#1** IMPERIAL BRANDS Our Transformation to Unlock Value Capital Markets Event 27 January 2021#2Disclaimer 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 2 Capital Markets Day | 27 January 2021 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 IMPERIAL BRANDS 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 or liability is expressly disclaimed.#3Driving change to strengthen performance 3 Capital Markets Day | 27 January 2021 ● ● ● ● Introduction from Chair IMPERIAL BRANDS Decisive Board action to strengthen leadership capabilities and performance - Three Non-Executive hires with deep experience: Pierre-Jean Sivignon - Finance; retail/technology Bob Kunze-Concewitz - CEO; consumer goods Alan Johnson - Finance; consumer goods/retail Undertaken a comprehensive strategic review Established building blocks for transforming Imperial Clear plan for delivering stronger, more consistent results#4Transforming our Business 16:00 Q&As 14:00 4 Capital Markets Day | 27 January 2021 14:55 Summary: Strategy Review & Priority Areas Stefan Bomhard - Chief Executive Combustibles: Driving Value from our Core Business Stefan Bomhard; Joerg Biebernick (Europe); Dominic Brisby (AAAA) 10-minute break NGP: Resetting our Strategy Murray McGowan - Group Strategy & Transformation Director Ways of Working and Culture Alison Clarke - Chief People & Culture Officer Financial Framework Oliver Tant - Chief Financial Officer IMPERIAL BRANDS Summary Stefan Bomhard - Chief Executive All times in UK GMT#5Strengthened management team Stefan Bomhard Chief Executive Officer Murray McGowan Group Strategy & Transformation Director Oliver Tant Chief Financial Officer Alison Clarke Chief People & Culture Officer 5 Capital Markets Day | 27 January 2021 Dominic Brisby Division Director, Americas, Africa, Asia & Australasia Javier Huerta Group Manufacturing & Supply Chain Director IMPERIAL BRANDS Joerg Biebernick Division Director, Europe TBC Chief Consumer Officer#6We are Imperial Brands PLC A global consumer business JOHN PLAYER 6| SPECIAL GAULOISES PARKER 120 markets SIMPSON 27,500 employees Net revenue £8bn &B IMPERIAL BRANDS News West PS Winston KOL RIZLA skruf● :PULZE Adjusted operating margin 44% Davidoff BACKWOODS blu CIGARETTES#7Transforming Imperial Brands: a clear and compelling strategy to strengthen performance Greater focus on priority tobacco markets with clear operational improvement drivers More disciplined execution in NGP; category strategy tailored to key markets Consumer-centric and data-led approach strengthens our confidence in delivery Changing our ways of working and our culture to embrace our challenger position Underpinned by a capital allocation framework to create long-term sustainable value 7 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS#8Strategic review: strategy defined by Imperial for Imperial ● ● ● ● Rigorous Approach Fresh perspectives and expertise Fact-based (market, consumer, competitor) Guiding Principles Developed with broader leadership team Leveraging our strongholds Learning from what went wrong in the past Considering all options to create value 8 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS Clear areas of future focus where we have a right to win#9Strategic review: solid foundations for the future Solid share positions in Europe and US; leadership in several African markets Promising heated tobacco proposition with Pulze Encouraging brand performances despite limited investment; strong local jewels blu vapour brand strength in US and Europe 9 Capital Markets Day | 27 January 2021 Solid customer partnerships as #2 or #3 in market Talented workforce willing to embrace change IMPERIAL BRANDS Competitive manufacturing and supply chain operations High margins and strong operating cash flow#10Strategic review: areas for improvement ● Tobacco Delivery Share performance has been poor Insufficient focus on markets that drive greatest value Distracted by smaller markets Performance Management Limited rigour in performance management • Lack of agility and responsiveness • Data and consumer insight not fully leveraged 10 Capital Markets Day | 27 January 2021 NGP Underperformance Scaling of vapour too rapid and too broad Lack of consumer validation • Investment decisions lacked robust data Insufficient focus on heated tobacco ● ● IMPERIAL BRANDS ● Capabilities and Culture Not sufficiently focused on consumer needs Limited central marketing capabilities • Inconsistent approach to market data and insight Siloed thinking, fragmented organisation#11● ● Five-year plan overview: compelling plan centred around three strategic pillars Focus on Priority Combustible Markets Target increased investment in our most appealing profit pools Focus on defined key operational levers to unlock value 11 | Capital Markets Day | 27 January 2021 ● Drive Value From Our Broader Market Portfolio ● Efficiently manage broader market portfolio • Create global processes and drive best practice sharing Prepare future growth engines Selectively rationalise portfolio ● ● IMPERIAL BRANDS Build A Targeted NGP Business Focus on heated tobacco in Europe as primary growth engine Turnaround vapour business with focus on the US Oral nicotine focus on existing markets#12Five-year plan overview: new ways of working to enable plan delivery Consumer at the Centre of our Business Performance-based Culture and Capabilities Simplified and Efficient Operations 12 Capital Markets Day | 27 January 2021 • Embed fact-based and collaborative ways of working Build a challenger mindset throughout organisation Invest in talent and embrace diversity and inclusivity ● ● IMPERIAL BRANDS Strengthen critical capabilities: marketing, innovation, digital and consumer insight Leverage relevant brand portfolio to address key consumer needs Simplify the organisation through global processes underpinned by technology Create and embed clear performance management framework that will drive agility and accountability in decision making#13Opportunity to differentiate our approach (W) I a Focus on selected battlegrounds More targeted with our investment A strong retail partner Relentlessly consumer focused A differentiated fast follower Faster, more agile decision-making 13 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS Execute with a clear challenger mindset#14What our strategy will deliver Stronger business in our five priority combustible markets Sustainable low-single digit revenue growth Clearly defined role for the broader market portfolio to optimise value creation Mid-single digit operating profit growth 14 Capital Markets Day | 27 January 2021 A targeted and more disciplined NGP business committed to harm reduction Robust and reliable cash generation Strong and efficient balance sheet IMPERIAL BRANDS New ways of working and culture that reinforce focus on consumer and delivery Enhanced cash returns#15Clear sustainability agenda aligned with our strategy REDUCED HAR NEXT GENERATIONA REDUCING OUR ENVIRONMENTAL IMPACT I HARM SUPPLY SUSTAOBACCO ENABLING GROWTH & CREATING VALUE TAINING HIGH STANDARDS OF GOVERNANCEI BEHAVING RE PEOPLE 15 Capital Markets Day | 27 January 2021 ATIONS E