bti-20251231

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report.

2,312,454,501 ordinary shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of

1934. ☐ Yes ☒ No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations

under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding

12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of

“large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with US GAAP, indicate by check mark if the registrant has elected not to use the

extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification

after April 5, 2012.

Indicate by check mark whether the registrant has ﬁled a report on and attestation to its management’s assessment of the eﬀectiveness of its internal control over ﬁnancial

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting ﬁrm that prepared or issued its audit report.☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the

correction of an error to previously issued financial statements.☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the

registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


US GAAP	International Financial Reporting Standards as issued by the	Other ☐
☐	International Accounting Standards Board ☒

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐

Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No


Name of the auditor’s firm	KPMG LLP
Auditors’ firm ID/ PCAOB issued Audit Firm Identifier	1118
Auditors’ Location – City, State/Province, Country	15 Canada Square, London, E14 5GL


British American Tobacco p.l.c. Form 20-F 2025

General

References in this Annual Report on Form 20-F 2025 (this Form 20-F) to ‘British American Tobacco’, ‘Company’, ‘BAT’, ‘Group’, ‘we’, ‘us’ and ‘our’

when denoting opinion refer to British American Tobacco p.l.c. and when denoting business activity refer to British American Tobacco p.l.c. and its

subsidiaries, collectively or individually as the case may be, as well as in some circumstances those who work for them. When denoting business activity

these collective expressions are used for ease of reference only and do not imply any other relationship between British American Tobacco p.l.c. and its

subsidiaries. The companies in which British American Tobacco p.l.c. directly and indirectly has an interest are separate and distinct legal entities.

The material in this Form 20-F is not provided for product advertising, promotional or marketing purposes. This Form 20-F does not constitute and should

not be construed as constituting an offer to sell, or a solicitation of an offer to buy, any of our products. Our products are sold only in compliance with the

laws of the particular jurisdictions in which they are sold. References in this Form 20-F to information on websites, including the web address of BAT, have

been included as inactive textual references only. These websites and the information contained therein or connected thereto are not intended to be

incorporated into or to form part of the Form 20-F.

Forward looking statements

This document contains certain forward-looking statements, including “forward-looking” statements made within the meaning of the U.S. Private Securities

Litigation Reform Act of 1995. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,”

“could,” “may,” “would,” “should,” “intend,” “plan,” “potential,” “predict,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “outlook”,

“target,” “being confident” and similar expressions. These include statements regarding our intentions, beliefs or current expectations concerning, amongst

other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the economic and business circumstances occurring

from time to time in the countries and markets in which the Group operates.

In particular, these forward-looking statements include, among other statements, statements regarding the Group’s future financial performance, planned

product launches and future regulatory developments and business objectives, as well as: (i) our expected gross capital expenditure in 2026; (ii) our belief

that Vuse is well-placed to benefit from stronger enforcement in the U.S. and our expectations of a promising performance of Vuse Ultra and a building

momentum with the continued roll-out of Velo Plus in the U.S.; (iii) certain statements in the Key Factors Affecting Results of Operations section; (iv)

certain statements in the Raw Materials section; (v) certain statements in the Regulation of the Group’s business section; (vi) certain statements in the

Regional Review section, including the reference to positive signs of illicit disposable decline and legal industry recovery and our encouragement by the

early performance Vuse Ultra in the AME region; (vii) certain statements in the Category Review, including our expectation to continue to seek opportunities

and develop the Modern Oral category in additional markets; (viii) certain statements in the Dividends section; (ix) certain statements in the Liquidity and

capital resources section, including the Group's confidence in being able to successfully access the debt capital markets, the Group’s belief that the Group has

sufficient working capital for present requirements, the Assessment as a Going Concern and the Off-Balance Sheet Arrangements and Contractual

Obligations; (x) certain statements in the Trend information section; and (xi) certain statements in the Notes on Accounts, including Accounting policies and

basis of preparation, the Group’s ability to navigate regulatory change, the Group’s forecast and assumptions with respect to impairment testing, the Group’s

expectation to close the sale of its Cuban subsidiary and the Contingent liabilities and financial commitments sections.

All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors. It is believed that the

expectations reflected in this document are reasonable but they may be affected by a wide range of variables that could cause actual results and performance

to differ materially from those currently anticipated.

Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are uncertainties related to

the following: the impact of increased competition from illicit trade and illegal products; changes or differences in domestic or international economic or

political conditions; the impact of adverse domestic or international legislation and regulation of tobacco, New Categories and other regulation; the impact of

supply chain disruptions; adverse litigation and external investigations and dispute outcomes and the effect of such outcomes on the Group’s financial

condition; the impact of significant increases or structural changes in tobacco, nicotine and New Categories related taxes; the inability to develop,

commercialise and deliver the Group’s New Categories strategy; adverse decisions by domestic or international regulatory bodies, including disputed taxes,

interest and penalties; the impact of serious injury, illness or death in the workplace and those who work with the business; the ability to maintain credit

ratings and to fund the business under the current capital structure; translational and transactional foreign exchange rate exposure; direct and indirect adverse

impacts associated with climate change (both physical and transition); the ability to deliver a viable circular business model in response to global demand,

combined with increasing regulatory, stakeholder and consumer pressure; and the Group’s ability to defend against Cyber & Digital actions that result in loss

of confidentiality, availability or integrity of systems and data. Further details on the principal risks that may affect the Group can be found on pages 4 to 17

of this document.

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. The forward-looking

statements reflect knowledge and information available at the date of preparation of this document and the Group undertakes no obligation to update or revise

these forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on

such forward-looking statements.

No statement in this document is intended to be a profit forecast and no statement in this document should be interpreted to mean that earnings per share of

BAT for the current or future financial years would necessarily match or exceed the historical published earnings per share of BAT.

All financial statements and financial information provided by or with respect to the U.S. or Reynolds American are initially prepared on the basis of U.S.

GAAP and constitute the primary financial statements or financial records of the U.S./Reynolds American. This financial information is then converted to

International Financial Reporting Standards as issued by the IASB and as adopted for use in the UK (IFRS) for the purpose of consolidation within the results

of the Group. To the extent any such financial information provided in this announcement relates to the U.S. or Reynolds American it is provided as an

explanation of, or supplement to, Reynolds American’s primary U.S. GAAP based financial statements and information.


British American Tobacco p.l.c. Form 20-F 2025

PART I

Item 3 - Key Information

Item 3.D - Risk factors

Business Execution and Supply Chain Risks

Risk: Competition from illicit trade

Description: Illicit trade in the form of counterfeit products, diversion of genuine Group products, products that are smuggled illegally across borders, and

locally manufactured products, which do not comply with applicable regulations and/or in which applicable taxes are evaded, has had a significant impact

and continues to represent a significant and growing threat to the legitimate tobacco industry, including New Categories products. Factors such as increasing

levels of taxation and inflation, economic downturn and increased cost of living, lack of law enforcement, appropriate penalties and weak border control are

encouraging more adult tobacco and New Categories consumers to switch to illegal cheaper tobacco and New Categories products and are providing greater

rewards for counterfeiters and smugglers. Regulatory restrictions such as plain packaging or graphic health warnings, display bans, flavour or ingredient

restrictions and increased compliance costs further disadvantage legitimate industry participants by providing competitive advantages to illicit manufacturers

and distributors of illicit tobacco and New Categories products.

Impact: Illicit trade has an overall negative impact on society, deprives governments of revenues and encourages various forms of crime such as terrorism,

money laundering and human trafficking. Above all, illicit trade has an adverse effect on the Group’s overall business and reputation. Illicit trade can damage

brand equity, which could undermine the Group’s investment in Trade Marketing and Distribution, increase operational costs where products may become

commoditised, make it more difficult to adhere to underage prevention and decrease volumes sold. Although anti-illicit trade is an integral part of our

Standards of Business Conduct (SoBC), representing our internal commitment in the fight against illicit trade and setting out the controls all Group

companies must have in place and adhere to, it cannot prevent all instances of illicit trade.

Furthermore, counterfeit products (especially New Categories) and other illicit products could harm consumers, damages goodwill and/or the category (with

lower volumes and reduced profits), and could potentially lead to misplaced claims against BAT, further regulation and a failure to deliver our corporate

harm reduction objective. Illicit trade may also reduce the Group’s ability to take price increases due to competitive pressure from cheaper illegal products.

Finally, as the Group has contractual and legislative obligations to prevent the diversion of our products into illicit channels, actual breaches of the obligations

to prevent product diversion into illicit channels have resulted, and may continue to result, in substantial fines in the forms of seizure payments and legislative

penalties (including financial penalties). Additionally, actual and perceived breaches may result in the risk of reputational damage (including negative

perceptions of our governance and our sustainability credentials) from Group products being found in illicit channels.

Risk: Geopolitical tensions that have the potential to disrupt the Group’s business in multiple markets

Description: The Group’s operations and financial condition are influenced by the economic and political situations in the markets and regions in which it

has operations, which are often unpredictable and outside of its control. Some markets in which the Group operates face the threat of civil unrest and can be

subject to frequent changes in regime. In others, there is a risk of terrorism, conflict, global health crisis, war, organised crime or other criminal activity. The

Group is also exposed to economic policy changes in jurisdictions in which it operates, for example state nationalisation of assets and withdrawal from

international / bilateral trade agreements including the introduction of tariffs or trade embargoes. In addition, some markets maintain trade barriers or adopt

policies that favour domestic producers, preventing or restricting the Group’s sales. Given the outsourcing of certain services to third‑party providers, the risk

may be amplified where such services are highly concentrated within a single country or region, increasing exposure to local geopolitical instability.

Geopolitical tensions caused by the effects of climate change and associated events, such as, but not limited to, water shortages, flooding, amplified natural

disasters and resultant disease outbreaks, land and food shortages, unemployment, and migration may also adversely impact the Group's business.

Impact: Deterioration of socio-economic or political conditions have led, and could in the future lead, to injury or loss of life, restricted mobility, loss of

assets and/or denial of access to BAT sites that reduce the Group’s access to particular markets or may disrupt the Group’s operations, such as supply chain,

or manufacturing or distribution capabilities. Such disruptions, including attacks on shipping routes in the Red Sea, may result in increased taxes and/or other

costs due to the requirement for more complex supply chain and security arrangements, the need to build new facilities or to maintain inefficient facilities, or

in a reduction of the Group’s sales volume. Further, there may be reputational damage, including negative perceptions of our governance and protection of

our people and our sustainability credentials.

Risk: Injury, illness or death in the workplace

Description: The Group considers the safety of its employees and other individuals working with it as of utmost importance and fundamental concern. Loss

of life, serious injury, disability or illness to employees or individuals due to accident, geopolitical tension or other events may occur during the research,

manufacturing, distribution or retail of the Group’s products.

Impact: Past events have led, and future events may lead to serious injuries, ill health, disability or loss of life to employees and individuals who work with

the Group. This may result in reputational damage, difficulties in recruiting and retaining staff, exposure to civil and criminal liability, prosecution and fines

and penalties. These impacts could have an adverse effect on the Group’s results of operations and financial condition and have a negative impact on its

sustainability credentials.

Risk: Disruption to the Group’s or its third-party providers’ digital and information technology systems, including by cyberattack, human error, or

the malicious manipulation or disclosure of confidential or sensitive information

Description: The Group relies on a complex and interconnected digital ecosystem, including information and digital technology (IDT) systems, to support

core business activities, such as manufacturing, distribution, marketing, customer engagement, R&D, and financial and management reporting. The Group’s

operations are exposed to disruptions arising not only from internal system failures or vulnerabilities but also from outages, security breaches, or performance

issues affecting external vendors, cloud service providers, and other critical third‑party technology partners. There is a risk that the digital landscape in the

Group or across its third-party providers may be compromised by intentional or unintentional actions. These include cyber-attacks, insider threats, system

misconfigurations, or human error.

The external threat landscape continues to intensify, with adversaries leveraging AI-powered tools and nation-state capabilities. The Group’s own adoption of

AI technologies, whether in products, services, or supply chain operations, may further increase exposure to cyber threats and introduce new attack vectors.


British American Tobacco p.l.c. Form 20-F 2025

Impact: The Group's digital ecosystem is continuously under attack by third parties. The Group experiences cybersecurity threats and incidents that are

typical for organisations in the same industry of a similar size, including phishing attempts, malware activity, and unauthorised access attempts. Although as

of the date of this Form 20-F, the Group has not experienced any cybersecurity incident, including those arising from third‑party provider failures, that has

materially affected our business strategy, results of operations, or financial condition, such an event could occur in the future.

Management recognises that digital and cyber threats could pose significant risks to the Group’s business, reputation, financial condition, and stakeholder

trust. Any disruption to IDT systems related to the Group’s operations could adversely affect its business and result in financial, legal and reputational

impacts. Any delays or failure to detect or respond to attempts to gain unauthorised access to the Group’s information technology systems can lead to a loss

in confidentiality, integrity or availability of systems and/or data. Failure to comply with digital, data protection or cybersecurity regulations could result in

regulatory investigations, enforcement actions, fines, legal exposure or operational restrictions.

Risk: Failure to meet current or future New Categories demand

Description: The New Categories supply chain is a multi-tiered and complex environment with reliance on multiple factors, such as third-party suppliers’

ability to upscale production in order to meet demand while maintaining product quality, dependency on single suppliers at various points in the chain and the

Group’s ability to build adequate consumables production capacity in line with product demand. The geographical spread of suppliers and customers exposes

the Group to political and economic issues such as trade wars and tariff increases, which may compromise the New Categories supply chain. Given the

developing nature of the New Categories portfolio, there is also an enhanced risk that some products may not meet product quality and safety standards or

may be subject to regulatory changes, leading to product recalls, which we have experienced in the past, or bans of certain ingredients or products (such as

the ban on menthol in our New Categories products in California) or failure of products to receive regulatory approval (such as the initial denial (currently

subject to an appeal) of a Premarket Tobacco Product Application (PMTA) for our Vuse menthol and mixed berry products in the United States). In addition,

the New Categories supply chain may be vulnerable to changes in local legislation related to liquid nicotine that could increase import duties. Furthermore,

the New Categories supply chain includes the development of sensitive trade secrets jointly with external design partners, which carries the risk of exposure

of innovations to competitors.

Impact: Vulnerabilities in the New Categories supply chain may impact the Group’s ability to maintain supply and meet the current and future demand

requirements across the New Categories portfolio, potentially resulting in significant reputational harm and financial impact that may negatively affect the

Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans. Over-forecasting has led, and may

also in the future lead, to write-offs and negatively impact working capital. The design of New Categories devices may also prevent the scaling of

commercial manufacturing, which will either restrict supply or increase the costs of production.

Further, there may be loss of investors’ confidence in sustainability performance, including failure to deliver our corporate purpose of harm reduction.

In addition, changes in local legislation related to liquid nicotine import duties may increase New Categories production costs, which may increase End

Market pricing and reduce demand. Furthermore, the exposure of sensitive trade secrets can lead to competitive disadvantages and further negatively impact

the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

Risk: Failure of a financial counterparty

Description: The Group relies on transactions with a variety of financial counterparties to manage the Group’s business and financial risks. In the event that

any of these counterparties fails, payments due from such counterparties, such as under hedging or insurance contracts, may not be recovered. In addition,

failure of a transactional banking party may lead to the loss of cash balances and disruption to payment systems provided by such counterparty, resulting in

the inability of collecting revenue and settling payment obligations.

Impact: The inability to recover payments due from one or more failed financial counterparties or the loss of cash balances may cause significant financial

loss and have an adverse impact on the Group’s results of operations, financial condition and financial risk profile. In addition, the loss of cash balances or a

disruption to payment systems may cause disruption to the Group’s ongoing operations and ability to pay its creditors and suppliers.

Risk: Exposure to unavailability of, and price volatility in, raw materials and increased costs of employment

Description: The availability and price of various commodities required in the manufacture of the Group’s products fluctuate. Raw materials and other

inputs used in the Group’s business, such as wood pulp and energy, are commodities that are subject to price volatility caused by numerous factors, including

inflation, political influence, introduction of new or higher tariffs or trade embargos, market fluctuations and natural disasters.

Similarly, the Group is exposed to the risk of an increase above inflation in employment costs, including due to governmental action to introduce or increase

minimum wages. Employment and health care law changes and the increase in inflation may also increase the cost of provided health care and other

employment benefits expenses.

Impact: Restricted availability and price volatility of commodities may result in supply shortages and unexpected increases in costs for raw materials and

packaging for the Group’s products, which may affect the Group’s results of operations and financial condition.

The Group has experienced some of these effects in the last several years, including higher cost of direct materials due to energy scarcity, increase in

transportation rates and commodity prices, as well as increases in utility costs, all of which have led to increases in overall cost. While inflation also caused

an increase in employment costs, this did not have a material adverse effect to the Group's profitability. However, we cannot assure that this will not be

materially affecting the Group's profitability in the future.

The Group has not always been able to, and in the future may not be able to, increase prices to offset increased costs without suffering reduced sales volume

and revenue. In the absence of compensating for increased costs through pricing, significant increases in raw material, packaging and employment costs

above inflation will impact product margins, leading to lower profits and negatively affecting the Group’s results of operations and financial condition and

cause the Group to fail to deliver on its strategic growth plans.

Risk: Failure to retain key personnel or to attract and retain skilled talent

Description: The Group relies on a number of highly experienced employees with detailed knowledge of the tobacco and nicotine industry and other areas of

focus for the Group (including New Categories and Beyond Nicotine). Similarly, the Group is dependent on its ability to identify, attract, develop and retain

such qualified personnel in the future. The Group is also dependent on external hires to ensure it is equipped with the right new business-critical capabilities

and knowledge to accelerate transformation. BAT anticipates that this trend will continue and therefore the ability to continue to build awareness, increase

reach and ultimately attract the new target audience remains a primary focus.

There are shifts in the career development expectations of employees, from a traditional one company long tenure approach to a much shorter tenure focused

on critical experiences and challenges. Furthermore, broader economic and sustainability trends (e.g. Group delivery against sustainability-related ambitions,

volatility in remuneration outcomes linked to Group’s share price) may impact the Group’s ability to retain key employees and may increase competition for

highly talented employees. Whilst the Group is enhancing its effort on retaining critical capabilities and knowledge, building the right leadership behaviour

and organisational culture, and focusing on employee development and engagement, the retention risk of experienced employees remains an area requiring

management attention. Furthermore, if the Group were to fail to introduce appropriately leveraged and differentiated pay-for-performance for key employees,

this may exacerbate the risk of not retaining such key personnel and attracting appropriately skilled talent in the future. This may expose the Group to the risk

of not being able to conduct future succession planning successfully.


British American Tobacco p.l.c. Form 20-F 2025

Impact: If the Group is unable to retain its existing key employees, fails to attract and retain skilled talent in the future, critical positions may be left vacant,

resulting in a failure to retain and advance critical business knowledge required for its transformation, as well as adversely impacting the Group’s results of

operations, financial condition and achieving broader business objectives, such as its sustainability ambitions.

High voluntary employee turnover may also reduce organisational performance and productivity, leading to further adverse impact on the Group’s results of

operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

Risk: Disruption to the supply chain and distribution channels

Description: The Group has adopted an increasingly global approach to managing its supply chain, including distribution channels. Disruption to the Group's

supply chain may be caused by various factors, including, but not limited to, disruption to suppliers’ operations or to distribution channels, and the

deterioration in the financial condition of a trading partner. Such disruption may also be caused by a cyber events, global health crises, political tensions,

wars, strikes, riots, civil commotion, major fires, severe weather conditions or other natural disasters which affect manufacturing or other facilities of the

Group’s operating subsidiaries or those of their suppliers and distributors. We have experienced such disruptions in the past, including recently in Sudan and

Ukraine due to the ongoing conflicts there. In certain geographic areas where the Group operates, insurance coverage may not be obtainable on commercially

reasonable terms, if at all. Coverage may be subject to limitations, or the Group may be unable to recover damages from its insurers. The Group foresees a

heightened level of risk of disruption in our New Categories supply chain because it is multi-tiered and complex in sourcing and distribution.

Disruption may also be caused by the spread of infectious disease (such as the COVID-19 pandemic) or by a deterioration/shortage in labour or union

relations, disputes or work stoppages or other labour-related developments within the Group or its suppliers and distributors. The ongoing organisational

structure review and transition of key responsibilities to third party strategic partners also exposes BAT to new risk of disruption. In addition, the Group’s

operating subsidiaries may not be able to establish or maintain relationships on favourable commercial terms with their suppliers and distributors, or at all. In

some markets, distribution of the Group’s products occurs through third-party monopoly channels, often licensed by governments. The Group may be unable

to renew these third-party supplier and distribution agreements on satisfactory terms for many different reasons, including government regulations or

sustainability considerations. There are also some product categories for which the Group does not have surplus production capacity or where substitution

between different production plants is impractical and this may cause further disruption to our supply chain. Consolidation of global suppliers and certain

distributors that control large geographies may reduce the Group’s availability of alternatives and negatively impact the Group’s negotiating power with key

suppliers and distributors. These risks are particularly relevant in jurisdictions where the Group’s manufacturing facilities are more concentrated or for certain

product categories where production is more centralised.

Impact: Any disruption to the Group’s supply chain and distribution channels has from time to time had, and could have, an adverse effect on reputation, the

results of operations and financial conditions of the Group through failures to meet shipment demand, contract disputes, increased costs, loss of market share

and inability to reinvest into Smokeless products and support harm reduction agenda and cause the Group to fail to deliver on its strategic growth plans.

Risk: Failure to uphold the high standard of sustainability management, performance and reporting

Description: Stakeholder expectations of, and regulatory requirements for, the Group’s sustainability management, performance and reporting are

continually evolving. The Group is exposed to risks arising from failure to have the appropriate internal standards, strategic plans and governance,

compliance, monitoring and reporting mechanisms in place to ensure it can identify emerging issues, meet external expectations (including sustainability

targets) and comply with applicable requirements.

Impact: Failure to uphold high standards of sustainability management and performance or to provide transparent and consistent reporting, in line with

applicable requirements and broader stakeholders expectations, could significantly impact the Group’s reputation or compliance position, and reduce investor

confidence. Poor performance across any aspect of sustainability, such as a failure to sufficiently address climate change-related risks, expectations and

requirements, or human rights impacts across the Group’s own operations and supply chain, could result in reputational damage, increased costs and

regulatory sanction, litigation, difficulty in attracting and retaining talent, or decrease in consumer demand for our products.

Current or future allegations of greenwashing and healthwashing, as a result of failure to responsibly and transparently market our products and communicate

our sustainability achievements and position, could result in reputational damage, litigation and regulatory sanction. Please refer to note 31 in Part III - Item

18 Notes on the Accounts for details of such actions applicable to the Group.

Risk: Inability to obtain adequate supplies of tobacco leaf

Description: The Group purchases significant volumes of packed leaf each year. Tobacco leaf, as any other agricultural commodity, can be impacted by a

variety of external factors. Like any other agricultural supply chain, the tobacco leaf supply chain can be particularly vulnerable to a range of challenges,

including climate change, weather-related events, such as drought, floods and other natural disasters, increasing demand for land and natural resources, rural

poverty, social inequality, child labour and ageing farmer populations. Tobacco production in certain countries is also subject to a variety of controls,

including regulation affecting farming and production control programmes, and competition for land use from other agriculture commodities. Such controls

and competition can further constrain the production of tobacco leaf, raising prices and reducing supply.

The Group recognises the above and any combination of those, as risks to our tobacco leaf supply chain.

Impact: Restricted availability of tobacco leaf may prevent the Group from accessing sufficient tobacco leaf that meets its volume, quality and sustainability

requirements. This could lead to an impact on the quality of the Group's products to a level that may be perceptible by consumers and may impact the

Group's ability to deliver on consumer needs. The Group’s sustainability commitments may restrict the sources we can buy from, which would result in an

imbalance in supply and demand potentially causing incrementally higher tobacco prices. Higher tobacco leaf prices would result in increased raw material

costs and have an adverse effect on the Group's financial condition. The Group may also experience reputational damage from not adequately managing its

sustainability priorities like climate change, protection of natural resources, including forests, and human rights in our leaf supply chain, which may restrict

suppliers’ willingness to do business with us.

Risk: Exposure to product contamination

Description: The Group may experience product contamination, whether by accident or deliberate malicious intent, during supply chain or manufacturing

processes, or may otherwise fail to comply with the Group’s quality standards. The Group may also receive threats of malicious tampering.

Impact: Product contamination or threats of contamination may expose the Group to significant costs associated with recalling products from the market or

temporarily ceasing production. In addition, adult tobacco consumers may lose confidence in the specific brand affected by the contamination, resulting in

reputational damage and a loss of sales volume and market share. The Group could be subject to liability and costs associated with civil and criminal actions

as well as regulatory sanctions brought in connection with a contamination of the Group’s products. Each of these results may in turn have an adverse effect

on the Group’s results of operations, financial condition and reputation and cause the Group to fail to deliver on its strategic growth plans.

Risk: Failure to successfully design, implement and sustain an integrated operating model and future-fit organisation

Description: The Group is undertaking transformation initiatives to remain competitive and relevant in a rapidly evolving global environment. These

initiatives aim to simplify the organisation, use partners for outsourced services, enhance agility, and embed a future-fit operating model. The objective is to

improve profitability and productivity through standardisation of processes, centralised services, and technology-enabled efficiencies, while supporting

strategic priorities such as New Categories sustainable growth and Beyond Nicotine. Failure to effectively design, implement, and sustain these

organisational and operational changes, due to complexity, resource constraints, governance gaps, or resistance to change, could undermine the Group’s

ability to deliver its long-term strategy.


British American Tobacco p.l.c. Form 20-F 2025

Impact: Failure to deliver and embed these transformation initiatives could lead to increased costs, delayed benefit realisation, operational disruption, and

reduced organisational effectiveness. This may result in employee dissatisfaction, decreased trading performance, loss of institutional knowledge and reduced

market share. Inability to develop governance process models in line with the Group’s evolving business strategy may result in the failure to achieve

sustainable multi-category long term growth including capturing additional productivity gains and achieving sustainability goals which may in turn have an

adverse effect on the Group’s results of operations and financial condition.

Risk: Inability to transition to a future-fit ERP platform

Description: The Group’s core transactional system, TaO (central SAP ERP system), is transitioning to SAP S/4HANA, with the clear objective of

completing this modernization by the end of 2030. This initiative is structured as a phased roll-out, so that business operations remain resilient and future-

ready throughout the process. By leveraging SAP’s Fit-to-Standard approach, the Group aims to minimize customization and complexity, supporting a

seamless upgrade and alignment with the Group’s digital transformation goals. The transition is designed to deliver enhanced data analytics, streamlined

operations, and a scalable platform that meets evolving business needs, with the majority of Group entities scheduled to migrate ahead of 2030.

