Imperial Brands : Results overview

IMPERIAL BRANDS PLC

FULL YEAR RESULTS STATEMENT 14 NOVEMBER 2023

CONSUMER-FOCUSED

TRANSFORMATION DRIVES

IMPROVING RETURNS

REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2023

BUSINESS HIGHLIGHTS

• Delivered an acceleration in adjusted operating profit growth in line with five-year strategic plan
• Improved combustible tobacco performance with 10 basis points aggregate market share growth in top-five priority markets and strong, broad-based pricing gains
• Next generation product net revenue up 26% as momentum grows in all categories; Europe NGP up 40%
• Operational and financial delivery underpinned by new consumer capabilities, ways of working and cultural change, with employee engagement 100 basis points ahead of global benchmark at 74%
• Enhanced shareholder returns with 4.0% dividend increase as well as a 10% increase in share buybacks; total FY24 returns of £2.4 billion equivalent to c. 15% of total market value

FINANCIAL SUMMARY

1. Reported revenue includes duty, similar items, Distribution gross profit (Logista) and sale of peripheral products, which are excluded from net revenue; net revenue comprises reported revenue less duty and similar items, excluding sale of peripheral products and Distribution gross profit (Logista).
2. See page 3 for the basis of presentation and the supplementary section at the end of the financial statements for the reconciliation between reported and adjusted measures.
3. Constant currency removes effect of exchange rate movements on the translation of the results of our overseas operations.
4. Constant currency movement excluding the prior year financial contribution from Russia, following our exit in April 2022.

STEFAN BOMHARD CHIEF EXECUTIVE

"Three years into Imperial's transformation, our investments in consumer capabilities, changes to the way we work, and a new performance culture are translating into stronger, more sustainable operational and financial outcomes. In combustible tobacco, improving brand equity and investment in our salesforce capabilities has led to the third consecutive year of stable or growing aggregate market share in the five priority markets which account for 70% of our operating profit. At the same time, we have offset structural volume declines with strong pricing in all key markets.

"In next generation products, our challenger approach, which combines partnership-based innovation with disciplined market entry, is delivering positive results. We now have credible propositions across all categories - vape, heated tobacco and oral nicotine. Following recent launches, we now offer consumers potentially reduced- harm choices in more than 20 European markets, as well as the United States. This step-up in investment in Europe has driven an acceleration in net revenue growth.

"Underpinning this broad-based progress is our continued transformation, which includes new innovation hubs in Liverpool, Hamburg and Shenzhen, modernisation of legacy systems, and investments in upskilling our leaders.

"All of this means we are well placed to deliver on our commitment to enhance returns to investors, with increases to both our dividend and buyback programme. Looking ahead, we expect the continuing benefits of our transformation to enable a further acceleration in our adjusted operating profit growth in the final two years of our five-year strategy. We look forward to building on our growing operational track record to deliver sustainable returns to shareholders and play a positive, distinctive role in this industry's transition to a healthier future."

Page 1 of 92

FULL YEAR RESULTS STATEMENT continued

DELIVERING AGAINST OUR STRATEGIC PRIORITIES

Growing market share in aggregate across our portfolio of five priority combustible markets

• 10 bps aggregate market share gain in our five priority markets, while achieving strong pricing in all markets
• Continued investment in brand equity building and sales force initiatives is driving performance
• Three out of five markets in share growth: gains in US, Australia and Spain offset declines in Germany and UK

Accelerating our NGP performance with disciplined execution

• New product and market launches delivering acceleration in NGP net revenue growth in second half of the year
• Driving growth across all three categories: vapour, heated tobacco and modern oral nicotine
• Our new heated tobacco offering, Pulze 2.0 and iD launched across seven European markets
• All-newblu 2.0 now available nationally in nine markets; disposable blu bar now available in 11 markets
• In modern oral, growth in Zone X, and Skruf Super White supported by flavour launches
• Acquisition of US nicotine pouch business creates opportunity to launch new modern oral in US in FY24