ANDRESPONSIBLY OPERA COLLABORATING FOR POSITIVE SOCIAL IMPACT I !!. Consumer Health B8B3 Waste Climate and Energy Farmer Livelihoods and Welfare Human Rights - Modern Slavery SUSTAINABLE GALS 3 GOOD HEALTH AND WELL-BEING W IMPERIAL BRANDS 6 CLEAN WATER AND SANITATION 13 CLIMATE 8 8 GOOD JOBS AND ECONOMIC GROWTH GOOD JOBS AND ECONOMIC GROWTH M RESPONSIBLE 12 CONSUMPTION AND PRODUCTION a#16ESG Focus for FY21 1 Greater transparency on performance measurement 2 Additional KPIs for priority ESG issues 3 4 5 16| Consumer Health KPIs in FY22 following business reset Diversity and Inclusion underpins new culture ㄱㄱㄱㄱㄱ ESG webinars: climate and energy later this year IMPERIAL BRANDS#17Climate and Energy 1 Long-term Science Based Targets 2 Implementing TFCD recommendations 3 4 5 17| CDP A rating retained for focus on climate change CDP A- rating for water security New KPI: renewable as % of total direct energy use ГГГГГ IMPERIAL BRANDS#18** IMPERIAL BRANDS Combustibles Driving Value from our Core Business#19Combustibles: value creation model remains strong with reliable profit growth and high cash returns ● Tobacco value creation model still robust Affordability is good supporting continued pricing power Strong brand loyalty Regulatory risks ongoing but are manageable Transition to NGP is happening but at a modest pace 19 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS News Winston West KOL L&B GAULOISES Davidoff J CIGARETTES JOHN PLAYER PARKER SPECIAL PS- RIZLA+ SIMPSON#20Combustibles remain attractive going forward 2020-25 Combustibles Outlook for Key Geographies* USA Europe¹ Australia Africa² 20 Capital Markets Day | 27 January 2021 Volume Outlook* - 3-4% - 2-3% - 4-5% + 1-2% Pricing Outlook* + 4-5% + 3-4% 0% + 1-2% Source: Imperial Internal Estimates Value Outlook* + 0-1% + 0-1% - 4-5% + 2-3% IMPERIAL BRANDS * 2020-25 Forecasted CAGR for FMC, FCT and Cigars 1. Top 10 Imperial European markets - excluding Russia 2. Top 5 Imperial African markets#21High combustible affordability across Imperial markets supports continued pricing 4.6 3.9 Japan USA 3.9 3.5 3.3 Affordability for 20 largest countries¹ (# Packs earned per hour of work at average salary) 21 Capital Markets Day | 27 January 2021 3.0 2.8 South Germany, Russia Spain Italy Korea 2.6 2.5 2.2 Saudi Canada France Arabia 2.2 Turkey 2.0 Poland 1.8 | 1.8 United Brazil Kingdom | 1.5 Imperial significant presence (>5% volume share - 2019) Imperial top 5 markets IMPERIAL BRANDS 1.4 11 Thailand Australia, Egypt Indonesia Philippines India 1.4 1.2 1.0 0.4 1. Top 20 countries in terms of Cigarettes Retail Sales Value in 2019 - excluding China Affordability = est. hourly wage / price per 20 sticks - based on 2019 data Source: Euromonitor, Imperial Internal Estimate#22But disappointing historic performance: marginal revenue and profit growth Historically achieved marginal revenue and profit growth in combustibles... ...whilst losing share to competitors ...and with limited investment in our key markets and brands ...driven by a lack of active performance management and a focus on short-term profit delivery 22 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS#23Market share losses across nearly all larger markets Share Change (%pts) IMB's FMC Market Share Change, Top 5 Markets, FY17-20 + 0.1%pts 23 | Capital Markets Day | 27 January 2021 - 2.3%pts - 1.0%pts NK - 1.3%pts - 0.9%pts IMPERIAL BRANDS Source: Imperial Internal Estimate Volume market share#24Multiple reasons for historic share losses: examples De PRE NK ● ● ● ● ● ● ● ● Under-investment has limited top 3 brand building (JPS, West, Gauloises) Limited penetration in growing channels and regions Excessive pricing ahead of competition Limited brand investment across the portfolio Prioritised profit growth over share performance Slow response to consumer trends (e.g., crushball, downtrading) Neglect of local jewel brands Unsuccessful brand migration into global brands Ongoing decline of the dark tobacco segment Too much focus on profit optimisation with JPS Stepping out of price war in the value segment Slow response to consumer trends (e.g., crushball, FCT) 24 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS#25Detailed review informed our new strategy ୧ Reviewed all markets with a deep-dive on our largest markets Looked at evolution and performance of all major brands and price tiers Analysed different channels and regions within markets T Assessed consumer trends and our competitive position within markets Engaged with local market teams to set up ambition at country level 25 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS#26Summary: combustibles approach and ambition Our new approach Clarity on strategic choices Increased focus on priority markets Disciplined investment in key operational levers Clear role for each individual market Targeted investment in capabilities/resources 26 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS Improved Operational Excellence Upgraded competitor and consumer insights Consumer-centric and data-led investment in brands and innovation More proactive and rigorous performance management Simplified organisation supporting delivery#27New approach to brand portfolio management Move away from investment focus on international brands towards a more holistic brand portfolio approach... ... with a reinforced focus on serving consumers with our full portfolio - a mixture of global and local brands... better leveraging our strong and margin attractive local jewel brands I Brand portfolio decisions at local level will be based on globally identified and managed consumer need-states with the most appropriate brands aligned to them - international or local 27 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS Fortuna ORIGINAL 23 Nobel Slims#28Summary: increase focus on priority markets; driving value from others Profit contribution* Focus on Priority Combustible Markets + NK 28 Capital Markets Day | 27 January 2021 c. 72% HE *% of FY20 Tobacco operating profit, excluding one-offs, after allocation of central costs Source: Company Data Manage Broader Market Portfolio to Optimise Value Creation Other European Markets c. 15% Africa IMPERIAL BRANDS c. 8% Rest of World c. 5%#29Five priority markets account for 72% of operating profit USA Germany UK Spain Australia % of Combustible OP c.49% c.23% 29 Capital Markets Day | 27 January 2021 FY20 Market Size¹ £26.1bn £4.7bn £1.9bn £1.2bn £0.8bn Market Value Outlook² ↑ + 0-1% + 1-2% - 2-3% - + 0-1% - 4-5% Imperial Share³ c.9% c.22% c.41% c.29% c.28% Gross Margin/'000 SE (Relative to Imperial Average) High High High Average IMPERIAL BRANDS High 1.FMC, FCT and cigars manufacturer sales value 2.Manufacturer sales value 2020-25 forecasted CAGR 3.FMC volume share Source: Imperial Internal Estimate#30Priority markets: six operational levers to improve combustibles performance FMC FCT All Combustibles 1 Operational levers to improve combustible performance 2 Increase participation in sub-premium Drive and rejuvenate local jewel brands Optimise our approach to the value segment 3 4 Maximise the potential of FCT category 5 Drive performance in under-penetrated channels and regions 6 Maximise value creation through Key Accounts 30 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS We identified 25+ growth initiatives across 6 operational levers in our 5 priority markets#31US deep dive: attractive market environment with strong Imperial positioning ● ● ● ● Attractive market environment 2nd largest combustibles market High affordability, strong headroom for continued pricing growth Attractive market outlook - pricing continuing to offset volume decline Growing mass market cigars category 31 Capital Markets Day | 27 January 2021 Strong brands Share growth opportunity * Strong Imperial portfolio across all products and price tiers FMC (c.80% OP) Traditional SALEM Premium Traditional Value KOOL Traditional Discount Deep Discount Winston 1. 