Impact: Failure to successfully evolve and transition to S/4HANA in a timely manner could result in increased operational costs, technical debt, and

challenges in maintaining compliance and supporting evolving business needs. Persistent delays may impact the Group’s ability to fully leverage new

capabilities, achieve real-time analytics, and deliver its strategic objectives, with potential consequences for financial performance and stakeholder

confidence. This may in turn have an adverse effect on the Group's results of operations and financial condition and cause the Group to underperform on the

delivery of its strategic growth plans.

Risk: Failure to manage the Group’s climate change-related risk

Description: The Group is exposed to direct and indirect adverse impacts associated with physical climate change-related risks, across its global operations

and supply chain. Climate change may cause acute physical risks (such as more frequent and severe weather events), or chronic risks (such as those related to

longer-term shifts in climate patterns and temperatures). These impacts could lead to reductions in the supply and quality of tobacco leaf and other physical

goods and cause transport and logistics disruptions in our supply chains.

The Group may also experience adverse impacts associated with transition climate change risks, associated with the move to a low carbon economy (such as

emissions-related regulations and additional taxes applicable to its operations and its supply chain, changing markets and emerging technologies).

As climate change policy, legislation and reporting requirements further evolve, companies need to effectively identify, assess, monitor and mitigate

associated risks. Failure to do so could lead to BAT scoring lower in sustainability ratings and indices used by financial sector in making investment

decisions. Conversely, environmental policy changes in particular jurisdictions could result in a negative perception of our management of climate risk.

As consumer and customer behaviours and expectations further evolve, the Group is exposed to the risk of failing to sufficiently adapt its product portfolio

and marketing strategy in response to stakeholders’ increasing sustainability expectations. Inadequate response to climate change considerations may result in

reduced demand for or rejection of the Group’s products, as well as reputational damage.

Impact: Disruption to the Group’s agricultural and/or non-agricultural supply chain or product distribution channels have had, and could have, an adverse

effect on its operations and financial condition through failures to meet product demand, contract disputes, increased costs, loss of market share and

interruption to the business and supply chain. Extreme temperatures and severe weather events could be harmful for employees, creating health and safety

risks, and affect our factories’ productivity.

In recent periods, the Group experienced impacts from severe weather events. In 2023, a tornado in the U.S. caused the destruction of a stock of tobacco

leaves in a warehouse with a final loss of £8 million. The 2024 flood in the UAE caused an £11 million loss in machinery.

Consumer and customer expectations may influence their purchasing decisions and lead them to seek alternative product offerings. As consumer behaviours

evolve, the Group may fail to sufficiently adapt its product portfolio and market strategy in response to increasing expectations on climate change

considerations, potentially resulting in reduced demand for, or rejection of the Group’s products.

Besides increased costs associated with climate change regulation and additional reporting obligations, non-compliance with climate change legislation

(including reporting requirements) could reduce BAT’s ability to attract investors, result in reputational damage and potentially regulatory sanctions. Poor

results in sustainability ratings and indices used by the financial sector may impact investors’ decisions, and thereby increase the cost of capital or negatively

impact share price.

Failure to meet current and future employees’ expectations concerning the Group’s actions to mitigate and adapt to climate change may negatively impact the

retention and attraction of high-quality employees.

Risk: Failure to manage the Group’s circularity risk

Description: The Group is exposed to risks associated with the move towards an increasingly circular business model, driven by internal and external

factors. These include product-related regulatory risks, such as product design/disassembly requirements, market access, loss of market share, sourcing risk

and Extended Producer Responsibility (EPR) requirements.

As circular economy-related policy, legislation and reporting requirements further evolve, companies need to effectively identify, assess, monitor and

mitigate associated risks. Failure to do so could lead to BAT scoring lower in sustainability ratings and indices used by the financial sector in making

investment decisions.

As consumer and customer behaviours and expectations further evolve, the Group is exposed to the risk of failing to sufficiently adapt its product portfolio

and marketing strategy in response to stakeholders’ increasing sustainability expectations. Inadequate response to product circularity considerations may

result in reduced demand for or rejection of the Group’s products, as well as reputational damage.

Impact: Consumer and customer expectations may influence their purchasing decisions and lead them to seek alternative product offerings. An inability to

develop and commercialise products, packaging or value chain sustainability innovations in line with demand or less well than competitors (including

failures to adequately predict changes in consumer and societal behaviour and expectations and reflect them in the product portfolio) could lead to missed

commercial opportunities, under- or over-supply, loss of competitive advantage, loss of market share, unrecoverable costs and the erosion of the Group’s

consumer base or brand equity. Product design decisions and the efficacy of Take-Back and consumer awareness schemes could have an impact on the

Group’s EPR risks and obligations.

Non-compliance with product circularity legislation (including reporting requirements) could reduce BAT’s ability to attract investors, result in reputational

damage, potentially regulatory sanctions and loss of market access. Poor results in sustainability ratings and indices used by the financial sector may impact

their investment decisions, and thereby increase the cost of capital or negatively impact share price.

Failure to meet current and future employees’ expectations concerning the Group’s actions to address product circularity matters may negatively impact the

retention and/or attraction of high-quality employees.


British American Tobacco p.l.c. Form 20-F 2025

Risk: Impact of a pandemic or other global health crises on the performance of the Group

Description: The Group continues to closely monitor the potential for disruption arising from pandemics, the most recent having been the coronavirus

(COVID-19) pandemic, or other global health crises. Consequences may include significant logistical challenges for employees and their ability to perform

their duties, potential loss of life or significant level of illness in the workforce, inability to deliver revenue stream and market share targets, impacting profits

and cash flows, and disruption to the supply chain and third parties being unable to deliver contractual goods and services. In addition, some countries in

which the Group operates have adopted in the past, and may adopt in the future, regulations restricting the ability to manufacture, distribute, market and sell

products during such crises.

Impact: The influence of COVID-19 was at that time, and the influence of future variants, other pandemics or other global health crises on the Group's

operations and financial condition is difficult to predict given the wide range of determining factors, not least the nature of the pandemic/virus, its speed of

infection, geographical scope, and duration.

The impact of a pandemic or other global health crisis on global economic activity and the nature and severity of measures adopted by governments are

numerous. The impact on the Group includes:

–Reductions or volatility in consumer demand for one or more of our products due to illness, retail closures, quarantine or other travel restrictions, health

consciousness (quitting use of tobacco and nicotine products), government restrictions, the deterioration of socio-economic conditions, economic hardship

and customer-downtrading (switching to a cheaper brand), which may impact the Group’s market share.

–Disruptions to the Group’s operations, such as its supply chain, or manufacturing or distribution capabilities, which may result in increased costs due to the

need for more complex supply chain arrangements, to expand existing facilities or to maintain inefficient facilities, a reduction of the Group’s sales

volumes or an increase in bad debts from customers.

–Disruption to the Group’s operations resulting from a significant number of the Group’s employees, including employees performing key functions,

working remotely for extended periods of time or becoming ill, which may reduce the employees’ efficiency and productivity and cause product

development delays, hamper new product innovation and have other adverse effects on the Group’s business. This also applies to activities that are

performed by the employees of our outsourced service providers.

–Significant volatility in financial markets (including exchange rate volatility) and measures adopted by governments and central banks that further restrict

liquidity, which may limit the Group’s access to funds, lead to shortages of cash and cash equivalents needed to operate the Group’s business, and impact

the Group’s ability to refinance its existing debt.

–Regulations restricting the ability to manufacture, distribute, market and sell products, and potentially increasing illicit trade.

–Governments seeking to increase revenues through increased corporate taxes and excise in combustible and/or New Category products, increasing the cost

and prices of our products – which could reduce volumes and margins, and/or increase illicit trade.

While some negative effects caused by COVID-19 materialised in several End Markets during the pandemic years, including reduced demand due to

temporary smoking bans, lockdown restrictions, increased border checks and change in consumer behaviours, none of these had a material effect on the

Group’s overall profitability. However, all of the above factors may have material adverse effects on the Group’s results of operations and financial condition

and cause the Group to fail to deliver on its strategic growth plans. The difficulty in predicting future pandemics exacerbates this risk.

Risk: Exposure to sustained and organised reputational activism and public campaigns

Description: As a global tobacco and nicotine company, the Group is exposed to the risk of coordinated activism and public campaigns, both online and

offline, by non-governmental organisations (NGOs), advocacy groups, consumers, shareholders, and other groups. These campaigns may target the Group’s

operations, product portfolio (including New Categories), supply chain, or sustainability positioning, and can take the form of social media activism, protests,

adverse media coverage, or shareholder resolutions.

Impact: Reputational activism has the potential to influence investor confidence and share price, trigger regulatory scrutiny or legal challenges, disrupt

operations or product distribution, and harm the Group’s employer brand and ability to attract talent. These outcomes could have an adverse effect on the

Group’s results of operations and financial condition and cause the Group to underperform on the delivery of its strategic growth plans. The evolving nature

and intensity of activism, driven by shifting societal expectations and increased sustainability scrutiny, could damage the Group’s reputation, limit

stakeholder trust, and disrupt business operations.

Legal, Regulatory and Compliance Risks

Risk: Exposure to, the enactment of, proposals for, or rumours of regulation that significantly impairs the Group’s ability to communicate,

differentiate, market or launch its products and/or the lack of appropriate regulation for New Categories

Description: The tobacco and nicotine industry is one of the most highly regulated in the world, with manufacturers required to comply with a variety of

different regulatory regimes across the globe. Most of these regulations, whether already in place or proposed, can be categorised as follows:

–Category bans: Prohibitions on the sale, import, possession, or use of specific products;

–Product Regulations: On use of ingredients, product design and attributes (e.g. nicotine limits or flavours), as well as product safety standards and product

disclosure requirements;

–Packaging and labelling: Requirements for health warnings and other government-mandated messages to be printed on packaging, as well as requirements

around pack shape, size, colour and weight or plain packaging requirements;

–Advertising and sponsorship: Partial or total bans on advertising, promotions and sponsorships for products, as well as brand stretching (the association

between a tobacco and a non-tobacco product by using the same tobacco branding on the non-tobacco product);

–Retail: Restrictions on the number of retailers and/or where tobacco and non-tobacco nicotine products can be sold, such as the types of outlets (e.g.

supermarkets, online, etc.), and restrictions on how they can be sold (e.g. above-the-counter versus below);

–Place: Bans on smoking or vaping in certain places;

–Price: Regulations which affect prices of tobacco and non-tobacco nicotine products, such as excise taxes and minimum pricing; and

–Responsibility: Obligations under Extended Producer Responsibility schemes (e.g. cigarette waste clean-up) and measures to combat illicit trade.


British American Tobacco p.l.c. Form 20-F 2025

The Group recognises and supports the objectives of governments and policymakers in reducing smoking rates and the associated health impacts, as well as

the role of regulation in achieving these goals. Accordingly, we endorse tobacco and nicotine regulations that are grounded in robust evidence, tailored to

local circumstances, effectively achieve intended policy objectives, and avoid unintended consequences, such as the expansion of illegal markets. However,

there is a risk that in some areas, the evolving regulatory environment may not follow these principles due to several key factors:

–Irresponsible behaviour or marketing practices by competitors, particularly in markets where appropriate regulation is lacking, or actions that violate

existing regulations, may cause reputational harm to the industry and result in disproportionate regulation or bans.

–Pressure on governments from international organisations, agencies, tobacco control NGOs, influential national regulators, and the private sector—

including philanthropists, pharmaceutical companies, security technology firms, and social justice groups—may drive the pursuit of regulatory policies

intended to harm the tobacco and nicotine industry.

–Regulators may also have a limited understanding of New Category products and their potential role in tobacco harm reduction. Concerns about underage

access and the environmental impact of these products can further increase the risk of inappropriate regulation.

From a compliance perspective, the Group may fail to implement appropriate control measures or maintain adequate standards of compliance with regulatory

requirements or Group-internal policies. For example, in 2024, we identified two incidents of non-compliance with local marketing regulations resulting in a

fine or penalty.

Insufficient information, instruction, and training in relevant areas—combined with limited awareness or understanding of applicable regulations, including

those relating not only to tobacco and nicotine but also to environmental or other technical standards—may heighten these risks. In addition, failure to

monitor, assess, and implement new or updated regulatory requirements could further exacerbate compliance challenges.

Beyond legal requirements, the Group also maintains several global policies that may impose higher obligations or standards than those mandated by local

regulatory regimes, such as commitments under the Group’s Responsible Marketing Framework.

Combustible Products

With respect to combustible tobacco products, many of the measures outlined in the World Health Organization’s Framework Convention on Tobacco

Control (FCTC) have been, or are in the process of being, implemented through national legislation across numerous markets in which the Group operates.

This includes the adoption of certain non-legally binding recommendations, such as plain packaging requirements and restrictions or bans on characterising

flavours.

The Eleventh Session of the Conference of the Parties to the WHO FCTC (COP11) took place in November 2025. Parties adopted a decision inviting

consideration of forward-looking measures beyond the current FCTC; however references to an endgame strategy and a ban on filters were removed from the

final text. Parties were also encouraged to strengthen environment-related measures covering tobacco and nicotine product components, implement “effective

tobacco tax policies” and consider voluntary increases in international financial support for FCTC implementation.

Parties were unable to reach consensus on several key areas, including Articles 9 and 10 (regulation of product contents and disclosure), harm-reduction

policy, and a Brazil-led proposal to extend the FCTC’s scope to pouches and vapour products. These negotiations have been deferred until COP12.

Ahead of COP12, which is scheduled to take place in Armenia in 2027, the Secretariat has been tasked with developing a self-assessment tool for Parties,

preparing a report on liability-related policy options, and assessing the funding gap for FCTC implementation. Several Parties emphasised regulatory

sovereignty and the importance of continued dialogue on harm-reduction approaches and the role of new products.

In the U.S., the Food and Drug Administration (FDA) announced its intention to ban menthol as a characterising flavour in cigarettes. The Biden

Administration’s Fall 2023 Unified Agenda anticipated issuance in March 2024 of a final rule to ban menthol as a characterising flavour in cigarettes;

however, in April 2024 the Biden Administration indicated that a final rule would take significantly more time. The current Trump Administration has

withdrawn the rule from the Office of Management and Budget and it is currently held pending the new administration’s reconsideration of regulations

advanced by the Biden Administration. On 15 January 2025, in the final days of the outgoing Biden Administration, the FDA issued a proposed product

standard whereby the agency would limit nicotine level in cigarettes following a two-year effective date from publication of any final rule. Although the

Spring 2025 Unified Agenda from 4 September 2025 no longer lists the proposed rule on the Long-Term Actions list and instead designates it as

‘withdrawn’, there can be no assurance that this or a future Administration may re-introduce a rule to ban menthol as a characterising flavour in cigarettes.

Traditional leaders in tobacco control, such as the United Kingdom, continue to advance stringent regulatory measures. The UK’s Tobacco and Vapes Bill—

where the legislative process is still ongoing—includes provisions for a generational sales ban (GSB), which would prohibit the sale of tobacco products to

individuals born after a specified year. This concept was first introduced in New Zealand but was subsequently repealed before it took effect. The Maldives

has enacted similar legislation, while the Turkish, Australian, Irish and Norwegian governments are among those reported to be evaluating comparable

measures to various degrees.

Preparations for a revised European Union (TPD) are also progressing. Should the process for a third iteration (TPD3) be initiated, it is anticipated that

discussions may encompass additional measures such as the introduction of plain packaging requirements for combustible tobacco products, among others.

Smokeless Products (including New Categories)

Transformative regulations, including forward-thinking policies for Smokeless products, are essential to Build a Smokeless World and deliver governments’

smoke-free ambitions.

The Group believes that the development of regulations for Smokeless products should follow the below principles:

–Be based on science and evidence and proportionate to the product's risks compared with those of combustible tobacco;

–Facilitate adult awareness of smokeless alternatives and allowing adult-only access;

–Ensure product quality, environmental sustainability, and consumer relevance;

–Enable effective enforcement.

From a global perspective, regulation continues to evolve, and public policy approaches vary significantly across jurisdictions. While some regulators have

adopted measures consistent with the principles previously described, others are considering applying the same regulatory frameworks used for combustible

tobacco products to Smokeless alternatives. A number of countries, including the Netherlands, Belgium, France and Germany, have implemented or have

passed regulations to ban Modern Oral products, either through provisions banning their sale outright, or via classification as foodstuffs, meaning their sale is

de facto prohibited. In some European countries, such as Spain and Luxembourg, authorities have sought to restrict the sale of nicotine pouches by setting

maximum nicotine limits at levels so low that the products become unsatisfying for consumers. It is considered likely that tobacco-free nicotine pouches will

be regulated at a European level as part of the next revision of the Tobacco Products Directive. It is also possible that Herbal Products for Heating could be

addressed in the TPD.

The primary drivers behind many recent regulatory initiatives targeting New Category products remain scepticism about the reduced-risk potential of

smokeless products, the prevention of underage appeal and nicotine addiction and the mitigation of environmental impacts. These concerns are frequently

cited in as reasons for legislative proposals to restrict or prohibit flavours in vapour products and, more recently, to ban disposable devices.

Regarding the U.S., and considering the risks associated with the FDA process, on 12 October 2021, the FDA issued its first Marketing Granted Orders

(MGOs) for tobacco-flavoured Vuse Solo and Vuse Solo power units. On the same date, Reynolds American companies received Marketing Denial Orders


British American Tobacco p.l.c. Form 20-F 2025

(MDOs) for the flavoured (non-menthol and non-tobacco) Vuse Solo products. R. J. Reynolds Vapour Company has since secured a court-ordered stay of

these MDOs, which remains in place. While a series of MGOs for tobacco-flavoured products have been granted, including recent MGOs for Vuse Alto

“Golden” and “Rich” tobacco-flavoured Vapour products, MDOs have also been issued (and may be issued in the future) for non-tobacco flavoured

products, including menthol flavoured Vuse Alto. This reflects the risks associated with products that contain flavours outside of tobacco, which are currently

subject to court challenges. As it pertains to menthol, on 20 August 2025, the Fifth Circuit granted a joint motion to hold the case in abeyance for nine

months to allow the FDA to review a new Vuse Alto menthol PMTA, which means the stay of the MDO remaining in place for at least nine months.

However, there can be no assurance that we will ultimately be successful and receive an MGO.

In the specific case of Modern Oral products, the FDA announced the launch of a pilot programme to increase efficiency and streamline the PMTA review

process for Modern Oral products, which includes a specific subset of pending product applications from Reynolds American companies and other

manufacturers. The FDA states the pilot will feature real-time communication between FDA and applicants with the goal of providing more frequent

feedback and shorter review timeframes. However, there can be no assurance that our PMTA applications will be granted.

Finally, beyond the differing market approaches to the regulation of New Category products, the lack of harmonisation across jurisdictions presents an

additional challenge for the sector. Greater alignment in regulatory standards and the establishment of a consistent framework across markets would be

beneficial from a business perspective, supporting a more predictable, transparent, and efficient operating environment.

Beyond Nicotine

As the Group also looks to Beyond Nicotine products including CBD and cannabis (in connection with its investments in Organigram, Sanity Group and

Charlotte's Web), it may be subject to additional regulation and these products might not be scalable on a global basis given varying degree of regulation.

Please refer to the discussion of tobacco and nicotine regulatory regimes under which the Group’s businesses operate set out from page 23.

Impact: Extreme regulatory measures, impacting one or more Smokeless and/or combustible tobacco and/or Beyond Nicotine products, could adversely

affect volume, revenue and profits, as a result of restrictions on the Group’s ability to sell and differentiate its products or brands, leverage price, innovate,

make scientific claims, and make new market entries. In addition, new regulations and lack of standards harmonisation among markets could lead to greater

complexity, as well as higher production and compliance costs.

As an example, through the acquisition of Reynolds American Inc., the Group acquired the Newport brand, the leading menthol cigarette brand in the U.S.,

the Group’s largest single market. The sales of Newport, together with the other menthol brands of the Group’s operating subsidiaries, represent a significant

portion of the Group’s total net sales. Any action by the FDA or any other governmental authority, including states and localities, banning or materially

restricting the use of menthol in tobacco products (such as the previously proposed FDA ban on menthol cigarettes) could have a significant negative impact

on sales volumes which would, in turn, have an adverse effect on the results of operations and financial position of the Group.

Disproportionate regulation of Smokeless products could significantly hinder our ability to deliver on our mission of Building a Smokeless World as part of

our transformative journey. Full category bans or regulations that jeopardise consumer acceptance would have a significant impact on the Group's strategy for

Smokeless products. These measures could both feed the illegal market (such as in the case of the increase in illicit single-use vapour devices in the U.S.

market) and undermine our ability to compete and develop our products profitably while encouraging consumers to switch to alternative products. As BAT

always seeks to comply with regulations, such disproportionate regulation that lacks robust enforcement measures reduces BAT’s ability to compete on equal

terms with less responsible industry actors, who disregard or deliberately do not comply with local law and regulations. For example, California’s 2022

flavour ban on all tobacco and nicotine products disrupted the market along with discouraging adult combustible consumers from switching to reduced-risk*†

New Categories.

There is a risk that environmental and sustainability regulations, such as EPR schemes for cigarette manufacturers, will continue to impact New Category

products, especially if the EU EPR schemes for New Category products are picked up by more countries outside of EU. As a reflection of the real or

perceived impact of stricter regulation of our business, the Group's share price has also experienced, and could in the future experience, shocks upon the

announcement, expectation or enactment of restrictive regulation. All these effects may have an adverse effect on the Group's results of operations and

financial conditions or share price and cause the Group to fail to deliver on its strategic growth plans.

Disproportionate regulation of our combustible products not only impacts our ability to execute the Group strategy for these products, but also influences

investor sentiment in the sector and the residual value of the Company. Emerging issues such as filter bans, mandatory limits on nicotine products, and

generational sales bans can significantly affect both our current business operations and future expectations.

Finally, and considering the significant number of regulations that may apply to the Group’s businesses across the world, the Group is and may in the future

be subject to claims for breach of such regulations. Government authorities (such as the FDA), organisations or even individuals may allege that our

marketing activities do not comply with the relevant laws and regulations. As such, the Group could be subject to liability and costs associated with civil and

criminal actions as well as regulatory sanctions, fines and penalties brought in connection with these allegations. Even when proven untrue, there are often

financial costs and reputational impacts in defending against such claims and allegations, including potential adverse impact on the treatment by the FDA of

the Group ‘s PMTAs in the U.S. Each of these results may in turn have an adverse effect on the Group’s results of operations and financial condition and

cause the Group to fail to deliver on its strategic growth plans.

Risk: Adverse implications of EU legislation on single-use plastics that will result in on-pack environmental warnings and financial implications

relating to the Extended Producer Responsibility (EPR)

Description: The EU adopted a Directive on single-use plastics in July 2019 (the SUP Directive) which, among other products, targets tobacco products with

filters containing plastic. The Cellulose Acetate in our filters is defined as a single-use plastic under the Directive and, as such, the Directive will have an

impact on the Group’s cigarettes, filters for other tobacco products and consumables for THPs and Heated Herbal Products (HHPs) (the latter, although not a

tobacco product, has the same filter as THP, thus the Group’s decision is to include it in the EPR scope).

Under the SUP Directive, the Group will be subject to (and in some cases already is subject to) EPR schemes, requiring the Group to cover the costs of

collecting, transporting, treating and cleaning-up of filters containing plastic, data gathering and reporting. The SUP Directive also imposes on tobacco

manufacturers the obligation to finance consumer awareness campaigns and to place environmental markings on packs of products with filters containing

plastic.


British American Tobacco p.l.c. Form 20-F 2025

Member States had to transpose the SUP Directive into national law by 3 July 2021, with an implementation deadline of 5 January 2023 for EPR schemes. In

practice, some Member States are still late on transposition and implementation, with the practical consequence that EPR schemes will go live with several

months delays in some Member States. The European Commission was also late in its issuance of guidelines on the criteria for the costs of cleaning up litter,

which should have been issued prior to the anticipated implementation deadline for EPR schemes and in fact were only published in October 2025. This

introduced further difficulties and uncertainty in the design and setting-up of EPR schemes. When transposing the SUP Directive into national law, Member

States could decide to expand the scope of EPR systems under their respective national laws, which may expose the Group to additional regulations and

financial obligations. This is the case in France, where EPR implementation has already occurred with an expansion of the scope to include non-plastic filters

for RYO products. Proposed regulations are still being discussed in some countries, i.e. in Belgium, the Netherlands, and Romania. It is worth noting that

although the current SUP Directive has not yet been fully transposed, it is undergoing an evaluation and public consultation which was launched in Q4 2025.

This process could ultimately lead to a revision of the directive, adding another layer of uncertainty and potential financial implications. The European

Commission has announced that it will consider options for binding measures to reduce filters and seems to be seeking coherence between SUP Directive

and FCTC.

It is noted that there is a growing level of scrutiny on the use of single-use plastic across the world and a number of other markets in which the Group

operates are considering ways to restrict (or ban) the use of filters made of plastic and/or introduce EPR schemes covering other plastic elements in our

products beyond filters for traditional products and/or New Categories products.

Impact: The financial implications of existing and future EPR schemes will increase administrative burdens and operating costs and may have an adverse

effect on the Group’s results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans. Failure to deliver

appropriate EPR schemes may lead to imposition of the schemes by the local authorities at a higher cost to the Group, adversely impacting the Group’s

results of operations, financial condition and reputation.

Risk: Exposure to litigation, regulatory action or criminal investigations on tobacco, nicotine, New Categories and other issues

Description: The Group is involved in litigation related to its tobacco and nicotine products, including legal, regulatory and patent actions, proceedings and

claims, brought against it in a number of jurisdictions. Claims brought against the Group may be based on personal injury (both individual claims and class

actions), economic loss arising from the treatment of smoking and health-related diseases (such as medical recoupment claims brought by local

governments), patent infringement (please refer to the risk factor under “Product pipeline, commercialisation and Intellectual Property risks, Exposure to

risks associated with intellectual property rights, including the failure to identify, protect and prevent infringement of the Group’s intellectual property rights

and potential infringement of, or the failure to retain licences to use, third-party intellectual property rights” below), negligence, strict tort liability, design

defect, failure to warn, fraud, misrepresentation, deceptive/unfair trade practices, conspiracy, medical monitoring, securities law violations and violations of

antitrust/racketeering laws. Sustainability-related litigation and regulatory action may also be brought against the Group.

Certain actions, such as those in the U.S. or the recently resolved proceedings in Canada, involve claims in the tens or hundreds of billions in sterling. The

Group is also involved in proceedings that are not directly related to its tobacco and nicotine products, including proceedings based on environmental

pollution claims.

Additional legal and regulatory actions and investigations, proceedings and claims may be brought against the Group in the future. The Group investigates,

and becomes aware of governmental authorities’ investigations into, allegations of misconduct, including alleged breaches of sanctions and allegations of

corruption, at Group companies. Some of these allegations are currently being investigated. The Group cooperates with the authorities, where appropriate.