Driving value from our broader market portfolio

• Strong pricing in our wider footprint markets has driven financial performance
• Good progress in several smaller clusters, e.g. Africa, Asia, Middle East and Taiwan
• Leveraging our capabilities in driving growth from portfolios of smaller markets with transfer of Central and Eastern Europe cluster from Europe region to the Africa, Asia and Australasia (AAA) region

Transforming our ways of working

• Consumer centricity: Significantly strengthened our consumer-facing capabilities under Global Consumer Office
• Performance-basedculture: Continued roll-out with 'how' objectives incorporated within remuneration incentives as well as senior leadership coaching programme
• Benchmark-beatingemployee engagement scores - showing buy-in to new strategy, vision, purpose and behaviours
• Simplified and efficient operations: have delivered the target cost savings of £150m by end FY23

RESULTS OVERVIEW*

Tobacco & NGP net revenue growth driven by resilient tobacco pricing

• Strong tobacco pricing across all key markets mitigating volume declines
• Excluding Russia, tobacco price mix of 8%: pricing +11% with adverse mix of -3%, driven primarily by adverse product mix in the USA (mass market cigars and cigarettes)
• Tobacco volumes down 10.4% driven by our exit from Russia and weakness in US mass market cigars
• Excluding Russia, tobacco volumes declined 7.1%, as anticipated against a stronger prior year comparator, down 1.2%
• NGP net revenue up 26.4% driven by growth across all categories; Europe net revenue up 40.4%
• Reported revenue declined -0.2% reflecting lower excise partially offset by higher Logista revenue

Delivering improved profitability and increased investment

• Group adjusted operating profit grew +3.8%, driven by our tobacco portfolio and Logista; excluding Russia, Group adjusted operating profit grew +3.9%
• Reported operating profit grew 26.8% because charges relating to our Russia exit last year were not repeated
• Tobacco adjusted operating profit grew +3.9%, reflecting strong pricing and cost control; excluding Russia +4.1%
• Tobacco adjusted operating margins increased +180bps driven by pricing more than offsetting cost inflation; ex. Russia +150bps
• NGP adjusted losses increased +48.3% to £135m as new product and market launches led to higher investment
• Distribution adjusted operating profit up 17.0% reflecting organic growth and the contribution from acquisitions
• Adjusted EPS grew +4.2% driven by operating results and reduced share count, partially offset by higher finance costs and increased minority interests; excluding Russia adjusted EPS grew +4.3%
• Reported EPS grew 52.1% driven by higher reported operating profit and a reduction in tax charge relating to favourable FX translation

Strong free cash flow and clear capital allocation framework supports growing shareholder returns

• Adjusted operating cash conversion of 92%, against a strong comparator (102%); free cash flow of £2.4bn
• Investing in organic growth initiatives and targeted bolt-on acquisitions in NGP and Logista
• Adjusted net debt £8.0bn (2022: £8.1bn); adjusted net debt to EBITDA at 1.9x (2022: 2.0x)
• Reported net debt £8.4bn (2022: £8.5bn)
• Annual dividend per share up 4.0% to 146.82 pence per share, in line with our progressive dividend policy
• Ongoing multi-year share buyback with £1.1bn underway for FY24; 10% increase on FY23 buyback
• Cumulative capital returns of £4.7bn in FY23 and FY24

* All measures at constant currency unless otherwise stated

Page 2 of 92

FULL YEAR RESULTS STATEMENT continued

OUTLOOK

Our five-year strategy is continuing to drive the operational and cultural changes which, despite challenging macro-economic headwinds, are strengthening financial delivery. This underpins our confidence in delivering against the final two years of our plan with a further improvement in adjusted operating profit growth to support a mid-single-digit constant currency CAGR over FY23-FY25, in line with our medium-term guidance.

