Barclays Back to School ConferenceImperial Tobacco Group PLC

Oliver Tant, Chief Financial Officer

10 September 2015

Oliver TantChief Financial Officer

3

DisclaimerCertain statements in this announcement constitute or may constitute forward-looking statements. Any statement in

this announcement that is not a statement of historical fact including, without limitation, those regarding the

Company’s future expectations, operations, financial performance, financial condition and business is or may be a

forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause

actual results to differ materially from those projected or implied in any forward-looking statement. These risks and

uncertainties include, among other factors, changing economic, financial, business or other market conditions. These

and other factors could adversely affect the outcome and financial effects of the plans and events described in this

announcement. As a result, you are cautioned not to place any reliance on such forward-looking statements. The

forward-looking statements reflect knowledge and information available at the date of this announcement and the

Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking

statements contained herein. Nothing in this announcement should be construed as a profit forecast or profit estimate

and no statement in this announcement should be interpreted to mean that the future earnings per share of the

Company for current or future financial years will necessarily match or exceed the historical or published earnings per

share of the Company.

This announcement has been prepared for, and only for the members of the Company, as a body, and no other

persons. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any

other person to whom this announcement is shown or into whose hands it may come and any such responsibility or

liability is expressly disclaimed.

4

The Strategy

…deliver sustainable, quality growth

supported by effective cost and cash

management, to maximise

shareholder returns…

5

Maximise sustainable shareholder returns

Turning Strategy into Actionfour operational priorities; one strategic objective

Strengthen

PortfolioDevelop

Footprint

Drive Cost

Optimisation

Embed Capital

Discipline• Enhance brand equity to

build sustainability

• Build on success of early

migrations

• Investment focused on

primary brands in all markets

• New launches from Fontem

• Building momentum

across Growth Markets

• Continue to optimise

performance in Returns

Markets

• Rapid and efficient

integration of US assets

• Deliver further savings

as part of £300m pa

2018 target

• Continue to refine

ways of working

• Embedding cash

conversion discipline

• Further improvements to

capital deployment

• Continue to manage

structure and level of

debt

6

Margins Supporting Strategy

Consistent theme

across all areas of

strategy is operating

margin development

High

Profit

Margins

Sales

Reinvest

Strong

Cash

Flow

Maximising

Shareholder

Returns

7

Video – Marginal Gains

8

Imperial’s Margin Development

+1.4% improvement between

FY11 – FY14

Reported Operating Margin based on published financials

42.3%

42.7%42.9%

43.7%

FY11 FY12 FY13 FY14 FY15e

9

41.7%

44.0%

IMT PMI BAT JTI

HY14 HY15

Imperial’s Marginal Gains

Reported Operating Margin based on published financials for HY14 and HY15

+2.3% improvement between

HY14 – HY15

10

Imperial Outperforming the FTSE

28% greater

return

FY09 FY14

90

100

110

120

130

140

150

160

170

180

190

Total Shareholder Return FY09-FY14 indexed to 100

IMT FTSE

11

Maximise sustainable shareholder returns

Turning Strategy into ActionStrengthening the portfolio

Strengthen

PortfolioDevelop

Footprint

Drive Cost

Optimisation

Embed Capital

Discipline• Enhance brand equity to

build sustainability

• Build on success of early

migrations

• Investment focused on

primary brands in all markets

• New launches from Fontem

• Building momentum

across Growth Markets

• Continue to optimise

performance in Returns

Markets

• Rapid and efficient

integration of US assets

• Deliver further savings

as part of £300m pa

2018 target

• Continue to refine

ways of working

• Embedding cash

conversion discipline

• Further improvements to

capital deployment

• Continue to manage

structure and level of

debt

12

Strengthening the Portfoliobuilding brand equity to support margins

Increasing Stability and

Reducing Risk

Increasing Margins

Reducing costs

Revenue quality improvement

Simplification

Procurement

Manufacturing

Marketing

Targeted Investment

Supporting Growth Brands

Global campaigns

13

Strengthening the Portfoliosuccessful brand migrations

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8 9 10 11 12

Va

lue

Time

Brand migration

Brand with migration

Value Uplift

Brand without migration

14

Strengthening the Portfolioinvesting in the strongest brands

Growth Brand percentage increase reflects YTD Q3 2015 performance versus FY14

40.7%

44.5%

IMT PMI BAT JT

FY13 FY14

Growth Brand volume as a percentage of total volume

50.8%

Growth Brands as %

of total Group Volume

+ 630 bps in the YTD Q3 2015

15

Video – JPS

16

Strengthening the Portfoliomarket share of Growth Brands growing

JPS Market

ShareQ3 2015

12 month

movement

Australia 20.0% 6.1%

UK 15.2% 5.8%

Spain 7.6% 6.1%

Italy 2.1% 0.6%

Germany 9.1% 0.4%

0.0%

0.5%

1.0%

1.5%

2.0%

FY14 P9 FY14 P12 FY15 P3 FY15 P6 FY15 P9

JPS Global Market Share (MAT)