There are instances where the Group investigates or where Group companies are cooperating with relevant national competition authorities in relation to

competition law investigations and/or where the Group engages in legal proceedings at the appellate level. In addition, the Group is, and may in the future be,

subject to investigations or legal proceedings in relation to, among other things, its marketing, promotion or distribution activities in respect of its products.

As such, the Group or Group companies, could be subject to liability and costs associated with any damages, fines, or penalties brought in connection with

these investigations or legal proceedings.

Impact: The Group’s consolidated results of operations and financial position could be materially affected by any unfavourable outcome of certain pending

or future litigation. In addition, an injunction arising from certain litigation outcomes may restrict the Group’s ability to sell specific products and fail to

deliver on its strategic growth plans. The Group could be exposed to substantial liability, which may take the form of ongoing payments, such as is the case

with the State Settlement Agreements in the U.S. and the Approved Plans in Canada described below that require substantial ongoing payments by Group

subsidiary, RJRT. Whether successful or not, the costs of the Group’s involvement in litigation could materially increase due to costs associated with

bringing proceedings and defending claims, which may also cause operational and strategic disruption by diverting management time away from business

matters. Liabilities and costs in connection with litigation could result in bankruptcy of one or more Group entities. For example, following a judgement in

Canada, certain of the Group's Canadian subsidiaries filed for protection under the Companies' Creditors Arrangement Act (CCAA). Although the Group's

relevant Canadian subsidiaries emerged from CCAA, subject to the Approved Plans, there can be no assurance that in the case of future judgments or

settlements of litigation the Group or Group entities will be able to emerge from such proceedings outside of bankruptcy. Moreover, the Approved Plans

require the Group’s relevant Canadian subsidiaries to make substantial ongoing payments to the former plaintiffs. Any negative publicity resulting from these

claims may also adversely affect the Group’s reputation or share price. Please refer to notes 24 and 31 in Part III - Item 18 Notes on the Accounts for details

of contingent liabilities respectively provisions applicable to the Group.

Risk: Significant and/or unexpected increases or structural changes in tobacco and nicotine-related taxes

Description: Tobacco and nicotine products are subject to high levels of taxation, including excise taxes, sales taxes, import duties and levies in most

markets in which the Group operates. In many of these markets, taxes are generally increasing, but the rate of increase varies between markets and between

different types of tobacco and nicotine products. Increases in, or the introduction of new, tobacco and nicotine-related taxes may be caused by a number of

factors, including fiscal pressures, health policy objectives and increased lobbying pressure from anti-tobacco advocates.

With respect to New Categories, although a common framework for regulation and taxation has yet to emerge, the manufacture, sale, packaging and

advertising of such products are increasingly being regulated and taxed.

The EU Tobacco Excise Directive is in the process of being revised. However, there is no set timetable. The EU Commission shared its proposal in July

2025. It will not, however, be agreed by the Member States and enter into force until 2028 or later.

In certain markets, specific tax measures have had a substantial impact on industry dynamics, for example, the significant excise increase and change to the

minimum retail price framework implemented in Bangladesh in January 2025.

Impact: Significant or unexpected increases in, or the introduction of new, tobacco-related taxes or minimum retail selling prices, changes in relative tax

rates for different tobacco and nicotine products or adjustments to excise have in the past resulted, and may in the future result, in the need for the Group to

absorb such tax increases due to limits in its ability to increase prices, an alteration in the sales mix in favour of value-for-money brands or products, or

growth in illicit trade, each of which could impact pricing, sales volume and profit for the Group’s products. Significant or unexpected increases of tobacco-

related taxes could also impact the Group's ability to invest in, develop, commercialise and deliver New Category products, and to deliver the corporate

purpose of harm reduction.


British American Tobacco p.l.c. Form 20-F 2025

Risk: Failure to comply with health and safety and environmental laws

Description: The Group is subject to a variety of laws, regulations and operational standards relating to health and safety and the environment.

The Group may fail to assess certain risks and implement the right level of control measures or to maintain adequate standards of health and safety or

environmental compliance, which could cause injury, ill health, disability or loss of life to employees, contractors or members of the public, or harm to the

natural environment and local communities in which the Group operates. As a result of the outcomes of the COP26, further future regulation is anticipated as

governments look to meet their climate change ambitions.

Insufficient information, instruction and training in the relevant areas and a lack of knowledge of the existence and/or requirements of relevant regulations, or

a failure to monitor, assess and implement the requirements of new or modified legislation, may increase these risks.

Impact: Any failure by the Group to comply with applicable health and safety or environmental laws, or the exposure to the consequences of a perceived

failure, could result in business disruption, reputational damage, difficulties in recruiting and retaining staff, increased insurance costs, consequential losses,

the obligation to install or upgrade costly pollution control equipment, loss of value of the Group’s assets, remedial costs and damages, fines and penalties as

well as civil or criminal liability. Each of these circumstances could in turn adversely impact the Group’s results of operations and financial condition and

cause the Group to fail to deliver on its strategic growth plans.

Risk: Exposure to unfavourable tax rulings

Description: The Group is subject to tax laws in a variety of jurisdictions. The Group‘s interpretation and application of the tax laws could differ from those

of the relevant tax authority, which may subject the Group to claims for breach of such laws, including for late or incorrect filings or for misinterpretation of

rules. Tax authorities in a variety of jurisdictions, such as the Netherlands and Brazil, have assessed, and may in the future assess, the Group for historical tax

claims, including interest and penalties, arising from disputed areas of tax law. The Group is currently party to tax disputes in a number of jurisdictions, some

of which involve claims for amounts in the hundreds of millions in sterling. Please refer to note 31 in Part III - Item 18 Notes on the Accounts for details of

contingent liabilities applicable to the Group.

Impact: The Group’s failure to comply with the relevant tax authority’s interpretation and application of the tax laws could result in significant financial and

legal penalties, including the payment of additional taxes, fines and interest in the event of an unfavourable ruling by a tax authority in a disputed area, as

well as the payment of dispute costs, or in connection with settlements of such disputes. Disruption to the business could occur as a result of management’s

time being diverted away from business matters. In certain cases, unfavourable outcomes may also lead to regulatory actions, such as license withdrawals,

which could disrupt production or distribution activities. Each of these results could negatively affect the Group’s reputation, results of operations and

financial condition, and cause the Group to fail to deliver on its strategic growth plans.

Risk: Exposure to potential liability under competition or antitrust laws

Description: According to the Group’s internal estimates, the Group is a leader by volume and/or value in certain categories in a number of countries in

which it operates and/or is one of a small number of tobacco and/or New Categories companies in certain other categories in which it operates. The Group

has had antitrust infringement decisions imposed against it in the past and is subject to ongoing investigations (please refer to note 31 in Part III - Item 18

Notes on the Accounts for details of contingent liabilities applicable to the Group). The Group may be subject to investigation, inquiry and/or litigation for

alleged abuse of its position in categories in which it has significant presence, alleged collusion/anti-competitive arrangements with other market participants,

and/or for other alleged competition law infringements and/or market features. Competition/antitrust laws continue to evolve globally with increasingly strict

enforcement.

Impact: Investigations (and/or litigation) for alleged violation of competition or antitrust laws, and any adverse decision as a result of such investigations

and/or litigation, may result in significant legal liability, fines, penalties, repayment orders and/or damages actions; criminal sanctions against the Group, its

officers and employees; increased costs, prohibitions on conduct of the Group’s business; forced changes in business practices, forced divestment of brands

and businesses (or parts of businesses) to competitors or other buyers; director disqualifications; commercial agreements being held void; and operational and

strategic disruption (including by diverting management time away from business matters). The Group may face increased public scrutiny and the

investigation or imposition of sanctions by antitrust regulation agencies and/or courts for violations of competition regimes which may subject the Group to

reputational damage and loss of goodwill, including negative perceptions of the Group’s governance and our sustainability credentials.

The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial condition and cause the

Group to fail to deliver on its strategic growth plans.

Risk: Failure to establish and maintain adequate controls and procedures to comply with applicable securities, corporate governance and

compliance regulations

Description: The Group’s operations are subject to a range of rules and regulations around the world. These include U.S. securities, corporate governance

and compliance laws and regulations, such as the Sarbanes-Oxley Act of 2002 and the U.S. Foreign Corrupt Practices Act of 1977, and expanding

sustainability reporting and disclosure requirements which apply to the Group’s worldwide activities. While the Group continuously seeks to improve its

systems of internal controls and to remedy any weaknesses identified, there can be no assurance that the policies and procedures will be followed at all times

or effectively detect and prevent violations of applicable laws. In addition, the Group is subject to increasingly stringent reporting obligations under UK

corporate reporting regulations.

Impact: The increased scope and complexity of applicable regulations to which the Group is subject may lead to higher costs for compliance. Failure to

comply with laws and regulations may result in significant legal liability, fines, penalties, class action suits and/or damages actions, criminal sanctions against

the Group, its officers and employees, and damage to the Group’s reputation. Non-compliance with such regulations could also lead to a loss of the Group’s

listing on one or more stock exchanges or a loss of investor confidence with a subsequent reduction in share price.

Risk: Lack of external recognition and acceptance of the foundational science and inability to effectively communicate to stakeholders about the

potential health impact of our Smokeless products

Description: Scientific evidence to support the harm reduction potential of Smokeless products is essential for demonstrating and communicating the risk

reduction potential of these products for adult smokers. BAT conducts rigorous science to demonstrate the potential risk reduction when smokers switch

completely to Smokeless products, and in the longer-term, epidemiological data will be required to demonstrate the health impact at population levels.

Consumer expectations and the rapid pace of innovation necessitate the evolution of the product portfolio, which requires the Group to regularly re-assess

and update the associated scientific evidence base.

Long-term epidemiological data requires decades to acquire. Therefore, the scientific data available today is by necessity shorter-term data that provides a

strong indication of the reduced-risk potential of Smokeless products relative to cigarettes. In terms of the wider Tobacco Harm Reduction strategy, there is a

risk that the long-term health impact of Smokeless products is not fully understood at this time. There is also a risk of failure to communicate the scientific

findings in a timely or effective manner. Furthermore, there are challenges on the choice of standards, controls and/or experimental design and methodology

used for demonstrating the robustness of scientific research, together with regulation limiting risk communication to consumers.

Impact: Inability to produce robust and externally-recognised scientific evidence to fully demonstrate and communicate the Tobacco Harm Reduction

abilities of Smokeless products in a timely manner may lead to greater regulatory restrictions or outright bans, market share reduction, fines and penalties,

reputational damage, and inability to sustain our quality growth and sustainability strategy. These potential impacts could cause the Group to fail to deliver on

its strategic growth plans and objectives.


British American Tobacco p.l.c. Form 20-F 2025

Risk: Insufficient product stewardship and failure to comply with product regulations

Description: The Group is subject to risks of safety incidents in pre-market testing or in market due to, for example, a lack of due caution and appropriate

response paid to pre-market product data, or toxicology information, inaccurate and unreliable information from suppliers and/or compromise of data or other

information through cybersecurity attacks.

The interpretation and application of regulations concerning the Group’s products, such as the Tobacco and Related Products Directive (TPD2), may be

subject to debate and uncertainty. This includes uncertainty over product classifications and restrictions on advertising. In particular, with respect to the

developing category of New Categories, which has grown in size and complexity in a relatively short period of time, a consensus framework for the

interpretation and application of existing regulation has yet to emerge.

The continuously changing and evolving landscape of regulation concerning the Group’s products contributes to the uncertainty surrounding interpretation

and application and creates a risk that the Group may misinterpret or fail to comply with developing regulations in the various jurisdictions in which it

operates, or becomes subject to enforcement actions from regulators. With the continuous changing of product cycle plans and expansion to new markets and

innovations, there is a risk that such changes and launches fail to comply with the relevant regulations, including pre-approval and/or pre-registration

requirements. For example, some governments have intentionally banned or are seeking to ban novel tobacco products and products containing nicotine,

while others would need to amend their existing legislation to permit their sale. Even in countries where the sale of such products is currently permitted, some

governments have adopted, or are seeking to adopt, bans on New Categories or restrictions on certain flavours.

Impact: The significant number of emerging regulations and the uncertainty surrounding their interpretation and application may subject the Group to claims

for breach of such regulations. Financial costs of such enforcement actions include financial penalties, product recalls and litigation costs, and entail a

significant risk of adverse publicity and damage to the Group’s reputation and goodwill. In cases of consumer injury or fatality due to a consumer product

safety issue, this could also cause significant Group reputational damage, leading to a negative impact on stakeholder confidence, including consumers,

retailers, investors, and regulatory and public health organisations.

Risk: Failure to uphold high standards of corporate behaviour, including through unintended or malicious breach of anti-bribery and anti-

corruption and other anti-financial crime laws

Description: The Group is subject to various anti-corruption laws and regulations and other anti-financial crime laws including but not limited to those

relating to tax evasion, money laundering, terrorist financing, corporate fraud and/or the facilitation of corporate fraud and bribery (anti-corruption laws,

including the UK Proceeds of Crime Acts (POCA)). All employees of BAT, its subsidiaries and joint ventures which it controls are expected to uphold a high

standard of corporate behaviour and comply with the Group Standards of Business Conduct (SoBC) which includes a requirement to comply with anti-

corruption and other relevant Laws combating financial crime. Employees, associates, suppliers, distributors and agents are prohibited from engaging in

improper conduct to obtain or retain business or to improperly influence (directly or indirectly) a person working in an official capacity to decide in the

Group’s favour. The Group’s employees, contractors and service providers may fail to comply with our SoBC and/or may violate applicable anti-corruption

laws and other relevant laws combating financial crime.

The Group investigates, and becomes aware of governmental authorities’ investigations into, allegations of misconduct, including allegations of corruption,

at Group companies. Some of these allegations are currently being investigated. The Group cooperates with the authorities, where appropriate. Please refer to

notes 24 and 31 in Part III - Item 18 Notes on the Accounts for details of contingent liabilities applicable to the Group.

Impact: Failure of the Group to comply with anti-corruption laws and regulations and other relevant laws combating financial crime, or to deploy and

maintain robust internal policies, procedures and controls may result, and have resulted, in significant fines and penalties (reducing the Group’s ability to

reinvest in the future), a share price impact, criminal and/or civil sanctions against the Group and its officers and employees, increased costs, prohibitions or

other limitations or requirements (e.g. compliance requirements) on the conduct of the Group’s business and reputational harm (including negative

perceptions of the Group’s governance and our sustainability credentials), and may subject the Group to claims for breach of such regulations.

The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial condition and cause the

Group to fail to deliver on its strategic growth plans. Even when proven untrue, there are often financial costs, time demands and reputational impacts

associated with investigating and defending against such claims.

Risk: Unexpected legislative changes to corporate income tax laws

Description: The Group is subject to corporate income tax laws in the jurisdictions in which it operates. These laws frequently change on a prospective or

retroactive basis.

Impact: Legislative changes to corporate income tax laws and regulations may have an adverse impact on the Group’s corporate income tax liabilities and

may lead to a material increase of the Group’s overall tax rate - these include changes in international tax laws following the Organisation for Economic Co-

operation & Development (OECD) project on base erosion and profit shifting. This could, in turn, negatively affect the Group’s results of operations and

financial such as any changes condition and cause the Group to fail to deliver on its strategic growth plans.

Risk: Imposition of sanctions under sanctions regimes or similar international, regional or national measures

Description: National, international and supra-national sanctions regimes or similar international, regional or national measures are complex and dynamic

and may affect territories in which the Group operates or third parties with which it may have commercial relationships. There may be unintended or

malicious breaches of sanctions due to inappropriate or negligent behaviour by BAT employees, contractors, customers, suppliers or service providers.

Operations in countries and territories subject to sanctions expose the Group to the risk of significant financial costs and disruption in operations that may be

difficult or impossible to predict or avoid or the activities could become commercially and/or operationally unviable. In particular, the Group has operations

in Cuba, which is subject to various sanctions in the United States. Sanctions can be imposed quickly with the possibility of further territories the Group

operates in becoming subject to sanctions at short notice.

The Group investigates, and becomes aware of governmental authorities’ investigations into, allegations of misconduct, including alleged breaches of

sanctions, at Group companies. Some of these allegations are currently being investigated. The Group cooperates with the authorities, where appropriate.

In 2023, the Group reached settlement agreements with the DOJ and OFAC in the United States related to breaches of sanctions related to North Korea,

which resulted in the imposition of fines against the Group totalling US$635 million plus interest.

National, international and supra-national sanctions regimes may also affect third parties with which the Group has commercial relationships, e.g. through

their banks (including possible risk aversion to being associated with a sanctioned territory), and could lead to supply and payment chain disruptions.

Please refer to note 31 in Part III - Item 18 Notes on the Accounts for details of contingent liabilities applicable to the Group.

Impact: As a result of the limitations imposed by sanctions, it may become commercially and/or operationally unviable for the Group and/or its critical

business partners to operate in certain territories or execute transactions related to them and the Group may be required to exit existing operations in such

territories. The Group may also experience difficulty in sourcing materials or importing products, repatriating currency from a sanctioned country and finding

financial institutions willing to transact with it, any of which may expose the Group to increased costs. In addition, the costs of complying with sanctions may

increase as a result of new, or changes to existing, sanctions regimes.


British American Tobacco p.l.c. Form 20-F 2025

In addition to the settlement agreements reached by the Group with the U.S. Department of Justice (DOJ) and U.S. Department of the Treasury, Office of

Foreign Asset Control (OFAC) in the United States, as detailed above, any other failure of the Group to comply with sanctions regimes or similar

international, regional, national or supra-national measures, or to deploy and maintain robust internal policies, procedures and controls, could result in

additional fines and penalties (reducing the Group’s ability to reinvest in the future), a share price impact, criminal and/or civil sanctions against the Group

and its officers and employees, increased costs, prohibitions or other limitations or requirements (e.g. compliance requirements) on the conduct of the

Group’s business, reputational harm (including negative perceptions of the Group’s governance or our sustainability credentials), and damage to commercial

or banking relationships, and may subject the Group to claims for breach of such regimes or measures. Reputational harm (including negative perceptions of

the Group’s governance and our sustainability credentials) may result from the Group's operations in a sanctioned country regardless of whether the Group

complies with imposed sanctions.

The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial condition and cause the

Group to fail to deliver on its strategic growth plans. Even when proven untrue, there are often financial costs, time demands and reputational impacts

associated with investigating and defending against such claims.

Risk: Failure to uphold New Categories marketing practices

Description: The regulatory landscape is constantly evolving with marketing practices being regulated differently in key New Categories markets. The

Group’s marketing activities may be found to be, or alleged (including in the media) to be, non-compliant with laws and regulations, or with the Responsible

Marketing Framework (RMF) on the marketing and sale of tobacco and nicotine products to consumers e.g. in relation to age verification measures. Online

activities can also be found to be, or alleged to be, aimed at consumers in a country where such activities are not permitted.

Impact: The Group is, and may in the future be, subject to claims for breach of marketing practices. In particular, national authorities (such as the FDA),

organisations or even individuals may allege that our marketing activities do not comply with the relevant laws and regulations, or with our RMF. As such,

the Group could be subject to litigation, regulatory sanctions, fines and penalties brought in connection with these allegations. Even when proven untrue,

there are often financial costs and reputational impacts in defending against such claims and allegations which may ultimately also lead to stricter regulations

impacting our business.

Future breaches may lead to a loss of investor confidence in sustainability performance and inability to meet our responsible marketing focus area if our RMF

are not followed, impacting our corporate purpose of delivering harm reduction.

Risk: Loss or misuse of personal data through a failure to comply with the European General Data Protection Regulation, the UK Data Protection

Act 2018, e-Privacy laws and other privacy legislation governing the processing of personal data.

Description: Personal data is a subset of data which attracts different risks and treatment under applicable law. Breaches of data privacy laws include misuse

of information which may not be confidential in nature. These include, for example, unsolicited marketing calls to a publicly available number, or using an

individual’s personal data in a way which was not authorised or in a way that the individual did not reasonably expect through technologies such as online

tracking or monitoring.

Various privacy laws, including the European General Data Protection Regulation (GDPR), UK Data Protection Act 2018 (UKDPA) and e-Privacy laws,

govern the way in which organisations handle personal data of individuals (such as consumers, employees, contractors, service providers and other

authorised persons) including tracking or monitoring their online behaviour.

Unintended or malicious breaches of data privacy laws may occur through system vulnerabilities, cyber-attacks, and by inappropriate or negligent behaviour

by BAT employees, contractors, service providers or others.

Depending on the risk of harm to the individuals concerned, such breaches of data privacy laws (including mass personal data unavailability) could trigger a

formal notification to a local data protection supervisory authority. This, in turn, could subject Group companies to not only regulatory scrutiny but also

individual claims or even class action suits; and e-Privacy laws state that any misuse of consumer personal data or lack of transparency provided to

consumers on how we use their data or track their online behaviours are subject to regulatory scrutiny.

Legal requirements relating to the collection, storage, handling, and transfer of personal data continue to evolve. Following the entry into force of the GDPR

in May 2018, other jurisdictions in which the Group operates have enacted similar local legislation such as the California Consumer Privacy Act U.S. and the

“LGPD” in Brazil which further increases the risks surrounding the processing of personal data especially in the consumer space. As part of the Group's

digital transformation, and move towards a more consumer centric approach, in particular related to New Categories, this could further increase these risks as

the expectation is that the exposure to consumer data volumes will increase as well. With the emergence, and increased use in our daily operations, of new

technologies, including AI, these risks (particularly, personal data misuse in the context of automated decision making by leveraging AI) may be exacerbated.

Impact: Failure to comply with existing or future e-Privacy laws and privacy legislation governing the processing of personal data may adversely impact the

Group’s results of operations and financial condition.

Loss or unlawful use of personal data may result in civil or criminal legal liability and prosecution by enforcement bodies, which may subject the Group to

the imposition of material fines and/or penalties and/or claims and costs associated with defending these claims (which could include class action suits

brought by consumers). The fine under the GDPR and UK data privacy laws for the most severe infringements can be up to the higher of €20 million and 4%

of the Group’s worldwide annual revenue from the preceding financial year, whichever is higher. In the event of a plurality of actions, with separate

sanctionable conducts not caught by the principle of concurrence of conduct, fines can be applied alongside each other, without being a single legal

maximum applicable to the sum. The Group’s officers and employees may also be subject to personal criminal sanctions in certain jurisdictions. Non-

compliance with the EU AI Act can result in fines up to EUR 35 million or 7% of a company's annual turnover. The Brazilian LGDP provides for fines up to

2% of a company's revenue in Brazil, capped at BRL 50 million per violation. Under the California CCPA, the fines for non-compliance include up to USD

7,500 per violation for intentional breaches.

Reputational damage could also potentially cause significant harm to the Group, including negative perceptions of the Group’s governance and our

sustainability credentials.

Relevant data protection supervisory authority could also order certain Group legal entities to cease processing activities, which could result in a significant

operational disruption. Regulatory interest may also prompt interest from other compliance authorities/governments, leading to further regulation or

proceedings.

The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial condition and cause the

Group to fail to deliver on its strategic growth plans.


British American Tobacco p.l.c. Form 20-F 2025

Economic and Financial Risks

Risk: Foreign exchange rate exposures

Description: The Group’s reporting currency is sterling. The Group is exposed to the risk of fluctuations in exchange rates affecting the translation of net

assets and earned profits of overseas subsidiaries into the Group’s reporting currency. These translational exposures are not normally hedged.

Exposures also arise from the foreign currency denominated trading transactions undertaken by subsidiaries and dividend flows. When these exposures are

not naturally offset by opposing flows, they are generally hedged in line with internal policies. However, hedging might be constrained by factors such as

exchange controls, limited currency availability or prohibitive costs, and errors in hedging might occur. Additionally, divergence in monetary policy in

relation to interest rates across top markets can further amplify these risks.

Impact: During periods of heightened exchange rate volatility, the impact of exchange rates on the Group’s results of operations and financial condition can

be significant. Fluctuations in exchange rates of key currencies against sterling may result in volatility in the Group’s reported earnings per share, cash flow

and balance sheet. Furthermore, the dividend paid by the Group may be impacted if the payout ratio is not adjusted. Differences in translation between

earnings and net debt may also affect key ratios used by credit rating agencies to assess creditworthiness, which may have an adverse effect on the Group’s

credit ratings.

In addition, volatility and/or increased costs in the Group’s business due to transactional foreign exchange rate exposures may adversely affect operating

margins and profitability and attempts to increase prices, in response, could adversely impact sales volumes.

Moreover, the increased volatility observed in recent years in commodity prices, international trade policies and the fiscal backdrop of major economies, has

contributed to additional volatility of exchange rates, impacting the financial performance of the Group's subsidiaries. The global dynamic backdrop of

monetary policy actions, the inflation cycle, as well as the economic performance may also increase the exchange rate risk in the short term.

Risk: Inability to obtain price increases and exposure to risks from excessive price increases and value chain erosion

Description: Annual price increases by the Group are among the key drivers in increasing market profitability. However, the Group has in the past been, and

may in the future be, unable to obtain such price increases as a result of increased regulation; increased competition from illicit trade; stretched consumer

affordability arising from deteriorating political and economic conditions and rising prices; sharp increases or changes in excise structures; and competitors’

pricing.

As the New Categories market continues to develop, the Group may face erosion in the value chain for New Categories through lower market prices, the

imposition of excise taxes, high retail trade margins or high production costs that make New Categories less competitive versus combustible tobacco

products.

In addition, the Group faces the risk that price increases it has conducted in the past, and may conduct in the future, may be excessive and not find adequate

adult tobacco consumer acceptance.

Impact: If the Group is unable to obtain price increases or is adversely affected by impacts of excessive price increases, it may be unable to achieve its

strategic growth metrics, have fewer funds to invest in growth opportunities, and, in the case of excessive price increases, be faced with quicker reductions in

sales volumes than anticipated due to accelerated market decline, down-trading (switching to a cheaper brand) and increased illicit trade. These in turn impact

the Group’s market share, results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans.

In addition, erosion in the value chain for New Categories could have a negative impact on the Group’s sales volume or pricing for these products. High

excise could dampen demand for New Categories or result in lower profit margins. Lower market prices, high retail trade margins or increases in production

costs could also negatively impact profit margins or lead to uncompetitive pricing. This may in turn have an adverse effect on the Group’s results of

operations and financial condition and cause the Group to underperform on the delivery of its strategic growth plans.

Risk: Effects of declining consumption of legitimate tobacco products and a tough competitive environment

Description: Evidence of market contraction and the growth of illicit trade of tobacco products is apparent in several key global markets in which the Group

operates. This decline is due to multiple factors, including increases in excise taxes leading to continuous above-inflation price rises, changes in the regulatory

environment, the continuing difficult economic environment in many countries impacting consumers’ disposable incomes, the increase in the trade of illicit

tobacco products, rising health concerns, a decline in the social acceptability of smoking and an increase in Smokeless products uptake.