In the coming year, we expect to deliver low-single-digit constant currency revenue growth and to grow our constant currency adjusted operating profit close to the middle of our mid-single digit range.

Performance will be weighted to the second half of the year driven by the phasing of our pricing in the prior year and investments in NGP. As a result, first-half operating profit is expected to grow at low single digits. at constant currency.

Our earnings per share growth will benefit additionally from the continued reduction in share count as a result of our ongoing share buyback programme, although this will be offset slightly by increased adjusted finance and tax costs.

At current rates, foreign exchange translation is expected to be a 0-1% headwind to net revenue, adjusted operating profit and earnings per share.

We look forward to building on our growing operational track record to deliver shareholder returns through an ongoing buyback and progressive dividend, and to play a positive, distinctive role in this industry's transition to a healthier future.

BASIS OF PRESENTATION

• To aid understanding of our results, we use 'adjusted' (non-GAAP) measures to provide a consistent comparison of performance from one period to the next. Reconciliations between adjusted and reported (GAAP) measures and further definitions of adjusted measures are provided in the supplementary information section. Change at constant currency removes the effect of exchange rate movements on the translation of the results of our overseas operations. References in this document to percentage growth and increases or decreases in our adjusted results are on a constant currency basis unless stated otherwise. These are calculated by translating current year results at prior year exchange rates.
• Stick Equivalent (SE) volumes reflect our combined cigarette, fine cut tobacco, cigar and snus volumes but exclude any NGP volume such as heated tobacco, modern oral nicotine and vapour.
• Market share is presented as a 12-month average to the end of September (MAT - moving annual trend), unless otherwise stated. Aggregate market share is a weighted average across markets within our footprint.

Analyst Presentation Webcast

Imperial Brands PLC will be hosting a live webcast at 09:00 (GMT) on 14 November 2023 for investors and investment analysts following the publication of our interim results at 07:00 (GMT). The webcast will be hosted by Stefan Bomhard, Chief Executive, and Lukas Paravicini, Chief Financial Officer. The presentation will be followed by a question and answer session. The presentation slides will be available on www.imperialbrandsplc.com from 07.00 (GMT). A webcast recording and the presentation script will also be available after the live webcast has concluded.

The webcast will be available on https://edge.media-server.com/mmc/p/mmry9v55. To participate in the Q&A session, please register in advance via this link: https://register.vevent.com/register/BI3cc04a0f77b246ea8dfafdf340b87071. You will then receive the dial-in details and your own PIN to access the live Q&A session.

Cautionary Statement

Certain 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.

Page 3 of 92

CHIEF EXECUTIVE'S STATEMENT

PERFORMING WITH PURPOSE

Three years into our strategy, I am pleased with the consistent track record we are building and excited by the growing opportunities ahead. Our focus has been to develop Imperial into a strong, consumer-centric challenger business, capable of growth, year in and year out. Since the launch of our strategy in early 2021, we have been creating the team and the capabilities to enable the revival of our combustible business and the successful reboot of our next generation products (NGP).

This approach is leading to clear operational progress, despite a challenging macro-economic environment. In our five priority combustible markets, which account for around 70% of our operating profit, we have stabilised the share declines and exceeded our expectations with a 43 basis point growth in aggregate share since September 2020. Over the same period, NGP net revenue has grown by 41% at actual exchange rates, underpinned by market launches and new products in all three categories.

We have also delivered a material step-up in shareholder returns. During FY23 and FY24, through a combination of dividends and our ongoing share buyback programme, we expect to make cumulative capital returns of £4.7 billion. This is the equivalent of c.30% of Imperial's market value as at 30 September 2023.

Meanwhile, we are continuing to make focused investments in consumer capabilities, data, processes and systems, and our culture to ensure we can grasp future opportunities across all segments. While I am pleased with our progress so far, I believe that the full benefits of Imperial's transformation will continue to emerge in the next few years and beyond.

