a
day on which banking institutions are authorized or obligated by law or regulation to close.
FORM AND DENOMINATION

The Notes were issued in fully registered form and only in minimum denominations of $2,000
and integral multiples of $1,000 in excess thereof. The Notes were issued as Global Notes.
FURTHER ISSUES

The aggregate principal amount of Notes issuable under the 2017 BATCAP Indenture is
unlimited. The Issuer may, from time to time, without notice to or the consent of the holders of
the Notes, “reopen” any series of the Notes and create and issue additional notes having identical
terms and conditions as the 3.222% Notes, the 3.557% Notes, the 4.390% Notes and the 4.540%
Notes, as the case may be (or in all respects except for the issue date, issue price, the payment of
interest accruing prior to the issue date of such additional notes and/or the first payment of
interest following the issue date of such additional notes) so that the additional notes are
consolidated and form a single series of Notes with the Notes, as the case may be (a “Further
Issue”), provided that if the additional notes are not fungible with the Notes for United States
federal income tax purposes, the additional notes will have separate CUSIPs, ISINs, or other
identifying numbers.
STATUS OF THE NOTES AND GUARANTEES

The Notes are unsecured and unsubordinated obligations of the Issuer and rank pari passu in
right of payment among themselves and with all other direct, unsecured and unsubordinated
obligations of the Issuer (except those obligations preferred by statute or operation of law). Each
Guarantor fully and unconditionally guaranteed, on a senior, unsecured basis, the due and
punctual payment (and not collectability) of the principal of and interest on the Notes (and the
payment of additional amounts described under “ —Payment of Additional Amounts” below) and
other obligations under the 2017 BATCAP Indenture when and as the same shall become due
and payable, whether at stated maturity, by declaration of acceleration, call for redemption or
otherwise. Each Guarantee is an unsecured and unsubordinated obligation of the respective
Guarantor and ranks pari passu in right of payment with all other direct, unsecured and
unsubordinated obligations of such Guarantor (except those obligations preferred by statute or
operation of law). The Issuer and each Guarantor are subject to a negative pledge with respect to
certain types of indebtedness, which are discussed in “ —Covenants of the Issuer and the
Guarantors—Negative Pledge” below.
GUARANTEES

Release

The 2017 BATCAP Indenture provides that, without the consent of the Trustee or the
Noteholders, a Guarantor that is a subsidiary of the Parent Guarantor (a “Subsidiary Guarantor”),
other than BATIF and the Dutch Guarantors, will automatically and unconditionally be released
from all obligations under its Guarantee, and such Guarantee shall thereupon terminate and be
discharged and of no further force or effect, in the event that (1) its guarantee of all then
outstanding notes issued under the EMTN Programme is released or (2) at substantially the same
time its Guarantee of the Notes is terminated, the Subsidiary Guarantor is released from all
obligations in respect of indebtedness for borrowed money for which such Subsidiary Guarantor
is an obligor (as a guarantor or borrower). For purposes of this paragraph, the amount of a
Subsidiary Guarantor’s indebtedness for borrowed money shall not include (A) the Notes issued

72
pursuant to the 2017 BATCAP Indenture, (B) any other debt the terms of which permit the
termination of such Subsidiary Guarantor’s guarantee of such debt under similar circumstances,
as long as such Subsidiary Guarantor’s obligations in respect of such other debt are terminated at
substantially the same time as its guarantee of the Notes, (C) any debt that is being refinanced at
substantially the same time that the guarantee of the Notes is being released, provided that any
obligations of the relevant Subsidiary Guarantor in respect of the debt that is incurred in the
refinancing shall be included in the calculation of the relevant Subsidiary Guarantor’s
indebtedness for borrowed money and (D) for the avoidance of doubt, any debt in respect of
which such Subsidiary Guarantor is an obligor (as a guarantor or borrower) (i) between or among
the Parent Guarantor and any subsidiary or subsidiaries thereof or (ii) between or among any
subsidiaries of the Parent Guarantor.

As of the date of this summary, RAI is the only Subsidiary Guarantor to which the above
provision is relevant. Under the EMTN Programme, a Subsidiary Guarantor’s guarantee is
released if at any time the aggregate amount of indebtedness for borrowed money for which the
Subsidiary Guarantor is an obligor does not exceed 10% of the outstanding long term debt of
BAT as reflected in the balance sheet included in BAT’s most recent publicly released interim or
annual consolidated financial statements, as evidenced by a certificate to such effect addressed to
the trustee under the EMTN Programme and signed by a director of BAT.
ADDITIONAL AMOUNTS

The Issuer or, if applicable, each Guarantor, will make payments of, or in respect of, principal,
premium (if any) and interest on the Notes, or any payment pursuant to the applicable Guarantee,
as the case may be, without withholding or deduction for or on account of any present or future
tax, levy, impost or other similar governmental charge whatsoever imposed, assessed, levied or
collected (“Taxes”) by or for the account of the United States, the United Kingdom (in the case
of a payment by the Parent Guarantor or BATIF), The Netherlands (in the case of a payment by a
Dutch Guarantor) or any other jurisdiction through which payment is made by or on behalf of the
Issuer or, if applicable, such Guarantor (or any political subdivision thereof or any authority
thereof having the power to tax) (a “Relevant Taxing Jurisdiction”), unless such withholding or
deduction is required by law.

If the Issuer or, if applicable, any Guarantor, is required by a Relevant Taxing Jurisdiction to so
withhold or deduct such Taxes, the Issuer or, if applicable, such Guarantor, will pay to the holder
of a Note such additional amounts (“Additional Amounts”) as may be necessary so that the net
amount received by such holder will not be less than the amount such holder would have
received if such Taxes had not been withheld or deducted; provided, however, that amounts with
respect to any United States Tax shall be payable only to holders that are not United States
persons (within the meaning of the Code); and provided further, that neither the Issuer nor such
Guarantor shall be required to pay any Additional Amounts for or on account of:

(i) any Taxes that would not have been so imposed, assessed, levied or collected but
for the fact that the holder or beneficial owner of the applicable Note or Guarantee
(or a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a
power over, such holder, if such holder is an estate, trust, partnership or
corporation) is or has been a domiciliary, national or resident of, or engaging or
having been engaged in a trade or business or maintaining or having maintained a
permanent establishment or being or having been physically present in, a Relevant
Taxing Jurisdiction or otherwise having or having had some connection with a
Relevant Taxing Jurisdiction other than the holding or ownership of, or the
collection of principal of, and premium (if any) or interest on, a Note or the
enforcement of the applicable Guarantee, as the case may be;

73
(ii) any Taxes that would not have been so imposed, assessed, levied or collected but
for the fact that, where presentation is required in order to receive payment, the
applicable Note or Guarantee was presented more than 30 days after the date on
which such payment became due and payable or was provided for, whichever is
later, except to the extent that the holder or beneficial owner thereof would have
been entitled to Additional Amounts had the applicable Note or Guarantee been
presented for payment on any day during such 30- day period;

(iii) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes;

(iv) any Taxes that are payable otherwise than by withholding or deduction from
payments on or in respect of the applicable Note or Guarantee;

(v) any Taxes that would not have been so imposed, assessed, levied or collected but
for the failure by the holder or the beneficial owner of the applicable Note or
Guarantee to (A) provide any certification, identification, information, documents
or other evidence concerning the nationality, residence or identity of the holder or
the beneficial owner or its connection with the Relevant Taxing Jurisdiction or
(B) make any valid or timely declaration or claim or satisfy any other reporting,
information or procedural requirements relating to such matters if, in either case,
compliance is required by statute, regulation, relevant income tax treaty or
administrative practice of the Relevant Taxing Jurisdiction as a condition to relief
or exemption from such Taxes;

(vi) any Taxes imposed by reason of the holder or the beneficial owner of the
applicable Note or Guarantee being or having been considered a bank receiving
payments on an extension of credit made pursuant to a loan agreement entered
into in the ordinary course of its trade or business, as described in Section
881(c)(3)(A) of the Code (or any amended or successor provisions);

(vii) any Taxes imposed on interest received by a 10-percent shareholder of the Issuer
within the meaning of Section 871(h)(3)(B) or Section 881(c)(3)(B) of the Code
(or any amended or successor provisions);

(viii) any backup withholding imposed pursuant to Section 3406 of the Code (or any
amended or successor provisions);
(ix) any Taxes imposed pursuant to Section 871(h)(6) or Section 881(c)(6) of the
Code (or any amended or successor provisions);

(x) any Taxes imposed by reason of the holder or the beneficial owner of the
applicable Note or Guarantee being or having been a personal holding company,
passive foreign investment company or controlled foreign corporation for U.S.
federal income tax purposes or a corporation that has accumulated earnings to
avoid U.S. federal income tax;

(xi) any Taxes imposed or withheld pursuant to Sections 1471 through 1474 of the
Code (or any amended or successor provisions), any Treasury regulations
promulgated thereunder, any official interpretations thereof or any agreements
entered into in connection with the implementation thereof; or

(xii) any combination of the Taxes described in (i) through (xi) above.

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In addition, Additional Amounts will not be paid with respect to any payment of the principal of,
or any premium or interest on, any of the applicable Notes or Guarantees to any holder that is a
fiduciary, a partnership, a limited liability company or any person other than the sole beneficial
owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary, a
member of such partnership, an interest holder in such limited liability company or a beneficial
owner that would not have been entitled to such amounts had such beneficiary, settlor, member,
interest holder or beneficial owner been the holder of the applicable Notes or Guarantees.

Unless otherwise stated, references in any context to the payment of principal of, and any
premium or interest on, any Note, or any payment pursuant to the Guarantees, will be deemed to
include payment of Additional Amounts to the extent that, in such context, Additional Amounts
are, were or would be payable in respect thereof.
REDEMPTION

The Notes are subject to optional redemption by the Issuer as described below under “—
Optional Redemption”.
The Notes will be subject to optional redemption by the Issuer in the event of certain changes in
tax laws applicable to payments in respect of the Notes as described below under “ —Redemption
for Tax Reasons”.
Optional Redemption

The Issuer may redeem the Notes, in whole or in part, at the Issuer’s option, at any time and from
time to time before the applicable Par Call Date, for all series of Notes at a redemption price
equal to the greater of (x) 100% of the principal amount of the Notes to be redeemed and (y) as
determined by the Independent Investment Banker (as defined below), the sum of the present
values of the applicable Remaining Scheduled Payments (as defined below) discounted to the
date of redemption (the “Redemption Date”) on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months or, in the case of an incomplete month, the number of days
elapsed) at the Treasury Rate (as defined below) plus, in the case of each respective series of
Notes as follows:

3.222% Notes 20 basis points

3.557% Notes 20 basis points
4.390% Notes 25 basis points
4.540% Notes 30 basis points

together with, in each case, accrued and unpaid interest on the principal amount of the Notes to
be redeemed to, but excluding, the Redemption Date.

If the Issuer elects to redeem the 3.222% Notes, 3.557% Notes, 4.390% Notes or the 4.540%
Notes on or after the applicable Par Call Date (as defined below), the Issuer will pay an amount
equal to 100% of the principal amount of the Notes redeemed, plus accrued and unpaid interest,
if any, to, but excluding, the date of redemption.

In connection with such optional redemption the following defined terms apply:

• Comparable Treasury Issue means the United States Treasury security selected by the
Independent Investment Banker that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt

75
 securities of comparable maturity to, the remaining term of the 3.222% Notes, 3.557%
Notes, 4.390% Notes or the 4.540% Notes, as the case may be, to the relevant Par Call
Date.

• Comparable Treasury Price means, with respect to any Redemption Date, (A) the
average of the Reference Treasury Dealer Quotations for that Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations or (B) if
the Independent Investment Banker for the applicable Notes obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Quotations.

• Independent Investment Banker means one of the Reference Treasury Dealers (as defined
below) appointed by the Issuer to act as the “Independent Investment Banker”.

• Par Call Date means (i) June 15, 2024, with respect to any 3.222% Notes (two months
prior to the maturity date of the 3.222% Notes), (ii) May 15, 2027, with respect to any
3.557% Notes (three months prior to the maturity date of the 3.557% Notes), (iii)
February 15, 2037, with respect to any 4.390% Notes (six months prior to the maturity
date of the 4.390% Notes) and (iv) February 15, 2047, with respect to any 4.540% Notes
(six months prior to the maturity date of the 4.540% Notes).

• Reference Treasury Dealer means each of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank
Securities Inc. and HSBC Securities (USA) Inc. and their respective successors and two
other nationally recognized investment banking firms that are Primary Treasury Dealers
specified from time to time by the Issuer; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City (a
“Primary Treasury Dealer”), the Issuer shall substitute therefor another nationally
recognized investment banking firm that is a Primary Treasury Dealer.

• Reference Treasury Dealer Quotation means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average, as determined by the Independent
Investment Banker, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in writing to the
Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third Business Day immediately preceding that Redemption Date.

• Remaining Scheduled Payments means, with respect to each Note to be redeemed, the
remaining scheduled payments of the principal thereof and interest thereon that would be
due from and including the related Redemption Date, but for such redemption, to but
excluding the relevant Par Call Date; provided, however, that if that Redemption Date is
not an Interest Payment Date with respect to such Notes, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of interest
accrued thereon to that Redemption Date.

• Treasury Rate means, with respect to any Redemption Date, the rate per annum equal to
the semi-annual equivalent yield to maturity (computed as of the third Business Day
immediately preceding that Redemption Date) of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for that Redemption Date.

Notice of any optional redemption will be given in accordance with “ —Notice” below at least 10
days but not more than 30 days before the Redemption Date to each holder of the Notes to be
redeemed.

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If less than all the Notes of any series are to be redeemed, in the case of a redemption at the
Issuer’s option as discussed in this section, the Notes to be redeemed shall be selected in
accordance with applicable procedures of DTC.
Redemption for Tax Reasons

Each series of Notes is also redeemable by the Issuer, in whole but not in part, at 100% of the
principal amount of such Notes plus any accrued and unpaid interest to the applicable
Redemption Date (including any Additional Amounts) at the Issuer’s option at any time prior to
their maturity if, due to a Change in Tax Law (as defined below): (i) the Issuer or a Guarantor, in
accordance with the terms of the applicable Notes or applicable Guarantee, has, or would,
become obligated to pay any Additional Amounts to the holders or beneficial owners of the
Notes of that series; (ii) in the case of a Guarantor, (A) the Parent Guarantor would be unable, for
reasons outside its control, to procure payment by the Issuer or any other Guarantor or (B) the
procuring of such payment by the Issuer and each such other Guarantor would be subject to
withholding taxes imposed by a Relevant Taxing Jurisdiction; and (iii) such obligation cannot
otherwise be avoided by such Guarantor, the Parent Guarantor or the Issuer, taking reasonable
measures available to it. In such case, the Issuer may redeem the applicable Notes upon not less
than 30 nor more than 60 days’ notice as provided in “ —Notice” below, at 100% of the principal
amount of such Notes plus accrued and unpaid interest to the Redemption Date (including
Additional Amounts); provided, that, (a) no such notice of redemption shall be given earlier than
90 days prior to the earliest date on which the Issuer or such Guarantor, as the case may be,
would be obligated to pay any such Additional Amounts in respect of the applicable Notes or
applicable Guarantee, as applicable, then due and (b) at the time such notice is given, such
obligation to pay such Additional Amounts remains in effect. The Issuer’s right to redeem the
applicable Notes shall continue as long as the Issuer or a Guarantor is obligated to pay such
Additional Amounts, notwithstanding that the Issuer or such Guarantor, as the case may be, shall
have made payments of Additional Amounts. Prior to the giving of any such notice of
redemption, the Issuer must deliver to the Trustee: (i) an officer’s certificate stating that the
Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer so to redeem have occurred; and (ii) an opinion of
independent counsel or an independent accountant of recognized standing, selected by the Issuer
or any Guarantor, as applicable, with respect to tax matters of the Relevant Taxing Jurisdiction to
the effect that the Issuer or such Guarantor has, or would, become obligated to pay such
Additional Amounts as a result of such Change in Tax Law.
For the purposes hereof, “Change in Tax Law” shall mean: (i) any changes in, or amendment to,
any law of a Relevant Taxing Jurisdiction (including any regulations or rulings promulgated
thereunder and including, for this purpose, any treaty entered into by the Relevant Taxing
Jurisdiction) or any amendment to or change in the application or official interpretation
(including judicial or administrative interpretation) of such law, which change or amendment
becomes effective or, in the case of an official interpretation, is announced, on or after August
15, 2017; or (ii) if the Issuer or a Guarantor consolidates, merges, amalgamates or combines
with, or transfers or leases its assets substantially as an entirety to, any person that is
incorporated or tax resident under the laws of any jurisdiction other than a Relevant Taxing
Jurisdiction (a “successor”) and as a consequence thereof such person becomes the successor
obligor to the Issuer or such Guarantor in respect of Additional Amounts that may become
payable (in which case, for purposes of this redemption provision, all references to the Issuer or
such Guarantor shall be deemed to be and include references to such person), any change in, or
amendment to, any law of the jurisdiction of organization or tax residence of such successor, or
the jurisdiction through which payments will be made by the successor, or any political
subdivision or taxing authority thereof or thereon for purposes of taxation (including any
regulations or rulings promulgated thereunder and including, for this purpose, any treaty entered
into by such jurisdiction) or any amendment to or change in the application or official

77
interpretation (including judicial or administrative interpretation) of such law, which change or
amendment becomes effective or, in the case of an official interpretation, is announced, on or
after the date of such consolidation, merger, amalgamation, combination or other transaction.
General

Upon presentation of any Note redeemed in part only, the Issuer will execute and the Paying
Agent will authenticate and deliver (or cause to be transferred by book-entry) to, or on, the order
of the holder thereof, at the expense of the Issuer, a new Note or Notes, of authorized
denominations, in principal amount equal to the unredeemed portion of the Note so presented.

On or before any Redemption Date (as defined above), the Issuer shall deposit with the Paying
Agent money sufficient to pay the redemption price of and accrued and unpaid interest on the
Notes to be redeemed on such date. The redemption price shall be calculated by the Independent
Investment Banker and the Issuer, and the Trustee and any agent shall be entitled to rely on such
calculation.

On and after any Redemption Date, interest will cease to accrue on the Notes or any portion
thereof called for redemption.
MATURITY

Unless previously purchased or redeemed by the Issuer, and cancelled, the principal amount of
each respective series of Notes shall mature on:

Series of Notes Maturity date

3.222% Notes August 15, 2024
3.557% Notes August 15, 2027
4.390% Notes August 15, 2037
4.540% Notes August 15, 2047

in an amount equal, in each case, to their principal amount, with accrued and unpaid interest to
such date.
REACQUISITION

There is no restriction on the ability of the Issuer to purchase or repurchase Notes, provided, that
any Notes so repurchased shall be cancelled and not reissued.
SINKING FUND

There is no provision for a sinking fund for any of the Notes.

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the Notes and the 2017
BATCAP Indenture. You should refer to the Notes and the 2017 BATCAP Indenture for the full
definition of all defined terms as well as any other terms used herein for which no definition is
provided.

“EMTN Programme” means the Euro Medium Term Note Programme to which BATIF,
BATCAP, BATHTN and BATNF are parties as the issuers under the programme and notes

78
issued thereunder are guaranteed by the Parent Guarantor, each of the issuers thereunder (except
when it is the relevant issuer) and RAI, as amended from time to time.

“Person” means any individual, corporation, partnership, joint venture, association, limited
liability company, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.

“Quoted Borrowing” means any indebtedness which: (a) is represented by notes, debentures or
other securities issued otherwise than to constitute or represent advances made by banks and/or
other lending institutions; (b) is denominated, or confers any right to payment of principal and/or
interest, in or by reference to any currency other than the currency of the country in which the
issuer of the indebtedness has its principal place of business or is denominated, or confers any
right to payment of principal and/or interest, in or by reference to the currency of such country
but is placed or offered for subscription or sale by or on behalf of, or by agreement with, the
issuer of such indebtedness as to over 20% outside such country; and (c) at its date of issue is, or
is intended by the issuer of such indebtedness to become, quoted, listed, traded or dealt in on any
stock exchange or other organized and regulated securities market in any part of the world.
COVENANTS OF THE ISSUER AND THE GUARANTORS

Negative Pledge

The 2017 BATCAP Indenture provides that so long as any of the applicable Notes remains
outstanding, neither the Issuer nor any Guarantor will secure or allow to be secured any Quoted
Borrowing or any payment under any guarantee by any of them of any Quoted Borrowing by any
mortgage, charge, pledge or lien (other than arising by operation of law) upon any of its
undertaking or assets, whether present or future, unless at the same time the same mortgage,
charge, pledge or lien is extended, or security which is not materially less beneficial to the
holders of the applicable Notes than the security given as aforesaid or which shall be approved
by consent of the holders of not less than 75% in aggregate principal amount of the applicable
Notes at the time outstanding is extended or created (as the case may be), to secure equally and
ratably the principal of, and interest on, and all other payments (if any) in respect of the
applicable Notes.
Limitation on Mergers, Consolidations, Amalgamations and Combinations

So long as any of the applicable Notes remain outstanding, neither the Issuer nor any Guarantor
may consolidate with or merge into any other person or sell, convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to any person (other than any
sale or conveyance by way of a lease in the ordinary course of business), unless: (i) in the case of
the Issuer, any successor person assumes the Issuer’s obligations on the applicable Notes and
under the 2017 BATCAP Indenture and, in the case of any Guarantor, any successor person
assumes such Guarantor’s obligations on the applicable Guarantee and under the 2017 BATCAP
Indenture; (ii) immediately after giving effect to such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; (iii) such successor person is organized under the laws of the United
States, the United Kingdom, The Netherlands or any other country that is a member of the
Organization for Economic Cooperation and Development as of the date of such succession; (iv)
such successor person agrees to pay any Additional Amounts imposed by the jurisdiction in
which such successor person is incorporated or otherwise a resident for tax purposes or through
which payments are made and resulting therefrom or otherwise; and (v) if as a result of such
consolidation or merger or such sale, conveyance, transfer or lease, properties or assets of the
Issuer or any Guarantor would become subject to a mortgage, pledge, security interest, lien or
similar encumbrance to secure payment of any indebtedness for borrowed money of the Issuer or

79
a Guarantor which would not be permitted by the applicable Notes or under the 2017 BATCAP
Indenture, the Issuer or any Guarantor or such successor person, as the case may be, shall take
such steps as shall be necessary to effectively secure the Notes equally and ratably with (or prior
to) all indebtedness for borrowed money secured thereby.

The limitation on mergers, consolidations, amalgamations and combinations described in this

section “ —Limitation on Mergers, Consolidations, Amalgamations and Combinations” shall not
apply to any consolidation, merger, amalgamation or combination in which the Issuer or
applicable Guarantor is the surviving corporation except that, in such case, the provisions of (ii)
and (v) above shall apply such that: (x) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have occurred and be continuing; and (y) if as a result of such
consolidation or merger or such sale, conveyance, transfer or lease, properties or assets of the
Issuer or any Guarantor would become subject to a mortgage, pledge, security interest, lien or
similar encumbrance to secure payment of any indebtedness for borrowed money of the Issuer or
a Guarantor which would not be permitted by the applicable Notes or under the 2017 BATCAP
Indenture, the Issuer or any Guarantor, as the case may be, shall take such steps as shall be
necessary to effectively secure the Notes equally and ratably with (or prior to) all indebtedness
for borrowed money secured thereby.

The 2017 BATCAP Indenture does not contain covenants or other provisions to afford protection
to holders of the Notes in the event of a highly leveraged transaction or a change in control of the
Issuer or any Guarantor except as provided above.

Upon certain mergers or consolidations involving the Issuer or a Guarantor, or upon certain sales
or conveyances of the properties of the Issuer or a Guarantor, the obligations of the Issuer or
such Guarantor, under the applicable Notes or the applicable Guarantee, shall be assumed by the
person formed by such merger or consolidation or which shall have acquired such property and
upon such assumptions such person shall succeed to and be substituted for the Issuer or such
Guarantor, as the case may be, and then the Issuer or such Guarantor will be relieved from all
obligations under the Notes and the applicable Guarantee, as the case may be. The terms “Issuer”
and “Guarantor”, as used in the Notes and the 2017 BATCAP Indenture, also refer to any such
successors or assigns so substituted.

Although there is a limited body of case law interpreting the phrase “entirety or substantially as
an entirety”, there is no precise established definition of the phrase under applicable law.
Accordingly, in certain circumstances, there may be a degree of uncertainty as to whether a
particular transaction would involve a disposition of “entirety or substantially as an entirety” of
the Issuer’s assets and its subsidiaries taken as a whole.
EVENTS OF DEFAULT

The following will be Events of Default (each an “Event of Default”) with respect to the
applicable Notes:

(i) Non-Payment: default is made in the payment of: (a) any installment of interest
(excluding Additional Amounts) upon any applicable Note as and when the same
shall become due and payable, and continuance of such default for a period of 14
days or more; (b) applicable Additional Amounts as and when the same shall
become due and payable, and continuance of such default for a period of 14 days;
or (c) all or any part of the principal or premium, if any, of any applicable Note as
and when the same shall become due and payable either at maturity, upon any
redemption, by declaration or otherwise, and continuance of such default for three
days;

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(ii) Breach of Other Obligations: the Issuer or any Guarantor does not perform or
comply with any one or more of its other obligations under the applicable Notes
or the 2017 BATCAP Indenture (other than those described in paragraph (i)
above) which is not remedied within 30 days after written notice of such default
shall have been given to the Issuer by the Trustee or to the Issuer and the Trustee
by the holders of at least 25% of the outstanding principal amount of the Notes;

(iii) Cross-Default: (a) any other present or future indebtedness for borrowed money
of the Issuer or any Guarantor, other than the Notes issued by the Issuer, becomes
due and payable prior to its stated maturity by reason of any default or event of
default in respect thereof by the Issuer or any Guarantor and remains unpaid; or
(b) any such indebtedness for borrowed money is not paid when due or, as the
case may be, within any applicable grace period; or (c) the Issuer or any
Guarantor fails to pay when due and called upon (after the expiry of any
applicable grace period) any amount payable by it under any present or future
guarantee for, or indemnity in respect of, any indebtedness for borrowed money
and which remains unpaid; provided that (x) payment of the indebtedness for
borrowed money is not being contested in good faith and in accordance with legal
advice or (y) the aggregate amount of the indebtedness for borrowed money,
guarantees and indemnities in respect of which one or more of the events
mentioned above in (a), (b) and (c) has or have occurred and is or are continuing,
equals or exceeds £750 million or its equivalent in any other currency of the
indebtedness for borrowed money or, if greater, 1.25% of the Total Equity of the
Parent Guarantor, as set out in the “Total Equity” line item in the most recent
consolidated group balance sheet of the Parent Guarantor and its subsidiaries in
the Parent Guarantor’s most recent Annual Report;

(iv) Cessation of Guarantees: any Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the 2017 BATCAP Indenture) or any
Guarantor denies or disaffirms in writing its obligations under the 2017 BATCAP
Indenture or Guarantee;

(v) Enforcement Proceedings: a distress or execution or other legal process is levied

or enforced against or an encumbrancer takes possession of or a receiver,
administrative receiver or other similar officer is appointed of the whole or a part
of the assets of the Issuer or any Guarantor which is substantial in relation to the
BAT Group taken as a whole and is not discharged, stayed, removed or paid out
within 45 days after such execution or appointment;

(vi) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance,
present or future, created or assumed by the Issuer or any Guarantor becomes
enforceable and any step is taken to enforce it (including the taking of possession
or the appointment of a receiver, administrative receiver, manager or other similar
person) against all or substantially all of the assets of the Issuer or any Guarantor
and is not discharged within 45 days;

(vii) Insolvency: the Issuer or any Guarantor is insolvent or bankrupt or unable to pay
its debts (in respect of companies incorporated in England and Wales, within the
meaning of Sections 123(1)(b) or (e) or Section 123(2) of the UK Insolvency Act
1986), stops, suspends or threatens to stop or suspend payment of all or a material
part of its debts, proposes or makes a general assignment or an arrangement or
composition (otherwise than for the purposes of reconstruction, amalgamation,
reorganization, merger or consolidation or other similar arrangement) with or for
the benefit of its creditors in respect of any of such debts or a moratorium is

81
 agreed or declared in respect of or affecting all or a material part of the debts of
the Issuer;

(viii) Winding-up: an order is made or an effective resolution passed for the winding-up
or dissolution or administration of the Issuer or any Guarantor, or the Issuer or
any Guarantor shall apply or petition for a winding-up or administration order in
respect of itself or ceases or threatens to cease to carry on all or substantially all of
its business or operations, in each case except for the purpose of and followed by
a reconstruction, amalgamation, reorganization, merger or consolidation or other
similar arrangement; or

(ix) Analogous Events: any event occurs that under the laws of any relevant
jurisdiction has an analogous effect to any of the events referred to in any of the
foregoing paragraphs (vii) and (viii).

The 2017 BATCAP Indenture provides that if an Event of Default occurs and is continuing with
respect to the Notes of a series, then and in each and every such case (other than certain Events
of Default specified in paragraphs (vii), (viii) and (ix) above with respect to the Issuer or any
Guarantor), unless the principal of all the applicable Notes shall have already become due and
payable, the holders of not less than 25% in aggregate principal amount of the applicable Notes
then outstanding, by notice in writing to the Issuer, each Guarantor and the Trustee, may declare
the entire principal amount of all applicable Notes issued pursuant to the 2017 BATCAP
Indenture and interest accrued and unpaid thereon, if any, to be due and payable immediately,
and upon any such declaration the same shall become immediately due and payable, without any
further declaration or other act on the part of any holder. If certain Events of Default described in
paragraph (vii), (viii) or (ix) above occur with respect to the Issuer and are continuing, the
principal amount of and accrued and unpaid interest on all the applicable Notes issued pursuant
to the 2017 BATCAP Indenture shall become immediately due and payable, without any
declaration or other act on the part of the Trustee or any holder. Under certain circumstances, the
holders of a majority in aggregate principal amount of the applicable Notes then outstanding, by
written notice to the Issuer, each Guarantor and the Trustee, may waive defaults and rescind and
annul declarations of acceleration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall impart any right
consequent thereon.

The holders of a majority in aggregate principal amount of the applicable Notes then outstanding
will have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on the Trustee,
subject to certain limitations to be specified in the 2017 BATCAP Indenture, including providing
to the Trustee indemnity satisfactory to it.

An Event of Default with respect to any series of Notes would not necessarily constitute an event
of default with respect to the other series of Notes.

The 2017 BATCAP Indenture also provides that no holder of any Notes governed by the 2017
BATCAP Indenture may institute any action or proceeding at law or in equity or in bankruptcy
or otherwise upon or under or with respect to the 2017 BATCAP Indenture, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other
remedy under the 2017 BATCAP Indenture (except suits for the enforcement of payment of
overdue principal or interest) unless (1) the holder of a Note gives to the Trustee written notice of
a continuing Event of Default, (2) the holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy, (3) the holder or
holders of Notes offer, and if requested, provide to the Trustee indemnity reasonably satisfactory
to the Trustee against any loss, liability or expense, (4) the Trustee does not comply with the

82
request within 60 days after receipt of the request and the offer and, if requested, the provision of
indemnity and (5) during such 60-day period the holders of a majority in principal amount of the
then outstanding Notes do not give the Trustee a direction inconsistent with the request. The
holder of a Note may not use the 2017 BATCAP Indenture to prejudice the rights of another
holder of a Note or to obtain a preference or priority over another holder of a Note (it being
understood that the Trustee does not have an affirmative duty to ascertain whether or not such
actions or forbearances are unduly prejudicial to such holders).
SATISFACTION AND DISCHARGE

The 2017 BATCAP Indenture provides that BAT may, subject to satisfying certain conditions,
discharge certain obligations to the holders of Notes of any series of Notes that have not already
been delivered to the Trustee for cancellation and that either have become due and payable or
will become due and payable within one year (or scheduled for redemption within one year) by
depositing with the Trustee or Paying Agent, in trust, funds in an amount sufficient to pay the
entire indebtedness on such series of Notes in respect of principal and premium, if any, and
interest, if any, to the date of such deposit (if such Notes have become due and payable) or to the
maturity thereof or redemption date, as the case may be, along with an officer’s certificate and an
opinion of counsel stating that all conditions precedent relating to the satisfaction and discharge
of the 2017 BATCAP Indenture have been complied with.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

The 2017 BATCAP Indenture provides that the Issuer will have the option either (a) to be
deemed (together with each Guarantor) to have paid and discharged the entire indebtedness
represented by, and obligations under, a series of Notes and the applicable Guarantees and to
have satisfied all the obligations under the 2017 BATCAP Indenture relating to the series of
Notes (except for certain obligations, including those relating to the defeasance trust and
obligations to register the transfer or exchange of Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain paying agencies) on the 91st day after the applicable conditions
described below have been satisfied or (b) to cease (together with each Guarantor) to be under
any obligation to comply with the covenant described above under “ —Covenants of the Issuer
and the Guarantors—Negative Pledge” and the condition relating to the absence of any events of
default under “—Covenants of the Issuer and the Guarantors—Limitation on Mergers,
Consolidations, Amalgamations and Combinations” under the 2017 BATCAP Indenture, and
non-compliance with such covenants and the occurrence of all events described above under “ —
Events of Default” will not give rise to any Event of Default under the 2017 BATCAP Indenture,
at any time after the applicable conditions described below have been satisfied.

In order to exercise either defeasance option, the Issuer must (i) deposit with the Trustee or
Paying Agent, irrevocably in money or Government Obligations (as defined in the 2017
BATCAP Indenture) funds sufficient in the opinion of a certified public accounting firm of
national reputation for the payment of principal of and interest on the applicable outstanding
Notes of any series to and including the Redemption Date irrevocably designated by the Issuer
on or prior to the date of deposit of such money or Government Obligations, and must (ii)
comply with certain other conditions, including delivering to the Trustee an opinion of U.S.
counsel to the effect that beneficial owners of the applicable Notes will not recognize income,
gain or loss for United States federal income tax purposes as a result of the exercise of such
option and will be subject to United States federal income tax on the same amount and in the
same manner and at the same time as would have been the case if such option had not been
exercised and, in the case of clause (a) in the previous paragraph, which opinion must state that
such opinion is based on a ruling received from or published by the United States Internal
Revenue Service or on a change of law after August 15, 2017.

83
MODIFICATION AND WAIVER

Without Consent of Noteholders

The 2017 BATCAP Indenture contains provisions permitting the Issuer, each Guarantor and the
Trustee, without the consent of the holders of any of the applicable Notes at any time outstanding
under such 2017 BATCAP Indenture, from time to time and at any time, to enter into a
supplemental indenture amending or supplementing such 2017 BATCAP Indenture, the Notes or
the Guarantees in order to:

• convey, transfer, assign, mortgage or pledge to the holders of the applicable Notes or any
person acting on their behalf as security for the applicable Notes any property or assets;

• evidence the succession of another person to the Issuer or any Guarantor, as the case may
be, or successive successions, and the assumption by the successor person(s) of the
covenants, agreements and obligations of the Issuer or any Guarantor, as the case may be,
pursuant to the 2017 BATCAP Indenture;

• evidence and provide for the acceptance of appointment of a successor or successors to

the Trustee and/or the Paying Agent, Transfer Agent, Calculation Agent and Registrar, as
applicable;

• add to the covenants of, or the restrictions, conditions or provisions applicable to, the
Issuer and any Guarantor, as the case may be, such further covenants, restrictions,
conditions or provisions as the Issuer and any Guarantor, as the case may be, shall
consider to be for the protection of the holders of the applicable Notes issued pursuant to
the 2017 BATCAP Indenture, including to eliminate one or both prongs of the release
provision under “—Guarantees—Release”, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an Event of Default under the 2017 BATCAP Indenture
permitting the enforcement of all or any of the several remedies provided in the 2017
BATCAP Indenture; provided that, in respect of any such additional covenant, restriction,
condition or provision, such supplemental indenture may provide for a particular period
of grace after default (which may be shorter or longer than that allowed in the case of
other defaults) or may limit the remedies available to the Trustee upon such an Event of
Default;
• if required by the requirements of the SEC, comply with any requirements of the SEC in
connection with the qualification of the 2017 BATCAP Indenture under the TIA;

• modify the restrictions on, and procedures for, resale and other transfers of the applicable
Notes pursuant to law, regulation or practice relating to the resale or transfer of restricted
securities generally;

• cure any ambiguity or to correct or supplement any provision contained in the 2017
BATCAP Indenture, the Notes, or the Guarantees which may be defective or inconsistent
with any other provision contained therein or to make such other provision in regard to
matters or questions arising under the 2017 BATCAP Indenture, the Notes or the
Guarantees as the Issuer, any Guarantor or the Trustee may deem necessary or desirable
and which will not, in the opinion of the Issuer or any Guarantor, adversely affect the
interests of the holders of the applicable Notes in any material respect;

• issue an unlimited aggregate principal amount of Notes under the 2017 BATCAP
Indenture or to “reopen” the applicable series of Notes and create and issue additional

84
 notes having identical terms and conditions as the applicable Notes (or in all respects
except for the issue date, issue price, payment of interest accruing prior to the issue date
of such additional notes and/or the first payment of interest following the issue date of
such additional notes) so that the additional notes are consolidated and form a single
series with the outstanding applicable Notes; and

• evidence the addition of any new Guarantor of the Notes and the 2017 BATCAP
Indenture, or the release of any Guarantor from its obligations with respect to the Notes
and the 2017 BATCAP Indenture, in either case pursuant to the terms of the 2017
BATCAP Indenture.
With Consent of Noteholders

The 2017 BATCAP Indenture contains provisions permitting the Issuer, each Guarantor and the
Trustee, with the consent of the holders of not less than a majority in aggregate principal amount
of all series of the Notes affected by such supplemental indenture (voting as one class) at the
time outstanding under the 2017 BATCAP Indenture (including consents obtained in connection
with a tender offer or exchange offer for the applicable Notes), from time to time and at any
time, to enter into a supplemental indenture for the purpose of amending, waiving or otherwise
modifying the provisions of the 2017 BATCAP Indenture, the Notes and the Guarantees, or
adding any provisions to or changing in any manner or eliminating any of the provisions of the
applicable Notes or of modifying in any manner the rights of the holders of the applicable Notes;
provided, that no such supplemental indenture may, without the consent of the holder of each of
the Notes so affected:

• change the stated maturity of the applicable Note of, or the date for payment of any
principal of, or installment of interest on, any applicable Note; or

• reduce the principal amount of or the rate or amount of interest on any applicable Note or
Additional Amounts payable with respect thereto or reduce the amount payable thereon
in the event of redemption or default or change the method for determining the interest
rate thereon; or

• change the currency of payment of principal of or interest on any applicable Note or

Additional Amounts payable with respect thereto; or change the obligation of the Issuer
or any Guarantor, as the case may be, to pay Additional Amounts (except as otherwise
permitted by such applicable Note); or

• impair the right to institute suit for the enforcement of any such payment on or with
respect to any applicable Note; or

• reduce the percentage of the aggregate principal amount of the applicable Notes
outstanding the consent of whose holders is required for any such supplemental
indenture; or

• reduce the aggregate principal amount of any applicable Note outstanding necessary to
modify or amend the 2017 BATCAP Indenture or any such Note or to waive any future
compliance or past default or reduce the quorum requirements or the percentage of
aggregate principal amount of any applicable Notes outstanding required for the adoption
of any action at any meeting of holders of such Notes or to reduce the percentage of the
aggregate principal amount of such Notes outstanding necessary to rescind or annul any
declaration of the principal of all accrued and unpaid interest on any Note to be due and
payable,

85
provided, that no consent of any holder of any applicable Note shall be necessary to permit the
Trustee, the Issuer and each of the Guarantors to execute supplemental indenture as described
under “ —Without Consent of Noteholders” above.
Any modifications, amendments or waivers to the 2017 BATCAP Indenture or to the conditions
of the applicable Notes will be conclusive and binding on all holders of the applicable Notes,
whether or not they have consented to such action or were present at the meeting at which such
action was taken, and on all future holders of the applicable Notes, whether or not notation of
such modifications, amendments or waivers is made upon such Notes. Any instrument given by
or on behalf of any holder of such a Note in connection with any consent to any such
modification, amendment or waiver will be irrevocable once given and will be conclusive and
binding on all subsequent registered holders of such Note.
PRESCRIPTION

Under New York’s statute of limitations, any legal action upon the Notes in respect of interest or
principal must be commenced within six years after the payment thereof is due.
NOTICE

Notices to holders of Notes will be given by first-class mail postage prepaid to the last addresses
of such holders as they appear in the Notes register; provided, no such mailing shall be required
if Notes are held through DTC, as such notice shall be given in accordance with applicable
procedures of DTC. Such notices will be deemed to have been given on the date of such
publication or mailing.

So long as any Global Notes representing the Notes are held in their entirety on behalf of a
clearing system, or any of its participants, there may be substituted for the publication and
mailing of notice to holders of Notes described above the delivery of the relevant notices to the
clearing system, and its participants, for communication by them to the entitled accountholders.
Any such notice shall be deemed to have been given on the day on which the said notice was
given to the clearing system, and its participants.
LISTING

The Notes are listed on the New York Stock Exchange.

CONSENT TO SERVICE

Each of the non-U.S. Guarantors has initially designated BATCAP as their authorized agent for
service of process in any legal suit, action or proceeding arising out of or relating to the
performance of its obligations under the 2017 BATCAP Indenture and the Notes brought in any
state or federal court in the Borough of Manhattan, the City of New York, and will irrevocably
submit (but for those purposes only) to the non-exclusive jurisdiction of any such court in any
such suit, action or proceeding.
GOVERNING LAW

The 2017 BATCAP Indenture, Notes and Guarantees shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles of conflicts of
laws thereof.

86
REGARDING THE TRUSTEE AND AGENTS

Wilmington Trust, National Association is the trustee under the 2017 BATCAP Indenture.
Citibank, N.A., London Branch has been appointed by the Issuer to act as registrar, transfer
agent, calculation agent and paying agent for the Notes. Citibank, N.A., New York Branch
replaced Citibank, N.A., London Branch as paying agent, registrar, transfer agent and calculation
agent on October 16, 2018. From time to time, Citibank, N.A., London Branch, Citibank, N.A.,
New York Branch and their respective affiliates perform various other services for the BAT and
its affiliates. The 2017 BATCAP Indenture contains limitations on the rights of the trustee, if it
becomes a creditor of the Issuer or any Guarantor, to obtain payment of claims in some cases, or
to realize on property received in respect of any of these claims as security or otherwise. The
Trustee is permitted to engage in other transactions. However, if the Trustee acquires any
conflicting interest (as defined in the TIA), it must either eliminate its conflict within 90 days,
apply to the SEC for permission to continue or resign.

The 2017 BATCAP Indenture provides that except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth in such 2017
BATCAP Indenture. During the continuance of an Event of Default of which the Trustee has
received written notice, the Trustee will exercise such of the rights and powers vested in it under
the 2017 BATCAP Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of such person’s
own affairs.

87
 EXHIBIT 4.2

BRITISH AMERICAN TOBACCO P.L.C.

RULES

of the

BRITISH AMERICAN TOBACCO

2016 LONG TERM INCENTIVE PLAN

Adopted pursuant to shareholders' approval obtained on 27 April 2016

and amended by the Board on 10 December 2018
and amended by the Board on 3 June 2019
and amended by the Board on 25 February 2020
and amended by the Board on 19 February 2021
and amended by the Board on 8 February 2022
and amended by the Board on 20 March 2023

Herbert Smith Freehills LLP

HSF Ref: 30889176

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 British American Tobacco 2016 Long Term Incentive Plan

CONTENTS

Clause Heading Page

1. INTERPRETATION AND CONSTRUCTION ................................................................. 3
2. PLAN LIMITS .................................................................................................................. 5
3. AWARDS ........................................................................................................................ 6
4. AWARDS ARE NON-TRANSFERABLE ........................................................................ 8
5. PERFORMANCE CONDITION ...................................................................................... 8
6. ADDITIONAL TERMS SPECIFIC TO FORFEITABLE SHARE AWARDS .................... 8
7. VESTING ........................................................................................................................ 9
8. CESSATION OF OFFICE OR EMPLOYMENT ............................................................ 10
9. CORPORATE ACTIONS .............................................................................................. 12
10. OPTIONS ..................................................................................................................... 14
11. DIVIDEND EQUIVALENT ............................................................................................ 15
12. CASH ALTERNATIVE – OPTIONS AND CONDITIONAL AWARDS .......................... 15
13. TAX LIABILITY ............................................................................................................. 16
14. VESTED SHARE ACCOUNTS .................................................................................... 16
15. CLAW-BACK ................................................................................................................ 17
16. VARIATION OF CAPITAL ............................................................................................ 18
17. ADMINISTRATION ....................................................................................................... 18
18. AMENDMENTS ............................................................................................................ 19
19. DATA PROTECTION ................................................................................................... 19
20. GENERAL .................................................................................................................... 20
APPENDIX 1 : OPERATION OF CLAW-BACK ................................................................................ 22
APPENDIX 2 : AWARDS GRANTED TO U.S. TAXPAYERS .......................................................... 24
1. INTERPRETATION ...................................................................................................... 24
2. APPLICATION .............................................................................................................. 24
3. PERFORMANCE AND SERVICE CONDITION ........................................................... 24
4. APPLICATION OF PARAGRAPH 5 AND 6 ................................................................. 25
5. AWARDS (I) WHERE THE “WAIT AND SEE” APPROACH SHALL APPLY
(INCLUDING ALL AWARDS SUBJECT TO AN EXTENDED VESTING
PERIOD), (II) DESCRIBED IN PARAGRAPHS 3.1 AND 3.2 OF
ADDENDUM I TO THE PLAN OR (III) THAT OTHERWISE ARE NOT
EXEMPT FROM CODE § 409A AS A SHORT-TERM DEFERRAL ............................ 25
6. AWARDS WITHOUT AN EXTENDED VESTING PERIOD AND WHERE
THE “WAIT AND SEE” APPROACH DOES NOT APPLY AND THAT ARE
OTHERWISE EXEMPT FROM CODE § 409A AS A SHORT-TERM
DEFERRAL .................................................................................................................. 26
7. DIVIDEND EQUIVALENTS .......................................................................................... 26
8. CASH ALTERNATIVE .................................................................................................. 26
9. CODE § 409A EXEMPTION AND COMPLIANCE ....................................................... 27
10. COOPERATION ........................................................................................................... 27

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11. SETTLEMENT .............................................................................................................. 27

ADDENDUM I: AWARDS GRANTED TO RAI PARTICIPANTS (PRIOR TO 2020) ........................ 28
1. APPLICATION .............................................................................................................. 28
2. MODIFICATION ........................................................................................................... 28
3. TERMS ......................................................................................................................... 28
4. SETTLEMENT .............................................................................................................. 28
ADDENDUM II: AWARDS GRANTED TO RAI PARTICIPANTS (FROM 2020) .............................. 29
1. APPLICATION .............................................................................................................. 29
2. MODIFICATION ........................................................................................................... 29
3. TERMS ......................................................................................................................... 29
4. SETTLEMENT .............................................................................................................. 29
SCHEDULE 1 : PERFORMANCE CONDITIONS............................................................................. 30

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 British American Tobacco 2016 Long Term Incentive Plan

RULES OF THE BRITISH AMERICAN TOBACCO P.L.C. LONG TERM INCENTIVE

PLAN

1. INTERPRETATION AND CONSTRUCTION

1.1 For the purposes of the Plan, the following terms shall have the meaning indicated below
unless the context clearly indicates otherwise:
"Award" means one of a Conditional Award, a Forfeitable Share Award or an Option;
"Board" means the board of directors of the Company or a committee duly authorised by
the board of directors or, following any Corporate Action, the Board or duly authorised
committee as constituted immediately prior to the Corporate Action;
"Claw-back" means a recovery of value by the Company from a Participant in accordance
with the provisions of Rule 15 (Claw-back) and Appendix 1 (Operation of Claw-back);
"Company" means British American Tobacco p.l.c. (registered in England and Wales
under No. 3407696);
"Conditional Award" means a right to receive a transfer of Shares following vesting of the
Award;
"Control" has the meaning given by Section 995 of the Income Tax Act 2007;
"Corporate Action" means any of the events referred to in:
(A) Rules 9.1 to 9.5 (but excluding a Reorganisation as defined in Rule 9.8); or
(B) if the Board determines that Awards will vest pursuant to such Rule, Rule 9.6;
"Cross-Border Merger" means a merger pursuant to the implementation in any relevant
jurisdiction of Directive 2005/56/EC (on cross-border mergers of limited liability
companies);
"Dealing Day" means any day on which the London Stock Exchange is open for trading;
"Dealing Restriction" means any restriction on the dealing in shares, whether direct or
indirect, pursuant to any law, regulation, code or enactment in England and Wales and/or
the jurisdiction in which the Participant is resident, or any share dealing code of the
Company;
"Eligible Employee" means an employee (including an executive director) of any Group
Company;
"Employees' Share Scheme" has the meaning given by Section 1166 of the Companies
Act 2006;
"Financial Year" means the financial year of the Company within the meaning of Section
390 of the Companies Act 2006;
"Forfeitable Share Award" means a beneficial interest in Shares, legal title to which is
held by the Nominee subject to the restrictions set out in Rule 6 (Additional terms
applicable to Forfeitable Share Awards) until, and which shall be transferred to the
Participant following, the vesting of the Award;
"Grant Date" means the date on which a Conditional Award or Option is granted, or the
date on which the Board determines that a Forfeitable Share Award shall be granted;
"Group" means the Company and any company which from time to time is a subsidiary of
the Company, within the meaning of section 1159 of the Companies Act 2006 (each a
"Group Company");
"Market Value" means, in relation to a Share on any day, the mid-closing price of a Share
on such day (as derived from the Daily Official List of the London Stock Exchange);
"Nominee" means any person appointed by the Company from time to time to hold legal
title to the Shares subject to a Forfeitable Share Award on behalf of the Participant in
accordance with these Rules (which may be the trustee of a Trust acting as a nominee);

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 British American Tobacco 2016 Long Term Incentive Plan

"Normal Vesting Date" means:

(A) subject to (B):
(i) where the Board determines that an extended vesting period shall apply,
the fifth anniversary of the Grant Date, or otherwise,
(ii) the third anniversary of the Grant Date or any later date determined by
the Board; or
(B) in respect of an Award granted in respect of the recruitment of an Eligible
Employee, any other date (which may be prior to the third anniversary of the Grant
Date) as determined by the Board prior to the Grant Date;
"Option" means a right to acquire Shares, which may be exercised by the Participant
following the vesting of the Award during any period permitted for exercise;
"Option Price" shall be nil, or such other amount as the Board may determine (provided
that the Board may reduce or waive such amount at any time);
"Participant" means an Eligible Employee who has received an Award to the extent it has
not been released and has not lapsed (or, following his death, his Personal
Representatives);
"Performance Condition" means the performance condition to which an Award is subject,
which may consist of one or more performance elements, being as set out in a Schedule to
the Plan (as substituted or amended by the Board from time to time);
"Performance Period" means the period of three Financial Years beginning with the
Financial Year in which the Grant Date falls, or such other period as is determined by the
Board prior to the Grant Date in accordance with Rule 5;
"Personal Representatives" means, following his death, the Participant's personal
representatives, or a person fulfilling a similar function in any jurisdiction;
"Plan" means this British American Tobacco 2016 Long Term Incentive Plan, as amended
from time to time;
"Quarter Day" means 31 March, 30 June, 30 September or 31 December;
"Rule" means a rule of this Plan;
"Share" means a fully paid ordinary share in the capital of the Company;
"Treasury Shares" means Shares to which Sections 724 to 732 of the Companies Act
2006 apply;
"Trust" means any employee benefit trust from time to time established by the Company;
"U.S. Taxpayer" has the meaning given in Rule 3.11 (U.S. Taxpayers); and
"vesting" means:
(A) Shares subject to a Conditional Award becoming due to be transferred to the
Participant;
(B) Shares subject to a Forfeitable Share Award ceasing to be subject to the
restrictions set out in Rule 6 (Additional terms applicable to Forfeitable Share
Awards), and legal title to such Shares becoming due to be transferred to the
Participant; or
(C) an Option becoming exercisable,
(and "vest" shall be construed accordingly).
1.2 In this Plan unless the context requires otherwise:
1.2.1 the headings are inserted for convenience only and do not affect the
interpretation of any Rule;
1.2.2 a reference to a statute or statutory provision includes a reference:

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 British American Tobacco 2016 Long Term Incentive Plan

(A) to that statute or statutory provision as from time to time consolidated,

modified, re-enacted or replaced by any statute or statutory provision;
(B) to any repealed statute or statutory provision which it re-enacts (with or
without modification); and
(C) to any subordinate legislation made under it;
1.2.3 words in the singular include the plural, and vice versa;
1.2.4 a reference to the masculine shall be treated as a reference to the feminine and
vice versa;
1.2.5 a reference to a person shall include a reference to a body corporate; and
1.2.6 a reference to writing or written form shall include any legible format capable of
being reproduced on paper, irrespective of the medium used.
1.3 In this Plan:
1.3.1 a reference to the "transfer of Shares" (or similar) shall include both the issue and
allotment of Shares and the transfer of Treasury Shares; and
1.3.2 a provision obliging, or permitting, any company to do any thing shall be read as
obliging, or permitting, such company to do that thing, or procure that thing to be
done; and
1.3.3 the use of the word "including" shall mean including without limitation and without
prejudice to the generality of the foregoing.

2. PLAN LIMITS
2.1 Pursuant to the Plan:
2.1.1 subject to Rule 2.2, the Board may not grant a Conditional Award or Option; and
2.1.2 Shares may not be issued for the purpose of a Forfeitable Share Award,
if the number of Shares subject to such proposed Award (the "Relevant Shares") would
cause either of the limits in Rules 2.3 or 2.4 to be breached.
2.2 Rule 2.1 shall not apply in respect of a Conditional Award or Option granted on terms that it
shall not be capable of being satisfied by the issue of Shares.

5 per cent limit: discretionary Employees' Share Scheme

2.3 The number of Relevant Shares, when added to the aggregate of:
2.3.1 the number of Shares subject to outstanding options or awards granted within the
previous 10 years under the Plan or any other discretionary Employees' Share
Scheme adopted by the Company which may be satisfied by the issue of Shares;
and
2.3.2 the number of Shares actually issued within the previous 10 years under the
Plan, under any other discretionary Employees' Share Scheme or to a Trust (but
excluding any of those Shares that were used to satisfy an option or award
granted more than 10 years previously, and without double counting any Shares
which the Board has determined are to be used to satisfy options or awards
counted under Rule 2.3.1 above),
may not exceed such number as represents 5 per cent of the Company's issued share
capital immediately prior to such proposed grant or issue.

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10 per cent limit: Employees' Share Scheme

2.4 The number of Relevant Shares, when added to the aggregate of:
2.4.1 the number of Shares subject to outstanding options or awards granted within the
previous 10 years under the Plan or any other Employees' Share Scheme
adopted by the Company which may be satisfied by the issue of Shares; and
2.4.2 the number of Shares actually issued within the previous 10 years under the
Plan, under any other Employees' Share Scheme or to a Trust (but excluding any
of those Shares: that were used to satisfy an option or award granted more than
10 years previously, and without double counting any Shares which the Board
has determined are to be used to satisfy options or awards counted under Rule
2.4.1 above),
may not exceed such number as represents 10 per cent of the Company's issued share
capital immediately prior to such proposed grant or issue.

Treasury Shares

2.5 References in this Rule 2 to the issue of Shares shall include the transfer of Treasury
Shares, but only until such time as the guidelines issued by institutional investor bodies
cease to provide that they should be so included.

3. AWARDS

Eligibility

3.1 Awards may be granted to Eligible Employees selected by the Board.

Timing of grants

3.2 An Award may only be granted:

3.2.1 during the period of 42 days commencing on the date on which the Plan is
approved shareholders of the Company in general meeting;
3.2.2 during the period of 42 days commencing on the Dealing Day immediately
following the day on which the Company announces its results for the preceding
financial year, half-year or other period;
3.2.3 in respect of an Award to be granted in respect of the recruitment of an Eligible
Employee, as soon as reasonably practicable after the Eligible Employee
commences holding office or employment with any Group Company; and/or
3.2.4 at such time at which the Board determines that exceptional circumstances exist
which justify the grant of the Award,
or, in any such case, if the grant of Awards during such period or at such time would be
contrary to any Dealing Restriction, as soon as reasonably practicable after such restriction
ceases to apply.

Individual limit

3.3 An Award may not be granted to an Eligible Employee where it would cause the aggregate
Relevant Value of the Shares subject to such Award and any Award(s) granted to the
Eligible Employee in the same Financial Year to exceed an amount equal to 500% of the
gross annual basic salary of that Eligible Employee as at the first day of such Financial
Year or, if later, the first day of the Eligible Employee's employment with the Group during
such Financial year.
An Award granted in breach of this limit shall immediately lapse in respect of the number of
Shares which cause this limit to be breached. Awards which have been released or have
lapsed, or which are granted in connection with the recruitment of an Eligible Employee in

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lieu of incentive awards granted by the individual's former employer which are forfeited,
and any right to receive Shares as a dividend equivalent, shall be ignored for this purpose.
In this Rule 3.3, the "Relevant Value" of a Share subject to an Award means either (as
determined by the Board): (i) the Market Value of a Share on the Dealing Day immediately
preceding the Grant Date; or (ii) the average of the Market Values of a Share over such
number of Dealing Days preceding the Grant Date as the Board may determine (all being
within the period of 30 days preceding the Grant Date and, where the Award is granted
within the period in Rule 3.2.2, being on or after the date of the results announcement).
3.4 Where an Eligible Employee's gross annual basic salary is denominated in a currency
other than pounds sterling, for the purposes of Rule 3.3 above such gross annual basic
salary shall be converted into pounds sterling on such basis as the Board may reasonably
determine.

Method of grant

3.5 An Award shall be granted by the Board.

3.6 A Conditional Award or an Option shall be granted by deed.
3.7 The Company shall procure that the Shares subject to a Forfeitable Share Award shall, on
or as soon as reasonably practicable following the Grant Date, be issued to or acquired by
a Nominee, and shall thereafter be held on behalf of the Participant until the date on which
the Forfeitable Share Award vests or such earlier date as the Forfeitable Share Award
lapses.
3.8 No payment for the grant of an Award shall be made by the Participant.
3.9 A Participant may within 30 days of the Grant Date release an Award (in full but not in part)
by written notice to the Company. Where a Participant does not release an Award within
such period, the Participant shall be deemed to have accepted the Award on the terms set
out in the Rules. Alternatively, it may be a term of the grant of an Award that the Participant
shall be required to accept the terms of the Award within such period following grant as
may be determined by the Board and, where the Board specifies such period, the Award
shall lapse at the end of such period if the terms of the Award have not been accepted by
the Participant.

Award notification

3.10 As soon as practicable following the Grant Date the Company shall notify a Participant of
the grant of an Award. Such notification shall specify:
3.10.1 whether the Award takes the form of a Conditional Award, a Forfeitable Share
Award or an Option;
3.10.2 the Grant Date;
3.10.3 the Normal Vesting Date;
3.10.4 the number of Shares in respect of which the Award is granted;
3.10.5 in relation to an Option, the Option Price (if any);
3.10.6 the full terms of the Performance Condition and the Performance Period;
3.10.7 if applicable, that the dividend equivalent provisions of Rule 11 (Dividend
equivalent) shall apply; and
3.10.8 that the Award is subject to the claw-back provisions of Rule 15 (Claw-back) and
Appendix 1 (Operation of Claw-back).

U.S. Taxpayers

3.11 The provisions of Appendix 2 (Awards Granted to U.S. Taxpayers) shall apply to a
Conditional Award or an Option that is held by any Participant while he or she is subject to

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taxation under the U.S. Internal Revenue Code of 1986, as amended (a "U.S. Taxpayer").
References to Code §409A are to §409A of the U.S. Internal Revenue Code of 1986, as
amended.

4. AWARDS ARE NON-TRANSFERABLE

4.1 A Participant may not transfer, assign, pledge, charge or otherwise dispose of, or grant any
form of security or other interest over, any part of his interest in an Award. An Award shall
(unless the Board determines otherwise) lapse on the Participant doing so (whether
voluntarily or involuntarily), being deprived of the beneficial ownership of an Award by
operation of law, or becoming bankrupt.
4.2 Rule 4.1 does not restrict the transmission of an Award to the Participant's Personal
Representatives following his death.

5. PERFORMANCE CONDITION
5.1 An Award shall be granted subject to the Performance Condition.
5.2 Subject to Rule 5.3, each element of the Performance Condition shall be assessed over a
period of not less than three years, ending no later than the Normal Vesting Date.
5.3 An Award granted in respect of the recruitment of an Eligible Employee may be granted on
terms that the Performance Condition shall be assessed over such shorter period as the
Board may determine prior to the grant of the Award.
5.4 If events happen following the Grant Date which cause the Board to determine that any
element of the Performance Condition is no longer a fair measure of the Company's
performance, the Board may alter the terms of such element as it determines to be
appropriate but not so that the revised target is, in the opinion of the Board, materially less
challenging than was intended in setting the original Performance Condition.
5.5 The Performance Condition may not be retested.

6. ADDITIONAL TERMS SPECIFIC TO FORFEITABLE SHARE AWARDS

Restrictions applicable to Forfeitable Share Awards

6.1 The Participant shall be (subject to the Award lapsing) the beneficial owner of the Shares
subject to a Forfeitable Share Award. For the avoidance of doubt, such beneficial interest
shall be subject to the restriction in Rule 4.1 (Awards are non-transferable).
6.2 Until a Forfeitable Share Award vests, the Nominee shall refuse to act on any instruction
from the Participant to (and, subject to Rule 6.3, shall not) transfer, assign, pledge, charge
or otherwise dispose of, or grant any form of security or other interest over, legal title to the
Shares subject to the Award or any interest therein, or enter into any agreement or accept
any offer to do any such thing.
6.3 The Nominee shall take such action as is necessary to give effect to Rules 9.8 (Roll-over of
Award), 13.1 (Tax Liability), 15 (Claw-back), 16 (Variation of capital) and Appendix 1
(Operation of Claw-back) and without further instruction from the Participant (and for the
avoidance of doubt nothing in this Rule 6 shall prevent Shares subject to a Forfeitable
Share Award becoming subject to a Corporate Action pursuant to Rule 9.3 (Scheme of
compromise or arrangement)).
Voting rights on forfeitable Shares
6.4 Unless the Board determines otherwise, the Participant shall be entitled to direct the
Nominee to vote the Shares subject to a Forfeitable Share Award, provided that the
Nominee shall not be bound to seek directions from the Participant to vote and in the
absence of any such direction shall not vote.

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Dividend rights on forfeitable Shares

6.5 Unless the Board determines otherwise, the Participant shall be entitled to receive any
dividends paid in respect of Shares subject to a Forfeitable Share Award (and if the Board
so determines the Nominee shall waive the right to receive any dividends in respect of
such Shares).

Lapse of Forfeitable Share Award

6.6 Where a Forfeitable Share Award lapses, the Participant shall cease to be beneficially
entitled to the Shares subject to the Award, and the beneficial interest in such Shares shall,
unless the Board directs otherwise, revert to a Trust specified by the Board for nil or
nominal consideration.

7. VESTING

Normal vesting

7.1 An Award shall vest on the Normal Vesting Date.

Vesting subject to Dealing Restrictions

7.2 A Conditional Award or a Forfeitable Share Award shall not vest unless, and vesting shall
be delayed until, the Board is satisfied that at that time:
7.2.1 such vesting;
7.2.2 the transfer of Shares to the Participant and the sale of Shares pursuant to Rule
13 (Tax Liability); and
7.2.3 any action needed to be taken by the Company to give effect to such vesting
is not contrary to any Dealing Restriction.

Extent of vesting determined by the Performance Condition

7.3 The extent to which an Award shall be capable of vesting (if at all) shall be determined by
reference to the Performance Condition. At the end of the period over which the
Performance Condition is assessed, the Award shall lapse to the extent that the
Performance Condition is not met.
7.4 Where an Award vests (pursuant to Rule 7.7 (International Transfers), Rule 8 (Cessation of
office or employment) or 9 (Corporate Actions)) prior to the end of the period over which
any element of the Performance Condition is assessed, such element shall be assessed
based on performance to the last Quarter Day prior to the date on which the Award vests
using such information (not limited to published accounts) as the Board shall determine.

Effect of vesting

7.5 The effect of the vesting of an Award is that:

7.5.1 the Shares in respect of which a Conditional Award vests shall be transferred to
the Participant as soon as is reasonably practicable (which may include
transferring the Shares on more than one consecutive Dealing Day on such basis
as the Board may determine);
7.5.2 the Shares in respect of which a Forfeitable Share Award vests shall cease to be
subject to the restrictions set out in Rule 6 (Additional terms applicable to
Forfeitable Share Awards), and legal title to such Shares shall be transferred to
the Participant as soon as is reasonably practicable; and
7.5.3 an Option shall, to the extent that it vests, become exercisable in accordance with
Rule 10 (Options).

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7.5A Shares shall not cease to be subject to the restrictions set out in Rule 6 (Additional terms
applicable to Forfeitable Share Awards) until such time as it is practicable for a number of
Shares in respect of such vesting to be sold in accordance with Rule 13.1.1 (Tax Liability)
(such that a proportion of such Shares may cease to be subject to such restrictions on
each Dealing Day within a period of consecutive Dealing Days (and on such basis) as the
Board may determine), unless the Participant has in advance made other arrangements to
pay the amount of the Tax Liability arising in respect of such vesting to the Company or the
Board determines otherwise.

Disciplinary proceedings

7.6 Unless the Board determines otherwise, an Award shall not vest while a Participant is
subject to an investigation process and/or formal disciplinary process (or similar), or where
a Participant has been served with notice that such a process may be instigated without
such notice having been rescinded, and vesting shall (subject to the Award lapsing to any
extent prior to or as a result of the conclusion of such process pursuant to Rule 8
(Cessation of office or employment) or 15 (Claw-back)) be delayed until the conclusion of
such process.

International transfers
7.7 Where a Participant, whilst continuing to hold an office or employment with a Group
Company, is to be transferred to work in another country, and as a result the Board
considers that following such transfer either he or a Group Company is likely to suffer a tax
disadvantage in respect of an Award or, due to securities or exchange control laws, the
Participant is likely to be restricted in his ability to receive Shares pursuant to an Award, to
exercise an Option and/or to hold or deal in Shares, the Board may decide that an Award
shall vest on such date as it may determine, in which case:

7.7.1 the proportion of the Award which may vest shall be limited (unless the Board
determines otherwise) to a pro rata proportion on the basis of the number of
months (rounded up to the nearest whole month) which have elapsed from the
first day of the Performance Period to such vesting date, as compared to the
number of whole months within the Performance Period. Any remainder of the
Award shall lapse; and

7.7.2 an Option may be exercised during such period as may be determined by the
Board ending no later than the date on which the Participant's transfer takes
effect.

8. CESSATION OF OFFICE OR EMPLOYMENT

Cessation where Awards lapse

8.1 An Award shall lapse:

8.1.1 on the Participant ceasing to hold office or employment with any Group
Company; or
8.1.2 if the Participant gives or receives notice of such cessation, on such earlier date
as may be determined by the Board,
save in each case where Rule 8.2 or Rule 8.6 applies.

Reasons for cessation where Awards remain capable of vesting

8.2 An Award shall not lapse pursuant to Rule 8.1 where the reason for the cessation or notice
is:
8.2.1 disability, ill-health or injury (as evidenced to the satisfaction of the Board);

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8.2.2 the transfer of the Participant's employment in connection with the disposal of a
business or undertaking, or a part- business or part- undertaking;
8.2.3 the company with which the Participant holds office or employment ceasing to be
a Group Company; or
8.2.4 any other reason, if the Board so determines,
provided that the Board shall not exercise its discretion under Rule 8.2.4 unless the
Participant has entered into a settlement agreement (or equivalent document) acceptable
to the Board in relation to the cessation of employment, which shall be entered into not
later than the date on which the Participant ceases to hold office or employment with any
Group Company (unless the Board determines, at its sole discretion, that the period for
entering into such settlement agreement shall be extended).
Where the Board exercises its discretion under Rule 8.2.4 the Board may also impose
additional conditions on the Award (including as to when the Award may vest).

Cessation prior to the Normal Vesting Date

8.3 Where prior to the Normal Vesting Date a Participant ceases to hold office or employment
with any Group Company for any of the reasons specified in Rule 8.2:
8.3.1 an Award shall not vest at the date of such cessation, but shall continue to be
capable of vesting (in which case an Option may be exercised during the period
of six months, or such other period as may be determined by the Board, from
such date on which the Award may vest, and shall lapse at the expiry of such
period); or
8.3.2 the Board may determine that the Award shall instead vest on or at any time
following the date of cessation (in which case an Option may be exercised during
the period of six months, or such other period as may be determined by the
Board, from such vesting date, and shall lapse at the expiry of such period).
For the avoidance of doubt, the Board may make the determination in Rule 8.3.2 on a
standing basis (subject to revocation of such determination at any time) in respect of all
Awards to be granted to a specified Eligible Employee or Eligible Employees.
8.4 Where prior to the Normal Vesting Date a Participant ceases to hold office or employment
with any Group Company for any of the reasons specified in Rule 8.2, unless the Board
determines otherwise:
8.4.1 if the date of such cessation falls within the first six months of the Performance
Period, the Award shall lapse in full on the date of such cessation; or
8.4.2 where Rule 8.4.1 does not apply, the proportion of the Award which may vest
(under any Rule) shall be limited to a pro rata proportion on the basis of the
number of months (rounded up to the nearest whole month) which have elapsed
from the first day of the Performance Period to the date of cessation, as
compared to the number of whole months within the Performance Period. Any
remainder of the Award shall lapse.

Exercise period in the event of cessation on or after the Normal Vesting Date

8.5 Where on or after the Normal Vesting Date a Participant ceases to hold office or
employment with any Group Company for any of the reasons specified in Rule 8.2, an
Option shall lapse at the expiry of the period of six months, or such other period as may be
determined by the Board, from the date of cessation.

Death

8.6 An Award shall vest on the Participant's death. An Option may be exercised (by the
Participant's Personal Representatives) during a period of one year from the date of the
Participant's death and shall lapse at the expiry of such period. Where a Participant dies

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during an exercise period pursuant to either Rule 8.3 or 8.5 an Option shall not lapse as a
result of such Rule until the expiry of the twelve month period in this Rule 8.6.

Cessation following a Corporate Action

8.7 Where a Participant ceases to hold office or employment with any Group Company
following a Corporate Action within the relevant exercise period referred to in Rule 9
(Corporate Actions), an Option shall not lapse pursuant to this Rule 8 until the expiry of the
relevant exercise period in Rule 9 (Corporate Actions). This Rule 8.7 shall not apply where
the cessation is by way of (or occurs where there are circumstances which the Board
determines would have justified) summary dismissal or service of notice of termination of
office or employment on the grounds of misconduct.

Meaning of cessation of office or employment

8.8 No provision of this Rule 8 shall apply in respect of any cessation of office or employment if
immediately following the cessation the Participant holds an office or employment with any
Group Company, or in respect of any notice of cessation if arrangements are in place that
mean immediately following the notice becoming effective the Participant will hold an office
or employment with any Group Company.

9. CORPORATE ACTIONS

General offers

9.1 Awards shall vest:

9.1.1 upon a person obtaining Control of the Company as a result of making a general
offer to acquire Shares;
9.1.2 upon a person, having obtained Control of the Company, making a general offer
to acquire Shares; or
9.1.3 if a person makes a general offer to acquire Shares that would result in that
person obtaining Control of the Company and the Board so determines, on the
date which the Board determines to be the last practicable date prior to the date
on which it expects such person to obtain Control of the Company,
in each case being a general offer to acquire all of the Shares (other than Shares held by
the person making the offer and any person connected to that person).
Options may be exercised during the period of six months from the date of any such event
(but if not exercised, Options shall not lapse at the expiry of such period).

Compulsory acquisition

9.2 Awards shall vest upon a person becoming entitled to acquire Shares under Sections 979
to 982 of the Companies Act 2006.
Options may be exercised during a period of one month from the date on which that person
first becomes so entitled, and shall lapse at the expiry of such period.

Scheme of compromise or arrangement

9.3 Awards shall vest upon a Court sanctioning a compromise or arrangement which, on
becoming effective, would result in:
9.3.1 any person obtaining Control of the Company;
9.3.2 the undertaking, property and liabilities of the Company being transferred to
another existing or new company; or
9.3.3 the undertaking, property and liabilities of the Company being divided among and
transferred to two or more companies, whether existing or new.

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Options may be exercised during a period of six months from the date of a Court
sanctioning such a compromise or arrangement (or, if earlier, to the day prior to the date on
which a transfer as described in Rule 9.3.2 or Rule 9.3.3 is to become effective), and shall
lapse at the expiry of such period.

Merger

9.4 Awards shall vest upon a competent authority approving a Cross-Border Merger, pursuant
to which the Company shall cease to exist.
Options may be exercised during the period from the date of a competent authority
approving a Cross-Border Merger until the day prior to the date on which the Cross-Border
Merger is to become effective, and shall lapse at the expiry of such period.

Voluntary winding-up

9.5 Awards shall vest in the event of a notice being given of a resolution for the voluntary
winding-up of the Company.
Options may be exercised during a period of two months from the date of such a notice
being given and shall lapse at the expiry of such period.

Demerger or special dividend

9.6 If the Board so determines, Awards may vest following the announcement of a demerger of
a substantial part of the Group's business, a special dividend or a similar event affecting
the value of Shares to a material extent on such date specified by the Board. Where the
Board makes such determination, Options may be exercised during a period of two months
(or such other period as the Board may determine) from the date specified by the Board
and, unless the Board determines otherwise, shall lapse at the expiry of such period.

Extent of vesting on a Corporate Action

9.7 Where an Award vests (and, in the case of an Option, is exercised) pursuant to any of
Rules 9.1 to 9.6, the proportion of the Award which may vest shall be limited (unless the
Board determines otherwise) to a pro rata proportion on the basis of the number of months
(rounded up to the nearest whole month) which have elapsed from the first day of the
Performance Period to the date of the Corporate Action, as compared to the number of
whole months within the Performance Period. Any remainder of the Award shall lapse.

Roll-over of Award on a Reorganisation or takeover

9.8 Unless the Board determines otherwise, an Award shall not vest pursuant to this Rule 9 if,
as a result of any event that would otherwise be a Corporate Action, a company will obtain
Control of the Company or will obtain substantially all of the assets of the Company (the
"Acquiring Company"), and either:
9.8.1 the Acquiring Company will immediately following such event have (either directly
or indirectly) substantially the same shareholders and approximate shareholdings
as those of the Company prior to such event (a "Reorganisation"); or
9.8.2 the Board, with the agreement of the Acquiring Company, determines that the
Award shall not vest as a result of such event and so notifies the Participant prior
to the occurrence of the date on which the Award would otherwise vest.
In such case:
9.8.3 the existing Option or Conditional Award (the "Old Award") shall lapse on the
occurrence of the relevant event, provided that the New Parent Company shall
grant a replacement right to receive shares (the "New Award") over such number
of shares in the New Parent Company which are of equivalent value to the
number of Shares in respect of which the Old Award was outstanding. The New

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Award shall be granted on the terms of the Plan, but as if the New Award had
been granted at the same time as the Old Award and shall continue to be subject
to the Performance Condition (but subject to Rule 5.4 (Performance Condition));
9.8.4 where the event is an event specified in Rule 9.1.1 or Rule 9.1.2 (notwithstanding
that the Award shall not vest pursuant to such Rule) the Nominee shall action the
acceptance of the general offer in respect of the Shares subject to the Forfeitable
Share Award; and/or
9.8.5 the proceeds from the relevant event received by the Nominee in respect of the
Shares subject to the Forfeitable Share Award, whether in cash or securities (and
the Nominee shall accept, on behalf of the Participant, any offer of securities in
preference to the receipt of cash), shall continue to be held on behalf of the
Participant subject to the terms of the Plan, provided that a proportion of such
proceeds as is of equal value to the amount of any Tax Liability arising in respect
of the Award at such time shall vest and shall be dealt with in accordance with
Rule 13.1.1 (Tax Liability) (and references in the Plan to the Shares subject to the
Forfeitable Share Award shall be read as being to the proceeds that continue to
be held on behalf of the Participant).
For the purposes of this Rule 9.8:
9.8.6 the "New Parent Company" shall be the Acquiring Company, or, if different the
company that is the ultimate parent company of the Acquiring Company within
the meaning of section 1159 of the Companies Act 2006; and
9.8.7 the terms of the Plan shall following the date of the relevant event be construed
as if:
(A) the reference to "British American Tobacco p.l.c." in the definition of
"Company" in Rule 1 (Interpretation and construction) were a reference to
the company which is the New Parent Company, and
(B) save where the New Parent Company is listed, Rule 18.2 (Amendments)
were omitted.

