British American Tobacco (BTI) Risk Factors

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. 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. Inappropriate regulations for New Categories (e.g. pharma or food) or total bans of tobacco and/or New Categories products in certain markets. 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, the announcement or enactment of restrictive regulation (e.g. sales ban to future generations). Increased scope and severity of compliance regimes in new regulation (e.g. Extended Producer Responsibility (EPR) schemes) leading to higher costs, greater complexity and potential reputational damage or fines for breach, including inadvertent breach.