2. Source: Imperial Internal Estimate 3. USA GOLD MAVERICK SONOMA Montclair #3 player in FMC (9% share¹) IMPERIAL BRANDS MMC (c.20% OP) BACKWOODS SINCE 1912 Dutch Masters #2 player in MMC (21% share²) #1 player in Natural Leaf³ Volume share, 2020 Cigar volume share includes cigarillos, excludes private label and hand-made cigars 45% volume share of mass market natural leaf category#32US deep dive: growth strategy focused on key brands and route to market 1 2 3 4 5 6 Increase participation in sub-premium Drive and rejuvenate local jewel brands Optimise our approach to the value segment Maximise the potential of FCT category Drive performance in under- penetrated channels & regions E Maximise value creation through Key Accounts 32 Capital Markets Day | 27 January 2021 Example Levers Grow share in MMC with Backwoods Step up proven advertising approach Multiply trial opportunities (e.g., smaller pack sizes) Drive brand desirability (e.g., flavoured variations) Continue to invest in product leaf quality ● ● ● ● IMPERIAL BRANDS Drive Salesforce Coverage and Effectiveness Expand salesforce from c.700 to c.900 reps to drive greater coverage (only 63% of outlets covered today) Increase visit frequency for top accounts Improve effectiveness through better tools and processes ●#33US deep dive: Backwoods to expand availability by region and channel Regional expansion Existing strongholds Proposed stronghold expansion 33 Capital Markets Day | 27 January 2021 Festivals, music, and comedy events Brand influencers and product placement Alternative Distribution Network Planned Activation Booths at age-verified festivals and music events Referenced by major music artists FRIDAY JUNE 21 100 www.dyrecomm chief Keef ARTIST SHOWCAS TOTTEE 1 FRITIHASLEPPINILITE 1. ENBİCİLER Branded partnerships at nightlife venues and cultural institutions THE SMOKE HOUSE 609 IMPERIAL BRANDS Co-branded concerts Apparel featured by celebrities on Instagram Brand ambassadors#34US deep dive: driving salesforce coverage and effectiveness Current salesforce vs. competition Size of Field Sales Force by Company (# reps) c.2,100 c.700 IMB Today +26% c.850-900 US Competitor Example 34 Capital Markets Day | 27 January 2021 IMB Tomorrow 5.5% Market share strongly correlated with no. of sales reps visits IMB Market Share by Frequency of Salesforce Visits (% FMC Share in Segment, visit frequency per annum) Ox (i.e., No Coverage) 6.8% 4x +1.5 ppts 8.2% 6x *** +1.6 ppts 9.8% 8x IMPERIAL BRANDS +0.5 ppts 10.3% 12x Source: Imperial Internal Estimate#35Australia deep dive: growth initiatives to somewhat reduce structural market decline ● ● ● ● #2 position in challenging market environment JOHN PLAYER SPECIAL RIVERSTONE TOSECCE PARKER PS SIMPSON Highly regulated and heavily taxed Low affordability due to consecutive accelerated excise increases Resulting in significant volume decline, growth of illicit, and downtrading 35 Capital Markets Day | 27 January 2021 Challenging outlook with price increases only partially offsetting volume decline Imperial strong #2 with 33% share¹, over-indexing in lower price points 1. Volume Share, 2020 Source: Imperial Internal Estimate IMPERIAL BRANDS Example Levers 4 Maximise the potential of FCT category Drive Growth in FCT Review pricing and positioning of FCT portfolio Potential new brand and product opportunities to address consumer needs ● Implement series of pack innovations (e.g., packaging innovation, smaller formats, etc.)#36Germany deep dive: attractive market environment with strong Imperial position ● ● ● Attractive market environment Large profit pool with relatively light regulation High affordability and stable consumer base Attractive market outlook - pricing continuing to offset volume decline Increasing downtrading towards lower tiers and FCT where Imperial is well positioned 36 | Capital Markets Day | 27 January 2021 Strong Portfolio Significant player Strong Imperial Positioning across FMC and FCT FMC (c.85% OP) Davidoff CIGARETTES JOHN PLAYER GAULOISES k West SPECIAL #2 player (22% share¹) IMPERIAL BRANDS FCT (c.15% OP) Ⓡ West JOHN PLAYER SPECIAL #1 branded player (17% share¹) 1. Volume Share - Measured as average share during period Oct 19 to Jul 20 - If Private Label excluded : FMC - 26%, FCT - 23% Source: Imperial Internal Estimate#37Germany deep dive: growth focused on brand equity and sales excellence 1 2 3 4 5 6 Increase participation in sub-premium Drive and rejuvenate local jewel brands Optimise our approach to the value segment Maximise the potential of FCT category Drive performance in under- penetrated channels & regions Maximise value creation through Key Accounts 37 Capital Markets Day | 27 January 2021 E D I ● Invest in Key Growth Brands Invest in driving target-relevant awareness for key growth brands like JPS ● ● Example Levers ● IMPERIAL BRANDS ● Drive Salesforce Excellence & Effectiveness Increase coverage to 80%+ of total outlets Leverage the growing discounter Key Account channel Improve performance in underdeveloped regions (e.g., East Germany) Rejuvenate JPS as leading brand to recruit attractive demographics... building on clear heritage and placing it into popular culture of urban smokers Enhance retailer partnerships and extend customer engagement platform to drive sales depth#38● ● ● Germany deep dive: rejuvenate JPS as leading brand to recruit attractive demographics JPS Poorly Positioned today ● Older age groups with limited growth potential Full flavour only while market is moving towards light-flavour • More price-sensitive consumers Aided Brand Awareness, FY19 Q4 (%) Age group 25-45 years Full + non-full flavour Lower price-sensitivity Pall Mall L&M JPS West JPS' Future Ambition Low awareness vs. peers 68 38 | Capital Markets Day | 27 January 2021 82 79 80 Enhance Awareness Select Examples of Planned Changes Drive Brand Loyalty Address Demand JOHN FLAYER Shifts Raise Perceived Quality JOHN PLAYER JOHN PLAYER Optimise logo re-design and increase communication to target group Innovate regularly to stay relevant (e.g., special editions) and increase communication of brand story / heritage JPS New Equity Campaigns LET THE PLAYERS PLAY Leverage market trends including offering a range of lighter flavours and new pack sizes Avoid showcasing large packs and price in advertisement to raise perceived quality will HANLAH TERENART SEREMAL Rose JP IMPERIAL BRANDS GENIESSE HEUTE RECYCEL FÜR MORGEN KYNNING M JPS New Duo Pack Offer UNSER ERSTER DOPPEL-PACK NEU PLAYER JR 2 X 30 STK 60 STK 16,90 SY Fac#39Germany deep dive: enhance retailer partnerships to gain efficiency Enhanced partnerships with retailers drove share gains Imperial Market Share in Test Area - Before vs. After Initiative (%) POS 1 POS 2 POS 3 POS 3 POS 4 POS 5 Before Initiative After Initiative 16% 18% 17% 17% 23% 22% 22% 21% 24% 24% 39 Capital Markets Day | 27 January 2021 +39% +27% +26% +24% 25% 29% +8% +18% We successfully launched a retailer incentive programme, which resulted in significant market share gain Average Market Share Gain = +20% *** National roll-out over next six months Engaging retailer staff to connect with adult smokers on our products using: IMPERIAL BRANDS ■ Common goals: to create shared connection to the brand goals ■ Simplicity: simple communications supported by frequent catch-ups with retailers Th MAN MENG Colares#40Germany deep dive: improve performance in East Germany - historically under-developed region Low Share in East Germany... 