Compulsory winding-up

9.9 An Award shall lapse on the passing of an effective resolution, or the making of a Court
order, for the compulsory winding-up of the Company.

Concert parties

9.10 For the purposes of this Rule 9, a person shall be deemed to have Control of the Company
where he and any others acting in concert with him together have Control of the Company.

10. OPTIONS
10.1 An Option may be exercised, in full or in any number of parts, by the delivery to the
Company (or such other person nominated by the Company) of a valid notice of exercise in
such form as the Board may prescribe together with payment of the Option Price for the
Shares in respect of which the Option is exercised (if any).
10.2 An Option shall lapse on the tenth anniversary of the Grant Date (or such earlier date as
the Board may determine prior to the Grant Date).
10.3 Any Shares in respect of which the Option is exercised shall be transferred to the
Participant as soon as reasonably practicable (which may include transferring the Shares
on more than one consecutive Dealing Days on such basis as the Board may determine).
10.4 An Option may not be exercised unless the Board is satisfied that at such time:
10.4.1 such exercise,
10.4.2 the transfer of Shares to the Participant and the sale of Shares pursuant to Rule
13; and

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10.4.3 any action needed to be taken by the Company to give effect to such exercise,
is not contrary to any Dealing Restriction. Where the exercise, transfer or dealing in Shares
is contrary to any Dealing Restriction on the last Dealing Day in any of the periods referred
to in Rules 8.3, 8.5 or 8.6 (Rule 8 being in relation to cessation of office or employment) or
Rules 9.1 to 9.3 or 9.6 (Rule 9 being in relation to Corporate Actions), such period shall be
extended to the end of the first Dealing Day thereafter on which the Board is satisfied that
the exercise, transfer and dealing in Shares is not contrary to any Dealing Restriction.
10.5 An Option shall lapse on the earliest date provided under any Rule (save only as expressly
provided in Rules 8.6 (Death) and 8.7 (Cessation following a Corporate Action)).

11. DIVIDEND EQUIVALENT

11.1 If at any time prior to the Normal Vesting Date the Board so determines, on or following the
date on which an Award vests the Company may:
11.1.1 make a cash payment to the Participant equal to the amount of any dividends that
the Participant would have received in respect of the number of Shares in respect
of which the Award vests had the Participant been the full legal and beneficial
owner of such Shares during the period from the Grant Date to the date the
Award vests; or
11.1.2 transfer to the Participant such number of additional Shares as have an
aggregate Market Value on the date on which the Award vests equal to the
amount determined in accordance with Rule 11.1.1 above.
11.2 A cash payment under Rule 11.1 may be made in a currency other than pounds sterling, in
which case the amount of such payment shall be converted into such other currency on
such basis as is determined by the Board.
11.3 Rule 11.1 shall not apply in respect of a Forfeitable Share Award unless the Board
determines pursuant to Rule 6.5 (Dividend rights on forfeitable Shares) that the Participant
shall not be entitled to receive dividends paid in respect of the Shares subject to the
Forfeitable Share Award.

12. CASH ALTERNATIVE – OPTIONS AND CONDITIONAL AWARDS

12.1 This Rule 12 shall not apply in respect of any Award granted to a Participant resident in
any jurisdiction where the grant of an Award which provides for a cash alternative would be
unlawful, fall outside any applicable exemption under securities, exchange control or
similar regulations, or would cause adverse tax or social security (or similar) contribution
consequences for the Company or the Participant (in each case as determined by the
Board) or where the Board determines prior to the Grant Date that this Rule 12 shall not
apply.
12.2 The Board may determine prior to the Grant Date that a Conditional Award or Option shall
only be satisfied in cash, in which case the Award shall not be a right to acquire Shares,
and the vesting of the Conditional Award or exercise of the Option shall be satisfied in full
by the payment of a cash equivalent amount, in substitution for the transfer of Shares.
12.3 Where the Board has made no determination pursuant to Rule 12.1 or 12.2 in respect of
any Conditional Award or Option, the Board may determine at any time prior to the transfer
of Shares pursuant to such Award that the vesting of the Conditional Award or the exercise
of the Option (or a part thereof) shall be satisfied by the payment of a cash equivalent
amount, in substitution for the transfer of Shares.
12.4 A "cash equivalent amount" shall be calculated as the number of Shares which would
otherwise be transferred in respect of the relevant vesting or exercise but which are being
substituted for the cash equivalent amount, multiplied by an amount equal to the relevant
value less, in the case of an Option, the Option Price (if any), where the “relevant value” is
the Market Value of a Share on the date on which the Award vests or, in the case of an
Option, is exercised (or, in either case, where only a part of the Award is to be satisfied

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with payment of a cash equivalent amount, is the Market Value of a Share on the date on
which Shares are transferred to the Participant pursuant to the Award)).
12.5 A cash equivalent amount shall be paid as soon as reasonably practicable following the
relevant vesting or exercise.
12.6 A cash equivalent amount may be paid in a currency other than pounds sterling, in which
case the cash equivalent amount shall be converted into such other currency on such basis
as is determined by the Board.

13. TAX LIABILITY

13.1 When any Tax Liability arises in respect of an Award, the Participant authorises any Group
Company:
13.1.1 to retain and sell legal title to such number of the Shares which would otherwise
have been transferred to the Participant on vesting or exercise of the Award, or
any part thereof, (notwithstanding that beneficial title shall pass) as may be sold
for aggregate proceeds equal to the Group Company's estimate of the amount of
the Tax Liability;
13.1.2 to deduct an amount equal to the Group Company's estimate of the Tax Liability
from any cash payment made under the Plan; and/or
13.1.3 where the amount realised under Rule 13.1.1 or deducted under Rule 13.1.2 is
insufficient to cover the full amount of the Tax Liability, to deduct any further
amount as is necessary through payroll,
and in each case to apply such amount in paying the amount of the Tax Liability to the
relevant revenue authority or in reimbursing the relevant Group Company for any such
payment, provided that, where the amount realised under Rule 13.1.1 or deducted under
Rule 13.1.2 is greater than the actual Tax Liability, the Group Company shall repay the
excess to the Participant as soon as reasonably practicable.
The Group Company shall be entitled to make the estimates referred to in this Rule 13.1 on
the basis of the highest rates of tax and/or social security applicable at the relevant time in
the jurisdiction in which the Group Company is liable to account for the Tax Liability,
notwithstanding that the Tax Liability may not arise at such rates.
13.2 "Tax Liability" shall mean any amount of tax and/or social security (or similar)
contributions which any Group Company becomes liable to pay on behalf of the Participant
to the revenue authorities in any jurisdiction, together with all or such proportion (if any) of
employer's social security contributions which would otherwise be payable by any Group
Company as is determined to be recoverable from the Participant (to the extent permitted
by law) by the Board, or which the Participant has agreed to pay or which are subject to
recovery pursuant to an election to which paragraph 3B of Schedule 1 to the Social
Security Contributions and Benefits Act 1992 applies.

14. VESTED SHARE ACCOUNTS

14.1 Legal title to any Shares which are due to be transferred to the Participant pursuant to the
Plan may be transferred to a person (the "Vested Share Account Provider") appointed by
the Company from time to time to hold legal title to such Shares on behalf of the
Participant.
14.2 The Vested Share Account Provider shall receive and hold Shares on behalf of the
Participant in accordance with such terms and conditions as are agreed by the Company
from time to time, and by participating in the Plan the Participant irrevocably agrees to
those terms and conditions (which shall be available to the Participant on request to the
Company).
14.3 The transfer of any Shares to the Vested Share Account Provider shall satisfy any
obligation of the Company under the Plan to transfer Shares to the Participant (and
references in the Plan to Shares (or legal title thereof) having been transferred to the
Participant shall be read accordingly).

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14.4 The terms and conditions referred to in Rule 14.2 above may include terms that the
Participant shall not be entitled to transfer, assign, pledge, charge or otherwise dispose of,
or grant any form of security or other interest over, some or all of the Shares if to do so
would be in breach of the Participant's obligations under the Company's shareholding
requirements as they apply to such Participant.

15. CLAW-BACK

Claw-back events

15.1 The Board may at any time prior to the fifth anniversary of the Grant Date of an Award
determine that a Claw-back shall apply in respect of the Award, if the Board determines
that:
15.1.1 there has been a material misrepresentation in relation to the performance of any
Group Company, relevant business unit and/or the Participant on the basis of
which the extent to which the Award will be capable of vesting, or vested, was
determined (which may include, but shall not be limited to: (i) a misstatement of
the financial results and/or health of any Group Company; (ii) an erroneous
calculation in relation to any Group Company's results or other performance
benchmark; (iii) errors in any Group Company's financial statements; or (iv)
discrepancies in the financial accounts, and, for the avoidance of doubt,
notwithstanding that such misrepresentation may not arise from fraud or reckless
behaviour); or
15.1.2 an erroneous calculation was made in assessing the extent to which the Award is
to be capable of vesting, or vested,
and, in either case, the Award is capable of vesting, or vested, in respect of a greater
number of Shares than would have been the case had there not been such a
misrepresentation or had such error not been made; or
15.1.3 there has been a significant failure within any Group Company which has a
material impact on the value of the Group (taken as a whole), including but not
limited to circumstances where the Company or any other Group Company has
entered into an involuntary administration or insolvency process or there has
been a significant reduction in, or cessation of, the ability of any material Group
Company (or group of Group Companies) to continue normal operations.
15.2 The Board may at any time (whether before or after vesting) determine that a Claw-back
shall apply in respect of an Award where the Participant is found to have:
15.2.1 committed at any time prior to the vesting of the Award, including prior to grant,
an act or omission which justifies, or in the opinion of the Board would have
justified, summary dismissal or service of notice of termination of office or
employment on the grounds of misconduct;
15.2.2 engaged in at any time prior to the vesting of the Award, including prior to grant:

(A) reckless, negligent or wilful action or inaction; or

(B) inappropriate behaviour or behaviour that is not aligned with any

employee policy or handbook or Group values,
and in either case the Board determines that such circumstances have
contributed to a material loss for any Group Company; or
15.2.3 contributed at any time prior to the vesting of the Award, including prior to grant,
to circumstances which give rise to a sufficiently negative impact on the
reputation of any Group Company or business unit (or would have if such
circumstances had been made public).
15.3 Rules 15.1.3, 15.2.2 and 15.2.3 shall only apply to awards granted on or after 1 January
2022.

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Applying Claw-back

15.4 A Claw-back shall be applied in accordance with the provisions of Appendix 1 (Operation of
Claw-back).

Lapse of Awards to give effect to claw-back of other awards

15.5 By participating in the Plan, the Participant acknowledges that the Board may lapse any
Award to such extent as it determines to be necessary (including in full) in order to give
effect to a claw-back under the terms of the Plan or any other Employees' Share Scheme
or bonus scheme operated from time to time by any Group Company.

No Claw-back following Corporate Action

15.6 No Claw-back shall be capable of being applied at any time following any Corporate Action,
save where the determination that the Claw-back shall apply was made prior to such event
(and, for the avoidance of doubt, a Corporate Action does not include a Reorganisation).

16. VARIATION OF CAPITAL

16.1 If in respect of Shares subject to a Forfeitable Share Award the Nominee receives on
behalf of a Participant any rights to acquire securities, the Nominee shall sell such rights nil
paid to the extent necessary to take up the remaining rights.
16.2 In the event of any variation of the share capital of the Company, or in the event of the
demerger of a substantial part of the Group's business, a special dividend or similar event
affecting the value of Shares to a material extent (which shall not include the payment of
any ordinary dividend):
16.2.1 the Board may make such adjustments to Conditional Awards and Options as it
may determine to be appropriate; and
16.2.2 any proceeds from such an event received by a Nominee in respect of any
Shares subject to a Forfeitable Share Award, whether in cash or securities,
(including where the Nominee takes up rights pursuant to Rule 16.1) shall be held
by the Nominee on the same terms as the Forfeitable Share Award to which they
relate, and references to the Shares subject to a Forfeitable Share Award shall be
read to include such proceeds.
16.3 For the avoidance of doubt Rule 16.2 shall not apply in respect of any Awards pursuant to
which legal title to Shares has been transferred prior to the date of the relevant event (such
that the recipient of such legal title shall participate in such event as a holder of Shares)
including pursuant to the vesting of an Award under Rule 9.6 (Demerger or special
dividend).

17. ADMINISTRATION
17.1 Any notice or other communication under or in connection with this Plan may be given by
the Company (or its agents) to a Participant personally, by email or by post, or by a
Participant to the Company or any Group Company either personally or by post to the
Secretary of the Company. Items sent by post shall be pre-paid and shall be deemed to
have been received 48 hours after posting. Items sent by email shall be deemed to have
been received immediately.
17.2 A Participant shall not be entitled to:
17.2.1 receive copies of accounts or notices sent to holders of Shares;
17.2.2 subject to Rule 6.4 (Voting rights on forfeitable Shares) in respect of a Forfeitable
Share Award, exercise voting rights; or
17.2.3 subject to Rule 6.5 (Dividends rights on forfeitable Shares) in respect of a
Forfeitable Share Award, receive dividends,

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in respect of Shares subject to an Award legal title to which has not been transferred to the
Participant.
17.3 Any discretion (including the power to make any determination) of the Board under or in
connection with the Plan may be exercised by the Board in its absolute discretion.
17.4 Any exercise of discretion (including the making of any determination) by the Board under
or in connection with the Plan shall be final and binding.
17.5 Any disputes regarding the interpretation of the Rules or the terms of any Award shall be
determined by the Board (upon such advice as the Board determines to be necessary) and
any decision in relation thereto shall be final and binding.

18. AMENDMENTS
18.1 Subject to Rules 18.2 and 18.4, the Board may at any time add to or alter the Plan or any
Award made thereunder in any respect.
18.2 Subject to Rule 18.3, no addition or alteration to the advantage of present or future
Participants relating to eligibility, the limits on participation, the overall limits on the issue of
Shares or the transfer of Treasury Shares, the basis for determining a Participant's
entitlement to, or the terms of, Shares or cash provided pursuant to the Plan and the
provisions for adjustments on a variation of share capital shall be made without the prior
approval by ordinary resolution of the shareholders of the Company in general meeting.
18.3 Rule 18.2 shall not apply to any alteration to or substitution of the Performance Condition
or to any alteration or addition which is necessary or desirable in order to comply with or
take account of the provisions of any proposed or existing legislation, law or other
regulatory requirements or to take advantage of any changes in legislation, law or other
regulatory requirements, or to obtain or maintain favourable taxation, exchange control or
regulatory treatment of any Group Company or any Participant or to make minor
amendments to benefit the administration of the Plan.
18.4 No alteration or addition shall be made under Rule 18.1 which would abrogate or adversely
affect the subsisting rights of a Participant unless it is made:
18.4.1 with the consent in writing of the Participant;
18.4.2 with the consent in writing of such number of Participants as hold Awards under
the Plan in relation to 75 per cent. of the Shares subject to all Awards under the
Plan; or
18.4.3 by a resolution at a meeting of Participants passed by not less than 75 per cent.
of the Participants who attend and vote either in person or by proxy,
and for the purpose of Rule 18.4.2 or 18.4.3 the Participants shall be treated as the holders
of a separate class of share capital and the provisions of the Articles of Association of the
Company relating to class meetings shall apply mutatis mutandis.
18.5 The Board may, in respect of Eligible Employees who are or who may become subject to
taxation outside the United Kingdom on their remuneration, establish such plans or sub-
plans based on the Plan but subject to such modifications as the Board determines to be
necessary or desirable to take account of or to mitigate or to comply with relevant overseas
taxation, securities or exchange control laws, provided that the terms of awards made
under such plans or sub-plans are not overall more favourable than the terms of Awards
made under the Plan and provided that awards made, and Shares issued, pursuant to such
plans or sub-plans shall count towards the limits set out in Rules 2 (Plan limits) and 3.3
(Individual limit).

19. DATA PROTECTION

19.1 From time to time the personal data of the Participant will be collected, used, stored,
transferred and otherwise processed for the purposes described in Rule 19.2 and 19.3.
The legal grounds for this processing will (depending on the nature and purpose of any
specific instance of processing) be one of: (i) such processing being necessary for the

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purposes of the legitimate interests of the Company and each other Group Company in
incentivising their officers and employees and operating the Plan; (ii) such processing
being necessary for the purposes of any relevant data controller in respect of such
personal data complying with its legal obligations; and (iii) such processing being
necessary for the performance of the contractual obligations arising under the Plan. The
collection and processing of such personal data for such purposes is a contractual
requirement of participation in the Plan.
19.2 The purposes for which personal data shall be processed as referred to in this Rule 19
shall be in order to allow the Company and any other relevant Group Companies to
incentivise their officers and employees and to operate the Plan and to fulfil its or their
obligations to the Participant under the Plan, and for other purposes relating to or which
may become related to the Participant’s office or employment, the operation of the Plan or
the business of the Group or to comply with legal obligations. Such processing will
principally be for, but will not be limited to, personnel, administrative, financial, regulatory or
payroll purposes as well as for the purposes of introducing and administering the Plan.
19.3 The personal data to be processed as referred to in this Rule 19 may be disclosed or
transferred to, and/or processed by:
19.3.1 any professional advisors of any Group Company, HM Revenue & Customs or
any other revenue, regulatory or governmental authorities;
19.3.2 a trustee of a Trust; any registrars, brokers, payroll provider or appointed in
connection with any employee share or incentive plans operated by any Group
Company; or any person appointed (whether by the Participant or any Group
Company) to act as nominee on behalf of (or provide a similar service to) the
Participant;
19.3.3 subject to appropriate confidentiality undertakings), any prospective purchasers
of, and/or any person who obtains control of or acquires, the Company or the
whole or part of the business of the Group; or
19.3.4 any Group Company and officers, employees or agents of such Group Company.
19.4 Further information in relation to the processing of personal data referred to in this Rule 19,
including the details and identity of the data controller and of the Participant’s rights in
respect of such personal data, is available in the Employee Data Protection Policy (or
otherwise on request to the Company Secretary).
19.5 To the extent that the processing of personal data of a Participant referred to in this Rule
19 is subject to the laws or regulations of any jurisdiction that is not an EU member state
and under which the legal grounds for processing described in Rule 19.1 do not provide a
sufficient legal basis under such other laws or regulations for the processing referred to in
Rule 19.1 to 19.3, by such processing for the purposes of such other laws or regulations
(but shall not be deemed to consent to such processing for the purposes of EU Regulation
2016/679).
19.6 In this Rule19, “personal data” and “data controller” each have the meaning given in EU
Regulation 2016/679 and “Employee Data Protection Policy” means such privacy policy or
similar operated by any Group Company in relation to the processing of personal data as
amended from time to time and as is applicable to the Participant.

20. GENERAL
20.1 In the event of any discrepancy between these Rules in English and (i) any copy of these
Rules translated into any other language; or (ii) any communications, notices or materials
issued in connection with this Plan, these Rules in English shall prevail.
20.2 The Plan shall terminate on the 10th anniversary of the approval of the Plan by the
shareholders of the Company in general meeting, or at any earlier time by resolution of the
Board or an ordinary resolution of the shareholders in general meeting. Such termination
shall be without prejudice to the subsisting rights of Participants.

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20.3 Save as otherwise provided under the Plan:

20.3.1 Shares issued and allotted pursuant to the Plan will rank pari passu in all
respects with the Shares then in issue at the date of such allotment, except that
they will not rank for any rights attaching to Shares by reference to a record date
preceding the date of allotment; and
20.3.2 Shares to be transferred pursuant to the Plan will be transferred free of all liens,
charges and encumbrances and together with all rights attaching thereto, except
they will not rank for any rights attaching to Shares by reference to a record date
preceding the date of transfer.
20.4 If and so long as the Shares are admitted to listing and/or for trading on any stock
exchange or market, the Company shall apply for any Shares issued and allotted pursuant
to the Plan to be so admitted as soon as practicable.
20.5 Any transfer of Shares under the Plan is subject to such consent, if any, of any authorities
in any jurisdiction as may be required, and the Participant shall be responsible for
complying with the requirements to obtain or obviate the necessity for such consents.
20.6 The terms of any individual's office or employment with any past or present Group
Company, and the rights and obligations of the individual thereunder, shall not be affected
by his participation in the Plan and the Plan shall not form part of any contract of
employment between the individual and any such company.
20.7 An Eligible Employee shall have no right to receive an Award under the Plan and
participation in the Plan and the grant of any Award is at the discretion of the Company.
20.8 Participation in the Plan by, or the grant of any Award under it to, a Participant in any year
does not create any right to or expectation of participation in the Plan or the grant of any
Award in any future year, even if the Participant has previously participated in the Plan (or
any similar plan) over a long period of time and/or if participation in the Plan and/or an
Award under it (or any similar plan) has been granted (including repeatedly) without the
relevant Group Company specifically expressing the voluntary and discretionary nature at
the time of each such participation or Award.
20.9 By participating in the Plan, the Participant waives all and any rights to compensation or
damages in consequence of the termination of his office or employment with any past or
present Group Company for any reason whatsoever, whether lawfully or otherwise, insofar
as those rights arise or may arise from his ceasing to have rights under the Plan (including
ceasing to be entitled to exercise any Option) as a result of such termination, or from the
loss or diminution in value of such rights or entitlements, including by reason of the
operation of the terms of the Plan, any determination by the Board pursuant to a discretion
contained in the Plan or the provisions of any statute or law relating to taxation.
20.10 Benefits under the Plan shall not form part of a Participant's remuneration for any purpose
and shall not be pensionable.
20.11 The invalidity or non-enforceability of any provision or Rule of the Plan shall not affect the
validity or enforceability of the remaining provisions and Rules of the Plan which shall
continue in full force and effect.
20.12 These Rules shall be governed by and construed in accordance with English Law.
20.13 The English courts shall have exclusive jurisdiction to determine any dispute which may
arise out of, or in connection with, the Plan.

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APPENDIX 1: OPERATION OF CLAW-BACK

Claw-back prior to the transfer of Shares in respect of an Award (or "malus")
1. Where the Board determines (pursuant to Rule 15 (Claw-back)) that a Claw-back shall
apply in respect of an Award prior to legal title to Shares having been transferred to the
Participant pursuant to the Award (whether before or after vesting), the Claw-back shall be
applied by the Board reducing the number of Shares in respect of which the Award may
vest or, in the case of an Option, be exercised (or after vesting by reducing the number of
Shares legal title to which may be transferred pursuant to the Award) by up to the number
of Shares determined by the Board to be the excess number of Shares in respect of which
the Award was granted and/or is outstanding (and the Award shall lapse to the extent so
reduced, which may be in full).
Claw-back following the transfer of Shares in respect of an Award
2. Where the Board determines (pursuant to Rule 15 (Claw-back)) that a Claw-back shall
apply in respect of an Award following legal title to Shares having been transferred to the
Participant pursuant to the Award (a "Post-Transfer Claw-back"), the Board shall
determine:
a. the excess number of Shares in respect of which the Award vested (the "Excess
Shares"); and
b. the aggregate Market Value of such Excess Shares (as determined by the Board) on
the date on which the Award vested or, in the case of an Option, the date the Option
was exercised (the "Equivalent Value").
3. In the case of a Post-Transfer Claw-back:
a. any dividends received in respect of the Shares subject to a Forfeitable Share Award
pursuant to Rule 6.5 (Dividend rights on forfeitable Shares); and/or
b. any cash payment made or additional Shares transferred pursuant to Rule 11
(Dividend equivalent) in respect of such Award shall be subject to the Claw-back to
the extent that the Board determines that such cash payment or Shares relate to the
Excess Shares.
4. A Post-Transfer Claw-back may be effected in such manner as may be determined by the
Board, and notified to the Participant, including by any one or more of the following:
a. by reducing the number of Shares and/or amount of cash in respect of which an
Outstanding Award vests or may vest (or has vested, but in respect of which no
Shares have yet been transferred or cash payment made), whether before or after
the assessment of performance conditions in respect of such Outstanding Award, by
the number of Excess Shares and/or the Equivalent Value (and such Outstanding
Award shall lapse to the extent so reduced);
b. by setting-off against any amounts payable by any Group Company to the
Participant an amount up to the Equivalent Value (including from any bonus payment
which may otherwise become payable to the Participant); and/or
c. by requiring the Participant to immediately transfer to the Company a number of
Shares equal to the Excess Shares or a cash amount equal to the Equivalent Value
(which shall be an immediately payable debt due to the Company), provided that the
Board may reduce the number of Excess Shares or the amount of the Equivalent
Value subject to the Claw-back in order to take account of any Tax Liability (as
defined in Rule 13 (Tax Liability)) which arose on the Excess Shares (howsoever
delivered to the Participant).
5. For the avoidance of doubt, nothing in Rule 15 (Clawback) or this Appendix shall in any
way restrict a Participant from being able to transfer or otherwise deal in Shares acquired
on vesting or exercise of an Award.
6. In paragraph 4 above:
"Outstanding Award" means any other Award under the Plan, any award or option under
any other Employees' Share Scheme operated from time to time by any Group Company
(other than any award or options granted under any arrangement which satisfies the

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provisions of Schedules 2 or 3, or (unless the terms of such arrangement state that shares
acquired thereunder are subject to claw-back) 4 or 5, of the Income Tax (Earnings and
Pensions) Act 2003), or any bonus award under any bonus scheme operated from time to
time by any Group Company, in each case which is either held by the Participant at the
time of a determination that a Claw-back shall be applied or which are granted to the
Participant following such a determination; and
"vests" shall include shares or cash subject to an award becoming due to be transferred or
paid, and in the case of an option, the option becoming exercisable.

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APPENDIX 2: AWARDS GRANTED TO U.S. TAXPAYERS

1. INTERPRETATION

1.1 This Appendix shall form part of the Rules of the Plan.

1.2 In this Appendix a reference to a "Paragraph" is to a paragraph of this Appendix.

1.3 Capitalized terms used in this Appendix that are not otherwise defined in this Appendix
shall have the meanings set forth in the Plan.

2. APPLICATION

2.1 The provisions of this Appendix shall apply to a Conditional Award or an Option that is held
by any Participant while he or she is a U.S. Taxpayer. For the avoidance of doubt, any
references to an Award in this Appendix shall be to a Conditional Award or an Option (and
not to a Forfeitable Share Award).

2.2 To the extent that any provision of Paragraphs 4 to 10 is inconsistent with any Rule of the
Plan, such provision of this Appendix shall take precedence. Paragraph 3 is included to
aid interpretation.

3. PERFORMANCE AND SERVICE CONDITION

Rule 5 – Performance Condition

3.1 All Awards to which this Appendix applies shall be subject to a Performance Condition,
each element of which shall be assessed over the Performance Period (or, if applicable the
period described in Rule 7.4).
Rule 8 – Cessation of Office or Employment

3.2 All Awards to which this Appendix applies are subject to a service condition which applies
until the Award's Normal Vesting Date or any earlier vesting date.
Paragraph 5 – Awards where the "wait and see approach" shall apply (including all Awards
subject to an extended vesting period); vesting date

3.3 Notwithstanding the date on which a Conditional Award that is subject to Paragraph 5
vests, the Shares in respect of which such Award vests shall not be transferred to the U.S.
Taxpayer until the Normal Vesting Date (subject to any earlier date specified in Paragraph
5.5). Shares in respect of an Option that is subject to Paragraph 5 shall be deemed to be
exercised on the date on which such Option vests pursuant to the Plan, as amended by
this Appendix.
Rule 8 and Paragraph 6 – Cessation of Office or Employment; Award without extended
vesting period and where the Committee does not determine that the "wait and see"
approach shall apply

3.4 An Award that is subject to Paragraph 6 will be subject to a service condition until the date
on which it vests, and (a) Shares in respect of a Conditional Award will be transferred to
the U.S. Taxpayer no later than the 15th day of the third month following the end of the
calendar year in which the Award is no longer subject to a substantial risk of forfeiture
(within the meaning of Code § 409A) and (b) Shares in respect of an Option shall be
deemed to be exercised on the date on which such Option vests.
Rules 7, 8 and 9 – Vesting, Cessation of Office or Employment and Corporate Actions

3.5 Where an Award vests prior to the Normal Vesting Date, the extent of vesting shall be
determined by such applicable Rule.
Lapse

3.6 Awards to which this Appendix applies shall lapse at any time specified in the Rules or this
Appendix.

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4. APPLICATION OF PARAGRAPH 5 AND 6

An Award to which this Appendix applies shall be subject to Paragraph 5 or 6, but shall
only be capable of being subject to one of Paragraph 5 or Paragraph 6, and which such
Paragraph the Award is subject to shall be determined without any involvement of the U.S.
Taxpayer and shall not be capable of change for any reason.

5. AWARDS (I) WHERE THE “WAIT AND SEE” APPROACH SHALL APPLY (INCLUDING
ALL AWARDS SUBJECT TO AN EXTENDED VESTING PERIOD), (II) DESCRIBED IN
PARAGRAPHS 3.1 AND 3.2 OF ADDENDUM I TO THE PLAN OR (III) THAT
OTHERWISE ARE NOT EXEMPT FROM CODE § 409A AS A SHORT-TERM
DEFERRAL

5.1 An Award shall be subject to this Paragraph 5 if:

5.1.1 the Normal Vesting Date of an Award is more than one year after the end of the
Performance Period;

5.1.2 on the Grant Date the U.S. Taxpayer is a director of the Company or a member of
the Management Board of the Company (unless determined otherwise by the
Committee prior to the Grant Date);

5.1.3 such Award is otherwise not exempt from Code § 409A by reason of complying
with the short-term deferral exemption from Code § 409A; and/or

5.1.4 it is so determined by the Committee prior to the Grant Date (including pursuant
to Paragraph 3.2 of Addendum I to the Plan).

5.2 An Award which is subject to this Paragraph 5 shall vest on the earliest of:

5.2.1 the Normal Vesting Date;

5.2.2 any date on which the Award vests pursuant to Rule 9 (subject to Paragraph 5.3);

5.2.3 the U.S. Taxpayer's death; or

5.2.4 any earlier vesting date determined by the Board pursuant to Rule 7.7 or Rule 8.2
(including pursuant to Paragraph 3.1 of Addendum I to the Plan).

5.3 An Award subject to this Paragraph 5:

5.3.1 may only vest under Rule 9 if the event falling within Rule 9 which would give rise
to such vesting constitutes a "change in control event" as described in U.S.
Treasury Regulations or other guidance issued pursuant to Code § 409A; and

5.3.2 to the extent it does not vest by such time, shall lapse on any date on which an
Option would lapse pursuant to Rule 9.2 to 9.6.

5.4 An Award subject to this Paragraph 5 that is an Option shall be deemed to be automatically
exercised to the fullest extent permitted by the Rules on the date on which it vests pursuant
to the Plan, as amended by this Appendix, and such Shares shall become due to be
transferred to the U.S. Taxpayer within 60 days (90 days if such Option vests pursuant to
Paragraph 5.2.3) of such date of automatic exercise.

5.5 Any Shares in respect of which a Conditional Award which is subject to this Paragraph 5
vests shall become due to be transferred to the U.S. Taxpayer within 60 days (90 days in
the case of Paragraph 5.5.2(ii) below) of the earlier of:

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5.5.1 the Normal Vesting Date; or

5.5.2 if applicable, (i) the date set forth in Paragraph 5.2.2; (ii) the date set forth in
Paragraph 5.2.3 or (iii) any applicable date described in Paragraph 5.2.4,
and shall be transferred within such period (and, for the avoidance of doubt, not prior to
such period).

5.6 The Board shall not exercise its discretion in connection with the operation of Rule 8.2.4 in
contradiction of this Paragraph 5.

6. AWARDS WITHOUT AN EXTENDED VESTING PERIOD AND WHERE THE “WAIT AND
SEE” APPROACH DOES NOT APPLY AND THAT ARE OTHERWISE EXEMPT FROM
CODE § 409A AS A SHORT-TERM DEFERRAL

6.1 An Award shall be subject to this Paragraph 6 if the Award is not subject to Paragraph 5.

6.2 An Award which is subject to this Paragraph 6 shall, subject to Rule 7.6, vest on the
earliest of:

6.2.1 the Normal Vesting Date;

6.2.2 any date on which the Award vests pursuant to Rule 9;

6.2.3 the Participant's death;

6.2.4 any earlier vesting date determined by the Board pursuant to Rule 7.7; and

6.2.5 the date on which the U.S. Taxpayer ceases to hold office or employment with
any Group Company for any of the reasons specified in Rule 8.2 (for the
avoidance of doubt subject to Rule 8.8).

6.3 An Award subject to this Paragraph 6 that is an Option shall be deemed to be automatically
exercised to the fullest extent permitted by the Rules on the date on which it vests pursuant
to this Plan, as amended by this Appendix, and such Shares shall become due to be
transferred to the U.S. Taxpayer no later than the 15th day of March in the calendar year
immediately following the calendar year in which the Award is no longer subject to a
substantial risk of forfeiture (within the meaning of Code § 409A).

6.4 Any Shares in respect of which a Conditional Award which is subject to this Paragraph 6
vests shall be transferred to the U.S. Taxpayer no later than the 15th day of March in the
calendar year immediately following the calendar year in which the Award is no longer
subject to a substantial risk of forfeiture (within the meaning of Code § 409A).

6.5 Rule 8.3.1 shall not apply to an Award which is subject to this Paragraph 6.

6.6 The Board shall not exercise its discretion in connection with the operation of Rule 8.2.4 in
contradiction of this Paragraph 6.

7. DIVIDEND EQUIVALENTS
Any payment to which a U.S. Taxpayer may become entitled under Rule 11 with respect to
an Award shall be paid to the U.S. Taxpayer at the same time as the transfer of Shares
under Paragraph 5.4, 5.5, 6.3 or 6.4, as applicable.

8. CASH ALTERNATIVE
8.1 If Shares cannot be delivered in accordance with Paragraph 5.4, 5.5, 6.3 or 6.4, as
applicable, because of a Dealing Restriction, such Award shall instead be satisfied by the
payment of a cash equivalent amount pursuant to Rule 12 (as such Rule is amended by
Paragraph 8.2).
8.2 Any cash payment to which a U.S. Taxpayer may become entitled under Rule 12 with
respect to an Award shall be paid to the U.S. Taxpayer at the same time as the transfer of
Shares would have occurred under Paragraph 5.4, 5.5, 6.3 or 6.4, as applicable.

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9. CODE § 409A EXEMPTION AND COMPLIANCE

9.1 Awards subject to Paragraph 6 are intended to be exempt from Code § 409A to the
maximum extent possible under the exemption for “short-term deferrals” specified in the
Treasury Regulations, and the provisions of this Appendix and the Plan, as it applies to
such Award, shall be construed, interpreted and applied accordingly. Without limiting the
foregoing, the Board shall not exercise any discretion that is otherwise afforded to it under
the Plan in a manner that is inconsistent with such treatment. For the avoidance of doubt,
any Award subject to Paragraph 6 shall, in all events, be paid within the short-term deferral
period specified in Treasury Regulation § 1.409A-1(b)(4).
9.2 To the extent that any Award to which this Appendix applies is subject to Code § 409A, the
provisions of this Appendix and the Plan, as it applies to such Award, shall be construed,
interpreted and applied in such a way as to comply with the applicable provisions of Code §
409A to the maximum extent possible. If an Award is subject to Code § 409A, then: (i) any
payment or transfer of Shares on account of a change in control shall be made only if the
change in control qualifies as a “change in control event,” as defined for purposes of Code
§ 409A; (ii) any provision in the Plan that is inconsistent with the requirements of Code §
409A shall not apply to such Award; (iii) the Board shall exercise discretion otherwise
afforded to it under the Plan (including under Appendix 1 to the Plan) only to the extent that
such exercise of discretion is consistent with the requirements of Code § 409A; and (iv) the
U.S. Taxpayer shall not have the right to designate any payment date with respect to such
Award.
9.3 In the event that a U.S. Taxpayer is deemed to be a "specified employee" on the date of
his or her “separation from service,” as defined for purposes of Code § 409A (other than by
reason of death), determined pursuant to identification methodology adopted by a Group
Company in compliance with Code § 409A, and if any portion of the Shares or other
payments to be received by such U.S. Taxpayer in respect of an Award upon separation
from service would constitute a “deferral of compensation” subject to Code § 409A, then to
the extent necessary to comply with Code § 409A, Shares or amounts that would otherwise
be delivered or payable pursuant to this Plan, as amended by this Appendix, during the six
(6) month period immediately following the date of such U.S. Taxpayer’s separation from
service shall instead be delivered or paid either (i) during the period commencing on the
date that is six (6) months and one (1) day following the date of such U.S. Taxpayer’s
separation from service and ending fifteen (15) days following the first business day of the
seventh month after the date of such separation from service, provided that the U.S.
Taxpayer shall not have the right to designate the delivery or payment date, or (ii) if earlier,
as soon as practicable (and in any event within ninety (90) days) after the U.S. Taxpayer’s
death.
9.4 Each Award hereunder shall constitute a separate payment within the meaning of Treasury
Regulation §1.409A-2(b)(2).

10. COOPERATION
In the event that the terms of this Plan would subject any U.S. Taxpayer to taxes or
penalties under Code § 409A ("409A Penalties"), the Committee, the Company and such
U.S. Taxpayer shall cooperate diligently to amend the terms of the Plan and the U.S.
Taxpayer’s Award agreement to avoid such 409A Penalties, to the extent possible,
provided that in no event shall any Group Company be responsible for any 409A Penalties
that arise in connection with any amounts payable in respect of any Award granted under
this Plan.

11. SETTLEMENT
No Award subject to paragraph 5 of this Appendix shall be settled with Shares from a trust.

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ADDENDUM I: AWARDS GRANTED TO RAI PARTICIPANTS (PRIOR TO 2020)

1. APPLICATION
1.1 This Addendum applies to Participants who are employees of Reynolds American Inc. or a
subsidiary of Reynolds American Inc. (collectively, “RAI” and such Participants, “RAI
Participants”).
1.2 This Addendum sets out certain additional terms which apply in respect of Awards granted
under the Plan to RAI Participants prior to 2020.
1.3 References in this Addendum to a “Rule” is to the Rule of the Plan. Capitalized terms used
in this Addendum shall, save where otherwise defined herein, have the meaning given in
the Rules. To the extent that any provision of this Addendum is inconsistent with any Rule
of the Plan, such provision of this Addendum shall take precedence.

2. MODIFICATION
2.1 The Board may at any time, and without notice to any person, add or alter or discontinue
the terms of this Addendum in any respect without prior notice to any Participant.

3. TERMS
Retirement

3.1 Pursuant to Rule 8.2.5 (Reasons for cessation where Award remain capable of vesting) it
has been determined that Rule 8.1 (Cessation where Awards lapse) shall not apply in
respect of a RAI Participant who ceases to hold office or employment with any Group
Company (within the meaning of Rule 8.8 (Meaning of cessation of office or employment))
in circumstances where the RAI Participant meets the criteria set out below (provided that
this provision shall not apply where, in the opinion of the Board, the RAI Participant has
committed an act or omission which justifies, or in the opinion of the Board would have
justified, summary dismissal of service or notice of cessation of employment on the
grounds of misconduct). The criteria referred to are: a RAI Participant’s voluntary
termination of his or her employment with RAI (i) on or after his or her 65th birthday, (ii) on
or after his or her 55th birthday with 10 or more years of service with RAI, or (iii) on or after
his or her 50th birthday with 20 or more years of service with RAI. RAI shall establish such
policies, procedures, rules and guidelines as it determines to be appropriate to administer
the preceding sentence, including the form and timing of the RAI Participant’s notice of the
RAI Participant’s intent to retire.
3.2 Notwithstanding anything in the Plan or Appendix 2 to the Plan to the contrary, a
Conditional Award or an Option granted to a RAI Participant who is on the Grant Date, or
who may become during the applicable Performance Period, eligible for the application of
the preceding paragraph, shall be subject to the terms of Paragraph 5 of Appendix 2 to the
Plan.
Disability
3.3 With respect to RAI Participants, the reference to “disability” in Rule 8.2 (Reasons for
cessation where Awards remain capable of vesting) shall mean that the RAI Participant
has become eligible for and is in receipt of benefits under RAI’s Long-Term Disability Plan.
RAI shall establish such policies, procedures, rules and guidelines as it determines to be
appropriate to administer the preceding sentence.

4. SETTLEMENT
4.1 Awards granted to RAI Participants may, at the discretion of the Board, be satisfied by the
transfer of British American Tobacco p.l.c. American Depositary Shares, and references in
the Plan (including any Appendix, Schedule or Addendum thereto) to “Shares” shall be
read accordingly.
4.2 No Award subject to this Addendum shall be settled with Shares from a trust.

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ADDENDUM II: AWARDS GRANTED TO RAI PARTICIPANTS (FROM 2020)

1. APPLICATION
1.1 This Addendum applies to Participants who are employees of Reynolds American Inc. or a
subsidiary of Reynolds American Inc. (collectively, “RAI” and such Participants, “RAI
Participants”).
1.2 This Addendum sets out certain additional terms which currently apply in respect of Awards
granted under the Plan to RAI Participants from 2020.
1.3 References in this Addendum to a “Rule” is to the Rule of the Plan. Capitalized terms used
in this Addendum shall, save where otherwise defined herein, have the meaning given in
the Rules. To the extent that any provision of this Addendum is inconsistent with any Rule
of the Plan, such provision of this Addendum shall take precedence.

2. MODIFICATION
2.1 The Board may at any time, and without notice to any person, add or alter or discontinue
the terms of this Addendum in any respect without prior notice to any Participant.

3. TERMS
Disability
3.1 With respect to RAI Participants, the reference to “disability” in Rule 8.2 (Reasons for
cessation where Awards remain capable of vesting) shall mean that the RAI Participant
has become eligible for and is in receipt of benefits under RAI’s Long-Term Disability Plan.
RAI shall establish such policies, procedures, rules and guidelines as it determines to be
appropriate to administer the preceding sentence.

4. SETTLEMENT
4.1 Awards granted to RAI Participants may, at the discretion of the Board, be satisfied by the
transfer of British American Tobacco p.l.c. American Depositary Shares, and references in
the Plan (including any Appendix, Schedule or Addendum thereto) to “Shares” shall be
read accordingly.
4.2 No Award subject to this Addendum shall be settled with Shares from a trust.

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Performance Condition

SCHEDULE 1: PERFORMANCE CONDITIONS

SCHEDULE 1A

PERFORMANCE CONDITION APPLICABLE TO AWARDS GRANTED

IN 2016, 2017 2018, 2019, 2020 and 2021
TO PARTICIPANTS OTHER THAN EXECUTIVE DIRECTORS

1. Subject to the Rules, the extent to which the Shares in respect of which an Award is granted
(the "Award Shares") may vest shall be determined:
a. as to 40% of the Award Shares, by reference to the performance target based on
Earnings per Share specified in paragraph 3 below is satisfied
b. as to 20% of the Award Shares, by reference to the performance target based on
Total Shareholder Return specified in paragraph 4 below;
c. as to 20% of the Award Shares, by reference to the performance target based on the
Operating Cash Flow Conversion Ratio specified in paragraph 5 below; and
d. as to 20% of the Award Shares, by reference to the performance target based on Net
Turnover specified in paragraph 6 below.
2. The Performance Period for
a. Awards granted in 2016 shall commence on 1 January 2016 and end on 31 December
2018;
b. Awards granted in 2017 shall commence on 1 January 2017 and end on 31 December
2019;
c. Awards granted in 2018 shall commence on 1 January 2018 and end on 31 December
2020;
d. Awards granted in 2019 shall commence on 1 January 2019 and end on 31 December
2021;
e. Awards granted in 2020 shall commence on 1 January 2020 and end on 31 December
2022; and
f. Awards granted in 2021 shall commence on 1 January 2021 and end on 31 December
2023.
3. Earnings per Share
a. The performance target in this paragraph 3 (the "EPS Target") shall consist of two
equal, independent elements such that the number of Award Shares which vest
pursuant to this EPS Target shall be the aggregate of the number of Award Shares
which vest pursuant to each element.
b. Each element of the EPS Target operates by calculating the compound annual growth
in adjusted diluted earnings per share (unless the Board determines that an alternative
definition of earnings per share is more appropriate) for the Company, in the case of
the first element measured at current rates of exchange, and in the case of the second
element measured at constant rates of exchange.
EPS Target: current rates of exchange
c. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings
per share over the Performance Period, measured at current rates of exchange, as
follows:

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Performance Condition

Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
current rates of exchange) over the Target
Performance Period

10% pa or greater 20%

Between 10% pa and 5% pa Pro-rata between 20% and 4%

5% pa 4%

Less than 5% pa 0%

EPS Target: constant rates of exchange

d. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings
per share over the Performance Period, measured at constant rates of exchange, as
follows:

Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
constant rates of exchange) over the Target
Performance Period

10% pa or greater 20%

Between 10% pa and 5% pa Pro-rata between 20% and 4%

5% pa 4%

Less than 5% pa 0%

e. For the purposes of paragraphs 3.c and 3.d above, compound annual growth in
adjusted diluted earnings per share over the Performance Period (expressed as a
percentage) is calculated as follows:

E3 ^ 1/3
[ { ( E0 ) } -1
] × 100

Where:
E0 = adjusted diluted earnings per share of the Company in the Financial Year
immediately preceding the Financial Year in which the Performance Period
begins (being "Year 0"); and
E3 = adjusted diluted earnings per share of the Company in the final Financial
Year of the Performance Period (being "Year 3"),
measured at:
i. current rates of exchange for the purposes of paragraph 3.c; and
ii. constant rates of exchange for the purposes of paragraph 3.d, for which purpose
the value of E0 and E3 shall be taken as index values, with the value for E0 being
the base index value (representing adjusted diluted earnings per share in Year 0),

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Performance Condition

with the purpose of such index being to reflect changes over the Performance
Period in adjusted diluted earnings per share of the Company as measured on a
constant currency basis, and E3 being taken as the value of such index for Year
3,
and in either case provided that if the Board determines that a measurement of
earnings per share other than adjusted diluted earnings per share is more appropriate
the calculation shall be on that other basis and this paragraph 3 shall apply
accordingly).

4. TSR Target
a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 4 (the "TSR Target") depends upon the Company's Total
Shareholder Return over the Performance Period relative to the Total Shareholder
Return of the Comparator Group:

Ranked position of the Company's TSR % of the Award Shares which vest
against the relevant comparator pursuant to this TSR Target
companies

Upper quartile or above 20%

Between upper quartile and median Pro-rata between 20% and 4%

Median 4%

Below median 0%

b. For the purpose of this TSR Target:

i. The Comparator Group shall comprise the following companies:

[Altria Group]1 Heineken Nestlé

Anheuser-Busch InBev Imperial Brands PepsiCo Inc
Campbell Soup Company Japan Tobacco Pernod Ricard
Carlsberg A/S Johnson & Johnson Philip Morris International
Coca-Cola Kellogg Procter & Gamble
Colgate-Palmolive Kimberley-Clark Reckitt Benckiser
Danone LVMH [SABMiller]2
Diageo Mondelēz International Unilever
ii. The Total Shareholder Return of the Company and each of the relevant
comparator companies over the relevant Performance Period (expressed as a
percentage) shall be computed as follows:

TSR3 ^ 1/3
{ ( TSR0 ) } -1

1 Included only for Awards granted from 2019

2
Included only for Awards granted in 2016

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Performance Condition

Where:
TSR0 = the average return index of the relevant companies as calculated by
Datastream (or other such data provider as determined by the Board)
(excluding Saturdays and Sundays) in the three months preceding the
beginning of the Performance Period; and
TSR3 = the average return index (calculated in the same manner as for TSR0) in
the 3 months preceding the end of the Performance Period.
iii. Unless the Board determines otherwise, the Total Shareholder Return for the
Company and each of the relevant comparator companies shall be calculated on
a local currency basis.
iv. The Company and the companies in the Comparator Group shall be ranked by
the resulting Total Shareholder Return figures, with the company with the highest
figure having the highest ranking, and median and upper quartile performance
shall be determined on such basis as the Board, acting reasonably, may specify
from time to time.

5. Operating Cash Flow Conversion Ratio Target

a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 5 (the "Operating Cash Flow Conversion Ratio Target")
depends upon the Company's average Operating Cash Flow as a percentage of
Adjusted Operating Profit over the Performance Period:

Average Operating Cash Flow % of the Award Shares which vest

Conversion Ratio over the Performance pursuant to the Operating Cash Flow
Period Conversion Ratio Target

95% or above 20%

Between 95% and 85% Pro-rata between 20% and 4%

85% 4%

Less than 85% of Adjusted Operating 0%

Profit

b. For the purpose of this Operating Cash Flow Conversion Ratio Target:
i. the "Average Operating Cash Flow Conversion Ratio" is the aggregate of the
Operating Cash Flow Conversion Ratios for each Financial Year in the
Performance Period, divided by the number of Financial Years in the Performance
Period; and
ii. the "Operating Cash Flow Conversion Ratio" for a Financial Year (expressed as
a percentage) is calculated as follows:

Operating Cash Flow

( Adjusted Operating Profit ) × 100

Where:
"Operating Cash Flow" in respect of a Financial Year is the adjusted profit from
operations (excluding associates) plus depreciation, amortisation and impairment, plus
other non-cash items, less the increase / (decrease) in working capital, less net capital
expenditure, in each case for such Financial Year. All of these items are excluding

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Performance Condition

costs and movements relating to restructuring and integration in the Financial Year;
and
"Adjusted Operating Profit" in respect of a Financial Year is derived by excluding
the adjusting items from the profit from operations for such Financial Year. Adjusting
items include restructuring and integration costs, amortisation and impairment of
trademarks and similar intangibles, a gain on deemed partial disposal of a trademark
and a payment and release of a provision relating to non-tobacco litigation.
For the purpose of this Operating Cash Flow Conversion Ratio Target, Operating
Cash Flow and Adjusted Operating Profit are calculated at current rates of exchange,
unless the Board determines otherwise.

6. Net Turnover Target

a. The performance target in this paragraph 6 (the "NTO Target") operates by
calculating the compound annual growth in the Net Turnover of the Company,
measured at constant rates of exchange on an organic basis.
b. The percentage of the Award Shares which may vest pursuant to this NTO Target
depends upon the compound annual growth in Net Turnover over the Performance
Period as follows:

Compound annual growth of Net % of the Award Shares which vest

Turnover over the Performance Period pursuant to this NTO Target

5% pa or greater 20%

Between 5% pa and 3% pa Pro-rata between 20% and 4%

3% pa 4%

Less than 3% pa 0%

provided that, notwithstanding above, but subject to the Rules, no Award Shares
shall vest pursuant to this NTO Target unless the three-year constant currency
compound annual growth rate of underlying adjusted operating profit exceeds the
compound annual growth rate of the threshold performance level for underlying
adjusted operating profit, as defined annually in the International Executive Incentive
Scheme (as approved by the Board).
c. For the purposes of this NTO Target, compound annual growth of Net Turnover
(expressed as a percentage) is calculated as follows:

NTO3 ^ 1/3
[ { ( NTO0
) } -1 ] X 100

Where:
NTO0 = Net Turnover in the Financial Year immediately preceding the Financial Year
in which the Performance Period begins (being "Year 0"); and
NTO3 = Net Turnover in the final Financial Year of the Performance Period (being
"Year 3"),
measured at constant rates of exchange, for which purpose the value of NTO0 and
NTO3 shall be taken as index values, with the value for NTO0 being the base index
value (representing Net Turnover in Year 0), with the purpose of such index being to
reflect changes over the Performance Period in Net Turnover of the Company as
measured on a constant currency basis, and NTO3 being taken as the value of such

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Performance Condition

index for Year 3, and where the values for NTO3 and/or NTO0 shall be adjusted in
such manner as is determined by the Board to exclude any Net Turnover attributable
to any business acquired or disposed of during the Performance Period or otherwise
with the intention that the growth in Net Turnover is assessed by reference to organic
growth.

7. Exchange rates
In this Schedule:
"current rates of exchange" means exchange rates applied for each year relevant to a
given calculation based on the average exchange rate in that year; and
"constant rates of exchange" means exchange rates applied based on a re-translation, at
prior year exchange rates, of the current year information, in order that the same exchange
rates are applied for each year relevant to a given calculation.

8. Adjustment to vesting outcome

a. After the performance targets in paragraphs 3 to 6 have been assessed, the Board
may make such adjustment to the percentage of Shares of the Award Shares that vest
pursuant to one or more of such performance targets to ensure a fair result for both
the Participants and shareholders.
b. An adjustment pursuant to this paragraph 8 may be either positive (but, for the
avoidance of doubt, not so that the percentage of the Award Shares which vests
pursuant to any one of the performance targets in paragraphs 3 to 6 exceeds the
maximum percentage of the Award Shares which may vest pursuant to that
performance target, as set out in paragraph 1) or negative (including reducing the
percentage of Awards Shares which vest to nil). For the avoidance of doubt, where
the Board makes any adjustment pursuant to this paragraph 8 the percentage of
Award Shares to be transferred shall be the percentage as adjusted by the Board
notwithstanding the outcome of the performance targets as set out in paragraphs 3 to
6.
c. For the avoidance of doubt, vesting outcomes are subject to any forfeiture or reduction
of Awards pursuant to Rule 15 (Claw-back).

9. Adjustments to performance targets

a. In the event of:
i. a change to the accounting standards of the Company or similar event;
ii. any events which affect any of the companies comprised in the Comparator
Group (such as a merger or de-listing);
iii. any variation of capital of the Company or a demerger, delisting, special
dividend, rights issue or other event which may, in the opinion of the Board,
affect the current or future value of the Company's shares; or
iv. any other similar event the Board considers relevant which may unduly affect
the calculation of the performance targets set out in paragraphs 3 to 6,
the Board may make such adjustments to the terms of this Performance Condition as
it determines appropriate to reflect such event with the intention of ensuring that this
Performance Condition continues to assess the performance of the Company on a
consistent basis over the Performance Period.
b. This Performance Condition may be amended in accordance with Rule 5.4 of the
Plan.

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Performance Condition

General
10. References in this Schedule 1A to a paragraph are to a paragraph of this Schedule 1A.

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Performance Condition

SCHEDULE 1B

PERFORMANCE CONDITION APPLICABLE TO AWARDS GRANTED

IN 2016, 2017, 2018, 2019, 2020 and 2021
TO EXECUTIVE DIRECTORS OF THE COMPANY

1. Subject to the Rules, the extent to which the Shares in respect of which an Award is granted
(the "Award Shares") may vest shall be determined:
a. as to 40% of the Award Shares, by reference to the performance target based on
Earnings per Share specified in paragraph 3 below is satisfied
b. as to 20% of the Award Shares, by reference to the performance target based on
Total Shareholder Return specified in paragraph 4 below;
c. as to 20% of the Award Shares, by reference to the performance target based on the
Operating Cash Flow Conversion Ratio specified in paragraph 5 below; and
d. as to 20% of the Award Shares, by reference to the performance target based on Net
Turnover specified in paragraph 6 below.

2. The Performance Period for:

a. Awards granted in 2016 shall commence on 1 January 2016 and end on 31
December 2018;
b. Awards granted in 2017 shall commence on 1 January 2017 and end on 31
December 2019;
c. Awards granted in 2018 shall commence on 1 January 2018 and end on 31
December 2020;
d. Awards granted in 2019 shall commence on 1 January 2019 and end on 31
December 2021;
e. Awards granted in 2020 shall commence on 1 January 2020 and end on 31
December 2022; and
f. Awards granted in 2021 shall commence on 1 January 2021 and end on 31
December 2023.
3. Earnings per Share
a. The performance target in this paragraph 3 (the "EPS Target") shall consist of two
equal, independent elements such that the number of Award Shares which vest
pursuant to this EPS Target shall be the aggregate of the number of Award Shares
which vest pursuant to each element.
b. Each element of the EPS Target operates by calculating the compound annual growth
in adjusted diluted earnings per share for the Company, in the case of the first element
measured at current rates of exchange, and in the case of the second element
measured at constant rates of exchange.
EPS Target: current rates of exchange
c. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings
per share over the Performance Period, measured at current rates of exchange, as
follows:

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Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
current rates of exchange) over the Target
Performance Period

10% pa or greater 20%

Between 10% pa and 5% pa Pro-rata between 20% and 3%

5% pa 3%

Less than 5% pa 0%

EPS Target: constant rates of exchange

d. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings
per share over the Performance Period, measured at constant rates of exchange, as
follows:

Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
constant rates of exchange) over the Target
Performance Period

10% pa or greater 20%

Between 10% pa and 5% pa Pro-rata between 20% and 3%

5% pa 3%

Less than 5% pa 0%

e. For the purposes of paragraphs 3.c and 3.d above, compound annual growth in
adjusted diluted earnings per share over the Performance Period (expressed as a
percentage) is calculated as follows:

E3 ^ 1/3
[ { ( E0 ) } -1
] × 100

Where:
E0 = adjusted diluted earnings per share of the Company in the Financial Year
immediately preceding the Financial Year in which the Performance Period
begins (being "Year 0"); and
E3 = adjusted diluted earnings per share of the Company in the final Financial
Year of the Performance Period (being "Year 3"),
measured at:
i. current rates of exchange for the purposes of paragraph 3.c; and
ii. constant rates of exchange for the purposes of paragraph 3.d, for which purpose
the value of E0 and E3 shall be taken as index values, with the value for E0 being
the base index value (representing adjusted diluted earnings per share in Year 0),
with the purpose of such index being to reflect changes over the Performance

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Period in adjusted diluted earnings per share of the Company as measured on a

constant currency basis, and E3 being taken as the value of such index for Year
3.

4. TSR Target
a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 4 (the "TSR Target") depends upon the Company's Total
Shareholder Return over the Performance Period relative to the Total Shareholder
Return of the Comparator Group:

Ranked position of the Company's TSR % of the Award Shares which vest
against the relevant comparator pursuant to this TSR Target
companies

Upper quartile or above 20%

Between upper quartile and median Pro-rata between 20% and 3%

Median 3%

Below median 0%

b. For the purpose of this TSR Target:

i. The Comparator Group shall comprise the following companies:

[Altria Group]3 Heineken Nestlé

Anheuser-Busch InBev Imperial Brands PepsiCo Inc
Campbell Soup Company Japan Tobacco Pernod Ricard
Carlsberg A/S Johnson & Johnson Philip Morris International
Coca-Cola Kellogg Procter & Gamble
Colgate-Palmolive Kimberley-Clark Reckitt Benckiser
Danone LVMH [SABMiller]4
Diageo Mondelēz International Unilever
ii. The Total Shareholder Return of the Company and each of the relevant
comparator companies over the relevant Performance Period (expressed as a
percentage) shall be computed as follows:

TSR3 ^ 1/3
{ ( TSR0 ) } -1

Where:
TSR0 = the average return index of the relevant companies as calculated by
Datastream (or other such data provider as determined by the Board)

3 Included only for Awards granted from 2019

4
Included only for Awards granted in 2016

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(excluding Saturdays and Sundays) in the three months preceding the

beginning of the Performance Period; and
TSR3 = the average return index (calculated in the same manner as for TSR0) in
the 3 months preceding the end of the Performance Period.
iii. The Total Shareholder Return for the Company and each of the relevant
comparator companies shall be calculated on a local currency basis.
iv. The Company and the companies in the Comparator Group shall be ranked by
the resulting Total Shareholder Return figures, with the company with the highest
figure having the highest ranking, and median and upper quartile performance
shall be determined on such basis as the Board, acting reasonably, may specify
from time to time.

5. Operating Cash Flow Conversion Ratio Target

a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 5 (the "Operating Cash Flow Conversion Ratio Target")
depends upon the Company's average Operating Cash Flow as a percentage of
Adjusted Operating Profit over the Performance Period:

Average Operating Cash Flow % of the Award Shares which vest

Conversion Ratio over the Performance pursuant to the Operating Cash Flow
Period Conversion Ratio Target

95% or above 20%

Between 95% and 85% Pro-rata between 20% and 3%

85% 3%

Less than 85% of Adjusted Operating 0%

Profit

b. For the purpose of this Operating Cash Flow Conversion Ratio Target:
i. the "Average Operating Cash Flow Conversion Ratio" is the aggregate of the
Operating Cash Flow Conversion Ratios for each Financial Year in the
Performance Period, divided by the number of Financial Years in the
Performance Period; and
ii. the "Operating Cash Flow Conversion Ratio" for a Financial Year (expressed
as a percentage) is calculated as follows:

Operating Cash Flow

( Adjusted Operating Profit ) × 100

Where:
"Operating Cash Flow" in respect of a Financial Year is the adjusted profit from
operations (excluding associates) plus depreciation, amortisation and impairment, plus
other non-cash items, less the increase / (decrease) in working capital, less net capital
expenditure, in each case for such Financial Year. All of these items are excluding
costs and movements relating to restructuring and integration in the Financial Year;
and

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"Adjusted Operating Profit" in respect of a Financial Year is derived by excluding

the adjusting items from the profit from operations for such Financial Year. Adjusting
items include restructuring and integration costs, amortisation and impairment of
trademarks and similar intangibles, a gain on deemed partial disposal of a trademark
and a payment and release of a provision relating to non-tobacco litigation.
For the purpose of this Operating Cash Flow Conversion Ratio Target, Operating
Cash Flow and Adjusted Operating Profit are calculated at current rates of exchange.

6. Net Turnover Target

a. The performance target in this paragraph 6 (the "NTO Target") operates by
calculating the compound annual growth in the Net Turnover of the Company,
measured at constant rates of exchange on an organic basis.
b. The percentage of the Award Shares which may vest pursuant to this NTO Target
depends upon the compound annual growth in Net Turnover over the Performance
Period as follows:

Compound annual growth of Net % of the Award Shares which vest

Turnover over the Performance Period pursuant to this NTO Target

5% pa or greater 20%

Between 5% pa and 3% pa Pro-rata between 20% and 3%

3% pa 3%

Less than 3% pa 0%

provided that, notwithstanding above, but subject to the Rules, no Award Shares
shall vest pursuant to this NTO Target unless the three-year constant currency
compound annual growth rate of underlying adjusted operating profit exceeds the
compound annual growth rate of the threshold performance level for underlying
adjusted operating profit, as defined annually in the International Executive Incentive
Scheme (as approved by the Board).
c. For the purposes of this NTO Target, compound annual growth of Net Turnover
(expressed as a percentage) is calculated as follows:

NTO3 ^ 1/3
[ { ( NTO0
) } -1 ] X 100

Where:
NTO0 = Net Turnover in the Financial Year immediately preceding the Financial Year
in which the Performance Period begins (being "Year 0"); and
NTO3 = Net Turnover in the final Financial Year of the Performance Period (being
"Year 3"),
measured at constant rates of exchange, for which purpose the value of NTO0 and
NTO3 shall be taken as index values, with the value for NTO0 being the base index
value (representing Net Turnover in Year 0), with the purpose of such index being to
reflect changes over the Performance Period in Net Turnover of the Company as
measured on a constant currency basis, with NTO3 being taken as the value of such
index for Year 3, and where the values for NTO3 and/or NTO0 shall be adjusted in
such manner as is determined by the Board to exclude any Net Turnover attributable

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to any business acquired or disposed of during the Performance Period or otherwise

with the intention that the growth in Net Turnover is assessed by reference to organic
growth.

7. Exchange rates
In this Schedule:
"current rates of exchange" means exchange rates applied for each year relevant to a
given calculation based on the average exchange rate in that year; and
"constant rates of exchange" means exchange rates applied based on a re-translation, at
prior year exchange rates, of the current year information, in order that the same exchange
rates are applied for each year relevant to a given calculation.

8. Adjustment to vesting outcome

a. After the performance targets in paragraphs 3 to 6 have been assessed, the Board
may make such adjustment to the percentage of Shares of the Award Shares that vest
pursuant to one or more of such performance targets to ensure a fair result for both
the Participants and shareholders.
b. An adjustment pursuant to this paragraph 8 may be either positive (but, for the
avoidance of doubt, not so that the percentage of the Award Shares which vests
pursuant to any one of the performance targets in paragraphs 3 to 6 exceeds the
maximum percentage of the Award Shares which may vest pursuant to that
performance target, as set out in paragraph 1) or negative (including reducing the
percentage of Awards Shares which vest to nil). For the avoidance of doubt, where
the Board makes any adjustment pursuant to this paragraph 8 the percentage of
Award Shares to be transferred shall be the percentage as adjusted by the Board
notwithstanding the outcome of the performance targets as set out in paragraphs 3 to
6.
c. For the avoidance of doubt, vesting outcomes are subject to any forfeiture or reduction
of Awards pursuant to Rule 15 (Claw-back).

9. Adjustments to performance targets

a. In the event of:
i. a change to the accounting standards of the Company or similar event;
ii. any events which affect any of the companies comprised in the
Comparator Group (such as a merger or de-listing);
iii. any variation of capital of the Company or a demerger, delisting, special
dividend, rights issue or other event which may, in the opinion of the
Board, affect the current or future value of the Company's shares; or
iv. any other similar event the Board considers relevant which may unduly
affect the calculation of the performance targets set out in paragraphs 3 to
6,
the Board may make such adjustments to the terms of this Performance Condition as
it determines appropriate to reflect such event with the intention of ensuring that this
Performance Condition continues to assess the performance of the Company on a
consistent basis over the Performance Period.
b. This Performance Condition may be amended in accordance with Rule 5.4 of the
Plan.

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General
10. References in this Schedule 1B to a paragraph are to a paragraph of this Schedule 1B.

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Performance Condition

SCHEDULE 1C

PERFORMANCE CONDITION APPLICABLE TO AWARDS GRANTED

IN 2022 and 2023
TO PARTICIPANTS OTHER THAN EXECUTIVE DIRECTORS

1. Subject to the Rules, the extent to which the Shares in respect of which an Award is granted
(the "Award Shares") may vest shall be determined:
a. as to 15% of the Award Shares, by reference to the performance target based on
Group Net Turnover specified in paragraph 3 below;
b. as to 15% of the Award Shares, by reference to the performance target based on New
Categories Net Turnover specified in paragraph 4 below;
c. as to 30% of the Award Shares, by reference to the performance target based on
Earnings per Share specified in paragraph 5 below is satisfied
d. as to 20% of the Award Shares, by reference to the performance target based on the
Operating Cash Flow Conversion Ratio specified in paragraph 6 below;
e. as to 20% of the Award Shares, by reference to the performance target based on
Total Shareholder Return specified in paragraph 7 below; and
2. The Performance Period for:
a. Awards granted in 2022 shall commence on 1 January 2022 and end on 31 December
2024; and
b. Awards granted in 2023 shall commence on 1 January 2023 and end on 31 December
2025.
3. Net Turnover Target
a. The performance target in this paragraph 3 (the "NTO Target") operates by calculating
the compound annual growth in the Net Turnover of the Company, measured at constant
rates of exchange on an organic basis.
b. The percentage of the Award Shares which may vest pursuant to this NTO Target
depends upon the compound annual growth in Net Turnover over the Performance
Period as follows:

Compound annual growth of Net % of the Award Shares which vest

Turnover over the Performance Period pursuant to this NTO Target

5% pa or greater 15%

Between 5% pa and 3% pa Pro-rata between 15% and 3%

3% pa 3%

Less than 3% pa 0%

provided that, notwithstanding above, but subject to the Rules, no Award Shares
shall vest pursuant to this NTO Target unless the three-year constant currency
compound annual growth rate of underlying adjusted operating profit exceeds the
compound annual growth rate of the threshold performance level for underlying
adjusted operating profit, as defined annually in the International Executive Incentive
Scheme (as approved by the Board).

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c. For the purposes of this NTO Target, compound annual growth of Net Turnover
(expressed as a percentage) is calculated as follows:

NTO3 ^ 1/3
[ { ( NTO0
) } -1 ] X 100

Where:
NTO0 = Net Turnover in the Financial Year immediately preceding the Financial Year
in which the Performance Period begins (being "Year 0"); and
NTO3 = Net Turnover in the final Financial Year of the Performance Period (being
"Year 3"),
measured at constant rates of exchange, for which purpose the value of NTO0 and
NTO3 shall be taken as index values, with the value for NTO0 being the base index
value (representing Net Turnover in Year 0), with the purpose of such index being to
reflect changes over the Performance Period in Net Turnover of the Company as
measured on a constant currency basis, and NTO3 being taken as the value of such
index for Year 3, and where the values for NTO3 and/or NTO0 shall be adjusted in
such manner as is determined by the Board to exclude any Net Turnover attributable
to any business acquired or disposed of during the Performance Period or otherwise
with the intention that the growth in Net Turnover is assessed by reference to organic
growth.
4. New Categories Net Turnover Target
a. The performance target in this paragraph 4 (the "NC NTO Target") operates by
calculating the compound annual growth in the New Categories Net Turnover of the
Company, measured at constant rates of exchange on an organic basis.
b. The percentage of the Award Shares which may vest pursuant to this NC NTO Target
depends upon the compound annual growth in New Categories Net Turnover over the
Performance Period as follows:

Compound annual growth of Net % of the Award Shares which vest

Turnover over the Performance Period pursuant to this NTO Target

30% pa or greater 15%

Between 30% pa and 20% pa Pro-rata between 15% and 3%

20% pa 3%

Less than 20% pa 0%

c. For the purposes of this NC NTO Target, compound annual growth of New Categories
Net Turnover (expressed as a percentage) is calculated as follows:

NC NTO3 ^ 1/3
[ { ( NC NTO0
) } -1 ] X 100

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Where:
NC NTO0 = New Categories Net Turnover in the Financial Year immediately
preceding the Financial Year in which the Performance Period begins
(being "Year 0"); and
NC NTO3 = New Categories Net Turnover in the final Financial Year of the
Performance Period (being "Year 3"),
measured at constant rates of exchange, for which purpose the value of NC NTO0 and
NC NTO3 shall be taken as index values, with the value for NC NTO0 being the base
index value (representing New Categories Net Turnover in Year 0), with the purpose
of such index being to reflect changes over the Performance Period in New
Categories Net Turnover of the Company as measured on a constant currency basis,
and NC NTO3 being taken as the value of such index for Year 3, and where the values
for NC NTO3 and/or NC NTO0 may be adjusted in such manner as is determined by
the Board to exclude any New Categories Net Turnover attributable to any business
acquired or disposed of during the Performance Period or otherwise with the intention
that the growth in New Categories Net Turnover is assessed by reference to organic
growth.

5. Earnings per Share

a. The performance target in this paragraph 5 (the "EPS Target") shall consist of two
equal, independent elements such that the number of Award Shares which vest
pursuant to this EPS Target shall be the aggregate of the number of Award Shares
which vest pursuant to each element.
b. Each element of the EPS Target operates by calculating the compound annual growth
in adjusted diluted earnings per share (unless the Board determines that an alternative
definition of earnings per share is more appropriate) for the Company, in the case of
the first element measured at current rates of exchange, and in the case of the second
element measured at constant rates of exchange.
EPS Target: current rates of exchange
c. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings
per share over the Performance Period, measured at current rates of exchange, as
follows:

Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
current rates of exchange) over the Target
Performance Period

10% pa or greater 15%

Between 10% pa and 5% pa Pro-rata between 15% and 3%

5% pa 3%

Less than 5% pa 0%

EPS Target: constant rates of exchange

d. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings

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Performance Condition

per share over the Performance Period, measured at constant rates of exchange, as
follows:

Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
constant rates of exchange) over the Target
Performance Period

10% pa or greater 15%

Between 10% pa and 5% pa Pro-rata between 15% and 3%

5% pa 3%

Less than 5% pa 0%

e. For the purposes of paragraphs 5.c and 5.d above, compound annual growth in
adjusted diluted earnings per share over the Performance Period (expressed as a
percentage) is calculated as follows:

E3 ^ 1/3
[ { ( E0 ) } -1
] × 100

Where:
E0 = adjusted diluted earnings per share of the Company in the Financial Year
immediately preceding the Financial Year in which the Performance Period
begins (being "Year 0"); and
E3 = adjusted diluted earnings per share of the Company in the final Financial
Year of the Performance Period (being "Year 3"),
measured at:
i. current rates of exchange for the purposes of paragraph 5.c; and
ii. constant rates of exchange for the purposes of paragraph 5.d, for which purpose
the value of E0 and E3 shall be taken as index values, with the value for E0 being
the base index value (representing adjusted diluted earnings per share in Year 0),
with the purpose of such index being to reflect changes over the Performance
Period in adjusted diluted earnings per share of the Company as measured on a
constant currency basis, and E3 being taken as the value of such index for Year
3,
and in either case provided that if the Board determines that a measurement of
earnings per share other than adjusted diluted earnings per share is more appropriate
the calculation shall be on that other basis and this paragraph 5 shall apply
accordingly).

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6. Operating Cash Flow Conversion Ratio Target

a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 6 (the "Operating Cash Flow Conversion Ratio Target")
depends upon the Company's average Operating Cash Flow as a percentage of
Adjusted Operating Profit over the Performance Period:

Average Operating Cash Flow % of the Award Shares which vest

Conversion Ratio over the Performance pursuant to the Operating Cash Flow
Period Conversion Ratio Target

95% or above 20%

Between 95% and 85% Pro-rata between 20% and 4%

85% 4%

Less than 85% of Adjusted Operating 0%

Profit

b. For the purpose of this Operating Cash Flow Conversion Ratio Target:
i. the "Average Operating Cash Flow Conversion Ratio" is the aggregate of the
Operating Cash Flow Conversion Ratios for each Financial Year in the
Performance Period, divided by the number of Financial Years in the Performance
Period; and
ii. the "Operating Cash Flow Conversion Ratio" for a Financial Year (expressed as
a percentage) is calculated as follows:

Operating Cash Flow

( Adjusted Operating Profit ) × 100

Where:
"Operating Cash Flow" in respect of a Financial Year is the adjusted profit from
operations (excluding associates) plus depreciation, amortisation and impairment, plus
other non-cash items, less the increase / (decrease) in working capital, less net capital
expenditure, in each case for such Financial Year. All of these items are excluding
costs and movements relating to restructuring and integration in the Financial Year;
and
"Adjusted Operating Profit" in respect of a Financial Year is derived by excluding
the adjusting items from the profit from operations for such Financial Year. Adjusting
items include restructuring and integration costs, amortisation and impairment of
trademarks and similar intangibles, a gain on deemed partial disposal of a trademark
and a payment and release of a provision relating to non-tobacco litigation.
For the purpose of this Operating Cash Flow Conversion Ratio Target, Operating
Cash Flow and Adjusted Operating Profit are calculated at current rates of exchange,
unless the Board determines otherwise.
7. TSR Target
a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 7 (the "TSR Target") depends upon the Company's Total
Shareholder Return over the Performance Period relative to the Total Shareholder
Return of the Comparator Group:

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Ranked position of the Company's TSR % of the Award Shares which vest
against the relevant comparator pursuant to this TSR Target
companies

Upper quartile or above 20%

Between upper quartile and median Pro-rata between 20% and 4%

Median 4%

Below median 0%

b. For the purpose of this TSR Target:

i. The Comparator Group shall comprise the following companies:

Altria Group PepsiCo Inc

Anheuser-Busch InBev Pernod Ricard
Carlsberg A/S Philip Morris International
Coca Cola Procter & Gamble
Diageo Reckitt Benckiser
Heineken Unilever
Imperial Brands
Japan Tobacco

ii. The Total Shareholder Return of the Company and each of the relevant
comparator companies over the relevant Performance Period (expressed as a
percentage) shall be computed as follows:

TSR3 ^ 1/3
[ { ( TSR0
) } -1 ] × 100

Where:
TSR0 = the average return index of the relevant companies as calculated by
Datastream (or other such data provider as determined by the Board)
(excluding Saturdays and Sundays) in the three months preceding the
beginning of the Performance Period; and
TSR3 = the average return index (calculated in the same manner as for TSR0) in
the 3 months preceding the end of the Performance Period.
iii. Unless the Board determines otherwise, the Total Shareholder Return for the
Company and each of the relevant comparator companies shall be calculated on
a local currency basis.
iv. The Company and the companies in the Comparator Group shall be ranked by
the resulting Total Shareholder Return figures, with the company with the highest
figure having the highest ranking, and median and upper quartile performance
shall be determined on such basis as the Board, acting reasonably, may specify
from time to time.

