Exhibit (c)(6)

STRICTLY PRIVATE AND CONFIDENTIAL
BOARD DISCUSSION MATERIALS
Project Baseball
November 8, 2016
J.P.Morgan

BOARD DISCUSSION MATERIALS
C O N F I D E N T I A L
This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan.
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J.P.Morgan

BOARD DISCUSSION MATERIALS
C O N F I D E N T I A L
Agenda
Page
Review of Braves current proposal 1
Royals implied valuation analysis 7
Braves implied valuation analysis 15
Combination analysis 19
Illustrative Braves financing considerations 30
Strategic alternatives and other deal considerations 33
Appendix 35
J.P.Morgan

REVIEW OF BRAVES CURRENT PROPOSAL
C O N F I D E N T I A L
Summary of Braves’ October 20th proposal to acquire the remaining shares not currently owned in Royals
$24.13 in cash and 0.5502x Braves shares per Royals share
Proposed purchase price
Stock consideration represents $32.37 per Royals share based on Braves’ share price of £48.03 and a £/$ exchange rate of 1.2250 as of October 20, 2016 and, together with cash consideration, results in a total purchase price of $56.50 per Royals share
Based on above October 20 data:
Consideration
$47 billion of total consideration to Royals shareholders for the remaining 57.8%
Consideration comprised of $20 billion in cash and $27 billion in Braves shares
20% premium to Royals’ closing share price on October 20, 2016 of $47.17 per share
Implied premium
& valuation
An implied firm value of $93bn, which, based on reported September 30, 2016 LTM EBITDA, represents a FV/EBITDA multiple of 16.3x according to Braves’ proposal
Per Braves’ October 20, 2016 proposal and October 21 press release, the transaction creates a stronger, truly global tobacco and Next Generation Products company with:
Transaction
A leading position in the US market, the largest global profit pool (ex-China) with strong growth dynamics
rationale
A significant presence in high growth emerging markets together with the most attractive developed markets
A unique portfolio of brands combined with joint Next Generation Products (“NGP”) and R&D capabilities
Accretive to earnings in the first year and accretive to dividends per share
Synergies
Braves estimated cost synergies of $400mm associated with the proposed merger
Proposed capital
Braves stated its commitment to maintaining an investment grade credit rating for the combined company, using a combination of existing cash, new bank credit lines and the issuance of new bonds for the cash portion of the consideration
structure & financing sources
Proposal not subject to any financing condition; Braves has received a highly confident letter from Deutsche Bank indicating that Braves will be able to obtain financing commitments for the cash portion of consideration; UBS is also an advisor to Braves
Approval process
The proposed merger is subject to the endorsement of Royals’ independent directors (who are not designated by Braves) and approval by Braves shareholders as well as a majority of the votes cast by holders of Royals shares not owned by Braves
Source: Braves’ letter to the Royals Board of Directors dated 10/20/16 and Braves’ October 21, 2016 press release
1
J.P.Morgan

REVIEW OF BRAVES CURRENT PROPOSAL
C O N F I D E N T I A L
Implied valuation summary of Braves’ October 20th proposal
Royals Braves
Royals unaffected share price 10/20/16 Braves’ proposal @ 10/20/16 Braves’ proposal @ 11/04/16 Braves unaffected share price 10/20/16
Stock price $47.17 £48.03 £45.20 £48.03
Exchange rate — 1.2250 1.2548 1.2250
Braves share price ($) — $58.84 $56.72 $58.84
Exchange ratio — 0.5502 0.5502 —
Stock consideration per Royals share ($) — $32.37 $31.20 —
Cash consideration per Royals share ($) — $24.13 $24.13 —
Total Braves implied offer price ($) — $56.50 $55.33 —
% premium to unaffected share price — 19.8% 17.3% —
Implied equity value ($mm)1 $67,497 $80,848 $79,179 $110,276
Implied firm value ($mm)2,3 $78,488 $91,839 $90,170 $91,806
FV / LTM Sep-16 EBITDA4 13.8x 16.1x 15.8x 14.1x
FV / Adjusted LTM Sep-16 EBITDA5 13.4x 15.7x 15.4x —
FV / 2016E EBITDA6, 8 13.2x 15.5x 15.2x 12.8x
FV / Adjusted FY 2016E EBITDA5, 8 13.0x 15.2x 14.9x —
FV / 2017E EBITDA7, 8 12.4x 14.5x 14.3x 11.2x
Source: Royals and Braves filings, broker estimates, FactSet as of 11/04/16; Note: GBP/USD exchanged at a rate of 1.2250
1 Assumes Royals and Braves diluted share count of 1,431mm and 1,874mm, respectively; 2 Royals debt of $12,950mm at principle value and cash of $1,959mm; Braves net debt of $19,981mm, $3,034mm minority interests and $41,485mm market value of affiliates; 3 Assumes Braves debt outstanding as of 09/15/16 per Braves debt investor microsite and Braves cash as of 06/30/16; 4 LTM EBITDA of $5,694mm and $6,522mm for Royals and Braves, respectively, exchanged at a GBP/USD rate of 1.2250; 5 Includes adjustments for run-rate Lorillard synergies in the amount of $155mm for LTM Sep-16 and $113mm for FY2016, per management guidance; 6 FY2016E EBITDA of $5,933mm and $7,190mm for Royals and Braves, respectively, exchanged at a GBP/USD rate of 1.2250; 7 FY17E EBITDA of $6,313mm and $8,175mm for Royals and Braves, respectively, exchanged at a GBP/USD rate of 1.2250; 8 Metrics represent management numbers for Royals and equity analyst estimates for Braves
2
J.P.Morgan

REVIEW OF BRAVES CURRENT PROPOSAL
C O N F I D E N T I A L
Equity analyst themes on the potential transaction
Highly attractive asset in a complementary geography1
“We think [Royals] makes [Braves] a better company as [Royals] has the fastest growing brands in what we regard as the most attractive major tobacco market in the world.” Citi – October 24, 2016
Favorable deal environment1
“We expect this deal to go through quickly as there are no anti-trust issues and the two boards are on friendly terms.” Citi – October 21, 2016
Conservative synergies estimate2
“…[Braves’] $400mm synergy is conservative since it likely underestimates the global opportunity the combined entity would have in reduced risk products (RRPs) and only modestly represents procurement, R&D and other cost considerations…” Wells Fargo – October 23, 2016
Immediately accretive1
“While the multiple looks expensive vs. recent deals, given first-year accretion of c.5%, we are very supportive of this deal…” Jefferies – October 21, 2016
Combined NGP development1
“We would also highlight that the deal provides full control ahead of next generation product development especially heat not burn in the next 2 years.” BAML – October 21, 2016
Improved offer expected2
“…we would not rule out the possibility of [Royals] negotiating a modest premium relative to this offer. We would note that we would not expect these negotiations to be protracted, given that this deal could face far less regulatory scrutiny…” Cowen – October 21, 2016
Source: Equity research
1 Research report on Braves; 2 Research report on Royals
3
J.P.Morgan

REVIEW OF BRAVES CURRENT PROPOSAL
C O N F I D E N T I A L
Braves and Royals trading update
($mm, except per share data)
Merger arbitrage metrics (11/04/16)
Proposed deal consideration1 1.0 Royals = $24.13 cash + 0.2751 Braves ADRs
Implied offer price1 $24.13 + 0.5502 * $47.17 = $55.33
Implied offer price using Braves ADR1 $24.13 + 0.2751 * $112.46 = $55.07
Royals share price $54.46
Gross deal spread 2 $0.61
% spread of deal value 1.1%
Net dividends 3 $0.09
Cost of borrowing 4 ($0.25)
Net spread 5 $0.45
% net spread of deal value 0.8%
Street assumed closing date 03/31/17
Annualized IRR for Arbs 7 2.0%
Potential deal value implied by current stock prices
Extrapolated deal value Increase from current offer
Assumed probability deal closes6
Assumed probability deal closes6
Targeted annualized IRR7
90% 80% 70% 90% 80% 70%
6% $56.95 $58.22 $59.85 3.4% 5.7% 8.7%
8% $57.40 $58.68 $60.32 4.2% 6.6% 9.5%
10% $57.84 $59.13 $60.79 5.0% 7.4% 10.4%
12% $58.29 $59.59 $61.26 5.9% 8.2% 11.2%
Price performance & Royals’ trading volume
Royals CommonBraves ORDBraves ADR
Volume
120%200mm 115% 115%186mm180mm 160mm 110% 140mm 105%120mm Royals Cumulative Volume
Cumulative Excess Volume 100%100mm 95% 95%80mm 94%60mm 90% 47mm40mm
85%20mm 80%0mm
20-Oct 21-Oct 24-Oct 25-Oct 26-Oct 27-Oct 28-Oct 31-Oct 1-Nov 2-Nov 3-Nov 4-Nov
Market developments since public proposal for Royals
Royals’ share price has responded positively to the offer, trading up 15.5% from the unaffected price of $47.17
186mm Royals shares have traded, almost 23% of the public float
We estimate that hedge funds / arbitrageurs now own ~12% ($5bn+) of Royals’ public float
Gross deal spread has fluctuated in a narrow band of $0.50 - $0.70 (0.9% - 1.3%) for the past week
Braves’ share price has underperformed its peers by ~6% since 10/20/16
Braves shareholders and equity analysts voiced surprise at the timing of the offer, but not at the offer amount
Equivalent of 130mm Braves shares (almost 6% of outstanding) have traded
Source: Bloomberg, Lending Pit, Braves’ 10/20/16 proposal; Note: Market data as of 11/04/16, unaffected date as of 10/20/16
1 Announced as $24.13 cash + 0.5502 Ordinary shares, adjusted for ADRs (1 ADR = 2 Ords), four hour time difference between closing price of BAT ORD and ADR; 2 Gross Spread = Implied deal Value – Royals’ stock price; 3 Net dividends expected before closing = 1 Royals dividend of $0.92 less Braves ADR dividend of $3.02 * 0.2751; 4 Borrowing Braves ADRs to hedge Royals currently costs 2% annualized per Lending Pit; 5 Net Spread = Gross Spread + net dividends to closing – cost to borrow shares shorted to hedge; 6 “Assumed probability deal closes” is the probability where the expected value of owning Royals and hedging with Braves would be zero; 7 Assumed internal rate of return desired from now until the deal closes (assumed street closing date of 3/31/17); 8 “Predicted Royals volume” = unaffected average daily volume of 4.3mm * # of days
4
J.P.Morgan

REVIEW OF BRAVES CURRENT PROPOSAL
C O N F I D E N T I A L
Braves and Royals stock price performance since Brexit
Share price performance since Brexit referendum date (06/23/16)
130% Braves (GBP) GBP / USD exchange rate Braves (USD) Royals (USD) Peer index1
125% Braves GBP/USD Braves Royals Peer
% change (GBP) exchange rate (USD) (USD) index1
Since Brexit referendum (06/23/16) 5.7% (15.3%) (10.4%) 7.1% (4.6%)
120% 115% 110% 7.1% 105% 5.7% 100%
95% (4.6%) 90% (10.4%) 85% (15.3%) 80%
Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16
Source: FactSet as of 11/04/16
1 Peers include Japan Tobacco, Altria Group, Philip Morris, Imperial Brands; price performance based on median
5
J.P.Morgan