BUILDING OUR CHALLENGER CAPABILITIES

Imperial is the fourth largest - and smallest - of the global businesses in our sector. To outperform consistently, we need to do things differently to our larger rivals - to act as the industry's challenger. Being a challenger is about being close to the consumer, having robust data and processes to enable fast, well-informed decisions, and developing a performance-based culture. Taken together, these are the critical enablers for strategic success and the focus for our investments over the past three years.

In a sector where consumer behaviour is becoming increasingly diverse, strong insights, innovation capabilities and brand building are more and more crucial. In June, I joined our consumer team at a capital markets event in New York City. Their presentations included our new research in consumer demand spaces, our emerging partnership approach to innovation, and our activity to refresh both our international and local brands. Since then, we have continued to improve our ways of working to ensure that our centres of expertise work as effectively as possible with our teams in the markets.

Today's Imperial was assembled through a series of global acquisitions during the past quarter century. A clear demonstration of our transformation journey is how we are replacing more than 60 legacy systems with a single, unified platform. In parallel, we are also creating an end-to-end supply chain system - from leaf to store. These investments will make a significant contribution to future operational improvements, by giving our people more robust, actionable data, and automating low-value processes, freeing up time to focus on meeting consumer needs. While these programmes will each take several years to complete, pilot markets and factories are currently adopting the new systems and ways of working.

We continue to build a distinctive, performance-based challenger culture, which internally we call "Connections". Having introduced our new behaviours in 2021, during 2022 all colleagues went through training to help them better understand how to deploy these behaviours in their everyday working lives. Over the past year, we moved to the next phase of this culture change journey by inviting 300 of our senior leaders to spend seven working days on a coaching programme to help them nurture high-performing teams (see pages 26-27). We also launched a new long-term diversity, equity and inclusion strategy designed to ensure that everyone in Imperial can feel that they belong (see pages 67-69).

Another important focus this year has been to support our colleagues in markets dealing with exceptional challenges. These include Laos and Morocco, which have been affected by natural disasters and, of course, in Ukraine.

Our 2023 employee experience survey was completed by 91% of eligible colleagues around the world, and we maintained our above- benchmark engagement score of 74%.

IMPROVED, MORE CONSISTENT PERFORMANCE

Our focused investments in the critical enablers of our strategy are driving improved business performance. In the period, excluding Russia we delivered growth in tobacco and NGP net revenue of 1.4% and in Group adjusted operating profit of 3.9%, at constant currency. Reported revenue was down 0.2% due to lower excise partially offset by higher Logista revenues. Operating profit grew 26.8% as charges relating to our exit from Russia were not repeated.

Once again, these achievements have been delivered against an inflationary backdrop which has squeezed consumer purchasing power. As anticipated, we delivered strong tobacco price mix for the year at 10.4% which more than offset volume declines.

During 2023, market share in our five priority markets increased by 10 basis points.

In our largest market, the United States, our challenger approach supported a share increase of 65 basis points for the year. Our flagship cigarette brands Winston and Kool were stable in their segments thanks to distinctive brand positioning and focused sales execution, and we continued to increase share in the deep discount segment. In mass market cigars we faced a decline in net revenue against a strong comparator period. As expected, this headwind, which we reported at the half year, has eased during the second half.

Page 4 of 92

CHIEF EXECUTIVE'S STATEMENT continued

We continue to refine our approach in Germany with investment in building brand equity and in our sales force effectiveness.

In the UK and Spain our strategy has been focused on investment in local jewel brands, while in Australia our approach to revenue growth management underpinned our clear brand offerings at each of the key price points.

To improve focus on our medium-sized and smaller markets, we have created the new AAACE region which includes Africa, Asia, Australasia and Central & Eastern Europe. Strong tobacco pricing across the region offset volume declines, while Central & Eastern Europe benefited from NGP growth.