The Group competes based on the strength of its strategic brand portfolio, product quality and taste, brand recognition loyalty, innovation, trade marketing

distribution activities and price. The Group is subject to highly competitive environments in all aspects of its business, and its competitive position can be

significantly influenced by the prevailing economic climate, consumers’ disposable income, regulation, competitors’ introduction of lower-price or

innovative products, higher tobacco and nicotine product taxes, higher absolute prices, governmental action to increase minimum wages, employment costs,

interest rates and increase in raw material costs.

Furthermore, the Group is subject to substantial payment obligations under the MSA and the State Settlement Agreements (in the U.S.) and settlement

payments in respect of Canada, which adversely affect the ability of the Group to compete with manufacturers of deep-discount cigarettes that are not subject

to such substantial obligations.

Impact: Any future decline in the demand for legitimate tobacco products could have an adverse effect on the Group’s results of operations and financial

conditions and cause the Group to fail to deliver on its strategic growth plans.

In a tough competitive environment, factors such as market size reduction, customer down-trading, illicit trade and competitors aggressively taking market

share through price re-positioning or price wars generally reduce the overall profit pool of the market and may impact delivery of the Group’s profits. This

may also lead to a decline in sales volume, loss of market share, impact delivery of the Group’s sustainability agenda, erosion of its portfolio mix and

reduction of funds available for investment in growth opportunities and may cause the Group to underperform on the delivery of its strategic growth plans.

Risk: Funding, liquidity and interest rate risks

Description: The Group cannot be certain that it will have access to bank financing or to the debt and equity capital markets at all times and is therefore

subject to funding and liquidity risks. Failure to appropriately engage with investors’ and lenders’ sustainability criteria and concerns may impact BAT’s

credit ratings, access to funding, or may result in an increase in the cost of funding.

The Group is also exposed to rising interest rates in connection with both existing floating rate debt and future debt refinancings. Although, interest rates have

started to be cut by main Central Banks, having reached their peak after few years of intense hikes, in the attempt to tame inflation, further changes are

expected to remain highly data dependent, with inflation and labour market trends playing an important role in central banks’ future actions.

Furthermore, the Group operates in several markets closely regulated by governmental bodies that intervene in foreign exchange markets by imposing

limitations on the ability to convert local currency into foreign currency and introducing other currency and capital controls that expose local currency cash

balances to devaluation risks, increase costs to obtain hard currency, or are a barrier to the repatriation of earnings. As a result, the Group’s operational

entities in these markets may be restricted from using End Market cash resources to pay for imported goods, dividend remittances, interest payments and

royalties. The inability to access End Market cash resources in certain markets contributes to the Group’s funding and liquidity risks.


British American Tobacco p.l.c. Form 20-F 2025

Compliance with sanctions and the restrictive policies of banks to facilitate transactions that are sanctions sensitive requires the Group to transfer and use

sanctions sensitive cash in a compliant manner. Anti-money laundering legislation can also lead to additional restrictions relating to the payment and receipt

of funds for both BAT as well as its business partners. In addition, the Group's further development into the cannabis sector may lead to inaccessible proceeds

from this activity, and such activity may expose the Group to further regulatory and legal risks due to different local and international laws. The Group may

also face reputation and compliance issues due to various levels of acceptance of the cannabis sector by stakeholders which may restrict bank and/or investor

access.

Impact: Adverse developments in the Group’s funding, liquidity and interest rate environment may lead to shortages of cash and cash equivalents needed to

operate the Group’s business and to refinance its existing debt. Inability to fund the business under the Group’s current capital structure, failure to access

funding and foreign exchange or increases in interest rates may also have an adverse effect on the Group’s credit rating, which would in turn result in further

increased funding costs and may require the Group to issue equity or seek new sources of capital. Although the Group currently benefits from investment

grade ratings from Moody's, S&P and Fitch, any adverse impact in the activity may trigger a rating revision. Any downgrade of the Group's credit ratings or

loss of investment grade status could materially increase the Group's financing costs.

All these factors may have material adverse effects on the Group’s results of operations and financial conditions and cause the Group to fail to deliver on its

strategic growth plans. These conditions could also lead to underperforming bond prices and increased yields.

In the case of funding or liquidity constraints, the Group may also suffer reputational damage due to its perceived failure to manage the financial risk profile

of its business, which may result in an erosion of shareholder value reflected in an underperforming share price, and/or underperforming bond prices and

higher yields. In addition, the Group’s ability to finance strategic opportunities or respond to threats may be impacted by limited access to funds.

Risk: Failure to achieve growth through mergers, acquisitions, joint ventures, investments and other transactions

Description: The Group’s growth strategy includes a combination of organic growth as well as mergers, acquisitions, joint ventures, investments and other

business combinations. The Group may be unable to acquire or invest in attractive businesses on favourable terms and may inappropriately value or

otherwise fail to identify or capitalise on growth opportunities. The Group may not be able to deliver strategic objectives and growth improvements from

business combinations, successfully integrate businesses it acquires or establishes, or obtain appropriate regulatory approvals for business combinations.

Risks from integration of businesses also include the risk that the integration may divert the Group’s focus and resources from its other strategic goals.

Furthermore, transactions may include risks associated with an unpredictable regulatory landscape, such as bans or more restrictive regulations which come

into force after the acquisition.

Additionally, the Group could be exposed to financial, legal or reputational risks if it fails to appropriately consider and address any compliance, antitrust or

sustainability aspects of a transaction or planned transaction. Further, the Group has certain uncapped indemnification obligations in connection with

divestitures and could incur similar obligations in the future.

Impact: Any of the foregoing risks could result in increased costs, decreased revenues or a loss of opportunities and have an adverse effect on the Group’s

results of operations and financial condition, and in the case of a breach of compliance, product regulation or antitrust regulation, could lead to reputational

damage, fines and potentially criminal sanctions and an adverse impact on the Group's sustainability priorities. This may impact the Group's ability to

compete in the long-term.

Inability to execute planned divestments, or poorly executed or delayed divestments, may not deliver fair value, or may result in loss of potential sale

proceeds resulting in fewer resources to drive quality growth or meet other corporate targets.

The Group may become liable for claims arising in respect of conduct prior to any merger or acquisition of businesses if deemed to be a successor to the

liabilities of the acquired company or indemnification claims relating to divestitures, and any resulting adverse judgment against the Group may adversely

affect its results of operations and financial condition and cause the Group to fail to deliver on its strategic growth plans. Please refer to note 31 in Part III -

Item 18 Notes on the Accounts for details of contingent liabilities applicable to the Group.

Risk: Unforeseen underperformance in key global markets

Description: A substantial majority of the Group’s profit from operations is based on its operations in certain top markets, including the U.S. A number of

these markets are declining for a variety of factors, including price increases, restrictions on marketing activities and promotions, smoking prevention

campaigns, increased pressure from anti-tobacco groups, accelerated migration to reduced-risk products and increasing prevalence of non-compliant New

Categories competitors.

Alongside external pressures, operational risks can intensify the situation. Examples include the concentration and consolidation of distribution into a single

trade partner, and inaccuracies in demand forecasting that lead to write-offs across both traditional and New Categories products.

Economic and political factors affecting the Group’s key markets include the prevailing economic climate, governmental austerity measures, levels of

employment, inflation, governmental action to increase minimum wages, employment costs, interest rates, raw material costs, consumer confidence and

consumer pricing.

Impact: Operational disruptions, failure of a key trade partner or inaccurate forecasts may lead to product shortages, excess inventory, or lost market

opportunities. Change to the economic and political factors in any of the top markets in which the Group operates often affect consumer behaviour and have

an impact on the Group’s results of operations and financial condition. These could cause the Group to fail to deliver on its strategic growth plans and reduce

its capacity to reinvest in innovation and harm reduction initiatives.

Risk: Increases in net liabilities under the Group’s retirement benefit schemes

Description: The Group currently maintains and contributes to defined benefit pension plans and other post-retirement benefit plans that cover various

categories of employees and retirees worldwide. Although the Group has made significant progress in recent years to de-risk pension and post-retirement

benefit plans, the Group’s obligations to make contributions under the residual arrangements may increase in the case of increases in pension liabilities,

decreases in asset returns, salary increases, inflation, decreases in long-term interest rates, increases in life expectancies, changes in population trends and

other actuarial assumptions.

Please refer to the information under the caption ‘Retirement benefit schemes’ note 1 on page 111 and to note 15 in Part - III Item 18 Notes on the Accounts

for details of the Group’s retirement benefit schemes.

Impact: Higher contributions to the Group’s retirement benefit schemes could have an adverse impact on the Group’s results of operations, financial

condition and ability to raise funds and cause the Group to fail to deliver on its strategic growth plans.

Product pipeline, commercialisation and Intellectual Property risks

Risk: Inability to predict consumers’ changing behaviours and launch innovative products that offer adult tobacco and nicotine consumers

meaningful value-added differentiation

Description: The Group focuses its research and development activities on both creating new products, including New Categories and Beyond Nicotine

products, whilst maintaining and improving the quality of its existing products. In a competitive market, the Group believes that innovation is key to growth.

The Group considers that one of its key challenges in the medium and long term is to provide adult tobacco and nicotine consumers with high-quality

products that take into account their changing preferences and expectations, including those in relation to sustainability, while complying with evolving

regulation.


British American Tobacco p.l.c. Form 20-F 2025

Predicting consumers’ changing needs and behaviours across categories is a critical requirement for the Group's development. The Group is exposed to the

risk it may fail to predict consumers' changing needs and behaviours across categories and fail to deliver its strategy effectively.

The Group continues to develop and roll out its New Categories portfolio which, requires significant investment. The Group is exposed to the risk that it may

be unsuccessful in developing and launching innovative products or maintaining and improving the quality of existing products across combustibles, New

Categories and Beyond Nicotine that offer consumers meaningful value-added differentiation. The Group must keep pace with innovation in its sector and

changes in consumer expectations. The Group is also exposed to the risk of an inability to build sufficiently strong brand equity through social media and

other digital tools to successfully compete. There are potential bans and restrictions in key markets on using social media to advertise and communicate and

further such bans or restrictions could be enacted in the future. Competitors may be more successful in predicting changing consumer behaviour or better able

to develop and roll out consumer-relevant products and may be able to do so more quickly and at a lower cost.

In addition, the Group devotes considerable resources to the research and development of innovative products that may have the potential to reduce the risks

of smoking-related diseases. The complex nature of research and development programmes necessary to satisfy emerging regulatory and scientific

requirements creates a substantial risk that these programmes will fail to demonstrate health-related claims regarding New Categories and Beyond Nicotine

or to achieve adult tobacco consumer, regulatory and scientific acceptance.

Furthermore, the regulatory environment impacting non-combustible tobacco products, Vapour products and other non-tobacco nicotine products and

Beyond Nicotine, including classification of products for regulatory and excise purposes, is still developing and it cannot be predicted whether regulations

will permit the marketing (freely or with certain restrictions) of such products in any given market in the future. Categorisation as medicines, for example,

and restrictions on advertising could stifle innovation, increase complexity and costs and significantly undermine the commercial viability of these products.

Alternatively, categorisation of any New Categories, as tobacco products for instance, could result in the application of onerous regulation, which could

further stifle uptake.

Impact: The inability to timely develop and roll out innovations or products in line with consumer demand, including any failure to predict changes in adult

tobacco consumer and societal behaviour and expectations and to fill gaps in the product portfolio, as well as the risk of poor product quality, could lead to

missed opportunities, under- or over-supply, loss of competitive advantage, unrecoverable costs and/or the erosion of the Group’s consumer base or brand

equity.

Restrictions on packaging and labelling or on promotion and advertising could impact the Group’s ability to communicate its innovations and product

differences to adult tobacco consumers, leading to unsuccessful product launches. An inability to provide robust scientific results sufficient to substantiate

health-related product claims poses a significant threat to the ability to launch innovative products and comply with emerging regulatory and legal regimes.

The occurrence of any of the above effects could in turn have an adverse effect on the Group’s results of operations and financial condition and cause the

Group to fail to deliver on its strategic growth plans.

In addition, there may be loss of investors’ confidence in sustainability performance, including failure to deliver our corporate purpose of harm reduction.

Risk: Exposure to risks associated with intellectual property rights, including the failure to identify, protect and prevent infringement of the

Group’s intellectual property rights and potential infringement of, or the failure to retain licences to use, third-party intellectual property rights

Description: The Group relies on trademarks, patents, registered designs, copyrights, domain names and trade secrets. The brand names under which the

Group’s products are sold are key assets of its business. The protection and maintenance of these brand names and of the reputation of these brands is

important to the Group’s success. Protection of intellectual property rights is also important in connection with the Group’s innovative products, including

New Categories.

The Group is exposed to the risk of infringements of its intellectual property rights by third parties due to limitations in judicial protection, failure to identify,

protect and register its innovations and/or inadequate enforceability of these rights in some markets in which the Group operates.

The Group currently is, and has in the past been, involved in various patent infringement litigation proceedings in the U.S. related to the Group’s Vapour

products. In 2024, a Group subsidiary entered into a settlement agreement with an indirect wholly-owned subsidiary of Philip Morris International Inc.

(PMI). Pursuant to this agreement (the Settlement Agreement), among other things, both parties agreed to dismiss certain pending legal proceedings between

the parties and certain of their affiliates concerning certain Vapour and Heated Products (HP) with prejudice and without admission of liability, to fully and

finally discharge without admission of liability any injunctions granted to the parties and their respective affiliates in such proceedings, and mutually release

each other from presently known and past, present and future claims arising out of or relating to, among other things, such proceedings, the infringement of

the patents at issue in the proceedings and certain intellectual property rights relating to certain products existing on or before a specified date. The parties

also agreed to covenants not to sue, on a perpetual, royalty-bearing or royalty-free basis, as the case may be, in respect of patents associated with certain

existing or changed Vapour or HP products. Please refer to note 31 in Part III - Item 18 Notes on the Accounts for details of contingent liabilities relating to

patent litigation and related settlements applicable to the Group and the "Settlement Agreement between Nicoventures Trading Limited and Philip Morris

Products S.A." described under Item 10.C. on page 89.

Some brands and trademarks under which the Group’s products are sold are licensed for a fixed period of time in certain markets. If any of these licences are

terminated or not renewed after the end of the applicable term, the Group would no longer have the right to use, and to sell products under, those brand(s) and

trademark(s).

In addition, as third party rights are not always identifiable, the Group may be subject to claims for infringement of third party intellectual property rights.

Impact: Any erosion in the value of the Group’s brands or innovations, or failure to obtain or maintain adequate protection of intellectual property rights for

any reason, or the loss of brands, trademarks or other intellectual property rights under licence to Group companies, may have a material adverse effect on the

Group‘s market share, results of operations and financial condition. Any inability to appropriately protect the Group’s products and key innovations will also

limit its growth and affect competitiveness and return on innovation investment.

Any infringement of third-party intellectual property rights could result in interim or final injunctions, product recalls, legal liability and the payment of

damages, any of which may disrupt operations, negatively impact the Group’s reputation and have an adverse effect on its results of operations and financial

condition and cause the Group to fail to deliver on its strategic growth plan. Litigation (even where successful) results in an intensive use of resources and

management time leading to potential disruption. In addition, although intellectual property-related settlements, such as the 2024 settlement agreement with

Philip Morris Products S.A., allow the Group to focus on developing innovative product solutions, they could also have an adverse effect on the Group’s

results of operations and financial condition. For example, the payment of royalties would create higher costs for the Group, whereas the grant of licenses

and/or covenants not to sue could result in a competitive advantage of the Group’s competitors which, in turn, could result in lower demand for the Group’s

own products and cause the Group to fail to deliver on its strategic growth plans.

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

†Products sold in the U.S., including Vuse, Velo, Grizzly, Kodiak, and Camel Snus, are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.


British American Tobacco p.l.c. Form 20-F 2025

Item 4 - Information on the Company

Item 4.A - History and development of the company

Corporate Information

The Company is a public limited company incorporated under the name of British American Tobacco p.l.c. and is registered in England and Wales under

registered number 3407696. It was incorporated in July 1997 under the laws of England and Wales as a public limited company and is domiciled in the

United Kingdom. Its registered office is at Globe House, 4, Temple Place, WC2R 2PG, London. Telephone: +44 (0)20 7845 1000.

The Company’s agent for service in the U.S. for the purposes of the registration statements on Form F-3 (registration no. 333-288448) is Puglisi &

Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711 U.S. The U.S. Securities and Exchange Commission (the SEC) maintains an internet

site that contains BAT’s reports and other information (for example, BAT’s Form 20-F and other documents) filed electronically with the SEC. BAT’s SEC

filings are available to the public at the SEC’s website, http://www.sec.gov. BAT’s Form 20-F is also available on BAT’s website, http://www.bat.com.

History and Development of the Group

The Group has had a significant global presence in the tobacco industry for over 100 years. BAT Ltd. was incorporated in 1902, when the Imperial Tobacco

Company and the American Tobacco Company agreed to form a joint venture company. BAT Ltd. inherited companies and quickly expanded into major

markets, including India, Ceylon, Egypt, Malaya, Northern Europe and East Africa. In 1927, BAT Ltd. expanded into the U.S. market through its acquisition

of B&W.

During the 1960s, 1970s and 1980s, the Group diversified its business under the umbrella of B.A.T Industries p.l.c., with acquisitions in the paper, cosmetics,

retail and financial services industries, among others. Various business reorganisations followed as the business was eventually refocused on the Group’s

core cigarette, cigars and tobacco products businesses with BAT becoming a separately listed entity on the LSE in 1998.

The following is a summary of the significant mergers, acquisitions and disposals undertaken since 1998:

–1999 – global merger with Rothmans International;

–2000 – acquisition of Imperial Tobacco Canada;

–2003 – acquisition of Ente Tabacchi Italiani S.p.A., Italy’s state-owned tobacco company, Tabacalera Nacional in Peru and Duvanska Industrija Vranje in

Serbia;

–2004 – the U.S. assets, liabilities and operations, other than certain specified assets and liabilities, of BAT’s wholly-owned subsidiary, B&W, were

combined with RJR Tobacco Company to form Reynolds American Inc. As a result of the B&W business combination, B&W acquired beneficial

ownership of approximately 42% of the Reynolds American Inc. shares;

–2008 – acquisition of Tekel, the Turkish state-owned tobacco company and the cigarette and snus business of Skandinavisk Tobakskompagni A/S;

–2009 – acquisition of an effective 99% interest in Bentoel in Indonesia;

–2011 – acquisition of Protabaco in Colombia;

–2012 – acquisition of CN Creative Limited in the UK;

–2013 – entered into joint operations in China and paved the way for the Group Transformation launching our first Vapour product;

–2015 – acquisition of the shares not already owned by the Group in Souza Cruz in Brazil, and the acquisitions of the CHIC Group in Poland, and TDR

d.o.o., a cigarette manufacturer in Central Europe. Also in 2015, the Group increased its investment in Reynolds American Inc. by US$4.7 billion to

maintain the Group’s approximate 42% equity position following Reynolds American Inc.’s purchase of Lorillard Inc.;

–2016 – acquisition of Ten Motives in the UK;

–2017 – acquisition of the remaining 57.8% of Reynolds American Inc. the Group did not already own. Following completion of the acquisition, Reynolds

American Inc. became an indirect, wholly-owned subsidiary of BAT and is no longer a publicly-held corporation. In 2017, the Group also acquired certain

tobacco assets from Bulgartabac Holding AD in Bulgaria and Fabrika Duhana Sarajevo (FDS) in Bosnia, acquired Winnington Holdings AB in Sweden

and acquired certain assets from Must Have Limited in the UK, including the electronic cigarette brand ViP;

–2018 – acquisition of Quantus Beteiligungs-und Beratungsgesellschaft mbH in Germany;

–2019 – acquisition of Twisp Proprietary Limited in South Africa and 60% of VapeWild Holdings LLC in the U.S.;

–2020 – acquisition of the nicotine pouch product assets of Dryft Sciences, LLC (Dryft) in the U.S. and the acquisition of Eastern Tobacco Company for

Trading in Saudi Arabia;

–2021 – entry into a strategic research and product development collaboration agreement with Organigram Inc., a licensed producer of cannabis and

cannabis-derived products in Canada and a wholly-owned subsidiary of publicly-traded Organigram Global Inc. (formerly known as Organigram Holdings

Inc.) and acquisition of a 19.9% equity stake in Organigram Global Inc. Also in 2021, the Group disposed of its Iranian subsidiary, BAT Pars Company

PJSC;

–2022 – acquisition of a 16% equity stake in Sanity Group GmbH, a German cannabis company. In 2022, the Group also made an investment, via a

convertible debenture in the amount of c.£48 million, into Charlotte’s Web Holdings, Inc., a U.S.-based hemp extract wellness products business;

–2023 – disposal of the Group's businesses in Russia and Belarus;

–2024 – partial sale of the Group's investment in ITC Ltd (ITC) in India, after which the Group's shareholding reduced to 25.45%. Also in 2024, further

investments in Organigram Global Inc. in Canada, increased the Group's equity stake to c. 30.6%, and the acquisition of Beni Oral Nicotine LLC in the

U.S.; and

–2025 – further partial sale of the Group's investment in ITC, after which the Group's shareholding reduced to 22.91%. Following the demerger of ITC’s

hotel business (ITC Hotels), that was completed on 1 January 2025, the Group recognised an initial direct stake in ITC Hotels of 15% as a non-current

investment on the balance sheet held at fair value through Other Comprehensive Income. In December 2025, the Group sold 9% of ITC Hotels in a block

trade with the retained direct stake reduced to 6.3%. Please refer to note 18 in Part III - Item 18 Notes on the Accounts. Also in 2025, the Group settled

historical litigation in Canada (please refer to note 24 in Part III - Item 18 Notes on the Accounts). The Group also concluded the final tranche of

investment in Organigram, increasing the equity stake to 36.8%, restricted to 30% voting rights (please refer to note 14 in Part III - Item 18 Notes on the

Accounts.

Since the launch of our first Vapour product in 2013, we have been on a transformation journey to become a truly multi-category consumer products

business. We are creating new Smokeless products that encourage adult smokers, who would otherwise continue to smoke, to switch to scientifically-

substantiated, reduced-risk*† alternative.

Principal Capital Expenditures and Divestitures


British American Tobacco p.l.c. Form 20-F 2025

Gross capital expenditures include purchases of property, plant and equipment and purchases of certain intangibles. The Group’s gross capital expenditures

for 2025, 2024 and 2023 were £648 million, £581 million and £541 million, respectively, representing investment in the Group’s global operational

infrastructure (including, but not limited to, the manufacturing network, trade marketing and IT systems). In 2025, this included £8 million of investments in

energy efficiency and renewable energy generation, water recycling and efficiency projects, waste reduction, and product innovation-led specification

improvements to enhance technical recyclability as part of our sustainability commitments (2024: £30 million).

We will continue to proactively assess the performance of our assets to ensure value is maximised through operational returns or through disposal. In 2026,

the Group expects to invest around £750 million of gross capital expenditure to enhance our growth opportunities and deliver operational efficiencies,

representing the ongoing investment in the Group’s operational infrastructure (as described above), including the continued investment in New Categories

across the Group. This is expected to be funded by the Group’s cash flows and existing facilities.

In addition, as part of our transformation, we invest in the Wellbeing and Stimulation space and through our venturing unit, Btomorrow Ventures, and in the

cannabis space, including in Organigram.

In 2025, we partially monetized our investment in ITC for £1,052 million in net proceeds. In 2024, a similar partial sale of our investment in ITC resulted in

net proceeds of £1,577 million. In 2025, following the demerger of ITC Hotels that was completed on 1 January 2025, the Group recognised an initial direct

stake in ITC Hotels of approximately 15% as a non-current investment on the balance sheet held at fair value through Other Comprehensive Income. In

December 2025, the Group sold 9% of ITC Hotels in a block trade, realising net proceeds of £318 million, with the retained direct stake reduced to 6.3%. In

2023, we sold our businesses in Russia and Belarus for net proceeds in the amount of £266 million.

For more information related to the most recent business developments and property, plant and equipment, please refer to notes 13, 14 and 27 in Part III -

Item 18 Notes on the Accounts.

Item 4.B - Business Overview

Overview

British American Tobacco p.l.c. is the parent holding company of the Group, a leading multi-category consumer goods business that provides tobacco and

nicotine products to millions of adult consumers around the world.

The Group, excluding the Group’s associated undertakings, is organised into three regions:

– The U.S.;

–Americas and Europe (AME), comprising markets operating in Europe, Latin America and Canada; and

–Asia-Pacific, Middle East and Africa (APMEA), comprising markets operating in Asia-Pacific, Middle East, Central Asia, Caucasus and Africa.

The Group’s range of combustible products covers all segments, from value-for-money to premium, with a portfolio of international, regional and local

tobacco brands to meet a broad array of adult tobacco consumer preferences wherever the Group operates.

The Group has also built a portfolio of smokeless tobacco and nicotine products – including Vapour products, Heated Products (HPs) and Modern Oral

products, which are collectively termed the New Categories, as well as Traditional Oral products.

The Group manages a globally-integrated supply chain and its products are distributed to retail outlets worldwide.

Multi-Category Portfolio

BAT is a consumer-focused business operating internationally. Our portfolio reflects our commitment to meeting the evolving and varied preferences of

today’s adult consumers.


Category	2025 Revenue	% of total revenue
New Categories	£3,621m	14.1%
Traditional Oral	£1,043m	4.1%
Combustibles	£20,201m	78.9%
Other	£745m	2.9%
Total	£25,610m	100.0%

For a breakdown of total revenues by category of activity for the financial years 2025, 2024 and 2023, see note 2 in Part III - Item 18 Notes on the Accounts.

Smokeless products

Our smokeless portfolio comprises all brands within New Categories (Vapour, Heated Products and Modern Oral) and the strategic Traditional Oral brands

in moist and snus.

Vapour

Vapour products contain an e-liquid, nicotine and flavours, and a battery-powered heating element. When activated, via puff or button, the heating element

heats the liquid and forms an aerosol, commonly known as vapour.

Vuse, our global Vapour brand, is the #1 brand in the category (in rechargeable closed system consumables and disposables in tracked channels). It

provides cigarette smokers, who would otherwise continue to smoke, with the opportunity to transition to smokeless alternatives*†.

Vapour revenue was down 10.4% to £1,542 million in 2025, largely driven by the continued proliferation of illegal single-use vapour products in the U.S.

and Canada, and the Group exiting the category in a number of APMEA markets. However, there are encouraging signs for Vuse in the U.S. with the

brand back to revenue growth in the second half of 2025 (compared to the first half of 2025 and full year 2024) – supported by increased enforcement

against illicit single-use vapour products at a Federal and State level.

Our new premium innovation, Vuse Ultra, offers adult consumers a differentiated, connected and personalised experience with a modern and stylish device.

We are encouraged by the early performance of Vuse Ultra in Canada, Germany and France.

As of the date of this Form 20-F, our Vapour brands are currently available in 57 markets.