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8. Exchange rates
In this Schedule:
"current rates of exchange" means exchange rates applied for each year relevant to a
given calculation based on the average exchange rate in that year; and
"constant rates of exchange" means exchange rates applied based on a re-translation, at
prior year exchange rates, of the current year information, in order that the same exchange
rates are applied for each year relevant to a given calculation.

9. Adjustment to vesting outcome

a. After the performance targets in paragraphs 3 to 7 have been assessed, the Board
may make such adjustment to the percentage of Shares of the Award Shares that vest
pursuant to one or more of such performance targets to ensure a fair result for both
the Participants and shareholders.
b. An adjustment pursuant to this paragraph 9 may be either positive (but, for the
avoidance of doubt, not so that the percentage of the Award Shares which vests
pursuant to any one of the performance targets in paragraphs 3 to 7 exceeds the
maximum percentage of the Award Shares which may vest pursuant to that
performance target, as set out in paragraph 1) or negative (including reducing the
percentage of Awards Shares which vest to nil). For the avoidance of doubt, where
the Board makes any adjustment pursuant to this paragraph 9 the percentage of
Award Shares to be transferred shall be the percentage as adjusted by the Board
notwithstanding the outcome of the performance targets as set out in paragraphs 3 to
7.
c. For the avoidance of doubt, vesting outcomes are subject to any forfeiture or reduction
of Awards pursuant to Rule 15 (Claw-back).

10. Adjustments to performance targets

a. In the event of:
i. a change to the accounting standards of the Company or similar event;
ii. any events which affect any of the companies comprised in the Comparator
Group (such as a merger or de-listing);
iii. any variation of capital of the Company or a demerger, delisting, special
dividend, rights issue or other event which may, in the opinion of the Board,
affect the current or future value of the Company's shares; or
iv. any other similar event the Board considers relevant which may unduly affect
the calculation of the performance targets set out in paragraphs 3 to 7,
the Board may make such adjustments to the terms of this Performance Condition as
it determines appropriate to reflect such event with the intention of ensuring that this
Performance Condition continues to assess the performance of the Company on a
consistent basis over the Performance Period.
b. This Performance Condition may be amended in accordance with Rule 5.4 of the
Plan.

General
11. References in this Schedule 1C to a paragraph are to a paragraph of this Schedule 1C.

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Performance Condition

SCHEDULE 1D

PERFORMANCE CONDITION APPLICABLE TO AWARDS GRANTED

IN 2022 and 2023
FOR EXECUTIVE DIRECTORS OF THE COMPANY

1. Subject to the Rules, the extent to which the Shares in respect of which an Award is granted
(the "Award Shares") may vest shall be determined:
a. as to 15% of the Award Shares, by reference to the performance target based on
Group Net Turnover specified in paragraph 3 below;
b. as to 15% of the Award Shares, by reference to the performance target based on New
Categories Net Turnover specified in paragraph 4 below;
c. as to 30% of the Award Shares, by reference to the performance target based on
Earnings per Share specified in paragraph 5 below is satisfied
d. as to 20% of the Award Shares, by reference to the performance target based on the
Operating Cash Flow Conversion Ratio specified in paragraph 6 below;
e. as to 20% of the Award Shares, by reference to the performance target based on
Total Shareholder Return specified in paragraph 7 below; and
2. The Performance Period for:
a. Awards granted in 2022 shall commence on 1 January 2022 and end on 31
December 2024; and
b. Awards granted in 2023 shall commence on 1 January 2023 and end on 31
December 2025.
3. Net Turnover Target
a. The performance target in this paragraph 3 (the "NTO Target") operates by
calculating the compound annual growth in the Net Turnover of the Company,
measured at constant rates of exchange on an organic basis.
b. The percentage of the Award Shares which may vest pursuant to this NTO Target
depends upon the compound annual growth in Net Turnover over the Performance
Period as follows:

Compound annual growth of Net % of the Award Shares which vest

Turnover over the Performance Period pursuant to this NTO Target

5% pa or greater 15%

Between 5% pa and 3% pa Pro-rata between 15% and 2.25%

3% pa 2.25%

Less than 3% pa 0%

provided that, notwithstanding above, but subject to the Rules, no Award Shares
shall vest pursuant to this NTO Target unless the three-year constant currency
compound annual growth rate of underlying adjusted operating profit exceeds the
compound annual growth rate of the threshold performance level for underlying
adjusted operating profit, as defined annually in the International Executive Incentive
Scheme (as approved by the Board).

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c. For the purposes of this NTO Target, compound annual growth of Net Turnover
(expressed as a percentage) is calculated as follows:

NTO3 ^ 1/3
[ { ( NTO0
) } -1 ] X 100

Where:
NTO0 = Net Turnover in the Financial Year immediately preceding the Financial Year
in which the Performance Period begins (being "Year 0"); and
NTO3 = Net Turnover in the final Financial Year of the Performance Period (being
"Year 3"),
measured at constant rates of exchange, for which purpose the value of NTO0 and
NTO3 shall be taken as index values, with the value for NTO0 being the base index
value (representing Net Turnover in Year 0), with the purpose of such index being to
reflect changes over the Performance Period in Net Turnover of the Company as
measured on a constant currency basis, and NTO3 being taken as the value of such
index for Year 3, and where the values for NTO3 and/or NTO0 shall be adjusted in
such manner as is determined by the Board to exclude any Net Turnover attributable
to any business acquired or disposed of during the Performance Period or otherwise
with the intention that the growth in Net Turnover is assessed by reference to organic
growth.
4. New Categories Net Turnover Target
a. The performance target in this paragraph 4 (the "NC NTO Target") operates by
calculating the compound annual growth in the New Categories Net Turnover of the
Company, measured at constant rates of exchange on an organic basis.
b. The percentage of the Award Shares which may vest pursuant to this NC NTO Target
depends upon the compound annual growth in New Categories Net Turnover over the
Performance Period as follows:

Compound annual growth of Net % of the Award Shares which vest

Turnover over the Performance Period pursuant to this NTO Target

30% pa or greater 15%

Between 30% pa and 20% pa Pro-rata between 15% and 2.25%

20% pa 2.25%

Less than 20% pa 0%

c. For the purposes of this NC NTO Target, compound annual growth of New Categories
Net Turnover (expressed as a percentage) is calculated as follows:

NC NTO3 ^ 1/3
[ { ( NC NTO0
) } -1 ] X 100

Where:
NC NTO0 = New Categories Net Turnover in the Financial Year immediately
preceding the Financial Year in which the Performance Period begins
(being "Year 0"); and

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 British American Tobacco 2016 Long Term Incentive Plan
Performance Condition

NC NTO3 = New Categories Net Turnover in the final Financial Year of the
Performance Period (being "Year 3"),
measured at constant rates of exchange, for which purpose the value of NC NTO0 and
NC NTO3 shall be taken as index values, with the value for NC NTO0 being the base
index value (representing New Categories Net Turnover in Year 0), with the purpose
of such index being to reflect changes over the Performance Period in New
Categories Net Turnover of the Company as measured on a constant currency basis,
and NC NTO3 being taken as the value of such index for Year 3, and where the values
for NC NTO3 and/or NC NTO0 may be adjusted in such manner as is determined by
the Board to exclude any New Categories Net Turnover attributable to any business
acquired or disposed of during the Performance Period or otherwise with the intention
that the growth in New Categories Net Turnover is assessed by reference to organic
growth.
5. Earnings per Share
a. The performance target in this paragraph 5 (the "EPS Target") shall consist of two
equal, independent elements such that the number of Award Shares which vest
pursuant to this EPS Target shall be the aggregate of the number of Award Shares
which vest pursuant to each element.
b. Each element of the EPS Target operates by calculating the compound annual growth
in adjusted diluted earnings per share (unless the Board determines that an alternative
definition of earnings per share is more appropriate) for the Company, in the case of
the first element measured at current rates of exchange, and in the case of the second
element measured at constant rates of exchange.
EPS Target: current rates of exchange
c. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings
per share over the Performance Period, measured at current rates of exchange, as
follows:

Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
current rates of exchange) over the Target
Performance Period

10% pa or greater 15%

Between 10% pa and 5% pa Pro-rata between 15% and 2.25%

5% pa 2.25%

Less than 5% pa 0%

EPS Target: constant rates of exchange

d. The percentage of the Award Shares which may vest pursuant to this element of the
EPS Target depends upon the compound annual growth in adjusted diluted earnings
per share over the Performance Period, measured at constant rates of exchange, as
follows:

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 British American Tobacco 2016 Long Term Incentive Plan
Performance Condition

Compound annual growth rate in % of the Award Shares which vest

adjusted diluted EPS (measured at pursuant to this element of the EPS
constant rates of exchange) over the Target
Performance Period

10% pa or greater 15%

Between 10% pa and 5% pa Pro-rata between 15% and 2.25%

5% pa 2.25%

Less than 5% pa 0%

e. For the purposes of paragraphs 5.c and 5.d above, compound annual growth in
adjusted diluted earnings per share over the Performance Period (expressed as a
percentage) is calculated as follows:

E3 ^ 1/3
[ { ( E0 ) } -1
] × 100

Where:
E0 = adjusted diluted earnings per share of the Company in the Financial Year
immediately preceding the Financial Year in which the Performance Period
begins (being "Year 0"); and
E3 = adjusted diluted earnings per share of the Company in the final Financial
Year of the Performance Period (being "Year 3"),
measured at:
i. current rates of exchange for the purposes of paragraph 5.c; and
ii. constant rates of exchange for the purposes of paragraph 5.d, for which purpose
the value of E0 and E3 shall be taken as index values, with the value for E0 being
the base index value (representing adjusted diluted earnings per share in Year 0),
with the purpose of such index being to reflect changes over the Performance
Period in adjusted diluted earnings per share of the Company as measured on a
constant currency basis, and E3 being taken as the value of such index for Year
3,
and in either case provided that if the Board determines that a measurement of
earnings per share other than adjusted diluted earnings per share is more appropriate
the calculation shall be on that other basis and this paragraph 5 shall apply
accordingly).

6. Operating Cash Flow Conversion Ratio Target

a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 6 (the "Operating Cash Flow Conversion Ratio Target")
depends upon the Company's average Operating Cash Flow as a percentage of
Adjusted Operating Profit over the Performance Period:

Average Operating Cash Flow % of the Award Shares which vest

Conversion Ratio over the Performance pursuant to the Operating Cash Flow
Period Conversion Ratio Target

95% or above 20%

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 British American Tobacco 2016 Long Term Incentive Plan
Performance Condition

Between 95% and 85% Pro-rata between 20% and 3%

85% 3%

Less than 85% of Adjusted Operating 0%

Profit

b. For the purpose of this Operating Cash Flow Conversion Ratio Target:
i. the "Average Operating Cash Flow Conversion Ratio" is the aggregate of the
Operating Cash Flow Conversion Ratios for each Financial Year in the
Performance Period, divided by the number of Financial Years in the
Performance Period; and
ii. the "Operating Cash Flow Conversion Ratio" for a Financial Year (expressed
as a percentage) is calculated as follows:

Operating Cash Flow

( Adjusted Operating Profit ) × 100

Where:
"Operating Cash Flow" in respect of a Financial Year is the adjusted profit from
operations (excluding associates) plus depreciation, amortisation and impairment, plus
other non-cash items, less the increase / (decrease) in working capital, less net capital
expenditure, in each case for such Financial Year. All of these items are excluding
costs and movements relating to restructuring and integration in the Financial Year;
and
"Adjusted Operating Profit" in respect of a Financial Year is derived by excluding
the adjusting items from the profit from operations for such Financial Year. Adjusting
items include restructuring and integration costs, amortisation and impairment of
trademarks and similar intangibles, a gain on deemed partial disposal of a trademark
and a payment and release of a provision relating to non-tobacco litigation.
For the purpose of this Operating Cash Flow Conversion Ratio Target, Operating
Cash Flow and Adjusted Operating Profit are calculated at current rates of exchange,
unless the Board determines otherwise.
7. TSR Target
a. The percentage of the Award Shares which may vest pursuant to the performance
target in this paragraph 7 (the "TSR Target") depends upon the Company's Total
Shareholder Return over the Performance Period relative to the Total Shareholder
Return of the Comparator Group:

Ranked position of the Company's TSR % of the Award Shares which vest
against the relevant comparator pursuant to this TSR Target
companies

Upper quartile or above 20%

Between upper quartile and median Pro-rata between 20% and 3%

Median 3%

Below median 0%

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 British American Tobacco 2016 Long Term Incentive Plan
Performance Condition

b. For the purpose of this TSR Target:

i. The Comparator Group shall comprise the following companies:

Altria Group PepsiCo Inc

Anheuser-Busch InBev Pernod Ricard
Carlsberg A/S Philip Morris International
Coca Cola Procter & Gamble
Diageo Reckitt Benckiser
Heineken Unilever
Imperial Brands
Japan Tobacco

ii. The Total Shareholder Return of the Company and each of the relevant
comparator companies over the relevant Performance Period (expressed as a
percentage) shall be computed as follows:

TSR3 ^ 1/3
[ { ( TSR0
) } -1 ] × 100

Where:
TSR0 = the average return index of the relevant companies as calculated by
Datastream (or other such data provider as determined by the Board)
(excluding Saturdays and Sundays) in the three months preceding the
beginning of the Performance Period; and
TSR3 = the average return index (calculated in the same manner as for TSR0) in
the 3 months preceding the end of the Performance Period.
iii. Unless the Board determines otherwise, the Total Shareholder Return for the
Company and each of the relevant comparator companies shall be calculated on
a local currency basis.
iv. The Company and the companies in the Comparator Group shall be ranked by
the resulting Total Shareholder Return figures, with the company with the highest
figure having the highest ranking, and median and upper quartile performance
shall be determined on such basis as the Board, acting reasonably, may specify
from time to time.
8. Exchange rates
In this Schedule:
"current rates of exchange" means exchange rates applied for each year relevant to a
given calculation based on the average exchange rate in that year; and
"constant rates of exchange" means exchange rates applied based on a re-translation, at
prior year exchange rates, of the current year information, in order that the same exchange
rates are applied for each year relevant to a given calculation.
9. Adjustment to vesting outcome
a. After the performance targets in paragraphs 3 to 7 have been assessed, the Board
may make such adjustment to the percentage of Shares of the Award Shares that vest

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 British American Tobacco 2016 Long Term Incentive Plan
Performance Condition

pursuant to one or more of such performance targets to ensure a fair result for both
the Participants and shareholders.
b. An adjustment pursuant to this paragraph 9 may be either positive (but, for the
avoidance of doubt, not so that the percentage of the Award Shares which vests
pursuant to any one of the performance targets in paragraphs 3 to 7 exceeds the
maximum percentage of the Award Shares which may vest pursuant to that
performance target, as set out in paragraph 1) or negative (including reducing the
percentage of Awards Shares which vest to nil). For the avoidance of doubt, where
the Board makes any adjustment pursuant to this paragraph 9 the percentage of
Award Shares to be transferred shall be the percentage as adjusted by the Board
notwithstanding the outcome of the performance targets as set out in paragraphs 3 to
7.
c. For the avoidance of doubt, vesting outcomes are subject to any forfeiture or reduction
of Awards pursuant to Rule 15 (Claw-back).

10. Adjustments to performance targets

a. In the event of:
i. a change to the accounting standards of the Company or similar event;
ii. any events which affect any of the companies comprised in the
Comparator Group (such as a merger or de-listing);
iii. any variation of capital of the Company or a demerger, delisting, special
dividend, rights issue or other event which may, in the opinion of the
Board, affect the current or future value of the Company's shares; or
iv. any other similar event the Board considers relevant which may unduly
affect the calculation of the performance targets set out in paragraphs 3 to
7,
the Board may make such adjustments to the terms of this Performance Condition as
it determines appropriate to reflect such event with the intention of ensuring that this
Performance Condition continues to assess the performance of the Company on a
consistent basis over the Performance Period.
b. This Performance Condition may be amended in accordance with Rule 5.4 of the
Plan.

General
11. References in this Schedule 1D to a paragraph are to a paragraph of this Schedule 1D.

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 EXHIBIT 4.5

BRITISH AMERICAN TOBACCO P.L.C.

RULES

of the

BRITISH AMERICAN TOBACCO

2019 DEFERRED ANNUAL SHARE BONUS

SCHEME

Adopted by the Board on 10 December 2018

and amended by the Board on 3 June 2019
and amended by the Board on 19 February 2021
and amended by the Board on 8 February 2022
and amended by the Board on 20 March 2023 (with effect from 1 January 2024)

Herbert Smith Freehills LLP

HSF Ref: 30889176

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

CONTENTS

Clause Heading Page

1. INTERPRETATION AND CONSTRUCTION ................................................................. 2
2. SCHEME LIMITS............................................................................................................ 3
3. AWARDS ........................................................................................................................ 3
4. AWARDS ARE NON-TRANSFERABLE ........................................................................ 4
5. ADDITIONAL VESTING CONDITION ............................................................................ 5
6. VESTING ........................................................................................................................ 5
7. CESSATION OF OFFICE OR EMPLOYMENT .............................................................. 6
8. CORPORATE ACTIONS ................................................................................................ 7
9. DIVIDEND EQUIVALENT .............................................................................................. 8
10. CASH ALTERNATIVE .................................................................................................... 9
11. TAX LIABILITY ............................................................................................................... 9
12. VESTED SHARE ACCOUNTS .................................................................................... 10
13. CLAW-BACK ................................................................................................................ 10
14. VARIATION OF CAPITAL ............................................................................................ 12
15. ADMINISTRATION ....................................................................................................... 12
16. AMENDMENTS ............................................................................................................ 12
17. DATA PROTECTION ................................................................................................... 13
18. GENERAL .................................................................................................................... 13
APPENDIX 1 : OPERATION OF CLAW-BACK ................................................................................ 15
APPENDIX 2 : AWARDS GRANTED TO U.S. TAXPAYERS .......................................................... 17
1. INTERPRETATION ...................................................................................................... 17
2. APPLICATION .............................................................................................................. 17
3. TERMS OF AWARD..................................................................................................... 17
4. DELIVERY OF SHARES .............................................................................................. 17
5. DIVIDEND EQUIVALENT ............................................................................................ 18
6. CASH ALTERNATIVE .................................................................................................. 18
7. CLAWBACK ................................................................................................................. 18
8. CODE SECTION 409A ................................................................................................. 18

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

RULES OF THE BRITISH AMERICAN TOBACCO P.L.C. DEFERRED ANNUAL SHARE

BONUS SCHEME

1. INTERPRETATION AND CONSTRUCTION

For the purposes of the Scheme, the following terms shall have the meaning indicated
below unless the context clearly indicates otherwise:
"Additional Vesting Condition" means any additional condition determined by the Board
under Rule 5 (Vesting Condition) to which the vesting of any Award is subject.
"Award" means a right to receive a transfer of Shares following vesting of the Award;
"Board" means the board of directors of the Company or a committee duly authorised by
the board of directors or, following any Corporate Action, the Board or duly authorised
committee as constituted immediately prior to the Corporate Action;
"Claw-back" means a recovery of value by the Company from a Participant in accordance
with the provisions of Rule 13 (Claw-back) and Appendix 1 (Operation of Claw-back);
"Company" means British American Tobacco p.l.c. (registered in England and Wales
under No. 3407696);
"Control" has the meaning given by Section 995 of the Income Tax Act 2007;
"Corporate Action" means any of the events referred to in:
(A) Rules 8.1 to 8.5 (but excluding a Reorganisation as defined in Rule 8.7); or
(B) if the Board determines that Awards will vest pursuant to such Rule, Rule 8.6;
"Cross-Border Merger" means a merger pursuant to the implementation in any relevant
jurisdiction of Directive 2005/56/EC (on cross-border mergers of limited liability
companies);
"Dealing Day" means any day on which the London Stock Exchange is open for trading;
"Dealing Restriction" means any restriction on the dealing in shares, whether direct or
indirect, pursuant to any law, regulation, code or enactment in England and Wales and/or
the jurisdiction in which the Participant is resident, or any share dealing code of the
Company;
"Eligible Employee" means an employee or former employee (including an executive
director) of any Group Company;
"Employees' Share Scheme" has the meaning given by Section 1166 of the Companies
Act 2006;
"Financial Year" means the financial year of the Company within the meaning of Section
390 of the Companies Act 2006;
"Grant Date" means the date on which an Award is granted;
"Group" means the Company and any company which from time to time is a subsidiary of
the Company, within the meaning of section 1159 of the Companies Act 2006 (each a
"Group Company");
"Market Value" means, in relation to a Share on any day, the mid-closing price of a Share
on such day (as derived from the Daily Official List of the London Stock Exchange);
"Normal Vesting Date" means the third anniversary of the Grant Date or any later date
determined by the Board;
"Participant" means an Eligible Employee who has received an Award to the extent it has
not been released and has not lapsed (or, following his death, his Personal
Representatives);
"Personal Representatives" means, following his death, the Participant's personal
representatives, or a person fulfilling a similar function in any jurisdiction;

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

"Rule" means a rule of this Scheme;

"Scheme" means this British American Tobacco 2019 Deferred Annual Share Bonus
Scheme, as amended from time to time;
"Share" means a fully paid ordinary share in the capital of the Company;
"Treasury Shares" means Shares to which Sections 724 to 732 of the Companies Act
2006 apply;
"Trust" means any employee benefit trust from time to time established by the Company;
"U.S. Taxpayer" has the meaning given in Rule 3.10 (U.S. Taxpayers); and
"vesting" means Shares subject to an Award becoming due to be transferred to the
Participant (and "vest" shall be construed accordingly).
In this Scheme unless the context requires otherwise:
1.2.1 the headings are inserted for convenience only and do not affect the
interpretation of any Rule;
1.2.2 a reference to a statute or statutory provision includes a reference:
(A) to that statute or statutory provision as from time to time consolidated,
modified, re-enacted or replaced by any statute or statutory provision;
(B) to any repealed statute or statutory provision which it re-enacts (with or
without modification); and
(C) to any subordinate legislation made under it;
1.2.3 words in the singular include the plural, and vice versa;
1.2.4 a reference to the masculine shall be treated as a reference to the feminine and
vice versa;
1.2.5 a reference to a person shall include a reference to a body corporate; and
1.2.6 a reference to writing or written form shall include any legible format capable of
being reproduced on paper, irrespective of the medium used.
In this Scheme:
1.3.1 a provision obliging, or permitting, any company to do any thing shall be read as
obliging, or permitting, such company to do that thing, or procure that thing to be
done; and
1.3.2 the use of the word "including" shall mean including without limitation and without
prejudice to the generality of the foregoing.

2. SCHEME LIMITS
No Shares may be issued and no Treasury Shares may be transferred for the purposes of
the Scheme.

3. AWARDS

Eligibility

The Scheme shall operate in connection with the award of annual bonuses to such Eligible
Employees as may be determined by the Board.

Bonus deferral

Prior to the amount of an Eligible Employee's annual bonus being determined, the Board
may specify a proportion of the Eligible Employee's annual bonus that shall be deferred. An
Eligible Employee shall have no entitlement to receive the proportion of the annual bonus
that is deferred under this Rule 3.2.

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

The Board shall grant to an Eligible Employee whose annual bonus is subject to deferral
under Rule 3.2 an Award over such number of Shares as have an aggregate Relevant
Value on the Grant Date equal to the proportion of the Eligible Employee's annual bonus
that is deferred under Rule 3.2.
In this Rule 3.3, the "Relevant Value" of a Share subject to an Award means either (as
determined by the Board): (i) the Market Value of a Share on the Dealing Day immediately
preceding the Grant Date; or (ii) the average of the Market Values of a Share over such
number of Dealing Days preceding the Grant Date as the Board may determine.
Where an Eligible Employee's annual bonus is denominated in a currency other than
pounds sterling, for the purposes of Rule 3.3 above such annual bonus amount shall be
converted into pounds sterling on such basis as the Board may reasonably determine.

Method of grant

An Award shall be granted by the Board.

An Award shall be granted by deed.
No payment for the grant of an Award shall be made by the Participant.
A Participant may within 30 days of the Grant Date release an Award (in full but not in part)
by written notice to the Company. Where a Participant does not release an Award within
such period, the Participant shall be deemed to have accepted the Award on the terms set
out in the Rules. Alternatively, it may be a term of the grant of an Award that the
Participant shall be required to accept the terms of the Award within such period following
grant as may be determined by the Board and, where the Board specifies such period, the
Award shall lapse at the end of such period if the terms of the Award have not been
accepted by the Participant.

Award notification

As soon as practicable following the Grant Date the Company shall notify a Participant of
the grant of an Award. Such notification shall specify:
3.9.1 the Grant Date;
3.9.2 the Normal Vesting Date;
3.9.3 the number of Shares in respect of which the Award is granted;
3.9.4 if applicable, details of any Additional Vesting Condition;
3.9.5 if applicable, that the dividend equivalent provisions of Rule 9 (Dividend
equivalent) shall apply; and
3.9.6 that the Award is subject to the claw-back provisions of Rule 13 (Claw-back) and
Appendix 1 (Operation of Claw-back).

U.S. Taxpayers

The provisions of Appendix 2 (Awards Granted to U.S. Taxpayers) shall apply to an Award
that is held by any Participant while he or she is subject to taxation under the U.S. Internal
Revenue Code of 1986, as amended (“U.S. Taxpayers”).

4. AWARDS ARE NON-TRANSFERABLE

A Participant may not transfer, assign, pledge, charge or otherwise dispose of, or grant any
form of security or other interest over, any part of his interest in an Award. An Award shall
(unless the Board determines otherwise) lapse on the Participant doing so (whether
voluntarily or involuntarily), being deprived of the beneficial ownership of an Award by
operation of law, or becoming bankrupt.
Rule 4.1 does not restrict the transmission of an Award to the Participant's Personal
Representatives following his death.

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

5. ADDITIONAL VESTING CONDITION

The vesting of an Award shall be subject to such additional condition as the Board may
determine.

6. VESTING

Normal vesting

An Award shall vest on the Normal Vesting Date.

Vesting subject to Dealing Restrictions

An Award shall not vest unless, and vesting shall be delayed until, the Board is satisfied
that at that time:
6.2.1 such vesting;
6.2.2 the transfer of Shares to the Participant and the sale of Shares pursuant to Rule
11 (Tax Liability); and
6.2.3 any action needed to be taken by the Company to give effect to such vesting
is not contrary to any Dealing Restriction.

Extent of vesting

Where an Award vests it shall vest in full, save that the extent to which an Award which is
subject to an Additional Vesting Condition shall be capable of vesting (if at all) shall, unless
the Board determines otherwise, be determined by reference to the extent to which such
Additional Vesting Condition is satisfied, and at the end of any period over which an
Additional Vesting Condition is assessed the Award shall lapse to the extent that such
Additional Vesting Condition is not met.
Where an Award which is subject to an Additional Vesting Condition becomes capable of
vesting (pursuant to Rule 6.7 (International transfers), 7 (Cessation of employment) or 8
(Corporate Actions) prior to the end of the period over which any element of the Additional
Vesting Condition is assessed, such element may be assessed on such basis as the Board
shall determine.

Effect of vesting

The effect of the vesting of an Award is that the Shares in respect of which an Award vests
shall be transferred to the Participant as soon as is reasonably practicable (which may
include transferring the Shares on more than one consecutive Dealing Day on such basis
as the Board may determine).

Disciplinary proceedings

Unless the Board determines otherwise, an Award shall not vest while a Participant is
subject to an investigation process and/or formal disciplinary process (or similar), or where
a Participant has been served with notice that such a process may be instigated without
such notice having been rescinded, and vesting shall (subject to the Award lapsing to any
extent prior to or as a result of the conclusion of such process pursuant to Rule 7
(Cessation of office or employment) or 13 (Claw-back)) be delayed until the conclusion of
such process.
International transfers
Where a Participant, whilst continuing to hold an office or employment with a Group
Company, is to be transferred to work in another country, and as a result the Board
considers that following such transfer either he or a Group Company is likely to suffer a tax
disadvantage in respect of an Award or, due to securities or exchange control laws, the
Participant is likely to be restricted in his ability to receive Shares pursuant to an Award

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

and/or to hold or deal in Shares, the Board may decide that an Award shall vest on such
date as it may determine, in which case the proportion of the Award which may vest shall
be limited (unless the Board determines otherwise) to a pro rata proportion on the basis of
the number of months (rounded up to the nearest whole month) which have elapsed from
the Grant Date to such vesting date, as compared to the number of whole months within
the period from the Grant Date to the Normal Vesting Date. Any remainder of the Award
shall lapse.

7. CESSATION OF OFFICE OR EMPLOYMENT

Cessation where Awards lapse

An Award shall lapse:

7.1.1 on the Participant ceasing to hold office or employment with any Group
Company; or
7.1.2 if the Participant gives or receives notice of such cessation, on such earlier date
as may be determined by the Board,
save in each case where Rule 7.2 or Rule 7.4 applies.

Reasons for cessation where Awards remain capable of vesting

An Award shall not lapse pursuant to Rule 7.1 where the reason for the cessation or notice
is:
7.2.1 disability, ill-health or injury (as evidenced to the satisfaction of the Board);
7.2.2 the transfer of the Participant's employment in connection with the disposal of a
business or undertaking, or a part- business or part-undertaking;
7.2.3 the company with which the Participant holds office or employment ceasing to be
a Group Company; or
7.2.4 any other reason, if the Board so determines,
provided that the Board shall not exercise its discretion under Rule 7.2.4 unless the
Participant has entered into a settlement agreement (or equivalent document) acceptable
to the Board in relation to the cessation of employment, which shall be entered into not
later than the date on which the Participant ceases to hold office or employment with any
Group Company (unless the Board determines, at its sole discretion, that the period for
entering into such settlement agreement shall be extended).
Where the Board exercises its discretion under Rule 7.2.4 the Board may also impose
additional conditions on the Award (including as to when the Award may vest).

Cessation prior to the Normal Vesting Date

Where prior to the Normal Vesting Date a Participant ceases to hold office or employment
with any Group Company for any of the reasons specified in Rule 7.2 an Award shall vest
on the date of such cessation, unless the Board determines that the Award shall not vest at
such time and shall instead continue to be capable of vesting in accordance with the Rules.
For the avoidance of doubt, the Board may make the determination in this Rule 7.3 on a
standing basis (subject to revocation of such determination at any time) in respect of all
Awards to be granted to a specified Eligible Employee or Eligible Employees.

Death

An Award shall vest on the Participant's death.

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

Meaning of cessation of office or employment

No provision of this Rule 7 shall apply in respect of any cessation of office or employment if
immediately following the cessation the Participant holds an office or employment with any
Group Company, or in respect of any notice of cessation if arrangements are in place that
mean immediately following the notice becoming effective the Participant will hold an office
or employment with any Group Company.

Cessation of office or employment prior to grant

The provisions of Rules 6.6, 6.7, 7.1, 7.2 and 7.3 shall not apply to Awards granted to a
Participant following the date on which the Participant ceased to hold office or employment
with any Group Company.

8. CORPORATE ACTIONS

General offers

Awards shall vest:

8.1.1 upon a person obtaining Control of the Company as a result of making a general
offer to acquire Shares;
8.1.2 upon a person, having obtained Control of the Company, making a general offer
to acquire Shares; or
8.1.3 if a person makes a general offer to acquire Shares that would result in that
person obtaining Control of the Company and the Board so determines, on the
date which the Board determines to be the last practicable date prior to the date
on which it expects such person to obtain Control of the Company,
in each case being a general offer to acquire all of the Shares (other than Shares held by
the person making the offer and any person connected to that person).

Compulsory acquisition

Awards shall vest upon a person becoming entitled to acquire Shares under Sections 979
to 982 of the Companies Act 2006.

Scheme of compromise or arrangement

Awards shall vest upon a Court sanctioning a compromise or arrangement which, on

becoming effective, would result in:
8.3.1 any person obtaining Control of the Company;
8.3.2 the undertaking, property and liabilities of the Company being transferred to
another existing or new company; or
8.3.3 the undertaking, property and liabilities of the Company being divided among and
transferred to two or more companies, whether existing or new.

Merger

Awards shall vest upon a competent authority approving a Cross-Border Merger, pursuant
to which the Company shall cease to exist.

Voluntary winding-up

Awards shall vest in the event of a notice being given of a resolution for the voluntary
winding-up of the Company.

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Demerger or special dividend

If the Board so determines, Awards may vest following the announcement of a demerger of
a substantial part of the Group's business, a special dividend or a similar event affecting
the value of Shares to a material extent on such date specified by the Board.

Roll-over of Award on a Reorganisation or takeover

Unless the Board determines otherwise, an Award shall not vest pursuant to this Rule 8 if,
as a result of any event that would otherwise be a Corporate Action, a company will obtain
Control of the Company or will obtain substantially all of the assets of the Company (the
"Acquiring Company"), and either:
8.7.1 the Acquiring Company will immediately following such event have (either directly
or indirectly) substantially the same shareholders and approximate shareholdings
as those of the Company prior to such event (a "Reorganisation"); or
8.7.2 the Board, with the agreement of the Acquiring Company, determines that the
Award shall not vest as a result of such event and so notifies the Participant prior
to the occurrence of the date on which the Award would otherwise vest.
In such case the existing Award (the "Old Award") shall lapse on the occurrence of the
relevant event, provided that the New Parent Company shall grant a replacement right to
receive shares (the "New Award") over such number of shares in the New Parent Company
which are of equivalent value to the number of Shares in respect of which the Old Award
was outstanding. The New Award shall be granted on the terms of the Scheme, but as if
the New Award had been granted at the same time as the Old Award.
For the purposes of this Rule 8.7:
8.7.3 the "New Parent Company" shall be the Acquiring Company, or, if different the
company that is the ultimate parent company of the Acquiring Company within
the meaning of section 1159 of the Companies Act 2006; and
8.7.4 the terms of the Scheme shall following the date of the relevant event be
construed as if the reference to "British American Tobacco p.l.c." in the definition
of "Company" in Rule 1 (Interpretation and construction) were a reference to the
company which is the New Parent Company.

Compulsory winding-up

An Award shall lapse on the passing of an effective resolution, or the making of a Court
order, for the compulsory winding-up of the Company.

Concert parties

For the purposes of this Rule 8, a person shall be deemed to have Control of the Company
where he and any others acting in concert with him together have Control of the Company.

9. DIVIDEND EQUIVALENT
If at any time in the period between the Grant Date and the date on which the Award vests
a dividend is declared on Shares, the Company shall, unless the Board determines
otherwise:
9.1.1 make a cash payment to the Participant equal to the amount of such dividend the
Participant would have received in respect of the number of Shares which are
subject to the Award had the Participant been the full legal and beneficial owner
of such Shares on the record date of such dividend; or
9.1.2 transfer to the Participant such number of Shares as have an aggregate Market
Value on the date on which the relevant dividend is paid equal to the amount
determined in accordance with Rule 9.1.1 above.

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Any cash payment or transfer of Shares under Rule 9.1 will be made by the Company to
the Participant as soon as reasonably practicable following the date on which the relevant
dividend is paid, unless the Board determines that such amount shall instead be payable or
such Shares shall be transferred when (and to the extent that) the Award vests.
A cash payment under Rule 9.1 may be made in a currency other than pounds sterling, in
which case the amount of such payment shall be converted into such other currency on
such basis as is determined by the Board.

10. CASH ALTERNATIVE

This Rule 10 shall not apply in respect of any Award granted to a Participant resident in
any jurisdiction where the grant of an Award which provides for a cash alternative would be
unlawful, fall outside any applicable exemption under securities, exchange control or
similar regulations, or would cause adverse tax or social security (or similar) contribution
consequences for the Company or the Participant (in each case as determined by the
Board) or where the Board determines prior to the Grant Date that this Rule 10 shall not
apply.
The Board may determine prior to the Grant Date that an Award shall only be satisfied in
cash, in which case the Award shall not be a right to acquire Shares, and the vesting of the
Award shall be satisfied in full by the payment of a cash equivalent amount, in substitution
for the transfer of Shares.
Where the Board has made no determination pursuant to Rule 10.1 or 10.2 in respect of
any Award the Board may determine at any time prior to the transfer of Shares pursuant to
such Award that the vesting of the Award (or a part thereof) shall be satisfied by the
payment of a cash equivalent amount, in substitution for the transfer of Shares.
A "cash equivalent amount" shall be calculated as the number of Shares which would
otherwise be transferred in respect of the relevant vesting but which are being substituted
for the cash equivalent amount, multiplied by the Market Value of a Share on the date on
which the Award vests (or, where only a part of the Award is to be satisfied with payment of
a cash equivalent amount, on the date on which Shares are transferred to the Participant
pursuant to the Award).
A cash equivalent amount shall be paid as soon as reasonably practicable following the
relevant vesting.
A cash equivalent amount may be paid in a currency other than pounds sterling, in which
case the cash equivalent amount shall be converted into such other currency on such basis
as is determined by the Board.

11. TAX LIABILITY

When any Tax Liability arises in respect of an Award, the Participant authorises any Group
Company:
11.1.1 to retain and sell legal title to such number of the Shares which would otherwise
have been transferred to the Participant (notwithstanding that beneficial title shall
pass) as may be sold for aggregate proceeds equal to the Group Company's
estimate of the amount of the Tax Liability;
11.1.2 to deduct an amount equal to the Group Company's estimate of the Tax Liability
from any cash payment made under the Scheme; and/or
11.1.3 where the amount realised under Rule 11.1.1 or deducted under Rule 11.1.2 is
insufficient to cover the full amount of the Tax Liability, to deduct any further
amount as is necessary through payroll,
and in each case to apply such amount in paying the amount of the Tax Liability to the
relevant revenue authority or in reimbursing the relevant Group Company for any such
payment, provided that, where the amount realised under Rule 11.1.1 or deducted under
Rule 11.1.2 is greater than the actual Tax Liability, the Group Company shall repay the
excess to the Participant as soon as reasonably practicable.

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The Group Company shall be entitled to make the estimates referred to in this Rule 11.1 on
the basis of the highest rates of tax and/or social security applicable at the relevant time in
the jurisdiction in which the Group Company is liable to account for the Tax Liability,
notwithstanding that the Tax Liability may not arise at such rates.
"Tax Liability" shall mean any amount of tax and/or social security (or similar)
contributions which any Group Company becomes liable to pay on behalf of the Participant
to the revenue authorities in any jurisdiction, together with all or such proportion (if any) of
employer's social security contributions which would otherwise be payable by any Group
Company as is determined to be recoverable from the Participant (to the extent permitted
by law) by the Board, or which the Participant has agreed to pay or which are subject to
recovery pursuant to an election to which paragraph 3B of Schedule 1 to the Social
Security Contributions and Benefits Act 1992 applies.

12. VESTED SHARE ACCOUNTS

Legal title to any Shares which are due to be transferred to the Participant pursuant to the
Scheme may be transferred to a person (the "Vested Share Account Provider")
appointed by the Company from time to time to hold legal title to such Shares on behalf of
the Participant.
The Vested Share Account Provider shall receive and hold Shares on behalf of the
Participant in accordance with such terms and conditions as are agreed by the Company
from time to time, and by participating in the Scheme the Participant irrevocably agrees to
those terms and conditions (which shall be available to the Participant on request to the
Company).
The transfer of any Shares to the Vested Share Account Provider shall satisfy any
obligation of the Company under the Scheme to transfer Shares to the Participant (and
references in the Scheme to Shares (or legal title thereof) having been transferred to the
Participant shall be read accordingly).
The terms and conditions referred to in Rule 12.2 above may include terms that the
Participant shall not be entitled to transfer, assign, pledge, charge or otherwise dispose of,
or grant any form of security or other interest over, some or all of the Shares if to do so
would be in breach of the Participant's obligations under the Company's shareholding
requirements as they apply to such Participant.

13. CLAW-BACK

Claw-back events

The Board may at any time prior to the third anniversary of the Grant Date of an Award
determine that a Claw-back shall apply in respect of the Award, if the Board determines
that:
13.1.1 there has been a material misrepresentation in relation to the performance of any
Group Company, relevant business unit and/or the Participant on the basis of
which the extent to which the annual bonus in respect of which the Award was
granted was determined (which may include, but shall not be limited to: (i) a
misstatement of the financial results and/or health of any Group Company; (ii) an
erroneous calculation in relation to any Group Company's results or other
performance benchmark; (iii) errors in any Group Company's financial
statements; or (iv) discrepancies in the financial accounts, and, for the avoidance
of doubt, notwithstanding that such misrepresentation may not arise from fraud or
reckless behaviour); or
13.1.2 an erroneous calculation was made in assessing the amount of such annual
bonus or the number of Shares over which the Award was granted,
and, in either case the annual bonus was awarded and/or the Award was granted to a
greater extent than would have been the case had there not been such a
misrepresentation or had such error not been made, or

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13.1.3 there has been a significant failure within any Group Company which has a
material impact on the value of the Group (taken as a whole), including but not
limited to circumstances where the Company or any other Group Company has
entered into an involuntary administration or insolvency process or there has
been a significant reduction in, or cessation of, the ability of any material Group
Company (or group of Group Companies) to continue normal operations.

The Board may at any time prior to legal title to Shares having been transferred to the
Participant pursuant to an Award determine that a Claw-back shall apply in respect of the
Award if the Board determines that any event has occurred which justifies such application
of Claw-back.
The Board may at any time (whether before or after vesting) determine that a Claw-back
shall apply in respect of an Award where the Participant is found to have:
13.3.1 committed at any time prior to the vesting of the Award, including prior to grant,
an act or omission which justifies, or in the opinion of the Board would have
justified, summary dismissal or service of notice of termination of office or
employment on the grounds of misconduct;

13.3.2 engaged in, at any time prior to the vesting of the Award:

(A) reckless, negligent or wilful action or inaction; or

(B) inappropriate behaviour or behaviour that is not aligned with any

employee policy or handbook or Group values,
and in either case the Board determines that such circumstances have
contributed to a material loss for any Group Company; or
13.3.3 contributed, at any time prior to vesting of the Award, to circumstances which give
rise to a sufficiently negative impact on the reputation of any Group Company or
business unit (or would have if such circumstances had been made public).
Rules 13.1.3, 13.3.2 and 13.3.3 shall only apply to Awards granted on or after 1 January
2022.

Applying Claw-back

A Claw-back shall be applied in accordance with the provisions of Appendix 1 (Operation of

Claw-back).

Lapse of Awards to give effect to claw-back of other awards

By participating in the Scheme, the Participant acknowledges that the Board may lapse any
Award to such extent as it determines to be necessary (including in full) in order to give
effect to a claw-back under the terms of the Scheme or any other Employees' Share
Scheme or bonus scheme operated from time to time by any Group Company.

No Claw-back following Corporate Action

No Claw-back shall be capable of being applied at any time following any Corporate Action,
save where the determination that the Claw-back shall apply was made prior to such event
(and, for the avoidance of doubt, a Corporate Action does not include a Reorganisation).

Interaction with the cash bonus schemes

No provision of the rules of this Scheme relating Claw-back shall in any way limit or restrict,
or be limited or restricted by, the operation of any provision of any cash bonus scheme or
similar operated by any Group Company from time to time.

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14. VARIATION OF CAPITAL

In the event of any variation of the share capital of the Company, or in the event of the
demerger of a substantial part of the Group's business, a special dividend or similar event
affecting the value of Shares to a material extent (which shall not include the payment of
any ordinary dividend) the Board may make such adjustments to Awards as it may
determine to be appropriate.
For the avoidance of doubt Rule 14.1 shall not apply in respect of any Awards pursuant to
which legal title to Shares has been transferred prior to the date of the relevant event (such
that the recipient of such legal title shall participate in such event as a holder of Shares)
including pursuant to the vesting of an Award under Rule 8.6 (Demerger or special
dividend).

15. ADMINISTRATION
Any notice or other communication under or in connection with this Scheme may be given
by the Company (or its agents) to a Participant personally, by email or by post, or by a
Participant to the Company or any Group Company either personally or by post to the
Secretary of the Company. Items sent by post shall be pre-paid and shall be deemed to
have been received 48 hours after posting. Items sent by email shall be deemed to have
been received immediately.
A Participant shall not be entitled to:
15.2.1 receive copies of accounts or notices sent to holders of Shares;
15.2.2 exercise voting rights; or
15.2.3 receive dividends,
in respect of Shares subject to an Award legal title to which has not been transferred to the
Participant.
Any discretion (including the power to make any determination) of the Board under or in
connection with the Scheme may be exercised by the Board in its absolute discretion.
Any exercise of discretion (including the making of any determination) by the Board under
or in connection with the Scheme shall be final and binding.
Any disputes regarding the interpretation of the Rules or the terms of any Award shall be
determined by the Board (upon such advice as the Board determines to be necessary) and
any decision in relation thereto shall be final and binding.

16. AMENDMENTS
Subject to Rule 16.2, the Board may at any time add to or alter the Scheme or any Award
made thereunder in any respect.
No alteration or addition shall be made under Rule 16.1 which would abrogate or adversely
affect the subsisting rights of a Participant unless it is made:
16.2.1 with the consent in writing of the Participant;
16.2.2 with the consent in writing of such number of Participants as hold Awards under
the Scheme in relation to 75 per cent. of the Shares subject to all Awards under
the Scheme; or
16.2.3 by a resolution at a meeting of Participants passed by not less than 75 per cent.
of the Participants who attend and vote either in person or by proxy,
and for the purpose of Rule 16.2.2 or 16.2.3 the Participants shall be treated as the holders
of a separate class of share capital and the provisions of the Articles of Association of the
Company relating to class meetings shall apply mutatis mutandis.

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17. DATA PROTECTION

From time to time the personal data of the Participant will be collected, used, stored,
transferred and otherwise processed for the purposes described in Rule 17.2 and 17.3.
The legal grounds for this processing will (depending on the nature and purpose of any
specific instance of processing) be one of: (i) such processing being necessary for the
purposes of the legitimate interests of the Company and each other Group Company in
incentivising their officers and employees and operating the Scheme; (ii) such processing
being necessary for the purposes of any relevant data controller in respect of such
personal data complying with its legal obligations; and (iii) such processing being
necessary for the performance of the contractual obligations arising under the Scheme.
The collection and processing of such personal data for such purposes is a contractual
requirement of participation in the Scheme.
The purposes for which personal data shall be processed as referred to in this Rule 17
shall be in order to allow the Company and any other relevant Group Companies to
incentivise their officers and employees and to operate the Scheme and to fulfil its or their
obligations to the Participant under the Scheme, and for other purposes relating to or which
may become related to the Participant's office or employment, the operation of the Scheme
or the business of the Group or to comply with legal obligations. Such processing will
principally be for, but will not be limited to, personnel, administrative, financial, regulatory or
payroll purposes as well as for the purposes of introducing and administering the Scheme.
The personal data to be processed as referred to in this Rule 17 may be disclosed or
transferred to, and/or processed by:
17.3.1 any professional advisors of any Group Company, HM Revenue & Customs or
any other revenue, regulatory or governmental authorities;
17.3.2 a trustee of a Trust; any registrars, brokers, payroll provider or other third party
administrator appointed in connection with any employee share or incentive plans
operated by any Group Company; or any person appointed (whether by the
Participant or any Group Company) to act as nominee on behalf of (or provide a
similar service to) the Participant;
17.3.3 subject to appropriate confidentiality undertakings, any prospective purchasers of,
and/or any person who obtains control of or acquires, the Company or the whole
or part of the business of the Group; or
17.3.4 any Group Company and officers, employees or agents of such Group Company.
Further information in relation to the processing of personal data referred to in this Rule 17,
including the details and identity of the data controller and of the Participant's rights in
respect of such personal data, is available in the Employee Data Protection Policy (or
otherwise on request to the Company Secretary).
To the extent that the processing of personal data of a Participant referred to in this Rule
17 is subject to the laws or regulations of any jurisdiction that is not an EU member state
and under which the legal grounds for processing described in Rule 17.1 do not provide a
sufficient legal basis under such other laws or regulations for the processing referred to in
Rule 17.1 to 17.3, by participating in the Scheme such Participant consents to such
processing for the purposes of such other laws or regulations (but shall not be deemed to
consent to such processing for the purposes of EU Regulation 2016/679).
In this Rule 17, "personal data" and "data controller" each have the meaning given in EU
Regulation 2016/679 and "Employee Data Protection Policy" means such privacy policy or
similar operated by any Group Company in relation to the processing of personal data as
amended from time to time and as is applicable to the Participant.

18. GENERAL
In the event of any discrepancy between these Rules in English and (i) any copy of these
Rules translated into any other language; or (ii) any communications, notices or materials
issued in connection with this Scheme, these Rules in English shall prevail.

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The Board may at any time, and without notice to any person, discontinue and terminate
the Scheme, provided that such termination shall be without prejudice to any subsisting
rights of Participants.
Save as otherwise provided under the Scheme Shares to be transferred pursuant to the
Scheme will be transferred free of all liens, charges and encumbrances and together with
all rights attaching thereto, except they will not rank for any rights attaching to Shares by
reference to a record date preceding the date of transfer.
Any transfer of Shares under the Scheme is subject to such consent, if any, of any
authorities in any jurisdiction as may be required, and the Participant shall be responsible
for complying with the requirements to obtain or obviate the necessity for such consents.
The terms of any individual's office or employment with any past or present Group
Company, and the rights and obligations of the individual thereunder, shall not be affected
by his participation in the Scheme and the Scheme shall not form part of any contract of
employment between the individual and any such company.
An Eligible Employee shall have no right to participate in the Scheme and participation in
the Scheme is at the discretion of the Company.
Participation in the Scheme by, or any Award under it to, a Participant in any year does not
create any right to or expectation of participation in the Scheme or the grant of any award
in any future year, even if the Participant has previously participated in the Scheme (or any
similar scheme) over a long period of time and/or if participation in the Scheme and/or an
Award under it (or any similar scheme) has been granted (including repeatedly) without the
relevant Group Company specifically expressing the voluntary and discretionary nature at
the time of each such participation or award.
By participating in the Scheme, the Participant waives all and any rights to compensation
or damages in consequence of the termination of his office or employment with any past or
present Group Company for any reason whatsoever, whether lawfully or otherwise, insofar
as those rights arise or may arise from his ceasing to have rights under the Scheme
(including ceasing to be entitled to exercise any Option) as a result of such termination, or
from the loss or diminution in value of such rights or entitlements, including by reason of
the operation of the terms of the Scheme, any determination by the Board pursuant to a
discretion contained in the Scheme or the provisions of any statute or law relating to
taxation.
Benefits under the Scheme shall not form part of a Participant's remuneration for any
purpose and shall not be pensionable.
The invalidity or non-enforceability of any provision or Rule of the Scheme shall not affect
the validity or enforceability of the remaining provisions and Rules of the Scheme which
shall continue in full force and effect.
These Rules shall be governed by and construed in accordance with English Law.
The English courts shall have exclusive jurisdiction to determine any dispute which may
arise out of, or in connection with, the Scheme.

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APPENDIX 1: OPERATION OF CLAW-BACK

Claw-back prior to the transfer of Shares in respect of an Award (or "malus")
1. Where the Board determines (pursuant to Rule 13 (Claw-back)) that a Claw-back shall
apply in respect of an Award prior to legal title to Shares having been transferred to the
Participant pursuant to the Award (whether before or after vesting), the Claw-back shall be
applied by the Board reducing the number of Shares in respect of which the Award may
vest (or after vesting by reducing the number of Shares legal title to which may be
transferred pursuant to the Award) by up to the number of Shares determined by the Board
to be the excess number of Shares in respect of which the Award was granted and/or is
outstanding (and the Award shall lapse to the extent so reduced, which may be in full).
Claw-back following the transfer of Shares in respect of an Award
2. Where the Board determines (pursuant to Rule 13 (Claw-back)) that a Claw-back shall
apply in respect of an Award following legal title to Shares having been transferred to the
Participant pursuant to the Award (a "Post-Transfer Claw-back"), the Board shall
determine:
a. the excess number of Shares in respect of which the Award vested (the "Excess
Shares"); and
b. the aggregate Market Value of such Excess Shares (as determined by the Board) on
the date on which the Award vested (the "Equivalent Value").
3. In the case of a Post-Transfer Claw-back any cash payment made pursuant to Rule 9
(Dividend equivalent) in respect of such Award shall be subject to the Claw-back to the
extent that the Board determines that such cash payment or Shares relate to the Excess
Shares.
4. A Post-Transfer Claw-back may be effected in such manner as may be determined by the
Board, and notified to the Participant, including by any one or more of the following:
a. by reducing the number of Shares and/or amount of cash in respect of which an
Outstanding Award vests or may vest (or has vested, but in respect of which no
Shares have yet been transferred or cash payment made), whether before or after
the assessment of performance conditions in respect of such Outstanding Award, by
the number of Excess Shares and/or the Equivalent Value (and such Outstanding
Award shall lapse to the extent so reduced);
b. by setting-off against any amounts payable by any Group Company to the
Participant an amount up to the Equivalent Value (including from any bonus payment
which may otherwise become payable to the Participant); and/or
c. by requiring the Participant to immediately transfer to the Company a number of
Shares equal to the Excess Shares or a cash amount equal to the Equivalent Value
(which shall be an immediately payable debt due to the Company), provided that the
Board may reduce the number of Excess Shares or the amount of the Equivalent
Value subject to the Claw-back in order to take account of any Tax Liability (as
defined in Rule 11 (Tax Liability)) which arose on the Excess Shares (howsoever
delivered to the Participant).
5. For the avoidance of doubt, nothing in Rule 13 (Clawback) or this Appendix shall in any
way restrict a Participant from being able to transfer or otherwise deal in Shares acquired
on vesting of an Award.
6. In paragraph 4 above:
"Outstanding Award" means any other Award under the Scheme, any award or option
under any other Employees' Share Scheme operated from time to time by any Group
Company (other than any award or option granted under any arrangement which satisfies
the provisions of Schedules 2 or 3, or (unless the terms of such arrangement state that
shares acquired thereunder are subject to claw-back) 4 or 5, of the Income Tax (Earnings
and Pensions) Act 2003), or any bonus award under any bonus scheme operated from
time to time by any Group Company, in each case which is either held by the Participant at
the time of a determination that a Claw-back shall be applied or which are granted to the
Participant following such a determination; and

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"vests" shall include shares or cash subject to an award becoming due to be transferred or
paid, and in the case of an option, the option becoming exercisable.

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APPENDIX 2: AWARDS GRANTED TO U.S. TAXPAYERS

1. INTERPRETATION
This Appendix shall form part of the Rules of the Scheme.
In this Appendix a reference to a "Paragraph" is to a paragraph of this Appendix.
Capitalized terms used in this Appendix that are not otherwise defined in this Appendix
shall have the meanings set forth in the Scheme.

2. APPLICATION
This Appendix contains provisions that modify certain terms of the Scheme in relation to
Participants who are U.S. Taxpayers with respect to an Award that is held by any such
Participant while he or she is a U.S. Taxpayer.
To the extent that any provision of this Appendix is inconsistent with any Rule of the
Scheme, such provision of this Appendix shall take precedence.

3. TERMS OF AWARD
In the case of a Participant who is a U.S. Taxpayer on the relevant “Determination Date”
(as such term is defined in Appendix 4 of the British American Tobacco P.L.C. International
Executive Incentive Scheme (the "IEIS")) or becomes a U.S. Taxpayer after such
Determination Date but during the relevant “Performance Period” (as defined in the IEIS),
the terms of such U.S. Taxpayer’s Award shall be established in accordance with
Paragraph 3 of Appendix 4 of the IEIS. Any award notification made to a U.S. Taxpayer
pursuant to Rule 3.9 shall reflect the Award terms previously established in accordance
with Paragraph 3 of Appendix 4 of the IEIS.
In the case of a Participant who becomes a U.S. Taxpayer after the end of the relevant
Performance Period but prior to the date on which Shares subject to the applicable Award
are delivered, the Board shall, prior to the end of the calendar year in which such
Participant becomes a U.S. Taxpayer, establish such terms that are described in
Paragraph 3.1 of Appendix 4 of the IEIS in respect of such U.S. Taxpayer’s Award as are
necessary to achieve compliance with Section 409A of the U.S. Internal Revenue Code of
1986, as amended (for purposes of this Appendix, "Code Section 409A") (and in the
absence of such action by the Board, the terms set forth in clauses (i) through (iv) of
Paragraph 3.1 of Appendix 4 of the IEIS that would apply in the absence of Board action as
described therein shall apply).

4. DELIVERY OF SHARES
Notwithstanding anything in the Scheme to the contrary, if a U.S. Taxpayer becomes
entitled to receive Shares subject to an Award, such Shares shall, in all events, be paid to
the U.S. Taxpayer during the 60-day period (90-day period in the case of (e) below)
following the first to occur of the following events (provided that the U.S. Taxpayer shall not
have the right to designate the payment date): (a) the Normal Vesting Date; (b) the U.S.
Taxpayer’s “separation from service” (as such term is defined in Code Section 409A); (c)
the U.S. Taxpayer ceases to hold office or employment with any Group Company where
the reason for the cessation is (1) the transfer of the U.S. Taxpayer’s employment in
connection with the disposal of a business or undertaking or a part-business or part-
undertaking or (2) the company with which the U.S. Taxpayer holds office or employment
ceases to be a Group Company, as described in Rules 7.2.2 and 7.2.3, but only if the
event described in (1) or (2) of this Paragraph 4.1 constitutes a “change in control event”
under Code Section 409A; (d) an event described in Rule 8 that constitutes a “change in
control event” under Code Section 409A; or (e) the U.S. Taxpayer’s death. For the
avoidance of doubt, the Board shall not exercise its discretion in connection with the
operation of Rule 7.2.4 in contradiction of this Paragraph 4.1.
If Shares cannot be delivered in accordance with Paragraph 4.1 because of the application
of Rule 6.2, such Award shall instead be satisfied by the payment of a cash equivalent

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 British American Tobacco 2019 Deferred Annual Share Bonus Scheme

amount pursuant to Rule 10 (as such Rule is amended by Paragraph 6) and shall be paid
at the applicable time set forth in Paragraph 4.1.

5. DIVIDEND EQUIVALENT
Any payment to which a U.S. Taxpayer may become entitled under Rule 9 with respect to
an Award shall be paid to such U.S. Taxpayer within sixty (60) days following the date on
which the applicable dividends are paid on the Shares underlying the U.S. Taxpayer’s
Award.

6. CASH ALTERNATIVE
Any cash payment to which a U.S. Taxpayer may become entitled under Rule 10 with
respect to an Award shall be paid to such U.S. Taxpayer at the same time as the Shares
would have been paid to such U.S. Taxpayer, as set forth in Paragraph 4.1.

7. CLAWBACK
The Board may not exercise its authority under Rule 13 or under Appendix 1 of the
Scheme to the extent that the exercise of such authority would cause a U.S. Taxpayer to
have an amount includible in the U.S. Taxpayer’s gross income for U.S. federal income tax
purposes under Code Section 409A.

8. CODE SECTION 409A

To the extent applicable, it is intended that the Scheme, and all amounts payable in cash
or Shares in respect of Awards thereunder, shall comply with the provisions of Code
Section 409A so that the income inclusion provisions of Code Section 409A(a)(1) do not
apply to any U.S. Taxpayer. The Scheme and the Awards paid thereunder will be
interpreted and administered in a manner consistent with this intent. A U.S. Taxpayer shall
not have the right to designate any payment date with respect to his or her Award.

Notwithstanding anything in the Scheme to the contrary, in the event that a U.S. Taxpayer
is deemed to be a “specified employee” on the date of his or her “separation from service,”
as such term is defined in Code Section 409A (other than by reason of death), determined
pursuant to identification methodology adopted by a Group Company in compliance with
Code Section 409A, and if any portion of the Shares or other payments to be received by
such U.S. Taxpayer in respect of an Award upon separation from service would constitute
a “deferral of compensation” subject to Code Section 409A, then to the extent necessary to
comply with Code Section 409A, Shares or amounts that would otherwise be delivered or
payable pursuant to this Scheme, as amended by this Appendix, during the six (6) month
period immediately following the date of such U.S. Taxpayer’s separation from service
shall instead be delivered or paid, as applicable, either (a) during the period commencing
on the date that is six (6) months and one (1) day following the date of such U.S.
Taxpayer’s separation from service and ending fifteen (15) days following the first business
day of the seventh month after the date of such separation from service, provided that the
U.S. Taxpayer shall not have the right to designate the delivery or payment date, or (b) if
earlier, as soon as practicable (and in any event within ninety (90) days) after the U.S.
Taxpayer’s death.

Notwithstanding any provision of the Scheme to the contrary, the Company reserves the
right to make amendments to the Scheme as the Company deems necessary or desirable
to avoid the imposition of taxes or penalties under Code Section 409A. In any case, a U.S.
Taxpayer shall be solely responsible and liable for the satisfaction of all taxes and
penalties that may be imposed on such U.S. Taxpayer in connection with the Scheme
(including any taxes and penalties under Code Section 409A), and neither the Company
nor any of its affiliates shall have any obligation to indemnify or otherwise hold a U.S.
Taxpayer harmless from any or all of such taxes or penalties.

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 EXHIBIT 4.6

BRITISH AMERICAN TOBACCO P.L.C.

RULES

of the

BRITISH AMERICAN TOBACCO

RESTRICTED SHARE PLAN

Adopted by the Board on 2 December 2019

Approved by Shareholders on 30 April 2020

and amended by the Board on 8 February 2022

and amended by the Board on 20 March 2023

Herbert Smith Freehills LLP

HSF Ref: 31026953

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 British American Tobacco Restricted Share Plan

CONTENTS
Clause Heading Page
1. INTERPRETATION AND CONSTRUCTION ................................................................. 3
2. PLAN LIMITS .................................................................................................................. 4
3. AWARDS ........................................................................................................................ 5
4. AWARDS ARE NON-TRANSFERABLE ........................................................................ 7
5. VESTING ........................................................................................................................ 7
6. CESSATION OF OFFICE OR EMPLOYMENT .............................................................. 8
7. CORPORATE ACTIONS .............................................................................................. 10
8. OPTIONS ..................................................................................................................... 12
9. DIVIDEND EQUIVALENT ............................................................................................ 12
10. CASH ALTERNATIVE .................................................................................................. 12
11. TAX LIABILITY ............................................................................................................. 13
12. VESTED SHARE ACCOUNTS .................................................................................... 14
13. CLAW-BACK ................................................................................................................ 14
14. VARIATION OF CAPITAL ............................................................................................ 15
15. ADMINISTRATION ....................................................................................................... 15
16. AMENDMENTS ............................................................................................................ 16
17. DATA PROTECTION ................................................................................................... 17
18. GENERAL .................................................................................................................... 17
APPENDIX 1 : OPERATION OF CLAW-BACK ................................................................................ 19
APPENDIX 2 : AWARDS GRANTED TO U.S. TAXPAYERS .......................................................... 21
1. INTERPRETATION ...................................................................................................... 21
2. APPLICATION .............................................................................................................. 21
3. SERVICE CONDITION ................................................................................................ 21
4. APPLICATION OF PARAGRAPHS 5 AND 6 ............................................................... 21
5. AWARDS WHERE RULE 6.3.2 (THE "WAIT AND SEE" APPROACH)
SHALL APPLY OR THAT OTHERWISE ARE NOT EXEMPT FROM CODE
§ 409A AS A SHORT-TERM DEFERRAL.................................................................... 22
6. AWARDS WHERE THE “WAIT AND SEE” APPROACH DOES NOT
APPLY AND THAT ARE OTHERWISE EXEMPT FROM CODE § 409A AS
A SHORT-TERM DEFERRAL ...................................................................................... 22
7. DIVIDEND EQUIVALENTS .......................................................................................... 23
8. CASH ALTERNATIVE .................................................................................................. 23
9. CODE § 409A EXEMPTION AND COMPLIANCE ....................................................... 23
10. COOPERATION ........................................................................................................... 24
11. SETTLEMENT .............................................................................................................. 24
ADDENDUM I: AWARDS GRANTED TO RAI PARTICIPANTS ...................................................... 25
1. APPLICATION .............................................................................................................. 25
2. MODIFICATION ........................................................................................................... 25
3. TERMS ......................................................................................................................... 25

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 British American Tobacco Restricted Share Plan

4. SETTLEMENT .............................................................................................................. 25

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 British American Tobacco Restricted Share Plan

RULES OF THE BRITISH AMERICAN TOBACCO P.L.C. RESTRICTED SHARE PLAN

1. INTERPRETATION AND CONSTRUCTION

1.1 For the purposes of the Plan, the following terms shall have the meaning indicated below
unless the context clearly indicates otherwise:
"Award" means one of a Conditional Award or an Option;
"Board" means the board of directors of the Company or a committee duly authorised by
the board of directors or, following any Corporate Action, the Board or duly authorised
committee as constituted immediately prior to the Corporate Action;
"Claw-back" means a recovery of value by the Company from a Participant in accordance
with the provisions of Rule 13 (Claw-back) and Appendix 1 (Operation of Claw-back);
"Company" means British American Tobacco p.l.c. (registered in England and Wales
under No. 3407696);
"Conditional Award" means a right to receive a transfer of Shares following vesting of the
Award;
"Control" has the meaning given by Section 995 of the Income Tax Act 2007;
"Corporate Action" means any of the events referred to in:
(A) Rules 7.1 to 7.5 (but excluding a Reorganisation as defined in Rule 7.8); or
(B) if the Board determines that Awards will vest pursuant to such Rule, Rule 7.6;
"Cross-Border Merger" means a merger pursuant to the implementation in any relevant
jurisdiction of Directive 2005/56/EC (on cross-border mergers of limited liability
companies);
"Dealing Day" means any day on which the London Stock Exchange is open for trading;
"Dealing Restriction" means any restriction on the dealing in shares, whether direct or
indirect, pursuant to any law, regulation, code or enactment in England and Wales and/or
the jurisdiction in which the Participant is resident, or any share dealing code of the
Company;
"Eligible Employee" means an employee of any Group Company, other than an executive
director of the Company;
"Employees' Share Scheme" has the meaning given by Section 1166 of the Companies
Act 2006;
"Financial Year" means the financial year of the Company within the meaning of Section
390 of the Companies Act 2006;
"Grant Date" means the date on which a Conditional Award or Option is granted;
"Group" means the Company and any company which from time to time is a subsidiary of
the Company, within the meaning of section 1159 of the Companies Act 2006 (each a
"Group Company");
"Market Value" means, in relation to a Share on any day, the mid-closing price of a Share
on such day (as derived from the Daily Official List of the London Stock Exchange);
"Normal Vesting Date" means the third anniversary of the Grant Date or such other date
as may be determined by the Board prior to the Grant Date;
"Option" means a right to acquire Shares, which may be exercised by the Participant
following the vesting of the Award during any period permitted for exercise;
"Option Price" shall be nil, or such other amount as the Board may determine (provided
that the Board may reduce or waive such amount at any time);

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"Participant" means an Eligible Employee who has received an Award to the extent it has
not been released and has not lapsed (or, following his death, his Personal
Representatives);
"Personal Representatives" means, following his death, the Participant's personal
representatives, or a person fulfilling a similar function in any jurisdiction;
"Plan" means this British American Tobacco Restricted Share Plan, as amended from time
to time;
"Rule" means a rule of this Plan;
"Share" means a fully paid ordinary share in the capital of the Company;
"Treasury Shares" means Shares to which Sections 724 to 732 of the Companies Act
2006 apply;
"Trust" means any employee benefit trust from time to time established by the Company;
"U.S. Taxpayer" has the meaning given in Rule 3.10 (U.S. Taxpayers); and
"vesting" means:
(A) Shares subject to a Conditional Award becoming due to be transferred to the
Participant; or
(B) an Option becoming exercisable,
(and "vest" shall be construed accordingly).
1.2 In this Plan unless the context requires otherwise:
1.2.1 the headings are inserted for convenience only and do not affect the
interpretation of any Rule;
1.2.2 a reference to a statute or statutory provision includes a reference:
(A) to that statute or statutory provision as from time to time consolidated,
modified, re-enacted or replaced by any statute or statutory provision;
(B) to any repealed statute or statutory provision which it re-enacts (with or
without modification); and
(C) to any subordinate legislation made under it;
1.2.3 words in the singular include the plural, and vice versa;
1.2.4 a reference to one gender shall be treated as a reference to any gender;
1.2.5 a reference to a person shall include a reference to a body corporate; and
1.2.6 a reference to writing or written form shall include any legible format capable of
being reproduced on paper, irrespective of the medium used.
1.3 In this Plan:
1.3.1 a reference to the "transfer of Shares" (or similar) shall include both the issue and
allotment of Shares and the transfer of Treasury Shares; and
1.3.2 a provision obliging, or permitting, any company to do any thing shall be read as
obliging, or permitting, such company to do that thing, or procure that thing to be
done; and
1.3.3 the use of the word "including" shall mean including without limitation and without
prejudice to the generality of the foregoing.

2. PLAN LIMITS
2.1 Subject to Rule 2.2, the Board may not grant a Conditional Award or Option pursuant to the
Plan if the number of Shares subject to such proposed Award (the "Relevant Shares")
would cause either of the limits in Rules 2.3 or 2.4 to be breached.

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2.2 Rule 2.1 shall not apply in respect of a Conditional Award or Option granted on terms that it
shall not be capable of being satisfied by the issue of Shares.

5 per cent limit: discretionary Employees' Share Scheme

2.3 The number of Relevant Shares, when added to the aggregate of:
2.3.1 the number of Shares subject to outstanding options or awards granted within the
previous 10 years under the Plan or any other discretionary Employees' Share
Scheme adopted by the Company which may be satisfied by the issue of Shares;
and
2.3.2 the number of Shares actually issued within the previous 10 years under the
Plan, under any other discretionary Employees' Share Scheme or to a Trust (but
excluding any of those Shares that were used to satisfy an option or award
granted more than 10 years previously, and without double counting any Shares
which the Board has determined are to be used to satisfy options or awards
counted under Rule 2.3.1 above),
may not exceed such number as represents 5 per cent of the Company's issued share
capital immediately prior to such proposed grant or issue.

10 per cent limit: Employees' Share Scheme

2.4 The number of Relevant Shares, when added to the aggregate of:
2.4.1 the number of Shares subject to outstanding options or awards granted within the
previous 10 years under the Plan or any other Employees' Share Scheme
adopted by the Company which may be satisfied by the issue of Shares; and
2.4.2 the number of Shares actually issued within the previous 10 years under the
Plan, under any other Employees' Share Scheme or to a Trust (but excluding any
of those Shares: that were used to satisfy an option or award granted more than
10 years previously, and without double counting any Shares which the Board
has determined are to be used to satisfy options or awards counted under Rule
2.4.1 above),
may not exceed such number as represents 10 per cent of the Company's issued share
capital immediately prior to such proposed grant or issue.

Treasury Shares

2.5 References in this Rule 2 to the issue of Shares shall include the transfer of Treasury
Shares, but only until such time as the guidelines issued by institutional investor bodies
cease to provide that they should be so included.
Shareholder Approval
2.6 No Shares may be issued or Treasury Shares transferred to satisfy entitlements under the
Plan before the date on which the Plan is approved by shareholders of the Company in
general meeting.

3. AWARDS

Eligibility

3.1 Awards may be granted to Eligible Employees selected by the Board.

Timing of grants

3.2 An Award may only be granted:

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 British American Tobacco Restricted Share Plan

3.2.1 during the period of 42 days commencing on the Dealing Day immediately
following the day on which the Company announces its results for the preceding
financial year, half-year or other period;
3.2.2 in respect of an Award to be granted in respect of the recruitment or promotion of
an Eligible Employee, as soon as reasonably practicable after the Eligible
Employee commences holding office or employment with any Group Company or
the promotion of such Eligible Employee takes effect (as relevant); and/or
3.2.3 at such time at which the Board determines that exceptional circumstances exist
which justify the grant of the Award,
or, in any such case, if the grant of Awards during such period or at such time would be
contrary to any Dealing Restriction, as soon as reasonably practicable after such restriction
ceases to apply.

Individual limit

3.3 An Award may not be granted to an Eligible Employee where it would cause the aggregate
Relevant Value of the Shares subject to such Award and any Award(s) granted to the
Eligible Employee in the same Financial Year to exceed an amount equal to 250% of the
gross annual basic salary of that Eligible Employee as at the Grant Date.
An Award granted in breach of this limit shall immediately lapse in respect of the number of
Shares which cause this limit to be breached. Awards which have been released or have
lapsed, or which are granted in connection with the recruitment of an Eligible Employee in
lieu of incentive awards granted by the individual's former employer which are forfeited
(i.e., a "buy-out"), and any right to receive Shares as a dividend equivalent, shall be
ignored for this purpose.
In this Rule 3.3, the "Relevant Value" of a Share subject to an Award means either (as
determined by the Board): (i) the Market Value of a Share on the Dealing Day immediately
preceding the Grant Date; or (ii) the average of the Market Values of a Share over such
number of Dealing Days preceding the Grant Date as the Board may determine (all being
within the period of 30 days preceding the Grant Date and, where the Award is granted
within the period in Rule 3.2.1, being on or after the date of the results announcement).
3.4 Where an Eligible Employee's gross annual basic salary is denominated in a currency
other than pounds sterling, for the purposes of Rule 3.3 above such gross annual basic
salary shall be converted into pounds sterling on such basis as the Board may reasonably
determine.

Method of grant

3.5 An Award shall be granted by the Board.

3.6 A Conditional Award or an Option shall be granted by deed.
3.7 No payment for the grant of an Award shall be made by the Participant.
3.8 A Participant may, within 30 days of the Grant Date, release an Award (in full but not in
part) by written notice to the Company. Where a Participant does not release an Award
within such period, the Participant shall be deemed to have accepted the Award on the
terms set out in the Rules. Alternatively, it may be a term of the grant of an Award that the
Participant shall be required to accept the terms of the Award within such period following
grant as may be determined by the Board and, where the Board specifies such period, the
Award shall lapse at the end of such period if the terms of the Award have not been
accepted by the Participant.

Award notification

3.9 As soon as practicable following the Grant Date the Company shall notify a Participant of
the grant of an Award. Such notification shall specify:

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3.9.1 whether the Award takes the form of a Conditional Award or an Option;
3.9.2 the Grant Date;
3.9.3 the Normal Vesting Date;
3.9.4 the number of Shares in respect of which the Award is granted;
3.9.5 in relation to an Option, the Option Price (if any);
3.9.6 if applicable, that the dividend equivalent provisions of Rule 9 (Dividend
equivalent) shall apply; and
3.9.7 that the Award is subject to the claw-back provisions of Rule 13 (Claw-back) and
Appendix 1 (Operation of Claw-back).

U.S. Taxpayers

3.10 The provisions of Appendix 2 (Awards Granted to U.S. Taxpayers) shall apply to a
Conditional Award or an Option that is held by any Participant while he or she is subject to
taxation under the U.S. Internal Revenue Code of 1986, as amended (a "U.S. Taxpayer").
References to Code §409A are to §409A of the U.S. Internal Revenue Code of 1986, as
amended.

4. AWARDS ARE NON-TRANSFERABLE

4.1 A Participant may not transfer, assign, pledge, charge or otherwise dispose of, or grant any
form of security or other interest over, any part of his interest in an Award. An Award shall
(unless the Board determines otherwise) lapse on the Participant doing so (whether
voluntarily or involuntarily), being deprived of the beneficial ownership of an Award by
operation of law, or becoming bankrupt.
4.2 Rule 4.1 does not restrict the transmission of an Award to the Participant's Personal
Representatives following his death.

5. VESTING

Normal vesting

5.1 An Award shall vest on the Normal Vesting Date.

Vesting subject to Dealing Restrictions

5.2 A Conditional Award shall not vest unless, and vesting shall be delayed until, the Board is
satisfied that at that time:
5.2.1 such vesting;
5.2.2 the transfer of Shares to the Participant and the sale of Shares pursuant to Rule
11 (Tax Liability); and
5.2.3 any action needed to be taken by the Company to give effect to such vesting
is not contrary to any Dealing Restriction.

Effect of vesting

5.3 The effect of the vesting of an Award is that:

5.3.1 the Shares in respect of which a Conditional Award vests shall be transferred to
the Participant as soon as is reasonably practicable (which may include
transferring the Shares on more than one consecutive Dealing Day on such basis
as the Board may determine); and
5.3.2 an Option shall, to the extent that it vests, become exercisable in accordance with
Rule 8 (Options).

