INVESTING FOR QUALITY GROWTH

Imperial Brands has an attractive portfolio of brands and markets which can deliver long-term profitable growth. Our strategy is to strengthen our tobacco and non-tobacco portfolio by generating an increasing proportion of revenue from our strongest brands, while also prioritising our investment in those markets that offer the best returns. We have a proven track record of achieving strong price/mix growth to offset industry volume declines and enhance profitability. We are also investing in non-tobacco products and experiences through our subsidiary, Fontem Ventures, to deliver future growth opportunities alongside our tobacco business.

VALUE CREATION THROUGH NEW WAYS OF WORKING

Our strategic agenda is changing the way we operate to strengthen the business and improve our quality of growth. Simplification and focus are at the heart of our new ways of working, as we reduce complexity and instil a more cost-conscious culture. We are also adopting lean principles through continuous improvement in everything we do. This provides opportunities to reduce costs, improve effectiveness and create a more agile organisation that can drive consistent returns for shareholders in an ever changing world.

STRONG CASH GENERATION

Our business generates strong cash flows as a result of our intrinsically high operating profit margins, coupled with our ability to convert a very high proportion of these profits to cash. Over recent years we have improved our cash conversion by reducing our working capital and prioritising our investments more effectively. Our current focus for our cash resources are: investment in our priority brands and markets, supporting double digit dividend growth for shareholders and reducing our net debt.

ANNUAL 10% DIVIDEND GROWTH OVER MEDIUM TERM

A core part of our investment proposition is our commitment to grow the dividend by at least 10 per cent per annum over the medium term. This is a commitment we have now achieved for eight consecutive years. Our ability to improve profitability and generate strong cash flows will enable us to continue to deliver this income growth to our shareholders.