27% Imperial Share by Nielsen Region (FMC, FY20, % Volume) 28% 1 2 3A 3A 3B 23% 586 21% 18% Avg. Share (22%) 16% 5 6 7 Imperial's Strongholds South Underpenetrated East Historically deprioritised Region 40 Capital Markets Day | 27 January 2021 ... while East is showing share growth... Market Split by Region (FMC, FY17-20, % of Volume) ¶¶¶ FY17 FY18 FY19 FY20 40 43 5, 6 & 7 3B & 4 1,2 & 3A and consumers in the East are value-focused Premium, High and Medium Tier Proportion of Total Volume (FMC, FY20, %¹) 51 53 49 1 2 Share change (FY17-20) 32 +0.5%pts +0.2%pts -0.7%pts 21 3A 3B 4 5&6 7 43 Potential to increase penetration in the East by leveraging our value portfolio 1.Based on select brands covering top c.85% of market **** Recent share gain suggests further uplift is possible FY20 FMC Activation Plan for Petrol and Grocery Channels 3A 3B 586 IMPERIAL BRANDS 1 Focus region > 100 km to border Period April 2020- September 2020 Approach Stepwise approach with support of all market forces +30bp in FMC in 3 months... suggesting potential for further uplift Source: SMART, Nielsen, Imperial Internal Estimate#41UK deep dive: strategic initiatives expected to offset market headwind ● ● Strong #2 in challenging market environment B L&B Slight market value decline expected as price increases only partially offset smoker penetration and decline in consumption JOHN PLAYER GOLDEN VIRGINIA SPECIAL SINGE 1877 HAND ROLLING TOBACCO Significant illicit trade driven by high price/lower affordability Imperial well positioned as #2 player (41% share¹) Several strong heritage brands (JPS, L&B, Golden Virginia)... ...in particular in growing low price tiers as consumers trade down 41 | Capital Markets Day | 27 January 2021 1. Volume Share, 2020 Source: Imperial Internal Estimate 5 Example Levers Drive performance in under -penetrated channels & regions ● IMPERIAL BRANDS Unlock further share in the South Defend FCT and FMC super king size where we have fair share today E Launch right product for the right local typology, e.g., Embassy Signature Drive trial with adult smokers, e.g., through brand ambassadors Drive retailer advocacy, leverage existing best in class trade incentive programme EMBASSY ~Signature GOLD SUPERKINGS#42Spain deep dive: drive growth in a stable market environment ● #2 position in stable market environment Fortuna DUCADOS RUBIO Nobel Stable market - tax driven price increases going forward likely to offset volume decline Low absolute price points, no excise increases for many years Imperial well positioned as #2 player with 29% share¹ Several strong local brands (Fortuna, Nobel, Ducados) that have been neglected in favour of international brands 42 Capital Markets Day | 27 January 2021 1. Volume Share, 2020 Source: Imperial Internal Estimate 2 ● Example Levers Drive and rejuvenate local jewel brands Invest behind local jewels Increase focus on local brands, e.g., Nobel, which has significant local equity and broad national coverage ● Increase brand investment, building brand equity and awareness to drive share Drive innovation in packaging and formats Fumar mata Fumar aumenta el riesgo de ceguera Nobel Fumar mata Fumar aumenta el riesgo de ceguera Fredaks Nobel AAL Fumar aumenta el riesgo de ceguera desejala s Nobel IMPERIAL BRANDS 23 Fumar aumenta el riesgo de ceguera tp:/quadesDajario.es Nobel E#43Priority markets: six operational levers to improve combustibles performance FMC FCT All Combustibles 1 Increase participation in sub-premium Drive and rejuvenate local jewel brands 2 3 4 LO 5 6 Optimise our approach to the value segment Maximise the potential of FCT category Drive performance in under-penetrated channels and regions Maximise value creation through Key Accounts 43 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS We will share frequent performance updates on progress in upcoming sessions#44Broader market portfolio: opportunities to deliver attractive returns Small compared to top five priority markets but with attractive margins Limited investment and resource requirements Benefit from leveraging scale in manufacturing and distribution Selective attractive leadership positions (e.g., key markets in Africa) 3 Benefit from broad brand portfolio Potential platforms for further growth ГГГГ 44 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS#45Africa: strong platform for future growth ● ● ● Reappraised as a platform for future growth Accounts c. 8% of operating profit Some further pricing potential Strong IMB brand portfolio Strong route to market in markets with leadership position Strong local manufacturing footprint 45 Capital Markets Day | 27 January 2021 IMB #1 in several sizeable markets* Algeria Morocco Ivory Coast Burkina Faso Madagascar IMB #1 29% 57% 76% 93% 98% IMB #2 ● ● ● IMPERIAL BRANDS Our new approach Leverage strong local and global brands to drive pricing Fill in gaps in price ladder Close remaining coverage gaps Increased ambition as future growth engine * Top 5 IMB African markets, FMC volume share, 2020 Source: Company Data#46Other European markets: clear plans to optimise value creation Eastern Europe (Top 5 markets)¹ Western Europe (Top 5 excl. Germany, UK & Spain)² Imperial Market Position * Forecasted 2020-25 CAGR in Market value Source: Imperial Internal Estimate 46 Capital Markets Day | 27 January 2021 #4 #4 个 Market Outlook (Value)* + 3-4% - 2-3% ● ● IMPERIAL BRANDS Our new approach Define clear role for individual markets, based on our starting point and market outlook Adopt focused approach, with targeted effort and investment 1. Eastern Europe includes: Top 5 countries in terms of volume: Poland, Ukraine, Romania, Czech Republic, Hungary 2. Western Europe includes: Top 5 countries in terms of volume (excluding Germany, UK & Spain): Italy, France, Netherlands, Belgium, Greece Source: Company Data Manage markets more efficiently using best practice sharing#47Potential to selectively trim our tail 国 W Tail Markets Today : An Attractive Part of our Business c. 80 markets with operating profit less than £25m¹ per market Attractive gross margins Account for c. 8%² of