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

Heated Products

Heated Products (HPs) have two main functional parts: a battery-powered device and a consumable, which contains a plant-based (tobacco leaf or non-

tobacco leaf) substance that is heated, not burned. Once the consumable has reached a certain temperature, it forms an aerosol releasing nicotine and flavours.


British American Tobacco p.l.c. Form 20-F 2025

Our flagship Heated Product brand, glo, offers an alternative to smoking that doesn't involve burning and, following scientific studies, produces lower levels

of certain toxicants than cigarettes.

Revenue for the category was down by 0.7%, due to a translational foreign exchange headwind of 1.7%. On a constant currency basis, revenue was up 1.0%.

While growth in the category has been impacted by competitive pressure, momentum is building with the roll-out of glo Hilo in our largest profit pools.

glo Hilo and glo Hilo Plus are our new premium connected devices which provide adult consumers with superior dual-heating technology and an integrated

display, combined with a new consumables range, Virto and tobacco-free Rivo. We have continued the roll-out through 2025, with launches in Japan, Poland

and Italy.

As of the date of this Form 20-F, following a reassessment of our geographic footprint, glo is now available in 29 markets.

Modern Oral

Velo is our leading Modern Oral brand. Unlike inhalable products, Modern Oral products are nicotine pouches that are placed between the gum and upper lip

so that nicotine can be absorbed effectively. They are typically manufactured tobacco leaf-free.

Revenue for the category was up 47.4% to £1,165 million in 2025, largely driven by the successful roll-out of Velo Plus in the U.S.

Modern Oral was the fastest growing New Category, with strong volume and value share growth reflecting the strength of our portfolio in all regions.

In 2025, we launched our newest Modern Oral innovation, Velo Shift, offering adult consumers an innovative pouch shape and a new hexagonal can.

Opportunities for these products in markets with established oral nicotine consumption and beyond, are vast – including in emerging markets.

As of the date of this Form 20-F, our Modern Oral brands are currently available in 49 markets.

Traditional Oral

Traditional Oral products include snus and snuff. Snus is a moist form of oral tobacco originating from Sweden. It is available in loose form or as pouches.

With Traditional Oral products, consumers take a single portion or pouch and place it within the mouth, between the lip and gum. The nicotine and flavours

are then absorbed through the inner lining of the cheek.

As of the date of this Form 20-F, our Traditional Oral brands are currently available in 3 markets.

Combustibles

The Group sold 465 billion cigarette sticks and 12 billion other tobacco products (stick equivalents) in 2025. With 36 fully integrated cigarette manufacturing

facilities in 35 markets, the Group operates internationally.

As of the date of this Form 20-F, our combustible products are sold in over 140 markets.

Principal Markets

The Group, excluding the Group’s associated undertakings, is organised into three complementary regions, with a balanced presence in both high-growth

emerging markets and highly profitable developed markets.


Regions	2025 Revenue
United States of America (U.S.)	£11,534m
Americas and Europe (AME)	£9,309m
Asia-Pacific, Middle East and Africa (APMEA)	£4,767m
Total	£25,610m

For a breakdown of total revenues by geographic markets for the financial years 2025, 2024 and 2023, see Item 5.A on page 28 and note 2 in Part III - Item

18 Notes on the Accounts.

Our in-depth marketplace analysis delivers insights on consumer trends and segmentation, which facilitates our geographic brand prioritisation across our

regions and markets.

The U.S. is one of our three regions and is also a Top Market across our product categories (other than HP). In AME, our Top Markets by category are

Brazil, Germany, Mexico and Romania for Combustibles, Germany, Greece, Italy, Poland, Portugal, Romania, Spain and the Czech Republic for Heated

Products, Canada, France, Germany, Poland, Spain and the UK for Vapour and Denmark, Norway, Poland, Sweden, Switzerland and the UK for Modern

Oral. In APMEA, Japan and Pakistan are the Top Markets for Combustibles and Japan and South Korea for Heated Products.

For a discussion of the Company’s financial condition, changes in financial condition and results of operations, see Item 5.A on page 28.

Seasonality

The Group’s business segments are not significantly affected by seasonality although in certain markets cigarette consumption trends rise during summer

months due to longer daylight time and tourism.

Raw Materials

The Group does not own tobacco farms or directly employ farmers. However, it sources tobacco leaf directly from approximately 91,000 contracted farmers

and third-party suppliers, primarily in emerging markets. We remain committed to enhancing the long-term sustainability and viability of our contracted

farmers by focusing on improving quality, the distribution of more resilient hybrid seeds and the implementation of tailored mechanisation to reduce

production costs and increased yields.

In Brazil, for example, our Global Leaf Agronomy Development (GLAD) centre develops agronomic solutions supported by technology. These solutions

improve crop management, optimise resource efficiency and help address challenges such as climate change and soil degradation. GLAD innovations are

now applied in 12 countries. For example, automated curing barns have reduced fuel consumption by up to 50% and manual labour requirements by a similar

proportion.

We expect our third-party suppliers to uphold comparable standards in managing their farmer contracts. We conduct annual reviews of our contracts, taking

into account projected Group requirements over the medium-term (2-3 years) to ensure stability of demand and supply on production volumes. The Group

also purchases tobacco leaf from India through our associate ITC, where a portion of leaf purchase occurs via an auction system. ITC maintains full

traceability of all purchases and monitors farmers for their adherence to required standards.


British American Tobacco p.l.c. Form 20-F 2025

As with any global agricultural commodity, international tobacco prices fluctuate yearly. Prices are influenced by multiple factors including production costs

(such as labour and agricultural inputs), local inflationary pressures, economic and political developments, and climatic conditions that affect the supply,

demand and crop quality.

Climate change-related risks may further contribute to tobacco price volatility. Even in a scenario in which global warming is limited to no more than 1.5°C

above pre-industrial levels, we anticipate medium- to long-term increases in energy prices which are likely to exert upward pressure on raw material costs.

Additionally, risks related to acute weather (e.g., extreme weather events, such as cyclones, floods or heatwaves) and chronic weather (continued change in

climate, resulting in changes to precipitation patterns and temperatures in general) are expected in the long-term (with respect to acute weather effects) and in

the short-term (with respect to chronic weather) to disrupt the agricultural supply chain further by reducing production capacity and yields, thereby increasing

raw material costs.

To mitigate the impact of leaf cost inflation, the Group maintains a diversified sourcing strategy built around multiple origins capable of supplying

interchangeable quality grades. This flexibility enables us to optimise procurement decisions in response to market conditions and reduces reliance on any

single geography. In addition, we operate a c,12‑month duration policy that provides forward visibility on pricing and availability, helping to smooth

short‑term fluctuations in supply and manage volatility in international tobacco markets. This structured approach supports cost stability, strengthens supply

resilience, and ensures continuity of high‑quality leaf for our manufacturing operations.

At the time of this report, the Group believes there is an adequate supply of tobacco leaf in the world markets to satisfy its current and anticipated production

requirements.

We also source a number of other materials as part of our production requirements, covering areas that include wrapping materials and filters for our

combustibles business and liquids, heaters and batteries for our New Categories products. We work closely with our suppliers to ensure a resilient supply

chain, with contingency sourcing in place. Contracts and sourcing agreements are reviewed regularly, to ensure competitive trading terms while recognising

that prices may be impacted by external factors. Our electronics supply chain includes multiple layers of suppliers, which create additional challenges for

managing human rights risks. We take a risk-based approach to our human rights due diligence, which includes evaluation through an independent risk

assessment platform and third-party audits, covering topics that are identified as the most relevant for the Group’s non-tobacco supply chain, such as working

conditions and forced labour. Sustainability represents about 10-15% of the supplier evaluation criteria and is in progress to be embedded in the contract

service levels agreements. In addition, our Supplier Code of Conduct applies to all our suppliers and outlines the actions we expect them to take in relation to

responsible mineral sourcing, and we are committed to engaging with our suppliers to build on supply chain traceability, as appropriate. We are currently

preparing for new regulatory requirements related to supply chain due diligence.

Raw material sourcing strategies are reviewed frequently (to ensure continuity of supply and cost efficiency) with other productivity initiatives (including

specification rationalisation) identified as part of the Group’s drive for productivity savings to further mitigate the impact of inflation and optimise cash flow.

We also have a vast network of suppliers of indirect goods and services that are unrelated to our products, such as for IT services and facilities management.

For more details on the volatility of raw material pricing as well as on the risks associated with the sourcing, please refer to Item 5.A - Raw materials and

other consumables paragraph on page 31 and Item 3.D, respectively.

Marketing

'Love our Consumer' is one of our values and consumers are the core of everything we do. Consumer-led product innovation is central to achieving our purpose and

we believe that our multi-category approach is the most effective way to meet the diverse preferences of adult nicotine consumers worldwide.

We engage with our adult consumers through extensive market research activities and sales interactions, led by our marketing teams across the Group.

We use a globally responsible approach to marketing, seeking to raise standards and prevent underage access, while growing our market share by

encouraging adult consumers to choose our products over those of our competitors.

As one of the most established tobacco and nicotine businesses in the world, we truly understand adult consumers and their diverse preferences. This,

combined with our data and analytics-led approach, helps us to gain insights and anticipate trends.

These insights enable the development and responsible marketing of our products, so that they are fit to satisfy consumer preferences.

Powered by our consumer insights platform, we focus on product categories and consumer segments across our global business that have the greatest

potential for sustainable growth. In addition, we engage loyalty programmes and other incentives to reward our adult consumers.

We work with customers to uphold responsible marketing and prevent underage access. Examples of our engagement with customers include:

–Ongoing dialogue - this represents most of our customer engagement and includes regular business meetings and performance reviews.

–Customer care portals and customer voice programmes - we operate helplines and websites for feedback and complaints, and survey retailers to assess

satisfaction via our Customer Engagement Index.

–Retail audits and engagements - we work with retail partners and conduct audits to help ensure adherence to our responsible marketing standards.

Our Responsible Marketing Principles

Our approach to responsible marketing is governed by our Responsible Marketing Principles (RMP) and Responsible Marketing Code (RMC). They apply to

all BAT entities and marketing suppliers working on our behalf. We seek to uphold the same high standards in every market in which we operate, even when

they are stricter than applicable local laws.

Our RMP, RMC and supporting guidelines govern how we market our products, with a particular focus on designing products for adult smokers and adult

nicotine consumers. Topics covered include Underage Access Prevention (UAP), mandatory health warnings and digital marketing content. The RMP and

RMC are underpinned by detailed guidelines and toolkits to facilitate their consistent application.

Processes are in place for reviewing and approving marketing content to facilitate compliance with both our standards and local laws.

Marketing in a digital age

We only use social media where the audience is predominantly adult. We do not use open social media for our combustibles brands. Where we use social

media partnerships to promote Smokeless products, we only select third-parties whose audience is predominately adult. Our e-commerce and social media

channels must also adhere to the requirements set out in the RMP and RMC. Our Digital Confidence Unit (DCU) is dedicated to monitoring social media

content 24/7 for compliance and reputational management purposes. To provide oversight, the team reviews our social media posts to check for compliance

with the RMP and RMC. The DCU engages with markets, as appropriate, to take swift, corrective action, in respect of any incidents identified.

Reporting and resolving incidents of non-compliance

Any allegations of non-compliance are managed and escalated by the relevant market. Regional Heads of Legal report any relevant findings to the Regional

Audit Committee and remediation actions are implemented, as appropriate. In 2025, we identified two incidents of non-compliance with local marketing

regulations resulting in a fine or penalty1.

Notes:

1.The data for the number of marketing incidents resulting in a fine or penalty is based on cases submitted under applicable governance by Regions and Direct Reporting Business Units (DRBUs) throughout the

year to the Responsible Marketing Committee. Incidents are only reported here when a fine is issued.


British American Tobacco p.l.c. Form 20-F 2025

Patents and Trademarks

Our trademarks, which include the brand names under which our products are sold, are key assets which we consider, in the aggregate, to be important to the

business as a whole. As well as protecting our brand names by way of trademark registration, we also protect our innovations by means of patents and

designs in key global jurisdictions.

In February 2024, we entered into a settlement agreement with an indirect wholly-owned subsidiary of Philip Morris International Inc. (PMI) regarding the

infringement of certain patents and certain intellectual property rights, see Item 10.C. on page 88.

New Manufacturing Processes

As the Group increases its capabilities in new products, including New Categories, we are developing relationships with third parties to support the

manufacture of certain components inherent within our New Category products. We have several development and commercial supply contracts, licences,

and agreements with our supply partners to support our new manufacturing processes. Within these arrangements, IP ownership and lack of supply liability

clauses are embedded within the framework documentation to ensure the risk exposure is managed accordingly and we are free to develop or source

alternative manufacturing solutions to ensure continued supply for growth and/or profitability.

We are also developing in-house manufacturing capabilities, including the manufacture of HP and Modern Oral products, and we continue to invest in the

Group’s manufacturing infrastructure to support the Group in the future.

Statements Regarding Competitive Position

Statements referring to the competitive position of BAT and its subsidiaries are based on the Group’s belief and best estimates. In certain cases, such

statements and figures rely on a range of sources, including investment analyst reports, independent market surveys, and the Group’s own internal

assessments of market share.

The Group uses certain non-financial measures to assess its competitive position:

Volume

Volume is defined as the number of units sold. Units may vary between categories. This can be summarised for the principal metrics as follows:

–Factory-made cigarettes (FMC) – sticks, regardless of weight or dimensions;

–Roll-Your-Own/Make-Your-Own – kilos, converted to a stick equivalent based upon 0.8 grams (per stick equivalent) for Roll-Your-Own and between 0.5

and 0.7 grams (per stick equivalent) for Make-Your-Own;

–Traditional Oral – pouches (being 1:1 conversion to stick equivalent) and kilos, converted to a stick equivalent based upon 2.8 grams (per stick equivalent)

for Moist Snuff, 2.0 grams (per stick equivalent) for Dry Snuff and 7.1 grams (per stick equivalent) for other oral;

–Modern Oral – pouches, being 1:1 conversion to stick equivalent;

–Heated sticks – sticks, being 1:1 conversion to stick equivalent; and

–Vapour – units, being pods, bottles and disposable units. There is no conversion to a stick equivalent.

Volume is recognised in line with IFRS 15 Revenue from Contracts with Customers, based upon transfer of control. It is assumed that there is no material

difference, in line with the Group’s recognition of revenue, between the transfer of control and shipment date.

Volume is used by management and investors to assess the relative performance of the Group and its brands within categories, given volume is a principal

determinant of revenue.

Volume Share

Volume share is the estimated number of units bought by adult consumers of a specific brand or combination of brands, as a proportion of the total estimated

units bought by adult consumers in the industry, category or other sub-category. Sub-categories include, but are not limited to, Heated Products, Modern

Oral, Traditional Oral, Total Oral or Cigarettes. Except when referencing particular markets, volume share is based on our Top markets. Top markets are

those markets that management determines are strategic in each category, with reliable share data from third parties. Management notes that the markets that

form the definition of Top markets may change between periods as this will reflect the development of the category within markets including their relative

revenue sizes.

Where possible, the Group utilises data provided by third-party organisations, including NielsenIQ, based upon retail audit of sales to adult consumers. In

certain markets, where such data is not available, other measures are employed which assess volume share based upon other movements within the supply

chain, such as sales to retailers. This may depend on the provision of data by customers including distributors/wholesalers.

Volume share is used by management to assess (and management believes that it is useful to users of the financial statements to understand) the relative

performance of the Group and its brands against the performance of its main competitors in the categories and geographies in which the Group operates. This

measure is also useful to understand the Group’s performance when seeking to grow scale within a market or category from which future financial returns

can be realised. Volume share provides an indicator of the Group’s relative performance in unit terms versus competitors.

Volume share in each period compares the average volume share in the period with the average volume share in the prior year (using the current year Top

markets). This is a more robust measure of performance, removing short-term volatility that may arise at a point in time. Due to the timing of available

information, volume share for 2025 is for the year ended 31 December 2025 unless otherwise stated.

However, in certain circumstances, related to periods of introduction to a market, in order to illustrate the latest performance, data may be provided as at the

end of the period rather than the average in that period. In these instances, the Group states these at a specific date (for instance, December 2025).

Please refer to page 20 for the Top Markets by region and by product category.

Value Share

Value share is the estimated retail value of units bought by adult consumers of a particular brand or combination of brands, as a proportion of the total

estimated retail value of units bought by adult consumers in the industry, category or other sub-category in discussion. Except when referencing particular

markets, value share is based on our Top markets. Top markets are those markets that management determines are strategic in each category, with reliable

share data from third parties. Management notes that the markets that form the definition of Top markets may change between periods as this will reflect the

development of the category within markets including their relative revenue sizes.

Where possible, the Group utilises data provided by third-party organisations, including NielsenIQ, based upon retail audit of sales to adult consumers. In

certain markets, where such data is not available, other measures are employed which assess value share based upon other movements within the supply

chain, such as sales to retailers. This may depend on the provision of data by customers (including distributors and wholesalers).

Value share is used by management to assess (and management believes that it is useful to users of the financial statements to understand) the relative

performance of the Group and its brands against the performance of its competitors in the categories and geographies in which the Group operates, specifically

indicating the Group’s ability to realise value relative to the market. The measure is particularly useful when the Group’s products and/or the relevant category

in the market in which they are sold has developed or achieved scale from which value can be realised.


British American Tobacco p.l.c. Form 20-F 2025

Value share in each period compares the average value share in the period with the average value share in the prior year (using the current year Top markets).

This is a more robust measure of performance, removing short-term volatility that may arise at a point of time. Due to the timing of available information,

value share for 2025 is for the year ended 31 December 2025 unless otherwise stated.

However, in certain circumstances, related to periods of introduction to a market, in order to illustrate the latest performance, data may be provided as at the

end of the period rather than the average in that period. In these instances the Group states these at a specific date (for instance, December 2025).

Please refer to page 20 for the Top Markets by region and by product category.

Our Top Markets are defined as the Top markets by industry revenue. These markets represent:

–c.80% of total industry vapour revenue (rechargeable closed systems consumables and disposables in tracked channels) in 2024.

–c.80% of total industry HP revenue in 2024.

–c.90% of total industry Modern Oral revenue in 2024.

–c.60% of total industry cigarettes revenue in 2024.

Regulation of the Group’s business

Overview

The tobacco and nicotine industry remains one of the most heavily regulated consumer goods sectors globally, with manufacturers operating under diverse

and often complex regulatory frameworks. Nearly all markets impose restrictions on the manufacture, pricing, sale, marketing, packaging and use of tobacco

products. At the same time, regulation of new, innovative, non-tobacco nicotine products continues to evolve as governments seek to establish appropriate

frameworks for these categories. In some markets, entirely new regulatory regimes are being developed, while in others, emerging products are being brought

under existing rules that were not originally designed for them – for example, Modern Oral products being treated under pharmaceutical legislation or

regulated as food products. The Group continues to engage proactively with governments, regulators and other stakeholders to provide advice and experience

that can help to shape balanced, evidence-based policies and achieve reasonable and proportionate regulation across all product categories.

Broadly, regulation of tobacco and New Categories falls into the following categories:

Category bans: Prohibitions on the sale, import, possession, or use of specific products, including newer nicotine or tobacco alternatives.

Product regulation: Regulations governing product composition, ingredients, format, design and attributes – such as nicotine strength or flavour –

along with product safety standards and disclosure requirements.

Packaging and labelling: Requirements mandating health warnings and other information on packaging, as well as requirements regarding pack

design, including shape, size, weight, and colour and plain packaging requirements.

Advertising and sponsorship: Partial or comprehensive restrictions on advertising, promotion and sponsorship, including on brand stretching (the

association of tobacco brands with non-tobacco products) and limitations on the use of certain descriptors or brand names.

Retail regulation: Controls on where and how products can be sold, such as outlet types (e.g. specialists, supermarkets or vending machines),

display restrictions (e.g. above or below the counter), and requirements for age verification and adult purchase.

Place-based restrictions: Bans on smoking or vaping in designated public or private spaces.

Price-related measures: Policies influencing product prices, including excise taxes, minimum pricing, and other fiscal measures.

Responsibility obligations: Requirements under Extended Producer Responsibility (EPR) schemes, such as waste management initiatives, and

actions to combat illicit trade.

In addition to complying with local laws and regulations, the Group implements a range of global policies and standards that may go beyond local

requirements, reflecting its commitment to responsible business practices and high regulatory compliance standards.

The Group recognises and supports the objectives of governments and policymakers in reducing smoking rates and the associated health impacts, as well as

the role of regulation in achieving these goals. Accordingly, the Group endorses tobacco and nicotine regulations that are grounded in robust evidence,

tailored to local circumstances, effectively achieve intended policy objectives, and which avoid unintended consequences, such as the expansion of illegal

markets.

Progressive, science-based regulation—including forward-looking policies for Smokeless products – is essential to achieving a smokeless world and

supporting governments’ smoke-free ambitions, helping to build A Better Tomorrow™.

The Group believes that the development of regulations for Smokeless products, should follow the below principles:

–be based on science and evidence, and proportionate to the products’ risks compared with those of combustible tobacco

–facilitate adult awareness of smokeless alternatives and allow adult-only access

–ensure high product quality and environmental sustainability, while ensuring consumer relevance; and

–enable effective enforcement.

World Health Organization’s Framework Convention on Tobacco Control

A large proportion of the regulation of tobacco products has been driven at global level by the World Health Organization (WHO)’s international treaty: the

Framework Convention on Tobacco Control (FCTC). The FCTC came into force in 2005 and contains provisions which seek to reduce tobacco consumption

and exposure to smoke. The original treaty is supplemented by one protocol on illicit trade and guidelines on the implementation of several of the treaty

obligations.

While the guidelines are not legally binding, they provide a framework for Parties to the treaty on implementing specific policies that target tobacco

consumption. To date, the FCTC has been ratified by 183 countries - not including the U.S.

Over time there have been growing efforts by tobacco-control advocates and public health organisations to encourage governments to regulate the tobacco

and nicotine industries in ways that go beyond the measures originally agreed in the FCTC. As a result, the scope of regulation is expected to continue to

expand, potentially encompassing products and areas not envisaged when the treaty was first adopted.

In recent years, the WHO and other public health bodies have been advancing what has been described as a broader interpretation of the FCTC, reframing its

objectives to encompass nicotine use rather than focusing solely on tobacco consumption. This is despite the original text referring to nicotine solely in the

context of dependence among tobacco users, not as a subject for wider regulation.

All engagement efforts by the tobacco industry are closely monitored by these organisations and are often erroneously characterised as unlawful. In turn, this

has an impact on the willingness of Parties to engage with the industry, which limits the opportunity for the tobacco industry to provide its experience and

expertise in the development of regulation around nicotine products.

The Eleventh Session of the Conference of the Parties to the WHO Framework Convention on Tobacco Control (COP11) took place in November 2025.

Among other debates, proposals and decisions, COP11 featured a debate on Tobacco Harm Reduction (THR), in which a number of Parties expressed


British American Tobacco p.l.c. Form 20-F 2025

support for a recommendation that Parties should consider it as a policy option when establishing national tobacco control frameworks and strategies.

However, no consensus was reached on the proposals. A decision on Article 19 (liability) was adopted, inviting Parties to consider recommendations from

the Expert Group – the Expert Group was created to examine the reasons for low implementation of Articles 9 and 10 (regulation of product contents and

disclosure) and related partial guidelines. Regarding environmental protection under Article 18, COP11 adopted a decision focusing on research, data

collection, awareness-raising and examination of potential regulatory pathways. Earlier proposals such as filter bans, mandatory classification of tobacco

waste as hazardous, and assertions of FCTC primacy in environmental fora were not included in the final text. Instead, the decision emphasises coordination

with environmental agreements and the preparation of a detailed report for COP12. No new guidelines were adopted at COP11. The next Conference of the

Parties (COP12) will take place in Armenia in November 2027.

EU Tobacco and Related Products Directive (2014/40/EU)

The most recent version of the EU Tobacco and Related Products Directive (2014/40/EU – colloquially called TPD2), which is the current main framework

for tobacco and nicotine product regulation for EU Member States, was adopted in April 2014 for transposition by May 2016. TPD2 seeks to ensure that the

same rules apply across all Member States, though they are also able to go beyond its requirements provided such measures are compatible with EU law.

For tobacco products, the main provisions of TPD2 include: a ban on the sale of cigarettes and roll-your-own tobacco with a characterising flavour, including

menthol flavours; requirements for combined pictorial and textual health warnings covering 65% of the two main pack surfaces (front and back) for

cigarettes; restrictions on pack shape and size, as well as ingredients reporting and ‘tracking and tracing’ requirements. The Directive also regulates vapour

products by introducing a nicotine limit of 20 mg/ml, a premarket notification requirement and ingredient reporting requirements and advertising restrictions.

In May 2021, the European Commission published a report reviewing the implementation of the Directive which concluded it had been successful in

reducing tobacco use but that more action was required, particularly on new categories such as vapour and tobacco heated products (THPs).

Stricter rules for THPs have already been adopted by way of a delegated act (Commission Delegated Directive 2022/2100), which removed the exemption

for THPs from the ban on tobacco products with characterising flavours and the requirement to carry certain health warnings (see the Regulation of

Ingredients, including Flavoured Tobacco Products section for details).

A revised legal instrument (TPD3), which may come in the form of an EU Regulation which would be immutable and directly applicable without any

transposition into national law, is currently being drafted. The European Commission is expected to propose a revision to the existing EU tobacco control

framework (both TPD2 and the Tobacco Advertising Directive) in 2027. The process of reviewing the tobacco control framework has been underway for the

last three years. A future framework will most likely take the form of a revised Directive, although directly applicable EU regulations are possible.

Specific provisions in any new Directive are yet to be confirmed. Recent Commission statements and publications - such as the EU’s Beating Cancer Plan

and Cardiovascular Health Plan - suggest that further restrictions will apply to traditional combustible tobacco products, which could include standardised

packaging, stricter ingredient rules and a ban on the use of plastic-containing filters. For vapour products, and where still permitted for THPs, changes could

include restrictions on flavours, packaging, communications and ingredients, and the extension of regulation to nicotine-free products. A revised TPD2 could

seek to regulate nicotine pouches, either by creating a new framework or potentially banning the category. Herbal Products for Heating are likely to also be

addressed by any Directive, although details on specifics are less clear for this category.

EU Single-Use Plastics and Environmental Regulation

The Single Use Plastics Directive (EU) 2019/904 (the SUP Directive) entered into force in July 2019. It mandates Member States to establish Extended

Producer Responsibility (EPR) schemes to cover the costs of litter clean-up and to implement on-pack marking requirements for tobacco product filters.

Member States were required to transpose the SUP Directive into national law by 3 July 2021, with an implementation deadline of 3 July 2021 for pack

marking requirements and of 5 January 2023 for EPR schemes.