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Disciplinary proceedings

5.4 Unless the Board determines otherwise, an Award shall not vest while a Participant is
subject to an investigation process and/or formal disciplinary process (or similar), or where
a Participant has been served with notice that such a process may be instigated without
such notice having been rescinded, and vesting shall (subject to the Award lapsing to any
extent prior to or as a result of the conclusion of such process pursuant to Rule 6
(Cessation of office or employment) or 13 (Claw-back)) be delayed until the conclusion of
such process.

International transfers
5.5 Where a Participant, whilst continuing to hold an office or employment with a Group
Company, is to be transferred to work in another country, and as a result the Board
considers that following such transfer either he or a Group Company is likely to suffer a tax
disadvantage in respect of an Award or, due to securities or exchange control laws, the
Participant is likely to be restricted in his ability to receive Shares pursuant to an Award, to
exercise an Option and/or to hold or deal in Shares, the Board may decide that an Award
shall vest on such date as it may determine, in which case:

5.5.1 the proportion of the Award which may vest shall be limited (unless the Board
determines otherwise) to a pro rata proportion on the basis of the number of days
which have elapsed from the Grant Date to such vesting date, as compared to
the number of days between the Grant Date and the Normal Vesting Date. Any
remainder of the Award shall lapse; and

5.5.2 an Option may be exercised during such period as may be determined by the
Board ending no later than the date on which the Participant's transfer takes
effect.

6. CESSATION OF OFFICE OR EMPLOYMENT

Cessation where Awards lapse

6.1 An Award shall lapse:

6.1.1 on the Participant ceasing to hold office or employment with any Group
Company; or
6.1.2 if the Participant gives or receives notice of such cessation, on such earlier date
as may be determined by the Board,
save in each case where Rule 6.2 or Rule 6.6 applies.

Reasons for cessation where Awards remain capable of vesting

6.2 An Award shall not lapse pursuant to Rule 6.1 where the reason for the cessation or notice
is:
6.2.1 disability, ill-health or injury (as evidenced to the satisfaction of the Board);
6.2.2 the transfer of the Participant's employment in connection with the disposal of a
business or undertaking, or a part- business or part- undertaking;
6.2.3 the company with which the Participant holds office or employment ceasing to be
a Group Company; or
6.2.4 any other reason, if the Board so determines,
provided that the Board shall not exercise its discretion under Rule 6.2.4 unless the
Participant has entered into a settlement agreement (or equivalent document) acceptable
to the Board in relation to the cessation of employment, which shall be entered into not
later than the date on which the Participant ceases to hold office or employment with any

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Group Company (unless the Board determines, at its sole discretion, that the period for
entering into such settlement agreement shall be extended).
Where the Board exercises its discretion under Rule 6.2.4 the Board may also impose
additional conditions on the Award (including as to when the Award may vest).

Cessation prior to the Normal Vesting Date

6.3 Where prior to the Normal Vesting Date a Participant ceases to hold office or employment
with any Group Company for any of the reasons specified in Rule 6.2:
6.3.1 the Award shall vest on the date of cessation (in which case an Option may be
exercised during the period of six months, or such other period as may be
determined by the Board, from such vesting date, and shall lapse at the expiry of
such period); or
6.3.2 the Board may determine that an Award shall not vest at the date of such
cessation, but shall continue to be capable of vesting (in which case an Option
may be exercised during the period of six months, or such other period as may be
determined by the Board, from such date on which the Award may vest, and shall
lapse at the expiry of such period).
For the avoidance of doubt, the Board may make the determination in Rule 6.3.2 on a
standing basis (subject to revocation of such determination at any time) in respect of all
Awards to be granted to a specified Eligible Employee or Eligible Employees.
6.4 Where prior to the Normal Vesting Date a Participant ceases to hold office or employment
with any Group Company for any of the reasons specified in Rule 6.2, unless the Board
determines otherwise, the proportion of the Award which may vest (under any Rule) shall
be limited to a pro rata proportion on the basis of the number of days which have elapsed
from the Grant Date to the date of cessation, as compared to the number of days between
the Grant Date and the Normal Vesting Date. Any remainder of the Award shall lapse.

Exercise period in the event of cessation on or after the Normal Vesting Date

6.5 Where on or after the Normal Vesting Date a Participant ceases to hold office or
employment with any Group Company for any of the reasons specified in Rule 6.2, an
Option shall lapse at the expiry of the period of six months, or such other period as may be
determined by the Board, from the date of cessation.

Death

6.6 An Award shall vest in full on the Participant's death. An Option may be exercised (by the
Participant's Personal Representatives) during a period of one year from the date of the
Participant's death and shall lapse at the expiry of such period. Where a Participant dies
during an exercise period pursuant to either Rule 6.3 or 6.5 an Option shall not lapse as a
result of such Rule until the expiry of the twelve month period in this Rule 6.6 (for the
avoidance of doubt, in such circumstances the Option shall only remain exercisable to the
extent previously vested).

Cessation following a Corporate Action

6.7 Where a Participant ceases to hold office or employment with any Group Company
following a Corporate Action within the relevant exercise period referred to in Rule 7
(Corporate Actions), an Option shall not lapse pursuant to this Rule 6 until the expiry of the
relevant exercise period in Rule 7 (Corporate Actions). This Rule 6.7 shall not apply where
the cessation is by way of (or occurs where there are circumstances which the Board
determines would have justified) summary dismissal or service of notice of termination of
office or employment on the grounds of misconduct.

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Meaning of cessation of office or employment

6.8 No provision of this Rule 6 shall apply in respect of any cessation of office or employment if
immediately following the cessation the Participant holds an office or employment with any
Group Company, or in respect of any notice of cessation if arrangements are in place that
mean immediately following the notice becoming effective the Participant will hold an office
or employment with any Group Company.

7. CORPORATE ACTIONS

General offers

7.1 Awards shall vest:

7.1.1 upon a person obtaining Control of the Company as a result of making a general
offer to acquire Shares;
7.1.2 upon a person, having obtained Control of the Company, making a general offer
to acquire Shares; or
7.1.3 if a person makes a general offer to acquire Shares that would result in that
person obtaining Control of the Company and the Board so determines, on the
date which the Board determines to be the last practicable date prior to the date
on which it expects such person to obtain Control of the Company,
in each case being a general offer to acquire all of the Shares (other than Shares held by
the person making the offer and any person connected to that person).
Options may be exercised during the period of six months from the date of any such event
(but if not exercised, Options shall not lapse at the expiry of such period).

Compulsory acquisition

7.2 Awards shall vest upon a person becoming entitled to acquire Shares under Sections 979
to 982 of the Companies Act 2006.
Options may be exercised during a period of one month from the date on which that person
first becomes so entitled, and shall lapse at the expiry of such period.

Scheme of compromise or arrangement

7.3 Awards shall vest upon a Court sanctioning a compromise or arrangement which, on
becoming effective, would result in:
7.3.1 any person obtaining Control of the Company;
7.3.2 the undertaking, property and liabilities of the Company being transferred to
another existing or new company; or
7.3.3 the undertaking, property and liabilities of the Company being divided among and
transferred to two or more companies, whether existing or new.
Options may be exercised during a period of six months from the date of a Court
sanctioning such a compromise or arrangement (or, if earlier, to the day prior to the date on
which a transfer as described in Rule 7.3.2 or Rule 7.3.3 is to become effective), and shall
lapse at the expiry of such period.

Merger

7.4 Awards shall vest upon a competent authority approving a Cross-Border Merger, pursuant
to which the Company shall cease to exist.
Options may be exercised during the period from the date of a competent authority
approving a Cross-Border Merger until the day prior to the date on which the Cross-Border
Merger is to become effective, and shall lapse at the expiry of such period.

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Voluntary winding-up

7.5 Awards shall vest in the event of a notice being given of a resolution for the voluntary
winding-up of the Company.
Options may be exercised during a period of two months from the date of such a notice
being given and shall lapse at the expiry of such period.

Demerger or special dividend

7.6 If the Board so determines, Awards may vest following the announcement of a demerger of
a substantial part of the Group's business, a special dividend or a similar event affecting
the value of Shares to a material extent on such date specified by the Board. Where the
Board makes such determination, Options may be exercised during a period of two months
(or such other period as the Board may determine) from the date specified by the Board
and, unless the Board determines otherwise, shall lapse at the expiry of such period.

Extent of vesting on a Corporate Action

7.7 Where an Award vests (and, in the case of an Option, is exercised) pursuant to any of
Rules 7.1 to 7.6, the proportion of the Award which may vest shall be limited (unless the
Board determines otherwise) to a pro rata proportion on the basis of the number of days
which have elapsed from the Grant Date to the date of the Corporate Action, as compared
to the number of days within the period between the Grant Date and the Normal Vesting
Date. Any remainder of the Award shall lapse.

Roll-over of Award on a Reorganisation or takeover

7.8 Unless the Board determines otherwise, an Award shall not vest pursuant to this Rule 7 if,
as a result of any event that would otherwise be a Corporate Action, a company will obtain
Control of the Company or will obtain substantially all of the assets of the Company (the
"Acquiring Company"), and either:
7.8.1 the Acquiring Company will immediately following such event have (either directly
or indirectly) substantially the same shareholders and approximate shareholdings
as those of the Company prior to such event (a "Reorganisation"); or
7.8.2 the Board, with the agreement of the Acquiring Company, determines that the
Award shall not vest as a result of such event and so notifies the Participant prior
to the occurrence of the date on which the Award would otherwise vest.
In such case the existing Option or Conditional Award (the "Old Award") shall lapse on the
occurrence of the relevant event, provided that the New Parent Company shall grant a
replacement right to receive shares (the "New Award") over such number of shares in the
New Parent Company which are of equivalent value to the number of Shares in respect of
which the Old Award was outstanding. The New Award shall be granted on the terms of the
Plan, but as if the New Award had been granted at the same time as the Old Award.
For the purposes of this Rule 7.8:
7.8.3 the "New Parent Company" shall be the Acquiring Company, or, if different the
company that is the ultimate parent company of the Acquiring Company within
the meaning of section 1159 of the Companies Act 2006; and
7.8.4 the terms of the Plan shall following the date of the relevant event be construed
as if:
(A) the reference to "British American Tobacco p.l.c." in the definition of
"Company" in Rule 1 (Interpretation and construction) were a reference to
the company which is the New Parent Company, and
(B) save where the New Parent Company is listed, Rule 16.2 (Amendments)
were omitted.

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Compulsory winding-up

7.9 An Award shall lapse on the passing of an effective resolution, or the making of a Court
order, for the compulsory winding-up of the Company.

Concert parties

7.10 For the purposes of this Rule 7, a person shall be deemed to have Control of the Company
where he and any others acting in concert with him together have Control of the Company.

8. OPTIONS
8.1 An Option may be exercised, in full or in any number of parts, by the delivery to the
Company (or such other person nominated by the Company) of a valid notice of exercise in
such form as the Board may prescribe together with payment of the Option Price for the
Shares in respect of which the Option is exercised (if any).
8.2 An Option shall lapse on the tenth anniversary of the Grant Date (or such earlier date as
the Board may determine prior to the Grant Date).
8.3 Any Shares in respect of which the Option is exercised shall be transferred to the
Participant as soon as reasonably practicable (which may include transferring the Shares
on more than one consecutive Dealing Days on such basis as the Board may determine).
8.4 An Option may not be exercised unless the Board is satisfied that at such time:
8.4.1 such exercise,
8.4.2 the transfer of Shares to the Participant and the sale of Shares pursuant to Rule
11; and
8.4.3 any action needed to be taken by the Company to give effect to such exercise,
is not contrary to any Dealing Restriction. Where the exercise, transfer or dealing in Shares
is contrary to any Dealing Restriction on the last Dealing Day in any of the periods referred
to in Rules 6.3, 6.5 or 6.6 (Rule 6 being in relation to cessation of office or employment) or
Rules 7.1 to 7.3 or 7.6 (Rule 7 being in relation to Corporate Actions), such period shall be
extended to the end of the first Dealing Day thereafter on which the Board is satisfied that
the exercise, transfer and dealing in Shares is not contrary to any Dealing Restriction.
8.5 An Option shall lapse on the earliest date provided under any Rule (save only as expressly
provided in Rules 6.6 (Death) and 6.7 (Cessation following a Corporate Action)).

9. DIVIDEND EQUIVALENT
9.1 If at any time prior to the Normal Vesting Date the Board so determines, on or following the
date on which an Award vests the Company may:
9.1.1 make a cash payment to the Participant equal to the amount of any dividends that
the Participant would have received in respect of the number of Shares in respect
of which the Award vests had the Participant been the full legal and beneficial
owner of such Shares during the period from the Grant Date to the date the
Award vests; or
9.1.2 transfer to the Participant such number of additional Shares as have an
aggregate Market Value on the date on which the Award vests equal to the
amount determined in accordance with Rule 9.1.1 above.
9.2 A cash payment under Rule 9.1 may be made in a currency other than pounds sterling, in
which case the amount of such payment shall be converted into such other currency on
such basis as is determined by the Board.

10. CASH ALTERNATIVE

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10.1 This Rule 10 shall not apply in respect of any Award granted to a Participant resident in
any jurisdiction where the grant of an Award which provides for a cash alternative would be
unlawful, fall outside any applicable exemption under securities, exchange control or
similar regulations, or would cause adverse tax or social security (or similar) contribution
consequences for the Company or the Participant (in each case as determined by the
Board) or where the Board determines prior to the Grant Date that this Rule 10 shall not
apply.
10.2 The Board may determine prior to the Grant Date that an Award shall only be satisfied in
cash, in which case the Award shall not be a right to acquire Shares, and the vesting of the
Conditional Award or exercise of the Option shall be satisfied in full by the payment of a
cash equivalent amount, in substitution for the transfer of Shares.
10.3 Where the Board has made no determination pursuant to Rule 10.1 or 10.2 in respect of an
Award, the Board may determine at any time prior to the transfer of Shares pursuant to
such Award that the vesting of the Conditional Award or the exercise of the Option (or a
part thereof) shall be satisfied by the payment of a cash equivalent amount, in substitution
for the transfer of Shares.
10.4 A "cash equivalent amount" shall be calculated as the number of Shares which would
otherwise be transferred in respect of the relevant vesting or exercise but which are being
substituted for the cash equivalent amount, multiplied by an amount equal to the relevant
value less, in the case of an Option, the Option Price (if any), where the “relevant value” is
the Market Value of a Share on the date on which the Award vests or, in the case of an
Option, is exercised (or, in either case, where only a part of the Award is to be satisfied
with payment of a cash equivalent amount, is the Market Value of a Share on the date on
which Shares are transferred to the Participant pursuant to the Award)).
10.5 A cash equivalent amount shall be paid as soon as reasonably practicable following the
relevant vesting or exercise.
10.6 A cash equivalent amount may be paid in a currency other than pounds sterling, in which
case the cash equivalent amount shall be converted into such other currency on such basis
as is determined by the Board.

11. TAX LIABILITY

11.1 When any Tax Liability arises in respect of an Award, the Participant authorises any Group
Company:
11.1.1 to retain and sell legal title to such number of the Shares which would otherwise
have been transferred to the Participant on vesting or exercise of the Award, or
any part thereof, (notwithstanding that beneficial title shall pass) as may be sold
for aggregate proceeds equal to the Group Company's estimate of the amount of
the Tax Liability;
11.1.2 to deduct an amount equal to the Group Company's estimate of the Tax Liability
from any cash payment made under the Plan; and/or
11.1.3 where the amount realised under Rule 11.1.1 or deducted under Rule 11.1.2 is
insufficient to cover the full amount of the Tax Liability, to deduct any further
amount as is necessary through payroll,
and in each case to apply such amount in paying the amount of the Tax Liability to the
relevant revenue authority or in reimbursing the relevant Group Company for any such
payment, provided that, where the amount realised under Rule 11.1.1 or deducted under
Rule 11.1.2 is greater than the actual Tax Liability, the Group Company shall repay the
excess to the Participant as soon as reasonably practicable.
The Group Company shall be entitled to make the estimates referred to in this Rule 11.1 on
the basis of the highest rates of tax and/or social security applicable at the relevant time in
the jurisdiction in which the Group Company is liable to account for the Tax Liability,
notwithstanding that the Tax Liability may not arise at such rates.

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11.2 "Tax Liability" shall mean any amount of tax and/or social security (or similar)
contributions which any Group Company becomes liable to pay on behalf of the Participant
to the revenue authorities in any jurisdiction, together with all or such proportion (if any) of
employer's social security contributions which would otherwise be payable by any Group
Company as is determined to be recoverable from the Participant (to the extent permitted
by law) by the Board, or which the Participant has agreed to pay or which are subject to
recovery pursuant to an election to which paragraph 3B of Schedule 1 to the Social
Security Contributions and Benefits Act 1992 applies.

12. VESTED SHARE ACCOUNTS

12.1 Legal title to any Shares which are due to be transferred to the Participant pursuant to the
Plan may be transferred to a person (the "Vested Share Account Provider") appointed by
the Company from time to time to hold legal title to such Shares on behalf of the
Participant.
12.2 The Vested Share Account Provider shall receive and hold Shares on behalf of the
Participant in accordance with such terms and conditions as are agreed by the Company
from time to time, and by participating in the Plan the Participant irrevocably agrees to
those terms and conditions (which shall be available to the Participant on request to the
Company).
12.3 The transfer of any Shares to the Vested Share Account Provider shall satisfy any
obligation of the Company under the Plan to transfer Shares to the Participant (and
references in the Plan to Shares (or legal title thereof) having been transferred to the
Participant shall be read accordingly).
12.4 The terms and conditions referred to in Rule 12.2 above may include terms that the
Participant shall not be entitled to transfer, assign, pledge, charge or otherwise dispose of,
or grant any form of security or other interest over, some or all of the Shares if to do so
would be in breach of the Participant's obligations under the Company's shareholding
requirements as they apply to such Participant.

13. CLAW-BACK

Claw-back events

13.1 The Board may at any time prior to the fifth anniversary of the Grant Date of an Award
determine that a Claw-back shall apply in respect of the Award, if the Board determines
that:
13.1.1 there has been a material misrepresentation in relation to the performance of any
Group Company, relevant business unit and/or the Participant on the basis of
which the Award was determined (which may include, but shall not be limited to:
(i) a misstatement of the financial results and/or health of any Group Company;
(ii) an erroneous calculation in relation to any Group Company's results or other
performance benchmark; (iii) errors in any Group Company's financial
statements; or (iv) discrepancies in the financial accounts, and, for the avoidance
of doubt, notwithstanding that such misrepresentation may not arise from fraud or
reckless behaviour); or
13.1.2 an erroneous calculation was made in assessing the extent to which the Award
was granted or is to be capable of vesting, or vested,
and, in either case, the Award was granted or is capable of vesting, or vested, in respect of
a greater number of Shares than would have been the case had there not been such a
misrepresentation or had such error not been made; or
13.1.3 there has been a significant failure within any Group Company which has a
material impact on the value of the Group (taken as a whole), including but not
limited to circumstances where the Company or any other Group Company has
entered into an involuntary administration or insolvency process or there has

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been a significant reduction in, or cessation of, the ability of any material Group
Company (or group of Group Companies) to continue normal operations.
13.2 The Board may at any time (whether before or after vesting) determine that a Claw-back
shall apply in respect of an Award where the Participant is found to have:
13.2.1 committed at any time prior to the vesting of the Award, including prior to grant,
an act or omission which justifies, or in the opinion of the Board would have
justified, summary dismissal or service of notice of termination of office or
employment on the grounds of misconduct;
13.2.2 engaged in, at any time prior to the vesting of the Award:
(A) reckless, negligent or wilful action or inaction; or
(B) inappropriate behaviour or behaviour that is not aligned with any
employee policy or handbook or Group values,
and in either case the Board determines that such circumstances have
contributed to a material loss for any Group Company; or
13.2.3 contributed, at any time prior to vesting of the Award, to circumstances which give
rise to a sufficiently negative impact on the reputation of any Group Company or
business unit (or would have if such circumstances had been made public).
13.3 Rules 13.1.3, 13.2.2 and 13.2.3 shall only apply to awards granted on or after 1 January
2022.

Applying Claw-back

13.4 A Claw-back shall be applied in accordance with the provisions of Appendix 1 (Operation of
Claw-back).

Lapse of Awards to give effect to claw-back of other awards

13.5 By participating in the Plan, the Participant acknowledges that the Board may lapse any
Award to such extent as it determines to be necessary (including in full) in order to give
effect to a claw-back under the terms of the Plan or any other Employees' Share Scheme
or bonus scheme operated from time to time by any Group Company.

No Claw-back following Corporate Action

13.6 No Claw-back shall be capable of being applied at any time following any Corporate Action,
save where the determination that the Claw-back shall apply was made prior to such event
(and, for the avoidance of doubt, a Corporate Action does not include a Reorganisation).

14. VARIATION OF CAPITAL

14.1 In the event of any variation of the share capital of the Company, or in the event of the
demerger of a substantial part of the Group's business, a special dividend or similar event
affecting the value of Shares to a material extent (which shall not include the payment of
any ordinary dividend) the Board may make such adjustments to Awards as it may
determine to be appropriate.
14.2 For the avoidance of doubt Rule 14.1 shall not apply in respect of any Awards pursuant to
which legal title to Shares has been transferred prior to the date of the relevant event (such
that the recipient of such legal title shall participate in such event as a holder of Shares)
including pursuant to the vesting of an Award under Rule 7.6 (Demerger or special
dividend).

15. ADMINISTRATION
15.1 Any notice or other communication under or in connection with this Plan may be given by
the Company (or its agents) to a Participant personally, by email or by post, or by a
Participant to the Company or any Group Company either personally or by post to the

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Secretary of the Company. Items sent by post shall be pre-paid and shall be deemed to
have been received 48 hours after posting. Items sent by email shall be deemed to have
been received immediately.
15.2 A Participant shall not be entitled to:
15.2.1 receive copies of accounts or notices sent to holders of Shares;
15.2.2 exercise voting rights; or
15.2.3 receive dividends,
in respect of Shares subject to an Award legal title to which has not been transferred to the
Participant.
15.3 Any discretion (including the power to make any determination) of the Board under or in
connection with the Plan may be exercised by the Board in its absolute discretion.
15.4 Any exercise of discretion (including the making of any determination) by the Board under
or in connection with the Plan shall be final and binding.
15.5 Any disputes regarding the interpretation of the Rules or the terms of any Award shall be
determined by the Board (upon such advice as the Board determines to be necessary) and
any decision in relation thereto shall be final and binding.

16. AMENDMENTS
16.1 Subject to Rules 16.2 and 16.4, the Board may at any time add to or alter the Plan or any
Award made thereunder in any respect.
16.2 Subject to Rule 16.3, no addition or alteration to the advantage of present or future
Participants relating to eligibility, the limits on participation, the overall limits on the issue of
Shares or the transfer of Treasury Shares, the basis for determining a Participant's
entitlement to, or the terms of, Shares or cash provided pursuant to the Plan and the
provisions for adjustments on a variation of share capital shall be made without the prior
approval by ordinary resolution of the shareholders of the Company in general meeting.
16.3 Rule 16.2 shall not apply to any alteration or addition which is necessary or desirable in
order to comply with or take account of the provisions of any proposed or existing
legislation, law or other regulatory requirements or to take advantage of any changes in
legislation, law or other regulatory requirements, or to obtain or maintain favourable
taxation, exchange control or regulatory treatment of any Group Company or any
Participant or to make minor amendments to benefit the administration of the Plan.
16.4 No alteration or addition shall be made under Rule 16.1 which would abrogate or adversely
affect the subsisting rights of a Participant unless it is made:
16.4.1 with the consent in writing of the Participant;
16.4.2 with the consent in writing of such number of Participants as hold Awards under
the Plan in relation to 75 per cent. of the Shares subject to all Awards under the
Plan; or
16.4.3 by a resolution at a meeting of Participants passed by not less than 75 per cent.
of the Participants who attend and vote either in person or by proxy,
and for the purpose of Rule 16.4.2 or 16.4.3 the Participants shall be treated as the holders
of a separate class of share capital and the provisions of the Articles of Association of the
Company relating to class meetings shall apply mutatis mutandis.
16.5 The Board may, in respect of Eligible Employees who are or who may become subject to
taxation outside the United Kingdom on their remuneration, establish such plans or sub-
plans based on the Plan but subject to such modifications as the Board determines to be
necessary or desirable to take account of or to mitigate or to comply with relevant overseas
taxation, securities or exchange control laws, provided that the terms of awards made
under such plans or sub-plans are not overall more favourable than the terms of Awards
made under the Plan and provided that awards made, and Shares issued, pursuant to such

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plans or sub-plans shall count towards the limits set out in Rules 2 (Plan limits) and 3.3
(Individual limit).

17. DATA PROTECTION

17.1 From time to time the personal data of the Participant will be collected, used, stored,
transferred and otherwise processed for the purposes described in Rule 17.2 and 17.3.
The legal grounds for this processing will (depending on the nature and purpose of any
specific instance of processing) be one of: (i) such processing being necessary for the
purposes of the legitimate interests of the Company and each other Group Company in
incentivising their officers and employees and operating the Plan; (ii) such processing
being necessary for the purposes of any relevant data controller in respect of such
personal data complying with its legal obligations; and (iii) such processing being
necessary for the performance of the contractual obligations arising under the Plan. The
collection and processing of such personal data for such purposes is a contractual
requirement of participation in the Plan.
17.2 The purposes for which personal data shall be processed as referred to in this Rule 19
shall be in order to allow the Company and any other relevant Group Companies to
incentivise their officers and employees and to operate the Plan and to fulfil its or their
obligations to the Participant under the Plan, and for other purposes relating to or which
may become related to the Participant’s office or employment, the operation of the Plan or
the business of the Group or to comply with legal obligations. Such processing will
principally be for, but will not be limited to, personnel, administrative, financial, regulatory or
payroll purposes as well as for the purposes of introducing and administering the Plan.
17.3 The personal data to be processed as referred to in this Rule 17 may be disclosed or
transferred to, and/or processed by:
17.3.1 any professional advisors of any Group Company, HM Revenue & Customs or
any other revenue, regulatory or governmental authorities;
17.3.2 a trustee of a Trust; any registrars, brokers, payroll provider or appointed in
connection with any employee share or incentive plans operated by any Group
Company; or any person appointed (whether by the Participant or any Group
Company) to act as nominee on behalf of (or provide a similar service to) the
Participant;
17.3.3 subject to appropriate confidentiality undertakings), any prospective purchasers
of, and/or any person who obtains control of or acquires, the Company or the
whole or part of the business of the Group; or
17.3.4 any Group Company and officers, employees or agents of such Group Company.
17.4 Further information in relation to the processing of personal data referred to in this Rule 19,
including the details and identity of the data controller and of the Participant’s rights in
respect of such personal data, is available in the Employee Data Protection Policy (or
otherwise on request to the Company Secretary).
17.5 To the extent that the processing of personal data of a Participant referred to in this Rule
19 is subject to the laws or regulations of any jurisdiction that is not an EU member state
and under which the legal grounds for processing described in Rule 19.1 do not provide a
sufficient legal basis under such other laws or regulations for the processing referred to in
Rule 17.1 to 17.3, by such processing for the purposes of such other laws or regulations
(but shall not be deemed to consent to such processing for the purposes of EU Regulation
2016/679).
17.6 In this Rule17, “personal data” and “data controller” each have the meaning given in EU
Regulation 2016/679 and “Employee Data Protection Policy” means such privacy policy or
similar operated by any Group Company in relation to the processing of personal data as
amended from time to time and as is applicable to the Participant.

18. GENERAL

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18.1 In the event of any discrepancy between these Rules in English and (i) any copy of these
Rules translated into any other language; or (ii) any communications, notices or materials
issued in connection with this Plan, these Rules in English shall prevail.
18.2 The Plan shall terminate on the 10th anniversary of the approval of the Plan by the
shareholders of the Company in general meeting, or at any earlier time by resolution of the
Board or an ordinary resolution of the shareholders in general meeting. Such termination
shall be without prejudice to the subsisting rights of Participants.
18.3 Save as otherwise provided under the Plan:
18.3.1 Shares issued and allotted pursuant to the Plan will rank pari passu in all
respects with the Shares then in issue at the date of such allotment, except that
they will not rank for any rights attaching to Shares by reference to a record date
preceding the date of allotment; and
18.3.2 Shares to be transferred pursuant to the Plan will be transferred free of all liens,
charges and encumbrances and together with all rights attaching thereto, except
they will not rank for any rights attaching to Shares by reference to a record date
preceding the date of transfer.
18.4 If and so long as the Shares are admitted to listing and/or for trading on any stock
exchange or market, the Company shall apply for any Shares issued and allotted pursuant
to the Plan to be so admitted as soon as practicable.
18.5 Any transfer of Shares under the Plan is subject to such consent, if any, of any authorities
in any jurisdiction as may be required, and the Participant shall be responsible for
complying with the requirements to obtain or obviate the necessity for such consents.
18.6 The terms of any individual's office or employment with any past or present Group
Company, and the rights and obligations of the individual thereunder, shall not be affected
by his participation in the Plan and the Plan shall not form part of any contract of
employment between the individual and any such company.
18.7 An Eligible Employee shall have no right to receive an Award under the Plan and
participation in the Plan and the grant of any Award is at the discretion of the Company.
18.8 Participation in the Plan by, or the grant of any Award under it to, a Participant in any year
does not create any right to or expectation of participation in the Plan or the grant of any
Award in any future year, even if the Participant has previously participated in the Plan (or
any similar plan) over a long period of time and/or if participation in the Plan and/or an
Award under it (or any similar plan) has been granted (including repeatedly) without the
relevant Group Company specifically expressing the voluntary and discretionary nature at
the time of each such participation or Award.
18.9 By participating in the Plan, the Participant waives all and any rights to compensation or
damages in consequence of the termination of his office or employment with any past or
present Group Company for any reason whatsoever, whether lawfully or otherwise, insofar
as those rights arise or may arise from his ceasing to have rights under the Plan (including
ceasing to be entitled to exercise any Option) as a result of such termination, or from the
loss or diminution in value of such rights or entitlements, including by reason of the
operation of the terms of the Plan, any determination by the Board pursuant to a discretion
contained in the Plan or the provisions of any statute or law relating to taxation.
18.10 Benefits under the Plan shall not form part of a Participant's remuneration for any purpose
and shall not be pensionable.
18.11 The invalidity or non-enforceability of any provision or Rule of the Plan shall not affect the
validity or enforceability of the remaining provisions and Rules of the Plan which shall
continue in full force and effect.
18.12 These Rules shall be governed by and construed in accordance with English Law.
18.13 The English courts shall have exclusive jurisdiction to determine any dispute which may
arise out of, or in connection with, the Plan.

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APPENDIX 1: OPERATION OF CLAW-BACK

Claw-back prior to the transfer of Shares in respect of an Award (or "malus")
1. Where the Board determines (pursuant to Rule 13 (Claw-back)) that a Claw-back shall
apply in respect of an Award prior to legal title to Shares having been transferred to the
Participant pursuant to the Award (whether before or after vesting), the Claw-back shall be
applied by the Board reducing the number of Shares in respect of which the Award may
vest or, in the case of an Option, be exercised (or after vesting by reducing the number of
Shares legal title to which may be transferred pursuant to the Award) by up to the number
of Shares determined by the Board to be the excess number of Shares in respect of which
the Award was granted and/or is outstanding (and the Award shall lapse to the extent so
reduced, which may be in full).
Claw-back following the transfer of Shares in respect of an Award
2. Where the Board determines (pursuant to Rule 13 (Claw-back)) that a Claw-back shall
apply in respect of an Award following legal title to Shares having been transferred to the
Participant pursuant to the Award (a "Post-Transfer Claw-back"), the Board shall
determine:
a. the excess number of Shares in respect of which the Award vested (the "Excess
Shares"); and
b. the aggregate Market Value of such Excess Shares (as determined by the Board) on
the date on which the Award vested or, in the case of an Option, the date the Option
was exercised (the "Equivalent Value").
3. In the case of a Post-Transfer Claw-back, any cash payment made or additional Shares
transferred pursuant to Rule 9 (Dividend equivalent) in respect of such Award shall be
subject to the Claw-back to the extent that the Board determines that such cash payment
or Shares relate to the Excess Shares.
4. A Post-Transfer Claw-back may be effected in such manner as may be determined by the
Board, and notified to the Participant, including by any one or more of the following:
a. by reducing the number of Shares and/or amount of cash in respect of which an
Outstanding Award vests or may vest (or has vested, but in respect of which no
Shares have yet been transferred or cash payment made), whether before or after
the assessment of performance conditions in respect of such Outstanding Award, by
the number of Excess Shares and/or the Equivalent Value (and such Outstanding
Award shall lapse to the extent so reduced);
b. by setting-off against any amounts payable by any Group Company to the
Participant an amount up to the Equivalent Value (including from any bonus payment
which may otherwise become payable to the Participant); and/or
c. by requiring the Participant to immediately transfer to the Company a number of
Shares equal to the Excess Shares or a cash amount equal to the Equivalent Value
(which shall be an immediately payable debt due to the Company), provided that the
Board may reduce the number of Excess Shares or the amount of the Equivalent
Value subject to the Claw-back in order to take account of any Tax Liability (as
defined in Rule 11 (Tax Liability)) which arose on the Excess Shares (howsoever
delivered to the Participant).
5. For the avoidance of doubt, nothing in Rule 13 (Clawback) or this Appendix shall in any
way restrict a Participant from being able to transfer or otherwise deal in Shares acquired
on vesting or exercise of an Award.
6. In paragraph 4 above:
"Outstanding Award" means any other Award under the Plan, any award or option under
any other Employees' Share Scheme operated from time to time by any Group Company
(other than any award or options granted under any arrangement which satisfies the
provisions of Schedules 2 or 3, or (unless the terms of such arrangement state that shares
acquired thereunder are subject to claw-back) 4 or 5, of the Income Tax (Earnings and
Pensions) Act 2003), or any bonus award under any bonus scheme operated from time to
time by any Group Company, in each case which is either held by the Participant at the

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time of a determination that a Claw-back shall be applied or which are granted to the
Participant following such a determination; and
"vests" shall include shares or cash subject to an award becoming due to be transferred or
paid, and in the case of an option, the option becoming exercisable.

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APPENDIX 2: AWARDS GRANTED TO U.S. TAXPAYERS

1. INTERPRETATION

1.1 This Appendix shall form part of the Rules of the Plan.

1.2 In this Appendix a reference to a "Paragraph" is to a paragraph of this Appendix.

1.3 Capitalized terms used in this Appendix that are not otherwise defined in this Appendix
shall have the meanings set forth in the Plan.

2. APPLICATION

2.1 The provisions of this Appendix shall apply to an Award that is held by any Participant
while he or she is a U.S. Taxpayer.

2.2 To the extent that any provision of Paragraphs 4 to 11 is inconsistent with any Rule of the
Plan, such provision of this Appendix shall take precedence. Paragraph 3 is included to
aid interpretation.

3. SERVICE CONDITION
Rule 6 – Cessation of Office or Employment

3.1 All Awards to which this Appendix applies are subject to a service condition which applies
until the Award's Normal Vesting Date or any earlier vesting date.
Paragraph 5 – Awards where the "wait and see approach" shall apply or the Awards
otherwise are not exempt from Code § 409A as a short-term deferral

3.2 Notwithstanding the date on which a Conditional Award that is subject to Paragraph 5
vests, the Shares in respect of which such Award vests shall not be transferred to the U.S.
Taxpayer until the Normal Vesting Date (subject to any earlier date specified in Paragraph
5.5). Shares in respect of an Option that is subject to Paragraph 5 shall be deemed to be
exercised on the date on which such Option vests pursuant to the Plan, as amended by
this Appendix.
Paragraph 6 –Awards where the "wait and see" approach does not apply and are
otherwise exempt from Code § 409A as a short-term deferral

3.3 An Award that is subject to Paragraph 6 will be subject to a service condition until the date
on which it vests, and (a) Shares in respect of a Conditional Award will be transferred to
the U.S. Taxpayer no later than the 15th day of the third month following the end of the
calendar year in which the Award is no longer subject to a substantial risk of forfeiture
(within the meaning of Code § 409A) and (b) Shares in respect of an Option shall be
deemed to be exercised on the date on which such Option vests.
Rules 5, 6 and 7 – Vesting, Cessation of Office or Employment and Corporate Actions

3.4 Where an Award vests prior to the Normal Vesting Date, the extent of vesting shall be
determined by such applicable Rule.
Lapse

3.5 Awards to which this Appendix applies shall lapse at any time specified in the Rules or this
Appendix.

4. APPLICATION OF PARAGRAPHS 5 AND 6

An Award to which this Appendix applies shall be subject to Paragraph 5 or 6, but shall
only be capable of being subject to one of Paragraph 5 or Paragraph 6, and which such
Paragraph the Award is subject to shall be determined without any involvement of the U.S.
Taxpayer and shall not be capable of change for any reason.

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 British American Tobacco Restricted Share Plan

5. AWARDS WHERE RULE 6.3.2 (THE "WAIT AND SEE" APPROACH) SHALL APPLY
OR THAT OTHERWISE ARE NOT EXEMPT FROM CODE § 409A AS A SHORT-TERM
DEFERRAL

5.1 An Award shall be subject to this Paragraph 5 if:

5.1.1 on the Grant Date the U.S. Taxpayer is a member of the Management Board of
the Company (unless determined otherwise by the Board prior to the Grant Date);

5.1.2 such Award is otherwise not exempt from Code § 409A by reason of complying
with the short-term deferral exemption from Code § 409A; and/or

5.1.3 it is so determined by the Board prior to the Grant Date.

5.2 An Award which is subject to this Paragraph 5 shall vest on the earliest of:

5.2.1 the Normal Vesting Date;

5.2.2 any date on which the Award vests pursuant to Rule 7 (subject to Paragraph 5.3);

5.2.3 the U.S. Taxpayer's death; or

5.2.4 any earlier vesting date determined by the Board pursuant to Rule 5.5 or Rule 6.2
(subject to Paragraph 5.3).

5.3 An Award subject to this Paragraph 5:

5.3.1 may only vest under Rule 7 if the event falling within Rule 7 which would give rise
to such vesting constitutes a "change in control event" as described in U.S.
Treasury Regulations or other guidance issued pursuant to Code § 409A; and

5.3.2 to the extent it does not vest by such time, shall lapse on any date on which an
Option would lapse pursuant to Rule 7.2 to 7.6.

5.4 An Award subject to this Paragraph 5 that is an Option shall be deemed to be automatically
exercised to the fullest extent permitted by the Rules on the date on which it vests pursuant
to the Plan, as amended by this Appendix, and the Shares subject to such automatic
exercise shall be transferred to the U.S. Taxpayer within 60 days (90 days if such Option
vests pursuant to Paragraph 5.2.3) of such date of automatic exercise.

5.5 Any Shares in respect of a Conditional Award that is subject to this Paragraph 5 that vest
pursuant to the Plan, as amended by this Appendix, shall be transferred to the U.S.
Taxpayer within 60 days (90 days in the case of Paragraph 5.5.2(ii) below) of the earlier of:

5.5.1 the Normal Vesting Date; or

5.5.2 if applicable, (i) the date set forth in Paragraph 5.2.2; (ii) the date set forth in
Paragraph 5.2.3 or (iii) any applicable date described in Paragraph 5.2.4
(provided that such date is a "permissible payment" event within the meaning of
Treasury Regulation § 1.409A-3(a)),
and shall be transferred within such period (and, for the avoidance of doubt, not prior to
such period).

5.6 The Board shall not exercise its discretion in connection with the operation of Rule 6.2.4 in
contradiction of this Paragraph 5.

6. AWARDS WHERE THE “WAIT AND SEE” APPROACH DOES NOT APPLY AND THAT
ARE OTHERWISE EXEMPT FROM CODE § 409A AS A SHORT-TERM DEFERRAL

6.1 An Award shall be subject to this Paragraph 6 if the Award is not subject to Paragraph 5.

6.2 An Award which is subject to this Paragraph 6 shall, vest on the earliest of:

11/57825794_9 22
 British American Tobacco Restricted Share Plan

6.2.1 the Normal Vesting Date;

6.2.2 any date on which the Award vests pursuant to Rule 7;

6.2.3 the Participant's death;

6.2.4 any earlier vesting date determined by the Board pursuant to Rule 5.5; and

6.2.5 the date on which the U.S. Taxpayer ceases to hold office or employment with
any Group Company for any of the reasons specified in Rule 6.2 (for the
avoidance of doubt subject to Rule 6.8).

6.3 An Award subject to this Paragraph 6 that is an Option shall be deemed to be automatically
exercised to the fullest extent permitted by the Rules on the date on which it vests pursuant
to the Plan, as amended by this Appendix, and the Shares subject to such automatic
exercise shall be transferred to the U.S. Taxpayer no later than the 15th day of March in the
calendar year immediately following the calendar year in which the Award is no longer
subject to a substantial risk of forfeiture (within the meaning of Code § 409A).

6.4 Any Shares in respect of a Conditional Award that is subject to this Paragraph 6 that vest
pursuant to the Plan, as amended by this Appendix, shall be transferred to the U.S.
Taxpayer no later than the 15th day of March in the calendar year immediately following the
calendar year in which the Award is no longer subject to a substantial risk of forfeiture
(within the meaning of Code § 409A).

6.5 Rule 6.3.2 shall not apply to an Award which is subject to this Paragraph 6.

6.6 The Board shall not exercise its discretion in connection with the operation of Rule 6.2.4 in
contradiction of this Paragraph 6.

7. DIVIDEND EQUIVALENTS
Any payment to which a U.S. Taxpayer may become entitled under Rule 9 with respect to
an Award shall be paid to the U.S. Taxpayer at the same time as the transfer of Shares
under Paragraph 5.4, 5.5, 6.3 or 6.4, as applicable.

8. CASH ALTERNATIVE
8.1 If Shares cannot be delivered in accordance with Paragraph 5.4, 5.5, 6.3 or 6.4, as
applicable, because of a Dealing Restriction, such Award shall instead be satisfied by the
payment of a cash equivalent amount pursuant to Rule 10 (as such Rule is amended by
Paragraph 8.2).
8.2 Any cash payment to which a U.S. Taxpayer may become entitled under Rule 10 with
respect to an Award shall be paid to the U.S. Taxpayer at the same time as the transfer of
Shares would have occurred under Paragraph 5.4, 5.5, 6.3 or 6.4, as applicable.

9. CODE § 409A EXEMPTION AND COMPLIANCE

9.1 Awards subject to Paragraph 6 are intended to be exempt from Code § 409A to the
maximum extent possible under the exemption for “short-term deferrals” specified in the
Treasury Regulations, and the provisions of this Appendix and the Plan, as it applies to
such Award, shall be construed, interpreted and applied accordingly. Without limiting the
foregoing, the Board shall not exercise any discretion that is otherwise afforded to it under
the Plan in a manner that is inconsistent with such treatment. For the avoidance of doubt,
any Award subject to Paragraph 6 shall, in all events, be paid within the short-term deferral
period specified in Treasury Regulation § 1.409A-1(b)(4).
9.2 To the extent that any Award to which this Appendix applies is subject to Code § 409A, the
provisions of this Appendix and the Plan, as it applies to such Award, shall be construed,
interpreted and applied in such a way as to comply with the applicable provisions of Code §
409A to the maximum extent possible. If an Award is subject to Code § 409A, then: (i) any
payment or transfer of Shares on account of a change in control shall be made only if the
change in control qualifies as a “change in control event,” as defined for purposes of Code
§ 409A; (ii) any provision in the Plan that is inconsistent with the requirements of Code §

11/57825794_9 23
 British American Tobacco Restricted Share Plan

409A shall not apply to such Award; (iii) the Board shall exercise discretion otherwise
afforded to it under the Plan (including under Appendix 1 to the Plan) only to the extent that
such exercise of discretion is consistent with the requirements of Code § 409A; and (iv) the
U.S. Taxpayer shall not have the right to designate any payment date with respect to such
Award.
9.3 In the event that a U.S. Taxpayer is deemed to be a "specified employee" on the date of
his or her “separation from service,” as defined for purposes of Code § 409A (other than by
reason of death), determined pursuant to identification methodology adopted by a Group
Company in compliance with Code § 409A, and if any portion of the Shares or other
payments to be received by such U.S. Taxpayer in respect of an Award upon separation
from service would constitute a “deferral of compensation” subject to Code § 409A, then to
the extent necessary to comply with Code § 409A, Shares or amounts that would otherwise
be delivered or payable pursuant to this Plan, as amended by this Appendix, during the six
(6) month period immediately following the date of such U.S. Taxpayer’s separation from
service shall instead be delivered or paid either (i) during the period commencing on the
date that is six (6) months and one (1) day following the date of such U.S. Taxpayer’s
separation from service and ending fifteen (15) days following the first business day of the
seventh month after the date of such separation from service, provided that the U.S.
Taxpayer shall not have the right to designate the delivery or payment date, or (ii) if earlier,
as soon as practicable (and in any event within ninety (90) days) after the U.S. Taxpayer’s
death.
9.4 Each Award hereunder shall constitute a separate payment within the meaning of Treasury
Regulation §1.409A-2(b)(2).

10. COOPERATION
In the event that the terms of this Plan would subject any U.S. Taxpayer to taxes or
penalties under Code § 409A ("409A Penalties"), the Board, the Company and such U.S.
Taxpayer shall cooperate diligently to amend the terms of the Plan and the U.S.
Taxpayer’s Award agreement to avoid such 409A Penalties, to the extent possible,
provided that in no event shall any Group Company be responsible for any 409A Penalties
that arise in connection with any amounts payable in respect of any Award granted under
this Plan.

11. SETTLEMENT
No Award subject to paragraph 5 of this Appendix shall be settled with Shares from a trust.

11/57825794_9 24
 British American Tobacco 2019 Restricted Share Plan

ADDENDUM I: AWARDS GRANTED TO RAI PARTICIPANTS

1. APPLICATION
1.1 This Addendum applies to Participants who are employees of Reynolds American Inc. or a
subsidiary of Reynolds American Inc. (collectively, “RAI” and such Participants, “RAI
Participants”).

1.2 This Addendum sets out certain additional terms which currently apply in respect of
Awards granted under the Plan to RAI Participants.

1.3 References in this Addendum to a “Rule” is to the Rule of the Plan. Capitalized terms used
in this Addendum shall, save where otherwise defined herein, have the meaning given in
the Rules. To the extent that any provision of this Addendum is inconsistent with any Rule
of the Plan, such provision of this Addendum shall take precedence.

2. MODIFICATION
The Board may at any time, and without notice to any person, add or alter or discontinue
the terms of this Addendum in any respect without prior notice to any Participant.

3. TERMS
Disability
3.1 With respect to RAI Participants, the reference to “disability” in Rule 6.2 (Reasons for
cessation where Awards remain capable of vesting) shall mean that the RAI Participant
has become eligible for and is in receipt of benefits under RAI’s Long-Term Disability Plan.
RAI shall establish such policies, procedures, rules and guidelines as it determines to be
appropriate to administer the preceding sentence.

4. SETTLEMENT
4.1 Awards granted to RAI Participants may, at the discretion of the Board, be satisfied by the
transfer of British American Tobacco p.l.c. American Depositary Shares, and references in
the Plan (including any Appendix, Schedule or Addendum thereto) to “Shares” shall be
read accordingly.

4.2 No Award subject to this Addendum shall be settled with Shares from a trust.

11/57825794_9 25
 EXHIBIT 4.8

BRITISH AMERICAN TOBACCO p.l.c.

and

TADEU MARROCO

SERVICE CONTRACT

11/80358126_1
 TABLE OF CONTENTS

Clause Headings Page

1. DEFINITIONS ................................................................................................................. 1
2. APPOINTMENT.............................................................................................................. 1
3. DUTIES .......................................................................................................................... 1
4. OTHER INTERESTS ...................................................................................................... 2
5. INDEMNITIES ................................................................................................................ 3
6. REMUNERATION .......................................................................................................... 5
7. EXPENSES AND INDEPENDENT PROFESSIONAL ADVICE ..................................... 6
8. DEDUCTIONS ................................................................................................................ 6
9. MOTOR CAR .................................................................................................................. 6
10. PENSION AND OTHER BENEFITS .............................................................................. 6
11. SICKNESS BENEFIT ..................................................................................................... 7
12. HOLIDAYS ..................................................................................................................... 7
13. REASONABLENESS OF RESTRICTIONS ................................................................... 8
14. CONFIDENTIALITY........................................................................................................ 8
15. COPYRIGHT, INVENTIONS AND PATENTS ................................................................ 9
16. POST-TERMINATION COVENANTS .......................................................................... 11
17. TERMINATION ............................................................................................................. 11
18. DIRECTORSHIPS ........................................................................................................ 14
19. WAIVER OF RIGHTS ................................................................................................... 14
20. GRIEVANCE AND DISCIPLINARY PROCEDURES ................................................... 14
21. MISCELLANEOUS ....................................................................................................... 14
22. CONSTRUCTION......................................................................................................... 15
23. PRIOR AGREEMENTS ................................................................................................ 15
24. ENFORCEMENT AND GOVERNING LAW ................................................................. 15
25. DATA PROTECTION ................................................................................................... 15
26. REPRESENTATIONS AND WARRANTIES ................................................................ 16
27. REFERENCES ............................................................................................................. 16
28. COUNTERPARTS ........................................................................................................ 16
SCHEDULE 1.................................................................................................................................... 18
DEFINITIONS ................................................................................................................................... 18
SCHEDULE 2 POST TERMINATION COVENANTS ....................................................................... 22

11/80358126_1
THIS AGREEMENT is made on 14 May 2023

BETWEEN:
(1) BRITISH AMERICAN TOBACCO p.l.c., a company incorporated in England and Wales
with registered number 03407696 whose registered office is at Globe House, 4 Temple
Place, London WC2R 2PG (the "Company"); and
(2) TADEU MARROCO of [ADDRESS] (the "Executive");

WHEREAS:
(A) The Board has approved the terms of this Agreement under which the Executive is to be
employed.

IT IS AGREED THAT:

1. DEFINITIONS
Schedule 1 contains the definitions for words and phrases for the purposes of this
Agreement.

2. APPOINTMENT

2.1 The Company shall employ the Executive and the Executive shall serve the Company as
the Chief Executive Officer with effect from the Effective Date subject to the terms and
conditions specified herein.
2.2 The Employment commences on the Effective Date and, subject to Clause 17 below, shall
continue thereafter until termination by not less than 12 months' prior written notice given
by either party to the other.
2.3 No probationary period applies to the Executive's Employment.
2.4 The Executive's period of continuous employment with a Group Company began on 14
April 1992. No previous employment with any other employer shall be treated as
continuous with the Employment.

3. DUTIES
3.1 The Executive shall during the continuance of his employment devote all such time,
attention and skill as may be required for the proper performance of his duties hereunder,
and shall at all times promote the success of the Company for the benefit of its members
as a whole and, save where there is any conflict with the success of the Company, the
success of its Group Companies and he shall comply with the directors' duties set out in
the Companies Act 2006, and shall also faithfully and diligently perform such duties and
exercise such powers consistent therewith as may from time to time be assigned to or
vested in him by the Board or the Company.
3.2 The Company reserves the right to assign to the Executive duties of a different nature
either additional to or instead of those referred to in Clause 3.1 above on terms and
conditions no less favourable than the terms and conditions set out herein, it being
understood that he will not be assigned duties which he cannot reasonably perform or
which are inconsistent with his status and subject always to the directors' duties set out in
the Companies Act 2006.
3.3 The Executive shall obey the reasonable and lawful orders of the Board, given by or with
the authority of the Board, and shall comply with all the Company's rules, regulations,
policies and procedures from time to time in force, unless any of the foregoing are
inconsistent with this Agreement, and all laws, codes of conduct, rules and regulations, in
all relevant jurisdictions, relevant to the Company or to any Group Company or to him as a
director of the Company or as an office-holder of any Group Company, including, without
limitation, pursuant to MAR, the LPDT Rules, the City Code on Take-Overs and Mergers,
the JSE Listings Requirements, the UK Corporate Governance Code and all applicable US
SEC rules and regulations.
3.4 The Executive shall promptly provide the Board with all such information as it may require
in connection with the business or affairs of the Company and of any other Group

11/80358126_1 1
 Company for which he is required to perform duties.
3.5 The Executive may be required in pursuance of his duties to perform services not only for
the Company but also for any Group Company and, without further remuneration (except
as otherwise agreed), to accept any such office or position with the Company, as the Board
or the Company may from time to time reasonably require. The Company may at its sole
discretion assign the Executive's employment to any Group Company on the same terms
and conditions as set out herein.
3.6 The Executive shall promptly disclose to the Board full details of any knowledge or
suspicion he has that any employee or officer of the Company or any Group Company has
or plans to commit any serious wrongdoing or serious breach of duty or other act which
might materially damage the interests of the Company or its Group Companies or if any
such employee or officer, or the Executive himself, plans to leave their employment or to
join or establish a business in competition with the Company or any of its Group
Companies (including details of any steps taken to implement any such plan).
3.7 The Executive shall work such hours as are necessary for the proper performance of his
duties of employment, which shall as a minimum include 35.5 hours per week from Monday
to Friday in accordance with the policy set out from time to time in the Company's HR
Policies and Procedures on Interact.
3.8 The parties agree that the nature of the Executive's position is such that his Employment is
not and cannot be measured and so the Employment falls within the scope of regulation 20
Working Time Regulations 1998 (as amended).
3.9 The Executive's normal place of work shall be the Company's principal United Kingdom
office from time to time or such other location at which the Company may from time to time
require the Executive to base himself. The Executive agrees to travel (both within and
outside of the United Kingdom) as may be required for the proper performance of his duties
and of the Employment. It is a fundamental condition of the Employment that the Executive
will at all times be fully mobile throughout the United Kingdom and the world and can be
required by the Company at any time to relocate to any other location in the world.
3.10 The Executive is required to undertake any and all mandatory training specified by the
Company from time to time as being necessary for the purposes of performing their role.
Where such mandatory training is specified by the Company, the costs of such training
shall be met by the Company. The Executive will also be entitled to take part in various
training courses appropriate to the Executive's role which the Company may provide in-
house from time to time, details of which can be found on the Company's intranet.

4. OTHER INTERESTS
4.1 During the period of the Employment the Executive shall devote his full time and attention
to his duties hereunder and shall not without the prior written consent of the Board (such
consent not to be unreasonably refused) directly or indirectly either on his own account or
on behalf of any other person, company, business entity or other organisation:
4.1.1 (i) engage in, or (ii) be concerned with, or (iii) provide services to, (whether as an
employee, officer, director, agent, partner, consultant or otherwise), or (iv) have
any financial or other interest in, or (v) make preparations to be engaged or
interested in or concerned with or to provide services to, any other business; or
4.1.2 accept any other engagement or public office which may adversely affect the
proper and efficient performance of his duties hereunder; or
4.1.3 have any other personal or financial interest in a business which has transactions
or dealings with the Company or any other Group Company (save for passive
investments through any tracker funds or any other passive investment vehicles);
PROVIDED THAT:
(A) the Executive may not, at any time, hold more than one external mandate as a
Non-Executive Director of a Listed Company; and
(B) the Executive may hold for investment purposes an interest (as defined in S.820 -
825 of the Companies Act 2006) of up to 5% in nominal value or (in the case of
Securities not having any nominal value) in number or class of Securities, in any

11/80358126_1 2
 class of Securities in a Listed Company and which are not the Securities of any
company which competes or proposes to compete with the business of the
Company or any Group Company. For this purpose, the references to Securities
held by the Executive includes Securities held or beneficially held by the
Executive's Immediate Family.
4.2 The Executive confirms that he has disclosed fully to the Company all circumstances in
respect of which there is, or there might be, a direct or indirect conflict of interest between
the Company or any Group Company, and the Executive, and he agrees to disclose fully
and in writing to the Company any such circumstances which may arise during the
Employment (including, but not limited to, where the holding of Securities by members of
his Immediate Family puts, or is likely to put, the Executive in breach of the 5% limit
referred to in Clause 4.1 above).
4.3 The Executive is required to note the formal procedures established by the Board for
managing compliance with the conflict of interest provisions of the Companies Act 2006.
Under these provisions the Executive:
4.3.1 may not allow any situation to arise in which he will have, or may have, a direct or
indirect interest that conflicts, or possibly may conflict, with the interests of the
Company (a situational conflict), unless the matter has been authorised in
advance by the Board in accordance with the Articles of Association of the
Company; and
4.3.2 he must declare in advance any interest in a proposed transaction or
arrangement with the Company (a transactional conflict).
4.4 The Executive is required to give advance notice of any situational or transactional conflict
to the Company Secretary of the Company and any such matter will be considered either
at the next meeting of the Board or, if the conflict or potential conflict is due to arise prior to
the next scheduled meeting of the Board, at a meeting of the Conflicts Committee. Details
of the role and responsibilities of the Conflicts Committee are set out in the British
American Tobacco Corporate Governance booklet, a copy of which is available from the
Company Secretary of the Company from time to time.
4.5 For the purposes of Clauses 4.1 and 4.3, the provisions of S. 820 - 825 of Companies Act
2006 shall apply for determining whether the Executive has an interest in any Securities.
4.6 The Executive undertakes that he will at all times:
4.6.1 comply with all rules of law or regulation of any competent authority or of the
Company, including the Company's Share Dealing Code, from time to time in
force in relation to dealing in the Securities of the Company and inside
information affecting the Securities of the Company; and
4.6.2 comply with the Company's Standards of Business Conduct Policy from time to
time in force.

5. INDEMNITIES
5.1 Subject to Clause 5.2 below, the Company shall, both during the Employment and after its
termination, indemnify the Executive and keep him indemnified against and to pay to him
an amount equal to all costs, charges, expenses or liabilities which the Executive may
sustain or incur in or about the execution of his duties to the Company or of any associated
company of the Company or as a result of any contract, deed, matter or thing done,
entered into or executed himself on behalf of any such company or in relation to the
business of any such company.
5.2 The indemnity referred to in Clause 5.1 shall not apply in any of the following
circumstances:
5.2.1 where and to the extent that any recovery is made by the Executive under any
policy of insurance;
5.2.2 where and to the extent prohibited or rendered unenforceable by the Companies
Act 2006 or, in the case of an associated company which is not subject to the
Companies Act 2006, to the extent that it would have been prohibited by the
Companies Act 2006 had the Companies Act 2006 applied to it, or as otherwise

11/80358126_1 3
 prohibited by law;
5.2.3 where the Company considers that the Executive has acted in bad faith, with
wilful default or gross negligence, dishonestly, fraudulently, intentionally not in
compliance with the Company's Standards of Business Conduct Policy (as from
time to time in force) or otherwise so as to bring the Company or any of its
associated companies into disrepute; and
5.2.4 where and to the extent any claim against the Executive relates to acts (or
omissions) of the Executive which, directly or indirectly, result in the summary
dismissal of the Executive by the Company or any associated company of the
Company.
5.3 The indemnity provided in Clause 5.1 shall take effect notwithstanding that the Company
(or any associated companies) or the Executive may have purchased and maintained
insurance cover in respect of any liability, loss or expenditure incurred by any director or
officer of the Company and the indemnity provided under Clause 5.1 above shall be
enforceable against the Company regardless of whether a claim may be made or has been
pursued under such insurance.
5.4 All sums payable by the Company hereunder shall be paid free and without any rights of
counterclaim or set-off and without deduction and withholding on any ground whatsoever,
save only as may be required by law. If any such deduction or withholding is required by
law, the Company shall be obliged to pay to the Executive such amount as will ensure that,
after any such deduction or withholding has been made, the Executive shall have received
a sum equal to the amount that he would otherwise have received in the absence of any
such deduction or withholding.
5.5 If the Executive becomes aware of any notice, demand or other document issued, any
claim made or action taken either before or after the date hereof which appears to him,
acting reasonably, to be relevant for the purposes of the indemnity provided in Clause 5.1
or likely to give rise to any liability of the Company under that indemnity (hereinafter
referred to as a "Demand"), he shall give notice thereof to the Company as soon as
reasonably practicable and in any event within 30 days.
5.6 The Executive shall provide the Company as soon as reasonably practicable with all
supporting documentation and information relating to a Demand as the Company may
reasonably require.
5.7 The Executive shall not take or omit to take any action which the Executive should
reasonably be aware would prejudice the Company's ability to recover the loss in respect
of the Demand under any applicable policy of insurance maintained by the Company, and
the Executive shall take such steps as the Company may reasonably require to comply
with the terms of any applicable policy of insurance.
5.8 The Executive shall, at the request and at the expense of the Company, do and concur in
doing and permit to be done all such acts and things as the Company may reasonably
request to avoid, dispute, resist, appeal or compromise any Demand. The Executive shall
further make no settlement or compromise of the subject matter of any Demand, nor agree
to any matter in the conduct of any dispute in relation thereto, nor admit nor assume any
liability, nor take any other action or omit to do any other thing in relation to any Demand
without the prior written approval of the Company (such approval not to be unreasonably
withheld or delayed).
5.9 The Company may, by written notice to the Executive at any time and without prejudice to
the rights of indemnification of the Executive set out in Clause 5.1 above, forthwith assume
(where appropriate, in the Executive's name) the conduct of any negotiations, settlement or
compromise discussions or proceedings in relation to a Demand. The Company shall have
full discretion in the conduct or settlement of any claim or proceedings. The Executive
shall take such steps, and provide such information, as the Company may reasonably
require to assist in the conduct and settlement of such claims or proceedings.
5.10 The Executive shall provide the Company as soon as reasonably practicable following any
request with reasonable details of all costs and liabilities incurred by the Executive in
relation to any Demand.
5.11 The rights and obligations set out in this Clause 5 shall not modify or waive any of the

11/80358126_1 4
 duties which the Executive owes as a director, officer or employee of the Company or any
of its associated companies (as the case may be), as a matter of law or under the rules of
any relevant stock exchange or regulatory body.
5.12 The Company shall, in the event that a payment is made to the Executive under this
indemnity in respect of a particular liability, be entitled to recover from the Executive an
amount equal to any payment received by the Executive under any policy of insurance or
from any other third party to the extent that such payment relates to the liability, and a
deduction may similarly be made from any payment made by the Company to the extent
any such payment has already been received by the Executive. The Executive shall pay
any sum owing in accordance with the foregoing forthwith upon the Company's request.
5.13 To the extent any payment of costs under Clause 5.1 of this indemnity is treated under the
Companies Act 2006 as a loan repayable to the Company, subject to the Companies Act
2006 and provided that the requirements for a qualifying third party indemnity provision are
met, the Executive shall not be required to repay the loan.
5.14 For the purposes of this Clause 5, "associated company" and "qualifying third party
indemnity provision" have the meanings given in Part 10 of the Companies Act 2006.

6. REMUNERATION
6.1 With effect from the Effective Date the Executive shall receive a base salary of £1,343,700
per annum.
6.2 The base salary provided for in Clause 6.1 above, as applicable, shall accrue from day to
day and shall be payable monthly in equal instalments part in arrears and part in advance
on or about the 11th of each month by way of credit transfer and shall be paid subject to
deduction of income tax and national insurance contributions.
6.3 The Remuneration Committee shall review the Executive's salary at least once in each
twelve months (with the first review taking place in 2024) save after notice of termination of
this Agreement has been served by either party, but shall not be obliged to make any
increase in the salary.
6.4 In addition to his salary, the Executive shall be eligible to participate in such annual and/or
long-term incentive arrangements as the Company may determine in its absolute discretion
from time to time, on such terms and at such level as the Remuneration Committee may
from time to time determine. The Company reserves the right at any time to amend the
terms of or terminate any such incentive schemes and to alter the level of the Executive's
participation therein without reference to or agreement from the Executive. The Executive
acknowledges that during the course of his employment and on its termination he has no
right to receive a bonus and/or other incentive award and that the Remuneration
Committee is under no obligation to operate a bonus and/or long-term incentive scheme
and that he will not acquire such a right, nor shall the Remuneration Committee come
under such an obligation, merely by virtue of the Executive's having received one or more
bonus and/or other incentive award(s) or the Remuneration Committee's having operated
one or more bonus and/or incentive scheme(s) during the course of the Executive's
employment.
6.5 The remuneration specified in Clause 6.1 above shall be inclusive of all fees and other
remuneration to which the Executive may be entitled as an officer of the Company or of
any Group Company. To achieve this, the Executive shall account for any sums he
receives to the Company and his salary shall be reduced by the amount of such sums (and
the Executive hereby authorises the Company to make any such reduction(s)).
6.6 In accordance with the Companies Act 2006, all remuneration payments (including
payments for loss of office and benefits) due to the Executive (including any such payment
due pursuant to this Agreement) will only be payable or provided if and to the extent that
they are either consistent with the most recent remuneration policy approved by members
of the Company pursuant to section 439A of the Companies Act 2006 (the "Directors’
Remuneration Policy") or are separately approved by resolution of the members of the
Company, and any provision of this Agreement relation to the making of any such payment
or provision shall only be enforceable to such extent.

11/80358126_1 5
7. EXPENSES AND INDEPENDENT PROFESSIONAL ADVICE
7.1 The Company shall reimburse (or procure the reimbursement of) to the Executive (against
receipts or other satisfactory evidence) all reasonable business expenses properly and
reasonably incurred and defrayed by him in the course of the Employment, subject to the
Company's rules and policies relating to expenses.
7.2 The Executive's expenses may include legal fees if it is necessary in the furtherance of the
Executive's duties for him to seek independent legal advice (provided that allegations of
negligence, breach of duty or bad faith have not been made against the Executive).
Accordingly, the Board has approved a procedure for taking independent advice in such
circumstances. Any such payment by the Company is subject to any applicable restriction
under company law.
7.3 Further to Clause 7.2 above, the advice and services of the Company Secretary of the
Company and of the Group Legal and Security Director and General Counsel of British
American Tobacco are available to each director of the Company for guidance on the
director's responsibilities and those of the Board and in relation to any specific activity or
transaction of the Company. It is recognised that there may be occasions when the
Executive may need to have independent professional advice in connection with the
performance of the Executive's duties as a director of the Company and that this should be
paid for by the Company.
7.4 In such an instance, the Executive should first refer the matter to the Company Secretary
of the Company and confirm with him that it is a matter for which independent professional
advice is required in the interests of the Company. Where this requirement arises, the
Executive should also consult with the Company Secretary of the Company in order that
regard may be had to any potential conflicts of interest that may arise in such a situation.

8. DEDUCTIONS
The Company shall be entitled at any time during the Employment, or in any event on its
termination, to deduct from the Executive's remuneration hereunder any monies due from
him to the Company including but not limited to any outstanding loans, advances,
relocation expenses, the cost of repairing any damage or loss to the Company's property
caused by him (and of recovering the same), excess holiday, any sums due from him
under Clause 12.2 below and any other monies owed by him to the Company.

9. MOTOR CAR
During the continuance of his employment, the Executive shall be entitled to the use of a
car and a driver, for personal and/or business use, and shall be paid a company car
allowance of £20,000 per annum, in each case subject to and in accordance with any
Executive Directors’ car policy from time to time and the Company's most recent Directors’
Remuneration Policy.

10. PENSION AND OTHER BENEFITS

10.1 The Executive shall be eligible to participate in such pension arrangements, including the
provisions for life assurance benefits (and on such terms) as the Remuneration Committee
may from time to time determine and communicate to the Executive in its absolute
discretion, subject to and in accordance with the rules of such arrangements (including
those relating to auto-enrolment and lifetime and annual allowances) and the Company's
most recent Directors’ Remuneration Policy. Further details (including arrangements
relating to salary sacrifice) can be obtained from the Company Secretary.
10.2 The Executive shall be eligible to participate in the following benefits schemes: private
medical expenses scheme and personal accident scheme, subject to the terms and
conditions of such schemes from time to time in force. Details of such scheme(s) can be
obtained from the Company's HR Policies and Procedures on Success Factors.
10.3 The Company reserves the right to terminate or substitute other scheme(s)/pension
arrangements for such scheme(s)/pension arrangements or to amend the scale of benefits
of such scheme(s)/pension arrangements including the level of benefits. If any scheme
provider (including but not limited to any insurance company) refuses for any reason
(whether based on its own interpretation of the terms of the insurance policy or otherwise)

11/80358126_1 6
 to provide any benefits to the Executive, the Company shall not be liable to provide any
such benefits itself or any compensation in lieu thereof.
10.4 Any actual or prospective loss of entitlement to benefit under any long-term disability or
private medical expenses benefits shall not limit or prevent the Company from exercising
its right to terminate the Employment in accordance with Clauses 2 or 17 hereof.
10.5 To the extent that any benefit provided to the Executive under this Agreement is taxable,
the Company shall, as appropriate, and if required by law, withhold an amount in respect of
the income tax and employee's National Insurance Contributions due on the taxable value
of that benefit.

11. SICKNESS BENEFIT

11.1 In the event of the Executive being absent from work due to sickness or injury, the
Company will continue to pay his normal salary (inclusive of any Statutory Sick Pay to
which he may be entitled) for a period of up to 12 weeks during any rolling period of 12
months ("Company Sick Pay"). Thereafter, the payment of any further sick pay will be at
the discretion of the Company and subject to the Company's Sick Pay Policy from time to
time. Company Sick Pay will be based on the Executive's normal salary less any State
benefits claimable by the Executive on account of his sickness or injury, less normal
deductions. The Executive's entitlement to Company Sick Pay is subject to his compliance
with the sickness notification requirements set out in the Company's HR Policies and
Procedures on Interact.
11.2 Irrespective of Clause 11.1 above, the Executive will receive Statutory Sick Pay ("SSP")
when the Executive qualifies for it, although where Company Sick Pay and Statutory Sick
Pay are payable for the same day of sickness absence, the Executive will receive the
higher of the two sums. Further details on Statutory Sick Pay are set out in the Company's
HR Policies and Procedures on Interact.
11.3 The Company reserves the right to require the Executive to undergo a medical examination
by a doctor or consultant nominated by it, in which event the Company will bear the cost
thereof. The Executive shall authorise the doctor to disclose to and discuss with the Board
(and, in the first instance, the Chairman) the results of the examination. The Executive
acknowledges that the Company will process his personal data and special categories of
personal data disclosed by the doctor in accordance with the Company's UK Employee
Privacy Notice.
11.4 The Executive's entitlement to Company Sick Pay is subject to the Company's right to
terminate the Employment in accordance with this Agreement.
11.5 If the illness, accident or other incapacity shall be, or appear to be, caused by actionable
negligence of a third party in respect of which damages are or may be recoverable, the
Executive shall immediately notify the Board of that fact and of any claim, compromise,
settlement or judgment made or awarded in connection with it. The Company in its
discretion may require the Executive to take all reasonable steps to recover from such third
party or its insurers compensation including repayment of all sums paid to him by the
Company under this Clause in respect of such absence. The Executive shall also give to
the Board all particulars the Board may reasonably require and shall, if required by the
Board and to the extent permitted by law, refund all or such part of the sums paid to or for
the benefit of him by way of salary, bonus or benefits during the relevant period as the
Board may reasonably determine. The amount to be refunded shall not, however, exceed
the amount of damages or compensation and interest thereon recovered by the Executive,
less any unrecovered costs borne by him in connection with the recovery of such damages
or compensation, and shall not exceed the total remuneration paid to him by way of salary,
bonus and benefits in respect of the period of such illness, accident or other incapacity.

12. HOLIDAYS
12.1 The Executive shall be entitled to receive his normal remuneration for all Bank and Public
holidays normally observed in England and a further 25 working days' holiday in each
holiday year (the period from 1 January to 31 December). The Executive may only take his
holiday at such times as are agreed with the Chairman, as appropriate. The first 28 days of
holiday taken in the holiday year including public holidays shall be deemed to be the

11/80358126_1 7
 Executive's statutory leave entitlement firstly under Regulation 13 and then under
Regulation 13A of the Working Time Regulations 1998. Save to the extent required by the
Working Time Regulations 1998, holidays may not be carried forward from one holiday
year to the next save with the express permission of the Chairman. No payment shall be
made by the Company (during the continuance or on termination of this Agreement) in lieu
of holidays not taken except as required by law or as set out under Clause 12.2 below.
Save to the extent required by the Working Time Regulations 1998, the Executive's
entitlement under this Clause shall not accrue during any period of absence from work due
to sickness or injury in excess of 30 continuous Working Days or during any period of
unpaid leave (excluding statutory shared parental or adoption leave).
12.2 In the holiday year when the Employment ceases, the Executive will be treated as having
accrued holiday on a pro rata basis by reference to his last day at work. If on the cessation
of his employment the Executive has exceeded his holiday entitlement, this excess of
holiday taken will be deducted from any sums due to him. If the Executive has accrued
holiday entitlement which has not been taken prior to any period of notice to terminate, the
Company may at its sole discretion either require him to take such holiday during any
period of notice or pay him a sum in lieu of it. In either case (and for the purposes of
Regulation 14 of the Working Time Regulations 1998) the payment shall be calculated by
multiplying the unused or excess entitlement (as the case may be) taken to the nearest
whole day by 1/260 of the Executive's salary at that time or, if lower and to the extent
permitted by law, the Executive's salary at the time the relevant leave was accrued and,
where the Executive is in receipt of payments under a personal accident insurance
scheme, the Executive's salary for these purposes shall be deemed to be at the rate of the
personal accident insurance payments. If the Executive refuses to work out all or any part
of his notice period, he will forfeit any accrued holiday which has not been taken or such
holiday entitlement equal to the number of days which the Executive refuses to work during
his notice period.
12.3 No holiday entitlement or pay shall be treated as accruing during any period covered by the
Compensation Payment.

13. REASONABLENESS OF RESTRICTIONS

The Executive recognises that, whilst performing his duties for the Company, he will have
access to and come into contact with trade secrets and Confidential Information belonging
to the Company or to Group Companies and will obtain personal knowledge of and
influence over its or their customers and/or employees. The Executive therefore agrees
that the restrictions contained or referred to in Clauses 14 and 15 and Schedule 2 are
reasonable and necessary to protect the legitimate business interests of the Company and
its Group Companies both during and after the termination of his employment.

14. CONFIDENTIALITY
14.1 The Executive shall neither during the Employment (except in the proper performance of
his duties or if authorised by the Board or required by law) nor at any time (without limit)
after the termination thereof, directly or indirectly:
14.1.1 use for his own purposes or those of any other person, company, business entity
or other organisation whatsoever; or
14.1.2 disclose to any person, company, business entity or other organisation
whatsoever; or
14.1.3 through any failure to exercise all due care and diligence cause or permit any
unauthorised disclosure of
any Confidential Information.
14.2 The Executive shall not at any time during the continuance of his employment with the
Company make any notes or memoranda relating to any matter within the scope of the
Company's business, dealings or affairs otherwise than for the benefit of the Company or
any Group Company.
14.3 The Executive shall use his best endeavours during the continuance of his employment to
prevent the publication, disclosure or misuse of any Confidential Information and shall not

11/80358126_1 8
 remove (including, for the avoidance of doubt, by emailing any Confidential Information to
third parties, any personal email accounts and/or saving any Confidential Information on
any cloud-based storage), nor authorise others to so remove, from the premises of the
Company or of any of its Group Companies any records of Confidential Information except
to the extent strictly necessary for the proper performance of his or the other person's
duties to the Company or any of its Group Companies.
14.4 The Executive shall promptly disclose to the Company full details of any knowledge or
suspicion he has (whether during or after his employment) of any actual, threatened or
pending publication, disclosure or misuse by any person (including the Executive himself)
of any Confidential Information and shall provide all reasonable assistance and co-
operation (at the Company’s expense) as the Company may request in connection with
any action or proceedings it may take or contemplate in respect of any such publication,
disclosure or misuse.
14.5 This Clause 14 is without prejudice to the Executive's equitable duty of confidence.
14.6 Nothing in this Agreement shall preclude the Executive from:

14.6.1 making a protected disclosure within the meaning of Part IVA (Protected
Disclosures) of the Employment Rights Act 1996 (as amended from time to time);

14.6.2 reporting an offence to the police or a law enforcement agency;

14.6.3 co-operating with a criminal investigation or prosecution;

14.6.4 reporting misconduct or a serious breach of regulatory requirement to a body

responsible for supervising or regulating relevant matters;

14.6.5 reporting, in the public interest, any serious wrongdoing to a law enforcement
agency or relevant regulator or an equivalent person or entity which has a proper
interest in receiving that information in the public interest;

14.6.6 communicating in confidence with the Executive's professional advisors

(including any tax, legal, medical and/or therapeutic advisors) and/or with the
Executive's spouse or registered civil partner or common-law spouse;

14.6.7 acting with statutory authority or complying with any order of, or giving evidence
to, a court or tribunal of competent jurisdiction;

14.6.8 complying with any law, any regulations of any statutory or regulatory authority, or
any request of any government body (including, for the avoidance of doubt, HM
Revenue & Customs); and/or

14.6.9 using any relevant information for the purpose of representation at any
investigation or proceedings brought by an applicable regulatory or professional
body relating to matters arising from the Executive's employment.