combustible operating profit Variety of operating models in tail markets, many light touch (e.g., distributor-led) 47 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS Future Value Optimisation Drive to run more efficiently whilst still realising significant value for Imperial Selectively trim over time (but acknowledging there is a limited universe of buyers) 1.FY20 Combustible operating profit, excluding-one offs. Exception: Norway OP > £25m 2. % of FY20 Combustible operating profit, excluding one-offs, after allocation of central costs#48Summary: combustibles approach and ambition Our new approach Clarity on strategic choices Increased focus on priority markets Disciplined investment in key operational levers Clear role for each individual market Targeted investment in capabilities/resources 48 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS Improved Operational Excellence Upgraded competitor and consumer insights Consumer-centric and data-led investment in brands and innovation More proactive and rigorous performance management Simplified organisation supporting delivery#49* Break IMPERIAL BRANDS#50***** IMPERIAL BRANDS Next Generation Products Resetting Our Strategy Through Focus & Consumer Understanding#51Growing demand across all NGP categories Market Size (NSV) & CAGR, 2020-25 (£bn, %) Cigarettes Heated tobacco Closed vapour Open vapour Modern oral nicotine 3 2 0 6 (₂) 5 2 12 78 +13% +8% +33% +15% 87 2020 +2% 2025 Share of Total, 2025 (%) 80% 11% 4% 3% 2% Gross Margin, (%) 60 - 65% 70 - 80% 45 - 55% 20 - 25% IMPERIAL BRANDS 55 - 65% Source: Imperial Internal Estimate (NSV shown for market size (excl. VAT, excise and TM, FMC includes all markets except China, NGP includes top 70 Combustible markets except China)) 51 Capital Markets Day | 27 January 2021#52High historic NGP growth rates although with relatively low penetration Historical NGP category growth Global NGP Market Size (RSV £bn) Open EVP Closed EVP HTP 8.5 1.6 2.7 4.2 2017 NGP penetration 2% +43% 21.0 4.6 15.6 3.7 3.3 8.7 2018 4% 52 Capital Markets Day | 27 January 2021 5.6 10.8 2019 6% 25.0 5.2 5.0 14.8 2020 7% ● ● Mixed category growth ● IMPERIAL BRANDS Whilst high global NGP growth: Historical category penetration has been mixed within Imperial's priority markets • US strongly dominated by closed vapour ● Germany nascent NGP but heated tobacco focus UK skew to open vapour Source: Imperial Internal Estimate (Top 70 EVP/HTP markets, excluding China)#53Significant uptake of NGP across our major markets Major Markets by Product Type, 2025F¹ (RSV, £bn) NGP Penetration 2020 (%) NGP Penetration 2025 (%) Delta (%pts) 58 14% 1% 86% USA 9% 14% +5 53 | Capital Markets Day | 27 January 2021 23 -1% 14% 85% Germany 3% 15% +12 13 17% <1% 82% UK 9% 18% +9 10 2% 18% 79% Spain 4% 21% +17 3 EVP 100% Australia HTP 427 4% 7% 89% Global 7% 11% +4 FMC 1. FMC does not account for future excise changes or MPI adjustments Source: Imperial Internal Estimate IMPERIAL BRANDS Illicit trade NGP (EVP) in Australia is estimated to account for c.4% of total NSV in 2019#54Fast growing NGP profit pools Vapour concentrated in the US Closed Vapour GM Potential by Region (£bn, %) 2.7 1.5 20% 76% 2020 5% 25% 70% 2025 Other¹ Europe North America 1. Includes APAC, South America, the Middle East and Africa; Excludes China 2. Includes South America, the Middle East and Africa; Excludes China Source: Imperial Internal Estimate 54 Capital Markets Day | 27 January 2021 * Heated Tobacco growing in Europe Heated Tobacco GM Potential by Region (£bn, %) 9.4 1% 4.6 57% 43% 2020 34% Other² 2% 2025 APAC 63% Europe North America IMPERIAL BRANDS#55Clear consumer needs for potentially less harmful alternatives Despite clear consumer demand for potentially less harmful products... Wanted to cut down on cigarette smoking Top 3 reasons to choose NGPs (% of NGP consumers¹, N=919) Less risky / harmful for me To reduce my nicotine intake 7.2% 9.7% 8.9% ...there still remains a lack of full consumer satisfaction Top 3 reasons to churn from NGP (% of consumers who churned NGP¹, N=183) Not as satisfying as smoking cigarettes Not the same experience as smoking usual cigarettes It is too expensive IMPERIAL BRANDS 1. Includes Heated Tobacco and Closed Vapour Users Source: Consumer Survey (conducted in September/ October 2020 across the US, Germany, UK, Italy, Japan, Russia and Czech Republic) 55 | Capital Markets Day | 27 January 2021 29.5% 27.9% 24.0%#56NGP: a growth opportunity for Imperial Brands Leveraging our Existing Assets and Capabilities ● ● ● ● Growing segment within nicotine consumption Meeting consumer need for potentially less harmful products No NGP product fully meets needs of adult smokers today Opportunity to leverage: our deep understanding of smoker needs NGP assets (e.g., brands, R&D, IP) - existing route to market - regulatory capabilities Supports our ESG agenda - 56 Capital Markets Day | 27 January 2021 2 RECHARGES 15ml my blu MENTHOL Teoritenu Sant Peroduire une Si Canalisation par les en-fumeurs commande. :PULZE PULZE blu IMPERIAL BRANDS PULZE#57Imperial NGP starting point Disappointing market performance with primary focus on vapour Vapour: Historic focus almost entirely on vapour Good position in Europe, losing share in the US Product and proposition challenges Poor return on investments However, good brand equity and engagement to build on - - Heated tobacco: Investment to date focused on delivering a limited market trial Oral nicotine: Good position in European modern oral nicotine 57 Capital Markets Day | 27 January 2021 blu IMPERIAL BRANDS ZONEX#58Detailed review of NGP strategy In-depth analysis of consumer needs, category drivers and economics... ...and a realistic assessment of our NGP capabilities 58 Capital Markets Day | 27 January 2021 Measured and realistic approach to reset our chosen NGP offering, investment profile and ambition IMPERIAL BRANDS Defined clear ambition to be the NGP challenger with increased focus on heated tobacco#59● A new approach: realistic ambition with a challenger mindset Focused category market combinations Significantly increase focus on heated tobacco in Europe Vapour investment focused on US Oral nicotine to remain focused on existing markets only ● ● 59 Capital Markets Day | 27 January 2021 Challenger Mindset Disciplined and more effective investment Modest investment levels and measured expansion pace Pilot-based approach Ability to act rapidly/ scale-up fast ● ● A differentiated fast follower Invest in markets where an initial consumer demand is evident Highly targeted and differentiated approach Providing greater choice in specific consumer segments ● IMPERIAL BRANDS Right ways of working Refine ways of working and partnership approach to leverage internal and external capabilities Accelerate development and deployment#60● ● Rationale for increasing focus on heated tobacco Market Tailwinds Fast-growing, sizeable markets Heated tobacco as single largest NGP category currently... ...with strong growth prospect, and strong absolute growth expected across Europe... ...given higher consumer retention for those looking to reduce their cigarette consumption Economically most