REVIEW OF BRAVES CURRENT PROPOSAL
C O N F I D E N T I A L
Overview of rating agencies’ commentary of Braves’ proposed transaction with Royals
Ratings trajectory: Potential downgrade
Pro-forma Braves ratings commentary
Moody’s: A3 | Review For Downgrade 10-27-2016
On Review for Downgrade, with downgrade likely not to exceed two notches (down to Baa2) Current rating A3
Pro-forma 2016E adjusted debt/EBITDA of 4.7x vs. 3.1x for Braves standalone Potential rating trajectory Baa1 Baa2
S&P: A- | CreditWatch Negative 10-24-2016
On CreditWatch Negative, with downgrade likely limited to one notch (down to BBB+) Current rating A-
Pro-forma 2016E adjusted debt/EBITDA of 4.0x vs. 2.7x Potential rating trajectory BBB+
Fitch: A- | Ratings Watch Negative 10-24-2016
On Ratings Watch Negative, with downgrade likely to be up to two notches (down to BBB) Current rating A-
Pro-forma 2017E adjusted debt/EBITDA of 4.5x vs. 2.8x at 2015 YE Potential rating trajectory BBB+ BBB
Source: Moody’s, S&P and Fitch Rating Agencies
Note: Pro-forma Braves rating agency commentary is from agencies commenting on proposed transaction
6
J.P.Morgan

BOARD DISCUSSION MATERIALS
C O N F I D E N T I A L
Agenda
Page
Review of Braves current proposal 1
Royals implied valuation analysis 7
Braves implied valuation analysis 15
Combination analysis 19
Illustrative Braves financing considerations 30
Strategic alternatives and other deal considerations 33
Appendix 35
J.P.Morgan

ROYALS IMPLIED VALUATION ANALYSIS
C O N F I D E N T I A L
Royals management standalone financial projections
Net sales1 ($mm)
$15,909
$14,331 $15,095
$12,479 $13,009 $13,621
2016E2017E2018E2019E2020E2021E
% growth
16.94.3%4.7%5.2%5.3%5.4%
EBITDA ($mm)
$8,026$8,696
$6,877$7,329
$5,933$6,313
2016E2017E2018E2019E2020E2021E
% margin
47.5%48.5%50.5%51.1%53.2%54.7%
Capital expenditures2 ($mm)
$255
$229
$189
$150 $150 $150
2016 E 2017 E 2018 E 2019 E 2020 E 2021 E
% of net sales
1.8% 2.0% 1.4% 1.0% 1.0% 0.9%
Unlevered Free Cash Flow3 ($mm)
$5,540
$5,110
$4,670
$4,005 $4,252
$3,385
2016E2017E2018E2019E2020E2021E
% of net sales
27.1%30.8%31.2%32.6%33.8%34.8%
Source: Royals management projections provided 10/31/16 (hereinafter referred to as “Royals management projections”)
1 Net of excise tax
2 Assumes capex of $150mm between 2019E and 2021E per Royals management’s guidance
3 EBIT * (1 – tax rate) + D&A – Capex – in NWC; tax rate per Royals management projections
7
J.P.Morgan

ROYALS IMPLIED VALUATION ANALYSIS
C O N F I D E N T I A L
Royals management standalone financial projections
Summary financials ($mm)
Management projections
FYE 12/31 4Q’16E 2016E 2017E 2018E 2019E 2020E 2021E
Net Sales 1 $3,162 $12,479 $13,009 $13,621 $14,331 $15,095 $15,909
% growth 3.5% 16.9% 4.3% 4.7% 5.2% 5.3% 5.4%
COGS $1,208 $4,834 $5,117 $5,163 $5,409 $5,498 $5,606
% of sales 38.2% 38.7% 39.3% 37.9% 37.7% 36.4% 35.2%
Gross profit $1,954 $7,645 $7,893 $8,458 $8,922 $9,597 $10,303
% margin 61.8% 61.3% 60.7% 62.1% 62.3% 63.6% 64.8%
SG&A $477 $1,811 $1,689 $1,700 $1,716 $1,702 $1,741
% of sales 15.1% 14.5% 13.0% 12.5% 12.0% 11.3% 10.9%
EBITDA $1,504 $5,933 $6,313 $6,877 $7,329 $8,026 $8,696
% margin 47.6% 47.5% 48.5% 50.5% 51.1% 53.2% 54.7%
D&A $32 $123 $132 $141 $139 $146 $148
% of capex 39.0% 53.7% 51.8% 74.6% 92.7% 97.3% 98.7%
Operating income $1,472 $5,810 $6,181 $6,736 $7,190 $7,880 $8,548
% margin 46.5% 46.6% 47.5% 49.5% 50.2% 52.2% 53.7%
Tax rate 37.2% 37.2% 36.2% 36.4% 36.5% 36.6% 36.6%
EPS $0.61 $2.31 $2.53 $2.78 $2.98 $3.28 $3.59
Select cash flow items:
Capex $82 $229 $255 $189 $1502 $1502 $1502
% net sales 2.6% 1.8% 2.0% 1.4% 1.0% 1.0% 0.9%
(Inc.) / Dec. in NWC ($89)3 ($160) $184 $14 $116 $114 $1224
% change in net sales — (8.9%) 34.7% 2.3% 16.3% 14.9% 15.0%
8
Source: Royals management projections; 1 Net of excise tax; 2 Assumes capex of $150mm between 2019E and 2021E per Royals management’s guidance; 3 Calculated as 9/30/16 reported NWC, less 2016E Royals management projected NWC; 4 Assumes current income tax liability in 2021E equals to the 2020E ending balance per Royals management’s guidance
J.P.Morgan

ROYALS IMPLIED VALUATION ANALYSIS
C O N F I D E N T I A L
Potential factors that may impact Royals management’s financial projections
Potential upside factors
Accelerated growth from new potential revenue streams
Further potential expansion of next-generation, heat-not-burn products
Future credits on MSA settlements / transition years
Favorable pension revaluation impact
Potential downside factors
Altria financial flexibility resulting from AB InBev’s acquisition of SABMiller
Potentially more aggressive state excise tax environment following the recent California vote
Effects of potential economic downturn such as unemployment and higher gas prices impacting adult tobacco consumers
MSA - higher inflation leads to increased obligations
FDA product standards and process risk
Ongoing Engle Litigation
Source: Per Royals management
9
J.P.Morgan

ROYALS IMPLIED VALUATION ANALYSIS
C O N F I D E N T I A L
Royals implied valuation perspectives
Implied equity value per share (rounded to the nearest $0.25)
Unaffected Royals share price (10/20/16): $47.17 Current Royals share price (11/04/16): Current value of Braves’ proposal (11/04/16): Midpoint3
$54.46 $55.33 Value per share
3 mo. VWAP:
For reference only1: $48.71
52-week trading range $43.50 $54.50 $49.00
Equity analyst price targets $47.00 $62.00 $54.50
Trading multiples:
FV / 2017E EBITDA:10.5x – 13.5x2 $38.75 $52.00 $45.25
P/E 2017E:15.0x – 20.0x4 $37.50 $50.00 $43.75
Transaction multiples:
FV / 2016E EBITDA: 12.0x – 16.0x5 $42.00 $58.75 $50.25
FV / 2016E Adj. EBITDA: 12.0x – 16.0x6 $43.00 $60.00 $51.50
Discounted cash flow:
Management projections7 $45.75 $65.00 $55.25
$30.00 $40.00 $50.00 $60.00 $70.00
FV / 2017E EBITDA² 8.5x 10.8x 13.1x 15.3x 17.6x
Source: Royals management projections; Equity analyst consensus; FactSet
Note: Valuation date as of 09/30/16; market data as of 11/04/16; net debt of $10,991mm as of 09/30/16; diluted share count of 1,431mm as of 09/30/16; 3 month VWAP as of unaffected date of 10/20/16;
1 Values as of 10/20/16 to represent unaffected share price; 2 Based on 2017E EBITDA of $6,313mm per Royals management guidance; 3 Represents the arithmetic midpoint of each valuation range;
4 Based on 2017E net income of $3,576mm; 5 Based on 2016E EBITDA of $5,933mm; 6 Based on 2016E EBITDA of $6,046mm adjusted by $113mm for synergies related to the acquisition of Lorillard, per Royals management guidance; 7 Assumes a discount rate of 6.0% - 7.0% and a terminal growth rate of 0.0% - 1.0%
10
J.P.Morgan

ROYALS IMPLIED VALUATION ANALYSIS
C O N F I D E N T I A L
Tobacco peers – Implied valuation comparables
Market cap. ($bn) Implied firm value ($bn) Dec-16E FV/EBITDA Dec-17E Dec-18E Dec-16E P/E Dec-17E Dec-18E Dividend yield1 Dec-16E Payout ratio2
Royals unaffected 67.5 78.5 13.2x 12.4x 11.4x 20.4x 18.6x 16.9x 3.9% 80.0%
Braves3 unaffected 110.3 133.4 12.8x 11.5x 10.8x 19.5x 17.0x 15.8x 3.3% 65.0%
Braves4 Excl. Associates unaffected 110.3 91.8 12.8x 11.2x 10.7x 19.5x 17.0x 15.8x 3.3% 65.0%
148.6 174.6 14.8x 13.6x 12.6x 21.0x 19.2x 17.4x 4.4% 90.9%
Altria 125.8 116.1 12.5x 11.8x 11.2x 21.2x 19.3x 17.8x 3.8% 78.1%
JT 67.7 72.0 10.3x 10.2x 9.6x 16.8x 16.6x 15.3x 3.3% 57.4%
IMPERIAL BRANDS 46.1 63.0 11.6x 10.8x 10.7x 15.0x 13.5x 12.7x 2.5% 62.8%
SWEDDISH MATCH 6.3 6.5 12.7x 12.7x 12.4x 19.3x 18.2x 17.1x NM5 NM5
Average: 12.4x Average: 11.8x Average: 11.3x Average: 18.7x Average: 17.3x Average: 17.3x Average: 3.5% Average: 72.3%
Overall average 12.6x 11.8x 11.2x 19.0x 17.5x 16.2x 3.5% 72.4%
Overall median 12.7x 11.7x 11.0x 19.5x 18.2x 16.9x 3.6% 71.6%
Source: Equity analyst consensus, FactSet as of 11/04/16; assumes a GBP/USD exchange rate of 1.2548 as of 11/04/16; assumes a GBP/USD exchange rate of 1.2250 as of 10/20/16
Note: Unaffected Royals and Braves implied values are as of 10/20/16; Total debt for Royals at principal value; Braves’ debt balance as of 09/15/16 and cash balance as of 06/30/16
1 Dividend yield = annualized dividend per share / share price; 2 Payout ratio = 2016E dividend per share / 2016E EPS; 3 Braves’ firm value includes net debt of $19,981mm and minority interest unaffected market value of $3,034mm, 2016E EBITDA of $7,190mm ($8,175mm in 2017E EBITDA) increased by $2,503mm ($2,663mm in 2017E) and $700mm ($770mm in 2017E) to reflect its proportionate ownership in Royals and ITC, respectively; 4 Braves’ firm value excludes $28,469mm and $13,016mm respectively, to reflect its proportionate ownership in the unaffected market value of equity of Royals and ITC; 5 No ordinary dividend announced in YTD2016, only a special dividend (company’s dividend policy = 40-60% of EPS)
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J.P.Morgan