In NGP, we now have credible consumer propositions across all categories - vape, heated tobacco and modern oral. During 2023 we accelerated the roll-out of new products in Europe, with the pod- based vape blu 2.0 now available in nine markets, the blu bar disposable in 11 markets, and Pulze 2.0, our heated tobacco device, in seven markets. We have also expanded the flavour range of Zone X pouches in Europe. In the Europe region, NGP net revenue grew by 40% year on year on a constant currency basis. We are pleased with the progress and feel that we now have a full product platform for the NGP category. We will continue to be disciplined and will now aim to consolidate momentum in our current markets. This means investing only in markets where NGP categories account for a material proportion of the overall nicotine market and where we have a strong route to market. In the US, we welcomed the unanimous federal court decision in August to vacate an earlier Marketing Denial Order issued by the Food and Drug Administration against our myblu pod-based vapour portfolio. In 2024, we will launch our new modern oral range under the brand "Zone". This follows the acquisition of a range of US pouches from TJP Labs in June.

PURPOSE, PEOPLE AND PLANET

A consumer-centric, challenger approach to NGP is how we will contribute to the broader industry-wide commitment to reduce harm. As the smallest of the international businesses, we know we cannot deliver a healthier future on our own. But, by getting close to our consumers, innovating fast and working with partners, we can drive responsible competition and help accelerate the transition to potentially reduced-harm products. This distinctive way of working is most clearly seen in our new Sense Hubs in Liverpool and Hamburg, which bring together consumers, our own product developers and third-party partners in a single collaborative space.

Consumer health is a key element of our broader environmental, social and governance (ESG) framework, which internally we refer to as our People and Planet agenda. We are making material progress in our other priority areas. We are committed to becoming a fully Net Zero carbon emission company by 2040 and, driven by an overall reduction in energy consumption, we have reduced our Scope 1 and Scope 2 market-based carbon emissions by 65% since our baseline year 2017. We are also on course to meet our commitment to eliminate landfill waste in our operations by 2025. For more information on People and Planet see pages 38-69.

ALLOCATING CAPITAL WITH DISCIPLINE

Capital allocation is a key value lever for the business. Focus and discipline are the key principles behind our four capital allocation priorities:

• Invest behind the strategy to deliver the growth initiatives.
• Deleverage to support a strong and efficient balance sheet with a target leverage towards the lower end of our adjusted net debt to EBITDA range of 2-2.5 times.
• A progressive dividend policy with dividend growing annually, taking into account underlying business performance.
• Return surplus capital to shareholders while maintaining our target leverage.

Having reached our target leverage, in October 2022 we began returning surplus capital to shareholders via a share buyback. We completed an initial buyback of £1 billion during FY23, and we have announced the next £1.1 billion tranche for FY24. As a result, we expect in total our returns to shareholders will exceed £2.4 billion in the coming fiscal year.

Given the highly cash generative nature of the business and our current valuation, we remain committed to a progressive dividend policy and an ongoing buyback programme, which will meaningfully reduce the capital base and generate significant shareholder returns.

EMBRACING CHANGE

Since joining Imperial in June 2020, I have visited a total of 35 markets and nine factories and had conversations both face to face and virtually with many hundreds of colleagues. During this past three years, I have seen how our people have embraced change, balancing the need for near-term delivery with supporting our long- term transformation. I have seen too a growing spirit of collaboration, accountability and inclusivity, as we integrate new hires with strong global consumer experience and our colleagues with deep local and sector expertise. Above all else it is the power of our people which gives me confidence in our ability to continue to deliver over our five- year strategy period and beyond.

Page 5 of 92

CHIEF EXECUTIVE'S STATEMENT continued

OUTLOOK

Our five-year strategy is continuing to drive the operational and cultural changes which, despite challenging macro-economic headwinds, are strengthening our financial delivery. This underpins our confidence in delivering against the final two years of our plan with a further improvement in adjusted operating profit growth to support a mid-single-digit constant currency compound annual growth rate over FY23-FY25, in line with our medium-term guidance.