attractive NGP category Attractive unit economics with strong GM potential (70- 80% GM in top 3 markets), and large share of NGP profit pool by 2025 60 Capital Markets Day | 27 January 2021 ● Internal Capabilities IMPERIAL BRANDS Plays to our strengths Leverages existing tobacco expertise, including manufacturing cost efficiency experience and route to market Promising product proposition Competitive device and stick developed with promising consumer feedback from initial testing Clear target consumer Positive feedback in distinct consumer segments Differentiated approach to competitors#61Heated tobacco: positive initial consumer feedback ● Pulze device ✓20 Consecutive smokes ✓ All-in-one 'pocket-ability' ✓ Faster heat up time and charging . iD sticks ✓ Ideal nicotine strength intensity High Mint/ Menthol/ Crush-ball flavour intensity ✓ Lower levels of heated tobacco odour Promising product ""The device is better, much easier to carry one piece and not having to wait for the battery to recharge." ""The smell was more discrete which is important.. so at a better price of course I would change!"" "I loved the long battery duration and the consecutive smokes because it made me feel safe that I can use it whenever I have the urge to smoke" The mint was much more intense and I loved it! 61 Capital Markets Day | 27 January 2021 Specific target segment Purchase Intent 25-30% of existing heated tobacco consumers in European test markets are "likely to purchase Pulze and ID" iD iDD iDD iD EXCLUSIVELY DESIGNED FOR PULZE EXCLUSIVELY DESIGNED FOR PULZE IMPERIAL BRANDS EXCLUSIVELY DESIGNED FOR PULZE RICH BRONZE TRIPLE FLOW FILTER Government HW .... PULZE Source: Imperial Internal Estimate, Imperial in-home consumer testing in European test markets#62Heated tobacco: our new, focused approach 1 2 3 Our Ambition Reaching a fair market share positioning Enabling a meaningful contribution to net revenue Positive returns over the course of our 5-year strategy 62 Capital Markets Day | 27 January 2021 Realistic approach for our heated tobacco business 東 Re-focus our heated tobacco efforts IMPERIAL BRANDS Launch in a few European markets first... in our stronghold markets in Europe, where we have a strong combustibles business and good route to market/ retail partnerships scaling subsequently with finetuned proposition#63Vapour: US is expected to remain single largest market Closed Vapour Market Size, NSV, in bn GBP Forecast 0.8 35% 6% 58% 2017 +90% 2.9 16% 4% 80% 2019 63 | Capital Markets Day | 27 January 2021 -10% 2.6 6% 22% 72% 2020 2020 decline due to EVALI and regulatory changes 3.0 6% 24% 70% +13% 2021 3.9 6% 26% 67% 2023 4.8 7% 28% Europe IMPERIAL BRANDS 65% USA 2025 Other Source: Imperial Internal Estimate (Top 70 EVP markets, excluding China)#64Vapour: clear plan to improve performance in the US ● ● Historically disappointing returns Ineffective, untargeted A&P Spend Lacked clear consumer target Promotions not linked to brand, positioning or consumer journey Poor Distribution and Visibility Insufficient Points of Sale coverage Poor in-store visibility 64 Capital Markets Day | 27 January 2021 ● ● ● ● Clear ambition to return to share growth Improved product proposition Clearer targeting Focused target consumer More efficient and effective A&P Improved distribution Enhanced execution at point of sale Upgraded go-to-market strategy Supported by stronger execution and increased management focus - - IMPERIAL BRANDS - Initial pilot phase in 2021, with future scale-up subject to positive results in FY22 - supporting a reduced investment and risk profile#65Vapour: good blu brand foundations in the US Competitor 1 blu Competitor 2 Competitor 3 Awareness of brand 86% 81% 72% 59% -94%- 94% 93% 86% Considered for purchase or bought 81% 76% 67% 51% -92%- 85% 80% 75% Bought 74% 64% 54% 39% -51%- 29% - 31% 19% Preferred brand Source: Consumer Survey (conducted in September/ October 2020 across the US), Includes closed vapour users in USA only; N=942 65 Capital Markets Day | 27 January 2021 38% 19% 17% 7% IMPERIAL BRANDS Better 'early' conversion - but drop in brand preference, reflecting marginally lower scores on key purchasing criteria for pods and devices#66Vapour: clear strategic market choices globally ● Turnaround our vapour business in the US Maintain levels of investment at significantly improved returns - Stage-gated approach, with future scale-up dependent on FY22 Maintain our presence and good share position in core European markets - Learn from US turnaround Focus on UK and France as core vapour markets in Europe Exit least attractive markets that do not drive value 66 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS#67Oral nicotine: strong position in Europe Traditional OND is c.90% of oral category c.10 bn c.1-1.3 c.9 2020 RSV Modern OND Traditional OND In Europe, largest markets are: #1: Sweden #2: Norway #3 Switzerland Illegal in other EU markets 67 Capital Markets Day | 27 January 2021 IMPERIAL BRANDS Imperial is well-positioned to maintain category share in Europe We are the #2 player in traditional OND in Europe 20% market share in Sweden 40% market share in Norway Strong growth since entering market in 2005 via acquisition of Skruf AB Strong basis to maintain share and retain consumers switching to modern OND Source: Imperial Internal Estimate (based on NSV)#68Significant future growth potential from modern oral Nordics and Europe comprise half of Modern OND market today c.12% Others c.13% Sweden c.15% Switzerland c.20% Norway c.40% USA Imperial Market Share (%) Strong position in selected markets (i.e. c. 16% in Germany/c.50% in Austria) 9% c.3% 2020 RSV 68 Capital Markets Day | 27 January 2021 c.17% n.a. ● ● IMPERIAL BRANDS Strategy for Modern OND focussed on Europe Continue to drive our OND business in existing Nordics and selective DACH markets Leveraging our traditional OND share in Nordics No current plans for US market entry No ambition to build category in greenfield markets - but maintain watching brief on category development Source: Imperial Internal Estimate (based on RSV)#69Summary: clear plan to enhance our NGP delivery Revised category prioritisation Limited category market combinations More consumer and data-led More disciplined investment and expansion 69 Capital Markets Day | 27 January 2021 ● IMPERIAL BRANDS Significantly increasing our focus on heated tobacco More concentrated market approach to vapour and oral nicotine Selective choice of NGP offering per market based on local consumer and market needs Grounded in consumer insights with clear consumer segments targeted rather than one-size fits all approach Stage-gated approach to investment and expansion pace based on testing to reduce overall risk profile#70***** IMPERIAL BRANDS Ways of Working and Culture Transforming our Business#71Our three strategic pillars Focus on Priority Combustible Markets 71 Capital Markets Day | 27 January 2021 Drive Value From Our Broader Market Portfolio Build a Targeted NGP Business IMPERIAL BRANDS#72New ways of working build on three critical enablers O Consumer at the centre of the business 72 Capital Markets Day | 27 January 2021 SE Performance- based