ROYALS IMPLIED VALUATION ANALYSIS
C O N F I D E N T I A L
Tobacco sector transaction comparables
Key selected tobacco transactions
Multiples1
Announcement Target Acquiror Implied Firm value ($mm) FV/sales FV/EBITDA EBITDA margin
01-Jun-15 TDR Braves 599 3.9x 12.5x 31.3%
23-Feb-15 Souza Cruz (24.7%) Braves 14,185 6.3x 16.0x 39.6%
15-Jul-14 Lorillard Royals 27,9492 5.6x 13.8x 40.4%
15-Jul-14 Lorillard and Royals assets Imperial Tobacco 7,056 2.9x 8.8x 33.3%
26-May-11 Protabaco Braves 452 4.1x 11.3x 36.4%
17-Jun-09 Bentoel (85.1%) Braves 744 1.3x 14.0x 9.0%
08-Sep-08 UST Altria 11,681 5.9x 12.0x 48.9%
31-Jul-08 Rothmans PMI 1,9343 4.9x 9.7x 50.8%
28-Feb-08 Skandinavisk Braves 4,141 N/A 11.2x N/A
22-Feb-08 Tekel Braves 1,720 3.3x 11.4x 29.0%
01-Nov-07 John Middleton Philip Morris USA 2,9004 8.1x 15.8x 51.0%
18-Jul-07 Altadis Imperial Tobacco 22,6195 4.1x 14.1x 29.3%
08-Feb-07 Commonwealth Brands Imperial Tobacco 1,900 5.5x 10.9x 50.0%
19-Jan-07 Lakson Tobacco PMI 675 2.1x 14.8x 14.4%
15-Dec-06 Gallaher Japan Tobacco 18,938 3.6x 13.0x 28.0%
24-Apr-06 Conwood Royals 3,500 7.8x 13.2x 59.1%
13-Mar-05 PTHM Sampoerna PMI 5,082 2.7x 13.9x 19.5%
07-Mar-02 Reemtsma Imperial Tobacco 5,103 2.5x 13.4x 18.5%
22-Jun-01 Austria Tabak Gallaher Group 1,871 1.6x 7.4x 21.4%
Mean 4.2x 12.5x 33.9%
Median 4.0x 13.0x 32.3%
Source: Press releases, annual reports and information brochures of target, broker reports; based on most recent available financials at time of announcement of the transaction
1 Multiples based on transaction value in local currency
2 Implied firm value is pension-adjusted and based on fully diluted equity
3 Transaction value reflects 100% of RI and 60% of RBH not currently owned by PMI (100% of RI cash & ST investments, 60% of RBH cash, and 60% of RBH debt) as of 07/31/08; financials reflect 60% of RI consolidated revenue and EBITDA
4 Firm value excludes $700mm in present value of tax benefits (multiples based on brokers’ estimates)
5 Firm value adjusted by minority in Logista valued at market value
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R O Y A L S I M P L I E D V A L U A T I O N A NA L Y S I S
C O N F I D E N T I A L
FV/EBITDA NTM evolution vs. historical transaction multiples – Tobacco industry
10-year FV/EBITDA NTM evolution vs. historical transaction multiples
International Tobacco index1 US Tobacco index2
Current 13.6x 14.1x
10-year avg. 10.9x 9.4x
5-year avg. 11.9x 11.1x
3-year avg. 12.7x 12.2x
1-year avg. 13.8x 13.5x
16.5x
12.5x
10.7x
8.9x
8.5x
4.5x
Philip Morris USA/ John Middleton
15.8x
PMI/Lakson Tobacco
14.8x
Imperial Tobacco/ Altadis
14.1x
Braves/Bentoel
14.0x JT/Gallaher
13.0x
Altria/UST
12.0x
Braves/Protabaco
11.3x Braves/Tekel
11.4x
Braves/Skandinavisk
11.2x
PMI/Rothmans
9.7x
Imperial Tobacco/ Commonwealth Brands
10.9x
Braves/Souza Cruz
16.0x
Royals/Lorillard
13.8x 14.1x
13.6x
Braves/TDR
12.5x
Imperial Tobacco/Royals and Lorillard assets
8.8x
Nov-06 Dec-07 Jan-09 Mar-10 Apr-11 May-12 Jul-13 Aug-14 Sep-15 Nov-16
Source: Company information, Equity research, FactSet as of 11/04/16; Tobacco indexes represents median valuation of tobacco peers over time Note: Yellow diamonds denote FV/EBITDA multiples
1 International Tobacco index includes Braves, PMI, SWMA, IMB and JT
2 US Tobacco index includes Royals and Altria
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J.P.Morgan

R O Y A L S I M P L I E D V A L U A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Illustrative Royals discounted cash flow analysis
5-year projections
($mm) – Implied valuation date as of 09/30/16
Management projections
FYE 12/31 Q4’16E 2017E 2018E 2019E 2020E 2021E Terminal
Net sales1 $3,162 $13,009 $13,621 $14,331 $15,095 $15,909 $15,988
% growth 3.5% 4.3% 4.7% 5.2% 5.3% 5.4% 0.5%
EBITDA $1,504 $6,313 $6,877 $7,329 $8,026 $8,696 $8,739
% margin 47.6% 48.5% 50.5% 51.1% 53.2% 54.7% 54.7%
EBIT 1,472 6,181 6,736 7,190 7,880 8,548 8,591
Less: Taxes (548) (2,237) (2,450) (2,625) (2,881) (3,128) (3,144)
% tax rate 37.2% 36.2% 36.4% 36.5% 36.6% 36.6% 36.6%
EBIAT $924 $3,944 $4,286 $4,565 $5,000 $5,420 $5,447
Plus: D&A 32 132 141 139 146 148 149
% of net sales 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9%
% of capex 39.0% 51.8% 74.6% 92.7% 97.3% 98.7% 98.7%
Less: Capex (82) (255) (189) (150) (150) (150) (151)
% of net sales (2.6%) (2.0%) (1.4%) (1.0%) (1.0%) (0.9%) (0.9%)
Less: (Inc) / dec in NWC (89) 184 14 116 114 122 12
Unlevered FCF for discounting $785 $4,005 $4,252 $4,670 $5,110 $5,540 $5,457
Implied firm value ($mm)
Perpetuity growth rate
0.00% 0.50% 1.00%
6.00% $89,203 $95,965 $104,079
Discount rate 6.50% $82,278 $87,911 $94,567
7.00% $76,346 $81,098 $86,643
Implied equity value per share 2
Perpetuity growth rate
0.00% 0.50% 1.00%
6.00% $54.66 $59.38 $65.05
Discount rate 6.50% $49.82 $53.75 $58.41
7.00% $45.67 $48.99 $52.87
Terminal forward EBITDA multiple
Perpetuity growth rate
0.00% 0.50% 1.00%
6.00% 10.7x 11.7x 13.0x
Discount rate 6.50% 9.9x 10.8x 11.9x
7.00% 9.2x 10.0x 10.9x
Source: Royals management projections
Note: Assumes net debt of $10,991mm and 1,431mm diluted shares outstanding as of 09/30/16 per Royals management projections; Assumes mid-period discounting
1 Net of excise tax per Royals management projections; 2 52-week low/high: $43.38 – $54.50 per FactSet
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B O A R D D I S C U S S I O N M A T E R I A L S
C O N F I D E N T I A L
Agenda
Page
Review of Braves current proposal 1
Royals implied valuation analysis 7
Braves implied valuation analysis 15
Combination analysis 19
Illustrative Braves financing considerations 30
Strategic alternatives and other deal considerations 33
Appendix 35
J.P.Morgan