This includes protected disclosures or reports made about matters previously disclosed to
another recipient.
14.7 The Company may at any time during the Employment require the Executive to deliver up
to it immediately all documents (including all notes, original documents, extracts and
summaries thereof), discs and other information storing medium relating to the business or
affairs of the Company or any Group Company which he obtained or made whilst an
employee of the Company. This obligation shall include all copies and reproductions of the
same, however made.

15. COPYRIGHT, INVENTIONS AND PATENTS

15.1 All records, documents, papers (including copies and summaries thereof) and Intellectual
Property Rights made, developed or acquired by the Executive in the course of the
Employment shall be, and at all times remain, the absolute property of the Company, and
the Executive hereby undertakes to keep confidential all information about, and details of,
such records and Intellectual Property Rights (unless otherwise permitted by the

11/80358126_1 9
 Company).
15.2 The Executive hereby assigns, wholly and absolutely and with full title guarantee, including
the right to sue for damages for past infringements, and by way of future assignment, to the
Company, all Intellectual Property Rights referred to in Clause 15.1 (including future
Intellectual Property Rights), for the full term thereof throughout the world, including any
extensions or renewals arising in respect of such Intellectual Property Rights. The
Executive hereby irrevocably and unconditionally waives all moral rights, including rights
granted by Chapter IV of Part I of the Copyright, Designs and Patents Act 1988, that vest in
him (whether before, on or after the date hereof) in connection with his authorship of any
Intellectual Property Rights in the course of his employment with the Company, wherever in
the world enforceable, including without limitation the right to be identified as the author of
any copyright works and the right not to have any such works subjected to derogatory
treatment, and hereby waives all similar moral rights in other jurisdictions.
15.3 The Company and the Executive acknowledge and accept the provisions of Sections 39 to
42 of the Patents Act 1977 (the "Act") relating to the ownership of employees' inventions
and the compensation of employees for certain inventions respectively.
15.4 The Executive acknowledges and agrees that, by virtue of the nature of his duties and the
responsibility arising, he has a special obligation to further the interests of the Company
within the meaning of Section 39(1)(b) of the Act.
15.5 Any invention, development, process, plan, design, formula, specification, program or other
matter or work whatsoever, whether or not patentable or capable of registration and
whether or not recorded in any medium, (collectively the "Inventions") made, developed or
discovered by the Executive, either alone or in concert, during the course of the Executive's
duties of employment for the Company shall forthwith be disclosed to the Company and,
subject to Section 39 of the Act, shall belong to and be the absolute property of the
Company.
15.6 With respect to those rights in the Inventions which do not belong to the Company pursuant
to Clause 15.5 but which were made (wholly or partly, either alone or in concert) using the
Company's equipment, or (wholly or partly, either alone or in concert) using information
obtained during the course of the Executive's employment, or else are Inventions which are
or may be relevant to or related to the Company's existing or future business (collectively
"Executive Rights"), the Executive at the request and cost of the Company (and
notwithstanding the termination of his employment) shall forthwith license or assign (as
determined by the Company) to the Company the Executive Rights and shall deliver to the
Company all documents and other materials relating to the Inventions. The Company shall
pay to the Executive such compensation for the licence or assignment as the Company
shall determine in its absolute discretion, subject to Section 40 of the Act.
15.7 The Executive shall at the request and cost of the Company (and notwithstanding the
termination of his employment) sign and execute all such documents and do all such acts
as the Company may reasonably require:-
15.7.1 to apply for and obtain in the sole name of the Company alone (unless the
Company otherwise directs) patent, registered design, or other protection of any
nature whatsoever in respect of the Intellectual Property Rights referred to in
Clause 15.1, or the Inventions, in any country throughout the world and, when so
obtained or vested, to renew and maintain the same;
15.7.2 to resist and defend any objection or opposition to obtaining, and any petitions or
applications for revocation or the invalidity of, and any claims of infringement in
respect of, any such Intellectual Property Rights;
15.7.3 to bring any proceedings for infringement of any such Intellectual Property Rights;
and
15.7.4 otherwise to give effect to the assignments, waivers and licences contemplated
under this Clause 15.
15.8 The Executive irrevocably appoints the Company to be his agent and in his name and on
his behalf to execute any documents and generally to act and to use his name for the
purpose of giving to the Company (or its nominee) the full benefit this Clause 15. A
certificate in writing signed by a director or the secretary of the Company that an instrument

11/80358126_1 10
 or act falls within the authority conferred by this Clause 15 shall be conclusive evidence in
favour of a third party that it is the case.
15.9 The Company shall decide, in its sole discretion, whenever to apply for patent, registered
design or other protection in respect of the Intellectual Property Rights referred to in Clause
15.1 and/ or the Inventions and reserves the right to work any of the Inventions as a secret
process in which event the Executive shall observe the obligations relating to Confidential
Information which are contained in Clause 14 of this Agreement.

16. POST-TERMINATION COVENANTS

16.1 The Executive agrees that he will observe the post-termination obligations set out in
Schedule 2 hereto. The Executive acknowledges that he has had the opportunity to take
legal advice in relation to the restrictions contained therein and that he considers them
reasonable and necessary for the protection of the legitimate interests of the Company and
its Group Companies.
16.2 The Executive agrees that in the event of receiving from any person, company, business
entity or other organisation an offer of employment or engagement either during the
continuance of the Agreement or during the continuance in force of any of the restrictions
set out in Schedule 2 annexed hereto, he will forthwith provide to such person, company,
business entity or other organisation making such an offer of employment a full and
accurate copy of the restrictions set out in Clauses 14 and 15 hereof, and Schedule 2
annexed hereto. In the event that the Executive accepts any such offer, he shall
immediately inform the Board of the identity of the offeror and a description of the principal
duties of the position accepted and shall confirm to the Board in writing that he has
provided a copy of such restrictions to such offeror.

17. TERMINATION
17.1 Notwithstanding Clause 2, and in addition to its rights at common law, the Company may
terminate the Employment with immediate effect and without any payment in lieu of notice
if, in the Board's reasonable opinion, any of the events set out below occur or have
occurred at any time (whether or not such event would otherwise be a repudiatory breach):
17.1.1 any of the representations and warranties in Clause 26 are materially inaccurate
or untrue or misleading;
17.1.2 the Executive is guilty of dishonesty, or other serious misconduct, or gross
incompetence or wilful neglect of duty, or commits any other serious or persistent
breach of this Agreement;
17.1.3 the Executive refuses or neglects to comply with any lawful directions given to the
Executive by the Company;
17.1.4 the Executive acts in any manner (whether in the course of his duties or
otherwise) which is likely to bring him, or the Company or any Group Company
into disrepute or prejudice the interests of the Company or any Group Company;
17.1.5 the Executive is declared bankrupt, applies for or has made against him a
receiving order under Section 286 Insolvency Act 1986, or has any order made
against him to reach a voluntary arrangement as defined by Section 253 of that
Act or compounded with his creditors;
17.1.6 the Executive resigns as a director of the Company or any Group Company
(without the Board's written consent) or fails to offer himself for re-election on his
retiring by rotation (unless agreed by the Company);
17.1.7 the Executive is or becomes of unsound mind;
17.1.8 the Executive is guilty of continuing unsatisfactory conduct or poor performance
of his duties, after having received a written warning from the Company relating
to the same;
17.1.9 the Executive is convicted of an indictable offence (excluding offences under road
traffic legislation for which he is not sentenced to a term of imprisonment); or
17.1.10 the Executive is or becomes prohibited by law from being a director.

11/80358126_1 11
 Any delay by the Company in exercising such right to termination shall not constitute a
waiver thereof. This Clause 17.1 shall not restrict any other right the Company may have
(whether at common law or otherwise) to terminate the Employment summarily.
17.2 On termination of the Employment or on the Executive being placed on garden leave
pursuant to Clause 17.3.2is so requested by the Company, the Executive shall forthwith
return to the Company in accordance with its instructions (and without destruction, deletion
or redaction of any data or images) all equipment, correspondence, records, specifications,
software, models, notes, reports, minutes of meetings and other papers of the Board and of
any board of directors of any Group Company, and any other documents and any copies
thereof and any other property belonging to the Company or its Group Companies
(including but not limited to the Company car, keys, credit cards, samples, equipment and
passes) which are in his possession or under his control and shall provide to the Company
full details of all then current passwords or other privacy or security measures used by the
Executive in respect of any such equipment. Having forwarded a copy to the Company, the
Executive shall irretrievably delete any and all Confidential Information from any laptops,
computer drives, computer storage equipment, mobile telephones, wireless devices (or
similar equipment) or other re-usable material and/or from any website and/or email
account and/or cloud-based storage in the Executive's possession or under his control (but
which do not belong to the Company or any of its Group Companies). The Executive shall,
if so required by the Company, confirm in writing his compliance with his obligations under
this Clause 17.2.
17.3 The Executive agrees that the Company may (in its absolute discretion):-
17.3.1 (as an alternative to giving notice to the Executive or requiring the Executive to
work out his notice) terminate the Executive's employment with immediate effect
by giving him written notice that it will give the Executive a Compensation
Payment in lieu of all or any part of any notice of termination of employment
(whether given by the Executive or the Company) to which, for the avoidance of
doubt, the Executive shall have no entitlement unless and until the Company
notifies the Executive in writing of its decision to make the Compensation
Payment to him; and/or
17.3.2 require the Executive not to attend work and/or not to undertake all or any of his
duties hereunder during all or any part of any period of notice (whether given by
the Executive or the Company), PROVIDED ALWAYS that the Company shall
continue to pay the Executive's salary and contractual benefits. During any such
garden leave period, the Company shall not be obliged to provide any work for
the Executive or to assign or vest in him any powers, duties or functions, and

(A) may appoint another person or persons to hold the same or similar job
title and carry out all or any of the Executive's duties instead of him;

(B) may announce externally or internally or both that the Executive has
given or been given notice of termination of his employment or office(s)
and been placed on garden leave and (where applicable) that a substitute
has been appointed;

(C) may exclude the Executive from all or any premises of the Company or
any Group Company;

(D) may require the Executive to abstain from engaging in any contact
(whether or not initiated by him) which concerns any of the business
affairs of the Company or any Group Company with any customer, client,
supplier, other business connection, employee, director, officer,
consultant or agent of the Company or any Group Company without the
prior written consent of the Board; and

(E) may suspend or limit the Executive's access to the Company's IT and
communications systems or databases.

During any such garden leave period, the Executive shall (for the avoidance of

11/80358126_1 12
 doubt) continue to be bound by all terms of this Agreement and the duties of
fidelity and good faith and cannot undertake work for any other entity or work in a
self employed or contractor capacity and shall hold himself available during
normal business hours (other than agreed holidays or authorised absence for
sickness or injury or other authorised leave) to perform such duties as may be
assigned to him, if any, and in the event that he fails to make himself available for
duties assigned to him, he shall (notwithstanding any other provision of this
Agreement) forfeit his right to salary and contractual benefits in respect of such
period of non-availability. The Executive shall have no right to be paid any bonus
during any garden leave period other than at the discretion of the Company.

17.4 Notwithstanding Clause 17.3.1, the Executive shall not be entitled to any Compensation
Payment pursuant to Clause 17.3.1 if the Company would otherwise have been entitled to
terminate the employment of the Executive without notice in accordance with Clause 17.1.
In the event that the Board reasonably considers that any of the events set out in Clause
17.1 has occurred (whether or not such event would otherwise be a repudiatory breach),
the Executive shall repay to the Company forthwith on demand by the Company an amount
equal to any Compensation Payment made to the Executive pursuant to Clause 17.3.1
and, the Company reserves the right and may in its absolute discretion seek to recover the
value of any income tax or National Insurance Contributions deducted from any such
Compensation Payment and paid by the Company and the Company shall be entitled to
reduce any Compensation Payment yet to be made pursuant to Clause 17.3.1 to nil or
such other amount as the Board in its absolute discretion determines.
17.5 In determining any Compensation Payment made to the Executive pursuant to Clause
17.3.1, the Company shall have regard to the overriding requirements to be fair to both the
Company and the Executive. In particular, the Company shall not be required to reward
failure on the part of the Executive (which failure may be inferred from the financial
performance of the Company or its Group Companies) and shall have regard to corporate
governance standards at the Termination Date. The Company may, without limitation,
exercise its reasonable discretion and determine that any Compensation Payment to the
Executive should be phased in monthly or quarterly instalments over a period of no longer
than 12 months from the Termination Date and that any Compensation Payment should be
reduced in accordance with the duty on the part of the Executive to mitigate his loss.
17.6 Where the Company pays the Compensation Payment to the Executive, (or, where the
Compensation Payment as calculated under Schedule 1 is zero and the Executive is owed,
or paid, an amount by any Group Company) the Executive shall be treated as accepting it
in full and final settlement of all claims against the Company, all Group Companies and
their respective employees arising in any jurisdiction and arising out of the Executive's
contract of employment or any other employment with any Group Company or any holding
of any office with the Company or any Group Company or its/their termination and, on
receipt of such Compensation Payment (or such payment from another Group Company as
referred to above), the Executive hereby unconditionally and irrevocably waives all such
claims.
17.7 The Company shall have the right to suspend the Executive on full pay pending any
investigation into any potential dishonesty, gross misconduct or any other circumstances
which may give rise to a right to the Company to terminate pursuant to Clause 17.1 above.
During any such period of suspension the Company may exclude the Executive from all or
any premises of the Company or any Group Company, may require the Executive to
abstain from engaging in any contact (whether or not initiated by him) which concerns any
of the business affairs of the Company or any Group Company with any customer, client,
supplier, other business connection, employee, director, officer, consultant or agent of the
Company or any Group Company without the prior written consent of the Board, and may
suspend or limit the Executive's access to the Company's IT and communications systems
or databases.
17.8 The termination of the Employment shall be without prejudice to any right the Company
may have in respect of any breach by the Executive of any of the provisions of this
Agreement which may have occurred prior to such termination.
17.9 The Executive agrees that (unless the contrary is agreed by the Company in writing) he will

11/80358126_1 13
 not at any time after the termination of the Employment represent himself as still having
any connection with the Company or any Group Company, save as a former employee for
the purpose of communicating with prospective employers or complying with any
applicable statutory requirements.

18. DIRECTORSHIPS
18.1 The Executive's duties as a director of the Company or any other Group Company are
subject to the Articles of Association of the relevant company for the time being.
18.2 The Executive shall, if requested by the Company, forthwith resign in writing from all
directorships, trusteeships and other offices he may hold from time to time with the
Company or any Group Company without compensation for loss of office in the event of:-
18.2.1 the termination of his employment; or
18.2.2 either the Company or the Executive serving on the other notice of termination of
the Employment; or
18.2.3 the Company exercising its rights under Clause 17.3.2 above.
18.3 In the event of the Executive failing to comply with his obligations under Clause 18.2
above, he hereby irrevocably and unconditionally authorises the Company to appoint some
person in his name and on his behalf to sign or execute any documents and/or do all things
necessary to requisite to give immediate effect to such resignations as referred to in
Clause 18.2 above.

19. WAIVER OF RIGHTS

The Executive shall have no claim against the Company or any Group Company if the
Employment is terminated by reason of the liquidation of the Company for the purposes of
amalgamation or reconstruction or as part of any arrangement for the amalgamation of the
undertaking of the Company not involving liquidation or for the transfer of the whole or part
of the undertaking of the Company to any of its Group Companies provided that he is
offered re-employment with any concern or undertaking resulting from such amalgamation
or reconstruction or transfer on terms and conditions which, taken as a whole, are not
substantially less favourable than the terms of this Agreement.

20. GRIEVANCE AND DISCIPLINARY PROCEDURES

20.1 If the Executive has any grievance relating to the Employment, he should raise it with the
Chairman and thereafter (if the matter is not resolved) with the Board. In such a case the
Board will deal with the matter by discussion and majority decision of those present and
voting (but without the Executive being entitled to vote on that issue).
20.2 The Company will follow any appropriate disciplinary procedures as applicable to the level
of seniority of the Executive. If the Executive is dissatisfied with any disciplinary decision
taken in relation to him, he may appeal in writing to the Chairman within 7 days of that
decision. The Executive is subject to the Company's disciplinary rules, which can be found
on the Company's HR Policies and Procedures on Interact.

21. MISCELLANEOUS
21.1 The various provisions and sub-provisions of this Agreement and the Schedules attached
hereto are severable and if any provision or sub-provision is held to be unenforceable by
any court of competent jurisdiction then such unenforceability shall not affect the
enforceability of the remaining provisions or sub-provisions in this Agreement or
Schedules.
21.2 The Executive represents and warrants that he is not prevented by any agreement,
arrangement, contract, understanding, Court Order or otherwise, which in any way directly
or indirectly restricts or prohibits him from fully performing the duties of the Employment, or
any of them, in accordance with the terms and conditions of this Agreement.
21.3 Any notice to be given hereunder may be delivered (a) in the case of the Company by first
class post addressed to its Registered Office for the time being and (b) in the case of the
Executive, either to him personally or by first class post to his last known address.

11/80358126_1 14
21.4 Notices served by post shall be deemed served on the second business day after the date
of posting. For the purposes of this Clause 21.4, "business day" means a day on which
banks are open for business in the place of both the posting and the address of the notice.
21.5 There is no collective agreement applicable to the Employment.

22. CONSTRUCTION
22.1 The provisions of Schedule 1 and Schedule 2 hereto and any additional terms endorsed in
writing by or on behalf of the parties hereto shall be read and construed as part of this
Agreement and shall be enforceable accordingly.
22.2 The benefit of each agreement and obligation of the Executive under Clauses 14, 15 and
Schedule 2 hereto of this Agreement may be assigned to and enforced by all successors
and assignees for the time being of the Company and its Group Companies and such
agreements and obligations shall operate and remain binding notwithstanding the
termination of this Agreement.
22.3 A person who is not a party to this Agreement shall not have any rights under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

23. PRIOR AGREEMENTS

This Agreement cancels and is in substitution for all previous letters of engagement,
agreements and arrangements (whether oral or in writing) relating to the subject-matter
hereof between the Company and the Executive all of which shall be deemed to have been
terminated by mutual consent. This Agreement constitutes the entire terms and conditions
of the Executive's employment and no waiver or modification thereof shall be valid unless
in writing, signed by the parties and only to the extent therein set forth.

24. ENFORCEMENT AND GOVERNING LAW

24.1 This Agreement is governed by and construed in accordance with the laws of England.
24.2 Without prejudice to any rights of either party to seek injunctive or declaratory relief in the
Courts, and without prejudice to the Executive's statutory rights, the Company and the
Executive agree that on the occurrence of any dispute concerning interpretation or
application of this Agreement, the help of the Centre for Dispute Resolution (CEDR) will be
sought to resolve the dispute in private by means of alternative dispute resolution (ADR).
Either party may refer the matter to CEDR in which event both parties will fully co-operate
in the process which CEDR may propose. There shall be no obligation on either party to
continue to participate in the ADR process after 90 days from the date of referral of the
dispute to CEDR.
24.3 The parties agree that if a dispute cannot be resolved pursuant to Clause 24.2 above, the
parties agree to submit to the exclusive jurisdiction of the English courts.

25. DATA PROTECTION

25.1 The Executive acknowledges that the Company and relevant Group Companies will collect,
use, store, transfer and otherwise process the Executive's personal data (and, where
relevant, that of the Executive's emergency contacts and, where applicable, dependants)
including providing personal data to third parties and transferring personal data within and
outside the European Economic Area, in accordance with applicable data protection
regulations. Further details relating to the processing of such personal data are set out in
the Company's UK Employee Privacy Notice (which is non-contractual and may be
amended from time to time), which is available from the Company Secretary or can be
found on the Company's HR Policies and Procedures on Interact.
25.2 The Executive agrees to use all reasonable endeavours to keep the Company informed
and updated of any changes to the Executive's personal data, including, for example any
change in the Executive's home address or other contact details.
25.3 The Executive agrees to familiarise themselves with the Company's UK Employee Privacy
Notice and General Data Privacy Policy in force from time to time, which are available from
the Company Secretary or can be found on the Company's HR Policies and Procedures on
Interact (and any other relevant policies and procedures relating to data protection in force

11/80358126_1 15
 from time to time, including any policies that the Company may have in place from time to
time relating to its IT systems, use of such systems and data handling (as set out on the
Company's HR Policies and Procedures on Interact)) and agrees to act at all times in
accordance with both the spirit and the letter of such policies and procedures when
processing the personal data of others during the course of the Executive's employment.
This includes, without limitation, personal data relating to any employee or other worker,
job candidate, customer, client, supplier or agent of the Company or any Group Company.
25.4 Failure to comply with the Company's policies (including those mentioned above) may lead
to disciplinary action up to and including termination of employment.

26. REPRESENTATIONS AND WARRANTIES

26.1 The Executive represents and warrants to the Company that, and acknowledges that in
entering into this Agreement the Company has relied upon prior representations and
warranties by the Executive in the following terms:
26.1.1 he has not (directly or indirectly) misappropriated, or otherwise made any
unlawful use or disclosure of, any Confidential Information and/or intellectual
property belonging to or relating to the business of any other person (including,
for the avoidance of doubt, his previous employer(s)) and will not do so whether
prior to the commencement of his employment under this Agreement or
otherwise;
26.1.2 he is not prohibited by law from being a director;
26.1.3 he is and remains legally entitled to work in the United Kingdom without any
additional approvals and he will notify the Company immediately if he ceases to
be so entitled at any time during his employment with the Company;
26.1.4 he is not and has not been subject to any prohibition, censure, criticism or
disciplinary sanction by any professional, regulatory or other body or authority
which would prevent him from performing any duties under this Agreement or
undermine the confidence of the Board in his employment by the Company; and
26.1.5 any curriculum vitae and other details provided by the Executive to the Company
or a third party in relation to his appointment to this role by the Company (if any)
are complete and accurate and the Executive has provided the Company with
genuine copies of certificates of all his academic and professional qualifications.
The Executive shall indemnify the Company against all claims, liabilities, losses, costs, and
expenses which the Company may suffer or incur or which may be made against the
Company arising out of, or in respect of, any breach of the warranties and representations
in this Clause 26.

27. REFERENCES
If the Company is asked to provide any reference in respect of the Executive it shall be
under no obligation to do so, save as required by law or by any professional, statutory or
regulatory body or authority. If it does agree to provide a reference it shall use reasonable
efforts to ensure that any reference is accurate but shall not in the absence of malice on
the part of the Company be liable to the Executive for any error in or omission from any
such reference.

28. COUNTERPARTS
The Agreement is subject to contract until it is dated and signed by all of the parties, at
which point it shall be treated as an agreement binding on the parties, notwithstanding that
it may still be labelled 'Draft ' or 'Subject to Contract'. This Agreement may be executed in
any number of counterparts each in the like form, all of which taken together shall
constitute one and the same document and any party may execute this Agreement by
signing and dating any one or more of such counterparts.

IN WITNESS whereof the parties hereto have set their hands the day and year written below.

11/80358126_1 16
SIGNED: /s/ Luc Jobin

Luc Jobin
For and on behalf of the Company

DATED: 14 May 2023

SIGNED: /s/ Tadeu Marroco

Tadeu Marroco

DATED: 14 May 2023

11/80358126_1 17
 SCHEDULE 1

DEFINITIONS
In this Agreement, the following expressions shall have the following meanings:

"Board" the Board of Directors of the Company from time to time or a duly
constituted committee of the Board of Directors;

"Companies Act 2006" the Companies Act 2006, as in force from time to time;

"Compensation Payment" means a sum calculated as follows:

𝐴𝐴 𝑥𝑥 £𝐵𝐵
minus C (less any deductions which the Company may
365
be required to make including in respect of income tax and
employee's National Insurance contributions)
(a) "A" is the number of days of the Executive's notice of
termination of employment (i) to which he is entitled under
Clause 2.2 above of this Agreement, or (ii) where the
notice period has already commenced, the number of
days of such notice period which remain outstanding.
(b) "B" is the aggregate of (i) the Executive's annual base
salary referred to in Clause 6.1 on the date when he is
notified in writing by the Company that it will be making
him a Compensation Payment, (ii) a cash sum equal to
the cost to the Company of providing to the Executive the
benefits referred to in Clause 10.2 above provided that
the Company shall have the option to continue to provide
one or more of such benefits to the Executive in lieu of
giving a cash sum in respect of such benefit so provided.
(c) "C" is any amount payable to or paid to the Executive on
termination of employment with any Group Company;

"Confidential Information" means all and any information, whether or not recorded, of the
Company or of any Group Company which the Executive (or,
where the context so requires, another person) has obtained by
virtue of his employment or engagement and which the Company
or any Group Company regards as confidential or in respect of
which the Company or any Group Company is bound by an
obligation of confidence to a third party, including:

(A) all and any information relating to business methods,

corporate plans, future business strategy, management
systems, finances, and maturing new business
opportunities;

(B) all and any information relating to research or development

projects or both;

(C) all and any information concerning the curriculum vitae,

remuneration details, work-related experience, attributes
and other personal information concerning those employed
or engaged by the Company or any Group Company;

(D) all and any information relating to marketing or sales of any

past present or future product or service of the Company
or any Group Company including sales targets and
statistics, market share and pricing statistics, marketing
surveys and strategies, marketing research reports, sales
techniques, price lists, mark-ups, discounts, rebates,

11/80358126_1 18
 tenders, advertising and promotional material, credit and
payment policies and procedures, and lists and details of
customers, prospective customers, suppliers and
prospective suppliers including their identities, personnel,
business requirements and contractual negotiations and
arrangements with the Company or any Group Company;

(E) all and any trade secrets, secret formulae, processes,

inventions, design, know-how, technical specification and
other technical information in relation to the creation,
production or supply of any past, present or future product
or service of the Company or any Group Company,
including all and any information relating to the working of
any product, process, invention, improvement or
development carried on or used by the Company or any
Group Company and information concerning the
intellectual property portfolio and strategy of the Company
or of any Group Company;

(F) any information which is a trade secret as defined in

Regulation 2 of the Trade Secrets (Enforcement, etc.)
Regulations 2018;

(G) any inside information (as defined in Article 7 of MAR)

but excluding any information which:
(i) is part of the Executive's own stock in trade;
(ii) is readily ascertainable to persons not connected
with the Company or any Group Company without
significant expenditure of labour, skill or money; or
(iii) which becomes available to the public generally
other than by reason of a breach by the Executive
of his obligations under this Agreement;

"Directors Remuneration shall have the meaning given to it in Clause 6.6

Policy"

"Effective Date" means 15 May 2023;

"Employment" means the Executive's employment in accordance with the terms

and conditions of this Agreement;

"Group Company" means the Company, any holding company of the Company and
any subsidiary of the Company or of any such holding company
(with holding company and subsidiary having the meanings
ascribed to them by the Companies Act 2006);

"Immediate Family" shall include husband, wife, common law spouse, civil partner,
children, brothers, sisters, cousins, aunts, uncles, parents,
grandparents, and the aforesaid relatives by marriage;

"Intellectual Property patents, utility models, rights to inventions (other than Inventions),
Rights" copyright and neighbouring and related rights, moral rights, trade
marks and service marks, business names and domain names,
rights in get-up and trade dress, goodwill and the right to sue for
passing off or unfair competition, rights in designs, rights in
computer software, database rights, rights to use, and protect the
confidentiality of, Confidential Information (including know-how
and trade secrets) and all other intellectual property rights, in
each case whether registered or unregistered and including all
applications and rights to apply for and be granted, renewals or

11/80358126_1 19
 extensions of, and rights to claim priority from, such rights and all
similar or equivalent rights or forms of protection which subsist or
will subsist now or in the future in any part of the world;

"JSE Listings the Listings Requirements published by the JSE Limited, as may
Requirements" be applicable from time-to-time in respect of the secondary listing
of the Company's ordinary shares on the JSE Limited in South
Africa;

"Listed Company" any company which is quoted on any Recognised Investment

Exchange;

"LPDT Rules" the Listing Rules, Prospectus Rules, Disclosure Guidance and
Transparency Rules issued by the UK Listing Authority;

"MAR" the Market Abuse Regulation (2014/596/EU) and its implementing

and delegated regulations;

"Persons Closely has the meaning attributed to it by Article 3(1)(26) of MAR;

Associated"

"Recognised Investment has the meaning given to it by section 285 of the Financial
Exchange" Services and Markets Act 2000;

"Remuneration the remuneration committee of the Board from time to time;

Committee"

"Securities" any shares, debentures (whether or not secured), warrants or

options to purchase any shares or debentures;

"Termination Date" shall mean the date upon which the Executive's employment with
the Company terminates;

"Working Day" means any day other than a Saturday, Sunday or a day which is
generally recognised as a public holiday in England.

In this Agreement, unless otherwise stated, a reference to the employment of the Executive is to
his employment by the Company under this Agreement and shall include any period of garden
leave pursuant to Clause 17.3.2 or suspension pursuant to Clause 17.7.
In this Agreement, unless the context otherwise requires:
(a) the contents page and headings and bold type face inserted in this Agreement are inserted
for convenience only and shall not affect the interpretation of this Agreement;
(b) references to clauses and sub-clauses are to clauses and sub-clauses of this Agreement;
(c) references to this Agreement include this Agreement as amended or supplemented in
accordance with its terms;
(d) references to any schedules are to the schedules to this Agreement which for the
avoidance of doubt are incorporated into and form part of the terms of this Agreement;
(e) references to writing shall include any modes of reproducing words in any legible form and
shall include e-mail except where expressly stated otherwise;
(f) references to "includes" or "including" shall mean "includes without limitation" or "including
without limitation";
(g) words in the singular shall include the plural and vice versa, and a reference to any gender
includes a reference to all genders or, where appropriate, is to be read as a reference to
the opposite gender;
(h) a reference to a person shall include a reference to a firm, a body corporate, an
unincorporated association or a partnership;
(i) a reference to an enactment, EU instrument or statutory provision shall include a reference

11/80358126_1 20
 to any subordinate legislation made under the relevant enactment, EU instrument or
statutory provision and is a reference to that enactment, EU instrument, statutory provision
or subordinate legislation as from time to time amended, modified, incorporated or
reproduced and to any enactment, EU instrument, statutory provision or subordinate
legislation that from time to time (with or without modifications) re-enacts, replaces,
consolidates, incorporates or reproduces it.

11/80358126_1 21
 SCHEDULE 2

POST TERMINATION COVENANTS

1. DEFINITIONS
For the purposes of this Schedule 2, the following words and cognate expressions shall
have the meanings set out below:
1.1 "Board" shall have the meaning set out in the Agreement attached hereto, and shall
include its successors in title and assigns (as applicable).
1.2 "Company" shall have the meaning set out in the Agreement attached hereto, and shall
include its successors in title and assigns (as applicable).
1.3 "Customer" shall mean any person, firm, company or other organisation whatsoever to
whom the Company has supplied goods or services, other than in a retail capacity, during
any part of the 12 months immediately preceding the Termination Date.
1.4 "Group Company" shall have the meaning set out in the Agreement attached hereto, and
shall include its successors in title and assigns (as applicable).
1.5 "Prohibited Area" means:
1.5.1 England, Wales, Scotland and Northern Ireland;
1.5.2 any other country in the world where, on the Termination Date, the Company
develops, sells, supplies, manufactures or researches its products or services or
where the Company is intending within 3 months following the Termination Date
to develop, sell, supply or manufacture its products or services and in respect of
which the Executive has been responsible (whether alone or jointly with others),
concerned or active on behalf of the Company during any part of the 12 months
immediately preceding the Termination Date.
1.6 "Prospective Customer" shall mean any person, firm, company or other organisation with
whom the Company has had any negotiations or material discussions regarding the
possible supply of goods or services by the Company other than in a retail capacity during
any part of the 12 months immediately preceding the Termination Date.
1.7 The "Relevant Period" shall mean the lesser of:-
1.7.1 the 12 months immediately following the Termination Date;
1.7.2 the period specified in paragraph 1.7.1 above less the number of days on which
the Executive has been required by the Company (pursuant to Clause 17.3.2 of
the Agreement) both not to attend at work and not to perform any duties of
employment.
1.8 "Restricted Employee" means any person who was employed by (i) the Company or (ii)
any Group Company, for at least 3 months prior to and on the Termination Date and:
1.8.1 with whom the Executive had material contact or dealings in performing his duties
of his employment; or
1.8.2 who had material contact with customers or suppliers of the Company in
performing his or her duties of employment with the Company or any Group
Company (as applicable); and
1.8.3 who was a member of the management team of the Company or any Group
Company (as applicable) or
1.8.4 who was a member of the Research & Development Department of the Company
or any Group Company (as applicable).
1.9 "Supplier" means any person, company, business entity or other organisation whatsoever
who:
1.9.1 has supplied goods or services to the Company during any part of the 12 months
immediately preceding the Termination Date; or
1.9.2 has agreed prior to the Termination Date to supply goods or services to the
Company to commence at any time in the 12 months following the Termination

11/80358126_1 22
 Date; or
1.9.3 as at the Termination Date, supplies goods or services to the Company under an
exclusive contract or arrangement between that Supplier and the Company.
1.10 "Termination Date" shall have the meaning set out in the Agreement hereto.

2. NON-COMPETITION
The Executive hereby agrees that he shall not (without the consent in writing of the Board)
for the Relevant Period within the Prohibited Area and whether on his own behalf or in
conjunction with or on behalf or any other person, firm, company or other organisation (and
whether as an employee, director, principal, agent, consultant or in any other capacity
whatsoever) in competition with the Company be directly or indirectly (i) employed or
engaged in, or (ii) perform services in respect of, or (iii) have any financial interest in, or (iv)
be otherwise concerned with:-
2.1 the research into, development, manufacture, supply or marketing of any product which is
of the same or similar type to any product researched, or developed, or manufactured, or
supplied, or marketed by the Company during the 12 months immediately preceding the
Termination Date;
2.2 the research into, development, manufacture, supply or marketing of any product which is
to the same or a similar type to any product which the Company was (as at the Termination
Date) proposing to launch within 12 months of the Termination Date;
2.3 the development or provision of any services (including but not limited to technical and
product support, or consultancy or customer services) which are of the same or similar type
to any services provided by the Company during the 12 months immediately preceding the
Termination Date;
2.4 the development or provision of any services (including but not limited to technical and
product support or consultancy or customer services) which are of the same or similar type
to any services which the Company was (as at the Termination Date) proposing to launch
within 12 months of the Termination Date.
PROVIDED ALWAYS that the provision of this paragraph 2 shall apply only in respect of
products or services with which the Executive was either personally concerned or for which
he was responsible whilst employed by the Company during the 12 months immediately
preceding the Termination Date.
The provisions of this paragraph 2 shall not, at any time following the Termination Date,
prevent the Executive (i) from for investment purposes an interest (as defined in S.820 –
825 of the Companies Act 2006) of up to 5% in nominal value or (in the case of Securities
not having any nominal value) in number or class of Securities, in any class of Securities in
a Listed Company and which are not the Securities of any company which competes or
proposes to complete with the business of the Company or any Group Company (and for
these purposes, the references to Securities held by the Executive shall include Securities
held or beneficially held by the Executive's Immediate Family) or (ii) from being employed
in, or providing services to, any part of a business (which does not fall within the scope of
paragraphs 2.1 to 2.4 above) being operated by another company, firm of other business
entity, even though another part of the business of such company, firm or other business
entity (with which the Executive is not directly or indirectly concerned or employed) does
fall within the scope of paragraphs 2.1 to 2.4 above.

3. NON-SOLICITATION OF CUSTOMERS
The Executive hereby agrees that he shall not for the Relevant Period whether on his own
behalf or in conjunction with or on behalf of any person, company, business entity or other
organisation (and whether as an employee, director, principal, agent, consultant or in any
other capacity whatsoever), directly or indirectly (i) solicit or, (ii) assist in soliciting, or (iii)
accept, or (iv) facilitate the acceptance of, or (v) deal with, in competition with the
Company, the custom or business of any Customer or Prospective Customer:-
3.1 with whom the Executive has had material contact or dealings on behalf of the Company
during the 12 months immediately preceding the Termination Date; or

11/80358126_1 23
3.2 for whom the Executive was, in a client management capacity on behalf of the Company,
directly responsible (on his own or in conjunction with other individuals) during the 12
months immediately preceding the Termination Date.

4. NON-SOLICITATION OF RESTRICTED EMPLOYEES

The Executive hereby agrees that he will not for the Relevant Period either on his own
behalf or in conjunction with or on behalf of any other person, company, business entity, or
other organisation (and whether as an employee, principal, agent, consultant or in any
other capacity whatsoever), directly or indirectly:-
4.1 (i) induce, or (ii) solicit, or (iii) entice or (iv) procure, any person who is a senior employee to
leave the Company's or any Group Company's employment (as applicable) where that
person is a Restricted Employee on the Termination Date;
4.2 be personally involved to a material extent in (i) accepting into employment or (ii) otherwise
engaging or using the services of any person who is a Restricted Employee on the
Termination Date.

5. INTERFERENCE WITH SUPPLIERS

The Executive hereby agrees that he shall not for the Relevant Period, in relation to any
contract or arrangement which the Company has with any Supplier for the exclusive or
preferential supply of goods or services to the Company and/or to its Group Companies, for
the duration of such contract or arrangement, whether on his own behalf or in conjunction
with or on behalf of any person, company, business entity or other organisation, (and
whether as an employee, director, agent, principal, consultant or in any other capacity
whatsoever), directly or indirectly:
5.1 interfere with the supply of goods or services to the Company from any Supplier;
5.2 induce any Supplier of goods or services to the Company to cease or decline to supply
such goods or services in the future.

6. NON-DISPARAGEMENT

6.1 Save for a protected disclosure within the meaning of Part IVA (Protected Disclosures) of
the Employment Rights Act 1996 (as amended from time to time), a report of an offence to
a law enforcement agency, as part of co-operating with a criminal investigation or
prosecution, or as required by law or the regulations of any statutory or regulatory authority,
the Executive shall not during his employment or after the Termination Date make, publish
or cause to be made or published any statement or remark which is likely or intended to
harm the business or reputation of the Company or any of its Group Companies or any
current or former officer, employee, consultant or agent of any such company.

7. GROUP COMPANIES
7.1 The provisions of paragraphs 7.2 and 7.3 below shall only apply in respect of those Group
Companies (i) to whom the Executive gave his services, or (ii) for whom he was
responsible, or (iii) with whom he was otherwise concerned, in the 12 months immediately
preceding the Termination Date.
7.2 Paragraphs 1, 2, 3, 4 and 5 in this Schedule 2 shall apply as though references to the
"Group Company" were substituted for references to the "Company". The obligations
undertaken by the Executive pursuant to this Schedule 2 shall, with respect to each Group
Company, constitute a separate and distinct covenant and the invalidity or unenforceability
of any such covenant shall not affect the validity or enforceability of the covenants in favour
of the Company or any other Group Company.
7.3 In relation to each Group Company referred to in paragraphs 7.1 and 7.2 above, the
Company contracts as trustee and agent for the benefit of each such Group Company. The
Executive agrees that, if required to do so by the Company, he will enter into covenants in
the same terms as those set out in paragraphs 1, 2, 3, 4 and 5 hereof directly with all or
any of such Group Companies, mutatis mutandis. If the Executive fails, within 7 days of
receiving such a request from the Company, to sign the necessary documents to give
effect to the foregoing, the Company shall be entitled, and is hereby irrevocably and

11/80358126_1 24
 unconditionally authorised by the Executive, to execute all such documents as are required
to give effect to the foregoing, on his behalf.

11/80358126_1 25
 EXHIBIT 4.19

EXECUTION VERSION

£2,538,000,000
REVOLVING CREDIT FACILITY

DATED ____________
6 March 2023

BRITISH AMERICAN TOBACCO P.L.C.

B.A.T. INTERNATIONAL FINANCE P.L.C.
B.A.T. NETHERLANDS FINANCE B.V.
B.A.T CAPITAL CORPORATION
as Borrowers

BRITISH AMERICAN TOBACCO P.L.C.

as Guarantor

HSBC BANK PLC

as Agent

HSBC BANK USA, N.A.

as Swingline Agent

and

CERTAIN BANKS AND FINANCIAL INSTITUTIONS

as Banks

Allen & Ov ery LLP

0013726-0004726 UKO1: 2010612413.17

 CONTENTS

Clause Page

1. Interpretation ...................................................................................................................... 1
2. The Facility ...................................................................................................................... 22
3. Purpose............................................................................................................................ 26
4. Conditions Precedent ......................................................................................................... 26
5. Advances ......................................................................................................................... 27
6. Repayment ....................................................................................................................... 29
7. Prepayment and Cancellation .............................................................................................. 30
8. Interest ............................................................................................................................ 33
9. Payments ......................................................................................................................... 36
10. Taxes .............................................................................................................................. 39
11. Changes to the Calculation of interest................................................................................... 44
12. Increased Costs ................................................................................................................. 47
13. Illegality and Mitigation ..................................................................................................... 48
14. Guarantee......................................................................................................................... 49
15. Representations and Warranties ........................................................................................... 51
16. Undertakings .................................................................................................................... 53
17. Default ............................................................................................................................ 57
18. The Administrative Parties.................................................................................................. 60
19. Fees ................................................................................................................................ 66
20. Expenses.......................................................................................................................... 68
21. Stamp Duties .................................................................................................................... 68
22. Indemnities ...................................................................................................................... 68
23. Calculations and Certificates ............................................................................................... 69
24. Amendments and Waivers .................................................................................................. 70
25. Changes to the Parties ........................................................................................................ 72
26. Confidentiality of Funding Rates ......................................................................................... 80
27. Disclosure of Information and Know Your Customer Requirements.......................................... 81
28. Set-Off ............................................................................................................................ 83
29. Pro Rata Sharing ............................................................................................................... 83
30. Severability ...................................................................................................................... 84
31. Counterparts ..................................................................................................................... 84
32. Notices ............................................................................................................................ 84
33. Language ......................................................................................................................... 87
34. Jurisdiction....................................................................................................................... 87
35. Waiver of Trial by Jury ...................................................................................................... 87
36. Governing Law ................................................................................................................. 88
37. US Patriot Act .................................................................................................................. 88
38. Contractual Recognition of Bail-In....................................................................................... 88
39. Recognition of the U.S. Special Resolution Regimes .............................................................. 88

Schedule

1. Banks and Commitments .................................................................................................... 90

Part 1 Arrangers ........................................................................................................ 90
Part 2 Banks and Commitments ................................................................................... 91
2. Conditions Precedent Documents......................................................................................... 94
Part 1 To Be Delivered before the First Advance ............................................................ 94
Part 2 To Be Delivered by an Additional Borrower......................................................... 95
3. Form of Request................................................................................................................ 96
4. Forms of Accession Documents........................................................................................... 97

0013726-0004726 UKO1: 2010612413.17

 Part 1 Novation Certificate.......................................................................................... 97
Part 2 Borrower Accession Agreement.......................................................................... 99
Part 3 Form of Borrower Novation Agreement..............................................................100
5. Form of Confidentiality Undertaking...................................................................................102
6. Form of Increase Confirmation...........................................................................................103
7. Extension Requests and Extension Notices ...........................................................................106
Part 1 Form of First Extension Request........................................................................106
Part 2 Form of First Extension Notice..........................................................................107
Part 3 Form of Second Extension Request ....................................................................109
Part 4 Form of Second Extension Notice ......................................................................110
8. Term Out – Revolving Facility ...........................................................................................112
Part 1 Form of Term Out Notice .................................................................................112
Part 2 Form of Selection Notice for Term Out Advances ................................................113
9. Compounded Rate Terms ..................................................................................................114
Part 1 Sterling ..........................................................................................................114
Part 2 US Dollars......................................................................................................117
10. Daily Non-Cumulative Compounded RFR Rate ....................................................................120
11. Cumulative Compounded RFR Rate....................................................................................122

0013726-0004726 UKO1: 2010612413.17

 6 March 2023
THIS AGREEMENT is dated __________

BETWEEN:

(1) BRITISH AMERICAN TOBACCO P.L.C. (registered number 3407696), B.A.T.

INTERNATIONAL FINANCE P.L.C. (registered number 1060930), B.A.T. NETHERLA NDS
FINANCE B.V. (registered number 60533536) and B.A.T CAPITAL CORPORATION (registered
number 0911777), as original borrowers (the Original Borrowers);

(2) BRITISH AMERICAN TOBACCO P.L.C. as guarantor (the Guarantor);

(3) THE FINANCIAL INSTITUTIONS listed in Part 1 of Schedule 1 (Banks and Commitments) as
mandated lead arrangers and bookrunners (the MLABs);

(4) THE FINANCIAL INSTITUTIONS listed in Part 1 of Schedule 1 (Banks and Commitments) as
lead arrangers (the Lead Arrangers);

(5) THE FINANCIAL INSTITUTIONS listed in Part 2 of Schedule 1 (Banks and Commitments) as
banks (the Original Banks);

(6) HSBC BANK PLC as agent (in this capacity the Agent); and

(7) HSBC BANK USA, N.A. as swingline agent (in this capacity the Swingline Agent).

IT IS AGREED as follows:

1. INTERPRETATION

1.1 Definitions

In this Agreement:

Acceptable Bank means a bank or financial institution which has a rating for its long term unsecured
and non credit-enhanced debt obligations of A- or higher by S&P or Fitch Rating Ltd or A3 or higher
by Moody's or a comparable rating from an internationally recognised credit rating agency.

Additional Borrower means any member of the Group which becomes a Borrower in accordance
with Clause 25.6 (Additional Borrowers).

Additional Business Day means any day specified as such in the applicable Compounded Rate Terms.

Administrative Party means the Agent or the Swingline Agent.

Advance means a Revolving Facility Advance, a Swingline Advance or a Term Out Advance.

Affiliate means a Subsidiary or a holding company (as defined in Section 1159 of the Companies Act
2006) of a person and any other Subsidiary of that holding company. Notwithstanding the foregoing,
in relation to The Royal Bank of Scotland plc, the term "Affiliate" shall not include:

(a) the UK government or any member or instrumentality thereof, including His Majesty's
Treasury and UK Financial Investments Limited (or any directors, officers, employees or
entities thereof); or

0013726-0004726 UKO1: 2010612413.17 1

 (b) any persons or entities controlled by or under common control with the UK government or
any member or instrumentality thereof (including His Majesty's Treasury and UK Financial
Investments Limited) and which are not part of The Royal Bank of Scotland Group plc and its
subsidiaries or subsidiary undertakings.

Agent's Spot Rate of Exchange means:

(a) the Agent's spot rate of exchange; or

(b) (if the Agent does not have an available spot rate of exchange), any other publicly available
spot rate of exchange selected by the Agent (acting reasonably),

for the purchase of the relevant currency with Sterling in the London foreign exchange market at or
about 11.00 am on a particular day.

Agreed Percentage means, in relation to a Bank and a Swingline Advance under the Swingline
Facility, the amount of its Commitment under the Revolving Facility expressed as a percentage of the
Total Commitments.

Anti-Bribery and Corruption Laws means all applicable anti-bribery and corruption laws and
regulations, including but not limited to the US Foreign and Corrupt Practices Act 1977 and the UK
Bribery Act 2010.

Anti-Money Laundering Laws means all applicable anti-money laundering laws and regulations.

Arrangers means the MLABs and Lead Arrangers.

Article 55 BRRD means Article 55 of Directive 2014/59/EU establishing a framework for the
recovery and resolution of credit institutions and investment firms.

Available Commitment means, in relation to the Revolving Facility at any time, a Bank's Revolving
Facility Commitment less the aggregate amount of:

(a) the Original Sterling Amount of its share of any outstanding Revolving Facility Advance
under the Revolving Facility; and

(b) the Original Sterling Amount of its share, or if applicable the share of any of its Swingline
Affiliates or any Bank of which it is a Swingline Affiliate, of any Advance under the Swingline
Facility at such time,

provided that for the purposes of calculating any Bank's Available Commitment on any day, any
Advance under the Revolving Facility or the Swingline Facility which is due to be repaid or prepaid
on such day shall be ignored and any Advance under the Revolving Facility or the Swingline Facility
which is to be made on such day shall be taken into account.

Available Facility means in relation to the Revolving Facility at any time, the aggregate amount at
that time of the Available Commitments of all the Banks under the Revolving Facility.

Available Swingline Commitment means, in relation to the Swingline Facility at any time, a Bank's
Swingline Commitment under the Swingline Facility less the aggregate amount of its share of any
outstanding Swingline Advances under the Swingline Facility at that time, provided that:

(a) for the purposes of calculating any Bank's Available Swingline Commitment on any day, any
Swingline Advance which is due to be repaid or prepaid on such day shall be ignored and any
Swingline Advance which is to be made on such day shall be taken into account; and

0013726-0004726 UKO1: 2010612413.17 2

 (b) such amount is not greater than the Bank's (or any Bank of which it is a Swingline Affiliate)
undrawn Commitment under the Revolving Facility at that time. If it is greater, that Bank's
Available Swingline Commitment shall be an amount equal to that Bank's (or any Bank of
which it is a Swingline Affiliate) undrawn Commitment under the Revolving Facility or zero,
as the case may be.

Available Swingline Facility means, in relation to the Swingline Facility at any time, the aggregate
amount at that time of the Available Swingline Commitments of all the Banks under the Swingline
Facility.

Bail-In Action means the exercise of any Write-down and Conversion Powers.

Bail-In Legislation means:

(a) in relation to an EEA Member Country which has implemented, or which at any time
implements, Article 55 BRRD, the relevant implementing law or regulation as described in
the EU Bail-In Legislation Schedule from time to time;

(b) in relation to any state other than such an EEA Member Country and the United Kingdom,
any analogous law or regulation from time to time which requires contractual recognition of
any Write-down and Conversion Powers contained in that law or regulation; and

(c) in relation to the United Kingdom, the UK Bail-In Legislation.

Banks means those financial institutions listed in Part 2 of Schedule 1 (Banks and Commitments) and
their respective successors and assigns which are for the time being participating in the Facility and
any bank or financial institution which has become a Bank in accordance with Clause 25.2 (Transfers
by Banks) or 25.10 (Increase).

Borrowed Moneys Indebtedness means, in relation to any person, any obligation (whether incurred
as principal or surety) for the payment or repayment of money, whether present or future, actual or
contingent, comprising or constituted by:

(a) any liability to repay the principal of or to pay interest on borrowed money or deposits; or

(b) any liability:

(i) under or pursuant to any letter of credit, acceptance credit facility or note purchase
facility; or

(ii) in relation to any foreign currency transaction or any purchase price for property or
services payment of which is deferred for a period in excess of 180 days after the later
of taking possession or becoming the legal owner thereof or the service being
rendered; or

(iii) with regard to any guarantee or indemnity in respect of repayment of obligations

referred to in paragraphs (i) and (ii) above or of any other borrowed money.

Borrower means, subject to Clauses 7.4 (Mandatory Prepayment by Borrowers) and 7.5 (Changes to
Borrowers), the Original Borrowers and each Additional Borrower.

Borrower Accession Agreement means a letter substantially in the form of Part 2 of Schedule 4
(Forms of Accession Documents) with such amendments as the Agent may approve or reasonably
require.

0013726-0004726 UKO1: 2010612413.17 3

 Borrower DTTP Filing means an HM Revenue & Customs' Form DTTP2 duly completed and filed
by the relevant Borrower, which:

(a) relates to an Original Bank and:

(i) where the Borrower is an Original Borrower, is filed with HM Revenue & Customs
at least 30 working days prior to the date of the first interest payment after the Signing
Date; or

(ii) where the Borrower is an Additional Borrower, is filed with HM Revenue & Customs
at least 30 working days prior to the date of the first interest payment after the date on
which that Borrower becomes an Additional Borrower; or

(b) relates to a Bank that is a New Bank or an Increase Bank and:

(i) where the Borrower is a Borrower as at the relevant Novation Date (or the date on
which the increase in Commitments described in the relevant Increase Confirmation
takes effect) is filed with HM Revenue & Customs at least 30 working days prior to
the date of the first interest payment after that Novation Date (or the date on which
the increase in Commitments described in the relevant Increase Confirmation takes
effect); or

(ii) where the Borrower is not a Borrower as at the relevant Novation Date (or the date on
which the increase in Commitments described in the relevant Increase Confirmation
takes effect), is filed with HM Revenue & Customs at least 30 working days prior to
the date of the first interest payment after the date on which that Borrower becomes
an Additional Borrower.

Borrowings means (without double counting) any indebtedness in respect of the following:

(a) money borrowed or raised and debit balances at banks;

(b) any bond, note, loan stock, debenture or similar debt instrument;

(c) acceptance credit facilities;

(d) receivables sold or discounted (other than on a non-recourse basis);

(e) leases and hire purchase contracts which are required to be capitalised under IFRS as applied
in the UK;

(f) any other transaction having the commercial effect of a borrowing or raising of money
excluding trade credit in the ordinary course of business; and

(g) guarantees in respect of indebtedness of any person falling within any of paragraphs (a) to (f)
(both inclusive) above,

provided that indebtedness owing by one member of the Group to another member of the Group shall
not be taken into account as Borrowings.

0013726-0004726 UKO1: 2010612413.17 4

 Business Day means a day (other than a Saturday or Sunday) on which banks are open for general
business in London and:

(a) (in relation to any date for payment or purchase of a currency other than euro) the principal
financial centre of the country of that currency and, in the case of a day on which any payment
is required to be made by an Obligor, in New York; and

(b) (in relation to any date for payment or purchase of euro) any TARGET Day; and

(c) (in relation to:

(i) the fixing of an interest rate in relation to a Term Rate Advance;

(ii) any date for payment or purchase of an amount relating to a Compounded Rate
Advance; or

(iii) the determination of the first day or the last day of a Term for a Compounded Rate
Advance, or otherwise in relation to the determination of the length of such a Term),

which is an Additional Business Day relating to that Advance or Unpaid Sum.

Central Bank Rate has the meaning given to that term in the applicable Compounded Rate Terms.

Central Bank Rate Adjustment has the meaning given to that term in the applicable Compounded
Rate Terms.

Change of Tax Law means the introduction, suspension, withdrawal or cancellation of, or change in,
or change in the official interpretation, administration or official application of, any law, regulation
having the force of law, tax treaty or any published practice or published concession of His Majesty's
Revenue & Customs or any other relevant taxing or fiscal authority in any jurisdiction, occurring after
the Signing Date or, if later, after the date on which the relevant Bank becomes a Party (as applicable),
other than the entry into force and/or the entry into effect of the MLI in respect of a tax treaty concluded
by the Netherlands.

Code means the United States Internal Revenue Code of 1986, as amended.

Commitment means the Revolving Facility Commitment or the Swingline Commitment.

Compounded Rate Advance means any Advance (other than a Swingline Advance) or, if applicable,
Unpaid Sum in a Compounded Rate Currency which is not a Term Rate Advance.

Compounded Rate Currency means any currency which is not a Term Rate Currency.

Compounded Rate Interest Payment means the aggregate amount of interest that:

(a) is, or is scheduled to become, payable under any Finance Document; and

(b) relates to a Compounded Rate Advance.

Compounded Rate Supplement means, in relation to any currency, a document which:

(a) is agreed in writing by the Parent and the Agent (acting on the instructions of the Majority
Banks);

0013726-0004726 UKO1: 2010612413.17 5

 (b) specifies for that currency the relevant terms which are expressed in this Agreement to be
determined by reference to Compounded Rate Terms;

(c) specifies whether that currency is a Compounded Rate Currency or a Term Rate Currency;
and

(d) has been made available to the Parent and each Finance Party.

Compounded Rate Terms means in relation to:

(a) a currency;

(b) an Advance or an Unpaid Sum in that currency;

(c) a Term for such an Advance or Unpaid Sum (or other period for the accrual of commission or
fees in respect of that currency); or

(d) any term of this Agreement relating to the determination of a rate of interest in relation to such
an Advance or Unpaid Sum,

the terms set out for that currency in Schedule 9 (Compounded Rate Terms) or in any Compounded
Rate Supplement.

Compounded Reference Rate means, in relation to any RFR Banking Day during the Term of a
Compounded Rate Advance, the percentage rate per annum which is the aggregate of:

(a) the Daily Non-Cumulative Compounded RFR Rate for that RFR Banking Day; and

(b) the applicable Credit Adjustment Spread.

Compounding Methodology Supplement means, in relation to the Daily Non-Cumulative

Compounded RFR Rate or the Cumulative Compounded RFR Rate, a document which:

(a) is agreed in writing by the Parent, the Agent (in its own capacity) and the Agent (acting on the
instructions of the Majority Banks);

(b) specifies a calculation methodology for that rate; and

(c) has been made available to the Parent and each Finance Party.

Credit Adjustment Spread means, in respect of any Compounded Rate Advance, any rate which is
either:

(a) specified as such in the applicable Compounded Rate Terms; or

(b) determined by the Agent (or by any other Finance Party which agrees to determine that rate
in place of the Agent) in accordance with the methodology specified in the applicable
Compounded Rate Terms.

Cumulative Compounded RFR Rate means, in relation to a Term for a Compounded Rate Advance,
the percentage rate per annum determined by the Agent (or by any other Finance Party which agrees
to determine that rate in place of the Agent) in accordance with the methodology set out in
Schedule 11 (Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology
Supplement.

0013726-0004726 UKO1: 2010612413.17 6

 Daily Non-Cumulative Compounded RFR Rate means, in relation to any RFR Banking Day during
a Term for a Compounded Rate Advance, the percentage rate per annum determined by the Agent (or
by any other Finance Party which agrees to determine that rate in place of the Agent) in accordance
with the methodology set out in Schedule 10 (Daily Non-Cumulative Compounded RFR Rate) or in
any relevant Compounding Methodology Supplement.

Daily Rate means the rate specified as such in the applicable Compounded Rate Terms.

Dangerous Substance means any radioactive emissions and any natural or artificial substance
(whether in solid or liquid form or in the form of a gas or vapour and whether alone or in combination
with any other substance) which, taking into account the concentrations and quantities present and the
manner in which it is being used or handled, it is reasonably foreseeable will cause harm to man or
any other living organism or damage to the Environment including any controlled, special, hazardous,
toxic, radioactive or dangerous waste.

Default means an Event of Default or an event specified in Clause 17 (Default) which, with the giving
of notice, determination of materiality or expiry of any grace period under this Agreement (or any
combination of the foregoing), would constitute an Event of Default.

Defaulting Bank means any Bank:

(a) which has failed to make its participation in an Advance available or has notified the Agent
that it will not make its participation in an Advance available by the Utilisation Date of that
Advance in accordance with Clause 5.6 (Payment of proceeds);

(b) which has otherwise rescinded or repudiated a Finance Document; or

(c) with respect to which an Insolvency Event has occurred and is continuing,

unless, in the case of paragraph (a) above:

(i) its failure to pay is caused by:

(A) administrative or technical error; or

(B) a Disruption Event; and

payment is made within five Business Days of its due date; or

(ii) that Bank is disputing in good faith whether it is contractually obliged to make the payment
in question.

Defeased Borrowings means any indebtedness (or obligations in respect thereof, such as future
interest) in respect of capital market issues in existence on the Signing Date which has been fully
covered by cash or cash equivalents as a means of achieving the economic effect of full repayment of
that indebtedness.

Disruption Event means either or both of:

(a) a material disruption to those payment or communication systems or to those financial markets
which are, in each case, required to operate in order for payments to be made in connection
with a Facility (or otherwise in order for the transactions contemplated by the Finance
Documents to be carried out) which disruption is not caused by, and is beyond the control of,
any of the Parties; or

0013726-0004726 UKO1: 2010612413.17 7

 (b) the occurrence of any other event which results in a disruption (of a technical or systems-
related nature) to the treasury or payments operations of a Party preventing that, or any other
Party:

(i) from performing its payment obligations under the Finance Documents; or

(ii) from communicating with other Parties in accordance with the terms of the Finance
Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose
operations are disrupted.

Dutch Borrower means a Borrower incorporated, established or resident for tax purposes in the
Netherlands.

EEA Member Country means any member state of the European Union, Iceland, Liechtenstein and
Norway.

Employee Plan means an employee pension benefit plan within the meaning of Section 3(2) of ERISA
(other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the
Code or Section 302 of ERISA, and in respect of which any US Borrower or any ERISA Affiliate is
(or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer"
as defined in Section 3(5) of ERISA.

Environment means the media of air, water and land (wherever occurring) and in relation to the media
of air and water includes, without limitation, the air and water within buildings and the air and water
within other natural or man-made structures above or below ground and any water contained in any
underground strata.

Environmental Approvals means all authorisations of any kind required under Environmental Laws
to which any member of the Group is subject at any time.

Environmental Law means all legislation, regulations or orders (insofar as such regulations or orders
have the force of law) to the extent that it relates to the protection or impairment of the Environment
or the control of Dangerous Substances (whether or not in force at the Signing Date) which are capable
of enforcement in any applicable jurisdiction by legal process.

ERISA means the United States Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto) as amended from time to time, and the regulations promulgated and rulings issued
thereunder.

ERISA Affiliate means any trade or business (whether or not incorporated) that for purposes of Title
I and Title IV of ERISA and Section 412 of the Code would be deemed at any relevant time to be a
single employer with any US Borrower, pursuant to Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA.

ERISA Event means:

(a) any reportable event, as defined in Section 4043 of ERISA, with respect to an Employee Plan,
as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA
that it be notified of such event;

(b) the filing under Section 4041 of ERISA of a notice of intent to terminate any Employee Plan
or the termination of any Employee Plan under Section 4041 of ERISA, or the receipt of notice

0013726-0004726 UKO1: 2010612413.17 8

 by any US Borrower or any ERISA Affiliate under section 4042 of ERISA from the PBGC
for the termination of, or the appointment of a trustee to administer, any Employee Plan;

(c) any failure by any Employee Plan to satisfy the minimum funding requirements of Sections
412 and 430 of the Code or Section 302 of ERISA applicable to such Employee Plan, in each
case whether or not waived;

(d) the incurrence by any US Borrower or any ERISA Affiliate of any liability with respect to the
complete or partial withdrawal, within the meaning of Section 4203 or 4205 of ERISA, of any
US Borrower or any ERISA Affiliate from an Employee Plan or Multiemployer Plan;

(e) the filing under Section 412 of the Code or Section 302 of ERISA of any request for a
minimum funding variance with respect to any Employee Plan;

(f) any US Borrower or any ERISA Affiliate incurring any liability under Title IV of ERISA with
respect to the termination of any Employee Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); and

(g) a determination that any Employee Plan is, or is expected to be, in "at risk" status (as defined
in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code).

EU Bail-In Legislation Schedule means the document described as such and published by the Loan
Market Association (or any successor person) from time to time.

EURIBOR means, in relation to any Term Rate Advance or overdue amount denominated in euro,
the applicable Screen Rate as of 11.00 a.m. (Brussels time) on the applicable Quotation Day for euro
and for a period equal in length to that Term and, if that rate is less than zero, EURIBOR shall be
deemed to be zero.

Event of Default means an event specified as such in Clause 17 (Default).

Existing Credit Agreement means the £6,000,000,000 revolving credit facilities agreement originally
dated 12 March 2020 made between, among others, British American Tobacco p.l.c., B.A.T.
International Finance p.l.c., B.A.T. Netherlands Finance B.V. and B.A.T Capital Corporation as
borrowers, British American Tobacco p.l.c. as guarantor and HSBC Bank plc as agent, as amended
and/or as amended and restated from time to time.

Extension Request means:

(a) the Revolving Facility First Extension Request; or

(b) the Revolving Facility Second Extension Request.

Facility means the Revolving Facility (and if the Term Out Option has been exercised then, after the
Term Out Date, the Term Facility) and the Swingline Facility described in Clause 2.1 (Facility).

Facility Office means the office(s) notified by a Bank to the Agent:

(a) on or before the date it becomes a Bank; or

(b) by not less than five Business Days' notice,

as the office(s) through which it will perform all or any of its obligations under this Agreement.

0013726-0004726 UKO1: 2010612413.17 9

 FATCA means:

(a) sections 1471 to 1474 of the Code or any associated regulations;

(b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental
agreement between the US and any other jurisdiction, which (in either case) facilitates the
implementation of any law or regulation referred to in paragraph (a) above; or

(c) any agreement pursuant to the implementation of any treaty, law or regulation referred to in
paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any
governmental or taxation authority in any other jurisdiction.

FATCA Application Date means:

(a) in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which
relates to payments of interest and certain other payments from sources within the US), 1 July
2014; or

(b) in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling
within paragraph (a) above, the first date from which such payment may become subject to a
deduction or withholding required by FATCA.

FATCA Deduction means a deduction or withholding required by FATCA.

Federal Funds Rate means in relation to any day, the rate per annum determined by the Swingline
Agent to be equal to:

(a) the rate on overnight federal funds transactions calculated by the Federal Reserve Bank of
New York as the federal funds effective rate as published for that day (or, if that day is not a
New York Business Day, for the immediately preceding New York Business Day) by the
Federal Reserve Bank of New York; or

(b) if a rate is not so published for any day which is a New York Business Day, the average of the
quotations for that day on overnight federal funds transactions received by the Swingline
Agent from three depository institutions of recognised standing selected by the Swingline
Agent,

and if, in either case, that rate is less than zero, the Federal Funds Rate shall be deemed to be zero.

Fee Letters means each letter dated on or about the Signing Date between the Agent and the Parent
setting out the amount of various fees referred to in Clause 19 (Fees).

Final Maturity Date means, subject to Clauses 2.4 (Extension Option – Revolving Facility and
Swingline Facility ) and 2.5 (Term Out Option – Revolving Facility ), the date falling 364 days after
the Signing Date.

Finance Document means this Agreement, any Compounded Rate Supplement, any Compounding
Methodology Supplement, each Fee Letter, a Novation Certificate, a Borrower Accession Agreement,
each novation agreement entered into pursuant to Clause 7.5(b) (Changes to Borrowers) or any other
document designated as such by the Agent and the Parent.

Finance Party means a Bank or an Administrative Party.

Funding Rate means any individual rate notified by a Bank to the Agent pursuant to Clause 11.8(a)(ii)
(Cost of Funds).

0013726-0004726 UKO1: 2010612413.17 10

 GAAP means generally accepted accounting principles in the jurisdiction of incorporation of the
Parent including IFRS.

Group means the Parent and its Subsidiaries.

IFRS means international accounting standards within the meaning of the IAS Regulation 1606/2002
to the extent applicable to the relevant financial statements.

Impaired Agent means an Administrative Party at any time when:

(a) it has failed to make (or has notified a Party that it will not make) a payment required to be
made by it under the Finance Documents by the due date for payment;

(b) that Administrative Party otherwise rescinds or repudiates a Finance Document;

(c) (if that Administrative Party is also a Bank) it is a Defaulting Bank under paragraph (a) or (b)
of the definition of "Defaulting Bank"; or

(d) an Insolvency Event has occurred and is continuing with respect to that Administrative Party;

unless, in the case of paragraph (a) above:

(i) its failure to pay is caused by:

(A) an administrative or technical error; or

(B) a Disruption Event; and

payment is made within five Business Days of its due date; or

(ii) that Administrative Party is disputing in good faith whether it is contractually obliged to make
the payment in question.

Increase Bank has the meaning given to that term in paragraph (a)(ii)(A) of Clause 25.10 (Increase).

Increase Confirmation means a confirmation substantially in the form set out in Schedule 6 (Form
of Increase Confirmation).

Insolvency Event means in relation to a Finance Party, that the Finance Party:

(a) is dissolved (other than pursuant to a consolidation, amalgamation or merger);

(b) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due;

(c) makes a general assignment, arrangement or composition with or for the benefit of its
creditors;

(d) institutes or has instituted against it, by a regulator, supervisor or any similar official with
primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its
incorporation or organisation or the jurisdiction of its head or home office, a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, all other than by way of an
Undisclosed Administration, or a petition is presented for its winding-up or liquidation by it
or such regulator, supervisor or similar official;

0013726-0004726 UKO1: 2010612413.17 11

 (e) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it, such proceeding or petition is
instituted or presented by a person or entity not described in paragraph (d) above and:

(i) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or
the making of an order for its winding-up or liquidation; or

(ii) is not dismissed, discharged, stayed or restrained in each case within 21 days of the
institution or presentation thereof;

(f) has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the
Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to
Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the
Banking Act 2009;

(g) has a resolution passed for its winding-up, official management or liquidation (other than
pursuant to a consolidation, amalgamation or merger);

(h) seeks or becomes subject to the appointment of an administrator, provisional liquidator,

conservator, receiver, trustee, custodian or other similar official for it or for all or substantially
all of its assets, all other than by way of an Undisclosed Administration;

(i) has a secured party take possession of all or substantially all of its assets or has a distress,
execution, attachment, sequestration or other legal process levied, enforced or sued on or
against all or substantially all of its assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or restrained, in each case within 21 days
thereafter;

(j) causes or is subject to any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (i)
above; or

(k) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence,
in any of the foregoing acts.

Interpolated Term Reference Rate means, in relation to any Term Rate Advance or overdue amount,
the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results
from interpolating on a linear basis between:

(a) the applicable Term Reference Rate for the longest period (for which that Term Reference
Rate is available) which is less than the Term of that Advance or overdue amount; and

(b) the applicable Term Reference Rate for the shortest period (for which that Term Reference
Rate is available) which exceeds the Term of that Advance or overdue amount,

as of, in the case of EURIBOR, 11.00 a.m. (Brussels time) on the Quotation Day for the currency of
that Advance or overdue amount and, if that rate is less than zero, such rate shall be deemed to be zero.

ITA means the Income Tax Act 2007.

Lookback Period means the number of days specified as such in the applicable Compounded Rate
Terms.

0013726-0004726 UKO1: 2010612413.17 12

 Majority Banks means, at any time:

(a) if any Advances are outstanding, Banks with an aggregate Original Sterling Amount of
Advances and undrawn Commitments at that time of more than 662 /3 per cent. of the aggregate
Original Sterling Amount of all Advances then outstanding and undrawn Commitments then
in force; or

(b) if no Advances are outstanding, Banks whose Commitments then aggregate more than 662/3
per cent. of the Total Commitments (or if the Total Commitments have been reduced to zero,
aggregated more than 662 /3 per cent. of the Total Commitments immediately before the
reduction).

Margin means the percentage figure calculated in accordance with Clause 8.3 (Calculation of the
Margin).

Margin Stock means "margin stock" as defined in Regulation U and X issued by the Board of
Governors of the Federal Reserve System of the United States.

Market Disruption Rate means the rate (if any) specified as such in the applicable Compounded Rate
Terms.

MLI means the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base
Erosion and Profit Shifting.

Month means, in relation to a Term (or any other period for the accrual of commission or fees in a
currency), a period starting on one day in a calendar month and ending on the numerically
corresponding day in the next calendar month, subject to adjustment in accordance with the rules
specified as Business Day Conventions in the applicable Compounded Rate Terms or, in respect of
euro:

(a) if any period is expressed to accrue by reference to a Month or any number of Months then,
in respect of the last Month of that period:

(i) subject to paragraph (iii) below, if the numerically corresponding day is not a Business
Day, that period shall end on the next Business Day in that calendar month in which
that period is to end if there is one, or if there is not, on the immediately preceding
Business Day;

(ii) if there is no numerically corresponding day in the calendar month in which that
period is to end, that period shall end on the last Business Day in that calendar month;
and

(iii) if a Term begins on the last Business Day of a calendar month, that Term shall end on
the last Business Day in the calendar month in which that Term is to end.

(b) if a Term would otherwise end on a day which is not a Business Day, that Term will instead
end on the next Business Day in that calendar month (if there is one) or the preceding Business
Day (if there is not).

Moody's means Moody's Investors Service Limited or any successor to its rating business.

Multiemployer Plan means a "multiemployer plan" (as defined in Section 3(37) of ERISA) that is
subject to Title IV of ERISA contributed to for any employees of any US Borrower or any ERISA
Affiliate.

0013726-0004726 UKO1: 2010612413.17 13

 New Bank has the meaning given to that term in paragraph (a) of Clause 25.2 (Transfers by Banks).

New York Business Day means a day (other than a Saturday or Sunday) on which banks are open for
business in New York City.

Novation Certificate has the meaning given to it in Clause 25.3(a)(i) (Procedure for novations).

Novation Date means, in relation to an assignment, transfer or novation in accordance with

Clause 25.2 (Transfers by Banks), the date on which such assignment, transfer or novation takes effect.

Obligor means each Borrower and the Guarantor.

OFAC means the Office of Foreign Assets Control of the US Department of the Treasury.

Optional Currency means:

(a) in relation to any Term Rate Advance or proposed Term Rate Advance, euro;

(b) in relation to any Compounded Rate Advance or proposed Compounded Rate Advance, US
Dollars or any currency other than Sterling and US Dollars approved by all the Banks and (i)
for which there is Compounded Rate Terms for that currency and (ii) which is readily available
and freely transferable in the London foreign exchange market in sufficient amounts to fund
that Advance; and

(c) in relation to a Swingline Advance, US Dollars.

Original Sterling Amount means:

(a) the principal amount of an Advance denominated in Sterling; or

(b) the principal amount of an Advance (other than a Swingline Advance) denominated in any
other currency, translated into Sterling on the basis of the Agent's Spot Rate of Exchange on
the date of receipt by the Agent of the Request for that Advance (or, in relation to a Term Out
Advance, on the Term Out Date); or

(c) the principal amount of a Swingline Advance denominated in US Dollars translated into
Sterling on the basis of the Swingline Agent's Spot Rate of Exchange on the date of receipt by
the Swingline Agent of the Request for that Swingline Advance.

Parent means British American Tobacco p.l.c.

Participating Member State means any member state of the European Union that has the euro as its
lawful currency in accordance with legislation of the European Union relating to Economic and
Monetary Union.

Party means a party to this Agreement.

PBGC means the US Pension Benefit Guaranty Corporation, or any entity succeeding to all or any of
its functions under ERISA.

Prime Rate means the prime commercial lending rate from time to time announced by the Swingline
Agent. Each change in the interest rate on a Swingline Advance which results from a change in the
Prime Rate becomes effective on the day on which the change in the Prime Rate becomes effective.

0013726-0004726 UKO1: 2010612413.17 14

 Principal Purpose Test means the principal purpose test as set forth in article 7 of the MLI.

Qualifying Bank means a Bank which:

(a) in respect of a payment under this Agreement from a UK Resident Borrower:

(i) is a bank as defined for the purposes of section 879 of the ITA which is making an
advance under this Agreement and is within the charge to United Kingdom
corporation tax as regards any interest received by it in respect of that advance, or
would be within such charge as respects such payment apart from section 18A
Corporation Tax Act 2009, which is beneficially entitled to that interest;

(ii) is resident (as such term is defined in the appropriate double taxation treaty) in a
country with which the United Kingdom has an appropriate double taxation treaty
under which that institution is entitled to exemption from United Kingdom tax on
interest and is entitled to apply for, and has applied for and obtained, approval (and
with an effective notice of direction to this effect provided by His Majesty's Revenue
& Customs to the relevant Borrower before the date of payment of the interest in
question) under the Double Taxation Relief (Taxes on Income) (General) Regulations
1970 to have interest under this Agreement paid to its Facility Office (being the
Facility Office which is beneficially entitled to the interest paid to the relevant Bank
under this Agreement) without withholding or deduction for or on account of United
Kingdom taxation (and does not carry on business in the United Kingdom through a
permanent establishment with which any loan or advance made under this Agreement
in respect of which the interest is paid is effectively connected) and for this purpose
double taxation treaty means any convention or agreement between the government
of the United Kingdom and any other government for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income and capital gains;

(iii)

(i) holds a passport under the HMRC DT Treaty Passport scheme and has
complied with the obligations in Clause 10.5 (Borrower DTTP Filing); and

(ii) approval has been given (and with an effective notice of direction to this effect
provided by His Majesty's Revenue & Customs to the relevant Borrower before the
date of payment of the interest in question) under the Double Taxation Relief (Taxes
on Income) (General) Regulations 1970 to have interest under this Agreement paid to
that Bank's Facility Office (being the Facility Office which is beneficially entitled to
the interest paid to the relevant Bank under this Agreement) without withholding or
deduction for or on account of United Kingdom taxation, provided that this paragraph
(ii) shall only apply where the relevant Borrower has made a Borrower DTTP Filing;

(iv) is a company not so resident in the United Kingdom which carries on a trade in the
United Kingdom through a permanent establishment and which brings into account
interest payable in respect of that advance in computing the chargeable profits (within
the meaning of section 19 of the CTA) of that company; or

(b) in respect of a payment under a Finance Document by or on behalf of a Dutch Borrower:

(i) fulfils the conditions imposed by Dutch law in order for such payment not to be
subject to (or, as the case may be, to be exempt from) any deduction or withholding
for or on account of tax imposed by the Netherlands, other than FATCA Deduction;
or

0013726-0004726 UKO1: 2010612413.17 15

 (ii) (a) is a resident of a jurisdiction having a double taxation agreement with the
Netherlands as amended and supplemented by the MLI (if applicable) (a Dutch
Treaty) which makes provision for a full exemption from tax imposed by the
Netherlands on interest and is treated as a resident for the purposes of that Dutch
Treaty, (b) does not carry on a business in the Netherlands through a permanent
establishment with which any loan or advance made under this Agreement is
effectively connected, and (c) fulfils any other conditions which must be fulfilled
under the Dutch Treaty (including the Principal Purpose Test (if applicable) and any
other conditions which must be fulfilled to obtain the full benefits under the relevant
Dutch Treaty) or domestic law by residents of that jurisdiction for such residents to
obtain a full exemption from tax on interest imposed by the Netherlands.