culture and capabilities Bree IMPERIAL BRANDS BADAY 1999 Simplified and efficient operations#73Placing the consumer at the centre of our business ● ● From: historical lack of consumer centricity... Siloed brand or market-led approach across our combustibles business Lack of focus within our NGP business on solving specific consumer needs • Consumer insight and market intelligence not represented at ExCom level since March 2017 • Innovation often not grounded in consumer needs 73 Capital Markets Day | 27 January 2021 ● IMPERIAL BRANDS To: our decisions are consumer centric Investment in consumer insight brand and portfolio management marketing and innovation capabilities Leadership through Chief Consumer Officer Realignment of our NGP teams against focused goals informed by consumer and competitor insight • New opportunities and execution plans defined through consumer insight#74Chief Consumer Officer to drive the new agenda across both combustibles and NGP Consumer and Competitor Insight Enabling markets to make better, faster decisions based on consumer and competitor insight and market data Marketing, Brand & Portfolio Management 74 Capital Markets Day | 27 January 2021 Enhancing our marketing and brand management capabilities to strengthen growth opportunities IMPERIAL BRANDS Innovation for Combustibles and NGP Delivers a co-ordinated approach under single leadership Delivering a focused pipeline of new products and solutions based on consumer needs#75Examples of culture change underway 75 Capital Markets Day | 27 January 2021 NOUVEAU CG BCG IMPERIAL BRANDS 300 CEO Meetings 6,000 Employees#76Embedding performance-based culture and capabilities Building on current strengths... Manufacturing and Supply Chain • Customer engagement Energised and passionate employees Willingness to embrace change ● ...with areas for improvement... Siloed thinking; fragmented organisation • Rebuild trust in leaders Reconnect consumers and strategy 76 Capital Markets Day | 27 January 2021 ● ● ● ... IMPERIAL BRANDS - to embed a performance-based culture and capabilities Co-create clear vision and purpose Build a challenger mindset Drive teamwork and collaboration Consumer-led decision making derived from strategy Rewards and incentives to enhance accountability and drive winning behaviours Greater alignment on shared Group objectives - 80% of bonus - Weighted ave. market share of top markets Revised LTIP metrics#77Simplified and efficient ways of working Greater focus on our priority Ensuring the right level of resource and capabilities across our footprint combustibles markets Investing behind our most attractive assets Unifying our NGP organisation and capabilities Simplified and efficient enabling functions IMPERIAL BRANDS 77 Capital Markets Day | 27 January 2021 Bringing our NGP operations together into a unified, entrepreneurial organisation Leaner, more agile ways of working as a differentiated fast follower Building the right capability and focus in our enabling functions to support the new strategy Ensuring more efficient allocation of resource and service#78Integrated NGP organisation to ensure focus Establish integrated NGP organisation 78 Capital Markets Day | 27 January 2021 Different Business managed with a clear focus, to drive a new and distinct NGP business within the broader Imperial group - IMPERIAL BRANDS Faster Innovation - driving growth with a start-up mindset, enabling agile innovation and development processes with faster time-to- market Interfaces integrated with the broader business to create shared accountability New Capabilities & Culture - to allow for different mentalities to be fostered and different capability sets to be prioritised#79NGP: Leveraging the strengths of wider Imperial set-up Consumer Insights Will integrate across combustibles and NGP Common consumer journey and largely similar consumer needs as consumers often use multiple categories R&D Combustibles experience and expertise can be leveraged for heated tobacco selectively (e.g., stick quality, flavour variety) 79 Capital Markets Day | 27 January 2021 Supply Chain/ Logistics Clear scale benefits in manufacturing, warehousing and transportation Marketing/ Advertising Will require dedicated digital platform and stronger capabilities Harness agency relationships IMPERIAL BRANDS Route to Market • In-market execution by existing local teams Fully leverage strong existing retail partnerships and selectively add specialist channels#80Invest in organisation and capabilities through efficiency ● Investing in Organisation and Capabilities Investing in core capabilities Sales force: Key Account Management Consumer and marketing - - Upskilling market support teams Enabled through lean process underpinned by technology c. £50-60m per year 80 Capital Markets Day | 27 January 2021 ● • Global processes underpinned by technology ● Funded Through Efficiency Through leaner, more agile operations ● Unified and focused NGP organisation Simplified and efficient enabling functions c. £100-150m per year IMPERIAL BRANDS Annualised net savings of c. £40-£100m (c.6-14% of addressable cost base)#81*** Financial Framework IMPERIAL BRANDS Strengthening the balance sheet and delivering enhanced returns#82Investments to support new strategy ● ● ● ● 821 Tobacco Investment Strategic levers in top five markets Selective increase in brand investment and innovation Targeted expansion of sales force Enhance consumer insights capabilities ● ● ● ● ● NGP Investment IMPERIAL BRANDS Resetting and refocusing investment Market trials for heated tobacco Targeted investment in vapour and oral Consumer-led innovation Measured approach - only scaled following consumer validation No major margin reset required Funded through resource allocation and cost savings through new ways of working#83Investment to support new ways of working: savings 83 | Cost Savings Phasing ● ● Simplify organisation to remove duplication Clarification of accountability and decision rights Flattened reporting structure to speed up decision making Creating a leaner, more agile business Delivering sustainable cost savings for investment FY21 £10 - £20m FY22 £60 - £80m FY23 £30 - £50m IMPERIAL BRANDS Annual cost savings of c. £100-£150m#84Investment to support new ways of working: restructuring costs Restructuring Cash Costs 84| Phasing Specific, time-bound restructuring programme to deliver the new ways of working and efficiencies One-off costs of reshaping business to support the new strategy Programme excludes factory closures Treated as an adjusting item to support comparison of performance over time FY21 FY22 FY23 £45 - £50m £155 £180m £45 - £50m IMPERIAL BRANDS Associated non-cash restructuring P&L charges of c. £150m Total cash costs of c. £245m-£275m#85Delivering a stronger financial outlook Strategic Focus Net revenue Adjusted operating profit ● ● ● Phase 1 - Strengthening FY21 to FY22 Increased investment in operational growth drivers New ways of working deliver efficiencies Implement operational excellence improvements FY21 - In-line with guidance FY22 - Flat on FY21 - with no margin reset 85 Capital Markets Day | 27 January 2021 ● ● IMPERIAL BRANDS Phase 2 - Improving Returns FY23 to FY25 Gradually improving trajectory with 5-year CAGR of 1-2% Investment and operational improvements enhance financial delivery Refine investment to consolidate delivery Leveraging efficiency benefits Delivering improving profit growth 3-year CAGR of mid-single digits This outlook is on an organic basis.