B R A V E S I M P L I E D V A L U A T I O N A N A L Y S I S
C O N F I D E N T I A L
Braves standalone financial estimates
Net sales1 (£mm)
£16,758 £17,291 £17,847 £18,419 £19,011
£14,857
2016E 2017E 2018E 2019E 2020E 2021E
% growth 13.4% 12.8% 3.2% 3.2% 3.2% 3.2%
EBITDA2 (£mm)
£7,027 £7,319 £7,554 £7,797
£6,674
£5,869
2016E 2017E 2018E 2019E 2020E 2021E
% margin 39.5% 39.8% 40.6% 41.0% 41.0% 41.0%
Capital expenditures (£mm)
£719
£688 £675 £697
£665 £661
2016E 2017E 2018E 2019E 2020E 2021E
% of net sales 4.6% 4.0% 3.8% 3.8% 3.8% 3.8%
Unlevered Free Cash Flow3 (£mm)
£4,291 £4,504 £4,667 £4,837
£3,872
£3,301
2016E 2017E 2018E 2019E 2020E 2021E
% net sales 22.2% 23.1% 24.8% 25.2% 25.3% 25.4%
Source: Equity analyst consensus estimates as of 11/04/16 for 2016E through 2019E, extrapolation thereafter based on assumptions reviewed and approved by Royals management
1 Net of excise tax
2 EBITDA exclude income from associates in Royals and ITC
3 EBIT * (1–30.5% tax rate) + D&A - Capex - D in NWC
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B R A V E S I M P L I E D V A L U A T I O N A N A L Y S I S
C O N F I D E N T I A L
Braves consolidated standalone financial estimates
Summary financials (£mm)
Street consensus Extrapolations
FYE 12/31 Q4’16E1 2016E 2017E 2018E 2019E 2020E 2021E
Net Sales2 £4,094 £14,857 £16,758 £17,291 £17,847 £18,419 £19,011
% growth — 13.4% 12.8% 3.2% 3.2% 3.2% 3.2%
EBITDA £1,620 £5,869 £6,674 £7,027 £7,319 £7,554 £7,797
% margin 39.6% 39.5% 39.8% 40.6% 41.0% 41.0% 41.0%
D&A £110 £397 £419 £433 £521 £600 £683
% of capex 40.7% 57.6% 63.0% 65.6% 77.1% 86.1% 95.0%
Operating income £1,510 £5,473 £6,255 £6,594 £6,798 £6,954 £7,113
% margin 36.9% 36.8% 37.3% 38.1% 38.1% 37.8% 37.4%
Tax rate 30.5% 30.5% 30.5% 30.5% 30.5% 30.5% 30.5%
EPS — £2.46 £2.83 £3.04 £3.19 £3.36 £3.53
Select cash flow items:
Capex £269 £688 £665 £661 £675 £697 £719
% net sales 6.6% 4.6% 4.0% 3.8% 3.8% 3.8% 3.8%
(Inc.) / Dec. in NWC (£53)3 (£211) (£229) (£64) (£67) (£69) (£71)
Source: Equity analyst consensus estimates as of 11/04/16 for 2016E through 2019E, extrapolation thereafter based on assumptions reviewed and approved by Royals management (hereinafter referred to as “Braves financial estimates”)
1 Q4’16E figures are calculated as half of the difference between 2016E consensus estimates and 1H’16 reported numbers
2 Net of excise tax
3 Q4’16E (Inc.) / Dec. in NWC is calculated as one quarter of the annual value projected by equity analyst research consensus
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B R A V E S I M P L I E D V A L U A T I O N A N A L Y S I S
C O N F I D E N T I A L
Implied Braves valuation perspectives
Implied equity value per share (rounded to the nearest £0.25)
Current Braves share price (11/04/16): £45.20 Unaffected Braves share price (10/20/16): £48.03 Midpoint6 Value per share
3 mo. VWAP:
For reference only1: £48.32
52-week trading range £35.75 £50.50 £43.00
Equity analyst price targets £43.00 £58.00 £50.50
Trading multiples:
FV / 2017E EBITDA:10.5x – 13.5x2 £43.00 £58.25 £50.75
P/ E 2017E:15.0x – 20.0x3 £42.50 £56.75 £49.50
Discounted cash flow4:
Braves financial estimates5 £40.00 £54.50 £47.25
£20.00 £40.00 £60.00 £80.00
FV / 2017E EBITDA2 5.9x 9.9x 13.9x 17.8x
Source: Braves financial estimates; Equity analyst consensus; FactSet
Note: Valuation date as of 09/30/16; market data as of 11/04/16; Debt balance of £18,254mm as of 09/15/16, cash balance of £1,943mm as of 06/30/16, minority interest unaffected market value of £2,476mm, and equity affiliate adjustments of £23,241mm and £10,619mm for the unaffected market value of equity in Royals and ITC, respectively; diluted share count of 1,874mm as of 10/31/16;
1 Values as of 10/20/16 represent unaffected share price; 2 Based on 2017E EBITDA of £9,476mm, which includes £2,174mm and £628mm to reflect Braves’ proportionate ownership in Royals and ITC, respectively, per equity analyst consensus; 3 Based on 2017E net income of £5,307mm; 4 Implied equity value reflects equity affiliates including 42% of Royals DCF equity value range of £21,968mm - £31,290mm at an GBP/USD exchange rate of 1.2548, and 30% of ITC’s unaffected market equity value; 5 Assumes a discount rate of 7.0% - 8.0% and a terminal growth rate of 0.0% -1.0%; 6 Represents the arithmetic midpoint of each valuation range before rounding
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B R A V E S I M P L I E D V A L U A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Illustrative Braves discounted cash flow analysis
5-year estimates, investment in Royals valued at DCF and ITC valued at market value
(£mm) – Implied valuation date as of 09/30/16
Street consensus Extrapolation
FYE 12/31 Q4 16E 1 2017E 2018E 2019E 2020E 2021E Terminal
Net sales 2 £4,094 £16,758 £17,291 £17,847 £18,419 £19,011 £19,106
% growth 3.5% 12.8% 3.2% 3.2% 3.2% 3.2% 0.5%
EBITDA £1,620 £6,674 £7,027 £7,319 £7,554 £7,797 £7,835
% margin 39.6% 39.8% 40.6% 41.0% 41.0% 41.0% 41.0%
EBIT 1,510 6,255 6,594 6,798 6,954 7,113 7,149
Less: Taxes (461) (1,908) (2,011) (2,073) (2,121) (2,170) (2,180)
% tax rate 30.5% 30.5% 30.5% 30.5% 30.5% 30.5% 30.5%
EBIAT £1,050 £4,347 £4,583 £4,725 £4,833 £4,944 £4,968
Plus: D&A 110 419 433 521 600 683 687
% of net sales 2.7% 2.5% 2.5% 2.9% 3.3% 3.6% 3.6%
% of capex 40.7% 63.0% 65.6% 77.1% 86.1% 95.0% 95.0%
Less: Capex (269) (665) (661) (675) (697) (719) (723)
% of net sales (6.6%) (4.0%) (3.8%) (3.8%) (3.8%) (3.8%) (3.8%)
Less: (Inc) / dec in NWC (53) 3 (229) (64) (67) (69) (71) (11)
Unlevered FCF for discounting £837 £3,872 £4,291 £4,504 £4,667 £4,837 £4,921
Implied firm value (£mm) 4
Perpetuity growth rate
0.00% 0.50% 1.00%
Discount rate 7.00% £70,031 £74,088 £78,821
7.50% £65,371 £68,819 £72,797
8.00% £61,295 £64,253 £67,635
Implied equity value per share 5,6
Perpetuity
growth rate
0.00% 0.50% 1.00%
Discount rate 7.00% £47.03 £50.41 £54.39
7.50% £43.30 £46.15 £49.47
8.00% £40.07 £42.50 £45.29
Terminal forward EBITDA multiple
Perpetuity growth rate
0.00% 0.50% 1.00%
Discount rate 7.00% 9.3x 10.0x 10.9x
7.50% 8.7x 9.3x 10.1x
8.00% 8.2x 8.7x 9.4x
Source: Braves financial estimates; Debt balance of £18,254mm as of 09/15/16, cash balance of £1,943mm as of 06/30/16 and minority interest market value of £2,476mm Note: Braves diluted share count of 1,874mm as of 10/31/16
1 Q4’16E numbers are calculated as half of the difference between 2016E consensus estimates and 1H’16 reported numbers
2 Net of excise tax
3 Q4’16E (Inc.) / Dec. in NWC is calculated as one quarter of the annual value of equity analyst consensus
4 Firm value excludes investments in associates
5 Equity value reflects £2,476mm of minority interests and equity affiliates, including 42% of Royals which has a DCF equity value range of £21,968mm - £31,290mm at an GBP/USD exchange rate of 1.2548, and £10,619mm of equity affiliates which represents their 30% ownership stake in ITC
6 52-week low/high: £35.75 – £50.50 (rounded to the nearest £0.25)
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B O A R D D I S C U S S I O N M A T E R I A L S
C O N F I D E N T I A L
Agenda
Page
Review of Braves current proposal 1
Royals implied valuation analysis 7
Braves implied valuation analysis 15
Combination analysis 19
Illustrative Braves financing considerations 30
Strategic alternatives and other deal considerations 33
Appendix 35
J.P.Morgan

C O M B I N A T I O N A N A L Y S I S
C O N F I D E N T I A L
Royals and Braves exchange ratio evolution
Royals and Braves exchange ratio since the day before the announcement of the Lorillard acquisition (07/14/14)
Exchange ratio More favorable to Royals
1.1000x Exchange ratio
1 month 0.7668x Unaffected date of 10/20/16
6 months 0.8046x
1 year 0.8287x
1.0000x Since Lorillard acquisition (07/14/14) 0.7200x
Since Lorillard acquisition completion (6/12/15) 0.8075x Implied all-stock exchange ratio at $56.50 per share: 0.9603x
0.9000x
0.8000x
Average exchange ratio since Lorillard acquisition: 0.7200x
0.7000x
0.6000x
0.5000x
More favorable to Braves
0.4000x
Jul ‘14 Nov ‘14 Mar ‘15 Jul ‘15 Nov ‘15 Mar ‘16 Jul ‘16 Nov ‘16
Source: Royals filings; FactSet as of 11/04/16
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J.P.Morgan

C O M B I N A T I O N A N A L Y S I S
C O N F I D E N T I A L
Overview of potential operating synergies in a combination with Braves
Potential operating synergies
Braves’ proposal includes an assumption of $400mm in annual run-rate synergies which can potentially provide meaningful value to Royals shareholders in a transaction that includes stock consideration
Per Royals management, we assume a range of $300mm-$500mm which would include, but is not limited to the following:
Consolidation of manufacturing (Mexico vs. Tobaccoville)
Consolidation of R&D platforms
Reduced supply chain expenses (procurement, etc.)
Reduction in certain administrative expenses (IR, SEC expenses, Board costs, other various public company costs)
Leadership/structure efficiencies
Consolidated marketing expenses
Consolidated finance, audit and communications departments
Conform certain HR related expenses (Payroll, annual bonus)
Combined portfolio of Next-Generation Products (vapor, Heat-not-burn, Niconovum AB)
In addition, there are likely to be significant working capital improvement opportunities which would enhance cash flow for the pro forma company including, but not limited to:
Difference in size of respective dividends payouts
Ability to consolidate leaf purchasing/durations
Optimization of cash usage throughout the year to reduce borrowing costs
Elimination of payment by Braves to Royals for ceasing of manufacturing in Japan
Ability to utilize off-shore cash
Post-tax NPV of assumed $400mm run-rate operating synergies ($mm)
Perpetuity growth
0.0% 0.5% 1.0%
Discount rate 6.00% $4,314 $4,638 $5,027
6.50% $3,973 $4,242 $4,561
7.00% $3,681 $3,908 $4,173
Post-tax NPV of synergy levels
NPV1
Run-rate operational synergies $300 $3,182
$400 $4,242
$500 $5,303
Source: $400mm in annual synergies as per Braves proposal on 10/20/16
Note: Assumes synergies are phased in over two years, net of cost to achieve per Royals management
1 Assumes a terminal growth rate of 0.5%, a constant blended tax rate of 33.4% and a discount rate of 6.5%
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J.P.Morgan

C O M B I N A T I O N A N AL Y S I S
C O N F I D E N T I A L
Overview of potential tax efficiencies in a combination with Braves
Potential tax efficiencies
In acquisitions of U.S. targets by non-U.S. multinationals, a significant amount of tax efficiencies can add to the economics of a combination with Braves
In Braves’ proposed acquisition of Royals, anticipated total annual tax efficiencies of $550mm+ in 2018 and growing annually
Braves could capitalize the legacy Royals business with intercompany debt following the acquisition, increasing tax shield from interest for the legacy Royals business
Total present value of tax efficiencies could be significant, and can vary depending on the following factors:
Amount of cash consideration paid by Braves to Royals shareholders
Interest rate on intercompany debt
Discount rate used to calculate present value tax efficiencies
Tax applicable to interest income in the U.K.
Adjustments (if any) for potential future legislative changes
In addition to intercompany debt, Braves would realize tax efficiencies through elimination of U.S. income tax currently applied to Braves’ share of its Royals dividends (and share repurchases)
Furthermore, although not quantified in this analysis, Braves has the opportunity to drive further tax efficiencies in the U.S. by using intercompany purchases and cost-sharing agreements to allocate R&D and other general corporate expense to the U.S. operations
Net present values of potential assumed tax efficiencies ($550mm+ in 2018 and growing annually)
Tax rate differential
32.5% 35.0% 37.5%
Discount rate used to PV tax efficiencies 4.50% $16,917 $17,872 $18,795
5.00% $15,197 $16,056 $16,887
5.50% $13,790 $14,571 $15,326
Source: Royals management. Note: Sensitivity assumes interest rate on intercompany debt and intercompany target leverage are held constant and discount rate and net effective tax rate differential between U.S. and U.K. are varied. Assumes tax efficiencies are achieved through incremental intercompany debt at 6.5% interest on a maximum of 6.5x (debt/EBITDA) leverage
Interest rate on intercompany debt
5.5% 6.5% 7.5%
Discount rate used to PV tax efficiencies 4.50% $15,635 $17,872 $20,028
5.00% $14,044 $16,056 $17,995
5.50% $12,744 $14,571 $16,332
Note: Sensitivity assumes net effective tax rate differential between U.S. and U.K. and intercompany target leverage are held constant and discount rate and the interest rate on intercompany debt are varied. Assumes tax efficiencies are achieved on 6.5x maximum leverage at a net tax rate differential of 35.0%
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J.P.Morgan