Quotation Day means the day that is Two TARGET Days before the first day of the relevant Term
(unless market practice differs in the Relevant Market, in which case the Quotation Day will be
determined by the Agent in accordance with market practice in the Relevant Market (and if quotations
would normally be given on more than one day, the Quotation Day will be the last of those days)).

Quoted Tenor means, in relation to the Screen Rate for a Term Reference Rate applicable to Advances
(that are not Swingline Advances) in a currency, any period for which that Screen Rate is customarily
displayed on the relevant page or screen of an information service.

Rating Agencies means Moody's and S&P and Rating Agency shall mean any one of them.

Register has the meaning ascribed to it in Clause 25.8 (Register).

Relevant Market means:

(a) in relation to euro, the European interbank market; and

(b) in relation to any other currency, the London interbank market.

Replacement Bank has the meaning given to that term in paragraph (a) of Clause 25.12 (Replacement
of a Defaulting Bank).

Reporting Day means the day (if any) specified as such in the applicable Compounded Rate Terms.

Reporting Time means the relevant time (if any) specified as such in the applicable Compounded
Rate Terms.

Request means a request made by a Borrower to utilise a Facility, substantially in the form of
Schedule 3 (Form of Request).

Requested Amount means the amount requested in a Request.

Resolution Authority means any body which has authority to exercise any Write-down and
Conversion Powers.

Revolving Facility means the committed multicurrency revolving credit facility described in
Clause 2.1(a) (Facility).

Revolving Facility Advance means an advance made or to be made by the Banks under the Revolving
Facility which has not been converted into a Term Out Advance pursuant to the Term Out Option.

Revolving Facility Bank means, at any time, a Bank with a Revolving Facility Commitment.

0013726-0004726 UKO1: 2010612413.17 16

 Revolving Facility Commitment means:

(a) in relation to an Original Bank, the amount in Sterling set opposite its name under Column 1
of Part 2 of Schedule 1 (Banks and Commitments) and the amount of any other Revolving
Facility Commitments transferred to it under this Agreement; and

(b) in relation to any other Bank, the amount in Sterling of any Revolving Facility Commitment
transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

Revolving Facility First Extension Request has the meaning given to that term in Clause 2.4(a)
(Extension Option – Revolving Facility and Swingline Facility ).

Revolving Facility Second Extension Request has the meaning given to that term in Clause 2.4(b)
(Extension Option – Revolving Facility and Swingline Facility ).

RFR means the rate specified as such in the applicable Compounded Rate Terms.

RFR Banking Day means any day specified as such in the applicable Compounded Rate Terms.

Rollover Advance means one or more Revolving Facility Advances under the Revolving Facility:

(a) made or to be made on the same day that a Revolving Facility Advance under the same
Revolving Facility is due to be repaid;

(b) the Original Sterling Amount of which equals or is less than the Original Sterling Amount of
the relevant maturing Revolving Facility Advance(s);

(c) in the same currency as the relevant maturing Revolving Facility Advance(s); and

(d) made or to be made to the same Borrower for the purpose of refinancing the relevant maturing
Revolving Facility Advance(s).

S&P means Standard and Poor's Credit Market Services Europe Limited or any successor to its rating
business.

Screen Rate means in relation to EURIBOR, the euro interbank offered rate administered by the
European Money Markets Institute (or any other person which takes over the administration of that
rate) for the relevant period displayed on page EURIBOR01 of the Thomson Reuters screen (or any
replacement Thomson Reuters page which displays that rate) or, on the appropriate page of such other
information service which publishes that rate from time to time in place of Thomson Reuters. If such
page or service ceases to be available, the Agent may specify another page or service displaying the
relevant rate after consultation with the Parent.

Security Interest means any mortgage, hypothecation, charge, pledge or lien (unless arising by
operation of law) or other security interest securing any obligation of any person.

Selection Notice means a notice substantially in the form set out in Part 2 of Schedule 8 (Term Out –
Revolving Facility ) given in relation to a Term Out Advance.

Signing Date means the date of this Agreement.

0013726-0004726 UKO1: 2010612413.17 17

 Sterling Amount means, in relation to a Swingline Commitment, the amount of that Swingline
Commitment translated into Sterling on the basis of the Agent's Spot Rate of Exchange on the date
any part of the Facility is to be cancelled pursuant to Clause 7.1 (Voluntary cancellation).

Subsidiary means:

(a) a subsidiary within the meaning of Section 1159 of the Companies Act 2006; and

(b) unless the context otherwise requires, a subsidiary undertaking within the meaning of Section
1162(2) of the Companies Act 2006.

Swingline Advance means an advance made or to be made by a Swingline Bank under the Swingline
Facility.

Swingline Affiliate means, in relation to a Bank, any Swingline Bank that is an Affiliate of that Bank
and which has been notified to the Administrative Parties by that Bank in writing to be a Swingline
Affiliate.

Swingline Agent's Spot Rate of Exchange means the spot rate of exchange as determined by the
Swingline Agent for the purchase of US Dollars in the New York foreign exchange market with
Sterling at the relevant time on the relevant day.

Swingline Bank means, subject to Clause 25.2 (Transfers by Banks), a Bank which has a Swingline
Commitment.

Swingline Commitment means in respect of a Swingline Bank and the Swingline Facility, the amount
in US Dollars set out opposite its name in Column 2 of Part 2 of Schedule 1 (Banks and Commitments)
or specified as such in the relevant Novation Certificate, to the extent not transferred, cancelled or
reduced under this Agreement.

Swingline Facility means the committed US Dollar swingline facility, forming part of the Revolving
Facility, described in Clause 2.1(b) (Facility).

Swingline Rate means, on any day, the higher of:

(a) the Prime Rate; and

(b) the aggregate of the Federal Funds Rate determined by the Swingline Agent for that day and
1.00 per cent. per annum.

Swingline Total Commitments means the aggregate for the time being of the Swingline
Commitments under the Swingline Facility, being US$2,500,000,000 as at the Signing Date.

TARGET Day means any day on which TARGET2 is open for the settlement of payments in euro.

TARGET2 means the Trans-European Automated Real-time Gross Settlement Express Transfer
payment system which utilises a single shared platform and which was launched on 19 November
2007 or any successor thereto.

Term means each period:

(a) selected by a Borrower in a Request for which the relevant Revolving Facility Advance or
Swingline Advance is to be outstanding;

(b) selected by a Borrower in a Selection Notice in relation to the relevant Term Out Advance; or

0013726-0004726 UKO1: 2010612413.17 18

 (c) by reference to which interest on an overdue amount is calculated.

Term End Date means the last day of a Term of an Advance.

Term Facility means the term facility described in Clause 2.5 (Term Out Option – Revolving Facility).

Term Out Advance means any Revolving Facility Advance converted to a term loan pursuant to the
Term Out Option or the principal amount outstanding for the time being of that loan.

Term Out Date means the date which, but for the exercise of the Term Out Option, would be the
applicable Final Maturity Date.

Term Out Notice means a notice substantially in the form set out in Part 1 of Schedule 8 (Term Out
– Revolving Facility ).

Term Out Option means the term out option described in Clause 2.5 (Term Out Option – Revolving
Facility ).

Term Rate Advance means any Advance or, if applicable, Unpaid Sum which is in a Term Rate
Currency.

Term Rate Currency means euro.

Term Reference Rate means, in relation to any Advance in euro, EURIBOR (or such other rate as
determined pursuant to Clause 11 (Changes to the Calculation of Interest)) and, if, in either case, that
rate is less than zero, the Term Reference Rate shall be deemed to be zero.

Total Commitments means the aggregate of the Revolving Facility Commitments from time to time,
being £2,538,000,000 as at the Signing Date (of which, subject to Clause 2.2 (Overall facility limit),
up to US$2,500,000,000 is available under the Swingline Facility).

UK or United Kingdom means the United Kingdom of Great Britain and Northern Ireland.

UK Bail-In Legislation means Part I of the United Kingdom Banking Act 2009 and any other law or
regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks,
investment firms or other financial institutions or their affiliates (otherwise than through liquidation,
administration or other insolvency proceedings).

UK Resident Borrower means a Borrower resident in the UK for the purposes of UK taxation.

Undisclosed Administration means in relation to a Bank the appointment of an administrator,

provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a
supervisory authority or regulator under or based on the law in the country where such Bank is subject
to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly
disclosed.

United States or US means the United States of America.

Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.

US Bankruptcy Law means the United States Bankruptcy Code or any other United States Federal
or State bankruptcy, insolvency or similar law.

US Borrower means each Borrower that is incorporated or organised under the laws of the United
States or any State of the United States (including the District of Columbia).

0013726-0004726 UKO1: 2010612413.17 19

 US Debtor means a US Borrower in respect of which an Advance is outstanding under this Agreement.

US Person means a "United States person" within the meaning of the Code and a disregarded entity
(for US federal income tax purposes) owned by any such person.

Utilisation Date means the date for the making of an Advance.

Write-down and Conversion Powers means:

(a) in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from
time to time, the powers described as such in relation to that Bail-In Legislation in the EU
Bail-In Legislation Schedule;

(b) in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to
cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other
financial institution or affiliate of a bank, investment firm or other financial institution, to
cancel, reduce, modify or change the form of a liability of such a person or any contract or
instrument under which that liability arises, to convert all or part of that liability into shares,
securities or obligations of that person or any other person, to provide that any such contract
or instrument is to have effect as if a right had been exercised under it or to suspend any
obligation in respect of that liability or any of the powers under that UK Bail-In Legislation
that are related to or ancillary to any of those powers; and

(c) in relation to any other applicable Bail-In Legislation:

(i) any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by
a person that is a bank or investment firm or other financial institution or affiliate of
a bank, investment firm or other financial institution, to cancel, reduce, modify or
change the form of a liability of such a person or any contract or instrument under
which that liability arises, to convert all or part of that liability into shares, securities
or obligations of that person or any other person, to provide that any such contract or
instrument is to have effect as if a right had been exercised under it or to suspend any
obligation in respect of that liability or any of the powers under that Bail-In
Legislation that are related to or ancillary to any of those powers; and

(ii) any similar or analogous powers under that Bail-In Legislation.

1.2 Construction

(a) In this Agreement, unless the contrary intention appears, a reference to:

(i) assets includes properties, revenues and rights of every description;

(ii) a Bank's cost of funds in relation to its participation in an Advance is a reference to the average
cost (determined either on an actual or a notional basis) which that Bank would incur if it were
to fund, from whatever source(s) it may reasonably select, an amount equal to the amount of
that participation in that Advance for a period equal in length to the Term of that Advance;

(iii) an authorisation includes an authorisation, consent, approval, resolution, licence, exemption,

filing, registration and notarisation;

(iv) pro rata shall mean in proportion to;

0013726-0004726 UKO1: 2010612413.17 20

 (v) a regulation includes any regulation, rule, official directive, request or guideline (whether or
not having the force of law) of any governmental body, agency, department or regulatory, self-
regulatory or other authority or organisation;

(vi) tax shall mean any tax, levy, impost, duty or other charge or withholding (including backup
withholding) of a similar nature (including any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same);

(vii) the currency of a country is to the lawful currency of that country for the time being, € and
euro is a reference to the single currency of the Participating Member States, £ and Sterling
is a reference to the lawful currency of the United Kingdom for the time being, US$ and US
Dollars is a reference to the lawful currency of the United States for the time being;

(viii) a provision of a law is a reference to that provision as amended or re-enacted;

(ix) a Clause or a Schedule is a reference to a clause of or a schedule to this Agreement;

(x) a person includes any person, firm, company, corporation, government, state or agency of a
state or any association, trust or partnership (whether or not having separate legal personality)
or two or more of the foregoing;

(xi) a Finance Document or another document is a reference to that Finance Document or that
other document as amended, novated or supplemented;

(xii) a time of day is a reference to London time;

(xiii) references to promptly shall exclude any day that is not a Business Day; and

(xiv) a reference in this Agreement to a page or screen of an information service displaying a rate
(other than in the definition of Screen Rate) shall include:

(A) any replacement page of that information service which displays that rate; and

(B) the appropriate page of such other information service which displays that rate from
time to time in place of that information service,

and, if such page or service ceases to be available, shall include any other page or service
displaying that rate specified by the Agent after consultation with the Parent.

(b) Unless the contrary intention appears, a term used in any other Finance Document or in any notice
given under or in connection with any Finance Document has the same meaning in that Finance
Document or notice as in this Agreement.

(c) The index to and the headings in this Agreement are for convenience only and are to be ignored in
construing this Agreement.

(d) The representation and warranty given in Clause 15.11 (Sanctions and Anti-Bribery and Corruption)
and the undertaking given in Clause 16.12 (Sanctions and Anti-Bribery and Corruption) (each a
Sanctions Provision) shall only apply to a Restricted Bank to the extent that the relevant Sanctions
Provision would not result in a violation of, conflict with or create a liability under: (i) Council
Regulation (EC) 2271/96 of 22 November 1996 (as amended) and/ or any applicable national law or
regulation regulating it; (ii) Council Regulation (EC) 2271/96 of 22 November 1996 (as amended) as
it forms part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal)
Act 2018; (iii) §7 of the German Außenwirtschaftsverordnung (in connection with section 4 paragraph
1 no. 3 of the German Außenwirtschaftsgesetz); or (iv) any similar applicable anti-boycott statute, and

0013726-0004726 UKO1: 2010612413.17 21

 in connection with any waiver, determination or direction relating to any part of any Sanctions
Provision which does not apply to any Restricted Bank, the Commitment of that Restricted Bank will
be excluded for the purpose of determining whether the consent of the requisite majority of Banks has
been obtained or whether the determination or direction by the requisite majority of Banks has been
made (as applicable). For the purposes of this paragraph (d) a Restricted Bank means a Bank that
has notified the Agent and the Parent that a Sanctions Provision may result in a violation of, a conflict
with or liability under: (A) EU Regulation (EC) 2271/96; (B) EU Regulation (EC) 2271/96 as it forms
part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018;
(C) §7 of the German Außenwirtschaftsverordnung (in connection with section 4 paragraph 1 no. 3 of
the German Außenwirtschaftsgesetz); or (D) any similar applicable anti-boycott statute.

(e) A reference in this Agreement to a Central Bank Rate shall include any successor rate to, or
replacement rate for, that rate.

(f) Any Compounded Rate Supplement relating to a currency overrides anything relating to that currency
in:

(i) Schedule 9 (Compounded Rate Terms); or

(ii) any earlier Compounded Rate Supplement.

(g) A Compounding Methodology Supplement relating to the Daily Non-Cumulative Compounded RFR
Rate or the Cumulative Compounded RFR Rate overrides anything relating to that rate in:

(i) Schedule 10 (Daily Non-Cumulative Compounded RFR Rate) or Schedule 11 (Cumulative

Compounded RFR Rate), as the case may be; or

(ii) any earlier Compounding Methodology Supplement.

(h) The determination of the extent to which a rate is "for a period equal in length" to a Term shall
disregard any inconsistency arising from the last day of that Term being determined pursuant to the
terms of this Agreement.

1.3 Contracts (Rights of Third Parties) Act 1999

No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a
person who is not a party to this Agreement. For the avoidance of doubt, this shall not prevent any
person taking the benefit of this Agreement in accordance with the provisions of Clause 7.5 (Changes
to Borrowers), Clause 18.7(b) (Exoneration), Clause 18.16 (Resignation of an Administrative Party),
Clause 25.2 (Transfers by Banks) and Clause 25.6 (Additional Borrowers).

2. THE FACILITY

2.1 Facility

The Banks grant to the Borrowers the following facility:

(a) subject to Clauses 2.4 (Extension Option – Revolving Facility and Swingline Facility ) and
2.5 (Term Out Option – Revolving Facility ), a committed 364-day multi-currency revolving
credit facility, to be designated as the Revolving Facility, under which the relevant Revolving
Facility Banks will, when requested by a Borrower, make cash advances in Sterling or
Optional Currencies to that Borrower on a revolving basis; and

(b) subject to Clause 2.4 (Extension Option – Revolving Facility and Swingline Facility ), a
committed US Dollar swingline advance facility (which is a sub-division of the Revolving

0013726-0004726 UKO1: 2010612413.17 22

 Facility) under which the relevant Swingline Banks will, when requested by a Borrower, make
to that Borrower Swingline Advances,

in all cases subject to the other terms of this Agreement.

2.2 Overall facility limit

(a) The aggregate:

(i) Original Sterling Amount of all outstanding Advances under the Revolving Facility (or if
applicable, the Term Facility) and the Swingline Facility, shall not at any time exceed the
Total Commitments at that time; and

(ii) amount of all Advances under the Swingline Facility, shall not at any time exceed the
Swingline Total Commitments at that time.

(b) The aggregate:

(i) Original Sterling Amount of Revolving Facility Advances under the Revolving Facility (or if
applicable, Term Out Advances under the Term Facility) and Swingline Advances under the
Swingline Facility made by a Bank and, if applicable, any of that Bank's Swingline Affiliates,
shall not at any time exceed its Revolving Facility Commitment under the Revolving Facility
at that time; and

(ii) amount of Swingline Advances made by a Swingline Bank under the Swingline Facility shall
not at any time exceed its Swingline Commitment under the Swingline Facility at that time.

2.3 Number of Requests and Advances

(a) No more than one Request may be delivered on any one day but that Request may specify any number
and type of Advances from the Revolving Facility and/or the Swingline Facility.

(b) Unless the Agent agrees otherwise:

(i) no more than 10 Advances may be outstanding under the Revolving Facility at any time; and

(ii) outstanding Advances at any time may not be denominated in more than 5 different currencies
under the Revolving Facility.

2.4 Extension Option – Revolving Facility and Swingline Facility

(a) The Parent may request by giving notice to the Agent (a Revolving Facility First Extension Request)
no more than 90 days, and not less than 30 days prior to the first anniversary of the Signing Date, that
the then current Final Maturity Date for all or part of the Revolving Facility and the Swingline Facility
be extended for an additional 365-day period. A Revolving Facility First Extension Request shall be
in the form set out in Part 1 of Schedule 7 (Extension Requests and Extension Notices).

(b) Without prejudice to paragraph (a) above, the Parent may request by giving notice to the Agent (a
Revolving Facility Second Extension Request) no more than 90 days, and not less than 30 days prior
to the second anniversary of the Signing Date, that the then current Final Maturity Date for all or part
of the Revolving Facility and the Swingline Facility be extended for a further 365-day period. A
Revolving Facility Second Extension Request shall be in the form set out in Part 3 of Schedule 7
(Extension Requests and Extension Notices).

0013726-0004726 UKO1: 2010612413.17 23

(c) Upon receipt of a Revolving Facility First Extension Request under paragraph (a) above, the Agent
shall promptly notify each Bank. Each such Bank shall have the right, in its absolute discretion, to
accept or decline any Revolving Facility First Extension Request and any such Bank which wishes to
accept the Revolving Facility First Extension Request (each a Revolving Facility First Extension
Bank) shall so notify the Agent no later than the date falling 20 days before the first anniversary of
the Signing Date. If any Bank does not accept a Revolving Facility First Extension Request by that
date, it will be deemed to have refused it.

(d) The Agent shall promptly notify the Parent of the Revolving Facility First Extension Banks in the form
set out in Part 2 of Schedule 7 (Extension Requests and Extension Notices), whereupon in respect of
those Banks only (if any), the Final Maturity Date in respect of the Revolving Facility and the
Swingline Facility shall be extended to the second anniversary of the Signing Date.

(e) Upon receipt of a Revolving Facility Second Extension Request under paragraph (b) above, the Agent
shall promptly notify each Bank. Each such Bank shall have the right, in its absolute discretion, to
accept or decline any Revolving Facility Second Extension Request and any such Bank which wishes
to accept the Revolving Facility Second Extension Request (each a Revolving Facility Second
Extension Bank) shall so notify the Agent no later than the date falling 20 days before the second
anniversary of the Signing Date. If any Bank does not accept a Revolving Facility Second Extension
Request by that date, it will be deemed to have refused it.

(f) The Agent shall promptly notify the Parent of the Revolving Facility Second Extension Banks in the
form set out in Part 4 of Schedule 7 (Extension Requests and Extension Notices), whereupon in respect
of those Banks only (if any), the then current Final Maturity Date in respect of those Banks shall be
extended by 365 days to the third anniversary of the Signing Date.

(g) Subject to Clause 2.5 (Term Out Option – Revolving Facility ), on the date falling 364 days after the
Signing Date:

(i) the Borrower shall repay the participation in the Advances under the Revolving Facility and
the Swingline Facility of each Bank (other than a Revolving Facility First Extension Bank) in
full; and

(ii) the Commitment of each Bank (other than a Revolving Facility First Extension Bank) under
the Revolving Facility and the Swingline Facility shall be cancelled automatically.

(h) Subject to Clause 2.5 (Term Out Option – Revolving Facility ), on the second anniversary of the
Signing Date:

(i) the Borrower shall repay the participation in the Advances under the Revolving Facility and
the Swingline Facility of each Revolving Facility First Extension Bank that has refused any
Revolving Facility Second Extension Request under paragraph (e) above in full; and

(ii) the Commitment of each Bank (other than a Revolving Facility Second Extension Bank) under
the Revolving Facility and the Swingline Facility shall be cancelled automatically.

(i) Subject to Clause 2.5 (Term Out Option – Revolving Facility ), on the third anniversary of the Signing
Date:

(i) the Borrower shall repay the participation in the Advances under the Revolving Facility and
the Swingline Facility of each Bank in full; and

(ii) the Commitment of each Bank under the Revolving Facility and the Swingline Facility shall
be cancelled automatically.

0013726-0004726 UKO1: 2010612413.17 24

(j) No more than one Revolving Facility First Extension Request or the Revolving Facility Second
Extension Request may be given under each of paragraphs (a) and (b) above, and any such request is
irrevocable.

2.5 Term Out Option – Revolving Facility

(a) The Parent may exercise the term out option by issue of a Term Out Notice to the Agent no more than
90 days, and not less than 10 days before the Final Maturity Date then applicable to the Revolving
Facility.

(b) The Agent shall promptly notify each Bank upon receipt of a Term Out Notice.

(c) If the Term Out Option is so exercised then, on the Term Out Date:

(i) any Available Commitment under the Revolving Facility and any Commitment under the
Swingline Facility shall be automatically cancelled;

(ii) the applicable Final Maturity Date of all Advances then outstanding under the Revolving
Facility shall be extended to either:

(A) the second anniversary of the Signing Date;

(B) if the applicable Final Maturity Date has already been extended pursuant to
Clause 2.4(a) (Extension Option – Revolving Facility and Swingline Facility ), the
third anniversary of the Signing Date; or

(C) if the applicable Final Maturity Date has already been extended pursuant to Clause
2.4(b) (Extension Option – Revolving Facility and Swingline Facility), the fourth
anniversary of the Signing Date; and

(iii) accordingly, the Banks participating in Advances under the Revolving Facility on the Term
Out Date shall make available a term facility to the relevant Borrowers in the amount of the
Advances then outstanding under the Revolving Facility.

(d) For the avoidance of doubt, the Swingline Facility shall not be extended pursuant to this Clause 2.5
and any Advances outstanding under the Swingline Facility shall be repaid in full on or before the
Term Out Date in accordance with Clause 6 (Repayment).

2.6 Nature of a Finance Party's rights and obligations

(a) The obligations of a Finance Party under the Finance Documents are several. Failure of a Finance
Party to carry out those obligations does not affect the obligations of any other Party under the Finance
Documents. No Finance Party is responsible for the obligations of any other Finance Party under the
Finance Documents.

(b) The rights of a Finance Party under or in connection with the Finance Documents are separate and
independent rights and any debt arising under the Finance Documents to a Finance Party from an
Obligor shall be a separate and independent debt in respect of which a Finance Party shall be entitled
to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include
any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt,
any part of an Advance or any other amount owed by an Obligor which relates to a Finance Party's
participation in the Facility or its role under a Finance Document (including any such amount payable
to the Agent on its behalf) is a debt owing to that Finance Party by that Obligor.

0013726-0004726 UKO1: 2010612413.17 25

(c) A Finance Party may, except as specifically provided in the Finance Documents, separately enforce
its rights under or in connection with the Finance Documents.

2.7 Parent as agent for Obligors

Each Obligor irrevocably authorises and instructs the Parent to give and receive as agent on its behalf
all notices (including Requests and Selection Notices) and sign all documents in connection with the
Finance Documents on its behalf (including Novation Certificates and novation agreements under
Clause 7.5(b) (Changes to Borrowers)) and take such other action as may be necessary or desirable
under or in connection with the Finance Documents and confirms that it will be bound by any action
taken by the Parent under or in connection with the Finance Documents.

2.8 Actions of Parent as agent for Obligors

The respective liabilities of each of the Obligors under the Finance Documents shall not be in any way
affected by:

(a) any irregularity (or purported irregularity) in any act done by or any failure (or purported
failure) by the Parent;

(b) the Parent acting (or purporting to act) in any respect outside any authority conferred upon it
by any Obligor; or

(c) the failure (or purported failure) by or inability (or purported inability) of the Parent to inform
any Obligor of receipt by it of any notification under this Agreement.

2.9 Each Borrower acting for its own account

Without prejudice to the provisions of Clause 2.7 (Parent as agent for Obligors), each Borrower is
acting for its own account and not for the account of any other person. Each Borrower undertakes to
notify the Agent without delay in writing, if after the Signing Date a situation arises in which that
Borrower acts for the account of another person (other than, in respect of the Parent only, in accordance
with the provisions of Clause 2.7 (Parent as agent for Obligors)).

3. PURPOSE

(a) Each Revolving Facility Advance (or if applicable, Term Out Advance) shall be applied in or towards
the general corporate purposes of the Group.

(b) Each Swingline Advance will be applied in or towards refinancing short term Borrowings of the Group
and providing support for the Group's commercial paper programme(s), provided that a Swingline
Advance may not be applied in or towards refinancing another Swingline Advance.

(c) Without affecting the obligations of any Borrower in any way, no Finance Party is bound to monitor
or verify the application of the proceeds of any Advance.

4. CONDITIONS PRECEDENT

4.1 Documentary conditions precedent

(a) The obligations of each Finance Party to any Borrower under this Agreement are subject to the
conditions precedent that:

(i) the Parent has paid to such Finance Party an up-front fee in the amount and on the date agreed
in the relevant Fee Letter; and

0013726-0004726 UKO1: 2010612413.17 26

 (ii) the Agent has notified the Parent and the Banks that it has received all of the documents set
out in Part 1 of Schedule 2 (Conditions Precedent Documents) in form and substance
satisfactory to the Agent. The Agent will promptly notify the Parent and the Banks upon such
receipt.

(b) Other than to the extent that the Majority Banks notify the Agent in writing to the contrary before the
Agent gives the notification described in paragraph (a)(ii) above, the Banks authorise (but do not
require) the Agent to give that notification. The Agent shall not be liable for any damages, costs or
losses whatsoever as a result of giving any such notification.

4.2 Further conditions precedent

The obligations of each Bank to participate in a Revolving Facility Advance or a Swingline Advance
are subject to the further conditions precedent that on the date of the Request for the Advance and on
its Utilisation Date:

(a) the representations and warranties in Clause 15 (Representations and Warranties) deemed to
be repeated on those dates pursuant to Clause 15.15(c) (Times for making representations and
warranties) are correct and will be correct immediately after the disbursement of the Advance;

(b) in the case of a Rollover Advance, no Event of Default is outstanding and, in the case of any
other Advance, no Default is outstanding or would result from the disbursement of the
Advance; and

(c) the Advance would not cause Clause 2.2 (Overall facility limit) to be contravened.

5. ADVANCES

5.1 Receipt of Requests

(a) A Borrower may borrow Revolving Facility Advances under the Revolving Facility if the Agent
receives, not later than 3 p.m. on the third Business Day before the proposed Utilisation Date, or, in
the case of a Revolving Facility Advance in Sterling not later than 9.30 a.m. on the proposed Utilisation
Date, a duly completed Request, copied to the Swingline Agent. For the avoidance of doubt, the
Request contemplated by this Clause 5.1(a) shall not be required for any Swingline Advance.

(b) A Borrower may borrow Swingline Advances if the Swingline Agent receives, not later than 11.00
a.m. (New York City time) on the proposed Utilisation Date, a duly completed Request, copied to the
Agent.

(c) Each Request is irrevocable.

5.2 Completion of Requests for Revolving Facility Advances

A Request for Revolving Facility Advances will not be regarded as having been duly completed unless:

(a) it identifies the relevant Borrower and the Revolving Facility;

(b) the Utilisation Date is a Business Day falling on or after the Signing Date and before the earlier
of the then applicable Final Maturity Date and, if applicable in relation to the Revolving
Facility, the Term Out Date;

(c) only one currency is specified for each separate Advance and the Requested Amount for each
separate Advance is in a minimum Original Sterling Amount of £25,000,000 (rounded to the
nearest convenient 100,000 units in the case of currencies other than Sterling); and

0013726-0004726 UKO1: 2010612413.17 27

 (d) only one Term for each separate Advance is specified, which:

(i) does not overrun the relevant Final Maturity Date;

(ii) in respect of each Term Rate Advance, is a period of one month, three or six months
(or such other period as the Agent, acting on the instructions of all the Banks, may
previously have agreed for the purposes of such Advance); and

(iii) in respect of each Compounded Rate Advance is a period of one month (or such other
period as the Agent, acting on the instructions of all the Banks, may previously have
agreed for the purposes of such Advance).

5.3 Completion of Requests for Swingline Advances

A Request for Swingline Advances will not be regarded as having been duly completed unless:

(a) it identifies the relevant Borrower;

(b) the Utilisation Date is a New York Business Day falling on or after the Signing Date and
before the earlier of the relevant Final Maturity Date and, if applicable, the Term Out Date;

(c) it is specified that the Swingline Advances are to be made in US Dollars under the Swingline
Facility;

(d) the Requested Amount is an integral multiple of US$10,000,000 or such other amount as the
Swingline Agent and the relevant Borrower may agree; and

(e) only one Term is specified, which:

(i) does not overrun the relevant Final Maturity Date; and

(ii) is a period not exceeding seven days.

5.4 Amount of each Bank's Advance

The amount of a Bank's Advance will, in the case of a Revolving Facility Advance, be the proportion
of the Requested Amount which its Available Commitment under the Revolving Facility bears to the
Available Facility on the relevant Utilisation Date and, in the case of a Swingline Advance, the
proportion of the Requested Amount which its Available Swingline Commitment under the Swingline
Facility bears to the Available Swingline Facility on the relevant Utilisation Date.

5.5 Notification of the Banks

The Agent or the Swingline Agent (as the case may be) shall promptly notify each Revolving Facility
Bank or Swingline Bank (as the case may be) of the details of the requested Advances and the amount
of each relevant Bank's Advance.

5.6 Payment of proceeds

Subject to the terms of this Agreement, each Bank (or each Swingline Bank) shall make its Advance
available to the Agent (or the Swingline Agent in the case of Swingline Advances) for the Borrower
concerned for value on the relevant Utilisation Date.

0013726-0004726 UKO1: 2010612413.17 28

6. REPAYMENT

6.1 Repayment of Revolving Facility Advances

(a) Subject to Clause 6.3 (Repayment of Term Out Advances) below, each Borrower shall repay each
Revolving Facility Advance made to it in full on its Term End Date to the Agent for the Banks. No
Revolving Facility Advance may be outstanding under the Revolving Facility after the relevant Final
Maturity Date.

(b) Without prejudice to each Borrower's obligation under Clause 6.1(a) above, if one or more Revolving
Facility Advances are to be made available to a Borrower under a Revolving Facility:

(i) on the same day that a maturing Revolving Facility Advance is due to be repaid by that
Borrower under the same Revolving Facility;

(ii) in the same currency as the maturing Revolving Facility Advance; and

(iii) in whole or in part for the purpose of refinancing the maturing Revolving Facility Advance,

the aggregate amount of the new Revolving Facility Advances shall be treated as if applied in or
towards repayment of the maturing Revolving Facility Advance so that:

(A) if the amount of the maturing Revolving Facility Advance exceeds the aggregate amount of
the new Revolving Facility Advances:

I. the relevant Borrower will only be required to pay an amount in cash in the relevant
currency equal to that excess; and

II. each Bank's participation (if any) in the new Revolving Facility Advances shall be
treated as having been made available and applied by the Borrower in or towards
repayment of that Bank's participation (if any) in the maturing Revolving Facility
Advance and that Bank will not be required to make its participation in the new
Revolving Facility Advances available in cash; and

(B) if the amount of the maturing Revolving Facility Advance is equal to or less than the aggregate
amount of the new Revolving Facility Advances:

I. the relevant Borrower will not be required to make any payment in cash; and

II. each Bank will be required to make its participation in the new Revolving Facility
Advances available in cash only to the extent that its participation (if any) in the new
Revolving Facility Advances exceeds that Bank's participation (if any) in the maturing
Revolving Facility Advance and the remainder of that Bank's participation in the new
Revolving Facility Advances shall be treated as having been made available and
applied by the Borrower in or towards repayment of that Bank's participation in the
maturing Revolving Facility Advance.

6.2 Repayment of Swingline Advances

(a) Subject to Clause 6.2(b) below, each Borrower shall repay each Swingline Advance made to it in full
on its Term End Date to the Swingline Agent.

No Swingline Advance may be outstanding under the Swingline Facility after the relevant Final
Maturity Date.

0013726-0004726 UKO1: 2010612413.17 29

(b) Each Swingline Advance shall be repaid on its Term End Date in accordance with Clause 6.2(a) above.
In the event that a Swingline Advance under the Swingline Facility is not so repaid, each Revolving
Facility Bank will within four Business Days of a demand to that effect from the Swingline Agent pay
to the Agent on behalf of the Swingline Banks who funded such Swingline Advance an amount equal
to its Agreed Percentage of the principal of such Swingline Advance and accrued interest (including
default interest) thereon to the date of actual payment by such Bank. The relevant Borrower shall
forthwith reimburse such Banks (through the Agent) in full for each payment made by such Banks
under this Clause 6.2(b). Each amount the relevant Borrower is required to reimburse to the Banks
under this Clause 6.2(b) shall be deemed to be an overdue amount (as defined in Clause 8.6 (Default
interest)) which fell due for payment by the relevant Borrower on the day on which the payment by
the Banks giving rise to the reimbursement obligation was made and shall accrue default interest under
Clause 8.6 (Default interest) accordingly.

6.3 Repayment of Term Out Advances

Each Borrower which has a Term Out Advance outstanding after the Term Out Date shall repay that
Advance to the Agent on the Final Maturity Date for the Term Facility.

7. PREPAYMENT AND CANCELLATION

7.1 Voluntary cancellation

(a) The Parent may, by giving not less than three Business Days' prior written notice to the Agent, cancel
the whole or any part of an Available Facility (but if in part, in an aggregate minimum amount of
£25,000,000). Any cancellation in part shall be applied against the Commitment of each Bank pro
rata under that Facility.

(b) Whenever part of the Total Commitments are cancelled (prior to the Term Out Date, in the case of the
Total Commitments) no Swingline Commitment under Swingline Facility shall be cancelled unless:
(A) the Sterling Amount of the Swingline Total Commitments would exceed the Total Commitments
after such cancellation; or (B) the Sterling Amount of the Swingline Commitment of any Swingline
Bank under Swingline Facility would exceed the Revolving Facility Commitment after such
cancellation. In any such case, the Swingline Total Commitments shall, at the same time as the
cancellation of the Total Commitments takes effect, be cancelled by such amount as is necessary to
ensure that after the cancellation of the Total Commitments, the Sterling Amount of the Swingline
Total Commitments does not exceed the Total Commitments and the Sterling Amount of the Swingline
Commitment of each Swingline Bank under Swingline Facility does not exceed the Revolving Facility
Commitment.

7.2 Automatic cancellation of Commitment

The Revolving Facility Commitment of each Bank under the Revolving Facility shall be automatically
cancelled at the close of business in London on the applicable Final Maturity Date.

7.3 Voluntary prepayment

(a) A Borrower to which a Revolving Facility Advance (or if applicable, Term Out Advance) has been
made may, if it gives to the Agent:

(i) in the case of a Term Rate Advance, not less than three Business Days' (or such shorter period
as the Majority Banks may agree) prior written notice, prepay subject to breakage costs, if
any; and

0013726-0004726 UKO1: 2010612413.17 30

 (ii) in the case of a Compounded Rate Advance, not less than five Business Days (or such shorter
period as the Majority Banks may agree) prior written notice, prepay on up to three occasions
in each 12-month period beginning on the Signing Date,

the whole or any part of a Revolving Facility Advance (or if applicable, Term Out Advance) made to
it under this Agreement (but if in part in an aggregate minimum Original Sterling Amount, taking all
prepayments made by all the Borrowers on the same day together, of £25,000,000).

(b) Any voluntary prepayment under Clause 7.3(a) above will:

(i) be applied against Revolving Facility Advances (or if applicable, Term Out Advances) in such
proportions as may be specified by the Parent in the notice of prepayment or, if not specified,
against all Revolving Facility Advances (and if applicable, Term Out Advances) pro rata (or,
if no Revolving Facility Advances are outstanding, against any Swingline Advances pro rata);
and

(ii) be applied against the relevant Advances of the relevant Banks pro rata.

(c) Any voluntary prepayment under Clause 7.3(a) above will be accompanied by all amounts payable
under Clause 22.2(c) (Other indemnities) in respect of that prepayment if not made on the Term End
Date of the relevant Advance.

7.4 Mandatory Prepayment by Borrowers

(a) If any Borrower (other than the Parent) ceases to be a Subsidiary of the Parent, it shall forthwith prepay
all Advances made to it together with all amounts payable by it under this Agreement, and thereupon
cease to be a Borrower.

(b) If any person or group of persons acting in concert gains control of the Parent:

(i) the Parent shall promptly notify the Agent upon becoming aware of such event; and

(ii) if the Majority Banks so require, the Agent shall, by not less than 10 Business Days' written
notice to the Parent, cancel the Total Commitments and declare all outstanding Advances,
together with accrued interest, and all other amounts accrued under the Finance Documents,
to be immediately due and payable, whereupon the Total Commitments will be cancelled in
full and all such outstanding amounts will become immediately due and payable.

For the purpose of this Clause 7.4(b):

control has the meaning given to it in section 450 of the Corporation Tax Act 2010; and

acting in concert has the meaning given to it in the City Code on Takeovers and Mergers.

7.5 Changes to Borrowers

(a) Any Borrower in respect of which no Advance is outstanding hereunder (including any other amounts
outstanding in relation thereto) may, at the request of the Parent, cease to be a Borrower by entering
into a supplemental agreement to this Agreement in such form as the Agent may reasonably require
which shall discharge that Borrower's obligations hereunder.

0013726-0004726 UKO1: 2010612413.17 31

(b) Any Borrower (the Existing Borrower) may be released from its obligations under this Agreement as
a Borrower, provided that another Borrower (the Substitute Borrower) assumes the obligations in
respect thereof of the Existing Borrower and provided further that:

(i) any such substitution shall take effect on and from the later of the day upon which the Agent
notifies the Parent in writing that it is satisfied with the compliance with the matters set out in
paragraphs (iii) and (iv) below and the date for substitution specified in the relevant notice
under paragraph (ii) below;

(ii) notice of the proposed substitution has been delivered by the Parent to the Agent not less than
14 days prior to the proposed substitution;

(iii) no Event of Default has occurred and is continuing; and

(iv) the Substitute Borrower enters into a novation agreement with the Existing Borrower, the
Parent and the Agent on behalf of the Banks in the form of Part 3 of Schedule 4 (Forms of
Accession Documents) together with such amendments as the Agent may reasonably require.

Each Bank authorises the Agent to sign on its behalf any novation agreement entered into in
accordance with this Clause 7.5(b).

(c) For the avoidance of doubt, this Clause 7.5 shall not operate to release the Guarantor from its
obligations under this Agreement in its capacity as the Guarantor.

7.6 Right of cancellation in relation to a Defaulting Bank

(a) If any Bank becomes a Defaulting Bank, a Borrower may, at any time whilst the Bank continues to be
a Defaulting Bank, give the Agent three Business Days' notice of cancellation of each Available
Commitment of that Bank.

(b) On the notice referred to in Clause 7.6(a) above becoming effective, each Available Commitment of
the Defaulting Bank shall immediately be reduced to zero.

(c) The Agent shall as soon as practicable after receipt of a notice referred to in Clause 7.6(a) above, notify
all the Banks.

7.7 Right of prepayment and cancellation

If any Borrower is required to pay or is notified by any Bank in writing that it will be required to pay
any amount to a Bank under Clause 10 (Taxes) or Clause 12 (Increased Costs), or if circumstances
exist such that a Borrower will be required to pay any amount to a Bank under Clause 10 (Taxes), the
Parent may, whilst the circumstances giving rise or which will give rise to the requirement continue,
serve a notice of prepayment and cancellation on that Bank through the Agent. On the date falling
five Business Days after the date of service of the notice:

(a) each Borrower shall prepay all outstanding Advances made to it by that Bank; and

(b) the Bank's Commitment (including its (and its Swingline Affiliates') Swingline Commitments
(if any)) shall be permanently cancelled on the date of service of the notice.

7.8 Miscellaneous provisions

(a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable once given. The
Agent shall notify the Banks promptly of receipt of any such notice.

0013726-0004726 UKO1: 2010612413.17 32

(b) All prepayments under this Agreement shall be made together with accrued interest on the amount
prepaid and any other amounts due under this Agreement in respect of the prepayment (including, but
not limited to, in the case of a prepayment under Clause 7.3(a) (Voluntary prepayment), any amounts
payable under Clause 22.2(c) (Other indemnities) if the prepayment is not made on the Term End Date
of the relevant Advance).

(c) No prepayment or cancellation is permitted except in accordance with the express terms of this
Agreement.

(d) No amount prepaid under Clauses 7.4 (Mandatory Prepayment by Borrowers) or 7.7 (Right of
prepayment and cancellation) may subsequently be reborrowed. Subject to the terms of this
Agreement, any amount prepaid under Clause 7.3 (Voluntary prepayment) in respect of the Revolving
Facility or the Swingline Facility may be reborrowed. Subject to Clauses 25.10 (Increase), no amount
of the Total Commitments (including the Swingline Total Commitments) cancelled under this
Agreement may subsequently be reinstated.

(e) No Borrower may reborrow any part of any Term Out Advance which is prepaid.

8. INTEREST

8.1 Calculation of interest – Term Rate Advances

The rate of interest on each Term Rate Advance for a Term is the percentage rate per annum which is
the aggregate of the applicable:

(a) Margin; and

(b) Term Reference Rate.

8.2 Calculation of interest – Compounded Rate Advances

(a) The rate of interest on each Compounded Rate Advance for any day during a Term is the percentage
rate per annum which is the aggregate of the applicable:

(i) Margin; and

(ii) Compounded Reference Rate for that day.

(b) If any day during a Term for a Compounded Rate Advance is not an RFR Banking Day, the rate of
interest on that Compounded Rate Advance for that day will be the rate applicable to the immediately
preceding RFR Banking Day.

8.3 Calculation of the Margin

(a) Subject to the following provisions of this Clause 8.3:

the initial Margin is 0.275 per cent. per annum and thereafter the Margin for the Term of a
Revolving Facility Advance under the Revolving Facility or a Term Out Advance will be
determined on the second Business Day before the first day of a Term (such day, the Margin
Determination Day) by reference to the table below:

Rating (S&P/Moody's) Facility Margin per annum

A-/A3 0.175 per cent.

0013726-0004726 UKO1: 2010612413.17 33

 BBB+/Baa1 0.225 per cent.

BBB/Baa2 0.325 per cent.

BBB-/Baa3 or below 0.425 per cent.

where, for the purposes of this Clause 8.3:

Rating means the corporate rating of the Parent assigned by S&P (currently known as the Corporate
Credit Rating) and/or Moody's (currently known as the Issuer Rating) as at the Margin
Determination Day on which the Margin is being determined.

For the avoidance of doubt, if there is a change to the Rating during the Term of a Revolving Facility
Advance or a Term Out Advance there shall be no adjustment to the Margin for that Term until the
next Margin Determination Day for that Advance.

(b) If Ratings are confirmed or assigned to the Parent by S&P and Moody's that are not equivalent at any
time, then the Margin will be the average of the Margins applicable to such credit ratings.

(c) If only one Rating Agency publishes a Rating for the Parent, the rating assigned by that Rating Agency
shall be deemed also to be the rating assigned by the other Rating Agency.

(d) If on the relevant Margin Determination Day both Rating Agencies have ceased to publish a Rating
for the Parent, the Margin for the relevant Advance shall be determined on the basis of a deemed
Corporate Credit Rating of BBB- and a deemed Issuer Rating of Baa3 until the date on which a Rating
Agency publishes a Rating for the Parent.

(e) For so long as an Event of Default is continuing, the Margin for the relevant Advance shall be
determined on the basis of a deemed Corporate Credit Rating of BBB- and a deemed Issuer Rating of
Baa3 (and any increase in the Margin pursuant to this paragraph (e) shall take effect immediately
following the occurrence of the relevant Event of Default).

(f) The Parent shall notify the Agent promptly of any publicly announced change in its Rating.

(g) In calculating the Margin for any Advance under this Clause 8.3, no account shall be taken of any
rating outlook or credit watch action assigned to any Rating by the relevant Rating Agency.

8.4 Interest rate on Swingline Advances

The rate of interest on each Swingline Advance during its Term is the rate per annum determined by
the Swingline Agent to be the Swingline Rate for each day during its Term.

8.5 Due dates

(a) Except as otherwise provided in this Agreement, accrued interest on each Advance is payable by the
relevant Borrower on each Term End Date, and also, in the case of any Advance with a Term longer
than six months, at six monthly intervals after its Utilisation Date (or in the case of a Term Out
Advance, the first day of the relevant Term) for so long as the Term is outstanding.

(b) A Borrower may select a Term for a Term Out Advance in a Selection Notice (and the conditions in
Clause 5.2(d) (Completion of Requests for Revolving Facility Advances) shall also apply to each
Selection Notice).

0013726-0004726 UKO1: 2010612413.17 34

(c) Each Selection Notice for a Term Out Advance denominated in sterling is irrevocable and must be
delivered to the Agent by the Borrower to which that Term Out Advance was made not later than 9.30
a.m. on the first day of the relevant Term.

(d) Each Selection Notice for a Term Out Advance denominated in a currency other than sterling is
irrevocable and must be delivered to the Agent by the Borrower to which that Term Out Advance was
made not later than 11.00 a.m. on the second Business Day before the first day of the relevant Term.

(e) If a Borrower fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above,
the relevant Term will be one month.

(f) A Term for a Term Out Advance shall not extend beyond the applicable Final Maturity Date. Each
Term for a Term Out Advance shall start on the Term Out Date or on the last day of its preceding
Term.

(g) If two or more Terms:

(i) relate to Term Out Advances in the same currency made to the same Borrower; and

(ii) any Term End Dates for such Term Out Advances are the same date,

those Term Out Advances will, unless that Borrower specifies to the contrary in the Selection Notice
for the next Term, be consolidated into, and treated as, a single Term Out Advance on that Term End
Date.

8.6 Default interest

(a) If an Obligor fails to pay any amount payable by it under this Agreement on its due date, interest shall
accrue on the overdue amount from the due date up to the date of actual payment (both before and
after judgment) at a rate which, subject to paragraph (b) below, is one per cent. per annum higher than
the rate which would have been payable if the overdue amount had, during the period of non-payment,
constituted an Advance in the currency of the overdue amount for successive Terms, each of a duration
selected by the Agent, or as the case may be, the Swingline Agent, (acting reasonably). Any interest
accruing under this Clause 8.6 shall be immediately payable by the Obligor on demand by the Agent.

(b) If any overdue amount consists of all or part of a Term Rate Advance and which became due on a day
which was not the last day of a Term relating to that Advance:

(i) the first Term for that overdue amount shall have a duration equal to the unexpired portion of
the current Term relating to that Advance; and

(ii) the rate of interest applying to the overdue amount during that first Term shall be one per cent.
per annum higher than the rate which would have applied if the overdue amount had not
become due.

(c) Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount
at the end of each Term applicable to that overdue amount but will remain immediately due and
payable.

8.7 Notifications

(a) The Agent shall promptly notify the relevant Banks and the relevant Borrower of the determination of
a rate of interest relating to a Term Rate Advance.

0013726-0004726 UKO1: 2010612413.17 35

(b) The Swingline Agent shall promptly notify the relevant Banks and the relevant Borrower of the
determination of a rate of interest relating to a Swingline Advance.

(c) The Agent shall notify the Banks and the relevant Borrower of Optional Currency amounts (and the
applicable Agent's Spot Rate of Exchange) promptly after they are ascertained.

(d) The Agent shall promptly upon a Compounded Rate Interest Payment being determinable notify:

(i) the relevant Borrower of that Compounded Rate Interest Payment;

(ii) each relevant Bank of the proportion of that Compounded Rate Interest Payment which relates
to that Bank's participation in the relevant Compounded Rate Advance; and

(iii) the relevant Banks and the relevant Borrower of:

(A) each applicable rate of interest relating to the determination of that Compounded Rate
Interest Payment; and

(B) to the extent it is then determinable, the Market Disruption Rate (if any) relating to
the relevant Compounded Rate Advance.

This paragraph (d) shall not apply to any Compounded Rate Interest Payment determined pursuant to
Clause 11.8 (Cost of Funds).

(e) The Agent or, as applicable, the Swingline Agent, shall promptly notify the relevant Borrower of each
Funding Rate relating to an Advance.

(f) The Agent or, as applicable, the Swingline Agent, shall promptly notify the relevant Banks and the
relevant Borrower of the determination of a rate of interest relating to a Compounded Rate Advance
to which Clause 11.8 (Cost of Funds) applies.

(g) This Clause 8.7 shall not require the Agent or, as applicable, the Swingline Agent, to make any
notification to any Party on a day which is not a Business Day.

9. PAYMENTS

9.1 Place of Payment

All payments by an Obligor or a Bank under this Agreement shall be made to the Agent or, if the
payment relates to the Swingline Facility, by a Bank to the Swingline Agent, in each case to its account
at such office or bank in the principal financial centre of the country of the currency concerned (or, in
the case of a payment in euro, in the financial centre of the country selected by the Agent) as it may
notify to the Obligor or Bank for this purpose.

9.2 Funds

Payments under this Agreement to an Administrative Party shall be made for value on the due date at
such times and in such funds as such Administrative Party may specify to the Party concerned as being
customary at the time for the settlement of transactions in the relevant currency in the place for
payment.

9.3 Distribution

(a) Each payment received by an Administrative Party under this Agreement for another Party shall,
subject to paragraph (b) below and Clause 9.9 (Clawback) below, be made available by such

0013726-0004726 UKO1: 2010612413.17 36

 Administrative Party to that Party by payment (on the date and in the currency and funds of receipt)
to its account with such bank in the principal financial centre of the country of the relevant currency
(or, in the case of a payment in euro, to its account in the financial centre of a country selected by it)
as it may notify to the relevant Administrative Party for this purpose by not less than five Business
Days' prior notice.

(b) An Administrative Party may apply any amount received by it for an Obligor in or towards payment
(on the date and in the currency and funds of receipt) of any amount due from an Obligor under this
Agreement or in or towards the purchase of any amount of any currency to be so applied.

9.4 Currency

(a) A repayment or prepayment of an Advance is payable in the currency in which the Advance is
denominated.

(b) Interest is payable in the currency in which the relevant amount in respect of which it is payable is
denominated.

(c) Amounts payable in respect of costs, expenses, taxes and the like are payable in the currency in which
they are incurred.

(d) Any other amount payable under this Agreement is, except as otherwise provided in this Agreement,
payable in Sterling.

9.5 Set-off and counterclaim

All payments made by an Obligor under this Agreement shall be made without set-off or counterclaim.

9.6 Non-Business Days

(a) Other than where paragraph (b) below applies, if a Term would otherwise end on a day which is not a
Business Day, that Term will instead end on the next Business Day in that calendar month (if there is
one) or the preceding Business Day (if there is not).

(b) If the Advance is a Compounded Rate Advance and there are rules specified as "Business Day
Conventions" in the applicable Compounded Rate Terms, those rules shall apply to each Term for that
Advance.

9.7 Impaired Agent

(a) If, at any time, an Administrative Party becomes an Impaired Agent and a Borrower or a Bank is
required to make a payment under the Finance Documents to that Administrative Party in accordance
with Clause 9.1 (Place of Payment), that Borrower or Bank may, subject to Clause 9.7(b) below,
instead either pay that amount:

(i) direct to the required recipient; or

(ii) to an interest-bearing account held with an Acceptable Bank and in relation to which no
Insolvency Event has occurred and is continuing, in the name of the relevant Borrower or the
Bank making the payment and designated as a trust account for the benefit of the Party or
Parties beneficially entitled to that payment under the Finance Documents. In each case, such
payments must be made on the due date for payment under the Finance Documents.

0013726-0004726 UKO1: 2010612413.17 37

(b) If a Bank has become and continues to be a Defaulting Bank and a payment is required to be made by
a Borrower or a Bank in accordance with Clause 9.7(a), that Obligor or Bank will make such payment
in accordance with Clause 9.7(a)(ii).

(c) A Party which is required to make a payment in accordance with Clause 9.7(a) shall notify the required
recipient of the account into which the payment is made.

(d) All interest accrued on the amounts standing to the credit of a trust account shall be for the benefit of
the beneficiaries of that trust account pro rata to their respective entitlements.

(e) A Party which has made a payment in accordance with this Clause 9.7 shall be discharged of the
relevant payment obligation under the Finance Documents and shall not take any credit risk with
respect to the amounts standing to the credit of the trust account.

(f) Promptly upon the appointment of a successor Administrative Party to an Impaired Agent in
accordance with Clause 18.16 (Resignation of an Administrative Party), each Party which has made a
payment to a trust account in accordance with this Clause 9.7 shall give all requisite instructions to the
bank with whom the trust account is held to transfer the amount (together with any accrued interest)
to the successor Administrative Party for distribution in accordance with Clause 9.3 (Distribution).

9.8 Partial payments

(a) If an Administrative Party receives a payment insufficient to discharge all the amounts then due and
payable by an Obligor under this Agreement, such Administrative Party shall apply that payment
towards the obligations of the Obligors under this Agreement in the following order:

(i) first, in or towards payment pro rata of any unpaid costs, fees and expenses of the
Administrative Parties under this Agreement;

(ii) secondly, in or towards payment pro rata of any accrued fees due but unpaid under Clause 19
(Fees);

(iii) thirdly, in or towards payment pro rata of any interest due but unpaid under this Agreement;

(iv) fourthly, in or towards payment pro rata of any principal due but unpaid under this Agreement;
and

(v) fifthly, in or towards payment pro rata of any other sum due but unpaid under this Agreement.

(b) The Administrative Parties, shall, if so directed by all the Banks, vary the order set out in
Clause 9.8(a) above (other than Clause 9.8(a)(i)). The Administrative Parties shall notify the Parent
of any such variation.

(c) Clauses 9.8(a) and 9.8(b) above shall override any appropriation made by any Obligor.

9.9 Clawback

(a) Where a sum is to be paid to an Administrative Party under the Finance Documents for another Party,
that Administrative Party is not obliged to pay that sum to that other Party (or to enter into or perform
any related exchange contract) until it has been able to establish to its satisfaction that it has actually
received that sum.

(b) If an Administrative Party pays an amount to another Party and it proves to be the case that that
Administrative Party had not actually received that amount, then the Party to whom that amount (or
the proceeds of any related exchange contract) was paid by the Administrative Party shall on demand

0013726-0004726 UKO1: 2010612413.17 38

 refund the same to the Administrative Party together with interest on that amount from the date of
payment to the date of receipt by the Administrative Party, calculated by the Administrative Party to
reflect its costs of funds.

9.10 Disruption to Payment Systems etc

If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is
notified by the Parent that a Disruption Event has occurred:

(a) the Agent shall consult with the Parent and shall use reasonable endeavours to agree with the
Parent such changes to the operation or administration of the Facility as the Agent may
reasonably deem necessary in the circumstances;

(b) the Agent may consult with the Finance Parties in relation to any changes mentioned in
paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to
do so in the circumstances;

(c) any such changes agreed upon by the Agent and the Parent shall (whether or not it is finally
determined that a Disruption Event has occurred) be binding upon the Parties as an amendment
to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the
provisions of Clause 24 (Amendments and Waivers);

(d) the Agent shall not be liable for any damages, costs or losses whatsoever arising as a result of
its taking, or failing to take, any actions pursuant to or in connection with this Clause 9.10
provided that any decision to act, or not to act, was taken in good faith; and

(e) the Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (c)
above.

10. TAXES

10.1 Gross-up

All payments by an Obligor under the Finance Documents shall be made free and clear of and without
deduction for or on account of any taxes, except to the extent that the Obligor is required by law to
make payment subject to any taxes or such deduction is a FATCA Deduction. Subject to Clauses 10.3
(Qualifying Banks) and 10.7 (US Borrower), if any tax or amounts in respect of tax (other than a
FATCA Deduction) must be deducted from any amounts payable or paid by an Obligor, or paid or
payable by the Agent or the Swingline Agent (in their capacity as agent) (as the case may be) to a
Finance Party under the Finance Documents, the Obligor shall pay such additional amounts as may be
necessary to ensure that the relevant Finance Party receives a net amount equal to the full amount
which it would have received had payment not been made subject to tax. The Parent shall upon
becoming aware that an Obligor must make such deduction (or that there is any change in the rate or
the basis of such a deduction) notify the Agent accordingly. Similarly, a Bank shall notify the Agent
on becoming so aware in respect of a payment payable to that Bank (and if the Agent receives such
notification it shall notify the Parent).

10.2 Tax receipts

All taxes required by law to be deducted or withheld by an Obligor from any amounts paid or payable
under the Finance Documents shall be paid by the relevant Obligor when due and the Obligor shall,
within 15 days of the payment being made, deliver to the Agent for the relevant Bank evidence
satisfactory to that Bank (including any relevant tax receipts) that the payment has been duly remitted
to the appropriate authority.

0013726-0004726 UKO1: 2010612413.17 39

10.3 Qualifying Banks

If:

(a) on the Signing Date, any Bank which is a Party on the Signing Date is not a Qualifying Bank;
or

(b) after the Signing Date, a Bank ceases to be a Qualifying Bank, other than as a result of a
Change of Tax Law; or

(c) on the date of any assignment, transfer or novation under Clause 25 (Changes to the Parties)
a New Bank (as such term is defined in that Clause) is not a Qualifying Bank,

then no UK Resident Borrower or Dutch Borrower shall be liable to pay to that Bank under Clause
10.1 (Gross-up) any amount in respect of taxes levied or imposed by the UK or the Netherlands or any
taxing authority of or in the UK or the Netherlands in excess of the amount (if any) it would have been
obliged to pay if that Bank had been, or had not ceased to be, a Qualifying Bank.

10.4 Tax Credit

(a) If an Obligor makes a payment pursuant to Clause 10.1 (Gross-up) for the account of any Finance
Party and such Finance Party has received or been granted a credit against, or relief or remission or
repayment of, any tax paid or payable by it (a Tax Credit) which is attributable to that payment or the
corresponding payment under the Finance Document such Finance Party shall, to the extent that it can
do so without prejudice to the retention of the amount of such credit, relief, remission or repayment,
pay to the Obligor concerned such amount as the Finance Party shall have reasonably determined to
be attributable to such payments and which will leave the Finance Party (after such payment) in no
better or worse position than it would have been if the Obligor concerned had not been required to
make any deduction or withholding.

(b) Nothing in this Clause 10.4 shall interfere with the right of a Finance Party to arrange its tax affairs in
whatever manner it thinks fit and without limiting the foregoing no Finance Party shall be under any
obligation to claim a Tax Credit or to claim a Tax Credit in priority to any other claims, relief, credit
or deduction available to it. No Finance Party shall be obliged to disclose any information relating to
its tax affairs or any computations in respect thereof. Unless it would in a Bank's reasonable judgement
be prejudicial to its interests, such Bank shall seek any Tax Credit available to it consequent upon any
deductions or withholdings for tax being made from any payment to it under Clause 10.1 (Gross-up).

10.5 Borrower DTTP Filing

(a) If a Bank holds a passport under the HMRC DT Treaty Passport scheme and wishes that scheme to
apply to this Agreement, it shall, or the Agent shall (if notified by the Bank) on its behalf, notify the
Parent in accordance with the provisions of Clause 32 (Notices) that the relevant Bank wishes the
scheme to apply and provide that Bank's scheme reference number and jurisdiction of tax residence
within five Business Days of becoming a Party to this Agreement.

(b) Each Bank which wishes the HMRC DT Treaty Passport scheme to apply to this Agreement shall
promptly provide such further information (directly to an Obligor or via the Agent) as an Obligor may
request in order to enable the Obligor to make a Borrower DTTP Filing.

(c) If a Borrower had received authority from HM Revenue & Customs to make payments to that Bank
without deduction for or on account of tax as a result of a Borrower DTTP Filing, but as a result of:
(i) a withdrawal or expiry of that authority; or (ii) a withdrawal or cessation of the DTTP passport
scheme due to any change in law or change in practice of HM Revenue & Customs, it is no longer
possible for that Borrower to make payments to the Bank without deduction for or on account of tax

0013726-0004726 UKO1: 2010612413.17 40

 by virtue of that authority, and the Borrower has notified that Bank in writing, that Bank and the
Borrower shall co-operate in completing any additional procedural formalities necessary for that
Borrower to obtain authorisation to make payment without deduction for or on account of tax.

10.6 FATCA

(a) Each Party may make any FATCA Deduction and any payment required in connection with that
FATCA Deduction, and no Party shall be required to increase any payment in respect of which it
makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that
FATCA Deduction.

(b) Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there
is any change in the rate or the basis of such FATCA Deduction) in respect of an Advance made to an
Obligor that is not a US Person, notify the Party to whom it is making payment and, in addition, shall
notify the Parent, the Agent and the other Finance Parties.

(c) Subject to paragraph (d) below, each Party shall, within ten Business Days of a reasonable request by
another Party, confirm to that other Party whether it is entitled to receive payments under the Finance
Documents free from any deduction or withholding required by FATCA (hereafter referred to as
FATCA Exempt) or is not so entitled, and shall supply to that other Party such forms, documentation
and other information relating to its status under FATCA (including information required under the
US Treasury Regulations or other official guidance including intergovernmental agreements) as that
other Party reasonably requests and is necessary for the purposes of that other Party's compliance with
FATCA or any other exchange of information regime (provided that the necessity of such request is
reasonably evidenced to the satisfaction of the Party to whom the request is made (acting reasonably)).
If a Party confirms to another Party pursuant to this paragraph (c) that it is FATCA Exempt and it
subsequently becomes aware that it is not, or has ceased to be FATCA Exempt, that Party shall
promptly notify that other Party.

(d) Paragraph (c) above shall not oblige a Finance Party to do anything which would or might in its
reasonable opinion constitute a breach of any law or regulation, any fiduciary duty, or any duty of
confidentiality.

(e) If a Finance Party fails to confirm its status or to supply forms, documentation or other information
requested in accordance with paragraph (c) above (including, for the avoidance of doubt, where
paragraph (d) above applies), then if that Finance Party failed to confirm whether it is (and/or remains)
FATCA Exempt then such Finance Party shall be treated for the purposes of this Agreement as if it is
not FATCA Exempt until such time as the Finance Party provides the requested confirmation, forms,
documentation or other information.

10.7 US Borrower

(a) Without prejudice to the generality of the foregoing, any Finance Party that is entitled to an exemption
from or reduction of withholding tax with respect to payments made under any Finance Document
shall deliver to the Agent or the relevant Obligor, at the time or times reasonably requested by the
Agent or any Obligor, such properly completed and executed documentation reasonably requested by
the Agent or such Obligor as will permit such payments to be made without withholding or at a reduced
rate of withholding. In addition, any Finance Party, if reasonably requested by the Agent or any
Obligor, shall deliver such other documentation prescribed by applicable law or reasonably requested
by the Agent or such Obligor as will enable the Agent or such Obligor to determine whether or not
such Finance Party is subject to backup withholding or information reporting requirements. This
paragraph (a) shall not require any Finance Party to provide to the Agent or any Obligor any
documentation if it would result in a breach of any applicable law or regulation, any fiduciary duty or
any duty of confidentiality (other than any such documentation required to be provided under

0013726-0004726 UKO1: 2010612413.17 41

 paragraph (b) or paragraph (c) below). Any taxes attributable to a Finance Party's failure to comply
with this paragraph (a) shall be considered excluded from the gross-up provided in Clause 10.1 (Gross-
up).

(b) Without limitation to the generality of the foregoing, each Finance Party that is a US Person shall:

(i) on or prior to the Signing Date (or, if it becomes a Finance Party after such date, on the date
it becomes a Finance Party); or

(ii) otherwise, from time to time thereafter as reasonably requested by the Agent or any Obligor
(but only so long as such Finance Party is lawfully able to do so),

provide the Agent and the relevant Obligor with one copy of a properly completed and duly executed
Internal Revenue Service Form W-9 (or any successor or other form prescribed by the Internal
Revenue Service) certifying that such Finance Party is a US Person and is not subject to US backup
withholding on payments made by an Obligor that is a US Person to such Finance Party under any
Finance Document (and the Agent shall promptly forward that Form W-9 to the relevant Obligor,
without any responsibility for the Agent to check the accuracy of the same).

(c) Without limitation to the generality of the foregoing, each Finance Party that is not a US Person shall:
(i) on or prior to the Signing Date (or, if it becomes a Finance Party after such date, on the date it
becomes a Finance Party); or (ii) otherwise, from time to time thereafter as reasonably requested by
the Agent or any Obligor (but only so long as such Finance Party is lawfully able to do so):

(i) in the case of a Finance Party claiming the benefits of an exemption from or a reduction in US
federal withholding tax pursuant to a double taxation agreement between the United States
and the jurisdiction of which such Finance Party is or is treated as a resident, provide the Agent
and the relevant Obligor with one copy of a properly completed and duly executed Internal
Revenue Service Form W-8BEN or W-8BEN-E, as applicable (or any successor or other form
prescribed by the Internal Revenue Service), certifying that such Finance Party is exempt from
or entitled to a reduced rate of US federal withholding tax under an applicable double taxation
agreement or treaty on payments made by an Obligor that is a US Person to such Finance Party
under any Finance Document;

(ii) in the case of a Finance Party claiming the benefits of an exemption from US federal
withholding tax because payments otherwise subject to such withholding tax made by an
Obligor that is a US Person are effectively connected with such Finance Party's conduct of a
trade or business within the United States, provide the Agent and the relevant Obligor with
one copy of a properly completed and duly executed Internal Revenue Service Form W-8ECI
(or any successor or other form prescribed by the Internal Revenue Service) certifying that
such payments are effectively connected with the conduct of a trade or business within the
United States;

(iii) in the case of a Finance Party claiming the benefits of the exemption from US federal
withholding tax pursuant to Section 881(c) of the Code with respect to payments of "portfolio
interest" made by an Obligor that is a US Person to such Finance Party under any Finance
Document, provide the Agent and the relevant Obligor with:

(A) a certificate to the effect that such Finance Party is: (I) not a "bank" (within the
meaning of Section 881(c)(3)(A) of the Code); (II) not a 10-percent shareholder of
any Obligor (within the meaning of Section 881(c)(3)(B) of the Code); and (III) not a
controlled foreign corporation related to any Obligor (as such term is described in
Section 881(c)(3)(C) of the Code); and

0013726-0004726 UKO1: 2010612413.17 42

 (B) one copy of a properly completed and duly executed Internal Revenue Service Form
W-8BEN or W-8BEN-E, as applicable (or any successor or other form prescribed by
the Internal Revenue Service), certifying that such Finance Party is not a US Person;
or

(iv) in the case of a Finance Party that is a foreign intermediary or foreign flow-through entity for
US federal income tax purposes, provide the Agent and the relevant Obligor with one copy of
a properly completed and duly executed Internal Revenue Service Form W-8IMY (or any
successor or other form prescribed by the Internal Revenue Service) as a basis for claiming an
exemption from or a reduction in US federal withholding tax on payments made by the
relevant Obligor that is a US Person to such Finance Party under any Finance Document,
together with any supplementary information such Finance Party is required to transmit with
such form and, in the case of a nonqualified intermediary that is a Finance Party or a non-
withholding Finance Party that is a foreign flow-through entity, with respect to each
beneficiary or member of such Finance Party, one copy of the forms or certificates described
in paragraph (i), (ii) or (iii) above of this paragraph (c), as applicable,

and, in each case, the Agent shall promptly forward the relevant form to the relevant Obligor, without
any responsibility for the Agent to check the accuracy of the same.

(d) If a Finance Party fails to provide the Agent or the relevant Obligor with the appropriate Internal
Revenue Service form or, if applicable, the certificate, each as described above and each being
properly completed and duly executed, or to update them as requested (other than if the failure to
furnish such form or certificate is due to a change in law, or in the interpretation or application thereof,
occurring after the date on which the form or certificate originally was required to be provided or if
such form, certificate or other document otherwise is not required under paragraph (a), (b) or (c)
above), US backup withholding tax and US federal withholding tax, in each case, imposed on any
amount paid by (or on account of) an Obligor that is a US Person under any Finance Document shall
be considered excluded from the gross-up provided in Clause 10.1 (Gross-up) by reason of such failure
unless and until such Finance Party provides the appropriate Internal Revenue Service form or
certificate that is properly completed and duly executed establishing: (i) an exemption from US backup
withholding tax; and (ii) a complete exemption from, or a reduction of, US federal withholding tax on
such amount, whereupon US federal withholding tax at such reduced rate only (to the extent a complete
exemption is not available to such Finance Party) shall be considered excluded from such gross-up for
periods governed by such form and certificate. If any Internal Revenue Service form provided by a
Finance Party pursuant to this paragraph (d) at the time such Finance Party first becomes a Finance
Party hereunder, or when it first provides such form, indicates a US federal withholding tax rate in
excess of zero in respect of any amount paid by (or an account of) the relevant Obligor that is a US
Person to such Finance Party under any Finance Document, US federal withholding tax imposed on
such amount at such rate shall be considered excluded from the gross-up provided in Clause 10.1
(Gross-up) unless and until such Finance Party provides the appropriate form certifying that a lesser
rate applies, whereupon US federal withholding tax at the lesser rate only shall be considered excluded
from the gross-up for periods governed by such form; provided, however, that if at the date a New
Bank becomes a party to this Agreement or any other Finance Document, the applicable transferor
Existing Bank was entitled to payments under Clause 10.1 (Gross-up) in respect of US federal
withholding tax in connection with any amount paid at such date, then, to that extent, the payments
under Clause 10.1 (Gross-up) shall include an amount of US federal withholding tax applicable with
respect to such transferor Existing Bank on such date.

(e) On or prior to the Signing Date (and from time to time thereafter as reasonably requested by any
Obligor), the Agent shall provide to any Obligor that is a US Person a properly completed and duly
executed Internal Revenue Service Form W-9 or an appropriate W-8 (as applicable); provided that,
the Agent shall not be required to assume primary US federal income tax withholding or reporting
responsibility in respect of any obligations under this Agreement.

0013726-0004726 UKO1: 2010612413.17 43

11. CHANGES TO THE CALCULATION OF INTEREST

11.1 Unavailability of Screen Rate

(a) If no Screen Rate is available for the Term Reference Rate for the Term of a Term Rate Advance, the
applicable Term Reference Rate will be the Interpolated Term Reference Rate for a period equal in
length to the Term of that Term Rate Advance.

(b) If no Screen Rate is available for the Term Reference Rate for:

(i) the currency of a Term Rate Advance; or

(ii) the Term of a Term Rate Advance and, it is not possible to calculate the Interpolated Term
Reference Rate,

there will be no Term Reference Rate for that Term Rate Advance and 11.8 (Cost of Funds) will apply
to that Term Rate Advance for that Term.

11.2 Interest calculation if no RFR or Central Bank Rate

If:

(a) there is no applicable RFR or Central Bank Rate for the purposes of calculating the Daily Non-
Cumulative Compounded RFR Rate for a RFR Banking Day during the Term for a Compounded Rate
Advance; and

(b) “Cost of funds will apply as a fallback” is specified in the Compounded Rate Terms for that Advance,

Clause 11.8 (Cost of Funds) shall apply to that Advance for that Term.

11.3 Market disruption

Notwithstanding anything to the contrary herein contained:

(a) in the case of a Term Rate Advance, if and each time that prior to or on a Utilisation Date
relative to a Term Rate Advance to be made:

(i) the Agent is notified by Banks whose Commitments represent 25 per cent or more of
the Total Commitments that deposits in the currency of that Term Rate Advance are
not in the ordinary course of business available in the wholesale market for the
relevant currency for a period equal to the Term concerned in amounts sufficient to
fund their participations in that Term Rate Advance; or

(ii) the Agent is notified by Banks whose Commitments represent 25 per cent or more of
the Total Commitments that by reason of circumstances affecting the wholesale
market for the relevant currency generally, adequate and fair means do not exist for
ascertaining EURIBOR applicable to such Advance during its Term or EURIBOR
does not adequately represent the cost of funding to the Banks, and

(b) in the case of a Compounded Rate Advance, if before the Reporting Time the Agent receives
notifications from a Bank or Banks (whose participations in that Advance exceed 662 /3 per
cent. of that Advance) that its cost of funds relating to its participation in that Advance would
be in excess of the Market Disruption Rate,

0013726-0004726 UKO1: 2010612413.17 44

 then the Agent shall promptly give written notice of such circumstance or notification to the Parent
and to each of the Banks.

11.4 Alternative Rates

(a) Term Rate Advances

If the Agent gives a notice under Clause 11.3(a) (Market disruption):

(i) the Parent and the Banks may (through the Agent) agree that the Term Rate Advance
concerned shall not be borrowed; or

(ii) in the absence of such agreement:

(A) the Term of the Term Rate Advance concerned shall be one month;

(B) in the case of Clause 11.3(a)(i) (Market disruption), the Term Rate Advance shall be
denominated in Sterling in an amount equal to the Original Sterling Amount of the
Term Rate Advance concerned; and

(C) the rate of interest applicable to such Term Rate Advance shall be the applicable
Margin plus the rate per annum notified by each Bank concerned to the Agent before
the last day of such Term to be that which expresses as a percentage rate per annum
the cost to such Bank of funding such Term Rate Advance from whatever sources it
may reasonably select.

(b) Compounded Rate Advances

If the Agent gives a notice under Clause 11.3 (Market disruption), Clause 11.8 (Cost of Funds) shall
apply to that Compounded Rate Advance for the relevant Term.

11.5 Non-availability of currency

If any Bank notifies the Agent before 10.00 a.m. (London time) on the Business Day prior to the
proposed Utilisation Date of an Advance to be denominated in an Optional Currency that it is unable
for any reason to fund its participation in such Advance in the Optional Currency concerned, the Agent
shall notify the Parent and such Bank shall make its participation in the Advance available in Sterling
for the period in question.