#86FY21 guidance remains unchanged Tobacco NGP COVID-19 Tax Rate Action to stabilise business; expect moderated losses will continue IMPERIAL BRANDS Strong underlying pricing though continued mix headwind; lower stock profits 86 Capital Markets Day | 27 January 2021 Expect unwind of temporary consumption benefit; more normal tobacco declines Not expecting significant recovery in duty free during the year Upward pressure as previously guided; 2% headwind to EPS in 2021 Low-mid single digit organic operating profit growth & organic EPS slightly ahead at constant currency Profit guidance excludes any impact of foreign currency movements and is organic, excluding dilution impact from sale of Premium Cigars#87Continued strong cash outlook: capital discipline will be a key priority ● ● ● ● Strong cash fundamentals Business remains highly cash generative Low capital intensity Growing adjusted operating cash flow (>£3bn) Group cash flows optimised through pooling arrangements 87 Capital Markets Day | 27 January 2021 ● Working capital focus Disciplined capex; net capex below depreciation • More effective capital controls High cash conversion ● IMPERIAL BRANDS • Will continue to support cash conversion of 90-100%#88● Logista: continuing to deliver valuable contribution to Group cash performance Logista 2008: acquired as part of Altadis Distributes for the tobacco industry in Spain, France and Italy Group benefits from cash pooling in excess of equity stake value Imperial supporting Logista management with their strategy 88 Capital Markets Day | 27 January 2021 Logista contribution to the Group £0.2bn £1.9bn Daily Working Capital Benefit to Group £2.4bn FY20 year end benefit £0.5bn £3.9bn Operating profit contribution p.a. FY20 daily average working capital benefit FY20 minimum IMPERIAL BRANDS FY20 maximum#89Deleverage priority to strengthen investment grade credit rating ● ● Debt repayment to strengthen balance sheet Accelerate pace of deleverage following limited progress in recent years. Increase headroom within financial credit metrics Create future flexibility by deleveraging to lower end of target 2-2.5x range Support a strong and efficient balance sheet 89 Capital Markets Day | 27 January 2021 3.3x FY16 Historical net debt/EBITDA progress 3.0x IMPERIAL BRANDS 2.9x 2.9x liii FY17 FY18 2.9x 2.7x FY19 FY20 excl. FY20 pro timing forma benefits* PCD** Target leverage: Lower end of 2-2.5 times *FY20 reported net debt/EBITDA 2.7x; excl. working capital temporary timing benefit it is 2.9x **Pro forma reduces year end net debt by €1.1 bn for post balance sheet sale of PCD#90Committed to an investment grade credit rating Current credit ratings Forlend Short-term Long-term Baa3 (stable outlook) MOODY'S INVESTORS SERVICE S&P Global Ratings A-2 Fitch Ratings F3 BBB (stable outlook) BBB (negative outlook) 90 Capital Markets Day | 27 January 2021 Benefits of maintaining investment grade Better access to capital markets Established debt investor base Lower coupon / interest cost IMPERIAL BRANDS Lower financing fees and other costs In line with peers and FTSE 100 companies#91Clear capital allocation framework: priorities ● ● ● ● Strong cash generation Investing in the strategy Targeted investment in operational levers New ways of working to deliver efficiencies Progressive dividend policy Growth reflecting underlying performance Consistent, reliable cash returns 91 Capital Markets Day | 27 January 2021 ● ● ● ● IMPERIAL BRANDS Strong and efficient balance sheet Committed to investment grade credit rating Priority to reduce debt to lower end of 2.0-2.5x Surplus capital returns Considered once target leverage achieved Via share buyback or special dividend#92***** IMPERIAL BRANDS Summary#93Our new strategy 93 Capital Markets Day | 27 January 2021 Focus on priority combustible markets Consumer at the centre of the business Strategic Pillars Drive value from our broader market portfolio Transforming Imperial Brands Build a targeted NGP business Simplified and efficient operations Performance -based culture and capabilities Critical Enablers IMPERIAL BRANDS#94What our strategy will deliver Stronger business in our five priority combustible markets Sustainable low-single digit revenue growth Clearly defined role for the broader market portfolio to optimise value creation Mid-single digit operating profit growth 94 | Capital Markets Day | 27 January 2021 A targeted and more disciplined NGP business committed to harm reduction Robust and reliable cash generation Strong and efficient balance sheet IMPERIAL BRANDS New ways of working and culture that reinforce focus on consumer and delivery Enhanced cash returns#95Imperial Brands: an attractive investment case Clear strategy to rebuild credibility and create value Revitalised tobacco business will be key driver of value creation A disciplined NGP business committed to harm reduction and providing options for growth Self-help initiatives deliver operational improvement and strengthen performance Strong sustainable cash flow generated from a high-quality portfolio Progressive dividend supplemented by capital returns over time IMPERIAL BRANDS 95 Capital Markets Day | 27 January 2021 Tr#96**** Questions & Answers Capital Markets Event 27 January 2021 IMPERIAL BRANDS#97Glossary AOP Constant currency EVP EVALI FCT FMC HTP Logista OND Organic MMC MPI Net revenue NGP NSV RSV RTM SE Adjusted operating profit which excludes the effects of adjusting items. Further details are provided in note 1 to the Annual Report & Accounts. Change at constant currency removes the effect of exchange rate movements on the translation of the results of our overseas operations E-vapour Acronym used by the US Center for Disease Control and Prevention for 'e-cigarette or vaping product use-associated lung injury' Fine cut tobacco Factory made cigarettes Heated tobacco IMPERIAL BRANDS Logista is a 50.1% owned subsidiary and publicly listed on the Spanish stock exchanges. It is a logistics business in Europe, with operations extending across Spain, France, Italy, Portugal and Poland. Oral nicotine delivery are pouches which typically contain no tobacco Organic movements exclude the effect of acquisitions and disposals, e.g. the sale of the premium cigar business Mass market cigar (in contrast to the premium cigar business, which has now been sold) Manufacturer's price increase Net revenue comprises the Tobacco & NGP revenue less associated duty and similar items less revenue from the sale of peripheral and non- tobacco related products. Next Generation Products which provide potentially reduced harm benefits to adult smokers Net sale value Retail sales value Route to market Stick Equivalent (SE) volumes reflect our combined cigarette, fine cut tobacco, cigar and snus volumes. 97 Capital Markets Day | 27 January 2021