C O M B I N A T I O N A N A L Y S I S
C O N F I D E N T I A L
Illustrative accretion / dilution analysis
Accretion / dilution detail (current proposal)
$mm
FYE Dec-31 2017E 2018E
Braves standalone
Net income $6,657 $7,157
Diluted EPS $3.55 $3.82
Transaction adjustments
Royals EBIT $6,181 $6,736
(+) Synergies achieved1 200 400
(-) IFRS adjustments2 (160) (160)
(+) Incremental interest income / (expense) (1,148) (1,071)
Incremental EBT $5,073 $5,905
(+) Incremental income tax credit / (expense) 3 (1,902) (2,192)
(+) Increase /(decrease) of post-tax results of associates and JVs (1,508) (1,646)
Total Net Adjustments $1,663 $2,066
PF Net Income with operating synergies $8,320 $9,223
Tax efficiencies adjustments
(+) Tax efficiencies through intercompany debt4 454 518
(+) Dividend withholding tax efficiencies5 59 64
Total tax efficiencies adjustments $513 $582
(-) Adjustment for tax efficiencies from acquisition debt (158) (123)
Adjusted incremental tax efficiencies $355 $459
PF Net Income with operating synergies and tax efficiencies $8,675 $9,682
Braves’ current share outstanding (mm)6 1,874 1,874
Shares issued to Royals (mm)6 455 455
PF shares O/S after combination 2,329 2,329
PF diluted EPS (w/ operating synergies) $3.57 $3.96
Cash EPS acc/dil ($) $0.02 $0.14
Cash EPS acc/dil (%) 0.6% 3.7%
PF diluted EPS (w/ operating synergies and tax efficiencies) $3.72 $4.16
Cash EPS acc/dil ($) $0.17 $0.34
Cash EPS acc/dil (%) 4.9% 8.8%
Braves cash EPS accretion / (dilution)
With run-rate operational synergies of $400mm per Braves proposal
Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share
$55.33 $56.60 $58.96 $61.32 $70.76
2017E 0.6% (0.2%) (1.7%) (3.1%) (8.3%)
2018E 3.7% 2.9% 1.4% (0.1%) (5.4%)
With run-rate operational synergies of $400mm per Braves proposal and also including $550mm+ of tax efficiencies3,4
Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share
$55.33 $56.60 $58.96 $61.32 $70.76
2017E 4.9% 4.0% 2.5% 1.1% (4.4%)
2018E 8.8% 8.0% 6.4% 4.9% (0.7%)
Source: Royals management projections; Royals management; Braves financial estimates; Note: Analysis assumes a 9/30/16 transaction date; GBP/USD exchange rate of 1.2548 as of 11/04/16; assumes 3.0% cost of acquisition debt; 1 Operating synergies, phased in over 2 years and net of cost to achieve; 2 Annual impact assumed for IFRS treatment of Royals on a pro forma basis; 3 Assumes a constant blended tax rate of 33.4%, based on the EBIT contribution in 2017E; 4 Assumes tax efficiencies are achieved through incremental intercompany debt at a 6.5% interest rate on 6.5x leverage and a 35.0% tax rate; 5 Assumes withholding tax efficiencies of 5.0% of Royals dividend attributable to Braves (42%); 6 Assumes Braves and Royals diluted shares outstanding of 1,874mm as of 10/31/16 and 1,431mm as of 09/30/16, respectively
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C O M B I N A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Illustrative market based value creation
Illustrative market based value creation in a cash / stock acquisition under current proposal ($mm, except per share data)
Braves Royals Operating synergies Tax
efficiencies $5,191 $150,585 % value creation
$19,965 $134,530 $16,056
$29,426 26.6%
$39,028 % ownership: $26,289 % value creation
19.5% 18.5% $121,159 9.9%
$110,276 80.5% $108,241 (1.8%)
Implied 2016E FV /
EBITDA multiple: 12.8x 13.2x 13.0x 13.0x
Braves standalone implied equity value ($7,190mm EBITDA)
Royals standalone1 implied equity value ($5,933mm EBITDA)
Synergies2 ($400mm pre-tax)
Cash paid to Royals shareholders ($13,523mm EBITDA)2
Pro forma implied equity value
Tax efficiencies5
Pro forma implied equity value with tax efficiencies
Value per Royals Share3
- $47.17 $2.233 $24.134 $31.774 $35.524
Total value to Royals shareholders
$55.90 $59.69
Note: This analysis is merely illustrative of the impact of hypothetical trading at assumed multiples and should not be interpreted as a stock price prediction by J.P. Morgan Source: Royals management projections; Royals management; Braves financial estimates; broker estimates; FactSet
Note: GBP/USD exchange rate of 1.2250 as of 10/20/16; 1 Implied equity value as of 10/20/16 represents the 58% currently not owned by Braves; 2 Braves’ estimated synergies of $400mm of run-rate synergies; capitalized at a blended multiple of 13.0x; 3 Pro forma diluted shares outstanding of 2,329mm; 4 Royals diluted shares outstanding of 1,431mm as of 9/30/2016; 5 Assumes tax efficiencies are achieved through incremental intercompany debt at 6.5% interest on 6.5x leverage and at a 35.0% tax rate, as well as dividend withholding savings and benefits
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C O M B I N A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Market based value creation sensitivities
Illustrative value creation with various assumed operational synergies2 and no tax efficiencies
Braves
Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share Pre-tax Post-tax
$55.33 $56.60 $58.96 $61.32 $70.76
Synergies1
$300 $3,893 (2.8%) (3.6%) (5.0%) (6.3%) (11.4%) $400 $5,191 (1.8%) (2.6%) (4.0%) (5.4%) (10.5%)
NPV
$500 $6,488 (0.9%) (1.7%) (3.1%)
(4.5%) (9.6%)
Royals
Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share
Pre-tax
Post-tax $55.33
$56.60 $58.96 $61.32 $70.76
Synergies1
$300 $3,893 17.9% 20.0% 24.0% 27.8% 42.1% $400 $5,191 18.5% 20.7% 24.7% 28.5% 42.9%
NPV
$500 $6,488 19.2% 21.4% 25.4% 29.3% 43.8%
Illustrative value creation with assumed $400mm operational synergies3 and $550mm+ of tax efficiencies4
Braves
Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share
Illustrative % potential of tax efficiencies
Post-tax
$55.33 $56.60 $58.96 $61.32 $70.76 0% $0 (1.8%) (2.6%) (4.0%) (5.4%) (10.5%)
NPV
50% $8,028 4.0% 3.2% 1.7% 0.3% (5.1%) 100% $16,056 9.9% 9.0% 7.4% 5.9% 0.2%
Royals
Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share
Post-tax $55.33
$56.60 $58.96 $61.32 $70.76
Illustrative % potential of tax efficiencies
0%
NPV
$0 18.5% 20.7% 24.7% 28.5% 42.9% 50% $8,028 22.5% 24.9% 29.1% 33.2% 100% $16,056 26.6% 29.0% 33.5% 37.8% 53.9%
Source: Royals management projections; Royals management; Braves financial estimates; Equity analyst consensus; FactSet
1 Represents pre-tax operational run-rate synergies; 2 Assumes synergies are phased in over 2 years, net of costs to achieve; present value calculated assuming a 6.5% discount rate; 3 Assumes synergies of $400mm per Braves proposal phased in over 2 years, net of costs to achieve; present value calculated assuming a blended multiple of 13.0x; 4 Assumes tax efficiencies are achieved through incremental intercompany debt at 6.5% interest on 6.5x leverage and 35.0% tax rate, as well as dividend withholding savings and benefits
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C O M B I N A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Illustrative intrinsic value creation under the current proposal
Illustrative intrinsic value creation in a cash / stock acquisition under current proposal ($mm, except per share data)
Braves
Royals
Operating synergies
Tax efficiencies $4,242 $153,355 $19,965 $137,300 $16,056 $29,967 $44,477
% ownership: $26,830
% value creation 19.5% 5.2% $123,388 $108,546 $110,470 80.5% 1.8%
Braves standalone implied equity value1
Royals standalone2 implied equity value
Synergies3 ($400mm pre-tax) ($266mm after-tax)
Cash paid to Royals shareholders
Pro forma implied equity value
Tax efficiencies6
Pro forma implied equity value with tax efficiencies
Value per Royals Share3
- $53.75 $1.824 $24.135 $32.435 $36.225
Total value to Royals $56.56 shareholders $60.35
% value creation 12.3% 13.7%
Note: This analysis is merely illustrative of the impact of hypothetical trading at assumed multiples and should not be interpreted as a stock price prediction by J.P. Morgan Source: Royals management projections; Royals management; Braves financial estimates; broker estimates; FactSet
Note: Assumes intrinsic standalone implied equity value is the mid-point of the DCF range; GBP/USD exchange rate of 1.2548 as of 11/04/16; 1 Reflects a WACC range of 7.0%-8.0% and a terminal growth rate of 0.0%-1.0%; 2 Implied equity value represents 58% currently not owned by Braves; Reflects a WACC range of 6.0%-7.0% and a terminal growth rate range of 0.0%-1.0%; 3 Estimates assume synergies of $400mm per Braves proposal are phased in over 2 years, net of costs to achieve; present value calculated assuming 6.5% discount and long-term growth rate of 0.5%; 4 Pro forma diluted shares outstanding of 2,329mm; 5 Royals diluted shares outstanding of 1,431mm as of 9/30/2016; 6 Assumes tax efficiencies are achieved through incremental intercompany debt at 6.5% interest on 6.5x leverage and 35.0% tax rate, as well as dividend withholding savings and benefits;
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C O M B I N A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Intrinsic value creation sensitivities
Illustrative value creation with various assumed operational synergies2 and no tax efficiencies
Braves
Premium (holding cash consideration constant)
17% 20% 25% 30% Price per share
Pre-tax Post-tax
$55.33 $56.60 $58.96 $61.32 $70.76
Synergies1 $300 $3,182 1.0% 0.2% (1.3%) (2.7%) (7.9%) $400 $4,242 1.8% 1.0% (0.5%) (1.9%) (7.2%)
NPV $500 $5,303 2.6% 1.7% 0.3% (1.1%) (6.5%)50%
Royals
Premium (holding cash consideration constant) 17% 20% 25% 30% 50%
Price per share Pre-tax Post-tax
$55.33 $56.60 $58.96 $61.32 $70.76
Synergies1 $300 $3,182 4.7% 6.7% 10.2% 13.7% 26.5% $400 $4,242 5.2% 7.2% 10.7% 14.2% 27.1%
NPV $500 $5,303 5.7% 7.7% 11.2% 14.7% 27.7%
Illustrative value creation with assumed $400mm operational synergies3 and $550mm+ of tax efficiencies4
Braves
Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share
Post-tax $55.33 $56.60 $58.96 $61.32 $70.76
Illustrative % potential of tax efficiencies 0%
NPV $0 1.8% 1.0% (0.5%) (1.9%) (7.2%) 50%
$8,028 7.7% 6.9% 5.3% 3.8% (1.8%) 100% $16,056 13.7% 12.8% 11.1% 9.6% 3.7%
Royals Premium (holding cash consideration constant)
17% 20% 25% 30% 50%
Price per share
Post-tax $55.33 $56.60 $58.96 $61.32 $70.76
Illustrative % potential of tax efficiencies 0%
NPV $0 5.2% 7.2% 10.7% 14.2% 27.1% 50% $8,028 8.7% 10.8% 14.6% 18.2% 31.9%
100% $16,056 12.3% 14.5% 18.4% 22.3% 36.7%
Source: Royals management projections; Royals management; Braves financial estimates; Equity analyst consensus; FactSet
1 Represents post-tax operational run-rate synergies; 2 Assumes synergies are phased in over 2 years, net of costs to achieve; present value calculated assuming a 6.5% discount rate; 3 Assumes synergies of $400mm per Braves proposal are phased in over 2 years, net of costs to achieve; present value calculated assuming a 6.5% discount and a long-term growth rate of 0.5%; 4 Assumes tax efficiencies are achieved through incremental intercompany debt at 6.5% interest on 6.5x leverage and 35.0% tax rate, as well as dividend withholding savings and benefits
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C O M B I N A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Braves debt capacity considerations
($mm, except per share amounts)
10/20 proposal at current Braves price and FX
Max leverage at BBB+ / Baa2 assuming same equity consideration as 10/20 proposal
Illustrative transaction date: 12/31/16
$19bn of acquisition debt
$24bn of acquisition debt
Illustrative offer price
$55.331 $61.322
Implied premium to unaffected price
17% 30%
Cash / stock mix ($)
$24.13 / $31.20 $30.12 / $31.20
Cash / stock mix (%) 44% / 56% 49% / 51%
Royals pro forma ownership 3 20% 20%
Shares issued as % of Braves DSO3
24% 24%
Combined standalone debt $35,856 $35,856
Incremental acquisition debt 18,965 23,919
Total pro forma debt
$54,821 $59,774
Expected rating
BBB+ / Baa2
BBB+ / Baa2
4.1x 4.5x 3.8x
Moody’s PF leverage (Debt / EBITDA)
3.5x 3.0x 3.4x
PF2016E 2017E 2018E PF2016E 2017E 2018E
Cash EPS acc / (dil) with operating synergies 0.6% 3.7% (0.6%) 2.6%
Cash EPS acc / (dil) with operating synergies and tax efficiencies 4 4.9% 8.8% 3.8% 7.8%
Note: Assumes synergies of $400mm per Braves proposal are phased in over 2 years, net of costs to achieve; 1 Implied offer price per share calculated as Braves closing price of £45.20 as of 11/04/16 at a GBP/USD exchange rate of 1.2548 as of 11/04/16 assuming an equity exchange ratio of 0.5502x plus cash consideration of $24.13; 2 Implied offer price per share calculated as Braves closing price of £45.20 as of 11/04/16 at a GBP/USD exchange rate of 1.2548 assuming an equity exchange ratio of 0.5502x plus cash consideration of $31.12; 3 827mm of Royals diluted shares outstanding as of 9/30/16 and currently not owned by Braves at an exchange ratio of 0.5502x; 4 Assumes a 35.0% tax rate in the U.S.; intercompany debt assumes a 6.5% interest rate on 6.5x maximum leverage; third party debt assumes a
3.0% interest rate; assumes a constant Royals dividend payout of 80% of net income; present value calculated assuming a 5.0% discount rate; domestic / foreign mix assumes 100% of revenues are booked in the U.S.
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C O M B I N A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Price sensitivity analysis based on incremental cash consideration up to maximum leverage capacity under a BBB+/Baa2 rating with stock consideration thereafter
Price increases based on incremental cash consideration (stock held constant at current amount)
Max leverage capacity at BBB+ / Baa2
Reflects incremental stock above 30% scenario
Premium to unaffected 1
17.3% 20.0% 25.0% 30.0% 50.0%
Price per share
$55.33 $56.60 $58.96 $61.32 $70.76
Cash component 2
$24.13 $25.40 $27.76 $30.12 $30.12
Stock component 2 $31.20 $31.20 $31.20 $31.20 $40.64
% cash / stock split 2
44% / 56% 45% / 55% 47% / 53% 49% / 51% 43% / 57%
Implied Royals % of PF ownership 19.5% 19.5% 19.5% 19.5% 24.0%
Implied equity purchase price
57.8% 45,783 46,834 48,785 50,737 58,542
Implied transaction value 3
$56,774 $57,825 $59,776 $61,728 $69,533
Acqusition debt financing
$18,965 $20,016 $21,967 $23,919 $23,919
Moody’s adjusted leverage
4.2x 4.3x 4.4x 4.6x 4.6x
FV / EBITDA
EBITDA
FY 2016E EBITDA
$5,933 15.2x 15.5x 16.1x 16.6x 18.9x
Adjusted FY 2016E EBITDA4
$6,047 14.9x 15.2x 15.8x 16.3x 18.6x
FY 2017E EBITDA
$6,313 14.3x 14.6x 15.1x 15.6x 17.8x
Cash acc/dil w/ operating synergies 5
FY 2017E EPS
0.6% 0.3% (0.2%) (0.6%) (6.2%)
FY 2018E EPS
3.7% 3.4% 3.0% 2.6% (3.2%)
Cash acc/dil w/ operating synergies and tax efficiencies 6
FY 2017E EPS 4.9% 4.8% 4.5% 3.8% (2.0%)
FY 2018E EPS
8.8% 8.7% 8.5% 7.8% 1.8%
Source: Royals management projections; Royals management; Royals filings, broker estimates, FactSet as of 11/04/16; Note: Assumes GBP / USD exchange rate of 1.2548 as of 11/04/16
1 Unaffected closing price of $47.17 as of 10/20/16; 2 Assuming stock component is held constant and cash component is varied except for the 50% scenario where the cash component is held constant at the 30% level and the stock component is increased; 3 Assumes net debt of $10,991mm as of 09/30/16; 4 Includes adjustments for run-rate Lorillard synergies in the amount of $113mm, per Royals management guidance;
5 Assumes synergies of $400mm per Braves proposal are phased in over 2 years, net of costs to achieve; 6 Assumes a 35.0% tax rate in the U.S. and a 20.0% tax rate in the U.K.; intercompany debt assumes a 6.5% interest rate on 6.5x maximum leverage; third party debt assumes a 3.0% interest rate; assumes a constant Royals dividend payout of 80% of net income; assumes a benefit from foregone dividend withholding tax; present value calculated assuming a 5.0% discount rate; domestic / foreign mix assumes 100% of revenues are booked in the U.S.
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C O M B I N A T I O N A N A L Y S I S
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Price sensitivity analysis based on incremental equity consideration
Price increases based on incremental equity consideration (cash held constant at current amount)
Premium to unaffected 1 17.3% 20.0% 25.0% 30.0% 50.0%
Price per share $55.33 $56.60 $58.96 $61.32 $70.76
Cash component 2 $24.13 $24.13 $24.13 $24.13 $24.13
Stock component 2 $31.20 $32.47 $34.83 $37.19 $46.63
% cash / stock split 2 44% / 56% 43% / 57% 41% / 59% 39% / 61% 34% / 66%
Implied Royals % of PF ownership 19.5% 20.2% 21.3% 22.4% 26.6%
Implied equity purchase price 57.8% $45,783 $46,834 $48,785 $50,737 $58,542
Implied transaction value $56,774 $57,825 $59,776 $61,728 $69,533
Acqusition debt financing $18,965 $18,965 $18,965 $18,965 $18,965
Moody’s adjusted leverage 4.2x 4.2x 4.2x 4.2x 4.2x
FV / EBITDA
EBITDA
FY 2016E EBITDA $5,933 15.2x 15.5x 16.1x 16.6x 18.9x
Adjusted FY 2016E EBITDA3 $6,047 14.9x 15.2x 15.8x 16.3x 18.6x
FY 2017E EBITDA $6,313 14.3x 14.6x 15.1x 15.6x 17.8x
Cash acc/dil with operating synergies 4
FY 2017E EPS 0.6% (0.2%) (1.7%) (3.1%) (8.3%)
FY 2018E EPS 3.7% 2.9% 1.4% (0.1%) (5.4%)
Cash acc/dil with operating synergies and tax efficiencies 5
FY 2017E EPS 4.9% 4.0% 2.5% 1.1% (4.4%)
FY 2018E EPS 8.8% 8.0% 6.4% 4.9% (0.7%)
Source: Royals management; Royals filings, equity research, FactSet as of 11/01/16; Note: Assumes GBP / USD exchange rate of 1.2548 as of 11/04/16
1 Unaffected closing price of $47.17 as of 10/20/16; 2 Assuming cash component is held constant and stock component is varied; 3 Includes adjustments for run-rate Lorillard synergies in the amount of $155mm for LTM Sep-16 and $113mm FY2016E, per Royals management guidance; 4 Assumes synergies of $400mm per Braves proposal are phased in over 2 years, net of costs to achieve; 5 Assumes a 35.0% tax rate in the U.S. intercompany debt; Assumes a 6.5% interest rate on 6.5x maximum leverage; third party debt assumes a 3.0% interest rate; assumes a constant Royals dividend payout of 80% of net income; present value calculated assuming a 5.0% discount rate; domestic / foreign mix assumes 100% of revenues are booked in the U.S.
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B O A R D D I S C U S S I O N M A T E R I A L S
C O N F I D E N T I A L
Agenda
Page
Review of Braves current proposal 1
Royals implied valuation analysis 7
Braves implied valuation analysis 15
Combination analysis 19
Illustrative Braves financing considerations 30
Strategic alternatives and other deal considerations 33
Appendix 35
J.P.Morgan