11.6 Change in circumstances

If before 9.00 a.m. (London time) on the proposed Utilisation Date in respect of an Advance which is
to be denominated in an Optional Currency, there occurs any change in national or international
financial, political or economic conditions, currency availability, currency exchange rates or exchange
controls, which in the opinion of the Agent renders the making of the Advance in such currency
impracticable:

(a) the Agent shall give notice to each of the Banks and the Parent to that effect as soon as
practicable but in any event before 11.00 a.m. (London time) on the proposed Utilisation Date;

(b) unless the Parent and the Banks agree otherwise, the Advance shall be made in Sterling; and

(c) the relevant Borrower shall pay to the Agent on behalf of the Bank any amount claimed in
accordance with Clause 22.2 (Other indemnities).

0013726-0004726 UKO1: 2010612413.17 45

11.7 Change in currency

(a) If more than one currency or currency unit are at the same time recognised by the central bank of any
country as the lawful currency of that country, then:

(i) any reference in the Finance Documents to, and any obligations arising under the Finance
Documents in, the currency of that country shall be translated into, or paid in, the currency or
currency unit of that country designated by the Agent; and

(ii) any translation from one currency or currency unit to another shall be at the official rate of
exchange recognised by the central bank for the conversion of that currency or currency unit
into the other, rounded up or down by the Agent acting reasonably.

(b) If any change in any currency of a country occurs, this Agreement will be amended to the extent the
Agent specifies to be necessary to reflect the change in the currency and to put the Finance Parties in
the same position, so far as possible, that they would have been in if no change in currency had
occurred.

11.8 Cost of Funds

(a) If this Clause 11.8 applies to an Advance for a Term, Clause 8.2 (Calculation of interest – Compounded
Rate Advances) shall not apply to that Advance for that Term and the rate of interest on each Bank's
share of that Advance for the relevant Term shall be the percentage rate per annum which is the sum
of:

(i) the applicable Margin; and

(ii) the weighted average of the rates notified to the Agent by each Bank as soon as practicable
and in any event by the Reporting Time for that Advance, to be that which expresses as a
percentage rate per annum its cost of funds relating to its participation in that Advance.

(b) If this Clause 11.8 applies and the Agent or the Parent so requires, the Agent and the Parent shall enter
into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis
for determining the rate of interest.

(c) Any alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the
Banks and the Parent, be binding on all Parties.

(d) If this Clause 11.8 applies pursuant to Clause 11.3 (Market disruption) and:

(i) a Bank's Funding Rate is less than the Market Disruption Rate; or

(ii) a Bank does not notify a rate to the Agent by the Reporting Time,

that Bank's cost of funds relating to its participation in that Advance for that Term shall be deemed,
for the purposes of paragraph (a) above, to be the Market Disruption Rate for that Advance.

(e) Subject to paragraph (d) above, if this Clause 11.8 applies but any Bank does not notify a rate to the
Agent by the Reporting Time for the relevant Advance, the rate of interest shall be calculated on the
basis of the rates notified by the remaining Banks and the Agent shall, as soon as is practicable, notify
the Parent.

0013726-0004726 UKO1: 2010612413.17 46

12. INCREASED COSTS

12.1 Increased costs

(a) Subject to Clause 12.3 (Exceptions), the Parent shall forthwith on demand by a Finance Party pay that
Finance Party the amount of any increased cost incurred by it or any of its holding companies as a
result of any change in or change in the interpretation of or introduction of any law or regulation
(including any relating to taxation or reserve asset, special deposit, cash ratio, liquidity or capital
adequacy requirements or any other form of banking or monetary control introduced by any central
bank or other competent authority), or reduce or repay that Finance Party's commitments or
outstandings without penalty.

(b) In this Agreement, increased cost means:

(i) an additional cost incurred by a Finance Party or any of its holding companies as a result of it
performing, maintaining or funding its obligations under, this Agreement; or

(ii) that portion of an additional cost incurred by a Finance Party or any of its holding companies
in making, funding or maintaining all or any advances comprised in a class of advances formed
by or including the Advances made or to be made by it under this Agreement as is attributable
to it making, funding or maintaining its Advances; or

(iii) a reduction in any amount payable to a Finance Party or the effective return to a Finance Party
under this Agreement or on its capital (or the capital of any of its holding companies); or

(iv) the amount of any payment made by a Finance Party, or the amount of interest or other return
foregone by a Finance Party, calculated by reference to any amount received or receivable by
a Finance Party from any other Party under this Agreement.

12.2 Increased costs claim

(a) A Finance Party intending to make a claim pursuant to Clause 12.1 (Increased costs) shall notify the
Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Parent.

(b) Each Finance Party shall, as soon as practicable after a demand by the Agent or the Parent, provide a
certificate confirming the amount of its increased costs, detailing the calculation of the claim and
confirming that it has considered whether there are any reasonable steps available to it to mitigate the
circumstances of such claim in accordance with Clause 13.2 (Mitigation) and there are no such steps
available to it.

12.3 Exceptions

Clause 12.1 (Increased costs) does not apply to any increased cost:

(a) attributable to any tax or amounts in respect of tax which must be deducted from any amounts
payable or paid by a Borrower, or paid or payable by the Agent, to a Finance Party under the
Finance Documents;

(b) which is, or is attributable to, any tax on the overall net income, profits or gains of a Finance
Party or any of its holding companies (or the overall net income, profits or gains of a division
or branch of the Finance Party or any of its holding companies) or any branch profit tax with
respect to such division or branch;

(c) attributable to a Finance Party or its Affiliate wilfully failing to comply with any law or
regulation;

0013726-0004726 UKO1: 2010612413.17 47

 (d) attributable to a FATCA Deduction required to be made by a Party;

(e) attributable to any tax under the laws of The Netherlands to the extent levied on the basis of
article 17a, paragraph c or any replacement of the Dutch Corporate Income Tax Act (Wet op
de vennootschapsbelasting 1969); or

(f) attributable to any tax levied pursuant to the Dutch Withholding Tax Act 2021 (Wet
bronbelasting 2021) where such tax would not have been applicable or due if the relevant
Bank had been a Qualifying Bank in relation to a Dutch Borrower at the relevant time, unless
(i) that Bank is not or has ceased to be a relevant Qualifying Bank at the relevant time as a
result of any Change of Tax Law or (ii) a Dutch Borrower has made a deduction or withholding
for or on account of tax from any payment under a Finance Document in accordance with
Clause 10 (Taxes) (other than a FATCA deduction), but such tax has not been remitted to the
Dutch tax authorities in part or in full by the Dutch Borrower.

13. ILLEGALITY AND MITIGATION

13.1 Illegality

If it becomes unlawful in any jurisdiction for a Bank to give effect to any of its obligations as
contemplated by this Agreement or to fund or maintain any Advance or it becomes unlawful for any
Affiliate of a Bank for that Bank to do so, then the Bank may notify the Parent through the Agent
accordingly and thereupon:

(a) each Borrower shall, upon request from that Bank within the period allowed or if no period is
allowed, forthwith, repay any Advances made to it by that Bank together with all other
amounts payable by it to that Bank under this Agreement; and

(b) the Bank's Commitment shall be cancelled.

13.2 Mitigation

Notwithstanding the provisions of Clauses 10 (Taxes), 12 (Increased Costs) and 13.1 (Illegality), if in
relation to a Finance Party circumstances arise which would result in:

(a) any deduction, withholding or payment of the nature referred to in Clause 10 (Taxes); or

(b) any increased cost of the nature referred to in Clause 12 (Increased Costs); or

(c) a notification pursuant to Clause 13.1 (Illegality),

then without in any way limiting, reducing or otherwise qualifying the rights of such Finance Party,
such Finance Party shall promptly upon becoming aware of the same notify the Agent thereof
(whereupon the Agent shall promptly notify the Parent) and such Finance Party shall use reasonable
endeavours to transfer its participation in the Facility and its rights hereunder and under the Finance
Documents to another financial institution or Facility Office not affected by the circumstances having
the results set out in Clauses 13.2(a) to 13.2(c) above and shall otherwise take such reasonable steps
as may be open to it to mitigate the effects of such circumstances provided that such Finance Party
shall not be under any obligation to take any such action if, in its reasonable opinion, to do so would
or would be likely to have a material adverse effect upon its business, operations or financial condition
or would involve it in any unlawful activity or any activity that is contrary to its policies or any request,
guidance or directive of any competent authority (whether or not having the force of law) or (unless
indemnified to its satisfaction) would involve it in any significant expense or tax disadvantage.

0013726-0004726 UKO1: 2010612413.17 48

14. GUARANTEE

14.1 Guarantee

The Guarantor irrevocably and unconditionally:

(a) guarantees to each Finance Party prompt performance by each Borrower of all its obligations
under the Finance Documents;

(b) undertakes with each Finance Party that whenever a Borrower does not pay any amount when
due under or in connection with any Finance Document, the Guarantor shall forthwith on
demand by the Agent pay that amount as if the Guarantor instead of the relevant Borrower
were expressed to be the principal obligor; and

(c) indemnifies each Finance Party on demand against any loss or liability suffered by it if any
obligation guaranteed by the Guarantor is or becomes unenforceable, invalid or illegal.

14.2 Continuing guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of all sums payable
by the Borrowers under the Finance Documents, regardless of any intermediate payment or discharge
in whole or in part.

14.3 Reinstatement

(a) Where any discharge, release or arrangement (whether in respect of the obligations of any Borrower
or any security for those obligations or otherwise) is made in whole or in part or any arrangement is
made on the faith of any payment, security or other disposition which is avoided or must be restored
on insolvency, liquidation or otherwise without limitation, the liability of the Guarantor under this
Clause 14 shall continue as if the discharge or arrangement had not occurred (but only to the extent
that such payment, security or other disposition is avoided or restored).

(b) Each Finance Party may concede or compromise any claim that any payment, security or other
disposition is liable to avoidance or restoration.

14.4 Waiver of defences

The obligations of the Guarantor under this Clause 14 will not be affected by any act, omission, matter
or thing which, but for this provision, would reduce, release or prejudice any of its obligations under
this Clause 14 or prejudice or diminish those obligations in whole or in part, including, without
limitation, (whether or not known to it or any Finance Party):

(a) any time or waiver granted to, or composition with, any Borrower or other person;

(b) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to
perfect, take up or enforce, any rights against, or security over assets of, any Borrower or other
person or any non-presentation or non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full value of any security;

(c) any incapacity or lack of powers, authority or legal personality of or dissolution or change in
the members or status of a Borrower or any other person;

(d) any variation (however fundamental) or replacement of a Finance Document or any other
document or security so that references to that Finance Document in this Clause 14 shall
include each variation or replacement;

0013726-0004726 UKO1: 2010612413.17 49

 (e) any unenforceability, illegality or invalidity of any obligation of any person under any Finance
Document or any other document or security, to the intent that the Guarantor's obligations
under this Clause 14 shall remain in full force and its guarantee be construed accordingly, as
if there were no unenforceability, illegality or invalidity; and

(f) any postponement, discharge, reduction, non-provability or other similar circumstance

affecting any obligation of any Borrower under a Finance Document resulting from any
insolvency, liquidation or dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the Guarantor's obligations under this Clause 14
be construed as if there were no such circumstance.

14.5 Immediate recourse

The Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or
agent on its behalf) to proceed against or enforce any other rights or security or claim payment from
any person before claiming from the Guarantor under this Clause 14. This waiver applies irrespective
of any law or any provision of a Finance Document to the contrary.

14.6 Appropriations

Until all amounts which may be or become payable by the Borrowers to it under or in connection with
the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent
on its behalf) may:

(a) refrain from applying or enforcing any other moneys, security or rights held or received by
that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply
and enforce the same in such manner and order as it sees fit (whether against those amounts
or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and

(b) hold in an interest bearing suspense account any moneys received from the Guarantor or on
account of the Guarantor's liability under this Clause 14.

14.7 Non-competition

Until all amounts which may be or become payable by the Borrowers under or in connection with the
Finance Documents have been paid in full, the Guarantor shall not, after a claim has been made or by
virtue of any payment or performance by it under this Clause 14:

(a) be subrogated to any rights, security or moneys held, received or receivable by any Finance
Party (or any trustee or agent on its behalf) or be entitled to any right of contribution or
indemnity in respect of any payment made or moneys received on account of the Guarantor's
liability under this Clause 14;

(b) claim, rank, prove or vote as a creditor of any Borrower or its estate in competition with any
Finance Party (or any trustee or agent on its behalf); or

(c) receive, claim or have the benefit of any payment, distribution or security from or on account
of any Borrower, or exercise any right of set-off as against any Borrower.

The Guarantor shall hold on trust for and forthwith pay or transfer to the Agent for the Finance Parties
any payment or distribution or benefit of security received by it contrary to this Clause 14.7.

0013726-0004726 UKO1: 2010612413.17 50

14.8 Additional security

This guarantee is in addition to and is not in any way prejudiced by any other security now or hereafter
held by any Finance Party.

15. REPRESENTATIONS AND WARRANTIES

15.1 Representations and warranties

Each Obligor makes the representations and warranties set out in this Clause 15 to each Finance Party
(but in the case of an Obligor other than the Parent only in respect of itself).

15.2 Status

It is a duly incorporated and validly existing corporation under the laws of the jurisdiction of its
incorporation.

15.3 Powers and authority

It has the power to enter into, or, as the case may be, to comply with, and be bound by all obligations
expressed on its part under the Finance Documents and (in the case of a Borrower) to borrow under
this Agreement and (in the case of the Guarantor) to give the guarantee in Clause 14 (Guarantee) and
has taken all necessary actions to authorise (in the case of a Borrower) borrowings under this
Agreement and (in the case of the Guarantor) the giving of the guarantee in Clause 14 (Guarantee) and
to authorise the execution, delivery and performance of the Finance Documents.

15.4 Non-conflict

The execution, delivery and performance of the Finance Documents will not violate any provisions of
any existing law or regulation or statute applicable to it or of any mortgage, contract or other
undertaking to which it is a party or which is binding upon its assets.

15.5 Borrowing limits

Borrowings under this Agreement up to and including the maximum amount available under this
Agreement will not when borrowed cause any limit on borrowings or, as the case may be, on the giving
of guarantees (whether imposed by statute, regulation, agreement or otherwise), or on the powers of
its board of directors, applicable to it to be exceeded.

15.6 Authorisations

All relevant consents or authorisations of any governmental authority or agency required by it in

connection with the execution, validity, performance or enforceability of the Finance Documents have
been obtained and are subsisting.

15.7 Pari passu

Its obligations under the Finance Documents constitute its legal, valid and binding unsecured and
unsubordinated obligations ranking (subject to the preference of certain obligations in the liquidation,
bankruptcy or other analogous proceedings in respect of it by operation of applicable law) pari passu
with all its other unsecured and unsubordinated obligations.

0013726-0004726 UKO1: 2010612413.17 51

15.8 Litigation

Save in respect of legal or arbitration proceedings disclosed in the last published annual audited or
interim unaudited consolidated financial statements or preliminary results in respect of any financial
year of the Parent or disclosed by the Parent to the Agent in writing on or before the Signing Date:
(a) no liability has arisen in relation to any legal or arbitration proceedings involving any member of
the Group which will require a provision to be made in the next published consolidated financial
statements of the Parent and, in the reasonable judgement of the board of directors of the Parent, will
have a material adverse effect on the ability of the Obligors (taken as a whole) to perform their
obligations under the Finance Documents; and (b) to the best of the knowledge of the Obligors, no
actions or investigations by any governmental or regulatory agency are ongoing against any of the
Obligors in relation to an alleged breach of any Anti-Bribery and Corruption Laws or Anti-Money
Laundering Laws.

15.9 Material adverse change

There has been no material adverse change in the financial condition of the Group (taken as a whole)
since the last audited consolidated financial statements of the Group, which in the reasonable
judgement of the board of directors of the Parent has had or will have a material adverse effect on the
Obligors' ability (taken as a whole) to perform their obligations under the Finance Documents. This
Clause 15.9 does not apply to matters covered by Clause 15.8 (Litigation).

15.10 Accounts

The most recent audited consolidated profit and loss account and balance sheet of the Parent which
have been or are to be delivered to the Agent together with the notes thereto give a true and fair view
of the results of the operations of the Parent and its Subsidiaries for the period to which they relate
and, as the case may be, the financial position of the Parent and its Subsidiaries as at the date to which
they relate and have been prepared in accordance with GAAP consistently applied.

15.11 Sanctions and Anti-Bribery and Corruption

(a) Save as disclosed in the last published annual audited or interim unaudited consolidated financial
statements or preliminary results in respect of any financial year of the Parent or disclosed by the
Parent to the Agent in writing on or before the Signing Date, none of the Obligors nor, to the best of
the knowledge of the Obligors, any director, officer, agent, employee or affiliate of the Obligors:
(i) are currently subject to any sanctions administered by OFAC or any equivalent sanctions
administered by the European Union or HM Treasury; or (ii) has engaged in any activity which would
breach the Anti-Bribery and Corruption Laws or Anti-Money Laundering Laws.

(b) Each of the Obligors have in place and will enforce policies and procedures designed to ensure
compliance with the Anti-Bribery and Corruption Laws and Anti-Money Laundering Laws.

15.12 No Event of Default

No Event of Default has occurred and is continuing.

15.13 Investment company status

No US Borrower is required to be registered as an "investment company" as defined in, or subject to

regulation under, the Investment Company Act of 1940.

0013726-0004726 UKO1: 2010612413.17 52

15.14 ERISA and Multiemployer Plans

All US Borrowers and their ERISA Affiliates are in compliance with all applicable provisions and
requirements of ERISA and the Code and the regulations thereunder with respect to each Employee
Plan, except for instances of non-compliance that would not reasonably be expected to result in a
material adverse effect on the ability of the Obligors (taken as a whole) to perform their obligations
under the Finance Documents. No ERISA Events have occurred, except as would not reasonably be
likely to result in a material adverse effect on the ability of the Obligors (taken as a whole) to perform
their obligations under the Finance Documents.

15.15 Times for making representations and warranties

The representations and warranties set out in this Clause 15:

(a) are made on the Signing Date;

(b) (except for Clause 15.8 (Litigation), Clause 15.9 (Material adverse change), Clause 15.10
(Accounts), Clause 15.11 (Sanctions and Anti-Bribery and Corruption) and Clause 15.14
(ERISA and Multiemployer Plans)) in the case of an Obligor which becomes a Party after the
Signing Date, are deemed to be made by that Obligor on the date it executes a Borrower
Accession Agreement; and

(c) (except for Clause 15.8 (Litigation), Clause 15.9 (Material adverse change), Clause 15.11
(Sanctions and Anti-Bribery and Corruption) and Clause 15.14 (ERISA and Multiemployer
Plans)) are deemed to be repeated by each Obligor with reference to the facts and
circumstances then existing on:

(i) the date of each Request; and

(ii) each Utilisation Date,

in each case in respect of any Advance;

(d) (except for Clause 15.8 (Litigation), Clause 15.9 (Material adverse change), Clause 15.11
(Sanctions and Anti-Bribery and Corruption) and Clause 15.14 (ERISA and Multiemployer
Plans)) are deemed to be repeated by each Obligor with reference to the facts and
circumstances then existing on each date on which the Final Maturity Date for all or part of
the Revolving Facility (and Swingline Facility, as applicable) is extended in accordance with
Clauses 2.4(d) and (f) (Extension Option – Revolving Facility and Swingline Facility ) or
Clause 2.5 (Term Out Option – Revolving Facility ).

16. UNDERTAKINGS

16.1 Duration

The undertakings in this Clause 16 will remain in force from the Signing Date for so long as any
amount is or may be outstanding under this Agreement or any Commitment is in force.

0013726-0004726 UKO1: 2010612413.17 53

16.2 Financial information

Each Obligor shall supply to the Agent in sufficient copies for all the Banks:

(a) as soon as the same are publicly available (and in any event within 180 days of the end of each
of its financial years):

(i) in the case of the Parent, its audited consolidated financial statements for that financial
year; and

(ii) in the case of each other Obligor, its audited statutory accounts for that financial year;
and

(b) as soon as the same are publicly available (and in any event within 90 days of the end of the
first half-year of each of its financial years) in the case of the Parent, its interim unaudited
consolidated financial statements for that half-year.

16.3 Information – Miscellaneous

The Parent shall supply to the Agent (in sufficient copies for all the Banks if the Agent so requests):

(a) all documents despatched by it to its shareholders (or any class of them) or its creditors
generally (or any class of them) in relation to it or its Subsidiaries at the same time as they are
despatched;

(b) promptly upon becoming aware of them, details of any legal or arbitration proceedings of the
kind referred to in Clause 15.8 (Litigation); and

(c) as soon as reasonably practicable, such further information in the possession or control of the
Parent regarding its financial condition, business or operations as the Agent may reasonably
request unless such information is, in the sole opinion of the Parent, confidential or price
sensitive (acting in good faith).

16.4 Notification of Default

The Parent shall notify the Agent of any Event of Default (and the steps, if any, being taken to remedy
it) promptly upon becoming aware of it.

16.5 Authorisations

Each Obligor shall promptly:

(a) comply with the terms of each Finance Document to which it is a party; and

(b) obtain and maintain, and, if requested, supply certified copies to the Agent of, any
authorisation required under any law or regulation to enable it to perform its obligations under,
or for the validity or enforceability of, any Finance Document to which it is a party.

16.6 Pari passu ranking

Each Obligor shall procure that its obligations under the Finance Documents do and will rank at least
pari passu with all its other present and future unsecured and unsubordinated obligations (subject to
the preference of certain obligations in the liquidation, bankruptcy or other analogous proceedings in
respect of it by operation of applicable law).

0013726-0004726 UKO1: 2010612413.17 54

16.7 Negative pledge

No Obligor shall create or permit to subsist any Security Interest on any of its assets except for any
Security Interest:

(a) to secure any excise or import taxes or duties, tobacco taxes or sales or goods and services
taxes owed to, or industrial grants made by, any state, government, political sub-division or
international organisation, or any agency, authority, instrumentality or body of any thereof or
any regulatory authority; or

(b) created or arising with the prior written approval of the Majority Banks; or

(c) created or arising out of retention of title provisions or a conditional sale in respect of goods
acquired by an Obligor in the ordinary course of business; or

(d) which is a lien or other Security Interest arising in the ordinary course of business consistent
with past practice and not securing Borrowings; or

(e) over assets or revenues acquired after the Signing Date and existing on the date of such
acquisition and not created in contemplation thereof provided the aggregate principal amount
secured thereby at the date of acquisition is not exceeded; or

(f) the principal purpose and effect of which is to allow the setting-off or netting of obligations
with those of a financial institution in the ordinary course of the cash management
arrangements of the Group; or

(g) constituted by netting, set-off or cash collateral arrangements in relation to swaps or other
derivative agreements in the ordinary course of its business; or

(h) arising under arrangements in connection with the participation in or trading on or through
any clearing system or investment, commodities or stock exchange where the Security Interest
arises in the ordinary course of business under the rules or normal procedures or legislation
governing such system or exchange; or

(i) on Margin Stock or otherwise over securities, derivatives or commodities, in respect of the
acquisition cost of securities, derivatives or commodities owed to a dealer therein or an agent
for the purchase thereof where such cost falls to be paid within 180 days of being incurred; or

(j) arising out of or in connection with pre-judgment legal process or a judgment or a judicial
award relating to security for costs; or

(k) which is to renew, extend or replace a Security Interest permitted by this Clause 16.7 if the
principal amount secured is not thereby exceeded and such permitted Security Interest is
discharged or released within three months of the creation of the replacement Security Interest;
or

(l) created by it in favour of another Obligor, or

(m) over cash or cash equivalents covering Defeased Borrowings; or

(n) created by or arising out of any Obligor provided the aggregate principal, capital or nominal
amount secured by all such Security Interests does not exceed £400,000,000 or its equivalent
in other currencies at any one time.

0013726-0004726 UKO1: 2010612413.17 55

16.8 Disposals

The Parent shall not, either in a single transaction or in a series of transactions, whether related or not
and whether voluntarily or involuntarily, sell, transfer, grant or lease or otherwise dispose of all or
substantially all of its assets (save for the purposes of an amalgamation, reconstruction or corporate
reorganisation, the terms of which have been approved by the Majority Banks).

16.9 Change of business

The Group taken as a whole shall not change to a material extent the nature of the businesses carried
on by the Group as at the Signing Date.

16.10 Insurance

The Parent will procure that each member of the Group will effect and maintain such insurance over
and in respect of its respective assets and business and in such a manner and to such extent as is
reasonable and customary for a business enterprise engaged in the same or a similar business and in
the same or similar localities.

16.11 Environmental undertakings

(a) Each Obligor will not, and the Parent will procure that no member of the Group will, other than when
duly licensed by the appropriate regulatory authorities, use, generate, store, handle, transport, dump,
release, deposit, bury, emit, abandon or place any Dangerous Substance at, on, from or under any
property which it owns or occupies if to do so will have a material adverse effect on the ability of the
Obligors (taken as a whole) to perform their obligations under the Finance Documents.

(b) Each Obligor will, and the Parent will procure that each member of the Group will, comply in all
respects (consistently with the manner in which similar businesses operating in the relevant jurisdiction
comply) with:

(i) all applicable Environmental Laws; and

(ii) the terms of all Environmental Approvals necessary for the ownership and operation of its
facilities and businesses as owned and operated from time to time,

if failure to do so will have a material adverse effect on the ability of the Obligors (taken as a whole)
to perform their obligations under the Finance Documents.

16.12 Sanctions and Anti-Bribery and Corruption

(a) Each Obligor will ensure that the proceeds of any Advance will not directly or indirectly be lent,
contributed or otherwise made available to any person or entity (whether or not related to any Obligor)
for: (i) the purpose of financing the activities of any person currently subject to any sanctions
administered by OFAC or any equivalent sanctions administered by the European Union or HM
Treasury; or (ii) for any purpose that would breach the Anti-Bribery and Corruption Laws or Anti-
Money Laundering Laws.

(b) Each Obligor will ensure that the proceeds of any Advance will not knowingly, directly or indirectly,
be lent, contributed or otherwise made available to any person or entity (whether or not related to any
Obligor) for any purpose that would result in a violation of any sanctions administered by OFAC, the
European Union or HM Treasury by any person.

0013726-0004726 UKO1: 2010612413.17 56

16.13 Margin Stock

None of the Advances will be used by any of the Obligors: (a) to directly or indirectly purchase or
carry any Margin Stock; (b) to refinance any Borrowings originally incurred for any such purpose; or
(c) for any other purpose or in any other manner that, in each case, would violate (including on the
part of any Finance Party) any provision of Regulation U or X of the Board of Governors of the Federal
Reserve System of the United States.

17. DEFAULT

17.1 Events of Default

Each of the events set out in Clauses 17.2 (Non-payment) to Clause 17.13 (Guarantee) is an Event of
Default (whether or not caused by any reason whatsoever outside the control of any Obligor or any
other person).

17.2 Non-payment

An Obligor does not pay, within five Business Days of the due date, any amount payable by it under
the Finance Documents at the place at and in the currency in which it is expressed to be payable.

17.3 Breach of other obligations

An Obligor does not comply with any provision of the Finance Documents (other than those referred
to in Clause 17.2 (Non-payment)) and such failure (if capable of remedy before the expiry of such
period) continues un-remedied for a period of 30 days from the earlier of the date on which: (a) an
Obligor becomes aware of the failure to comply; or (b) the Agent gives notice to the Parent requiring
the same to be remedied.

17.4 Misrepresentation

A representation, warranty or statement made or deemed to be repeated by any Obligor in any Finance
Document or in any document delivered by or on behalf of any Obligor under or in connection with
any Finance Document is incorrect in any respect which is material in the context of this Agreement
when made or deemed to be made or repeated.

17.5 Cross-default

Any other Borrowed Moneys Indebtedness of an Obligor becomes due and repayable by reason of an
event of default (howsoever described) prior to its stated date of payment or any other Borrowed
Moneys Indebtedness of an Obligor is not paid within the longer of seven days of its due date or any
applicable grace period thereof (and for such purpose there shall be deemed to be a grace period of not
less than seven days in respect of any obligation under any guarantee or indemnity or otherwise as
surety), provided that no such event shall constitute an Event of Default unless the Borrowed Moneys
Indebtedness either:

(a) in any particular case amounts to at least £50,000,000 or the equivalent thereof in any other
currency; or

(b) when aggregated with other Borrowed Moneys Indebtedness then so due and repayable or not
so paid amounts to at least £200,000,000 or the equivalent thereof in any other currency.

0013726-0004726 UKO1: 2010612413.17 57

17.6 Insolvency

(a) An Obligor is, or is deemed for the purposes of any law to be unable to pay its debts as they fall due
or to be insolvent (except by reason of the failure to pay individual liability not exceeding
US$10,000,000 or its equivalent in any other currency), or admits inability to pay its debts as they fall
due.

(b) An Obligor suspends making payments on all or any class of its debt or announces an intention to do
so, or a moratorium (such moratorium including a surseance van betaling, in the case of an Obligor
incorporated in the Netherlands) (other than a general governmental moratorium affecting foreign
currency or exchange controls) is declared in respect of any of its indebtedness.

(c) An Obligor, by reason of financial difficulties, begins negotiations with its creditors generally or any
class of them with a view to the readjustment or rescheduling of any of its indebtedness.

17.7 Insolvency proceedings

(a) Any formal voluntary step commencing legal proceedings (including petition or convening a meeting)
is taken by an Obligor (other than a US Debtor) with a view to a composition, assignment or
arrangement with any class of creditors of an Obligor (other than a US Debtor).

(b) A meeting of an Obligor (other than a US Debtor) is convened by its directors or secretary for the
purpose of considering any resolution for (or to petition for) its winding-up or for its administration
or, in the case of an Obligor incorporated in the Netherlands, its bankruptcy (faillissement), or any
such resolution is passed.

(c) Any person presents a petition for the winding-up or for the administration of an Obligor (other than
a US Debtor) or, in the case of an Obligor incorporated in the Netherlands, its bankruptcy
(faillissement), and the petition is not discharged or stayed within 21 days.

(d) An order for the winding up or administration of an Obligor (other than a US Debtor) or, in the case
of an Obligor incorporated in the Netherlands, its bankruptcy (faillissement), is made.

17.8 Appointment of receivers and managers

(a) Any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver,
administrative receiver, administrator, herstructureringsdeskundige or the like is appointed in respect
of an Obligor (other than a US Debtor) or all or substantially all of its assets and, only in the case of
the appointment of a judicial custodian, compulsory manager or receiver, is not discharged within 21
days.

(b) The directors of an Obligor (other than a US Debtor) request the appointment of a liquidator, trustee
in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver,
administrator, herstructureringsdeskundige or the like in respect of itself.

17.9 Creditors' process

Any attachment, sequestration, distress or execution affects any material asset of an Obligor and is not
discharged within 21 days.

17.10 Analogous proceedings

There occurs, in relation to an Obligor any event anywhere which corresponds with any of those
mentioned in Clauses 17.6 (Insolvency) to 17.9 (Creditors' process) (both inclusive).

0013726-0004726 UKO1: 2010612413.17 58

17.11 US Bankruptcy Law

Any of the following occurs in respect of a US Debtor:

(a) it makes a general assignment for the benefit of creditors;

(b) it commences a voluntary case or proceeding under any US Bankruptcy Law; or

(c) an involuntary case under any US Bankruptcy Law is commenced against it and is not
dismissed or stayed within 60 days after commencement of the case.

17.12 Unlawfulness

It is or becomes unlawful for any Obligor to perform any of its payment or other material obligations
under the Finance Documents.

17.13 Guarantee

The guarantee of the Guarantor under Clause 14 (Guarantee) is not effective or is alleged by an Obligor
to be ineffective for any reason (other than by reason of written release or waiver by the Finance
Parties).

17.14 Employee Plans

Any ERISA Event shall have occurred that, when aggregated with all other ERISA Events, would
have or would be reasonably expected to result in a material adverse effect on the ability of the
Obligors (taken as a whole) to perform their obligations under the Finance Documents.

17.15 Exceptions

Nothing in Clause 17.7 (Insolvency proceedings), 17.8 (Appointment of receivers and managers) or
17.10 (Analogous proceedings) applies to any reconstruction, amalgamation or other transfer of any
part of any Obligor's business and/or assets to or with another Obligor.

17.16 Acceleration

(a) If an Event of Default described in Clause 17.11 (US Bankruptcy Law) occurs, the Total Commitments
will, if not already cancelled under this Agreement, be immediately and automatically cancelled and
all amounts outstanding under the Finance Documents will be immediately and automatically due and
payable, without the requirement of notice or any other formality.

(b) On and at any time after the occurrence of an Event of Default and while such event is continuing the
Agent may, and shall if so directed by the Majority Banks, by notice to the Parent, declare that an
Event of Default has occurred and:

(i) to the extent not already cancelled under paragraph (a) above, cancel the Total Commitments;
and/or

(ii) to the extent not already due and payable pursuant to paragraph (a) above, demand that all the
Advances, together with accrued interest, and all other amounts accrued under this Agreement
be immediately due and payable, whereupon they shall become immediately due and payable;
and/or

(iii) demand that all the Advances be payable on demand, whereupon they shall immediately
become payable on demand.

0013726-0004726 UKO1: 2010612413.17 59

18. THE ADMINISTRATIVE PARTIES

18.1 Appointment and duties of the Administrative Parties

Each Finance Party (other than the Agent) irrevocably appoints the Agent to act as its agent under and
in connection with the Finance Documents

and each Swingline Bank appoints the Swingline Agent to act as its agent in relation to the Swingline
Facility, and each Finance Party irrevocably authorises the Agent or, as the case may be, the Swingline
Agent on its behalf to perform the duties and to exercise the rights, powers and discretions that are
specifically delegated to it under or in connection with the Finance Documents, together with any other
incidental rights, powers and discretions. The Administrative Parties shall have only those duties
which are expressly specified in this Agreement (and no duties, responsibilities or obligations shall be
implied). Those duties are solely of a mechanical and administrative nature.

18.2 Relationship

The relationship between each Administrative Party and the other Finance Parties is that of agent and
principal only. Nothing in this Agreement constitutes any of the Administrative Parties as trustee or
fiduciary for any other Party or any other person and the Administrative Parties need not hold in trust
any moneys paid to it for a Party or be liable to account for interest on those moneys.

18.3 Majority Banks' directions

Each Administrative Party will be fully protected if it acts in accordance with the instructions of the
Majority Banks in connection with the exercise of any right, power or discretion or any matter not
expressly provided for in the Finance Documents. Any such instructions given by the Majority Banks
will be binding on all the Banks. In the absence of such instructions, an Administrative Party may act
or refuse to act as it considers to be in the best interests of all the Banks. No Administrative Party
shall be liable to any Bank for any act (or omission) if it acts (or refrains from taking any action) in
accordance with an instruction of the Majority Banks. An Administrative Party may refrain from
acting in accordance with any instructions of any Bank or group of Banks until it has received any
indemnification and/or security from such Bank or group of Banks that it may in its discretion require
(which may be greater in extent than that contained in the Finance Documents and which may include
payment in advance) for any cost, loss or liability which it may incur in complying with those
instructions.

18.4 Delegation

Each Administrative Party may act under the Finance Documents through its personnel and agents.

18.5 Responsibility for documentation

No Administrative Party is responsible to any other Party for:

(a) the execution, genuineness, validity, enforceability or sufficiency of any Finance Document
or any other document;

(b) the collectability of amounts payable under any Finance Document; or

(c) the accuracy of any statements (whether written or oral) made in or in connection with any
Finance Document.

0013726-0004726 UKO1: 2010612413.17 60

18.6 Default

(a) No Administrative Party is obliged to monitor or enquire as to whether or not a Default has occurred.
No Administrative Party will be deemed to have knowledge of the occurrence of a Default. However,
if an Administrative Party receives notice from a Party referring to this Agreement, describing the
Default and stating that the event is a Default, it shall promptly notify the Banks.

(b) Any Administrative Party may require the receipt of security satisfactory to it from the Banks whether
by way of payment in advance or otherwise, against any liability or loss which it will or may incur in
taking any proceedings or action arising out of or in connection with any Finance Document before it
commences these proceedings or takes that action.

18.7 Exoneration

(a) Without limiting Clause 18.7(b) below, no Administrative Party will be liable to any other Party for
any action taken or not taken by it under or in connection with any Finance Document, unless directly
caused by its negligence or wilful misconduct.

(b) No Party may take any proceedings against any officer, employee or agent of any Administrative Party
in respect of any claim it might have against that Administrative Party in respect of any act or omission
of any kind (including negligence or wilful misconduct) by that officer, employee or agent in relation
to any Finance Document.

(c) No Administrative Party will be liable for any damages, costs or losses to any person, any diminution
in value or any liability whatsoever arising as a result of:

(i) any act, event or circumstance not reasonably within its control; or

(ii) the general risks of investment in, or the holding of assets in, any jurisdiction,

including (in each case and without limitation) such damages, costs, losses, diminution in value or
liability arising as a result of: nationalisation, expropriation or other governmental actions; any
regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution
or settlement of transactions or the value of assets (including any Disruption Event); breakdown,
failure or malfunction of any third party transport, telecommunications, computer services or systems;
natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial
action.

(d) Without prejudice to any provision of any Finance Document excluding or limiting any Administrative
Party's liability, any liability of an Administrative Party arising under or in connection with any
Finance Document shall be limited to the amount of actual loss suffered (as determined by reference
to the date of default of that Administrative Party or, if later, the date on which the loss arises as a
result of such default) but without reference to any special conditions or circumstances known to that
Administrative Party at any time which increase the amount of that loss. In no event shall any
Administrative Party be liable for any loss of profits, goodwill, reputation, business opportunity or
anticipated saving, or for special, punitive, indirect or consequential damages, whether or not that
Administrative Party has been advised of the possibility of such loss or damages.

18.8 Reliance

Each Administrative Party may:

(a) rely on any notice or document believed by it to be genuine and correct and to have been
signed by, or with the authority of, the proper person;

0013726-0004726 UKO1: 2010612413.17 61

 (b) rely on any statement made by a director or employee of any person regarding any matters
which may reasonably be assumed to be within his knowledge or within his power to verify;
and

(c) engage, pay for and rely on legal or other professional advisers selected by it (including those
in that Administrative Party's employment and those representing a Party other than that
Administrative Party).

18.9 Credit approval and appraisal

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in
connection with any Finance Document, each Bank confirms that it:

(a) has made its own independent investigation and assessment of the financial condition and
affairs of each Obligor and its related entities in connection with its participation in this
Agreement and has not relied exclusively on any information provided to it by any
Administrative Party in connection with any Finance Document; and

(b) will continue to make its own independent appraisal of the creditworthiness of each Obligor
and its related entities while any amount is or may be outstanding under the Finance
Documents or any Commitment is in force.

18.10 Information

(a) Each Administrative Party shall promptly forward to the person concerned the original or a copy of
any document which is delivered to that Administrative Party by a Party for that person.

(b) The Agent shall promptly supply a Bank with a copy of each document received by the Agent under
Clause 4 (Conditions Precedent) or 25.6 (Additional Borrowers) upon the request and at the expense
of that Bank.

(c) Except where this Agreement specifically provides otherwise, no Administrative Party is obliged to
review or check the accuracy or completeness of any document it forwards to another Party.

(d) Except as provided above, no Administrative Party has any duty:

(i) either initially or on a continuing basis to provide any Bank with any credit or other
information concerning the financial condition or affairs of any Obligor or any related entity
of any Obligor whether coming into its possession or that of any of its related entities before,
on or after the Signing Date; or

(ii) unless specifically requested to do so by a Bank in accordance with this Agreement, to request
any certificates or other documents from any Obligor.

(e) An Administrative Party may disclose the identity of a Defaulting Bank to the other Finance Parties
and the Parent and shall disclose the same upon the written request of the Parent, a Borrower or the
Majority Banks.

18.11 The Administrative Parties individually

(a) If it is also a Bank, each Administrative Party has the same rights and powers under this Agreement
as any other Bank and may exercise those rights and powers as though it were not an Administrative
Party.

0013726-0004726 UKO1: 2010612413.17 62

(b) Each Administrative Party may:

(i) carry on any business with an Obligor or its related entities;

(ii) act as agent or trustee for, or in relation to any financing involving, an Obligor or its related
entities; and

(iii) retain any profits or remuneration in connection with its activities under this Agreement or in
relation to any of the foregoing.

18.12 Indemnities

(a) Without limiting the liability of any Obligor under the Finance Documents, each Bank shall forthwith
on demand indemnify each Administrative Party for its proportion of any cost, liability or loss incurred
by that Administrative Party in any way relating to or arising out of its acting as an Administrative
Party, except to the extent that the liability or loss arises directly from that Administrative Party's
negligence or wilful misconduct.

(b) A Bank's proportion of the liability or loss set out in Clause 18.12(a) above is the proportion which
the Original Sterling Amount of its Advance(s) bears to the Original Sterling Amount of all Advances
outstanding on the date of the demand. If, however, no Advances are outstanding on the date of
demand, then the proportion will be the proportion which its Commitment bears to the Total
Commitments at the date of demand or, if the Total Commitments have been cancelled, bore to the
Total Commitments immediately before being cancelled.

(c) The Parent shall forthwith on demand reimburse each Bank for any payment made by it under Clause
18.12(a) above except to the extent it arises out of the Bank's negligence or default.

18.13 Compliance

(a) An Administrative Party may refrain from doing anything which might, in its opinion, constitute a
breach of any law or regulation or be otherwise actionable at the suit of any person, and may do
anything which, in its opinion, is necessary or desirable to comply with any law or regulation of any
jurisdiction.

(b) Without limiting Clause 18.13(a) above, an Administrative Party need not disclose any information
relating to any Obligor or any of its related entities if the disclosure might, in the opinion of that
Administrative Party constitute a breach of any law or regulation or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.

18.14 Deduction from amounts payable by the Agent

If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving
notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which
the Agent would otherwise be obliged to make under the Finance Documents and apply the amount
deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents
that Party shall be regarded as having received any amount so deducted.

18.15 Money held as banker

The Agent shall be entitled to deal with money paid to it by any person for the purposes of this
Agreement in the same manner as other money paid to a banker by its customers except that it shall
not be liable to account to any person for any interest or other amounts in respect of the money.

0013726-0004726 UKO1: 2010612413.17 63

18.16 Resignation of an Administrative Party

(a) Notwithstanding its irrevocable appointment an Administrative Party may resign by giving notice to
the Banks and the Parent, in which case the Parent may (following consultation with the Banks, or the
relevant Swingline Banks, as the case may be) forthwith appoint a successor Administrative Party
(which shall be a Bank or an Affiliate of a Bank) or, failing that, the retiring Administrative Party shall
forthwith appoint its successor or, failing that, the Majority Banks shall appoint the successor
Administrative Party.

(b) The resignation of the retiring Administrative Party and the appointment of any successor
Administrative Party will both become effective only upon the successor Administrative Party
notifying all the Parties that it accepts the appointment. On giving the notification and receiving such
approval, the successor Administrative Party will succeed to the position of the retiring Administrative
Party and the term "Agent" or "Swingline Agent" will mean the successor Agent or successor
Swingline Agent, respectively.

(c) The retiring Administrative Party shall, at its own cost, make available to its successor such documents
and records and provide such assistance as the relevant successor Administrative Party may reasonably
request for the purposes of performing its functions as the relevant Administrative Party under this
Agreement.

(d) Upon its resignation becoming effective, this Clause 18 shall continue to benefit the relevant retiring
Administrative Party in respect of any action taken or not taken by it under or in connection with the
Finance Documents while it was the relevant Administrative Party and, subject to Clause 18.16(c)
above, it shall have no further obligation under any Finance Document.

(e) Notwithstanding the irrevocable appointment of an Administrative Party, after consultation with the
Parent, the Majority Banks may, by notice to that Administrative Party, require it to resign in
accordance with Clause 18.16(a) above. In this event, such Administrative Party shall resign in
accordance with Clause 18.16(a) above.

(f) An Administrative Party shall resign in accordance with paragraph (a) above if on or after the date
which is three months before the earliest FATCA Application Date relating to any payment to that
Administrative Party under the Finance Documents:

(i) that Administrative Party fails to respond to a request under Clause 10.6 (FATCA) and an
Obligor or a Bank reasonably believes that that Administrative Party will not be (or will have
ceased to be) FATCA Exempt (as defined in Clause 10.6 (FATCA)) on or after that FATCA
Application Date;

(ii) the information supplied by that Administrative Party pursuant to Clause 10.6 (FATCA)
indicates that that Administrative Party will not be (or will have ceased to be) FATCA Exempt
on or after that FATCA Application Date; or

(iii) that Administrative Party notifies an Obligor and the Bank that that Administrative Party will
not be (or will have ceased to be) FATCA Exempt on or after that FATCA Application Date,

and (in each case) an Obligor or a Bank reasonably believes that a Party will be required to make a
FATCA Deduction that would not be required if that Administrative Party were FATCA Exempt, and
the Obligor or a Bank, by notice to that Administrative Party, requires it to resign.

(g) If an Administrative Party resigns pursuant to paragraph (f) above:

(i) its successor shall be appointed in accordance with paragraph (a) above; and

0013726-0004726 UKO1: 2010612413.17 64

 (ii) such resignation shall only become effective when the successor Administrative Party notifies
all the Parties that it accepts such appointment.

18.17 Replacement of an Administrative Party

(a) After consultation with the Parent, the Majority Banks may, by giving 30 days' written notice to the
relevant Administrative Party (or, at any time the relevant Administrative Party is an Impaired Agent,
by giving any shorter notice determined by the Majority Banks) replace that Administrative Party by
appointing a successor Administrative Party.

(b) The retiring Administrative Party shall (at its own cost if it is an Impaired Agent and otherwise at the
expense of the Banks) make available to the successor Administrative Party such documents and
records and provide such assistance as the successor Administrative Party may reasonably request for
the purposes of performing its functions as agent under the Finance Documents.

(c) The appointment of the successor Administrative Party shall take effect on the date specified in the
notice from the Majority Banks to the retiring Administrative Party. As from this date, the retiring
Administrative Party shall be discharged from any further obligation in respect of the Finance
Documents but shall remain entitled to the benefit of this Clause 18 (and any agency fees for the
account of the retiring Administrative Party shall cease to accrue from (and shall be payable on) that
date).

(d) Any successor Administrative Party and each of the other Parties shall have the same rights and
obligations amongst themselves as they would have had if such successor had been an original Party.

18.18 Banks

Each Administrative Party may treat each Bank as a Bank, entitled to payments under this Agreement
and as acting through its Facility Office(s) until it has received notice from the Bank to the contrary
by not less than five Business Days prior to the relevant payment.

18.19 Regulatory Position

The Agent is authorised by the Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority. Nothing in this Agreement shall require
the Agent to carry on an activity of the kind specified by any provision of Part II (other than article 5
(accepting deposits)) of the Financial Services and Markets Act 2000 (Regulated Activities) Order
2001 or to lend money to any Borrower in its capacity as Agent.

18.20 Information Barriers

In acting as an Administrative Party, the agency and syndications division of each Administrative
Party shall be treated as a separate entity from its other divisions and departments. Any information
acquired at any time by an Administrative Party otherwise than in the capacity of an Administrative
Party through its agency and syndications division (whether as financial advisor to any member of the
Group or otherwise) may be treated as confidential by that Administrative Party and shall not be
deemed to be information possessed by that Administrative Party in their capacity as such. Each
Finance Party acknowledges that each Administrative Party may, now or in the future, be in possession
of, or provided with, information relating to the Obligors which has not or will not be provided to the
other Finance Parties. Each Finance Party agrees that, except as expressly provided in this Agreement
no Administrative Party will be under any obligation to provide, or under any liability for failure to
provide, any such information.

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18.21 Amounts paid in error

(a) If any of the Administrative Parties pays an amount to another Party and within ten Business Days of
the date of payment the relevant Administrative Party notifies that Party that such payment was an
Erroneous Payment then the Party to whom that amount was paid by the relevant Administrative Party
shall on demand refund the same to that Administrative Party.

(b) Neither:

(i) the obligations of any Party to the relevant Administrative Party; nor

(ii) the remedies of the relevant Administrative Party;

(whether arising under this Clause 18.21 or otherwise) which relate to an Erroneous Payment will be
affected by any act, omission, matter or thing which, but for this paragraph (b), would reduce, release
or prejudice any such obligation or remedy (whether or not known by the relevant Administrative
Party or any other Party).

(c) All payments to be made by a Party to the relevant Administrative Party (whether made pursuant to
this Clause 18.21 or otherwise) which relate to an Erroneous Payment shall be calculated and be made
without (and free and clear of any deduction for) set-off or counterclaim.

(d) In this Agreement, “Erroneous Payment” means a payment of an amount by the relevant
Administrative Party to another Party which that Administrative Party determines (in its sole
discretion) was made in error.

19. FEES

19.1 Commitment fee

(a) The Parent shall, on behalf of the Borrowers, pay to the Agent a commitment fee at the rate of 25 per
cent. of the applicable Margin calculated in accordance with Clause 8.3 (Calculation of the Margin)
on the undrawn, uncancelled amount of the Total Commitments on each day, for distribution to each
Bank pro rata to the proportion its Revolving Facility Commitment bears to the Total Commitments
from time to time.

(b) Each commitment fee is calculated and accrues from the Signing Date on a daily basis and is payable
quarterly in arrear with the first payment due three months after the Signing Date for the period from
the Signing Date. Accrued commitment fee is also payable to the Agent for the relevant Bank(s) on
the cancelled amount of its Commitment at the time the cancellation takes effect.

(c) No commitment fee is payable to the Agent (for the account of a Bank) on any Available Commitment
of a Bank on any day on which such Bank is a Bank in relation to which:

(i) any of the events or circumstances referred to in paragraph (a), (b) or (c) of the definition of
"Defaulting Bank" has occurred; and

(ii) in so far as such event or circumstance relates to paragraph (c) of the definition of "Defaulting
Bank", a notice of cancellation has been despatched by the Parent to the Agent under
Clause 7.6 (Right of cancellation in relation to a Defaulting Bank) (such Bank being a
Disenfranchised Bank).

0013726-0004726 UKO1: 2010612413.17 66

19.2 Utilisation Fee

(a) On any day on which the aggregate Original Sterling Amount of all outstanding Advances is less than
or equal to one third of the Total Commitments on that day, the Parent shall, on behalf of the
Borrowers, pay to the Agent for distribution to each Bank a utilisation fee at the rate of 0.075 per cent.
per annum on the Original Sterling Amount of each Bank's share of the Advances outstanding on that
day.

(b) On any day on which the aggregate Original Sterling Amount of all outstanding Advances exceeds
one third but is less than or equal to two thirds of the Total Commitments on that day, the Parent shall,
on behalf of the Borrowers, pay to the Agent for distribution to each Bank a utilisation fee at the rate
of 0.15 per cent. per annum on the Original Sterling Amount of each Bank's share of the Advances
outstanding on that day.

(c) On any day on which the aggregate Original Sterling Amount of all outstanding Advances exceeds
two thirds of the Total Commitments on that day, the Parent shall, on behalf of the Borrowers, pay to
the Agent for distribution to each Bank a utilisation fee at the rate of 0.30 per cent. per annum on the
Original Sterling Amount of each Bank's share of the Advances outstanding on that day.

(d) Utilisation fees (if any) are calculated on a daily basis and are payable quarterly in arrears, with the
first payment (if any) due three months after the Signing Date for the period from the Signing Date.
Any accrued utilisation fee unpaid at the time the Commitments are repaid and cancelled in full will
be paid on the date of such repayment and cancellation.

19.3 Administrative Parties fees

(a) The Parent shall, on behalf of the Borrowers, pay to the Administrative Parties for their own account
agency fees in the amounts and on the dates agreed in the relevant Fee Letter.

(b) The fees, commissions and expenses payable to an Administrative Party for services rendered and the
performance of its obligations under this Agreement shall not be abated by any remuneration or other
amounts or profits receivable by that Administrative Party (or by any of its associates) in connection
with any transaction effected by that Administrative Party with or for the Banks or the Parent.

19.4 Up-front fee

The Parent shall, on behalf of the Borrowers, pay to the Agent for distribution to each Bank an up-
front fee in the amounts and on the date agreed in the relevant Fee Letter.

19.5 Extension fee

If all or part of the Revolving Facility is extended in accordance with Clause 2.4(d) or 2.4(f) (Extension
Option – Revolving Facility and Swingline Facility ), the Parent shall, if applicable, pay to the Agent
for distribution to each Revolving Facility First Extension Bank and the Revolving Facility Second
Extension Bank, an extension fee in the amounts and on the date agreed in the relevant Fee Letter.

19.6 Term Out fee

If the Term Out Option is exercised in accordance with Clause 2.5 (Term Out Option – Revolving
Facility ), the Parent shall pay to the Agent for distribution to each relevant Bank a term out fee in the
amounts and on the date agreed in the relevant Fee Letter.

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19.7 VAT

Any fee referred to in this Clause 19 is exclusive of any United Kingdom value added tax. If any value
added tax is so chargeable, it shall be paid by the Parent at the same time as it pays the relevant fee.

20. EXPENSES

20.1 Initial and special costs

The Parent shall forthwith on demand pay the Administrative Parties the amount of all out-of-pocket
costs and expenses (including but not limited to legal fees) reasonably incurred by any of them in
connection with:

(a) the negotiation, preparation, printing and execution of:

(i) this Agreement and any other documents referred to in this Agreement; and

(ii) any other Finance Document (other than a Novation Certificate) executed after the
Signing Date;

(b) any amendment waiver, consent or suspension of rights (or any proposal for any of the
foregoing) requested by or on behalf of an Obligor and relating to a Finance Document or a
document referred to in any Finance Document; and

(c) any other matter, not of an ordinary administrative nature, arising out of or in connection with
a Finance Document.

20.2 Enforcement costs

The Parent shall forthwith on demand pay to each Finance Party the amount of all costs and expenses
(including legal fees) incurred by it:

(a) in connection with the enforcement of, or the preservation of any rights under, any Finance
Document; or

(b) in investigating any possible Default of which an Obligor or the Majority Banks have given
notice.

21. STAMP DUTIES

The Parent shall pay and forthwith on demand indemnify each Finance Party against any liability it
incurs in respect of any stamp, registration or similar tax which is or becomes payable in connection
with the entry into, performance or enforcement of any Finance Document other than a Novation
Certificate or any document signed or otherwise entered into pursuant to Clauses 25.2 (Transfers by
Banks), 25.3 (Procedure for novations) and 25.9 (Affiliates of Banks).

22. INDEMNITIES

22.1 Currency indemnity

(a) If a Finance Party receives an amount in respect of an Obligor's liability under the Finance Documents
or if that liability is converted into a claim, proof, judgment or order in a currency other than the

0013726-0004726 UKO1: 2010612413.17 68

 currency (the contractual currency) in which the amount is expressed to be payable under the relevant
Finance Document:

(i) that Obligor shall indemnify that Finance Party as an independent obligation against any loss
or liability arising out of or as a result of the conversion;

(ii) if the amount received by that Finance Party, when converted into the contractual currency at
a market rate in the usual course of its business, is less than the amount owed in the contractual
currency, the Obligor concerned shall forthwith on demand pay to that Finance Party an
amount in the contractual currency equal to the deficit; and

(iii) the Obligor shall pay to the Finance Party concerned on demand any exchange costs and taxes
payable in connection with any such conversion.

(b) Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance
Documents in a currency other than that in which it is expressed to be payable.

22.2 Other indemnities

The Parent shall forthwith on demand indemnify each Finance Party against any loss or liability which
that Finance Party incurs as a consequence of:

(a) the occurrence of any Event of Default;

(b) the operation of Clause 17.16 (Acceleration) or Clause 29 (Pro Rata Sharing);

(c) in respect of any Term Rate Advance, any payment of principal or an overdue amount being
received from any source otherwise than on its Term End Date (and, for the purposes of this
paragraph (c), the Term End Date of an overdue amount is the last day of each Term (as
described in Clause 8.6 (Default interest));

(d) the occurrence of a change described in, and the operation of Clause 11.6 (Change in
circumstances) in relation to, an Optional Currency; or

(e) (other than by reason of negligence or default by a Finance Party) an Advance not being
disbursed after a Borrower has delivered a Request for that Advance.

The Parent's liability in each case includes any loss or expense on account of funds borrowed,
contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid
or prepaid or any Advance.

22.3 Indemnity

The Parent shall forthwith on demand by the Agent or, as the case may be, the Swingline Agent,
indemnify the Agent or, as the case may be, the Swingline Agent, against any actual costs, loss or
liability incurred by the Agent or, as the case may be, the Swingline Agent, (acting reasonably) as a
direct result of the Agent or, as the case may be, the Swingline Agent, acting or relying on any notice,
request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.

23. CALCULATIONS AND CERTIFICATES

23.1 Accounts

Accounts maintained by a Finance Party in connection with this Agreement are prima facie evidence
of the matters to which they relate.

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23.2 Certificates and determinations

Any certification or determination by a Finance Party of a rate or amount under this Agreement is, in
the absence of manifest error, conclusive evidence of the matters to which it relates.

23.3 Day count convention and interest calculation

(a) Any interest, commission or fee accruing under a Finance Document will accrue from day to day and
the amount of any such interest, commission or fee is calculated:

(i) on the basis of the actual number of days elapsed and a year of 360 days (or, in any case where
the practice in the Relevant Market differs, in accordance with that market practice); and

(ii) subject to paragraph (b) below, without rounding.

(b) The aggregate amount of interest, commission or fee which is, or becomes, payable by an Obligor
under a Finance Document shall be rounded to 2 decimal places.

24. AMENDMENTS AND WAIVERS

24.1 Procedure

(a) Subject to Clause 24.2 (Exceptions), any term of the Finance Documents may be amended or waived
with the agreement of the Parent and the Agent (acting on the instructions of the Majority Banks). The
Agent may effect, on behalf of the Banks, any amendment or waiver permitted by this Clause 24.1(a).

(b) The Agent shall promptly notify the other Parties of any amendment or waiver effected under Clause
24.1(a) above, and any such amendment or waiver shall be binding on all the Parties.

24.2 Exceptions

(a) Subject to Clause 24.3 (Changes to reference rates), an amendment or waiver which relates to:

(i) the definition of "Majority Banks" in Clause 1.1 (Definitions);

(ii) an extension of the date for, or a decrease in an amount or a change in the currency of, any
payment under the Finance Documents;

(iii) an increase in a Bank's Commitment;

(iv) a change in the guarantee under Clause 14 (Guarantee);

(v) any change to the Borrowers other than in accordance with Clause 7.5 (Changes to Borrowers)
or 25.6 (Additional Borrowers);

(vi) a term of a Finance Document which expressly requires the consent of each Bank; or

(vii) Clause 29 (Pro Rata Sharing) or this Clause 24 (Amendments and Waivers),

may not be effected without the consent of each Bank.

(b) An amendment or waiver which relates to the rights or obligations of an Administrative Party (in its
capacity as such) may not be effected without the consent of that Administrative Party.

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24.3 Changes to reference rates

(a) Subject to paragraph (b) below, any amendment or waiver which relates to:

(i) providing for the use of a Replacement Benchmark; and

(ii) (A) aligning any provision of any Finance Document to the use of that Replacement
Benchmark;

(B) enabling that Replacement Benchmark to be used for the calculation of interest under
this Agreement (including, without limitation, any consequential changes required to
enable that Replacement Benchmark to be used for the purposes of this Agreement);

(C) implementing market conventions applicable to that Replacement Benchmark;

(D) providing for appropriate fallback (and market disruption) provisions for that
Replacement Benchmark; or

(E) adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any
transfer of economic value from one Party to another as a result of the application of
that Replacement Benchmark (and if any adjustment or method for calculating any
adjustment has been formally designated, nominated or recommended by the Relevant
Nominating Body, the adjustment shall be determined on the basis of that designation,
nomination or recommendation),

may be made with the consent of the Agent (acting on the instructions of the Majority Banks) and the
Parent.

(b) An amendment or waiver that relates to, or has the effect of, aligning the means of calculation of
interest on a Compounded Rate Advance in any currency under this Agreement to any
recommendation of a Relevant Nominating Body which:

(i) relates to the use of the RFR for that currency on a compounded basis in the international or
any relevant domestic syndicated loan markets; and

(ii) is issued on or after the Signing Date,

may be made with the consent of the Agent (acting on the instructions of the Majority Banks) and the
Parent.

(c) In this Clause 24.3:

Published Rate means:

(i) an RFR; or

(ii) the Screen Rate for any Quoted Tenor.

Relevant Nominating Body means any applicable central bank, regulator or other supervisory
authority or a group of them, or any working group or committee sponsored or chaired by, or
constituted at the request of, any of them or the Financial Stability Board.

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 Replacement Benchmark means a benchmark rate which is:

(i) formally designated, nominated or recommended as the replacement for a Published Rate by:

(A) the administrator of that Published Rate (provided that the market or economic reality
that such benchmark rate measures is the same as that measured by that Published
Rate); or

(B) any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or
recommended under both paragraphs, the "Replacement Benchmark" will be the replacement
under paragraph (B) above;

(ii) in the opinion of the Majority Banks and the Parent, generally accepted in the international or
any relevant domestic syndicated loan markets as the appropriate successor to a Published
Rate; or

(iii) in the opinion of the Majority Banks and the Parent, an appropriate successor to a Published
Rate.

24.4 Waivers and remedies cumulative

The rights of each Party under the Finance Documents:

(a) may be exercised as often as necessary;

(b) are cumulative and not exclusive of its rights under the general law; and

(c) may be waived only in writing and specifically.

Delay in exercising or non-exercise of any such right is not a waiver of that right.

25. CHANGES TO THE PARTIES

25.1 Transfers by Obligors

No Obligor may assign, transfer, novate or dispose of any of, or any interest in, its rights and/or
obligations under this Agreement, except in the manner contemplated in Clause 7.5 (Changes to
Borrowers).

25.2 Transfers by Banks

(a) A Bank (the Existing Bank) may at any time assign, transfer, novate or sub-participate any of its rights
and/or obligations under this Agreement to another person (the New Bank) provided that:

(i) the Parent shall have given its prior written consent to such assignment, transfer, novation or
sub-participation (such consent not to be unreasonably withheld or delayed, having regard
(without limitation) to the relative credit rating of the New Bank and the other Banks), except
that such consent shall not be required if an Event of Default is outstanding or where the New
Bank is an Existing Bank or is an Affiliate of the Existing Bank or any other Bank;

(ii) in the case of a partial assignment, transfer or novation of rights and/or obligations, a minimum
amount of £5,000,000 (unless to an Affiliate of the Existing Bank or the Agent or the

0013726-0004726 UKO1: 2010612413.17 72

 Swingline Agent (as applicable) agrees otherwise) must be assigned, transferred or novated;
and

(iii) in the case of an assignment, transfer or novation by a Swingline Bank, a portion of that
Swingline Bank's Swingline Commitment must also be assigned, transferred or novated to the
extent necessary (if at all) to ensure that the Swingline Bank's Swingline Commitments under
the Revolving Facility do not exceed its Revolving Facility Commitment under that Revolving
Facility after the assignment, transfer or novation. A Bank may not acquire a Swingline
Commitment under the Revolving Facility if that Swingline Commitment would exceed its
Revolving Facility Commitment under that Revolving Facility.

(b) A transfer of obligations will be effective only if either:

(i) the obligations are novated in accordance with Clause 25.3 (Procedure for novations); or

(ii) the New Bank confirms to the Agent or the Swingline Agent (as applicable) and the Parent
that it undertakes to be bound by the terms of this Agreement as a Bank in form and substance
satisfactory to the Agent or the Swingline Agent (as applicable) and the Parent. On the transfer
becoming effective in this manner the Existing Bank shall be relieved of its obligations under
this Agreement to the extent that they are transferred to the New Bank.

(c) On each occasion an Existing Bank assigns, transfers or novates any of its rights and/or obligations
under this Agreement (other than to an Affiliate), the New Bank shall, on the date the assignment,
transfer and/or novation takes effect, pay to the Agent for its own account a fee of £2,500.

(d) An Existing Bank is not responsible to a New Bank for:

(i) the execution, genuineness, validity, enforceability or sufficiency of any Finance Document
or any other document;

(ii) the collectability of amounts payable under any Finance Document; or

(iii) the accuracy of any statements (whether written or oral) made in connection with any Finance
Document.

(e) Each New Bank confirms to the Existing Bank and the other Finance Parties that it:

(i) has made its own independent investigation and assessment of the financial condition and
affairs of each Obligor and its related entities in connection with its participation in this
Agreement and has not relied exclusively on any information provided to it by the Existing
Bank in connection with any Finance Document; and

(ii) will continue to make its own independent appraisal of the creditworthiness of each Obligor
and its related entities while any amount is or may be outstanding under this Agreement or
any Commitment is in force.

(f) Nothing in any Finance Document obliges an Existing Bank to:

(i) accept a re-transfer from a New Bank of any of the rights and/or obligations assigned,
transferred or novated under this Clause 25.2; or

(ii) support any losses incurred by the New Bank by reason of the non-performance by any
Obligor of its obligations under this Agreement or otherwise.

(g) If:

0013726-0004726 UKO1: 2010612413.17 73

 (i) a Bank assigns, transfers, novates or sub-participates any of its rights and/or obligations under
this Agreement or changes its Facility Office; and

(ii) as a result of circumstances existing at the date the assignment, transfer, novation, sub-
participation or change occurs, an Obligor would be obliged to make a payment to the New
Bank or Bank acting through its new Facility Office under Clause 10 (Taxes) or Clause 12
(Increased Costs),

then the New Bank or Bank acting through its new Facility Office is only entitled to receive payment
under Clause 10 (Taxes) and Clause 12 (Increased Costs) to the same extent as the Existing Bank or
Bank acting through its previous Facility Office would have been if the assignment, transfer, novation,
sub-participation or change had not occurred.

(h) Any reference in this Agreement to a Bank includes a New Bank but excludes a Bank if no amount is
or may be owed to or by it under this Agreement and its Commitment has been cancelled or reduced
to nil.

25.3 Procedure for novations

(a) A novation is effected if:

(i) the Existing Bank and the New Bank deliver to the Agent a duly completed certificate (a
Novation Certificate), substantially in the form of Part 1 of Schedule 4 (Forms of Accession
Documents), with such amendments as the Agent approves to achieve a substantially similar
effect (which may be delivered by fax and confirmed by delivery of a hard copy original but
the fax will be effective irrespective of whether confirmation is received); and

(ii) the Agent (except if the novation is to an Existing Bank or an Affiliate of the Existing Bank
or any other Bank) executes it. The Agent shall only be obliged to execute a Novation
Certificate delivered to it by the Existing Bank and the New Bank once it is satisfied it has
complied with all necessary "know your customer" or other similar checks under all applicable
laws and regulations in relation to the transfer to such New Bank.

(b) Each Party (other than the Existing Bank, the New Bank and the Parent) irrevocably authorises the
Agent to execute any duly completed Novation Certificate on its behalf.

(c) To the extent that they are expressed to be the subject of the novation in the Novation Certificate:

(i) the Existing Bank and the other Parties (the Existing Parties) will be released from their
obligations to each other (the discharged obligations);

(ii) the New Bank and the Existing Parties will assume obligations towards each other which differ
from the discharged obligations only insofar as they are owed to or assumed by the New Bank
instead of the Existing Bank;

(iii) the rights of the Existing Bank against the Existing Parties and vice versa (the discharged
rights) will be cancelled; and

(iv) the New Bank and the Existing Parties will acquire rights against each other which differ from
the discharged rights only insofar as they are exercisable by or against the New Bank instead
of the Existing Bank,

all on the date of execution of the Novation Certificate by the Agent, the Existing Party, the New Bank
and the Parent or, if later, the date specified in the Novation Certificate.

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(d) If the effective date of a novation (other than a novation by an Existing Bank to an Affiliate) is after
the date a Request is received by the Agent but before the date the requested Advance is disbursed to
the relevant Borrower, the Existing Bank shall be obliged to participate in that Advance in respect of
its discharged obligations notwithstanding that novation, and the New Bank shall reimburse the
Existing Bank for its participation in that Advance and all interest and fees thereon up to the date of
reimbursement (in each case to the extent attributable to the discharged obligations) within three
Business Days of the Utilisation Date of that Advance.

25.4 Security over Bank's Rights

A Bank may, without consulting with or obtaining consent from any Obligor, at any time charge to,
assign to, or otherwise create a Security Interest in or over (whether by way of collateral or otherwise)
all or any of its rights under any Finance Document to secure obligations of that Bank to a federal
reserve, central bank or any authorised government body, except that no such charge, assignment or
Security Interest shall:

(a) release a Bank from any of its obligations under the Finance Documents or substitute the
beneficiary of the relevant charge, assignment or Security Interest for the Bank as party to any
of the Finance Documents; or

(b) affect the obligations of the Obligors under the Finance Documents or require any payments
to be made by an Obligor other than or in excess of, or grant to any person any more extensive
rights than, those required to be made or granted to the relevant Bank under the Finance
Documents.

25.5 Pro rata interest settlement

(a) If the Agent has notified the Banks that it is able to distribute interest payments on a "pro rata basis"
to Existing Banks and New Banks then (in respect of any transfer pursuant to Clause 25.2 (Transfers
by Banks) or a novation pursuant to Clause 25.3 (Procedure for novations) the date on which the
transfer or novation effective (the Transfer Date) of which, in each case, is after the date of such
notification and is not on a Term End Date):

(i) any interest or fees in respect of the relevant participation which are expressed to accrue by
reference to the lapse of time shall continue to accrue in favour of the Existing Bank up to but
excluding the Transfer Date (the Accrued Amounts) and shall become due and payable to the
Existing Bank (without further interest accruing on them) on the Term End Date of the current
Term (or, if the Term is longer than six months, on the next of the dates which falls at six
monthly intervals after the first day of that Term); and

(ii) the rights assigned or transferred by the Existing Bank will not include the right to the Accrued
Amounts so that, for the avoidance of doubt:

(A) when the Accrued Amounts become payable, those Accrued Amounts will be payable
for the account of the Existing Bank; and

(B) the amount payable to the New Bank on that date will be the amount which would,
but for the application of this Clause 25.5, have been payable to it on that date, but
after deduction of the Accrued Amounts.

(b) In this Clause 25.5, references to "Term" shall be construed to include a reference to any other period
for accrual of fees.

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25.6 Additional Borrowers

(a) If the Parent wishes one of its wholly-owned Subsidiaries incorporated in the jurisdiction of
incorporation of any Original Borrower to become an Additional Borrower, then it may (if the Majority
Banks and the Agent have approved the identity of the Additional Borrower in writing) deliver to the
Agent the documents listed in Part 2 of Schedule 2 (Conditions Precedent Documents).

(b) On delivery of a Borrower Accession Agreement, executed by the relevant Subsidiary and the Parent,
the Subsidiary concerned will become an Additional Borrower. However, it may not submit a Request
until the Agent confirms to the other Finance Parties and the Parent that it has received all the
documents referred to in Clause 25.6(a) above in form and substance satisfactory to it.

(c) Delivery of a Borrower Accession Agreement, executed by the relevant Subsidiary and the Parent,
constitutes confirmation by that Subsidiary that the representations and warranties set out in Clause 15
(Representations and Warranties), except for Clause 15.8 (Litigation), Clause 15.9 (Material adverse
change), Clause 15.10 (Accounts) and Clause 15.11 (Sanctions and Anti-Bribery and Corruption),
deemed to be made by it on the date of the Borrower Accession Agreement are correct, as if made
with reference to the facts and circumstances then existing.

25.7 Bank Retirement

(a) Without prejudice to Clause 25.12 (Replacement of a Defaulting Bank), the Parent may, at any time
whilst an Event of Default is not continuing, require a Bank to retire from the Facility by giving at
least ten Business Days' notice to the Administrative Parties and the relevant Bank.

(b) If the Parent has given its prior written consent to such retirement (which consent may be withheld in
the Parent's absolute discretion), a Bank may retire from the Facility by giving at least ten Business
Days' notice to each of the Administrative Parties and the Parent.

(c) On expiry of a notice (a Retirement Notice) given pursuant to Clause 25.7(a) or 25.7(b) above then,
at the Parent's option:

(i) (A) the Commitment of the relevant Bank shall be automatically cancelled;

(B) each Borrower shall repay any Advances made to it by the relevant Bank together
with all accrued interest on the amount repaid, all accrued commitment fees on the
cancelled Commitment, and any other amounts payable by it to that Bank under this
Agreement (including under Clause 22.2(c) (Other indemnities)); and

(C) (upon payment of the amounts referred to in paragraph (B) above) the relevant Bank
shall cease to be a Party to this Agreement and shall cease to have any rights or
obligations hereunder (other than in respect of any amounts referred to in
paragraph (B) above subsequently required by a court of competent jurisdiction to be
repaid by the relevant Bank to any person); or

(ii) the relevant Bank shall novate to another bank or financial institution selected by the Parent
its Commitment and the Advances made by it in accordance with Clause 25.3 (Procedure for
novations).

(d) Any Retirement Notice is irrevocable once given.

25.8 Register

The Agent, acting for this purpose as an agent of each Borrower, shall maintain at one of its offices a
copy of each transfer effected pursuant to Clause 25.2 (Transfers by Banks) and a register for the

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 recordation of the names and Facility Offices of the Banks, and the Commitment of, and principal
amount (and stated interest) of the Advances owing to, each Bank pursuant to the terms hereof from
time to time (the Register). The entries in the Register shall be conclusive, and the Borrowers, the
Agent and the Banks shall treat each person whose name is recorded in the Register pursuant to the
terms hereof as a lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrowers and any Bank, at any
reasonable time and from time to time upon reasonable prior notice.

25.9 Affiliates of Banks

(a) Each Bank may fulfil its obligations in respect of any Advance through an Affiliate (a Designated
Entity) if:

(i) the relevant Affiliate is specified in this Agreement as a Bank and is further specified in
Column 3 of Part 2 of Schedule 1 (Banks and Commitments) as a Designated Entity or
becomes a Bank by means of a Novation Certificate in accordance with this Agreement; and

(ii) the Advances in which that Affiliate will participate are specified in Column 4 of Part 2 of
Schedule 1 (Banks and Commitments) or in a notice given by that Bank to the Agent and the
Borrowers.

In this event, the Bank and the Affiliate will participate in Advances in the manner provided for in
paragraph (ii) above.

(b) If Clause 25.9(a) above applies, the Bank and its Affiliate will be treated as having a single
Commitment and a single vote, but, for all other purposes, will be treated as separate Banks.

(c) If:

(i) a Bank designates a Designated Entity in accordance with Clause 25.9(a); and

(ii) as a result of circumstances existing at the date of the designation an Obligor would be obliged
to make a payment to the Designated Entity under Clause 10 (Taxes) or Clause 12 (Increased
Costs),

then the Designated Entity is only entitled to receive payment under Clause 10 (Taxes) and Clause 12
(Increased Costs) to the same extent as the Bank would have been if the designation had not occurred.

25.10 Increase

(a) The Parent may by giving prior written notice to the Agent after the effective date of a cancellation of:

(i) the Available Commitments of a Defaulting Bank in accordance with Clause 7.6 (Right of
cancellation in relation to a Defaulting Bank); or

(ii) the Commitments of a Bank in accordance with Clause 13.1 (Illegality),

request that the Total Commitments be increased in an aggregate amount under the Revolving Facility
in Sterling of up to the amount of the Available Commitments or Commitments so cancelled under
that Revolving Facility as follows:

(A) the increased Total Commitments will be assumed by one or more Banks or other banks or
financial institutions (each an Increase Bank) selected by the Parent (each of which shall not
be a member of the Group and which is acceptable to the Agent (acting reasonably)), and each
of which confirms its willingness to assume and does assume all the obligations of a Bank

0013726-0004726 UKO1: 2010612413.17 77

 corresponding to that part of the increased Commitments which it is to assume, as if it had
been an Original Bank;

(B) each Obligor and any Increase Bank shall assume obligations towards one another and/or
acquire rights against one another as that Obligor and the Increase Bank would have assumed
and/or acquired had the Increase Bank been an Original Bank;

(C) each Increase Bank shall become a Party as a "Bank" and any Increase Bank and each of the
other Finance Parties shall assume obligations towards one another and acquire rights against
one another as that Increase Bank and those Finance Parties would have assumed and/or
acquired had the Increase Bank been an Original Bank; and

(D) the Commitments of the other Banks shall continue in full force and effect.