In the coming year, we expect to deliver low single-digit constant currency tobacco and NGP net revenue growth and to grow our constant currency adjusted operating profit close to the middle of our mid-single-digit range.

Performance will be weighted to the second half of the year driven by the phasing of investments in NGP and the phasing of our pricing in FY23. As a result, first half operating profit is expected to grow at low single digits, at constant currency.

Our earnings per share growth will benefit additionally from the continued reduction in the number of shares as a result of our ongoing share buyback programme, although this will be offset slightly by increased adjusted finance and tax costs.

At current rates, foreign exchange translation is expected to be a 0-1% headwind to net revenue, adjusted operating profit and earnings per share.

We look forward to building on our growing operational track record to deliver shareholder returns through an ongoing buyback and progressive dividend, and to play a positive, distinctive role in this industry's transition to a healthier future.

Stefan Bomhard

Chief Executive Officer

Page 6 of 92

OPERATING REVIEW

EUROPE

REGION

Aleš Struminský

President, Europe Region

OPERATING REVIEW

To provide a greater focus on "driving value from our broader market portfolio", which is one of our strategic pillars, we have transferred the management of our Central and Eastern Europe cluster from our Europe region to the Africa, Asia and Australasia (AAA) region. Under the leadership of Paola Pocci, we have been

enhancing our capabilities and expertise in managing our smaller markets, many of which have attractive margins and the potential to become platforms for future growth in combustible tobacco and NGP. The AAA region will now be known as AAACE. The affected markets are Poland, Czech Republic, Ukraine, Slovakia, Hungary, Azerbaijan, Armenia, Georgia, Moldova, Croatia and Slovenia. The Americas region is unaffected by this change.

AT A GLANCE

Tobacco volume

-8.2%

Tobacco & NGP net revenue*

+4.8%

Tobacco net revenue*

+2.8%

HEADLINES

• Strong financial performance driven by strong pricing action early in the year which offset volume declines
• Leveraging our local jewel brand strategy to drive operational and financial performance
• Positive NGP net revenue performance with growth across all categories driven by product innovation and new market launches
• Successful launch and roll-out of all-new vapour device blu 2.0 and disposable blu bar
• New and improved Pulze 2.0 offering consumer choice across four markets
• Adjusted operating profit growth reflects strong combustible performance and increased investments behind NGP

Our results in Europe are driven by strong combustible pricing, which helped mitigate inflationary headwinds and support increased investment in NGP launches. Tobacco volumes were impacted by macro conditions and continued pressure on consumer spending. As expected, the volume trajectory improved in the second half of the year. Net revenue benefited from an acceleration in NGP revenue growth (year on year up 45.1% in the second half of the year at constant currency) as our innovation pipeline supported new product and market launches alongside growth in existing markets.

Strategic initiatives in our priority markets supported our combustible tobacco performance. In the UK, after two years of market share growth, we raised prices early in the period, causing our market share to decline as we balanced market share with value creation. As anticipated, we experienced some market share recovery during the second half of the year. We remain confident that our strategic initiatives in the UK, such as our local jewel brands, Richmond Embassy and Regal Signature, have continued to gain

NGP net revenue*

+40.4%

Adjusted operating profit*

+2.0%

* Change at constant currency.

traction. Our work to arrest the long-term share declines in Germany continues with a refinement in our investment in brand equity building initiatives. In Spain, we achieved strong price increases while also gaining market share as our local jewel brand, Nobel, benefited from new format launches and we refined our focus on the key sales channels, for example vending machines.

Tobacco volumes declined 8.2% with consumer buying patterns impacted by cost-of-living pressures. The elevated excise regimes in markets such as the UK and France have contributed to continuing pressure on volumes. However, volume declines moderated in the second half of the year in the UK. Tobacco net revenue was up 2.8% at constant currency, reflecting strong price mix of 11.0%, which more than offset the volume declines.