17

Maximise sustainable shareholder returns

Turning Strategy into Actiondeveloping footprint

Strengthen

PortfolioDevelop

Footprint

Drive Cost

Optimisation

Embed Capital

Discipline• Enhance brand equity to

build sustainability

• Build on success of early

migrations

• Investment focused on

primary brands in all markets

• New launches from Fontem

• Building momentum

across Growth Markets

• Continue to optimise

performance in Returns

Markets

• Rapid and efficient

integration of US assets

• Deliver further savings

as part of £300m pa

2018 target

• Continue to refine

ways of working

• Embedding cash

conversion discipline

• Further improvements to

capital deployment

• Continue to manage

structure and level of

debt

18

Developing the Footprintincreased presence in stable markets

Reducing Risk

Increasing MarginsTargeted Investment

Growth Market expansion

Sustaining Returns Markets

Focus on stable profitable

markets

19

Strengthen

Portfolio

Develop

Footprint

Capital

Discipline

Enhanced brand portfolio, capabilities, scale and influence

Greater market share in a large profitable market

Stable regulatory environment and relative affordability

support long term growth

Diversifying Group revenues and profits

Cost synergies support brand investment

Increased cash flow extends dividend cover and supports

further debt repayment

Cost

Optimisation

Developing the Footprintincreased presence in profitable US market

20

44%

Total TobaccoOperating Margin

FY14

Estimated OperatingMargin for US Business

Developing the Footprinthigher operating margins

> 50%

-10

10

30

50

70

90

110

130

150

170

190

India

Moro

cco

Sou

th A

fric

a

Indo

ne

sia

Tha

iland

Ukra

ine

Vie

tnam

Un

ited

Kin

gdo

m

Turk

ey

Bra

zil

Fra

nce

Austr

alia

Spa

in

Ita

ly

Sw

eden

Sau

di A

rab

ia

Ca

na

da

Ru

ssia

Ge

rman

y

Arg

en

tina

Sw

itze

rla

nd

Ja

pa

n

Taiw

an

US

A

UA

E

Min

ute

s o

f la

bour

at avera

ge r

ate

sto

purc

hase 2

0 c

igare

ttes

USA

21 mins

Affordability gives margin

expansion potential

21

Developing the Footprintweighted to stable markets

US grows from less than

10% of Group Revenues to

c.20%

ROW

US

EU

EU

ROW

US

Diversification of revenue

stream

Increased proportion from

stable, profitable market

with growth potential

Reduced exposure to

emerging markets and

associated volatilities e.g.

foreign exchange

22

Maximise sustainable shareholder returns

Turning Strategy into Actioneffectively managing cost

Strengthen

PortfolioDevelop

Footprint

Drive Cost

Optimisation

Embed Capital

Discipline• Enhance brand equity to

build sustainability

• Build on success of early

migrations

• Investment focused on

primary brands in all markets

• New launches from Fontem

• Building momentum

across Growth Markets

• Continue to optimise

performance in Returns

Markets

• Rapid and efficient

integration of US assets

• Deliver further savings

as part of £300m pa

2018 target

• Continue to refine

ways of working

• Embedding cash

conversion discipline

• Further improvements to

capital deployment

• Continue to manage

structure and level of

debt

23

Effectively Managing Costfunding investment and expanding margins

Manufacturing

optimisation

De-Complexing

Local marketing

overhead

Salesforce

optimisation

Back offices & HQ

Global

procurement

OverheadsProduct Cost

Funding Investment

Increasing Margins

24

Global Procurement

Global procurement introduced 2 years ago to drive

better value from our spend

Delivering a fit for future supplier base; reduced by

10% in FY15 - reduces business risk, leverages scale

& drives collaboration

Simplified & aligned supplier terms – c.£12m working

capital benefit FY15

£1.5m annual saving (12% reduction) in facilities

management cost

E-procurement tools implemented to provide

transparency & governance; eAuctions started in FY15

lower risk, lower cost, better performance

Procurement Process

Optimisation

Contract

ManagementStrategic Sourcing

Value

Realised

SavingsEfficiency

Sustainability

25

Salesforce Optimisation

Differentiating through excellence in customer engagement

Field force teams re-structured - removes complexity, clarifies

purpose & builds capability

Bespoke CRM technology – reduce administration and increase

value add

50% less time collecting data, live competitor insight, live outlet

profiling

Globally consistent approach to customer interaction and service

More effective delivery drives revenue opportunities

More efficient delivery drives material savings; c. £50m p.a. by

2018

more efficient & effective delivery to customer

26

Maximise sustainable shareholder returns

Turning Strategy into Actionembedding capital discipline

Strengthen

PortfolioDevelop

Footprint

Drive Cost

Optimisation

Embed Capital

Discipline• Enhance brand equity to

build sustainability

• Build on success of early

migrations

• Investment focused on

primary brands in all markets

• New launches from Fontem

• Building momentum

across Growth Markets

• Continue to optimise

performance in Returns

Markets

• Rapid and efficient

integration of US assets

• Deliver further savings

as part of £300m pa

2018 target

• Continue to refine

ways of working

• Embedding cash

conversion discipline

• Further improvements to

capital deployment

• Continue to manage

structure and level of

debt

27

Greater Capital Disciplineimproved cash generation

Increasing Investment

Repaying Debt

Increased Dividend

Improving Cash Conversion

Effective Asset Management

Working Capital Efficiency

28

Greater Capital Disciplineimproving cash conversion

82%

86%

91%

Average 2011-13 2013 2014

Divestment of non core assets and

business e.g. Logista

Disciplined approach to fixed asset

purchases

Review of tail end brands for

disposal

Effective working capital

management e.g. leaf procurement

29

Improving and Strengthening

We have already made significant changes to our model since our change

of strategy in 2010

From Mergers & acquisitions To Sustainability

30

Journey is in Progress

Global

ProcurementField Force

TransformationSales Growth

Drivers

Regions to

Divisions

Chassis &

MigrationsUS Asset

Acquisition

31

Video – Davidoff

32

Hunting Margins

High

Profit

Margins

Maximising

Shareholder

Returns

Barclays Back to School ConferenceImperial Tobacco Group PLC

Oliver Tant, Chief Financial Officer

10 September 2015