(b) An increase in the Total Commitments will only be effective on:

(i) the execution by the Agent of an Increase Confirmation from the relevant Increase Bank;

(ii) in relation to an Increase Bank which is not a Bank immediately prior to the relevant increase,
the performance by the Agent of all necessary "know your customer" or other similar checks
under all applicable laws and regulations in relation to the assumption of the increased
Commitments by that Increase Bank, the completion of which the Agent shall promptly notify
to the Parent and the Increase Bank; and

(iii) any increase in the Total Commitments shall take effect on the date specified by the Parent in
the notice referred to in Clause 25.10(a) above or any later date on which the conditions set
out in this Clause 25.10(b) are satisfied.

(c) Each Increase Bank, by executing the Increase Confirmation, confirms (for the avoidance of doubt)
that the Agent has authority to execute on its behalf any amendment or waiver that has been approved
by or on behalf of the relevant Bank or Banks in accordance with this Agreement on or prior to the
date on which the increase becomes effective.

(d) Unless the Agent otherwise agrees or the increased Commitment is assumed by an Existing Bank, the
Obligors shall, on the date upon which the increase takes effect, pay to the Agent (for its own account)
a fee of £2,000 and the Obligors shall promptly on demand pay the Agent the amount of all costs and
expenses (including legal fees) reasonably incurred by it in connection with any increase in
Commitments under this Clause 25.10.

(e) Clauses 25.2(d) to 25.2(g) (both inclusive) (Transfers by Banks), shall apply mutatis mutandis in this
Clause 25.10 in relation to an Increase Bank as if references in that Clause to:

(i) an Existing Bank were references to all the Banks immediately prior to the relevant increase;

(ii) the New Bank were references to that Increase Bank; and

(iii) a re-transfer and re-assignment were references to respectively a transfer and assignment.

25.11 Disenfranchisement of a Bank

(a) For so long as a Disenfranchised Bank (as such term is defined in Clause 19.1(c) (Commitment fee))
has any Available Commitment, in ascertaining the Majority Banks or whether any given percentage
has been obtained to approve any request for a consent, waiver, amendment or other vote under the
Finance Documents, that Disenfranchised Bank's Commitments will be reduced by the amount of its
Available Commitments.

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(b) For the purposes of this Clause 25.11, the Agent may assume that the following Banks are
Disenfranchised Banks:

(i) any Bank which has notified the Agent that it has become a Disenfranchised Bank; and

(ii) any Bank in relation to which it is aware that any of the events or circumstances referred to in
paragraph (a), (b) or (c) of the definition of "Defaulting Bank" has occurred and, in so far as
such event or circumstance relates to paragraph (c) of the definition of "Defaulting Bank", it
has received a notice of cancellation from the Parent in respect of that Bank pursuant to
Clause 7.6 (Right of cancellation in relation to a Defaulting Bank),

unless it has received notice to the contrary from the Bank concerned (together with any supporting
evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Bank has ceased
to be a Disenfranchised Bank.

25.12 Replacement of a Defaulting Bank

(a) Without prejudice to Clause 25.7 (Bank Retirement), the Parent may, at any time a Bank has become
and continues to be a Defaulting Bank, by giving five Business Days' prior written notice to the Agent
and such Bank:

(i) replace such Bank by requiring such Bank to (and such Bank shall) transfer pursuant to this
Clause 25 (Changes to the Parties) all (and not part only) of its rights and obligations under
this Agreement; or

(ii) require such Bank to (and such Bank shall) transfer pursuant to this Clause 25 (Changes to the
Parties) all (and not part only) of the undrawn Commitments of the Bank,

to a Bank or other bank or financial institution (a Replacement Bank) selected by the Parent, and
which (unless the Agent is an Impaired Agent) is acceptable to the Agent (acting reasonably), which
confirms its willingness to assume and does assume all the obligations or all the relevant obligations
of the transferring Bank (including the assumption of the transferring Bank's participations or
unfunded participations (as the case may be) on the same basis as the transferring Bank) for:

(iii) at any time in respect of EURIBOR, a purchase price in cash, payable at the time of transfer,
equal to the outstanding principal amount of such Bank's participation in the outstanding
Advances and all accrued but unpaid interest, any amounts payable under Clause 22.2 (Other
indemnities) and any other amounts payable in relation thereto under the Finance Documents;
and

(iv) in respect of an Advance denominated in Sterling or US Dollars, a purchase price in cash

consisting of:

(A) an amount (payable on the date of the transfer) equal to the outstanding principal
amount of such Bank's participation in the outstanding Advances and other amounts
payable in relation thereto under the Finance Documents (other than those described
in paragraph (B) below); and

(B) in relation to each Term in which that transfer occurs, an amount (payable on the last
day of that Term) equal to such Bank's share of the interest payable under this
Agreement in respect of that participation and that Term (determined on a pro rata
basis by reference to the total amount of that interest) and the proportion borne by:

I. the number of days in that Term up to but excluding the day of that transfer;
to

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 II. the total number of days in that Term.

(b) The Agent may in its absolute discretion (and is authorised by each Finance Party, but is not obliged
by the Obligors, to) execute, without requiring any further consent or action from any other Party, a
Novation Certificate on behalf of any Defaulting Bank which is required to transfer its rights and
obligations under this Agreement pursuant to this Clause 25.12 which shall be effective for the
purposes of Clause 25.3 (Procedure for novations). The Agent shall not be liable in any way for any
action taken by it pursuant to this Clause 25.12 and, for the avoidance of doubt, the provisions of
Clause 18.7 (Exoneration) shall apply in relation thereto.

(c) Any transfer of rights and obligations of a Defaulting Bank pursuant to this Clause 25.12 shall be
subject to the following conditions:

(i) neither the Agent nor the Defaulting Bank shall have any obligation to the Obligors to find a
Replacement Bank;

(ii) the transfer must take place no later than seven days after the notice referred to in
Clause 25.12(a) above; and

(iii) in no event shall the Defaulting Bank be required to pay or surrender to the Replacement Bank
any of the fees received by the Defaulting Bank pursuant to the Finance Documents.

(d) For the avoidance of doubt, the rights of the Obligors under Clause 25.7 (Bank Retirement) and
Clause 25.12 (Replacement of a Defaulting Bank) are without prejudice to each other and the rights
under each Clause are capable of being exercised independently of each other by the Obligors.

26. CONFIDENTIALITY OF FUNDING RATES

26.1 Confidentiality and disclosure

(a) The Agent and each Obligor agree to keep each Funding Rate confidential and not to disclose it to
anyone, save to the extent permitted by paragraphs (b) and (c) below.

(b) The Agent may disclose:

(i) any Funding Rate to the relevant Borrower pursuant to Clause 8.7 (Notifications); and

(ii) any Funding Rate to any person appointed by it to provide administration services in respect
of one or more of the Finance Documents to the extent necessary to enable such service
provider to provide those services if the service provider to whom that information is to be
given has entered into a confidentiality agreement substantially in the form of the LMA Master
Confidentiality Undertaking for Use With Administration/Settlement Service Providers or
such other form of confidentiality undertaking agreed between the Agent and the relevant
Lender.

(c) The Agent and each Obligor may disclose any Funding Rate to:

(i) any of its Affiliates and any of its or their officers, directors, employees, professional advisers,
auditors, partners and Representatives if any person to whom that Funding Rate is to be given
pursuant to this paragraph (i) is informed in writing of its confidential nature and that it may
be price-sensitive information except that there shall be no such requirement to so inform if
the recipient is subject to professional obligations to maintain the confidentiality of that
Funding Rate or is otherwise bound by requirements of confidentiality in relation to it;

0013726-0004726 UKO1: 2010612413.17 80

 (ii) any person to whom information is required or requested to be disclosed by any court of
competent jurisdiction or any governmental, banking, taxation or other regulatory authority or
similar body, the rules of any relevant stock exchange or pursuant to any applicable law or
regulation if the person to whom that Funding Rate is to be given is informed in writing of its
confidential nature and that it may be price-sensitive information except that there shall be no
requirement to so inform if, in the opinion of the Agent or the relevant Obligor, as the case
may be, it is not practicable to do so in the circumstances;

(iii) any person to whom information is required to be disclosed in connection with, and for the
purposes of, any litigation, arbitration, administrative or other investigations, proceedings or
disputes if the person to whom that Funding Rate is to be given is informed in writing of its
confidential nature and that it may be price-sensitive information except that there shall be no
requirement to so inform if, in the opinion of the Agent or the relevant Obligor, as the case
may be, it is not practicable to do so in the circumstances; and

(iv) any person with the consent of the relevant Bank.

27. DISCLOSURE OF INFORMATION AND KNOW YOUR CUSTOMER REQUIREMENTS

27.1 Disclosure of information

A Bank may disclose:

(a) a copy of any Finance Document; and

(b) any information which that Bank has acquired under or in connection with any Finance
Document,

to:

(c) any of its Affiliates and any of its or their officers, directors, employees, professional advisers
and auditors to the extent necessary in connection with the Facility;

(d) any person with whom it is proposing to enter, or has entered into, any kind of transfer,
novation, participation or other agreement in relation to this Agreement;

(e) a federal reserve, central bank or any authorised government body to whom a Bank is charging
to, assigning to or otherwise creating a Security Interest in or over (whether by way of
collateral or otherwise) all or any of its rights under any Finance Document under Clause 25.4
(Security over Bank's Rights); or

(f) any person to whom it is required to disclose such information under any law or regulation or
by any taxation or regulatory authority,

provided that a Bank shall not disclose any such information to a person under:

(i) paragraph (c) above unless such person is informed of its confidential nature and that some or
all of such information may be price-sensitive information and such person is subject to
professional obligations to maintain the confidentiality of the information or is otherwise
bound by requirements of confidentiality in relation to such information; and

(ii) paragraph (d) above (other than one of its Affiliates) unless that person has provided to that
Bank a confidentiality undertaking addressed to that Bank and the Parent substantially in the
form of Schedule 5 (Form of Confidentiality Undertaking) or such other form as the Parent
may approve.

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27.2 Disclosure to numbering service providers

(a) Any Finance Party may disclose to any national or international numbering service provider appointed
by that Finance Party to provide identification numbering services in respect of this Agreement, the
Facility and/or one or more Obligors the following information:

(i) names of Obligors;

(ii) country of domicile of Obligors;

(iii) place of incorporation of Obligors;

(iv) Signing Date;

(v) governing law of this Agreement;

(vi) the names of the Agent, the Swingline Agent and the Arrangers;

(vii) date of each amendment and restatement of this Agreement, if applicable;

(viii) amounts of, and names of the Facility (and any tranches);

(ix) amount of Total Commitments;

(x) currencies of the Facility;

(xi) type of Facility;

(xii) ranking of Facility;

(xiii) Final Maturity Date of the Facility;

(xiv) changes to any of the information previously supplied pursuant to paragraphs (i) to (xiii)
above; and

(xv) such other information agreed between such Finance Party and the Parent,

to enable such numbering service provider to provide its usual syndicated loan numbering
identification services.

(b) The Parties acknowledge and agree that each identification number assigned to this Agreement, the
Facility and/or one or more Obligors by a numbering service provider and the information associated
with each such number may be disclosed to users of its services in accordance with the standard terms
and conditions of that numbering service provider.

27.3 Know your Customer requirements

(a) Each Obligor must promptly on the request of any Finance Party supply to that Finance Party any
documentation or other evidence which is reasonably requested by that Finance Party (whether for
itself, on behalf of any Finance Party or any prospective new Bank) to enable a Finance Party or
prospective New Bank to carry out and be satisfied with the results of all applicable know your
customer requirements.

(b) Each Bank must promptly on the request of the relevant Administrative Party supply to such
Administrative Party any documentation or other evidence which is reasonably required by such

0013726-0004726 UKO1: 2010612413.17 82

 Administrative Party to carry out and be satisfied with the results of all applicable know your customer
requirements.

27.4 Additional disclosure permission

Nothing in any Finance Document shall prevent disclosure of any information or other matter to the
extent that preventing that disclosure would otherwise cause any transaction contemplated by the
Finance Documents or any transaction carried out in connection with any transaction contemplated by
the Finance Documents to become an arrangement described in Part II A 1 of Annex IV of Directive
2011/16/EU.

28. SET-OFF

Whilst an Event of Default is continuing, a Finance Party may set off any matured obligation owed by
an Obligor under this Agreement (to the extent beneficially owned by that Finance Party) against any
obligation (whether or not matured) owed by that Finance Party to that Obligor, regardless of the place
of payment, booking branch or currency of either obligation. If the obligations are in different
currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual
course of business for the purpose of the set-off. If either obligation is unliquidated or unascertained,
the Finance Party may set off in an amount estimated by it in good faith to be the amount of that
obligation.

29. PRO RATA SHARING

29.1 Redistribution

If any amount owing by an Obligor under this Agreement to a Finance Party (the recovering Finance
Party) is discharged by payment, set-off or any other manner other than in accordance with Clause 9
(Payments) (a recovery), then:

(a) the recovering Finance Party shall, within three Business Days, notify details of the recovery
to the Agent or the Swingline Agent (as applicable);

(b) the Agent or the Swingline Agent (as applicable) shall determine whether the recovery is in
excess of the amount which the recovering Finance Party would have received had the
recovery been received and distributed in accordance with Clause 9 (Payments);

(c) subject to Clause 29.3 (Exception), the recovering Finance Party shall, within three Business
Days of demand by the Agent or the Swingline Agent (as applicable) pay to the Agent or the
Swingline Agent (as applicable) an amount (the redistribution) equal to the excess;

(d) the Agent or the Swingline Agent (as applicable) shall treat the redistribution as if it were a
payment by the Obligor concerned under Clause 9 (Payments) and shall pay the redistribution
to the Finance Parties (other than the recovering Finance Party) in accordance with Clause 9.8
(Partial payments); and

(e) after payment of the full redistribution, the recovering Finance Party will be subrogated to the
portion of the claims paid under Clause 29.1(d) above, and that Obligor will owe the
recovering Finance Party a debt which is equal to the redistribution, immediately payable and
of the type originally discharged.

0013726-0004726 UKO1: 2010612413.17 83

29.2 Reversal of redistribution

If under Clause 29.1 (Redistribution):

(a) a recovering Finance Party must subsequently return a recovery, or an amount measured by
reference to a recovery, to an Obligor; and

(b) the recovering Finance Party has paid a redistribution in relation to that recovery,

each Finance Party shall, within three Business Days of demand by the recovering Finance Party
through the Agent or the Swingline Agent (as applicable), reimburse the recovering Finance Party all
or the appropriate portion of the redistribution paid to that Finance Party. Thereupon the subrogation
in Clause 29.1(e) (Redistribution) will operate in reverse to the extent of the reimbursement.

29.3 Exception

A recovering Finance Party need not pay a redistribution to the extent that it would not, after the
payment, have a valid claim against the Obligor concerned in the amount of the redistribution pursuant
to Clause 29.1(e) (Redistribution).

30. SEVERABILITY

If a provision of any Finance Document is or becomes illegal, invalid or unenforceable in any

jurisdiction, that shall not affect:

(a) the legality, validity or enforceability in that jurisdiction of any other provision of the Finance
Documents; or

(b) the legality, validity or enforceability in other jurisdictions of that or any other provision of
the Finance Documents.

31. COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and this has the same effect
as if the signatures on the counterparts were on a single copy of the Finance Document.

32. NOTICES

32.1 Giving of notices

Subject to Clause 32.3 (Electronic communications), all notices or other communications under or in
connection with this Agreement shall be given in writing. Any such notice will be deemed to be given
as follows:

(a) if in writing, when delivered; and

(b) if by email or any other electronic communication, when received.

However, a notice given in accordance with the above but received on a non-business day or after 5
pm in the place of receipt will only be deemed to be given on the next business day in that place.

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32.2 Addresses for notices

(a) The address (and email address, where specified) (and the department or officer, if any, for whose
attention the communication is to be made) of each Party for any communication or document to be
made or delivered under or in connection with the Finance Documents is:

(i) in the case of the Parent, that identified with its name below;

(ii) in the case of each Bank or any other Obligor:

(A) that notified in writing to the Agent on or prior to the date on which it becomes a
Party; or

(B) such other address notified by that Party for this purpose to the Agent by not less than
five Business Days' notice; and

(iii) in the case of the Agent, that identified with its name below.

(b) The address of the Agent is:

HSBC Bank plc

Issuer Services, Level 14
8 Canada Square
London E14 5HQ

Contact: Issuer Services/Loan Agency

or such other address as the Agent may notify to the other Parties by not less than five Business Days'
notice.

(c) The address and email address of the Swingline Agent are:

HSBC Bank USA, N.A.

452 Fifth Avenue
Issuer Services/Loan Agency
New York, NY 10018
U.S.A.

Primary Contact: Issuer Services/Loan Agency

Email: ctlany.loanagency@us.hsbc.com

With a copy to:

HSBC Bank plc

Issuer Services, Level 14
8 Canada Square
London E14 5HQ

Contact: Issuer Services/Loan Agency

Email: lag.fax@hsbcib.com (for Borrower operational requests only),
lad.agency.pef.loans@hsbc.com (all other enquiries)

or such other address or email address as the Swingline Agent may notify to the other Parties by not
less than five Business Days' notice.

0013726-0004726 UKO1: 2010612413.17 85

(d) The address and email address of the Parent are:

British American Tobacco p.l.c.

Globe House
4 Temple Place
London WC2R 2PG

Contact: The Group Treasurer

Email: Corporate_Finance_Financial_Risk@bat.com

or such other address or email address as the Parent may notify to the other Parties by not less than
five Business Days' notice.

(e) Notices to be served on an Obligor other than the Parent shall be validly served on such Obligor by
being addressed in accordance with Clause 32.2(d) above and marked as served on the Parent on behalf
of the relevant Obligor.

(f) The Agent shall, promptly upon request from any Party, give to that Party the address and email
address of any other Party applicable at the time for the purposes of this Clause 32.2.

32.3 Electronic communications

(a) Any communication to be made between any two Parties under or in connection with the Finance
Documents may be made by email or other electronic means (including, without limitation, by way of
posting to a secure website) if those two Parties:

(i) notify each other in writing of their email address and/or any other information required to
enable the transmission of information by that means; and

(ii) notify each other of any change to their email address or any other such information supplied
by them by not less than five Business Days' notice.

(b) Any such electronic communication as specified in paragraph (a) above to be made between an Obligor
and a Finance Party may only be made in that way to the extent that those two Parties agree that, unless
and until notified to the contrary, this is to be an accepted form of communication.

(c) Any such electronic communication as specified in paragraph (a) above made between any two Parties
will be effective only when actually received (or made available) in readable form and in the case of
any electronic communication made by a Party to the Agent or the Swingline Agent (as applicable)
only if it is addressed in such a manner as the Agent shall specify for this purpose.

(d) Any reference in a Finance Document to a communication being sent or received shall be construed
to include that communication being made available in accordance with this Clause 32.3.

32.4 Communications when Agent is an Impaired Agent

If the Agent or the Swingline Agent (as applicable) is an Impaired Agent, the Parties may, instead of
communicating with each other through the Agent or the Swingline Agent (as applicable),
communicate with each other directly and (while the Agent or the Swingline Agent (as applicable) is
an Impaired Agent) all the provisions of the Finance Documents which require communications to be
made or notices to be given to or by the Agent or the Swingline Agent (as applicable) shall be varied
so that communications may be made and notices given to or by the relevant Parties directly. This
provision shall not operate after a replacement Agent or the Swingline Agent (as applicable) has been
appointed.

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33. LANGUAGE

(a) Any notice given under or in connection with any Finance Document shall be in English.

(b) All other documents provided under or in connection with any Finance Document shall be:

(i) in English; or

(ii) if not in English, accompanied by a certified English translation and, in this case, the English
translation shall prevail unless the document is a statutory or other official document.

34. JURISDICTION

34.1 Submission

For the benefit of each other Party, each Party agrees that the courts of England have exclusive
jurisdiction to settle any disputes in connection with any Finance Document (including a dispute
relating to the existence, validity or termination of any Finance Document or any non-contractual
obligations arising out of or in connection with any Finance Document) and accordingly submits to
the jurisdiction of the English courts.

34.2 Service of process

Without prejudice to any other mode of service, each Obligor (other than an Obligor incorporated in
England and Wales):

(a) irrevocably appoints the Parent as its agent for service of process relating to any proceedings
before the English courts in connection with any Finance Document (and the Parent accepts
this appointment);

(b) agrees that failure by a process agent to notify the Obligor of the process will not invalidate
the proceedings concerned; and

(c) consents to the service of process relating to any such proceedings by prepaid posting of a
copy of the process to its address for the time being applying under Clause 32.2 (Addresses
for notices).

34.3 Forum convenience and enforcement abroad

Each Party:

(a) waives objection to the English courts on grounds of inconvenient forum or otherwise as
regards proceedings in connection with a Finance Document; and

(b) agrees that a judgment or order of an English court in connection with a Finance Document is
conclusive and binding on it and may be enforced against it in the courts of any other
jurisdiction.

35. WAIVER OF TRIAL BY JURY

EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION IN CONNECTION WITH ANY FINANCE DOCUMENT OR ANY
TRANSACTION CONTEMPLATED BY ANY FINANCE DOCUMENT. THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY THE COURT.

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36. GOVERNING LAW

This Agreement and any dispute or claim arising out of or in connection with it or its subject matter,
existence, negotiation, validity, termination or enforceability (including any non-contractual disputes
or claims) shall be governed by and construed in accordance with English law.

37. US PATRIOT ACT

Each Finance Party that is subject to the requirements of the (ii) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56 (commonly known as the USA Patriot Act) (the USA Patriot Act) hereby notifies
each Obligor that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify
and record information that identifies the Obligors, which information includes the name and address
of the Obligors and other information that will allow such Finance Party to identify the Obligors in
accordance with the USA Patriot Act. Each Obligor agrees that it will provide each Finance Party
with such information as it may reasonably request in order for such Finance Party to satisfy the
requirements of the USA Patriot Act.

38. CONTRACTUAL RECOGNITION OF BAIL-IN

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or
understanding between the Parties, each Party acknowledges and accepts that any liability of any Party
to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action
by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a) any Bail-In Action in relation to any such liability, including (without limitation):

(i) a reduction, in full or in part, in the principal amount, or outstanding amount due
(including any accrued but unpaid interest) in respect of any such liability;

(ii) a conversion of all, or part of, any such liability into shares or other instruments of
ownership that may be issued to, or conferred on, it; and

(iii) a cancellation of any such liability; and

(b) a variation of any term of any Finance Document to the extent necessary to give effect to any
Bail-In Action in relation to any such liability.

39. RECOGNITION OF THE U.S. SPECIAL RESOLUTION REGIMES

(a) To the extent that the Finance Documents provide support, through a guarantee or otherwise, for any
agreement or instrument that is a QFC (such support, QFC Credit Support and each such QFC a
Supported QFC), the Parties acknowledge and agree as follows with respect to the resolution power
of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations
promulgated thereunder, the U.S. Special Resolution Regimes) in respect of such Supported QFC
and QFC Credit Support (with the provisions below applicable notwithstanding that the Finance
Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of
New York and/or of the United States or any other state of the United States):

(i) in the event that any Bank that is a Covered Entity and a party to a Supported QFC becomes
subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Bank
of such Supported QFC and the benefit of such QFC Credit Support (and any interest and
obligation in or under such Supported QFC and such QFC Credit Support and any rights in
property securing such Supported QFC or such QFC Credit Support), will be effective to the

0013726-0004726 UKO1: 2010612413.17 88

 same extent as the transfer would be effective under the U.S. Special Resolution Regime if
the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights
in property) were governed by the laws of the United States or a state of the United States;

(ii) in the event that any Bank is a Covered Entity or a BHC Act Affiliate of such Bank is a
Covered Entity and becomes subject to a proceeding under a U.S. Special Resolution Regime,
Default Rights under the Finance Documents that might otherwise apply to such Supported
QFC or any QFC Credit Support that may be exercised against such Bank are permitted to be
exercised to no greater extent than such Default Rights could be exercised under the U.S.
Special Resolution Regime if the Supported QFC and the Finance Documents were governed
by the laws of the United States or a state of the United States; and

(iii) without limitation of the foregoing, rights and remedies of the parties with respect to a
Defaulting Bank shall in no event affect the rights of any Covered Entity with respect to a
Supported QFC or any QFC Credit Support.

(b) For the purposes of this Clause 39:

(i) BHC Act Affiliate has the meaning assigned to the term "affiliate" in, and shall be interpreted
in accordance with, 12 U.S.C. § 1841(k);

(ii) Covered Entity means any of the following:

(A) a covered entity as that term is defined in, and interpreted in accordance with, 12
C.F.R. §252.82(b);

(B) a covered bank as that term is defined in, and interpreted in accordance with, 12
C.F.R. §47.3(b); or

(C) a covered FSI as that term is defined in, and interpreted in accordance with, 12 C.F.R.
§382.2(b);

(iii) Default Right has the meaning assigned to that term in, and shall be interpreted in accordance
with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable; and

(iv) QFC has the meaning assigned to the term "qualified financial contract" in, and shall be
interpreted in accordance with, 12 U.S.C. 53900(c)(8)(D).

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

0013726-0004726 UKO1: 2010612413.17 89

 SCHEDULE 1

BANKS AND COMMITMENTS

PART 1

ARRANGERS

Mandated Lead Arrangers and Bookrunners

Barclays Bank PLC

HSBC Bank plc
Banco Bilbao Vizcaya Argentaria, S.A., London Branch
Banco Santander S.A., London Branch
Bank of America Europe Designated Activity Company
Bank of China Limited, London Branch
Citibank, N.A., London Branch
Commerzbank Aktiengesellschaft
Deutsche Bank AG, London Branch
Goldman Sachs Bank USA
Lloyds Bank plc
Mizuho Bank, Ltd.
National Westminster Bank plc
Standard Chartered Bank
Sumitomo Mitsui Banking Corporation
Wells Fargo Bank, N.A., London Branch

Lead Arrangers

Emirates NBD Bank (P.J.S.C), London Branch

The Standard Bank of South Africa Limited, Isle of Man Branch

0013726-0004726 UKO1: 2010612413.17 90

 PART 2

BANKS AND COMMITMENTS

Bank Column 1 Column 2 Column 3 Column 4

Commitment under Revolving Facility Commitment under Swingline Designated Jurisdictions

Facility Entity in relation to
which the
Designated
Entity will
participate
in Advances

£ US$ - -

Barclays Bank PLC 154,000,000 166,666,666.67 - -

HSBC Bank plc 154,000,000 166,666,666.67 - -

Banco Bilbao Vizcaya Argentaria,
154,000,000 166,666,666.67 - -
S.A., London Branch
Banco Santander S.A., London
154,000,000 166,666,666.67 - -
Branch
Bank of United States
America, N.A., of America
London Branch
in respect of
Bank of America Europe Designated
154,000,000 NIL US Borrowers
Activity Company
in respect of
any Revolving
Facility
Advance

0013726-0004726 UKO1: 2010612413.17 91

 Bank Column 1 Column 2 Column 3 Column 4

Commitment under Revolving Facility Commitment under Swingline Designated Jurisdictions

Facility Entity in relation to
which the
Designated
Entity will
participate
in Advances

£ US$ - -

Bank of America, N.A. NIL 166,666,666.67 - -

Bank of China Limited, London
154,000,000 NIL - -
Branch
Citibank, N.A., London Branch 154,000,000 166,666,666.67 - -

Commerzbank Aktiengesellschaft 154,000,000 166,666,666.67 - -

Deutsche Bank AG, London Branch 154,000,000 166,666,666.67 - -

Goldman Sachs Bank USA 154,000,000 166,666,666.67 - -

Lloyds Bank plc 154,000,000 166,666,666.67 - -

Mizuho Bank, Ltd. 154,000,000 166,666,666.66 - -

National Westminster Bank plc 154,000,000 166,666,666.66 - -

Standard Chartered Bank 154,000,000 166,666,666.66 - -

Sumitomo Mitsui Banking
154,000,000 166,666,666.66 - -
Corporation
Wells Fargo Bank, N.A., London 154,000,000 166,666,666.66 - -
Branch
Emirates NBD Bank (P.J.S.C),
37,000,000 NIL - -
London Branch

0013726-0004726 UKO1: 2010612413.17 92

 Bank Column 1 Column 2 Column 3 Column 4

Commitment under Revolving Facility Commitment under Swingline Designated Jurisdictions

Facility Entity in relation to
which the
Designated
Entity will
participate
in Advances

£ US$ - -
The Standard Bank of South Africa
37,000,000 NIL - -
Limited, Isle of Man Branch
2,538,000,000 2,500,000,000 - -
Total

0013726-0004726 UKO1: 2010612413.17 93

 SCHEDULE 2

CONDITIONS PRECEDENT DOCUMENTS

PART 1

TO BE DELIVERED BEFORE THE FIRST ADVANCE

1. A copy of the articles of association and certificate of incorporation and by-laws (or equivalent
constitutional documents) of each Obligor.

2. An up-to-date extract of the registration of an Obligor incorporated in the Netherlands in the Trade
Register of the Chamber of Commerce.

3. A copy of a resolution (or extract of a resolution, if applicable) of the board of directors of each Obligor
(or any duly authorised committee of any such board):

(a) approving the terms of, and the transactions contemplated by, the Finance Documents and
resolving that it execute and, where applicable, deliver the Finance Documents to which it is
a party;

(b) authorising a specified person or persons to execute and, where applicable, deliver the Finance
Documents to which it is a party on its behalf; and

(c) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents
and notices (including Requests and Selection Notices) to be signed and/or despatched by it
under or in connection with the Finance Documents.

4. A specimen of the signature of each person authorised by the resolutions referred to in paragraph 3
above.

5. A certificate of an officer of each Obligor confirming that the borrowing of the Total Commitments in
full would not cause any borrowing limits binding on that Obligor to be exceeded.

6. A certificate of an authorised signatory of each Obligor certifying that each copy document specified
in this Part 1 of this Schedule 2 is correct, complete and in full force and effect as at a date no earlier
than the Signing Date.

7. Legal opinions of Allen & Overy LLP in relation to English law, Stibbe London B.V. in relation to
Dutch law and Cravath, Swaine & Moore LLP in relation to United States and relevant state laws.

8. Evidence of cancellation and (if applicable) repayment or prepayment in full of Revolving Facility A
as defined in and under the Existing Credit Agreement.

0013726-0004726 UKO1: 2010612413.17 94

 PART 2

TO BE DELIVERED BY AN ADDITIONAL BORROWER

1. A Borrower Accession Agreement, duly executed by the Additional Borrower and the Parent.

2. A copy of the articles of association and certificate of incorporation and by-laws or equivalent
constitutional documents of the Additional Borrower.

3. A copy of a resolution of the board of directors of the Additional Borrower:

(a) approving the terms of, and the transactions contemplated by, the Borrower Accession
Agreement and resolving that it execute the Borrower Accession Agreement;

(b) authorising a specified person or persons to execute the Borrower Accession Agreement on
its behalf; and

(c) authorising a specified person or persons, on its behalf, to sign and/or despatch all other
documents and notices (including Requests and Selection Notices) to be signed and/or
despatched by it under or in connection with this Agreement.

4. A copy of any other authorisation or other document, opinion or assurance which the Agent reasonably
considers to be necessary in connection with the entry into and performance of, and the transactions
contemplated by, the Borrower Accession Agreement or for the validity and enforceability of any
Finance Document.

5. A specimen of the signature of each person authorised by the resolution referred to in paragraph 3
above.

6. The latest audited accounts of the Additional Borrower (if any).

7. A legal opinion of Allen & Overy LLP, English legal advisers to the Agent and, if applicable, other
lawyers approved by the Agent in the place of incorporation of the Additional Borrower, addressed to
the Finance Parties.

8. A certificate of an authorised signatory of the Additional Borrower certifying that each copy document
specified in this Part 2 of this Schedule 2 is correct, complete and in full force and effect as at a date
no earlier than the date of the Borrower Accession Agreement.

9. A process agent appointment letter if the Additional Borrower is incorporated outside the United
Kingdom.

0013726-0004726 UKO1: 2010612413.17 95

 SCHEDULE 3

FORM OF REQUEST

To: [ ] as Agent/ Swingline Agent*

From: [Borrower] Date: [ ]

British American Tobacco p.l.c.

6 March 2023 (the Facility Agreement)
£2,538,000,000 revolving credit facility agreement dated _________

We wish to utilise the Revolving Facility / the Swingline Facility by way of Revolving Facility
Advances*/ Swingline Advances as follows:

(a) Name of Borrower:

(b) Utilisation Date: Revolving Facility: [ ]*

Swingline Facility: [ ]*

(c) Requested Amount (including Revolving Facility: [ ]*

currency):
Swingline Facility: [ ]*

(d) Term*: Revolving Facility: [ ]*

Swingline Facility: [ ]*

(e) Payment Instructions: Revolving Facility: [ ]*

Swingline Facility: [ ]*

We confirm that each condition specified in Clause 4.2 (Further conditions precedent) of the Facility
Agreement is satisfied on the date of this Request and this Advance would not cause any borrowing
limit binding on us to be exceeded.

By:

[BORROWER]

Authorised Signatory

____________________________

[NOTE: PLEASE SEEK DUTCH LEGAL ADVICE (I) UNTIL THE COMPETENT AUTHORIT Y
PUBLISHES ITS INTERPRETATION OF THE TERM "PUBLIC" (AS REFERRED TO IN ARTICLE 4.1(1)
OF THE CAPITAL REQUIREMENTS REGULATION (EU/575/2013)), IF ANY AMOUNT LENT TO A
DUTCH BORROWER IS TO BE ASSIGNED WHICH IS LESS THAN €100,000 (OR ITS EQUIVALENT);
AND (II) AS SOON AS THE COMPETENT AUTHORITY PUBLISHES ITS INTERPRETATION OF THE
TERM "PUBLIC", IF THE NEW BANK IS CONSIDERED TO BE PART OF THE PUBLIC ON THE BASIS
OF THAT INTERPRETATION.]
* Delete as appropriate

0013726-0004726 UKO1: 2010612413.17 96

 SCHEDULE 4

FORMS OF ACCESSION DOCUMENTS

PART 1

NOVATION CERTIFICATE

To: HSBC Bank plc as Agent and British American Tobacco p.l.c. as Parent

From: [The Existing Bank] and [The New Bank] 1

Date: [ ]

British American Tobacco p.l.c.

£2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 (the Facility Agreement)
We refer to Clause 25.3 (Procedure for novations) of the Facility Agreement.

1. We [] (the Existing Bank) and [] (the New Bank) agree to the novation to the New Bank of all
the Existing Bank's rights and obligations under the Facility Agreement referred to in the Schedule in
accordance with Clause 25.3 (Procedure for novations).

2. The specified date for the purposes of Clause 25.3(c) (Procedure for novations) is [date of novation].

3. The Facility Office and address for notices of the New Bank for the purposes of Clause 32.2
(Addresses for notices) are set out in the Schedule.

4. This Novation Certificate, and any non-contractual obligations arising out of or in connection with it,
are governed by English law. Capitalised terms used in this Novation Certificate have the meanings
specified in the Facility Agreement.

5. The New Bank confirms that it is [a Qualifying Bank within the meaning of the definition “Qualifying
Bank” under paragraph (b)(i) of Clause 1.1 (Definitions) of the Facility Agreement]/[a Qualifying
Bank within the meaning of the definition “Qualifying Bank” under paragraph (b)(ii) of Clause 1.1
(Definitions) of the Facility Agreement]/[not a Qualifying Bank within the meaning of the definition
“Qualifying Bank” under paragraph (b)(i) or paragraph (b)(ii) of Clause 1.1 (Definitions) of the
Facility Agreement.] 2

[NOTE: PLEASE SEEK DUTCH LEGAL ADVICE: (I) UNTIL THE COMPETENT AUTHORIT Y
PUBLISHES ITS INTERPRETATION OF THE TERM "PUBLIC" (AS REFERRED TO IN ARTICLE 4.1(1)
OF THE CAPITAL REQUIREMENTS REGULATION (EU/575/2013)), IF ANY AMOUNT LENT TO A
DUTCH BORROWER IS TO BE ASSIGNED WHICH IS LESS THAN €100,000 (OR ITS EQUIVALENT);
AND (II) AS SOON AS THE COMPETENT AUTHORITY PUBLISHES ITS INTERPRETATION OF THE
TERM "PUBLIC", IF THE NEW BANK IS CONSIDERED TO BE PART OF THE PUBLIC ON THE BASIS
OF THAT INTERPRETATION.]

1
If the New Bank holds a passport under the HMRC DT Treaty Passport scheme and wishes that scheme to apply to the Facility Agreement,
it must comply with the obligations set out in Clause 10.5 (Borrower DTTP Filing) of the Facility Agreement.
2
New Bank to provide confirmation.

0013726-0004726 UKO1: 2010612413.17 97

 The Schedule
Rights and obligations to be novated

[Details of the rights and obligations of the Existing Bank to be novated].

[New Bank]

[Facility Office Address for notices]

[Existing Bank] [New Bank] [HSBC Bank plc]

By: By: By:

Date: Date: Date:

[British American Tobacco p.l.c.]

By:

Date:

0013726-0004726 UKO1: 2010612413.17 98

 PART 2

BORROWER ACCESSION AGREEMENT

To: HSBC Bank plc as Agent

From: [Proposed Borrower] and British American Tobacco p.l.c.

[Date]

British American Tobacco p.l.c.

£2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 (the Facility Agreement)
We refer to Clause 25.6 (Additional Borrowers) of the Facility Agreement.

[Name of company] of [registered office] (registered no. []) (the Proposed Borrower) agrees to become an
Additional Borrower and to be bound by the terms of the Facility Agreement as an Additional Borrower in
accordance with Clause 25.6 (Additional Borrowers) of the Facility Agreement.

The address for notices of the Proposed Borrower for the purposes of Clause 32.2 (Addresses for notices) of
the Facility Agreement is:

[ ]

This Borrower Accession Agreement and any non-contractual obligations arising out of or in connection with
it, are governed by English law. Capitalised terms used in this Borrower Accession Agreement have the
meanings specified in the Facility Agreement.

By:

[Proposed Borrower]

Authorised Signatory

By:

British American Tobacco p.l.c.

Authorised Signatory

0013726-0004726 UKO1: 2010612413.17 99

 PART 3

FORM OF BORROWER NOVATION AGREEMENT

A NOVATION AGREEMENT dated [ ]

BETWEEN:

(1) [ ] (the Existing Borrower);

(2) [ ] (the Substitute Borrower);

(3) British American Tobacco p.l.c. on behalf of itself and each other Obligor (such capitalised term are
defined in the Facility Agreement referred to below) the (Parent); and

(4) HSBC Bank plc as agent (the Agent) on behalf of itself and the Finance Parties (as defined in the
Facility Agreement referred to below),

and is supplemental to the £2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 between,
among others, British American Tobacco p.l.c., HSBC Bank plc as agent and the financial institutions listed
in Part 2 of Schedule 1 (Banks and Commitments) thereto (the Facility Agreement).

IT IS AGREED:

1. Novation

In consideration of a payment made by the Existing Borrower to the Substitute Borrower and the
release of the Existing Borrower from its obligations and liabilities (actual or contingent) specified in
the Schedule hereto under the Facility Agreement and with effect on and from [] (the Substitution
Date) the Substitute Borrower hereby undertakes to observe and perform all the obligations and
liabilities (actual or contingent) of the Existing Borrower under the Facility Agreement in respect of
the Advances specified in the Schedule (including any such obligations or liabilities as may have
accrued or become due in respect thereof prior to the Substitution Date).

2. Integration

This Borrower Novation Agreement shall be read as one with the Facility Agreement so that any
reference therein to "this Agreement", "hereunder" and similar shall include and be deemed to include
this Borrower Novation Agreement.

3. Continuing Liability

The Parent on behalf of itself and each other Obligor acknowledges and confirms that its obligations
as Guarantor under Clause 14 (Guarantee) of the Facility Agreement apply to the obligations and
liabilities assumed by the Substitute Borrower hereunder.

0013726-0004726 UKO1: 2010612413.17 100

 Schedule

[]

IN WITNESS whereof the parties hereto have caused this Borrower Novation Agreement to be duly executed
on the date first written above.

……………………………

For and on behalf of

[The Existing Borrower]

……………………………

For and on behalf of

[The Substitute Borrower]

……………………………

BRITISH AMERICAN TOBACCO P.L.C.

For and on behalf of each Obligor

………………………………..

HSBC BANK PLC AS AGENT

For and on behalf of each

Finance Party

0013726-0004726 UKO1: 2010612413.17 101

 SCHEDULE 5

FORM OF CONFIDENTIALITY UNDERTAKING

To: British American Tobacco p.l.c.

To: [Bank]

Dear Sirs

6 March 2023 (the Facility

We refer to the £2,538,000,000 revolving credit facility agreement dated _________
Agreement) between, among others, British American Tobacco p.l.c. and HSBC Bank plc as Agent.

This is a confidentiality undertaking referred to in Clause 27 (Disclosure of Information and Know Your
Customer Requirements) of the Facility Agreement. A capitalised term defined in the Facility Agreement has
the same meaning in this undertaking.

We are considering entering into contractual relations with [insert name of Bank] (the Bank) and understand
that it is a condition of our receiving information about British American Tobacco p.l.c. and its related
companies and any Finance Document and/or any information under or in connection with any Finance
Document (the Information) that we execute this undertaking.

We undertake to treat as confidential any Information and to use the Information solely for the purposes of
determining whether or not to enter into the contractual relations and to keep any Information under secured
and controlled conditions. We will not disclose any of the Information to any third party (other than our
directors, officers, employees or outside advisors, who shall be advised of and agree to those confidentiality
obligations) without the prior written consent of the Parent.

The foregoing undertakings do not apply to any Information that is publicly available when provided or that
thereafter becomes publicly available other than through a breach by us of the above undertakings, or that is
required to be disclosed by us by judicial or administrative process in connection with any action, suit,
proceedings or claim or in order to comply with a request from any fiscal, monetary or other authority with
which we are accustomed to comply or otherwise by applicable law. Information shall be deemed publicly
available if it becomes a matter of public knowledge or is contained in materials available to the public or is
obtained by us from any source other than the Bank or from you (or its or your directors, officers, employees
or outside advisors), provided that such source has not entered into a confidentiality agreement with you with
respect to the Information.

Yours faithfully,

0013726-0004726 UKO1: 2010612413.17 102

 SCHEDULE 6

FORM OF INCREASE CONFIRMATION

To: HSBC Bank plc as Agent, British American Tobacco p.l.c. as Parent

From: [the Increase Bank] (the Increase Bank)3

Dated:

British American Tobacco p.l.c.

6 March 2023 (the Facility Agreement)
£2,538,000,000 revolving credit facility agreement dated _________

1. We refer to the Facility Agreement. This agreement (the Agreement) shall take effect as an Increase
Confirmation for the purpose of the Facility Agreement. Terms defined in the Facility Agreement
have the same meaning in this Agreement unless given a different meaning in this Agreement.

2. We refer to Clause 25.10 (Increase) of the Facility Agreement.

3. The Increase Bank agrees to assume and will assume all of the obligations corresponding to the
Commitment specified in the Schedule (the Relevant Commitment) as if it was an Original Bank
under the Facility Agreement.

4. The proposed date on which the increase in relation to the Increase Bank and the Relevant
Commitment is to take effect (the Increase Date) is [ ].

5. On the Increase Date, the Increase Bank becomes party to the relevant Finance Documents as a Bank.

6. The Facility Office and address, fax number, attention, credit contact and loan administration contact
details for notices to the Increase Bank for the purposes of Clause 32.2 (Addresses for notices) are set
out in the Schedule.

7. The Increase Bank expressly acknowledges the limitations on the Banks' obligations referred to in
Clause 25.10 (Increase).

8. The Increase Bank confirms that it is not an Affiliate of the Parent.

9. The Increase Bank confirms that it is [a Qualifying Bank within the meaning of the definition
“Qualifying Bank” under paragraph (b)(i) of Clause 1.1 (Definitions) of the Facility Agreement]/[a
Qualifying Bank within the meaning of the definition “Qualifying Bank” under paragraph (b)(ii) of
Clause 1.1 (Definitions) of the Facility Agreement]/[not a Qualifying Bank within the meaning of the
definition “Qualifying Bank” under paragraph (b)(i) or paragraph (b)(ii) of Clause 1.1 (Definitions) of
the Facility Agreement.] 4

10. This Agreement may be executed in any number of counterparts and this has the same effect as if the
signatures on the counterparts were on a single copy of this Agreement.

11. This Agreement and any non-contractual obligations arising out of or in connection with it are
governed by English law.

12. This Agreement has been entered into on the date stated at the beginning of this Agreement.

3
If the Increase Bank holds a passport under the HMRC DT Treaty Passport scheme and wishes that scheme to apply to the Facility
Agreement, it must comply with the obligations set out in Clause 10.5 (Borrower DTTP Filing) of the Facility Agreement.
4
Increase Bank to provide confirmation.

0013726-0004726 UKO1: 2010612413.17 103

[NOTE: PLEASE SEEK DUTCH LEGAL ADVICE: (I) UNTIL THE COMPETENT AUTHORIT Y
PUBLISHES ITS INTERPRETATION OF THE TERM "PUBLIC" (AS REFERRED TO IN ARTICLE 4.1(1)
OF THE CAPITAL REQUIREMENTS REGULATION (EU/575/2013)), IF ANY AMOUNT LENT TO A
DUTCH BORROWER IS TO BE ASSIGNED WHICH IS LESS THAN €100,000 (OR ITS EQUIVALENT);
AND (II) AS SOON AS THE COMPETENT AUTHORITY PUBLISHES ITS INTERPRETATION OF THE
TERM "PUBLIC", IF THE NEW BANK IS CONSIDERED TO BE PART OF THE PUBLIC ON THE BASIS
OF THAT INTERPRETATION].

0013726-0004726 UKO1: 2010612413.17 104

 THE SCHEDULE

RELEVANT COMMITMENT/RIGHTS AND OBLIGATIONS TO BE ASSUMED BY THE

INCREASE BANK

[Facility office address, fax number and attention details for notices and account details for
payments/standard settlement instructions]

[Increase Bank]

By:

This Agreement is accepted as an Increase Confirmation for the purposes of the Facility Agreement by the
Agent and the Increase Date is confirmed as [ ].

Agent:

By:

0013726-0004726 UKO1: 2010612413.17 105

 SCHEDULE 7

EXTENSION REQUESTS AND EXTENSION NOTICES

PART 1

FORM OF FIRST EXTENSION REQUEST

To: HSBC Bank plc as Agent

From: British American Tobacco p.l.c.

Date: [ ]

British American Tobacco p.l.c.

£2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 (the Facility Agreement)
1. We wish to request an extension to the Final Maturity Date under [the Revolving Facility [and the
Swingline Facility]] 5 for an additional period of 365 days to the second anniversary of the date of the
Facility Agreement.

2. We confirm that as at the date of this Revolving Facility First Extension Request:

(a) the representations and warranties in Clause 15 (Representations and Warranties) of the
Facility Agreement except for Clause 15.8 (Litigation), Clause 15.9 (Material adverse
change), Clause 15.11 (Sanctions and Anti-Bribery and Corruption) and Clause 15.14 (ERISA
and Multiemployer Plans) are correct; and

(b) no Event of Default is outstanding.

3. Capitalised terms used in this Revolving Facility First Extension Request bear the meaning given to
them in the Facility Agreement.

By:

BRITISH AMERICAN TOBACCO P.L.C.

Authorised Signatory

_____________________________

5
Delete as applicable.

0013726-0004726 UKO1: 2010612413.17 106

 PART 2

FORM OF FIRST EXTENSION NOTICE

To: British American Tobacco p.l.c.

From: HSBC Bank plc as Agent

Date: [ ]

British American Tobacco p.l.c.

£2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 (the Facility Agreement)
1. We refer to your Revolving Facility First Extension Request dated [] and confirm that the Banks
listed in the Schedule to this Extension Notice have agreed to your request of an extension of the Final
Maturity Date under the Revolving Facility [and the Swingline Facility] 6 for an additional period of
365 days to the second anniversary of the date of the Facility Agreement.

2. Capitalised terms used in this Revolving Facility First Extension Notice bear the meaning given to
them in the Facility Agreement.

By:

HSBC Bank plc as Agent

Authorised Signatory

_____________________________

Dated: 202[]

6
Delete as applicable.

0013726-0004726 UKO1: 2010612413.17 107

 Schedule

Bank Revolving Commitment £ Swingline

Facility Commitment

[] [] [] []

Total:

Percentage
of Total
Commitments:

0013726-0004726 UKO1: 2010612413.17 108

 PART 3

FORM OF SECOND EXTENSION REQUEST

To: HSBC Bank plc as Agent

From: British American Tobacco p.l.c.

Date: [ ]

British American Tobacco p.l.c.

£2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 (the Facility Agreement)
1. We wish to request an extension to the Final Maturity Date under the Revolving Facility [and the
Swingline Facility], for an additional period of 365 days to the third anniversary of the date of the
Facility Agreement.

2. We confirm that as at the date of this Revolving Facility Second Extension Request:

(a) the representations and warranties in Clause 15 (Representations and Warranties) of the
Facility Agreement except for Clause 15.8 (Litigation), Clause 15.9 (Material adverse
change), Clause 15.11 (Sanctions and Anti-Bribery and Corruption) and Clause 15.14 (ERISA
and Multiemployer Plans) are correct; and

(b) no Event of Default is outstanding.

3. Capitalised terms used in this Revolving Facility Second Extension Request bear the meaning given
to them in the Facility Agreement.

By:

BRITISH AMERICAN TOBACCO P.L.C.

Authorised Signatory

_____________________________

0013726-0004726 UKO1: 2010612413.17 109

 PART 4

FORM OF SECOND EXTENSION NOTICE

To: British American Tobacco p.l.c.

From: HSBC Bank plc as Agent

Date: [ ]

British American Tobacco p.l.c.

£2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 (the Facility Agreement)
1. We refer to your Revolving Facility Second Extension Request dated [] and confirm that the Banks
listed in the Schedule to this Revolving Facility Second Extension Notice have agreed to your request
of an extension of the Final Maturity Date under the Revolving Facility [and the Swingline Facility]7
for an additional period of 365 days to the third anniversary of the date of the Facility Agreement, in
the case of the Revolving Facility Second Extension Banks.

2. Capitalised terms used in this Revolving Facility Second Extension Notice bear the meaning given to
them in the Facility Agreement.

By:

HSBC Bank plc as Agent

Authorised Signatory

_____________________________

Dated: 202[]

7
Delete as applicable.

0013726-0004726 UKO1: 2010612413.17 110

 Schedule

Bank Period of Revolving Commitment £ Swingline

Extension Facility Commitment
(days) for
Banks

[] [] [] [] []

Total:

Percentage
of Total
Commitments:

0013726-0004726 UKO1: 2010612413.17 111

 SCHEDULE 8

TERM OUT – REVOLVING FACILITY

PART 1

FORM OF TERM OUT NOTICE

To: HSBC Bank plc as Agent

From: British American Tobacco p.l.c.

Date: [ ]

British American Tobacco p.l.c.

£2,538,000,000 revolving credit facility agreement dated _________
6 March 2023 (the Facility Agreement)
1. We refer to the Facility Agreement. This is a Term Out Notice. Terms defined in the Facility
Agreement have the same meaning in this Term Out Notice unless given a different meaning in this
Term Out Notice.

2. We elect to exercise the Term Out Option pursuant to Clause 2.5 (Term Out Option – Revolving
Facility ) in relation to all outstanding Revolving Facility Advances under the Revolving Facility.

3. We confirm that as at the date of this Term Out Notice:

(a) the representations and warranties in Clause 15 (Representations and Warranties) of the
Facility Agreement except for Clause 15.8 (Litigation), Clause 15.9 (Material adverse
change), Clause 15.11 (Sanctions and Anti-Bribery and Corruption) and Clause 15.14 (ERISA
and Multiemployer Plans) are correct; and

(b) no Event of Default is outstanding.

4. This Term Out Notice is irrevocable.

By:

BRITISH AMERICAN TOBACCO P.L.C.

Authorised Signatory

_____________________________

0013726-0004726 UKO1: 2010612413.17 112

 PART 2

FORM OF SELECTION NOTICE FOR TERM OUT ADVANCES

From: [Borrower]

To: [Agent]

Date: [ ]
British American Tobacco p.l.c.
6 March 2023 (the Facility Agreement)
£2,538,000,000 revolving credit facility agreement dated _________

1. We refer to the Facility Agreement. This is a Selection Notice. Terms defined in the Facility
Agreement have the same meaning in this Selection Notice unless given a different meaning in this
Selection Notice.

2. We refer to the following [the Revolving Facility/Term] Advance[s] in [identify currency] with a Term
ending on [ ]. 8

3. We request that the next Term for the above Advance[s] is [ ].

4. This Selection Notice is irrevocable.

By:

[Borrower]

Authorised Signatory

_____________________________

8
Insert details of all Term Out Advances in the same currency which have a Term ending on the same date.

0013726-0004726 UKO1: 2010612413.17 113

 SCHEDULE 9

COMPOUNDED RATE TERMS

PART 1

STERLING

CURRENCY Sterling.

Cost of funds as a fallback

Cost of funds will not apply as a fallback.

Definitions

Additional Business Days: An RFR Banking Day.

Business Day Conventions (definition (a) If any period is expressed to accrue by reference to a
of "Month" and Clause 9.6 (Non- Month or any number of Months then, in respect of the
Business Days)): last Month of that period:

(i) subject to paragraph (iii) below, if the

numerically corresponding day is not a Business
Day, that period shall end on the next Business
Day in that calendar month in which that period
is to end if there is one, or if there is not, on the
immediately preceding Business Day;

(ii) if there is no numerically corresponding day in

the calendar month in which that period is to end,
that period shall end on the last Business Day in
that calendar month; and

(iii) if a Term begins on the last Business Day of a

calendar month, that Term shall end on the last
Business Day in the calendar month in which that
Term is to end.

(b) If a Term would otherwise end on a day which is not a

Business Day, that Term will instead end on the next
Business Day in that calendar month (if there is one) or
the preceding Business Day (if there is not).

Central Bank Rate: The Bank of England's Bank Rate as published by the Bank of
England from time to time.

Central Bank Rate Adjustment: In relation to the Central Bank Rate prevailing at close of business
on any RFR Banking Day, the 20 per cent trimmed arithmetic
mean (calculated by the Agent, or by any other Finance Party
which agrees to do so in place of the Agent) of the Central Bank
Rate Spreads for the five most immediately preceding RFR
Banking Days for which the RFR is available.

0013726-0004726 UKO1: 2010612413.17 114

Central Bank Rate Spread: In relation to any RFR Banking Day, the difference (expressed as
a percentage rate per annum) calculated by the Agent (or by any
other Finance Party which agrees to do so in place of the Agent)
of:

(a) the RFR for that RFR Banking Day; and

(b) the Central Bank Rate prevailing at close of business on

that RFR Banking Day.

Credit Adjustment Spread: 0.05 per cent. per annum.

Daily Rate: The Daily Rate for any RFR Banking Day is:

(a) the RFR for that RFR Banking Day; or

(b) if the RFR is not available for that RFR Banking Day, the
percentage rate per annum which is the aggregate of:

(i) the Central Bank Rate prevailing at close of

business on that RFR Banking Day; and

(ii) the applicable Central Bank Rate Adjustment; or

(c) if paragraph (b) above applies but the Central Bank Rate
for that RFR Banking Day is not available, the percentage
rate per annum which is the aggregate of:

(i) the most recent Central Bank Rate for a day

which is no more than 5 RFR Banking Days
before that RFR Banking Day; and

(ii) the applicable Central Bank Rate Adjustment,

rounded, in either case, to four decimal places and if, in

either case, the aggregate of that rate and the applicable
Credit Adjustment Spread is less than zero, the Daily Rate
shall be deemed to be such a rate that the aggregate of the
Daily Rate and the applicable Credit Adjustment Spread
is zero.

Lookback Period: Five RFR Banking Days.

Market Disruption Rate: The percentage rate per annum which is the aggregate of:

(a) the Cumulative Compounded RFR Rate for the Term of

the relevant Advance; and

(b) the applicable Credit Adjustment Spread.

Relevant Market: The sterling wholesale market.

0013726-0004726 UKO1: 2010612413.17 115

Reporting Day: The day which is the Lookback Period prior to the last day of the
Term or, if that day is not a Business Day, the immediately
following Business Day.

Reporting Time: Close of business in London on the Reporting Day for the relevant
Advance.

RFR: The SONIA (sterling overnight index average) reference rate

displayed on the relevant screen of any authorised distributor of
that reference rate.

RFR Banking Day: A day (other than a Saturday or Sunday) on which banks are open
for general business in London.

Term: See paragraph (d) of Clause 5.2 (Completion of Requests for

Revolving Facility Advances).

0013726-0004726 UKO1: 2010612413.17 116

 PART 2

US DOLLARS

CURRENCY US Dollars.

Cost of funds as a fallback

Cost of funds will not apply as a fallback.

Definitions

Additional Business Days: An RFR Banking Day.

Business Day Conventions (definition (a) If any period is expressed to accrue by reference to a
of "Month" and Clause 9.6 (Non- Month or any number of Months then, in respect of the
Business Days)): last Month of that period:

(i) subject to paragraph (iii) below, if the

numerically corresponding day is not a Business
Day, that period shall end on the next Business
Day in that calendar month in which that period
is to end if there is one, or if there is not, on the
immediately preceding Business Day;

(ii) if there is no numerically corresponding day in

the calendar month in which that period is to end,
that period shall end on the last Business Day in
that calendar month; and

(iii) if a Term begins on the last Business Day of a

calendar month, that Term shall end on the last
Business Day in the calendar month in which that
Term is to end.

(b) If a Term would otherwise end on a day which is not a

Business Day, that Term will instead end on the next
Business Day in that calendar month (if there is one) or
the preceding Business Day (if there is not).

Central Bank Rate: (a) The short-term interest rate target set by the US Federal
Open Market Committee as published by the Federal
Reserve Bank of New York from time to time; or

(b) if that target is not a single figure, the arithmetic mean of:

(i) the upper bound of the short-term interest rate

target range set by the US Federal Open Market
Committee and published by the Federal Reserve
Bank of New York; and

(ii) the lower bound of that target range

0013726-0004726 UKO1: 2010612413.17 117

Central Bank Rate Adjustment: In relation to the Central Bank Rate prevailing at close of business
on any RFR Banking Day, the 20 per cent trimmed arithmetic
mean (calculated by the Agent, or by any other Finance Party
which agrees to do so in place of the Agent) of the Central Bank
Rate Spreads for the five most immediately preceding RFR
Banking Days for which the RFR is available.

Central Bank Rate Spread: In relation to any RFR Banking Day, the difference (expressed as
a percentage rate per annum) calculated by the Agent (or by any
other Finance Party which agrees to do so in place of the Agent)
of:

(a) the RFR for that RFR Banking Day; and

(b) the Central Bank Rate prevailing at close of business on

that RFR Banking Day.

Credit Adjustment Spread: 0.10 per cent. per annum.

Daily Rate: The Daily Rate for any RFR Banking Day is:

(a) the RFR for that RFR Banking Day; or

(b) if the RFR is not available for that RFR Banking Day, the
percentage rate per annum which is the aggregate of:

(i) the Central Bank Rate prevailing at close of

business on that RFR Banking Day; and

(ii) the applicable Central Bank Rate Adjustment; or

(c) if paragraph (b) above applies but the Central Bank Rate
for that RFR Banking Day is not available, the percentage
rate per annum which is the aggregate of:

(i) the most recent Central Bank Rate for a day

which is no more than 5 RFR Banking Days
before that RFR Banking Day; and

(ii) the applicable Central Bank Rate Adjustment,

rounded, in either case, to five decimal places and if, in

either case, the aggregate of that rate and the applicable
Credit Adjustment Spread is less than zero, the Daily Rate
shall be deemed to be such a rate that the aggregate of the
Daily Rate and the applicable Credit Adjustment Spread
is zero.

Lookback Period: Five RFR Banking Days.

Market Disruption Rate: The percentage rate per annum which is the aggregate of:

(a) the Cumulative Compounded RFR Rate for the Term of

the relevant Advance; and

0013726-0004726 UKO1: 2010612413.17 118

 (b) the applicable Credit Adjustment Spread.

Relevant Market: The market for overnight cash borrowing collateralised by US

Government securities.

Reporting Day: The Business Day which follows the day which is the Lookback
Period prior to the last day of the Term.

Reporting Time: Close of business in London on the Reporting Day for the relevant
Advance.

RFR: The secured overnight financing rate (SOFR) administered by the

Federal Reserve Bank of New York (or any other person which
takes over the administration of that rate) published by the Federal
Reserve Bank of New York (or any other person which takes over
the publication of that rate).

RFR Banking Day: Any day other than:

(a) a Saturday or Sunday; and

(b) a day on which the Securities Industry and Financial

Markets Association (or any successor organisation)
recommends that the fixed income departments of its
members be closed for the entire day for purposes of
trading in US Government securities.

Term: See paragraph (d) of Clause 5.2 (Completion of Requests for

Revolving Facility Advances).

0013726-0004726 UKO1: 2010612413.17 119

 SCHEDULE 10

DAILY NON-CUMULATIVE COMPOUNDED RFR RATE

The Daily Non-Cumulative Compounded RFR Rate for any RFR Banking Day i during a Term for a
Compounded Rate Advance is the percentage rate per annum (without rounding, to the extent reasonably
practicable for the Finance Party performing the calculation, taking into account the capabilities of any
software used for that purpose) calculated as set out below:

𝑑𝑑𝑑𝑑𝑑𝑑
(𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑖𝑖 − 𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑖𝑖−1 ) ×
𝑛𝑛𝑖𝑖

where:

UCCDRi means the Unannualised Cumulative Compounded Daily Rate for that RFR Banking Day i;

UCCDRi-1 means, in relation to that RFR Banking Day i, the Unannualised Cumulative Compounded Daily
Rate for the immediately preceding RFR Banking Day (if any) during that Term;

dcc means 360 or, in any case where market practice in the Relevant Market is to use a different number for
quoting the number of days in a year, that number;

ni means the number of calendar days from, and including, that RFR Banking Day i up to, but excluding, the
following RFR Banking Day; and

the Unannualised Cumulative Compounded Daily Rate for any RFR Banking Day (the Cumulated RFR
Banking Day) during that Term is the percentage rate per annum (without rounding, to the extent reasonably
practicable for the Finance Party performing the calculation, taking into account the capabilities of any
software used for that purpose) calculated as set out below:
𝑡𝑡𝑡𝑡𝑖𝑖
𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 ×
𝑑𝑑𝑑𝑑𝑑𝑑

where:

ACCDR means the Annualised Cumulative Compounded Daily Rate for that Cumulated RFR Banking Day;

tni means the number of calendar days from, and including, the first day of the Cumulation Period to, but
excluding, the RFR Banking Day which immediately follows the last day of the Cumulation Period;

Cumulation Period means the period from, and including, the first RFR Banking Day of that Term to, and
including, that Cumulated RFR Banking Day;

dcc has the meaning given to that term above; and

the Annualised Cumulative Compounded Daily Rate for that Cumulated RFR Banking Day is the
percentage rate per annum (rounded to four decimal places for Sterling and five decimal places for US Dollars)
calculated as set out below:
d0
⎡ 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷i−LP × ni ⎤ dcc
⎢� �1 + � − 1⎥ ×
⎢ dcc ⎥ tni
⎣ i̇=1 ⎦

where:

0013726-0004726 UKO1: 2010612413.17 120

d0 means the number of RFR Banking Days in the Cumulation Period;

Cumulation Period has the meaning given to that term above;

i means a series of whole numbers from one to d0 , each representing the relevant RFR Banking Day in
chronological order in the Cumulation Period;

DailyRate i-LP means, for any RFR Banking Day i in the Cumulation Period, the Daily Rate for the RFR
Banking Day which is the applicable Lookback Period prior to that RFR Banking Day i;

ni means, for any RFR Banking Day i in the Cumulation Period, the number of calendar days from, and
including, that RFR Banking Day i up to, but excluding, the following RFR Banking Day;

dcc has the meaning given to that term above; and

tni has the meaning given to that term above.

0013726-0004726 UKO1: 2010612413.17 121

 SCHEDULE 11

CUMULATIVE COMPOUNDED RFR RATE

The Cumulative Compounded RFR Rate for any Term for a Compounded Rate Advance is the percentage
rate per annum (rounded to the same number of decimal places as is specified in the definition of “Annualised
Cumulative Compounded Daily Rate” in Schedule 10 (Daily Non-Cumulative Compounded RFR Rate))
calculated as set out below:
d0
⎡ 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷i−LP × ni ⎤ dcc
⎢� �1 + � − 1⎥ ×
⎢ dcc ⎥ d
⎣ i=1
̇ ⎦

where:

d0 means the number of RFR Banking Days during the Term;

i means a series of whole numbers from one to d0 , each representing the relevant RFR Banking Day in
chronological order during the Term;

DailyRate i-LP means for any RFR Banking Day i during the Term, the Daily Rate for the RFR Banking Day
which is the applicable Lookback Period prior to that RFR Banking Day i;

ni means, for any RFR Banking Day i, the number of calendar days from, and including, that RFR Banking
Day i up to, but excluding, the following RFR Banking Day;

dcc means 360 or, in any case where market practice in the Relevant Market is to use a different number for
quoting the number of days in a year, that number; and

d means the number of calendar days during that Term.

0013726-0004726 UKO1: 2010612413.17 122

 Name: TADEU LUIZ MARROCO

Title: DIRECTOR

Name: NEIL ARTHUR WADEY

Title: DIRECTOR
Name: JUDITH Name: HENDRIK MARIE JOAN LINA
ELIZABTEH
PATRICIA Title: DIRECTOR
BOLLEN

Title: DIRECTOR
Name: TADEU LUIZ MARROCO

Title: DIRECTOR
MANDATED LEAD ARRANGERS AND BOOKRUNNERS

BARCLAYS BANK PLC

By:

Roger Cosby
Director

SIGNATURE PAGE TO THE FACILITY AGREEMENT

HSBC BANK PLC
By: Anandita Khanna

SIGNATURE PAGE TO THE FACILITY AGREEMENT

BANCO SANTANDER S.A., LONDON BRANCH
By:

Rebecca Cook, Managing Director, Loan Markets Asuncion Gonzalez, Executive Director, Loan Markets

SIGNATURE PAGE TO THE FACILITY AGREEMENT

BANK OF CHINA LIMITED, LONDON BRANCH
By:

MR. STEPHEN HARDMAN MR. XIA BIN

CO-HEAD OF CORPORATE BANKING DEPUTY GENERAL MANAGER

SIGNATURE PAGE TO THE FACILITY AGREEMENT

SAMUEL NORTON
MANAGING DIRECTOR
DEUTSCHE BANK AG, LONDON BRANCH
By:

Alastair Macdonald
Managing Director

Rishi Bajaj
Vice President

SIGNATURE PAGE TO THE FACILITY AGREEMENT

MIZUHO BANK, LTD.
By: Mark Ralston,
Senior Director
2023.02.24 09:
37:24 Z

SIGNATURE PAGE TO THE FACILITY AGREEMENT

 4?

SIGNATURE PAGE TO THE FACILITY AGREEMENT

ORIGINAL BANKS

BARCLAYS BANK PLC

By:

Roger Cosby
Director

SIGNATURE PAGE TO THE FACILITY AGREEMENT

HSBC BANK PLC
By: Anandita Khanna

SIGNATURE PAGE TO THE FACILITY AGREEMENT

BANCO SANTANDER S.A., LONDON BRANCH
By:

Rebecca Cook, Managing Director, Loan Markets Asuncion Gonzalez, Executive Director, Loan Markets

SIGNATURE PAGE TO THE FACILITY AGREEMENT

BANK OF CHINA LIMITED, LONDON BRANCH
By:

MR. STEPHEN HARDMAN MR. XIA BIN

CO-HEAD OF CORPORATE BANKING DEPUTY GENERAL MANAGER

SIGNATURE PAGE TO THE FACILITY AGREEMENT

SAMUEL NORTON
MANAGING DIRECTOR
DEUTSCHE BANK AG, LONDON BRANCH
By:

Alastair Macdonald
Managing Director

Rishi Bajaj
Vice President

SIGNATURE PAGE TO THE FACILITY AGREEMENT

MIZUHO BANK, LTD.
By: Mark Ralston,
Senior Director
2023.02.24 09:
38:44 Z

SIGNATURE PAGE TO THE FACILITY AGREEMENT

SIGNATURE TO THE FACILITY AGREEMENT
 EXHIBIT 12
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tadeu Marroco, certify that:
1. I have reviewed this annual report on Form 20-F of British American Tobacco p.l.c.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the company, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) Disclosed in this report any change in the company’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected, or
is reasonably likely to materially affect, the company’s internal control over financial
reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the company's auditors and the audit committee
of the company's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the company's
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the company's internal control over financial reporting.

Signature: /s/ Tadeu Marroco Date: 9 February 2024

Tadeu Marroco
Chief Executive
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Javed Iqbal, certify that:
1. I have reviewed this annual report on Form 20-F of British American Tobacco p.l.c.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the company, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) Disclosed in this report any change in the company’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected, or
is reasonably likely to materially affect, the company’s internal control over financial
reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the company's auditors and the audit committee
of the company's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the company's
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the company's internal control over financial reporting.

Signature: /s/ Javed Iqbal Date: 9 February 2024

Javed Iqbal
Interim Finance Director, and
Director, Digital and Information
 EXHIBIT 13

CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F (the “Report”) of British American Tobacco p.l.c.,
a public limited company incorporated in England and Wales (the “Company”), for the year ended
December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof, each
of the undersigned officers certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that the Report fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained
in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.

Signature: /s/ Tadeu Marroco Date: 9 February 2024

Tadeu Marroco
Chief Executive

Signature: /s/ Javed Iqbal Date: 9 February 2024

Javed Iqbal
Interim Finance Director, and
Director, Digital and Information
 EXHIBIT 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-219440,
333-223678 and 333-237186) on Form S-8 and the registration statements (Nos. 333-265958,
333-265958-01, 333-265958-02, 333-265958-03, 333-265958-04 and 333-265958-05) on Form
F-3 of our report dated February 7, 2024, with respect to the consolidated financial statements
of British American Tobacco p.l.c. and the effectiveness of internal control over financial
reporting.

/s/ KPMG LLP

London, United Kingdom

February 9, 2024

Registered in England No OC301540

Registered office: 15 Canada Square, London, E14 5GL
For full details of our professional regulation please refer to
KPMG LLP, a UK limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG ‘Regulatory Information’ under ‘About/About KPMG’ at www.kpmg.com/
International Cooperative (“KPMG International”), a Swiss entity. uk

Document Classification - KPMG Confidential

 EXHIBIT 97

Malus and Clawback Policy for Senior Executives

Applicable to: Covered Executives as defined in this Policy.

Approver: Main Board. Approval reference: Main Board Meeting 3 October 2023. Effective date: 1 December 2023.

Covered executives: individuals who meet, or met, the definition of “executive officers” as defined in accordance with
US Listing Standards, which will include current and past Executive Directors and Management Board Members and
others, if any, who are determined to meet such definition from time to time.

Accounting restatement: an accounting restatement due to the material non-compliance of British American Tobacco
p.l.c. (BAT) with any financial reporting requirement under the securities laws, including any required accounting
restatement to correct an error in previously issued financial statements that is material to the previously issued
financial statements, or that would result in a material misstatement in the current period financial statements if the
error were corrected in the current period or was left uncorrected in the current period (each, an “Accounting
Restatement”).

Compensation subject to recovery: compensation that was granted, earned or vested based wholly or in part upon
the attainment of financial reporting measures and was Received (as defined below) by a covered executive (i) after
such individual began service in such capacity, (ii) who served in such capacity at any time during the performance
period for such compensation, (iii) while BAT had a class of securities listed on the New York Stock Exchange (the
“NYSE”), or any other national securities exchange or a national securities association, and (iv) during the applicable
Recovery Period and on or after October 2, 2023 (“Compensation Subject to Recovery”).

Financial reporting measures 1 are:

• measures that are determined in accordance with the accounting principles used in BAT’s financial statements,
whether presented in or outside of BAT’s financial statements,
• any measures derived wholly or in part from such measures (including non-GAAP measures and other measures,
metrics and ratios that are not non-GAAP measures, e.g., New Categories revenue growth at constant rates of
exchange) and
• share price, Total Shareholder Return (“TSR”) and relative TSR.

Received: compensation is deemed received in BAT’s fiscal period during which the financial reporting measure
specified in the compensation is attained, even if the payment or grant of the compensation occurs after the end of
that period (“Received”).

Recovery period: three completed fiscal years immediately preceding the earlier of (i) the date that the company is
required, or should have reasonably concluded that it was required, to prepare an Accounting Restatement for a given
reporting period and (ii) the date a court, regulator, or other legally authorized body directs the issuer to prepare the
relevant Accounting Restatement; provided that the “Recovery Period” will also include any transition period that
results from a change in BAT’s fiscal year within or immediately following the three completed fiscal years; provided,
further, that a transition period between the last day of BAT’s previous fiscal year end and the first day of its new fiscal
year that comprises a period of at least 9 months would be deemed a completed fiscal year.

Incentives the Policy will be applicable to: awards made under the International Executive Incentive Scheme (“IEIS”),
Deferred Share Bonus Scheme (“DSBS”), Long term Incentive Plan (“LTIP”) or any other compensation plan,
programme, or arrangement, in each case, to be granted, earned, or vested based wholly or in part upon the
attainment of a financial reporting measure. Restricted Share Plan (“RSP”), being an equity award that vests solely

1 The Adopting Release provides a non-exhaustive list of financial reporting measures, including revenue; net income; operating
income; profitability of one or more reportable segments; financial ratios; net assets or net asset value per share; earnings before
interest, taxes, depreciation and amortization; liquidity measures; return measures; earnings measures; sales per square foot or
same-store sales, where sales are subject to an accounting restatement; revenue per user, or average revenue per user, where
revenue is subject to an accounting restatement; cost per employee, where cost is subject to an accounting restatement; any of
such financial reporting measures relative to a peer group where the company’s financial reporting measure is subject to an
accounting restatement; and tax basis income.
based on continued service, is not considered by the regulations to be “incentive-based compensation”, and therefore
is excluded from this Policy. The foregoing is illustrative only and is based on the incentive schemes BAT has in place at
the time the Policy is adopted, and the incentives the Policy applies to will ultimately be determined based on the
compensation that meets the definition of “Compensation Subject to Recovery” above.

Recoverable compensation: (i) the amount of Compensation Subject to Recovery that was received in excess of what
would have been received based on the restated financials following the applicable Accounting Restatement,
computed on a pre-tax basis, and (ii) any other compensation that is computed based on, or otherwise attributable to,
the amounts described in clause (i) (“Recoverable Compensation”).

BAT will seek to reasonably promptly recover any Recoverable Compensation. However, in determining application of
clawback arrangements under this Policy, the Remuneration Committee may consider recovery impracticable, and BAT
does not need to recover compensation if:
(i) direct expenses paid to third parties to recover are greater than the amount to be recovered; provided,
however, that before concluding that the recovery would be impracticable for such reason, a reasonable
attempt to recover such erroneously awarded compensation has been made, such reasonable attempt to
recover has been documented, and this documentation is provided to the NYSE or any such national securities
exchange or association, as applicable at that time;
(ii) recovery would violate the laws of the UK adopted prior to 28 November 2022; provided, however, that before
concluding that the recovery would be impracticable based on violation of such laws, an opinion of UK counsel,
acceptable to the NYSE or any such national securities exchange or association, as applicable at that time, that
recovery would result in such a violation must be obtained and provided to such exchange or association; or
(iii) recovery would likely cause an otherwise tax-qualified retirement plan to fail to meet the requirements of
Section 401(a)(13) and 411(a) of the US Internal Revenue Code and regulations thereunder.

Effective date: This Policy is effective as of 1st December 2023.

Governance: The Remuneration Committee is responsible for all decision making around application of malus and
clawback for covered persons.

Indemnification: No covered person shall be indemnified by BAT against the loss of erroneously awarded incentive-
based compensation.

Prevailing Rules: In the event of any discrepancies between this Policy, the existing general policy and the rules of the
relevant incentive plan, this Policy shall prevail in the first instance; application of the existing general policy and the
rules of the relevant incentive plan shall apply secondarily to the extent greater recoupment is provided under such
policy or rules.

2
 SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign this annual
report on its behalf.

Date: 9 February 2024

British American Tobacco p.l.c.

(Registrant)

By: /s/ Caroline Ferland

Caroline Ferland
Company Secretary