However, several Member States experienced delays in transposing and implementing the SUP Directive, resulting in EPR schemes becoming operational

months - or in some cases years - behind schedule. Spain, for instance, only published its implementing regulations in late 2024, while Greece began

discussing its own in early 2025. At the EU level, the European Commission issued long-awaited guidance in 2025 to assist Member States in defining cost

criteria for litter clean-up. It also confirmed plans to evaluate the SUP Directive by 2027 to assess its impact and determine whether revisions are required. A

public consultation and call for evidence was launched in December 2025, open for feedback through to March 2026.

The European Commission also held consultations on a proposed Circular Economy Act in 2025 and on reducing administrative burdens arising from

environmental legislation. Internationally, the UN Environment Programme’s Intergovernmental Negotiating Committee failed to reach agreement on a

legally binding treaty on plastic pollution, after opposition to a cap on plastic production from countries including Russia, India and the United States. The

Committee is expected to reconvene in 2026.

Restrictions on the Use of Tobacco and Vapour Products in Public and Private Places

The Group operates across various markets where restrictions are in place on smoking and vaping in certain private, public, and workplace settings, such as

restaurants, bars, beaches, and nightclubs. While the specifics of these restrictions vary, comprehensive bans on smoking, vaping and the use of THPs in

public and workplace environments have been established in markets such as the U.S., Canada, the UK, France, Spain, New Zealand, and Australia. More

recently, new restrictions have included restrictions on the use of such products within a specified distance from designated public areas, such as primary

schools, and/or in private places such as vehicles when children are present or balconies in shared housing.

Regulation of Ingredients, including Flavoured Products

Some countries have restricted or banned the use of certain flavours or ingredients in cigarettes and other tobacco, vapour and nicotine products. These

actions are typically based on claims that flavoured products disproportionately appeal to minors, encourage youth smoking initiation or can increase the

addictiveness or toxicity of products. In these cases, permitted flavours are often limited to tobacco and/or menthol variants only.

Such restrictions have been enacted in markets including the U.S., Canada, Australia and Türkiye. The EU’s TPD2 similarly banned the sale of cigarettes,

roll-your-own tobacco and THPs, with characterising flavours other than tobacco. However, some regulations relating to flavours currently face legal

challenges. In Brazil, for example, a proposed ban on ingredients with flavouring or aromatic properties, including menthol, remains unenforced due to

ongoing litigation.

Additionally, regulators in Europe are increasingly examining restrictions on flavours and other ingredients for RRPs*† . For example, Finland, the

Netherlands, Denmark, Spain and the UK have adopted, or are considering adopting, restrictions on flavours for vapour products. In 2023, an instrument

(called a Delegated Directive), issued by the European Commission, extended the ban in the TPD2 on characterising flavours for tobacco products to also

apply to THPs. Member States were required to apply the Directive from October 2023.

A growing number of countries have restricted, or are considering restrictions on flavours for nicotine pouches, including Canada, Denmark, Latvia and

Poland, while a very limited number, such as Spain, are considering flavour restrictions for Herbal Products for Heating. In a few cases, some countries have

sought to restrict flavours for all “nicotine products”, thereby seeking to capture all categories under flavour provisions.

Further legislation on ingredients for both cigarettes and RRPs*† is expected. The Conference of Parties to the FCTC has tasked a Working Group to expand

the partial guidelines on the regulation of the contents of tobacco products and tobacco product disclosures (Articles 9 and 10 of the FCTC). This Working

Group’s activity was suspended in 2018 and an Expert Group was created to examine the reasons for low implementation of Articles 9 and 10 and related

partial guidelines. Although the Expert Group reported back in 2021, COP10 could not agree on whether to proceed through a Working Group or an Expert

Group. COP11 again failed to resolve this question, deferring it to COP12 in 2027.


British American Tobacco p.l.c. Form 20-F 2025

Plain and Standardised Packaging and Design

Plain (or ‘standardised’) packaging typically involves restrictions on using trademarks, logos, and colours on product packaging, allowing only a single

approved base colour and specifying the font, size, and placement of the brand name and variant. Tobacco control advocates have tended to prioritise these

measures, with non-binding FCTC guidelines suggesting that Parties "should" consider adopting plain packaging.

As of November 2025, 28 countries have either implemented or passed legislation for plain packaging requirements impacting cigarettes, including Australia,

Belgium, Canada, Denmark, France, Ireland, New Zealand, the Netherlands, Saudi Arabia, Singapore, Türkiye and the UK. A number of other countries,

including but not limited to Spain, South Africa and potentially Indonesia, are currently actively considering introducing similar legislation.

More recently, some regulators and tobacco control advocates have examined measures which could apply to individual cigarettes, such as mandatory on-

product health messages. A series of such messages was approved in Canada and Australia, and regular cigarettes were required to carry the messages as of

April 2025 in both jurisdictions.

Notes:

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

Product Display Bans at Point of Sale and Licensing Regimes

Product display bans at the point of sale and licensing regimes have become relatively commonplace for combustible tobacco products and have been

implemented for several years in a number of countries, including in Norway, Iceland, Finland, New Zealand, Thailand, Canada, Australia, and the UK. A

small number of countries have also sought to extend these provisions to apply to RRPs*†.

Some countries, such as Hungary, Finland and Spain, have also sought to restrict the supply of tobacco products, including through the adoption of licensing

regimes limiting the number of retail outlets from which it is possible to purchase tobacco products or by prohibiting the sale of tobacco products within a

certain distance of specified public places.

Illicit Trade

The illegal market for tobacco products is an increasingly important issue for governments and the industry across the world with an increasing number

considering or adopting regulation to support anti-illicit trade activities.

These regulations may include mandatory "tracking and tracing" systems to help regulators identify where seized products entered the supply chain, security

features to prevent counterfeiting, and inspection and authentication requirements for seized products. For instance, the TPD2 mandates that all unit packets

of tobacco be marked with a unique, indelible identifier that provides various details about the product’s route-to-market when scanned.

In November 2012, FCTC Parties adopted the protocol to Eliminate Illicit Trade in Tobacco Products (Protocol), which includes a range of supply chain

control measures, such as the implementation of "tracking and tracing" technologies. As of November 2025, 72 parties, including the EU, have ratified the

Protocol.

Regulation of Reduced-Risk Products*† (RRPs)

The vapour products category has grown rapidly in both size and complexity in the past decade. However, there is still no consensus on how RRPs*† should

be regulated. The EU’s TPD2, for example, establishes frameworks for the regulation of novel tobacco products and vapour products by introducing nicotine

limits, health warning requirements, advertising restrictions and pre-market notification and post-market disclosure obligations. As noted above, the World

Health Organization and other public health organisations have also sought to widen the scope of the FCTC to include RRPs*†.

In countries where sales of vapour products are permitted, governments are seeking to regulate them more strictly, including by adopting bans on vaping in

public places, restrictions on flavours, requiring plain packaging and retail display bans. An increasing number of governments have moved to ban the sale of

single-use vapour products, with Belgium, the UK and New Zealand implementing bans in 2025.

Other RRPs*† such as nicotine pouches and THPs are also facing increasing scrutiny. In many jurisdictions, existing legislative definitions of ‘tobacco

products’ are interpreted as applying to THPs, thereby subjecting them to the same restrictions as those designed for traditional combustible tobacco

products, often without any need to change existing laws.

Countries including Brazil, India and Mexico, have expressly banned all RRPs*† while others, such as Australia and Japan, regulate vapour products as

medicinal products, thereby heavily restricting or effectively banning their sale.

A number of countries, including Netherlands, Belgium, France and Germany, have implemented or have passed regulations to ban Modern Oral products,

either through provisions banning their sale outright, or via classification as foodstuffs, meaning their sale is de facto prohibited. Certain European countries,

such as Spain and Luxembourg, have sought to de facto ban sales of nicotine pouches by limiting the amount of nicotine permitted in the products to levels

so low that the products would be unsatisfying for consumers. Other jurisdictions have sought to implement bans via their classification as tobacco substitutes

or medicinal products. It is considered likely that tobacco-free nicotine pouches will be regulated at a European level as part of the next revision of the

Tobacco Products Directive (TPD). It is also possible that Herbal Products for Heating could be addressed in the TPD.

Additional measures

Generational Sales Bans (GSBs) are among the latest significant developments under discussion in tobacco control policy. These measures seek to prohibit

the sale of tobacco products - and in some cases nicotine products - to anyone born after a specified date, meaning affected individuals would never legally be

permitted to purchase such products in their lifetime. The most prominent example is in the United Kingdom, where legislation proposes to ban the sale of

tobacco and THPs to anyone born on or after 1 January 2009.

The concept has attracted some international attention: the Maldives passed legislation to implement a similar ban in 2025; the Turkish Government is

reportedly drafting a bill with comparable provisions; and the Australian and Norwegian Governments have indicated they are assessing similar approaches.

In several other countries, individual lawmakers have also attempted to introduce GSB proposals, though none have yet been enacted. The real-world

implications of a full generational ban - including any impact on illicit trade - remain uncertain.

New Zealand became the first country to legislate for a GSB in 2022, introducing a ban on tobacco sales to anyone born on or after 1 January 2009.

However, these provisions were repealed by a subsequent government due to enforcement concerns and fears of fuelling an illicit market. Likewise, the

Malaysian Government sought to include GSB provisions in a 2023 bill, but they were later removed amid concerns over their constitutionality.

Another key measure that has garnered attention from regulators in recent years is the proposal to gradually reduce the nicotine content in combustible

tobacco products to levels that are ‘minimal’ or ‘non-addictive’. Notable countries that have initiated significant discussions on these proposals include New

Zealand, where the measure was approved in Parliament but subsequently repealed by the successor government, with concerns expressed as to the efficacy

of such a method for cessation and its potential to contribute significantly to illicit trade. In the U.S., plans to introduce a similar policy have been removed

from the Government’s list of immediate priorities.

Cannabis

The regulatory environment and consumer sentiment towards cannabis is also evolving. From the reclassification of medical cannabis in Germany, to the

roll-out of recreational pilot programs in Switzerland and the Netherlands, we are seeing progress across the globe. Such developments are essential to further

exploration of the category, and we will continue to monitor the changes in the regulatory environment as it evolves.


British American Tobacco p.l.c. Form 20-F 2025

The U.S.

Through the Reynolds American Inc. (RAI) subsidiaries, the Group is subject to U.S. federal, state, and local laws and regulations. The Family Smoking

Prevention and Tobacco Control Act (FSPTCA), which was enacted in 2009, grants the U.S. Food & Drug Administration (FDA) broad authority over the

manufacture, sale, marketing, and packaging of tobacco products but initially limited the FDA’s authority to cigarettes, smokeless tobacco products, cigarette

tobacco and roll-your-own tobacco products. Elements of the FSPTCA include: filing of facility registrations, product listing, constituent testing and

ingredient information; obtaining the FDA's clearance for new products and product modifications; banning all characterising flavours other than tobacco or

menthol in cigarettes; establishing ‘user fees’ to fund the FDA’s regulation of tobacco products; requiring large pictorial warnings to be included on cigarette

packaging and advertising; directing FDA to establish good manufacturing practices; revising the labelling and advertising requirements for smokeless

tobacco products; and requiring the study of menthol. The U.S. Congress did limit the FDA’s authority in various ways, including prohibiting it from:

–Banning categories of tobacco products; and

–Requiring the reduction of nicotine yields of a tobacco product to zero.

On 10 May 2016, the FDA issued a final regulation, referred to as the Deeming Rule, deeming all remaining products that are “made or derived from

tobacco” to be subject to the FDA’s regulatory authority under the FSPTCA. The Deeming Rule became effective as of 8 August 2016, though some

requirements of the Deeming Rule had their own compliance dates. Such ‘deemed’ tobacco products subject to the FSPTCA include, among others,

electronic nicotine delivery systems (including e-cigarettes, e-hookah, e-cigars, vape pens, advanced refillable personal vapourisers, electronic pipes and e-

liquids mixed in vape shops), certain dissolvable tobacco products, cigars, pipe tobacco, and nicotine pouches.

The ‘pre-existing products’ date under the Final Rule for newly deemed products remained the same as the ‘pre-existing products’ date for those tobacco

products already subject to the FSPTCA – 15 February 2007 (known as ‘Pre-Existing Tobacco Products’). Any tobacco product that was not legally

marketed as of 15 February 2007 is considered a new tobacco product subject to premarket review by the FDA. The FDA established a compliance policy

allowing all newly deemed new tobacco products that were on the market as of 8 August 2016 to remain on the market so long as the manufacturer filed a

Premarket Tobacco Product Application (PMTA) by a specific deadline (9 September 2020).

In October 2019, R. J. Reynolds Vapor Company filed PMTAs for Vuse Solo. Based upon requirements of the FSPTCA that must be addressed in PMTAs,

and the FDA’s Guidance regarding the type of evidence required for such applications, the costs of preparing a PMTA are significant. R. J. Reynolds Vapor

Company thereafter filed PMTAs for the remaining Vuse products (Vibe, Ciro, and Alto) and the Velo products (pouch and lozenge) by the September 2020

deadline. Certain additional data from ongoing research relevant to the Alto and Velo applications were submitted as amendments to the PMTAs during the

FDA review process.

The FDA issued marketing granted orders for the Vuse Solo device and its tobacco (‘original’) flavour in October 2021, but issued a marketing denial order

for Vuse Solo flavours other than menthol (which were not on the market). That denial is being appealed with the FDA. In May 2022, the FDA issued

marketing granted orders for the Vuse Vibe device and its tobacco flavour and the Ciro device and its tobacco flavour but issued a marketing denial order for

flavours other than menthol (which were not on the market). R. J. Reynolds Vapor Company has appealed the denials issued for the relevant Vuse Vibe and

Ciro products by requesting further Agency review. We have received and are challenging the FDA's marketing denial orders dated January 2023 related to

Vibe and Ciro (menthol variants) and the FDA’s marketing denial orders dated March 2023 related to Solo (menthol variants).

In October 2023, the FDA issued a marketing denial order for Vuse Alto menthol and mixed-berry (the latter of which was not on the market). As with Vibe,

Ciro, and Solo, we challenged the denial order in court with retailers as co-petitioners. We have received court-ordered stays of enforcement of the FDA’s

denial orders for currently marketed menthol Vuse Alto, Solo, and Vibe products, which means these Vuse menthol products can continue to be marketed

and sold while the judicial review process continues. In the U.S., menthol variants account for 75% of total Vuse consumables (2024: 73%). In a case called

FDA v. Wages & White Lion Investments, L.L.C, the U.S. Supreme Court concluded that with respect to dessert, candy, and fruit-flavoured e-cigarettes sold

by another company, the FDA had not unlawfully changed positions on what evidence was required for those products, and the denial of the marketing

authorisation was rightful. We have arguments that the facts and circumstances of our cases are different from Wages & White Lion. There can be no

assurance, however, that the Vuse menthol or other flavours-related appeals will succeed. The U.S. Supreme Court ruled in 2025 on an important aspect of

R.J. Reynolds Vapor Company’s challenge to the FDA’s denial of menthol and mixed-berry Alto. Specifically, the Supreme Court held that retailers are

“adversely affected” and thus have a cause of action to challenge an FDA denial order. So the retailers affected by the FDA’s denial orders for Vuse menthol

products could validly challenge those orders in the Fifth Circuit Court of Appeals. In two subsequent decisions, the Fifth Circuit held that venue is proper so

long as just one of the petitioners has its principal place of business in the circuit, which, assuming it is applied in the Vuse cases, would allow R.J. Reynolds

Vapor Company’s challenges to remain in the Fifth Circuit. The Vuse cases are now being held in abeyance until May 2026. The FDA agreed to review a

new application for menthol Vuse Alto, which R. J. Reynolds Vapour Company submitted in August 2025. The menthol Vuse products can therefore remain

on the market until at least May 2026. In May 2026, if the FDA has not decided the new application, the parties may agree to continue holding the cases in

abeyance for longer, or may proceed to merits briefing.

In July 2024, the FDA issued marketing granted orders for the Vuse Alto device as well as Vuse Alto Rich Tobacco and Golden Tobacco. The Group’s Velo

products remain on the market in the U.S., pending the FDA's decisions on their premarket tobacco product applications and there can be no assurance these

applications will be granted. If the FDA denies a marketing authorisation, then the relevant product(s) would need to be withdrawn from the market (unless a

court, or the agency via supervisory review, intervenes).

Legislation granting the FDA authority over synthetic nicotine products (products containing nicotine not ‘made or derived from tobacco’) went into effect in

April 2022, which required manufacturers of such products to file PMTAs by a May 2022 deadline to continue marketing those products.

In July 2024, the Group acquired the marketing rights to synthetic nicotine pouch products that had submitted PMTAs by the May 2022 deadline. Those

products are marketed as Velo Plus Pouches and Grizzly Pouches. The applications for those products remain pending with the FDA and the products are on

the market in the U.S. pending the FDA’s review. There can be no assurance that the application will be granted.

Comprehensive Plan for Tobacco and Nicotine Regulation

In March 2018, the Agency issued three Advance Notices of Proposed Rulemaking, seeking information on (1) the lowering of nicotine levels to non-

addictive or minimally addictive levels, (2) the impact of flavours (including menthol) in increased initiation among youth and young adults as well as

assisting adult smokers to switch to potentially less harmful forms of nicotine delivery, and (3) the patterns of use and public health impact of premium

cigars. In April 2022, the FDA published a proposed product standard that would ban menthol as a characterising flavour in cigarettes. The FDA accepted

public comment on this proposed rule through August 2022. RAI Services Company submitted a detailed comment to the FDA (available on the U.S.

Government's Regulations.gov website) opposing the proposed rule as unsupported by existing scientific evidence and with the potential for negative

unintended consequences. The Biden Administration initially announced a non-binding target date of August 2023 for issuing the final rule. The

administration then pushed the target date back to March 2024. Then, in April 2024, the Biden Administration announced that the final rule would be further

delayed, and the final rule has yet to be issued. The rule has now been withdrawn from the FDA’s list of priorities.

Additional regulation

In December 2022, the sale of all tobacco products with characterising flavours other than tobacco (including menthol) were banned in the state of California.

This has negatively impacted the Group's volumes in the U.S. In January 2025, California extended the prohibition to cover tobacco products that produce a


British American Tobacco p.l.c. Form 20-F 2025

“cooling sensation” and instituted a registry for all “unflavored” tobacco products that can be sold in the state – this includes combustibles, Traditional Oral,

Modern Oral and Vapour products. The list took effect on 1 January 2026.

In April 2019, the FDA issued a proposed rule on the format and content of reports to demonstrate substantial equivalence. This follows on from the FDA’s

previous statements regarding the development of foundational rules so as to provide clarity and predictability to the tobacco product submission process,

including not only substantial equivalence applications but new product applications as well as MRTP applications. In September 2019, the FDA published a

proposed rule on the format and content of PMTAs.

The final foundational rules for substantial equivalence and PMTAs were published on 5 October 2021 and became effective on 4 November 2021. The FDA

has not yet promulgated its proposed rule for MRTP applications.

Under the FSPTCA, for a manufacturer to launch a new tobacco product or modify an existing tobacco product after 15 February 2007, the manufacturer

must obtain an order from the FDA authorising the new or modified product to be marketed. One exception is that a manufacturer that introduced a cigarette

or smokeless tobacco product between 15 February 2007 and 22 March 2011 could file a substantial equivalence report with the FDA demonstrating either

(1) that the new or modified product had the same characteristics as a product commercially available as at 15 February 2007, referred to as a predicate

product, or (2) if the new or modified product had different characteristics than the predicate product, that it did not raise different questions of public health.

A product subject to such report is referred to as a provisional product. A manufacturer may continue to market a provisional product unless and until the

FDA issues an order that the provisional product is not substantially equivalent, in which case the FDA could then require the manufacturer to remove the

provisional product from the market. Many of the RAI subsidiaries’ cigarette and smokeless tobacco products currently on the market are provisional

products.

In January 2017, the FDA issued its first proposed product standard whereby it would require the reduction, over a three-year period, of the levels of N-

nitrosonornicotine (NNN) contained in smokeless tobacco products. Since issuing this proposal, the FDA has simply stated that it is evaluating submitted

comments. The FDA’s semi-annual regulatory agenda has not listed the NNN proposal since its publication. Thus, it is not known whether or when this

proposed rule will be finalised, and, if adopted, whether the final rule will be the same as or similar to the proposed rule.

On 18 March 2020, the FDA issued a rule mandating the incorporation on cigarettes packages and advertising of graphic health warnings. The rule required

eleven new textual warnings, each accompanied by a specific graphic image, on the top 50% of the front and back of all cigarette packages, on the left 50%

of the front and back of cigarette cartons, and on 20% of all cigarette advertising in a location at the top of each advertisement, beginning 18 June 2021.

On 3 April 2020, RAI subsidiaries R. J. Reynolds Tobacco Company and Santa Fe Natural Tobacco Company, in conjunction with several cigarette

manufacturers and retailers, filed a lawsuit seeking an order and judgment holding unlawful, enjoining, and setting aside the rule in its entirety. The court,

following multiple orders to delay the implementation of the rule, invalidated it as unconstitutional in December 2022. In February 2023, the FDA appealed

this decision to the U.S. Court of Appeals for the Fifth Circuit. On 21 March 2024, the U.S. Court of Appeals for the Fifth Circuit issued its opinion reversing

the court’s decision, and concluding that the warnings are constitutional. On 25 November 2024, the U.S. Supreme Court declined to review the Fifth

Circuit’s decision. Plaintiffs continue to pursue their remaining statutory claims against the rule.

On 13 January 2025, the District Court entered an order postponing the effective date of the rule pending final disposition of the remaining statutory claims.

The FDA appealed that order to the U.S. Court of Appeals for the Fifth Circuit; briefing has concluded and the court has not yet scheduled oral argument. In

the meantime, on 29 August 2025, in a separate case, the U.S. District Court for the Southern District of Georgia entered an order vacating the rule due to the

FDA’s failure to follow notice-and-comment procedures. The FDA has appealed that order to the U.S. Court of Appeals for the Eleventh Circuit, and the

appeal remains pending.

Under the prior Biden Administration, the FDA announced its intention to issue a final rule to ban menthol as a characterising flavour in cigarettes. The

Trump Administration has listed the rule as withdrawn on the Spring 2025 Unified Agenda. It is not known whether or when this rule will be finalised, and, if

adopted, whether the final rule will be the same as or similar to the proposed rule.

On 15 January 2025, in the final days of the outgoing Biden Administration, the FDA issued a proposed product standard whereby the agency would limit

nicotine levels in cigarettes following a two-year effective date from publication of any final rule. The proposed rule was subject to public comment. RAI

companies submitted a detailed comment opposing the proposed comment deadline. The Trump Administration has listed the rule as “withdrawn” on the

Spring 2025 Unified Agenda.

Cigarettes and other tobacco products are subject to substantial taxes in the U.S. All states and the District of Columbia currently impose cigarette excise

taxes. Certain city and county governments, such as those of New York City, Philadelphia, and Chicago, also impose substantial excise taxes on cigarettes

sold in those jurisdictions. Also, all states and the District of Columbia currently subject smokeless tobacco products to excise taxes. Various states and the

District of Columbia impose a tax on Vapour products, such as e-cigarettes, and many other states have proposed taxes on Vapour products. Currently, there

is no federal tax on Vapour products.

State and local governments also consider and implement other legislation and regulation regarding the sale of tobacco products. Measures include, among

others, limiting or prohibiting the sale of flavours in tobacco products, restricting where tobacco products may be sold and increasing the minimum age to

purchase tobacco products.

The Group believes that, as a responsible business, it can contribute through information, ideas and practical steps, to help regulators address the key issues

regarding its products, including underage access, illicit trade, product information, product design, involuntary exposure to smoke and the development of

potentially less harmful products, while maintaining a competitive market that accommodates the significant percentage of adults who choose to be tobacco

consumers. The Group is committed to working with national governments and multilateral organisations and welcomes opportunities to participate in good

faith to achieve sensible and balanced regulation of traditional tobacco and potentially RRPs.

See also the Group’s risk factors related to legal, regulatory and compliance risks under Item 3.D.

Notes:

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

Item 4.C - Organizational structure

British American Tobacco p.l.c. is the Group’s parent company. We have a number of direct and indirect subsidiaries, incorporated across the globe. A

complete list of our subsidiaries is filed as Exhibit 8 to this Form 20-F.


British American Tobacco p.l.c. Form 20-F 2025

Item 4.D - Property, plant and equipment

The Group uses a combination of in-house and contract manufacturers to manufacture its products.

BAT-owned manufacturing facilities1


	United States	AME	APMEA	Total
Fully integrated manufacturing	1	13	22	36
Other processing sites (including leaf threshing and OTP)	—	6	9	15
Sites manufacturing other products (including Snus, Modern Oral and Liquids)	2	5	—	7
Research and development facilities	1	2	3	6
Total	4	26	34	64

Note:

1.As of 31 December 2025.

The plants and properties owned or leased and operated by the Group’s subsidiaries are maintained in good condition and are believed to be suitable and

adequate for the Group’s present needs.

The technology employed in the Group’s factories is sophisticated, especially in the area of cigarette-making and packing where throughputs can reach

between 500 and 1,000 packs per minute. The Group can produce many different pack formats (e.g., the number of cigarettes per packet) and configurations

(e.g., bevel edge, round corner, international) to suit marketing and consumer requirements. New technology machines are sourced from the leading

machinery suppliers to the industry. Close cooperation with these organisations helps the Group support its marketing strategy by driving its product

innovations, which are brought to the market on a regular basis.

The Group utilises quality standards, processes and procedures covering the entire end-to-end value chain to help to ensure quality products are provided to

its customers and adult tobacco consumers according to the Group’s requirements and End Market regulatory requirements.

In 2025, the Group manufactured cigarettes in 36 cigarette factories in 35 countries. These plants and properties are owned or leased and operated by the

Group’s subsidiaries. The Group’s factory outputs and establishments vary significantly in size and production capacity. In line with our corporate

commitment to fight climate change, our factories have decarbonisation, water usage and waste optimisation programmes.

Also in 2025, the Group used third-party manufacturers to manufacture the components required, including the devices, related to New Categories. The

Group also used third-party manufacturers to supplement the Group’s own production facilities in the U.S. and Poland to bottle the liquids used in Vapour

products. Further, in 2025, the Group’s manufacturing facilities in Poland and Sweden (included in the above analysis) also undertook research and

development activities, but were not distinct sites from the manufacturing activities. As such, they were not recorded in the research and development

facilities to avoid the risk of double counting.

For more information on property, plant and equipment, please refer to note 13 in Part III - Item 18 Notes on the Accounts.

Item 5 - Operating and Financial Review and Prospects

Item 5.A - Operating results

The following discussion is based on and should be read in conjunction with the Company’s audited consolidated financial statements beginning on page 102

of this report.