Our NGP portfolio has delivered strong net revenue growth, which was up 40.4% at constant currency with growth across all three categories. We delivered a step-up in new product and flavour launches following our "test and learn" validation with consumers and market pilots in FY22. Our new consumer-led partnership model on NGP product innovation delivered a range of new products in all three categories: Pulze 2.0 in heated tobacco (four markets); blu 2.0 (10 markets) and blu bar (nine markets) in vapour; and ZoneX (three markets) and Skruf Modern (Norway) in modern oral nicotine.

Tobacco and NGP adjusted operating profit for the year increased 2.0% at constant currency, mainly reflecting the strong tobacco performance together with increased investment in our NGP product and market launches.

Page 7 of 92

OPERATING REVIEW continued

* 2022 figures restated for the transfer of the Central & Eastern Europe cluster from Europe to AAACE.

Priority market

Tobacco share

Germany

• 18.2% (-80bps)
• 13% of Group net revenue

UK

• 41.1% (-50 bps)
• 8% of Group net revenue

Spain

• 28.4% (+10 bps)
• 5% of Group net revenue

Performance

Tobacco market size declined 1.9% in the year with some downtrading, together with a category shift from cigarettes to fine cut tobacco. Our market share declined although we continue to refine our investment initiatives with the aim of stabilising our share over time. As anticipated, it is taking time to address our share performance after more than a decade of underinvestment and share losses. We remain confident the investment behind these strategic initiatives will enhance our brand equity and improve our sales force effectiveness. Our brand portfolio remains well positioned across the key price segments to appeal to a range of consumer needs, which includes the launch of Paramount to meet consumer needs in the value segment. We expanded our vapour offer with the launch of blu 2.0 and blu bar during the year.

Tobacco market size declined 16.9%, driven by the COVID-19 unwind, inflationary excise increases and manufacturer price increases in the period. We increased prices in November and again in March to pass on the excise increases. As anticipated, and after two years of share gains, these price increases caused us to lose share. However, we recovered some of the market share lost in H1 as we sought to optimise the balance between managing share and value creation. Our strategic investments continue to gain traction with our local jewel brand variants of Richmond, Embassy and Regal Signature performing well - and as we focused on supporting our key account customers. We grew our NGP contribution in vaping, launching both blu 2.0 and blu bar in the period, supported by innovation of our flavours in both platforms.

Tobacco market size declined 2.6% year on year. We were able to increase prices for the second year in a row, following several years of stable pricing, while also continuing to deliver share gains. Our market share increase was driven by investments in innovation and brand extensions, such as limited-edition packs and big pack launches for West. We continued to focus on our portfolio of local jewel brands with the launch of new, high-quality packs for brands such as Nobel. We also benefited from refocusing our sales force on channels, where we have been under-represented historically. The launches of blu 2.0 and blu bar have been well received by consumers and the trade and the blu brand is the joint market-leading brand by retail sales value as at August 2023.

Page 8 of 92

OPERATING REVIEW continued

AMERICAS

REGION

Kim Reed

President and CEO, Americas Region

AT A GLANCE

Tobacco volume

-5.5%

Tobacco & NGP net revenue*

-4.7%

Tobacco net revenue*

-4.5%

HEADLINES

• Cigarette share growth up 65 basis points to 10.7% with gains across all three of our focus price segments
• Investment in strategic initiatives continues to drive operational improvements
• Net revenue decline reflects adverse product mix in mass market cigars partially offset by strong cigarette pricing
• Mass market cigar performance temporarily affected by wholesaler inventory movements and market share pressure
• NGP net revenue declined as we prioritised investment in Europe pending resolution of the FDA's Marketing Denial Orders for myblu, which was vacated in August 2023
• Adjusted operating profit growth reflects strong cigarette pricing and cost initiatives to mitigate the reduction in volumes

We delivered a strong combustible market share performance in the US while achieving strong pricing across our cigarette portfolio. This was offset by a decline in our mass market cigar volumes due to a temporary wholesaler destock after they increased inventories ahead of Hurricane Ian in September 2022. This contributed to adverse product mix which has weighed on our net revenue performance.