I L L U S T R A T I V E B R A V E S F I N A N C I N G C O N S I D E R A T I O N S
C O N F I D E N T I A L
Financing considerations for the cash portion of Braves’ October 20th offer
Under the current offer, Braves will need to source $19bn in incremental debt financing to finance the cash portion of Braves’ current offer (assuming $1bn of balance sheet cash is used)
Financing overview
We believe Braves has additional debt capacity under their pro forma rating of BBB+/Baa2 to raise in total up to $24bn of incremental debt
To fund any debt portion of the consideration, Braves will likely tap the U.S. and European bond markets for the majority of financing need; with the remainder coming from the term loan market
Source markets and estimated capacity
Braves is estimated to have access to ~$18-20bn of global bond market capacity assuming current market conditions and BBB+/Baa2 ratings
Braves will rely on the U.S. bond market for deepest capacity, estimated as ~$12-13bn
European bond markets (largely through combination of EUR and GBP issuances) expected to provide ~$6-7bn of capacity
The remaining need (~$1-4bn) can be addressed through the term loan market
Pro forma for the transaction, Braves will have over ~$14bn of bonds maturing over the next 5 years and $3bn annually on average (not inclusive of any newly issued debt), providing significant deleveraging flexibility going forward
As such, Braves will likely look to issue debt across the full maturity spectrum (including long-dated tenors) in order to manage their near-term debt load and optimize market capacity / execution
Debt tranching / structuring considerations
Braves has the ability to supplement bond financing with term loan borrowings, which provides further deleveraging flexibility as cash flow is generated
From a cost of financing perspective, it is likely that Braves will benefit from a marginally lower cost of borrowing than Royals despite relatively similar ratings on pro forma basis. Over time, this differential is expected to further improve as Braves delevers and integrates the acquisition
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I L L U S T R A T I V E B R A V E S F I N A N C I N G C O N S I D E R A T I O N S
C O N F I D E N T I A L
Flowback, or the likelihood that Royals shareholders sell their shares of Braves, may factor into what percentage of the merger consideration Braves may issue as ADRs
Given large percentage of Braves outstanding equity being issued in the deal, flowback will be a consideration
If the sell-down causes a dislocation in Braves’ share price, it would decrease the near term value of the total consideration received by Royals shareholders
Impact of flowback can be mitigated by overlap in shareholder bases, U.S. and U.K. re-weightings, and positive shareholder perception of the combination
Current proposal
100% common stock
Cash shortfall $26
Rights issue amount $0
Common stock issued $26
Estimated gross outflows $11 - 19bn
Estimated demand from index re-weighting $5 - 7bn
Estimated net outflow $7 - 13bn % of Pre-deal O/S¹ 6% -11% % of Post-deal O/S¹ 4% -8%
Source: Thomson, FactSet, and most recent filings as of 08/26/16; 1 Represents net flowback as a percentage of pre- / post- deal O/S
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I L L U S T R A T I V E B R A V E S F I N A N C I N G C O N S I D E R A T I O N S
C O N F I D E N T I A L
Braves could consider issuing stock to the market for cash to further increase the cash component of its offer and reduce flowback
Braves could consider issuing stock to the market to raise cash proceeds in order to be able to increase the cash component of its offer to Royals and reduce flowback
Potential alternatives for issuing stock could include:
Cash placing up to 5% of market capitalization or vendor placing up to 10% of market capitalization
– Under UK rules, Braves could offer up to 10% of its current market capitalization to investors on a non pre-emptive basis if the cash is used for an acquisition
A rights issue if it were considering issuing over 10% of Braves’ market capitalization
– Braves shareholders receive a tradeable right to acquire their pro-rata share of stock being offered at the offer price
– Depending on timing of execution, to the extent Braves uses a rights issue to raise cash for the merger consideration, the exchange ratio would need to be adjusted to reflect the lower ex-rights price
Investors in the UK are very familiar with these methods of stock issuance and UK companies have used them to finance M&A transactions previously
Greater than a third of precedent UK capital raisings are in excess of 30% of market cap and such offers are common but market conditions at the time will be key given sheer size
Source: Dealogic U.K. Main Market follow on transactions, Thomson, FactSet 32
J.P.Morgan

