Speech by Richard Burrows, Chairman, at the British American Tobacco p.l.c. 2019 Annual General Meeting

Good morning ladies and gentlemen.

It is my pleasure to welcome you to British American Tobacco’s 2019 Annual General Meeting.

I am pleased to report that our 2018 results demonstrate that the business is in good shape. This is the result of our established strategy that focuses on a multi-category approach, and which enables us to continue to deliver shareholder returns today while investing in our future.

While our business is continuing to perform very well we are very conscious that investor sentiment over the last year has been negatively impacted by concerns over possible regulation in the US and competitor dynamics in new categories resulting in a sharp fall in our share price.

I am, however, confident that the business is in good shape and that the causes of these concerns in fact present significant opportunities for future growth.

Our core combustible business continues to outperform the industry; we have established a successful and fast growing potentially reduced-risk product business, and our US acquisition – which has a long track record of managing regulatory change – is now fully integrated. Against a backdrop of a strong set of results and consequently rising share price, all of this, I believe, puts us is a strong position to deliver long-term sustainable growth, reflected in our continued annual dividend increases, this year’s of 4%.

With respect to potentially reduced-risk products, which we call PRRPs, this past year has seen a near-doubling of our revenues in vapour and tobacco heating products alone. Our vapour revenues increased by 26%, while our tobacco heating products grew revenue by over 180%.

These are early stages in our PRRP journey, and as technology and innovation increasingly play a role in our business, our product pipeline will continue to expand. In 2018 we filed 130 patents and expect that number to nearly double this year.

The result is better and more innovative products appearing in markets around the world.  Last year we launched new products in over a dozen countries, including our Vype ePen3 which won vapour category Product of the Year in the UK’s largest consumer survey, and the successful launch of our Vuse Alto product in the US.

In the combustible category, our overall market share increased 40 basis points, powered by the strong performance of our Strategic Portfolio which grew volume by 4.8%.

Our combustible products continue to make up the bulk of our revenues and profit. This will remain the case for many years to come, and these profits will drive sustainable returns and dividends for our shareholders as we make the investment required to grow our PRRP business.

Looking forward to 2019 we can expect another year of good earnings growth.

Turning to the composition of our board, let me begin by welcoming our new Chief Executive Jack Bowles, who took over from our outgoing CEO, Nicandro Durante, at the beginning of April this year.

Jack’s track record of success across many regions within the company equips him to write the next chapter in BAT’s history, which will be focused on combustible value growth, a step change in new categories, and ultimately creating a stronger, simpler, and faster company.

In August this year our Finance Director Ben Stevens will be retiring following a 30-year career at BAT. Tadeu Marroco, our current Director of Group Transformation and former director of both Business Development and Western Europe, will succeed Ben.

And, as you would expect, given my tenure in office as Chairman, the Board and Nominations Committee will be focused on succession planning for my role bearing in mind the need for continuity in a period when our two top executives will have retired during 2019.

Before we move to the Resolutions, let me thank my fellow Directors, our new Chief Executive and his management team, as well as colleagues around the world for their outstanding contributions to the Group’s continued success.