Tobacco volumes declined against an industry volume decline of 8.4% in cigarettes and a 5.4% fall in industry mass market cigar volumes. Market volumes continue to be impacted by macroeconomic pressure on consumer disposable income. Our cigarette outperformance reflects the improvement in our cigarette market share of 65 basis points to 10.7% - our fifth consecutive year of market share growth. Our cigarette volumes also reflect a slight increase in wholesaler inventories in the period, which increased our shipment volumes by c. 0.2%.

Our market share performance was driven by three factors: first, the continued benefit from our investment in sales execution and brand building; second, the way we have positioned our brand portfolio to meet the needs of consumers, particularly as they continue to trade down; and third, to a much smaller extent, the annualisation of the benefit from our agile response to capture share arising from KT&G's exit in December 2021. We gained or held share in the three price segments, where we are focused.

NGP net revenue*

-21.4%

Adjusted operating profit*

+1.9%

* Change at constant currency

On a constant currency basis, tobacco net revenue declined by 4.5%, as strong pricing of around +10% was more than offset by volumes down -5.5% and adverse mix of around -9%. The adverse mix was driven by the performance of mass market cigars, which accounted for around -5% of decline. This reflects the relatively high value, low volume nature of the category - the revenue per stick for cigars is around 2.5 times that for cigarettes. Adverse cigarette mix accounted for the remaining around -4% adverse mix driven by our market share performance in the deep discount segment and the successful capture of the KT&G share following their exit from the market in December 2021.

Our cigarette share performance partly reflects our progress in building brand equity and strengthening our sales force capabilities. For example, our brand investment behind KOOL continues to support share growth in the premium value segment. We continue to improve our sales execution with our increased sales force, setting our "perfect store" concept as the standard to achieve across all stores and working with our key account customers on joint business planning.

As anticipated our mass market cigar portfolio improved into the second half of the year, driven by product innovation. Over the year, however, volumes came under pressure driven by a temporary wholesaler destock, market share losses and overall market size declines. The destock followed a wholesaler inventory build last September ahead of Hurricane Ian, which affected Southwest Florida where our Tampa cigar warehouse is located. Wholesaler inventories have now normalised. The overall category decreased as consumer buying patterns changed post COVID. Pressure on consumer spending drove some downtrading, leading to market share losses in our premium Backwoods offering. We believe the outlook for this category remains positive and we continue to have a strong brand presence with Backwoods, a premium quality iconic heritage brand.

Page 9 of 92

OPERATING REVIEW continued

Our NGP net revenue declines improved into the second half of the year on a constant currency basis, declining 21.4% over the full year. The uncertainty caused by the FDA's Marketing Denial Orders (MDOs) issued in April 2022 for our myblu products eased into the period end as we welcomed the unanimous decision on 29 August 2023 by United States Court of Appeals for the District of Columbia Circuit to vacate the FDA's Marketing Denial Order for our myblu pod-based vapour portfolio. Our products have remained in the market throughout the appeals process. We also completed the acquisition of a range of nicotine pouches to facilitate our entry into the US modern oral market.

We plan to launch this range of 14 product variants under a new brand, which will leverage the Company's existing US sales force.

Adjusted operating profit grew 1.9% at constant currency, reflecting the strong cigarette pricing and cost initiatives to mitigate the reduction in volumes, as well as a year-on-year benefit (c. £30 million) from ongoing non-participating manufacturers' settlements relating to prior year disputes under the Master Settlement Agreement. Although we expect further settlements over time, we do not anticipate this level of benefit to be repeated in the coming financial year.

Page 10 of 92