B O A R D D I S C U S S I O N M A T E R I A L S
C O N F I D E N T I A L
Agenda
Page
Review of Braves current proposal 1
Royals implied valuation analysis 7
Braves implied valuation analysis 15
Combination analysis 19
Illustrative Braves financing considerations 30
Strategic alternatives and other deal considerations 33
Appendix 35
J.P.Morgan

S T R A T E G I C A L T E R N A T I V E S A N D O T H E R D E A L C O N S I D E R A T I O N S
C O N F I D E N T I A L
Potential strategic alternatives
Most disruptive Least disruptive
Bolt-on acquisition
Limited number of targets available, especially those that offer new capabilities or access to new markets
Does not immediately create substantial value for shareholders
Partnership / JV
Limited number of partners that offer new products or distribution capabilities in a significant manner
Asset sale / separation
No business units of scale within the Royals portfolio is likely to unlock meaningful value as a standalone company or under new ownership
Potential dis-synergies
Does not create long-term incremental value for shareholders
Leveraged recapitalization
Does not enhance company’s operational capabilities or competitiveness
Increases indebtedness and financial risk profile of the company
Transformational merger or sale of company
Limited universe of executable counterparties
Per Braves’ October 20th proposal, Braves is not interested in selling its 42.2% ownership stake in Royals and would not support an alternative transaction
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S T R A T E G I C A L T E R N A T I V E S A N D O T H E R D E A L C O N S I D E R A T I O N S
C O N F I D E N T I A L
Illustrative discussion points regarding a potential transaction
Royals & Braves valuation Discussion regarding each company’s standalone value as reflected in the current market
Exchange ratio Braves’ offered exchange ratio captures the lowest relative valuation for Royals in over a year and does not reflect normalized relative valuations
Synergies Incremental value from potential synergies likely higher than what Braves has articulated
Consideration mix Optimize mix of cash and stock consideration to maximize tax efficiencies and minimize financing costs
Consideration election Provide Royals shareholders the ability to elect cash versus stock consideration (subject to proration)
Downside protection Possibility of a collar on Braves’ stock price between announcement and closing to provide downside protection to Royals shareholders
Governance Royals representation on the combined company Board given Royals’ significant ownership in the pro forma company
Break fee Reverse break fee to be paid by Braves if their shareholders do not vote in favor of the acquisition of Royals
Dividend record dates Payment of respective dividends up to closing of any transaction
Tax treatment to Royals shareholders Structuring considerations which may allow Royals shareholders to defer taxes on capital gains for the portion of consideration received in Braves stock
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B O A R D D I S C U S S I O N M A T E R IA L S
C O N F I D E N T I A L
Agenda
Page
Review of Braves current proposal 1
Royals implied valuation analysis 7
Braves implied valuation analysis 15
Combination analysis 19
Illustrative Braves financing considerations 30
Strategic alternatives and other deal considerations 33
Appendix 35
J.P.Morgan

A P P E N D I X
C O N F I D E N T I A L
Braves and Royals – public market overview
Braves public market overview
(£mm / $mm, except per share data) GBP USD1
Closing price (11/04/16) £45.20 $56.72
% 52-wk high 89.6% 89.6%
Shares outstanding 1,874.3 1,874.3
Market cap £84,717 $106,303
+ Debt as of 09/15/16 £18,254 $22,906
- Cash as of 06/30/16 (1,943) (2,438)
- Other adj. as of 06/30/16 2 (34,631) (43,455)
Implied firm value £66,397 $83,315
FYE 12/31 2015A 2016E 2017E
Revenues £13,104 £14,857 £16,758
% growth (6.2%) 13.4% 12.8%
EBITDA £5,355 £5,869 £6,674
% margin 40.9% 39.5% 39.8%
EPS £2.30 £2.46 £2.83
% growth 38.2% 7.0% 14.9%
Implied valuation 2016E 2017E
FV / EBITDA 11.3x 9.9x
P/E 18.3x 16.0x
Credit metrics Debt as of 09/15/16 (cash as of 06/30/16)
Debt / 2016E EBITDA 3.1x
Net debt / 2016E EBITDA 2.8x
Credit ratings A- / A3
Royals public market overview
($mm, except per share data) USD1
Closing price (11/04/16) $54.46
% 52-wk high 98.8%
Shares outstanding 1,430.9
Market cap $77,929
+ Debt as of 09/30/16 $12,950
- Cash as of 09/30/16 (1,959)
- Other adj. as of 09/30/16 0
Implied firm value $88,920
FYE 12/31 2015 A2016E 2017E
Revenues $10,675 $12,479 $13,009
% growth 26.0% 16.9% 4.3%
EBITDA $4,529 $5,933 $6,313
% margin 42.4% 47.5% 48.5%
EPS $2.57 $2.31 $2.53
% growth - (10.1%) 9.7%
Implied valuation 2016E 2017E
FV / EBITDA 15.0x 14.1x
P/E 23.6x 21.5x
Credit metrics As of 9/30/2016
Debt / 2016E EBITDA 2.2x
Net debt / 2016E EBITDA 1.9x
Credit ratings BBB / Baa3
Source: FactSet, equity research and Royals filings. Market data as of 11/04/16 Note: Braves 2015A and 2016E financials adjusted for TDR acquisition
1 GBP/USD exchange rate of 1.2548 as of 11/04/16
2 Assumes Braves net other adjustment of £34,631mm, consisting of £2,371mm in current market value of minority interests and (£37,002mm) in associates current market value
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A P P E N D I X
C O N F I D E N T I A L
P/E NTM over time – Tobacco peers
10-year P/E NTM evolution
Royals Braves Altria PMI SWMA IMB JT
Current 21.9x 16.4x 19.6x 19.5x 18.4x 13.7x 16.6x
10-year avg. 14.2x 14.5x 14.3x 15.5x1 15.9x 12.2x 17.8x
5-year avg. 16.6x 15.7x 16.3x 17.0x 16.8x 12.6x 15.5x
3-year avg. 18.3x 16.5x 17.8x 18.1x 17.0x 13.7x 16.2x
1-year avg. 20.3x 17.6x 19.9x 20.6x 17.9x 14.8x 17.9x
30x 25x 20x 15x 10x 5x
Nov-06 Dec-07 Jan-09 Mar-10 Apr-11 May-12 Jul-13 Aug-14 Sep-15 Nov-16
21.9x
19.6x
19.5x
18.4x
16.6x
16.4x
13.7x
Source: FactSet as of 11/04/16
1 Since PMI listing on 03/31/08
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A P P E N D I X
C O N F I D E N T I A L
FV/EBITDA NTM evolution vs. historical transaction multiples – Tobacco industry
FV/EBITDA NTM evolution vs. historical transaction multiples
20.0x Transaction Sector1 trading multiples at announcement
Average delta to sector trading multiples (precedents): 1.8x
15.8x 16.0x
14.8x
15.0x 14.1x 14.0x 13.8x
13.0x 13.0x
12.0x 11.7x
10.9x 11.4x 11.2x 11.3x 12.5x
10.0x 9.7x
8.8x
13.3x
11.2x 12.1x 11.7x
5.0x 10.6x 10.5x 10.4x 9.9x 9.6x 9.6x 9.9x 9.2x
8.9x
0.0x
JT/ Gallaher PMI/ Lakson Tobacco IMB/ Common-wealth Brands IMB/ Altadis Philip Morris USA/ John Middleton Braves/ TekelBraves/ Skand-inavisk PMI/ Rothmans Altria/ UST Braves/ Bentoel Braves/ Protabaco Royals/ Lorillard IMB/ Royals and Lorillard assets Braves/ Souza Cruz Braves/ TDR
15 Dec-06 19 Jan-07 08 Feb-07 18 Jul-07 01 Nov-07 22 Feb-08 28 Feb-08 31 Jul-08 08 Sep-0817 Jun-09 26 May-11 15 Jul-14 15 Jul-14 23 Feb-15 Jun-15 01
Source: Company information, Equity research, FactSet as of 11/04/16 Note: Implied transaction multiple based on LTM EBITDA
1 Sector index represents median valuation of tobacco peers in the week of the announcement; index includes Royals, Braves, Altria, PMI, SWMA, IMB and JT
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J.P.Morgan

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C O N F I D E N T I A L
Tobacco peers – Operational benchmarking
Source: FactSet consensus as of 11/04/16
Net debt/ EBITDA Dec-16E EBITDA margin Dec-16E Dec-17E CAGR 2016E–18E Sales EBITDA EPS
Royals1 1.9x 47.5% 48.5% 4.5% 7.7% 9.8%
Braves2 2.8x 39.5% 39.8% 7.9% 9.4% 11.2%
2.1x 44.3% 45.5% 5.5% 8.6% 9.8%
Altria 1.0x 48.0% 49.5% 2.3% 5.3% 9.4%
JT 0.7x 33.4% 33.1% 2.9% 3.5% 4.7%
IMPERIAL BRANDS 3.2x 52.8% 52.2% 5.9% 4.4% 8.6%
SWEDISH MATCH 1.1x 29.8% 28.8% 3.0% 1.1% 6.1%
Average: 1.6x Average: 41.7% Average: 41.8% Average: 3.9% Average: 4.6% Average: 7.7%
Overall average 1.8x 42.2% 42.5% 4.6% 5.7% 8.5%
Overall median 1.9x 44.3% 45.5% 4.5% 5.3% 9.4%
1 Per management projections
2 EBITDA exclude income from associates in Royals and ITC 38
J.P.Morgan

A P P E N D I X
C O N F I D E N T I A L
Combined bond maturity profile for Braves and Royals
Combined bond maturity profile ($mm, USD equivalent) – 2017 and beyond
Total Royals Outstanding $ 12.96bn
Total Braves Outstanding $ 22.98bn
Total
$35.94bn
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0
4,729 2,500
3,557
3,444 1,158
2,970 1,521
2,949 1,250 750
2,503 2,344 500 2,464 2,398 606 2,220 2,229
2,002 1,923
1,699 1,739 1,102
898
650
Royals Bonds Braves Bonds
2,923
2,250
607
845 750 673 650 673 250 550 450 455 357 250 173
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2034 2035 2037 2040 2041 2042 2043 2044 2045 2050 2052 2055
Source: Bloomberg, all figures shown as USD equivalent; data and FX rates as of 9/29/16
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J.P.Morgan