Key Factors Affecting Results of Operations

The illicit market

The illicit tobacco market has continued to increase since the COVID-19 pandemic, and is estimated to have reached just above 15% of total global

volume in 2025. Exacerbated by the increased cost-of-living in many countries, overall illicit volumes are expected to approach an unprecedented level of

sales by 2027. Illicit trade exists in all world regions. Its growth is forecast to continue to worsen especially in Australasia, and the Middle East and Africa, in

the continued absence of effective enforcement and regulatory or fiscal changes.

Global combustibles regulation

Combustible tobacco products remain among the most tightly regulated consumer goods worldwide. Longstanding measures across many countries include

restrictions on flavour additives, standardised (or plain) packaging, prohibitions on smoking in enclosed public spaces, and bans on retail product displays – all

aimed at reducing the appeal, visibility and accessibility of tobacco.

In recent years, regulation has intensified further, with many governments – often drawing on World Health Organization (WHO) guidance – setting ‘smoke-

free’ or ‘tobacco endgame’ targets aimed at reducing adult smoking prevalence to below 5% within defined timeframes. To achieve these goals,

some countries have begun considering more novel or interventionist approaches.

One such approach is the generational sales ban (GSB), which would permanently prohibit the sale of cigarettes and other tobacco products to anyone born after a

specified year. The UK is among the most prominent examples, with legislation under consideration that would ban sales to individuals born on or after 1 January

2009. The Maldives has enacted similar legislation, while the Turkish, Australian, Irish and Norwegian governments are among those reported to be evaluating

comparable measures to various degrees. Individual lawmakers in other countries and regional assemblies have also attempted to introduce GSB-style bills.

New Zealand and Malaysia were among the first countries to legislate for such policies but subsequently reversed course in 2023, citing concerns around

enforcement, proportionality and constitutional compatibility. The real-world implications of a full generational ban – including any impact on illicit trade – remain

uncertain. Other recent innovations include Canada and Australia’s introduction of requirements for individual health warnings to appear directly on cigarette

sticks.

Lastly, environmental considerations are increasingly shaping tobacco regulation. The European Union’s Single-Use Plastics Directive (SUP Directive)

requires Member States to establish extended producer responsibility schemes covering products such as cigarette filters. The European Commission has

commenced an evaluation of the SUP Directive – to be completed by July 2027 – to assess how it has worked in practice, collect evidence and opinions on

whether the current measures are sufficient, and identify areas for improvement. Proposals to restrict, phase out or more tightly regulate the use of filters in cigarettes

have been raised in a small number of countries.

At the global level, negotiations to develop an internationally binding instrument on plastic pollution, including in the marine environment, remain ongoing.

A number of stakeholders have advocated for the inclusion of measures specific to cigarette filters, signalling that sustainability issues are likely to be an

increasing focus in future tobacco regulation.


British American Tobacco p.l.c. Form 20-F 2025

See also the Group risk factors related to legal, regulatory and compliance risks under Item 3.D and the section regarding the regulation of the Group’s

business under Item 4.B for further details on regulation and the related risks.

AI and Optimisation

Artificial intelligence (AI) continues to transform how businesses operate, make decisions and engage with consumers. The integration of AI across product

design, logistics and marketing has accelerated, delivering efficiency gains, deeper insights and more tailored experiences. Yet the full extent of AI’s benefits

is still being realised. While some applications remain experimental or, in some cases, potentially overstated, others are already generating measurable

productivity improvements and reshaping competitive dynamics.

A changing workforce

Automation and intelligent systems are redefining roles and organisational structures. As demand for digital and analytical skills grows, companies are

rethinking talent strategies, upskilling employees and embedding AI into daily operations to boost performance and engagement. Those that adapt early are

likely to capture significant productivity and innovation gains.

Smarter decisions and empowered consumers

AI is enabling businesses to anticipate consumer needs and optimise product design, sustainability and quality. While consumers are using AI to discover,

compare and assess products, making informed, data-driven choices. The growing intersection of AI and personal health technology is also shaping

behaviour. From wearable devices and digital health assistants to personalised wellness recommendations, consumers are using AI to better understand and

manage their wellbeing. For the nicotine industry, these developments could influence how adult consumers seek information, evaluate alternatives and make

more health-conscious decisions – reinforcing the importance of transparency, accuracy and innovation in product development.

Continued transition to new products

The rapid adoption of new, lower risk*† nicotine products is transforming the global market. The category of alternative products has expanded well

beyond early vapour devices to include tobacco heating products (THPs), nicotine pouches, and – more recently – herbal products designed for

heating. These innovations are increasingly popular among adult consumers seeking to continue using nicotine while avoiding the risks of

combusting tobacco.

This shift represents one of the most significant structural changes in the history of the nicotine sector. By 2028, the global number of adult smokers

is projected to fall by around 20 million, driven both by evolving social attitudes towards smoking and the accelerating consumer migration towards

RRPs*†. RRPs are forecast to account for a steadily rising share of total industry revenue, reflecting both consumer demand and continued product

innovation.

Within this landscape, HPs are expected to grow by around 28% in volume over 2024–2029, while nicotine pouches are forecast to grow by

approximately 130%. Volume growth for vapour products is expected to remain inconsistent and broadly flat, reflecting continued legislative

uncertainty and regulatory grey areas in key markets.

New Categories Regulation

While alternative nicotine products are becoming more established across global markets, there remains significant divergence in how RRPs*† are regulated.

These products’ reduced-risk*† potential has been recognised by regulators in the UK and New Zealand, both of which have publicly stated that RRPs*†

represent a lower risk alternative to continued smoking. These countries have introduced proportionate regulatory frameworks that reflect this position while

maintaining strong safeguards to prevent underage access. Other markets, including Greece, the Czech Republic and Sweden, have also signalled cautious

support for Tobacco Harm Reduction as a complementary public health approach.

In contrast, several major markets – such as Brazil, Argentina, Mexico and India – remain sceptical of the potential public health benefits of RRPs*†. These

countries have opted to impose broad restrictions or outright bans on product categories such as vapour products and tobacco heated products. Belgium and

France, similarly, have prohibited the sale of nicotine pouches, while Kazakhstan has implemented a ban on vapour products. In other cases, governments

have adopted more limited prohibitions – such as non-tobacco flavour bans or product-specific restrictions – that nevertheless reduce consumer choice.

It is increasingly important that this debate be informed by evidence, ensuring that millions of adult smokers, who would otherwise continue to smoke, are

not discouraged from switching to reduced-risk*† alternatives.

The UK and Sweden illustrate how balanced, science-led regulations that make RRPs *† available to adult consumers can accelerate Tobacco Harm

Reduction.

The illicit RRP*† market

Stricter nicotine regulations globally have also created significant challenges for the legitimate industry. For example, in 2024 the illicit market is estimated to

have accounted for around 60% of global vapour product sales on a unit basis, being more than 76% of liquids (in litres) sold. We estimate that in the U.S.

illegal flavoured and single-use vapour products account for 70% of the total U.S. vapour market. This rapid growth has in part been fuelled by regulatory

gaps, particularly in regions with restrictive or unclear frameworks and inadequate enforcement. As a result, illicit products have proliferated the market.

Beyond Nicotine1

The Wellbeing and Stimulation category covers products that consumers are seeking to better manage their daily wellbeing. It is expected to grow

to £460 billion by 2030.

Some consumers are also beginning to look at alternative stimulant products that use nicotine-like analogues such as Ceretine, Metatine and Hippotine. These

substances replicate certain effects of nicotine. However, they are not regulated as such, placing analogue-based products in a regulatory grey area and

keeping them niche at present.

The nicotine and cannabis markets continue to evolve, and are expected to reach a combined US$1.2 trillion in value by 2029. While the growth of the adult-

use cannabis market is predominantly concentrated in the U.S., the global cannabis market is anticipated to expand as more countries reassess their

prohibitionist approaches.

In Europe, Germany became the first major EU Member State to legalise personal cultivation and possession for recreational use in 2024, with Luxembourg

and Malta taking similar steps and the Czech Republic legalising home cultivation and limited possession in 2026.

This shifting regulatory environment reflects a broader global trend, as governments assess the health, social and economic implications of legalisation and

seek to balance public health objectives with consumer preferences and emerging economic opportunities.

The global legal recreational cannabis market has grown, from around £5 billion (2019) to £13 billion (2024)2. It is predicted to continue to grow by 8%3

each year, with non-combustible formats driving this category growth.

We believe this is signalling a shift away from traditional smokable combustible cannabis formats into other, potentially less harmful, more progressive

consumption methods.

1.Unless otherwise stated, all data sources within this section are from Euromonitor International research published in 2025 and based on 2024 data (the latest full year available), unless otherwise stated.

All figures exclude China unless otherwise stated.

2.Euromonitor 2024 Market Sizing Data | Global.

3.Euromonitor 2024 Market Sizing Data | Global.


British American Tobacco p.l.c. Form 20-F 2025

Cost of Living

Despite easing inflation in some regions, the cost of living remains a global challenge. Persistent pressures on energy, food and housing – alongside currency

volatility and uneven wage growth – continued to influence consumption patterns worldwide in 2025. Entering 2026, higher living costs and constrained

disposable income are prompting consumers across both developed and emerging markets to reassess spending priorities and value perceptions.

Global shifts in consumer behaviour

Consumers are becoming more deliberate in their purchasing choices – trading down in some categories, delaying discretionary spending and seeking

promotions or discounts wherever possible. Meanwhile, health, wellbeing and digital lifestyle management continue to shape preferences, even in cost-

conscious contexts. In emerging economies, affordability is a key driver of access and inclusion, while in more mature markets consumers are balancing

price sensitivity with innovation, quality and sustainability.

Balancing cost, health and value

Brands that respond with affordable innovation, transparent value propositions and locally relevant offerings are best placed to maintain loyalty. For the

nicotine industry, ensuring that Reduced-Risk Products*† (RRPs) remain accessible and competitively priced will be critical to supporting informed consumer

choice globally. Fiscal and regulatory frameworks that reflect relative risk potential can help sustain affordability, encourage switching for those who would

otherwise continue to smoke, and reinforce progress toward harm reduction in a cost-sensitive world.

Geopolitics and Trade

The global trading environment remains shaped by heightened geopolitical competition and economic realignment. As the policy shifts that followed the

2024 super-election cycle continue to take effect, governments are pursuing active approaches to industrial policy, supply-chain resilience and market access.

These dynamics will continue to influence trade flows and business strategy through 2026 and beyond, underscoring the importance of stability and

predictable global frameworks.

Evolving trade architecture

The world’s major economies – notably the U.S., China and the EU – are advancing distinct approaches to trade, technology and regulation. This has

encouraged innovation and regional investment, while also creating growing complexity and uneven standards across markets. Greater international

alignment around product quality, safety and sustainability standards will be essential to ensure fair competition, consumer protection and a level playing

field within global markets.

Building resilience

As global trade becomes more fragmented, resilience will depend on flexibility, foresight and engagement with evolving regulations. Businesses that can

adapt quickly will be best placed to manage disruption and maintain market continuity. For the nicotine industry, this means ensuring agile supply chains,

strong compliance systems and active participation in global efforts to enhance consistency and mutual recognition of product standards.

Notes:

All data sources within this section are from Euromonitor International research published in 2025 and based on 2024 data (the latest full year available), unless otherwise stated. All figures exclude China unless

otherwise stated.

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

Results for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

Group Operating Review

Accounting Policies

The application of the accounting standards and the accounting policies adopted by the Group are set out in the Group Manual of Accounting Policies and

Procedures (GMAPP).

GMAPP includes the Group instructions in respect of the accounting and reporting of business activities, such as revenue recognition, asset valuations and

impairment testing, adjusting items, the accrual of obligations and the appraisal of contingent liabilities, which include taxes and litigation. Formal processes

are in place whereby central management and End Market management confirm adherence to the principles and the procedures and to the completeness of

reporting. Central analyses and revision of information are also performed to ensure and confirm adherence.

In order to prepare the Group’s consolidated financial information in accordance with IFRS, management has used estimates and assumptions that affect the

reported amounts of revenue, expenses and assets, and the disclosure of contingent liabilities, at the date of the financial statements.

Accounting Estimates

The critical accounting estimates are described in note 1 in Part III - Item 18 Notes on the Accounts and include:

–review of asset values, including goodwill and impairment testing;

–estimation of provisions, including as related to taxation and legal matters, specifically in respect of the Approved Plans in the Canadian litigation

settlement; and

–estimation and accounting for retirement benefit cost.

Accounting Judgements

The critical accounting judgements are described in note 1 in Part III - Item 18 Notes on the Accounts and include:

–identification and quantification of adjusting items;

–determination as to the value of provisions and the exposures to contingent liabilities related to litigation (including as related to Canada) or other

outstanding claims;

–determination as to whether control (subsidiaries), joint control (joint arrangements), or significant influence (associates) exist in relation to investments

held by the Group;

–review of applicable exchange rates for transactions with and translation of entities in territories where there are restrictions on the free access to foreign

currency or multiple exchange rates; and

–the determination as to whether perpetual hybrid bonds should be classified as equity instead of borrowings.

Revenue

Reported revenue decreased 1.0% to £25,610 million, negatively impacted by a translational foreign exchange headwind of 3.1%.

On a constant currency basis, revenue grew by 2.1%. Our performance was driven by:


British American Tobacco p.l.c. Form 20-F 2025

–The U.S. where revenue increased 2.3% to £11,534 million (up 5.5% at constant rates of exchange) driven by combustibles, which benefitted from both

strong price/mix (including excise duty drawback) contributing +12.3% and the success of the Velo Plus launch (with Modern Oral up 297% to £317

million (up 310% at constant rates of exchange))..

These more than offset lower combustibles volume (down 7.7%) and lower revenue in Vapour (down 6.4% to £934 million, being a decrease of 3.4% at

constant rates of exchange);

–AME, which was up 0.7% to £9,309 million (up 3.3% at constant rates of exchange). This was led by combustibles price/mix (+7.2%) and the growth of

Modern Oral (up 18.3% to £800 million, an increase of 17.3% at constant rates of exchange), which drove New Categories up 4.8% to £1,813 million (up

4.3% at constant rates of exchange) despite a decline in Vapour of 11.2% to £543 million (down 11.4% at constant rates of exchange); and

–APMEA, which was down 10.9% to £4,767 million (down 7.2% at constant rates of exchange) due to regulatory and fiscal challenges in Australia and

Bangladesh, partially offset by higher revenue in Pakistan, Nigeria and Indonesia.

New Categories continued to grow, with revenue up 5.5% to £3,621 million (up 7.0% at constant rates of exchange) driven by Modern Oral (up 47.4% to

£1,165 million, an increase of 48.0% at constant rates of exchange). While HP was down 0.7% to £914 million, this was an increase of 1.0% at constant rates

of exchange)). However, Vapour declined 10.4% to £1,542 million (down 8.6% at constant rates of exchange) due to the continued impact of illicit products

mainly in the U.S. and Canada and regulatory and excise changes in the UK, Poland and France and market exits.

Refer to pages 34 to 37 for a discussion on regional performance and pages 37 to 40 for a further discussion on the performance by category.

Profit From Operations

Profit from operations on a reported basis was up 265%, with reported operating margin up 28.4 ppts to 39.0%. This was driven by lower adjusting items of

£1,575 million (compared to £9,154 million in 2024), largely due to:

–movements in respect of the Canadian litigation settlement. While 2024 included a charge of £6.2 billion, 2025 benefited from a net credit of £524 million

following a change to the forecasted Canadian combustibles industry performance. This reduced the provision by £708 million (credit) but was partly offset by a

goodwill impairment charge of £184 million, described on page 162;

–the classification in 2025 of the Group's business in Cuba as held-for-sale, recognising a charge of £235 million (2024: £74 million); and

–the partial release of the provision recognised in respect of an excise assessment in Romania (2025: £15 million credit; 2024: £449 million charge).

Translational foreign exchange was a headwind of 3.1% or £364 million.

On an adjusted, constant rates basis, profit from operations was up 0.4%, despite inflation on our product costs estimated to be 5.8% (or £315 million). This

increase was largely due to the U.S., which was up 5.9%, and AME, up 1.7%. However, APMEA was down 17.9%, with the regional delivery largely driven

by the respective revenue performance discussed above.

The regional performance includes a total increase in New Categories contribution of £193 million to £442 million at constant rates.

Included within the Group’s adjusted profit from operations was £308 million (2024: £520 million) related to the Canadian business, excluding New

Categories.

Raw materials and other consumables costs decreased 2.2% to £4,465 million in 2025, compared to £4,565 million in 2024.

Our reported costs are impacted by translational foreign exchange, which was a tailwind in 2025.

Our cost base was negatively impacted by the macro-economic headwinds, with inflation of £315 million (or 5.8%) in 2025 mainly due to higher leaf prices

(impacted by adverse weather conditions) and manufacturing costs (labour and utilities). Results will likely continue to be impacted by inflationary forces

(particularly related to tobacco leaf). Such pressures were offset by efficiency initiatives delivering £327 million in 2025 in total savings.

We committed to deliver cost savings of over £1.2 billion in the three years to 2025 and have delivered £1.2 billion, in line with expectations.

Transactional foreign exchange was also a negative drag to our performance, at £96 million in 2025, due to movement in our operating currencies largely

against the US dollar.

Employee benefit costs increased 10.4% to £3,125 million (2024: £2,831 million). The increase in 2025 was driven by salary inflation, a £28 million charge

as the UK pension fund progressed towards a buy-out and a higher average overall headcount (2025: 50,290; 2024: 48,209), including an increased

headcount in the U.S. in line with reinvestment in trade capabilities.

Depreciation, amortisation and impairment costs declined by £554 million to £2,547 million in 2025 compared to £3,101 million in 2024. The charge

largely relates to the amortisation of certain U.S. combustibles brands over a useful economic life not exceeding 30 years from 1 January 2024.

However, the decrease was mainly due to a charge, in 2024, in respect of Camel Snus as the Group recognised an impairment charge of £646 million

reflecting the U.S. market dynamics as consumers of traditional snus products increasingly adopt Modern Oral variants and which did not repeat.

This was partly offset by the recognition in 2025 of goodwill impairment charges of £72 million in respect of Peru and £21 million (2024: £39 million) in

respect of Malaysia in response to the ongoing difficult trading conditions. Also in 2025, a goodwill impairment charge of £184 million was recognised to

reflect the revised forecast of the Group's Canadian business.

These are described in notes 4 and 7 in Part III - Item 18 Notes on the Accounts.

Expenditure on research and development, including employee benefit costs and depreciation, was £358 million in 2025 (2024: £380 million), with a focus

on products that could potentially reduce the risk associated with smoking conventional cigarettes.

Other operating income decreased by £148 million to £192 million (2024: £340 million), as income in 2024 included the settlement of historical litigation

in respect of the Fox River (£132 million).

Other operating expenses decreased by £7,198 million to £5,895 million (2024: increase of £5,555 million to £13,093 million).

Both years have been impacted by the provision recognised in relation to the Canadian litigation settlement. In 2024, a charge of £6,203 million was

recognised. In 2025, this was partially reversed, following a change to the forecasted Canadian combustibles industry performance impacting the present

value of the future liability, partially offset by the finalisation of the terms of the settlement, resulting in a net credit of £708 million as described in note 24 in

Part III - Item 18 Notes on the Accounts.

Furthermore in 2024, the Group recognised a charge in respect of an excise assessment in Romania of £449 million, which was reduced by £15 million in

2025.

The Group continued to invest in New Categories, maintaining the level of investment (in marketing spend and research and development) in line with 2024.

The Group incurred £49 million (2024: £66 million) of costs related to recycling (Take-Back and waste collection schemes).These charges are described in

note 33 in Part III - Item 18 Notes on the Accounts.

Adjusting items included within profit from operations totalled £1,575 million in 2025 (2024: £9,154 million). These mainly related to:

–trademark amortisation and impairment (2025: £1,584 million; 2024: £2,279 million) largely in respect of the impairment of certain of the U.S. acquired

brands as discussed within note 12 in Part III - Item 18 Notes on the Accounts. The decrease in 2025 was mainly due to the adjustment for the impairment


British American Tobacco p.l.c. Form 20-F 2025

charge (in 2024) in respect of Camel Snus of £646 million. Also in 2025, a goodwill impairment charge of £184 million was recognised to reflect the

revised forecast of the Group's Canadian business with goodwill impairment charges recognised of £72 million in respect of Peru and £21 million (2024:

£39 million) in respect of Malaysia in response to the ongoing difficult trading conditions;

–a net credit of £708 million in 2025 (compared to a charge of £6,203 million in 2024), in respect of the settlement provision in Canada discussed earlier;

–a credit in 2025 of £15 million (compared to a charge of £449 million in 2024)in respect of an excise assessment in Romania;

–a charge of £66 million mainly in respect of the Fit2Win programme, which will simplify the way we work, with increased agility and embedding digital

decision making;

–a charge of £39 million which related to the loss of a distribution facility in Ukraine following a missile attack in the second half of 2025;

–a charge of £235 million related to the classification of the Group's business in Cuba as held-for-sale (2024: £74 million);

–other litigation costs of £66 million (2024: £157 million) which, in both periods, was mainly in respect of U.S. litigation costs including Engle progeny and other

health-related claims. Refer to note 6(d) in Part III - Item 18 Notes on the Accounts;

–a charge of £28 million recognised in respect of the proposed pension liability management programme as the UK pension fund progressed towards a buy-out;

–impairment charges in 2024 in respect of fixed assets related to the Group’s head office in London (£75 million) that did not repeat; and

–a credit in 2024 as the Group settled the historical litigation in respect of the Fox River (£132 million).

Adjusted profit from operations is the Group’s profit from operations before adjusting items referred to above.

Adjusted profit from operations decreased by 2.7% to £11,572 million (2024: £11,890 million). On a constant currency basis, this was an increase of 0.4%.

New Categories continued to improve their financial performance.

Included within the Group’s adjusted profit from operations was £308 million (2024: £520 million) related to the Canadian business, excluding New

Categories.

Operating Margin

Operating margin in 2025 was up 28.4 ppts to 39.0% compared to 10.6% in 2024. This improvement was largely due to the net impact of lower one-off items

described earlier, including the net impact of charges in respect of the provision recognised in relation to the Canadian settlement.

Excluding the adjusting items and the impact of translational foreign exchange, in 2025, adjusted operating margin decreased by 80 bps to 45.2% from

46.0% in 2024 at constant rates of exchange. The decrease was driven by the difficult trading in high margin markets including Australia and Canada which

more than offset the improved financial performance of New Categories.

Net Finance Costs

In 2025, net finance costs were £1,819 million, an increase of £721 million on 2024 which were £1,098 million.

The increase in net finance costs was largely due to:

–a net credit in 2024 of £590 million related to the capped cash debt tender offers, which targeted series of low-priced, long-dated GBP-, EUR- and USD-

denominated bonds, under which the Group repurchased bonds prior to their maturity in an aggregate principal amount of £1.8 billion, including

£15 million of accrued interest, completed in May 2024 and, including other costs of £3 million;

–a charge, in 2025, of £112 million related to the unwinding of the discount on the provision associated with the Approved Plans in Canada;

–interest of £66 million (2024: £8 million) in respect of a tax provision in the Netherlands (described in note 8 in Part III - Item 18 Notes on the Accounts);

partly offset by

–a net monetary gain of £63 million related to Venezuela, due to the continued application of hyperinflation accounting under IAS 29; and

–lower finance costs related to FII GLO of £30 million (2024: £61 million), discussed within note 10(b) in Part III - Item 18 Notes on the Accounts.

Before adjusting items described above, adjusted net finance costs were 3.8% higher at £1,649 million (2024: £1,589 million), an increase of 5.5% at constant

rates of exchange, as 2025 was also impacted by a translational foreign exchange tailwind due to the relative movement of sterling of 1.7%.

This was largely due to lower interest income mainly related to balances held in Canada, as £2.6 billion was paid in line with the Approved Plans (discussed

on page 162) with interest income (net of fair value gains on derivatives) in Canada reducing from £126 million in 2024 to £57 million in 2025.

The Group’s average cost of debt was 5.0% in 2025, compared to 4.9% in 2024.

In 2021, the Group issued perpetual hybrid bonds totalling €2 billion. During 2025, the Group repurchased €1 billion of perpetual hybrid bonds and issued a

further €1.2 billion of perpetual hybrid bonds. The perpetual hybrid bonds are recognised, in line with IAS 32 Financial Instruments, as equity. Interest on

such instruments is recognised in reserves rather than as a charge to the income statement in net finance costs. Accordingly, in 2025, in line with IAS 33

Earnings Per Share, £87 million (2024: £42 million) has been recognised as a deduction from earnings similar to non-controlling interests.

The Group has debt maturities of around £2.4 billion in 2026 and around £2.9 billion in 2027. Due to higher interest rates, net finance costs are expected to

increase as debts are refinanced.

Associates and Joint Ventures

Associates largely comprised the Group’s shareholding in its Indian associate, ITC Limited (ITC) with investments in other associates including Organigram

Global Inc. (Organigram).

The Group’s share of post-tax results of associates and joint ventures, included at the pre-tax level under IFRS, decreased from £1,900 million to

£1,681 million in 2025.

ITC and ITC Hotels

The Group’s share of post-tax results in respect of ITC was 12.3% lower at £1,672 million (2024: £1,906 million).

In 2025, the Group recognised a credit of £333 million (net of tax) as an adjusting item, being the Group’s share of a gain recognised by ITC following the

demerger of ITC’s hotel business (ITC Hotels) that was completed on 1 January 2025. The Group’s initial direct stake was approximately 15% and

recognised as a non-current investment on the balance sheet held at fair value through Other Comprehensive Income. In December 2025, the Group sold 9%

of ITC Hotels in a block trade with the retained direct stake reduced to 6.3%. Please see note 14 in Part III - Item 18 Notes on the Accounts. Net proceeds

from the sale amounted to £318 million.

However, the credit to the Income Statement was more than offset by a lower gain in respect of the sale by the Group of shares held in ITC. In 2025, the

Group sold 313.0 million ordinary shares held in ITC, realising a gain of £898 million. This compares to a gain of £1,361 million in 2024 when the Group

sold 436.9 million ordinary shares. The sale in 2025 represents 2.5% (2024: 3.5%) of ITC's ordinary shares.

The gains have been treated as an adjusting item in both years.

Included in the results for 2025 and 2024 are other adjusting items, which included a deemed gain of £6 million in 2025 (2024: £18 million), arising on the

deemed disposal of part of the Group’s shareholding in ITC (due to issuances of ordinary shares under the ITC Employee Share Option Scheme).


British American Tobacco p.l.c. Form 20-F 2025

As a result of the above, the Group's share of ITC has reduced from 25.45% (31 December 2024) to 22.91% at 31 December 2025.

Organigram Global Inc.

On 28 February 2025, the Group made the third and final tranche investment in Organigram for CAD$42 million (£23 million), subscribing for 7,562,447

common shares and 5,330,728 preferred shares at a price of CAD$3.22 per share. As a result of this investment, BAT's ownership in Organigram increased to

36.8%.