A P P E N D I X
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Implied relative value analysis
Braves shares per Royals share
Current Braves proposal: 0.5502x1
For reference only2:
52-week trading range 0.3043x 0.6785x
Equity analyst price targets 0.3142x 0.7019x
Trading multiples:
FV / 2017E EBITDA3 0.2001x 0.5158x
P/E 2017E 0.1882x 0.4854x
Discounted cash flow: 0.3150x 0.8123x
0.0000x 0.2000x 0.4000x 0.6000x 0.8000x 1.0000x
Source: Royals management projections; Braves financial estimates; broker estimates; FactSet
Note: Market data as of 11/04/16; Exchange ratios based on high/low and low/high valuation range for each corresponding valuation methodology; GBP/USD exchange rate of 1.2548 as of 11/04/16
1 Exchange ratio as per Braves 10/20/16 proposal
2 Values as of 10/20/16 to represent unaffected share price
3 Based on 2017E EBITDA of £9,476mm, which is adjusted by £2,174mm and £628mm to reflect Braves’ proportionate ownership in Royals and ITC, respectively
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J.P.Morgan

A P P E N D I X
Hypothetical illustrative analysis only – no prediction as to future share trading
C O N F I D E N T I A L
Contribution analysis
Contribution analysis ($mm, % represents equity ownership)
Gross contribution Equity contribution
Braves1 Royals Pro forma Braves Royals Braves Royals Ex. Ratio
Firm value metrics
2016E revenue $18,643 $12,479 $31,12260% 40% 68% 32% 0.614x
2017E revenue 21,029 13,009 34,038 62% 38% 70% 30% 0.565x
2016E EBITDA 7,365 5,933 13,298 55% 45% 64% 36% 0.742x
2017E EBITDA 8,374 6,313 14,688 57% 43% 65% 35% 0.694x
Equity value metrics
2016E net income 4,619 3,254 7,872 59% 41% 59% 41% 0.651x
2017E net income 5,308 3,576 8,884 60% 40% 60% 40% 0.622x
Current offer price: $56.502 Exchange ratio: 0.5502x Royals ownership: 19.5% Braves ownership: 80.5%
Source: Royals management projections; Braves financial estimates; FactSet as of 11/04/16 Note: GBP/USD of 1.2548
1 Braves’ firm value includes adjustment for 42% of Royals DCF equity value and 30% of ITC market equity value (£10,619mm) and minority interest market value of £2,476
2 Represents Braves October 20 proposal based on Braves’ share price of £48.03 at the exchange rate of 1.2250 as of 10/20/16
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J.P.Morgan

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C O N F I D E N T I AL
Royals / Braves – illustrative tax efficiencies – cash / stock acquisition
Tax efficiencies ($mm)
FYE 12/31 2017E 2018E 2019E 2020E 2021E
5-year forward projections
EBITDA $6,313 $6,877 $7,329 $8,026 $8,696
D&A (132) (141) (139) (146) (148)
Interest expense, net ($577) ($601) ($646) ($657) ($646)
EBT $5,604 $6,134 $6,544 $7,224 $7,902
Tax at 35.0% $1,961 $2,147 $2,290 $2,528 $2,766
Benefit of intercompany debt at Royals
EBITDA $5,933 $6,313 $6,877 $7,329 $8,026
Target debt / EBITDA 6.5x 6.5x 6.5x 6.5x 6.5x
Maximum US debt capacity $38,567 $41,036 $44,699 $47,638 $52,172
Less: Standalone debt $12,950 $12,450 $12,450 $11,781 $11,781
Maximum US intercompany debt $25,617 $28,586 $32,249 $35,857 $40,391
Memo: Cash consideration $19,965
(+) Current year E&P $0 $2,799 $3,026 $3,164 $3,472
Memo: Maximum IC debt under new regulations $19,965 $22,764 $25,790 $28,953 $32,426
Total intercompany debt $19,965 $22,764 $25,790 $28,953 $32,426
Internal debt rate 6.5% 6.5% 6.5% 6.5% 6.5%
Intercompany interest expense $1,298 $1,480 $1,676 $1,882 $2,108
Memo: Section 163 (j) limit $2,967 $3,157 $3,438 $3,664 $4,013
Intercompany interest expense (post 163(j)) $1,298 $1,480 $1,676 $1,882 $2,108
Net increase in US interest expense $1,298 $1,480 $1,676 $1,882 $2,108
Incremental tax efficiencies at 35.0% $454 $518 $587 $659 $738
Terminal value of tax efficiencies at 35.0% $14,754
PV of tax efficiencies (5% discount rate) $443 $481 $519 $555 $12,438
PV of tax efficiencies (2017 and after) $14,437
Dividend withholding tax efficiencies
Royals dividend attributable to Braves $1,186 $1,278 $1,381 $1,499 $1,634
Incremental tax efficiencies at 5.0% $59 $64 $69 $75 $82
Terminal value of tax efficiencies at 5.0% $1,634
PV of tax efficiencies (5% discount rate) $58 $59 $61 $63 $1,377
PV of tax efficiencies (2017 and after) $1,619
Benefit of new third party debt at Braves
Principal amount of refinanced Royals debt $12,450 $12,450 $11,781 $11,781 $11,781
Interest on refinanced debt at 3.0% $374 $374 $353 $353 $353
Incremental tax efficiencies at 20.0% $75 $75 $71 $71 $71
Terminal value of tax efficiencies at 20.0% $1,414
PV of tax efficiencies (5% discount rate) $73 $69 $63 $60 $1,192
PV of tax efficiencies (2017 and after) $1,456
Total incremental tax efficiencies $529 $593 $657 $729 $808
Total PV of tax efficiencies (2017 and after) $17,512
Base tax efficiencies
Base tax efficiencies
Optimized tax efficiencies
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Note: Royals management projections; Royals management; assumes a 35.0% tax rate in the U.S. and a 20.0% tax rate in the U.K.; intercompany debt assumes a 6.5% interest rate on 6.5x maximum leverage; third party debt assumes a 3.0% interest rate; assumes a constant Royals dividend payout of 80% of net income; present value calculated assuming a 5.0% discount rate; domestic / foreign mix assumes 100% of revenues are booked in the U.S.
J.P.Morgan

A P P E N D I X
C O N F I D E N T I A L
Royals discount rate analysis
Discount rate summary
Risk free rate1 1.8%
Equity risk premium 6.5% — 7.5%
Levered beta 0.55 — 0.95
Country risk premium 0.0% — 0.0%
Cost of equity 5.4% — 8.9%
Pre-tax cost of debt 3.3%
Post-tax cost of debt 2.1%
Debt/total cap target 15.0%
Calculated discount rate 4.9% — 7.9%
Selected range 6.0% — 7.0%
Capital structure benchmarks
Company Market cap ($bn) Debt / Total cap. Levered beta Barra Historical Relevered historical2
Philip Morris $148.6 16.8% 0.590 0.651 0.633
Altria $125.8 9.9% 0.522 0.535 0.556
Braves $106.3 17.7% 0.949 0.793 0.768
Japan Tobacco $67.7 8.4% 1.269 0.916 0.956
Imperial Brands $46.1 28.0% 0.770 0.631 0.555
SWMA $6.3 15.2% 0.670 0.538 0.526
Mean 16.0% 0.795 0.677 0.666
Median 16.0% 0.720 0.641 0.594
Royals $77.9 14.2% 0.570 0.528 0.532
Cost of equity vs. Debt/total cap target3
Cost of equity
Debt/total cap
5.4% 6.6% 7.7% 8.9%
10.0% 5.0% 6.1% 7.2% 8.2%
12.5% 5.0% 6.0% 7.0% 8.1%
15.0% 4.9% 5.9% 6.9% 7.9%
17.5% 4.8% 5.8%6.8% 7.7%
20.0% 4.7% 5.7% 6.6% 7.6%
Cost of equity vs. Pre-tax cost of debt3
Cost of equity
Pre-tax cost of debt
5.4% 6.6% 7.7% 8.9%
2.3% 4.8% 5.8% 6.8% 7.8%
2.8% 4.8% 5.8% 6.8% 7.9%
3.3% 4.9% 5.9% 6.9% 7.9%
3.8% 4.9% 5.9% 6.9% 7.9%
4.3% 5.0% 6.0% 7.0% 8.0%
Source: FactSet, Barra, J.P. Morgan estimates; Note: Market data as of 11/04/16
¹ U.S. 10-year treasury bond yield as of 10/14/16; ² Historic levered beta is implied based on unlevering beta for each respective company based on their current capital structure and relevering beta based on assumed debt/total cap target of 15.0%; ³ Assumes pre-tax cost of debt of 3.25%, debt/total cap target of 15.0% and tax rate of 36.0%
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J.P.Morgan

A P P E N D I X
C O N F I D E N T I A L
Braves discount rate analysis
Discount rate summary
UK Risk free rate1 1.3%
UK Equity risk premium 7.2% — 7.2%
Levered beta 0.60 — 1.00
Country risk premium 1.6% — 1.6%
Cost of equity 7.2% — 10.1%
Pre-tax cost of debt 2.1%
Post-tax cost of debt 1.4%
Debt/total cap target 15.0%
Calculated discount rate 6.3% — 8.8%
Selected range 7.0% — 8.0%
Capital structure benchmarks
Market Debt / Levered beta Relevered
Company cap ($bn) Total cap. Barra Historical historical2
Philip Morris $148.6 16.8% 0.590 0.651 0.638
Altria $125.8 9.9% 0.522 0.535 0.561
Royals $77.9 14.2% 0.570 0.528 0.537
Japan Tobacco $67.7 8.4% 1.269 0.916 0.965
Imperial Brands $46.1 28.0% 0.770 0.631 0.560
SWMA $6.3 15.2% 0.670 0.538 0.530
Mean 15.5% 0.732 0.633 0.632
Median 14.7% 0.630 0.584 0.561
Braves $106.3 17.8% 0.949 0.793 0.774
Cost of equity vs. Debt/total cap target3
Cost of equity
Debt/total cap
7.2% 8.2% 9.1% 10.1%
5.0% 6.9% 7.8% 8.7% 9.7%
10.0% 6.6% 7.5% 8.4% 9.2%
15.0% 6.3% 7.2% 8.0% 8.8%
20.0% 6.1% 6.8% 7.6% 8.4%
25.0% 5.8% 6.5% 7.2% 7.9%
Cost of equity vs. Pre-tax cost of debt3
Cost of equity
Pre-tax cost of debt
7.2% 8.2% 9.1% 10.1%
1.1% 6.2% 7.1% 7.9% 8.7%
1.6% 6.3% 7.1% 7.9% 8.7%
2.1% 6.3% 7.2% 8.0% 8.8%
2.6% 6.4% 7.2% 8.0% 8.8%
3.1% 6.4% 7.3% 8.1% 8.9%
Source: FactSet, Barra, J.P. Morgan estimates; Note: Market data as of 11/04/16;
¹ Yield from British Government Securities as of 11/01/16, 10 year; ² Historic levered beta is implied based on unlevering beta for each respective company based on their current capital structure and relevering beta based on assumed debt/total cap target of 15.0%; ³ Assumes pre-tax cost of debt of 2.1%, debt/total cap target of 15.0% and tax rate of 30.5%
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J.P.Morgan