VST Industries Limited

One of our associates, VST Industries Limited, recognised an adjusting gain in relation to a sale of land and buildings. The Group's share of this gain was

£3 million.

Excluding such adjusting items and the impact of translational foreign exchange, the Group’s share of associates and joint ventures on an adjusted, constant

currency basis declined 8.6% in2025 to £475 million (2024: £521 million), largely driven by the reduction in the Group’s shareholding in ITC.


Analysis of Profit from Operations, Net Finance Costs and Results from Associates and Joint Ventures - 2025
				At constant rates1
	Reported £m	Adjusting items £m	Adjusted £m	Impact of exchange £m	Adjusted at CC1 £m
Profit from operations
U.S.	4,942	1,601	6,543	223	6,766
AME	3,433	(128)	3,305	72	3,377
APMEA	1,622	102	1,724	69	1,793
Total regions	9,997	1,575	11,572	364	11,936
Net finance costs	(1,819)	170	(1,649)	(27)	(1,676)
Associates and joint ventures	1,681	(1,239)	442	33	475
Profit before tax	9,859	506	10,365	370	10,735


Analysis of Profit from Operations, Net Finance Costs and results from Associates and Joint Ventures - 2024
	Reported £m	Adjusting items £m	Adjusted £m
Profit/(loss) from operations
U.S.	4,087	2,299	6,386
AME	(3,464)	6,784	3,320
APMEA	2,113	71	2,184
Total regions	2,736	9,154	11,890
Net finance costs	(1,098)	(491)	(1,589)
Associates and joint ventures	1,900	(1,379)	521
Profit before tax	3,538	7,284	10,822

Notes:

1.As translated in 2024 rates of exchange.

Tax

In 2025, the tax charge in the income statement was £2,094 million, compared to £357 million in 2024. The effective tax rates in the income statement were

therefore 21.2% in 2025 and 10.1% in 2024. These are affected by the inclusion of adjusting items described earlier and the associates and joint ventures’ post-

tax profit in the Group’s pre-tax results.

Excluding these items, the underlying tax rate for subsidiaries was 24.6% in 2025 and 24.9% in 2024. The marginal decrease in the underlying tax rate in 2025

largely reflects the mix of profits and changes in legislation (including the new Pillar Two rules, described in note 10(c) in Part III - Item 18 Notes on the

Accounts).

See the section Non-GAAP measures on page 46 for the computation of underlying tax rates for the periods presented.

In September 2025, the Court of Appeal issued its judgment in respect of the ongoing tax disputes in the Netherlands. While further avenues of appeal are being

pursued, the Group has increased the provision by £171 million, with a total provision of £326 million at 31 December 2025. Please refer to the Tax Disputes

section within note 31 in Part III - Item 18 Notes on the Accounts of the Notes to the Accounts for further information.

Earnings Per Share

Profit for the year was £7,765 million, up 144.1% (2024: £3,181 million).

The improvement largely relates to the lower net impact in respect of the Canadian settlement described on page 162.

In both 2025 and 2024, the Group undertook a share repurchase programme, totalling £1.1 billion and £0.7 billion respectively. These reduced the number of

shares (for the purposes of the EPS calculation) by 0.67% (2024: 0.62%).

After accounting for the movement in non-controlling interests in the year, basic earnings per share were 351.0p (2024: 136.7p).

Diluted earnings per share were 349.1p in 2025, compared to 136.0p in 2024.

Earnings per share (EPS) are impacted by the adjusting items discussed earlier.

Adjusted diluted EPS, as calculated in note 11 in Part III - Item 18 Notes on the Accounts, was 2.9% lower in 2025 at 352.1p, with 2024 at 362.5p.

Adjusted diluted EPS at constant rates would have been 0.7% ahead of 2024 at 365.0p.

Included within the Group’s adjusted diluted EPS at constant rates was 12.2p (2024: 21.4p) related to the Canadian business, excluding New Categories.


British American Tobacco p.l.c. Form 20-F 2025

Regional Review

United States

Top Markets:

The U.S. is a top market for Cigarettes, Vapour, Modern Oral and Traditional Oral products


Volume (units)
	2025	vs 2024	2024
New Categories:
Vapour (units mn)	262	-8.8%	287
HP (sticks bn)	—	—	—
Modern Oral (pouches bn)	3.5	+249%	1.0
Traditional Oral (stick eq bn)	4.8	-8.9%	5.3
Cigarettes (bn sticks)	43	-7.7%	47
Other (bn sticks eq)*	1	-0.1%	—
Total Combustibles	44	-7.7%	47

Notes:

*Other includes MYO/RYO.


Revenue (£m)
	2025	vs 2024	2025	2025	vs 2024 (adj at cc)	2024
	Reported	%	FX	at CC	%	Reported
New Categories:
Vapour	934	-6.4%	29	963	-3.4%	998
HP	—	—	—	—	—	—
Modern Oral	317	+297%	10	327	+310%	80
Total New Categories	1,251	+16.1%	39	1,290	+19.8%	1,078
Traditional Oral	1,006	-5.0%	31	1,037	-2.0%	1,058
Total Smokeless	2,257	+5.6%	70	2,327	+9.0%	2,136
Combustibles	9,218	+1.4%	295	9,513	+4.6%	9,094
Other	59	+23.2%	4	63	+27.5%	48
Revenue	11,534	+2.3%	369	11,903	+5.5%	11,278
% of Smokeless	19.6%	+70 bps				18.9%

Revenue

In 2025, revenue increased 2.3%, despite a translational foreign exchange headwind, negatively impacting revenue by 3.2%. On a constant currency basis,

which we believe reflects the operational performance, revenue increased 5.5%. This was driven by the performance in:

Combustibles

Revenue was up 1.4% to £9,218 million. On a constant currency basis, revenue increased 4.6%, as the positive impact of price/mix (including excise duty

drawback) of +12.3% more than offset a 7.7% reduction in volume, compared to the industry volume decline of 7.4%.

The U.S. combustibles industry continues to be negatively impacted by the adult nicotine consumer migration to alternative nicotine products (Vapour and

pouches). The level of poly-usage for combustibles consumers continued to increase as part of the consumer migration journey, reaching 53% in 2025, up 4

ppts from 2023. In addition, continued consumer affordability pressure resulted in downtrading to the deep-discount category (in which the Group is not

present).

Our volume share was down 10 bps while value share was up 30 bps following the commercial actions taken in 2024 to deliver sustainable value.

New Categories

Revenue was up 16.1% to £1,251 million, an increase of 19.8% (at constant rates of exchange), driven by:

–Modern Oral, where revenue increased by 297% (or 310% at constant rates of exchange), driven by higher volume (up 249%), following the successful

national roll-out of Velo Plus. Accordingly, our category volume share was up 11.6 ppts to 18.0% with value share growth of 9.1 ppts to 13.1%. This

performance has positioned Velo as the fastest growing brand in the category, reaching the number 2 position in both volume and value share.

While we await the outcome of our PMTA submission for new Velo variants, we have invested in higher capacity to support our sustainable growth agenda.

In addition, in August 2025, we expanded distribution of Grizzly nicotine pouches, reaching 1.8% national share by December 2025 - successfully capturing

Grizzly Traditional Oral consumers interacting with the Modern Oral category.

This was partly offset by:

–Vapour, where the U.S. is the world's largest market. Revenue was down 6.4%, a decline of 3.4% at constant rates of exchange, as price/mix (+5.4%) was

offset by an 8.8% decline in consumables volume driven by an industry decline of c.9% mainly due to the continued impact of illicit single-use vapour

products. There are encouraging signs for Vuse with the brand back to revenue growth in the second half of 2025 driven by increased enforcement at a

Federal and State level. We remain optimistic that Vuse will benefit as the authorities continue with enforcement initiatives in 2026. We maintained

leadership in value share with an increase in value share of 2.0 ppts to 51.7%*; and

*Based on estimated value share for Vapour in tracked channels (i.e., value share of rechargeable closed systems consumables and disposables sales in retail) in the Top Vapour markets. Top Vapour markets are defined

as the Top markets by industry revenue, being the U.S., Canada, the UK, France, Germany, Poland and Spain. These Top markets account for c.80% of total industry vapour revenue (rechargeable closed systems

consumables and disposables in tracked channels) in 2024.

Traditional Oral

Revenue was down 5.0% (down 2.0% on a constant currency basis), as price/mix (+6.9%) was more than offset by lower volume (down 8.9%) due to the

continued Poly-use* of Modern Oral by Traditional Oral consumers.


British American Tobacco p.l.c. Form 20-F 2025

Value share in the U.S. decreased 40 bps, with volume share down 40 bps, negatively impacted by consumer migration predominantly in the aspirational

premium segment, where Grizzly is positioned.

*Refers to consumers consuming two or more tobacco and/or nicotine products.

Profit from Operations

Reported profit from operations increased by 20.9% to £4,942 million (2024: £4,087 million), as both an impairment charge of £646 million in respect of

Camel Snus (see page 31) and income (£132 million) related to Fox River recognised in 2024 did not repeat. Accordingly, reported operating margin was up

6.6 ppts to 42.8% (2024: 36.2%).

Excluding adjusting items (largely in respect of amortisation, impairment charges and income related to Fox River recognised in 2024) and a translational

foreign exchange headwind of £223 million, our performance was positively impacted by the growth in revenue (described above).

At constant rates of exchange, adjusted profit from operations was up 5.9% to £6,766 million, with adjusted operating margin up 20 bps.

Update on regulation

We are encouraged by the FDA's actions, the implementation of vapour directories and enforcement actions in 18 states, representing 48% of the legal

Vapour industry^. There are positive signs of illicit disposables decline and legal industry recovery in eight states (approximately 22% of the legal industry^).

However, we believe more effective enforcement is needed to drive a meaningful impact and legalise the vapour industry. This is why we took the proactive

step of filing two complaints with the U.S. International Trade Commission. One of those complaints is based on patent infringement while the other is based

on unfair trade practices.

Notes:

^Data sourced from tracked retail channels.

Also, as stated on the pages above, based upon the published science, we believe that a ban on menthol cigarettes would negatively affect, not benefit, public

health. We believe a ban on menthol is contrary to the FDA’s stated goal of reducing the health effects of tobacco use.

AME

Top Markets:

Cigarettes: Brazil, Germany, Mexico and Romania

HP: Germany, Greece, Italy, Poland, Portugal, Romania, Spain and the Czech Republic

Vapour: Canada, France, Germany, Poland, Spain and the UK

Modern Oral: Denmark, Norway, Poland, Sweden, Switzerland and the UK


Volume (units)
	2025	vs 2024	2024
New Categories:
Vapour (units mn)	244	-11.6%	276
HP (sticks bn)	8	-3.4%	8
Modern Oral (pouches bn)	7.5	+19.0%	6.3
Traditional Oral (stick eq bn)	0.7	-10.3%	0.8
Cigarettes (bn sticks)	227	-4.5%	238
Other (bn sticks eq)*	10	-12.4%	11
Total Combustibles	237	-4.9%	249

Notes:

*Other combustibles includes MYO/RYO.


Revenue (£m)
	2025	vs 2024	2025	2025	vs 2024 (adj at cc)	2024
	Reported	%	FX	at CC	%	Reported
New Categories:
Vapour	543	-11.2%	(1)	542	-11.4%	611
HP	470	+6.2%	1	471	+6.2%	443
Modern Oral	800	+18.3%	(6)	794	+17.3%	676
Total New Categories	1,813	+4.8%	(6)	1,807	+4.3%	1,730
Traditional Oral	37	+9.9%	(1)	36	+5.1%	34
Total Smokeless	1,850	+4.9%	(7)	1,843	+4.4%	1,764
Combustibles	6,974	-0.9%	226	7,200	+2.3%	7,039
Other1	485	+10.8%	20	505	+15.7%	438
Revenue	9,309	+0.7%	239	9,548	+3.3%	9,241
% of smokeless	19.9%	+80 bps				19.1%

Note:

1.Other revenue in AME largely relates to sales of leaf to external parties and revenue from warehousing and distribution of other fast moving consumer goods.

Revenue

Reported revenue was up 0.7%, negatively impacted by a translational foreign exchange headwind of 2.6%.

On a constant currency basis, which we believe reflects the operational performance, revenue increased by 3.3% to £9,548 million.

This was driven by the performance in:

Combustibles

Revenue was down 0.9% to £6,974 million, negatively impacted by a translational foreign exchange headwind of 3.2%.


British American Tobacco p.l.c. Form 20-F 2025

On a constant currency basis, revenue was 2.3% higher, largely driven by higher volume and pricing in Türkiye, Brazil and Mexico. These factors combined

with robust pricing in Romania to more than offset a reduction in revenue in Canada (due to lower price/mix and volume) and Germany (driven by lower

volume).

Cigarette value share was down 70 bps in 2025.

Cigarette volume share grew 10 bps with volume share up in Brazil and Mexico partially offset by Romania and Germany.

New Categories

Revenue was up 4.8% to £1,813 million, an increase of 4.3% at constant rates of exchange, driven by:

–Modern Oral, where we are category leaders, with volume up 19.0%. Revenue grew 18.3% or 17.3% at constant rates of exchange, while volume share of

the Modern Oral category was down 20 bps.

The volume and revenue growth reflects the strength of our portfolio in both established oral markets across Scandinavia, and markets that are more recent

adopters of Modern Oral such as the UK, Switzerland and Austria; and

–HP (revenue up 6.2% or 6.2% at constant rates of exchange), as higher revenue in Italy and Germany was partly offset by lower revenue in Romania largely

due to the prioritisation of resource allocation ahead of the wider roll-out of glo Hilo in the region.

These more than offset a decline from:

–Vapour (revenue down 11.2% or 11.4% at constant rates of exchange), largely driven by a decline in revenue in Canada (due to the continued lack of

enforcement against illegal flavoured vapour products) and regulatory and excise changes in the UK, Poland and France. Our value share* leadership was

down 60 bps with gains in Germany more than offset by a value share decline in Canada.

Our new premium innovation, Vuse Ultra, offers consumers a highly differentiated, connected and customisable experience. We are encouraged by the

early performance in Canada, Germany and France.

Our strategic focus is to drive growth in Vapour through premiumisation of rechargeable closed system products (including via Vuse Ultra) while

approaching the single-use product category, where relevant, in a responsible way.

*Based on estimated value share for Vapour in tracked channels (i.e., value share of rechargeable closed systems consumables and disposables sales in retail) in the Top Vapour markets.

Profit from Operations

Reported profit from operations increased to a profit of £3,433 million (from a loss of £3,464 million in 2024), largely due to movements in respect of the

Canadian litigation settlement. While 2024 included a charge of £6.2 billion, 2025 benefited from a net credit of £524 million following a change to the

forecasted Canadian combustibles industry performance. This reduced the provision by £708 million (credit) but was partly offset by a goodwill impairment

charge of £184 million. Please see note 6(c) and 24 (for more information on the movement in the provision) and note 12(e)(vii) (for more information on

goodwill) in Part III - Item 18 Notes on the Accounts.

Our performance was also negatively impacted by:

–the classification in 2025 of the Group's business in Cuba as held-for-sale, recognising a charge of £235 million (2024: £74 million) as discussed on page

170;

–a charge of £39 million which related to the loss of a distribution facility in Ukraine following a missile attack in the second half of 2025; and

–a goodwill impairment charge in Peru (£72 million) recognised due to the ongoing difficult trading conditions.

These were partially offset by a credit of £15 million in respect of an excise audit in Romania (2024: £449 million charge). Other fixed asset charges of £75

million in 2024 did not repeat.

Our performance was also negatively impacted by a translational foreign exchange headwind of £72 million or 2.2%.

Excluding the impact of currency and adjusting items (described above), the regional performance was driven by:

–Brazil (due to combustibles with higher volume and pricing);

–Romania (driven by pricing in combustibles); and

–Türkiye (led by the revenue performance in combustibles).

The increase was also due an improved financial performance across our New Categories; notably in Modern Oral (driven by Sweden, Switzerland and

Italy), Vapour (which became profitable on a category contribution basis) and a reduction in losses in HP driven by resource allocation.

At constant rates of exchange, adjusted profit from operations was up 1.7% in 2025.

Included within the Region’s adjusted profit from operations was £308 million (2024: £520 million) related to the Canadian business, excluding New

Categories.

APMEA

Top Markets:

Cigarettes: Japan and Pakistan

HP: Japan and South Korea


Volume (units)
	2025	vs 2024	2024
New Categories:
Vapour (units mn)	32	-38.2%	53
HP (sticks bn)	12	-3.9%	13
Modern Oral (pouches bn)	1.2	+24.7%	1.0
Traditional Oral (stick eq bn)	—	0.0%	0.0
Cigarettes (bn sticks)	195	-11.6%	220
Other (bn sticks eq)*	1	-26.9%	2
Total Combustibles	196	-11.7%	222

Note:

*Other combustibles includes MYO/RYO.


British American Tobacco p.l.c. Form 20-F 2025


Revenue (£m)
	2025	vs 2024	2025	2025	vs 2024 (adj at cc)	2024
	Reported	%	FX	at CC	%	Reported
New Categories:
Vapour	65	-41.2%	3	69	-39.4%	112
HP	444	-7.0%	12	465	-3.8%	478
Modern Oral	48	+39.8%	1	47	+44.2%	34
Total New Categories	557	-10.6%	16	581	-7.6%	624
Traditional Oral	—	0.0%	—	—	0.0%	—
Total Smokeless	557	-10.6%	16	581	-7.6%	624
Combustibles	4,009	-11.9%	177	4,199	-8.3%	4,552
Other	201	+16.3%	12	209	+23.7%	172
Revenue	4,767	-10.9%	205	4,989	-7.2%	5,348
% of smokeless	11.7%	Flat				11.7%

Revenue

In 2025, revenue declined 10.9% to £4,767 million.

Translational foreign exchange was a headwind of 3.7%.

On a constant currency basis, which we believe reflects the operational performance, revenue was down 7.2%. This was largely driven by:

Combustibles

Revenue was down 11.9% to £4,009 million. On a constant currency basis, revenue declined 8.3%, largely due to the regulatory and fiscal challenges

impacting combustibles in Australia and Bangladesh, partly offset by higher combustibles revenue in Nigeria, Indonesia and Pakistan.

Our combustibles value share declined 40 bps in 2025 with volume share down 40 bps as volume share gains in Pakistan were more than offset by reductions

in Japan.

New Categories

New Categories revenue was down 10.6% to £557 million, a decline of 7.6% at constant rates of exchange.

Revenue grew in Modern Oral (up 39.8% to £48 million, an increase of 44.2% at constant rates of exchange) with strong revenue growth in Global Travel

Retail (GTR), Pakistan, Japan and South Africa.

However, this was more than offset by a reduction in:

–HP (down 7.0% to £444 million, or a decline of 3.8% at constant rates of exchange), largely driven by Japan (which remains highly competitive alongside

the continued phase-out of our legacy super-slims platform) and South Korea, partially offset by a strong performance in Kazakhstan; and

–Vapour, as volume was down 38.2%, leading to a 41.2% reduction in revenue to £65 million, being a decline 39.4% at constant rates of exchange. This

was largely driven by lower volume in South Africa and New Zealand and by the Group exiting the category in a number of markets (including Malaysia

and Saudi Arabia).

Profit from Operations

Profit from operations was down 23.3% to £1,622 million (2024: £2,113 million), including a translational foreign exchange headwind of £69 million or

3.2%. The lower profit from operations was mainly driven by the revenue movements above.

In 2025, the Group recognised a further impairment charge of £21 million (2024: £39 million) in respect of Malaysia in response to the ongoing difficult

trading conditions.

Excluding adjusting items and translational foreign exchange, adjusted profit from operations at constant rates was down 17.9% to £1,793 million driven by:

–Australia, due to continued increases in the illicit segment which we estimate now accounts for more than 65% of the combustibles industry volume, with

the duty paid combustibles industry volume down more than 40% in 2025; and

–Bangladesh, driven by the increase in excise and minimum price in January 2025, necessitating an increase in consumer prices by 20-30%, which resulted

in a reduction in the duty paid combustibles industry volume by more than 20%.

However, these were partly offset by an increase in Pakistan (led by the growth of Modern Oral and pricing in combustibles), Nigeria (driven by higher

combustibles volume and improved combustibles pricing) and Indonesia (driven by higher combustibles volume and pricing).

For more details on the segmental analysis, please refer to note 2 in Part III - Item 18 Notes on the Accounts.

Please refer to page 28 for further details on our views regarding regulation affecting the Group’s results as well as for a discussion on regulatory

developments in Combustibles during 2025 and 2024.

Category Review

Vapour - Vuse

Vapour consumables volume declined 12.6% to 538 million units in 2025.

Led by Vuse, BAT maintained global Vapour value share* leadership with an increase in full-year closed system value share of 60 bps vs 2024.

Consumers of our Vapour products increased by 0.6 million to 12.7 million.


Proportion of Vapour revenue by region	2025 £m	2024 £m
U.S.	934	998
AME	543	611
APMEA	65	112
Total	1,542	1,721

Group Vapour performance was negatively impacted by:


British American Tobacco p.l.c. Form 20-F 2025

–The U.S., the world's largest Vapour market, where Group volume was down 8.8% mainly due to the continued proliferation of illicit single-use vapour

products. Accordingly, revenue was down 6.4% (or 3.4% on a constant currency basis). However, we are encouraged by recent signs of Vuse returning to

revenue growth in the second half of 2025 in the U.S. supported by increased enforcement against illicit single-use vapour products. We maintained

leadership in value share with an increase in value share of 2.0 ppts to 51.7%*;

–AME, where revenue was 11.2% lower (a decline of 11.4% on a constant currency basis), largely driven by a decline in revenue in Canada (due to the

continued lack of enforcement against illegal flavoured vapour products) and regulatory and excise changes in the UK, Poland and France. Our value

share* leadership was down 60 bps with gains in Germany more than offset by a value share decline in Canada; and

–APMEA, where volume declined 38.2%, leading to a 41.2% reduction in revenue (being down 39.4% at constant rates), largely driven by lower volume in

South Africa and New Zealand and by the Group exiting the category in a number of markets (including Malaysia and Saudi Arabia).

Our new premium innovation, Vuse Ultra, offers consumers a highly differentiated, connected and customisable experience. We are encouraged by the early

performance in Canada, Germany and France.

consumables and disposables in tracked channels) in 2024.

Heated Products (HP) - glo


Proportion of Heated Products revenue by region	2025 £m	2024 £m
U.S.	0	0
AME	470	443
APMEA	444	478
Total	914	921

In 2025, total consumables volume declined 3.7% to 20.1 billion sticks.

In 2025, glo HP category volume share in the Top markets* declined 1.5 ppts impacted by competitive pressure in Japan and phase-out of legacy super-

slims.

Revenue was marginally lower, down 0.7% to £914 million (2024: £921 million). However, excluding the impact of the relative movements in sterling, at

constant rates of exchange revenue increased 1.0% in 2025 driven by Quality Growth focus in the largest profit pools.

In AME, volume was down 3.4%, with revenue up 6.2% (being an increase of 6.2% at constant rates), as higher revenue in Italy and Germany was partly

offset by lower revenue in Romania largely due to the prioritisation of resource allocation ahead of the wider roll-out of glo Hilo in the region.

In APMEA, volume was down 3.9%, with revenue down 7.0%, or 3.8% at constant rates, largely driven by Japan (which remains highly competitive

alongside the continued phase-out of our legacy super-slims platform) and South Korea, partially offset by a strong performance in Kazakhstan.

glo Hilo and glo Hilo Plus are our new premium connected devices which provide adult consumers with superior dual-heating technology and an integrated

display, combined with a new consumables range, Virto and tobacco-free Rivo. We have continued the roll-out through 2025, with launches in Japan, Poland

and Italy.

* Volume share is based upon the Top HP markets, which are defined as the Top markets by industry revenue. Top markets are Japan, South Korea, Italy, Germany, Greece, Poland, Romania, the Czech Republic,

Spain and Portugal. These Top markets account for c.80% of total industry HP revenue in 2024.

Modern Oral - Velo


Proportion of Modern Oral revenue by region	2025 £m	2024 £m
U.S.	317	80
AME	800	676
APMEA	48	34
Total	1,165	790

2025 maintained the momentum from 2024 with growth in volume and value. Volume was up 47.1% to 12.2 billion pouches.

Revenue increased 47.4% to £1,165 million. Excluding the impact of foreign exchange, this was an increase of 48.0% in 2025 supported by price/mix of

0.9%.

Volume share of the Modern Oral category in our Top markets** was 33.4%, up 7.5 ppts compared to 2024. This was driven by the U.S. where our volume

share of Modern Oral increased by 11.6 ppts to 18.0%.

In AME, where we are category leaders, our volume was up 19.0%, with revenue up 18.3% (up 17.3% at constant rates) while volume share of the Modern

Oral category was down 20 bps.

The volume and revenue growth reflects the strength of our portfolio in both established oral markets across Scandinavia, and markets that are more recent

adopters of Modern Oral such as the UK, Switzerland and Austria.

In the U.S., revenue increased by 297% (or 310% at constant rates), driven by higher volume (up 249%), following the successful national roll-out of Velo

Plus. Accordingly, our category volume share was up 11.6 ppts to 18.0% with value share growth of 9.1 ppts to 13.1%. This performance has positioned Velo

as the fastest growing brand in the category, reaching the number 2 position in both volume and value share.

While we await the outcome of our PMTA submission for new Velo variants, we have invested in higher capacity to support our sustainable growth agenda.

In addition, in August 2025, we expanded distribution of Grizzly nicotine pouches, reaching 1.8% national share by December 2025 - successfully capturing

Grizzly Traditional Oral consumers interacting with the Modern Oral category.

In APMEA, our volume grew 24.7% and our revenue grew 39.8% (up 44.2% at constant rates), with strong revenue growth in Global Travel Retail (GTR),

Pakistan, Japan and South Africa. We continue to seek opportunities and develop the category in other markets as we believe that Modern Oral is an exciting

longer-term opportunity to commercialise reduced-risk products*†.

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

**Volume share is based upon the Top Modern Oral markets which are defined as the Top markets by industry revenue, being the U.S., Sweden, Denmark, Norway, Switzerland, the UK and Poland, accounting for c.90% of

total industry Modern Oral revenue in 2024.


British American Tobacco p.l.c. Form 20-F 2025

Traditional Oral


Proportion of Traditional Oral revenue by region	2025 £m	2024 £m
U.S.	1,006	1,058
AME	37	34
APMEA	0	0
Total	1,043	1,092

Total revenue decreased 4.5% to £1,043 million from £1,092 million in 2024.

Translational foreign exchange was a headwind in 2025 of 2.8% due to the relative movement of sterling.

On a constant rates basis, revenue fell 1.7% in 2025. In 2025, volume declined 9.1% to 5.5 billion stick equivalents. While pricing remained strong (2025:

+7.4%; 2024: +4.8%), this was more than offset by the volume decline.

In the U.S. (which accounts for 96% of Group revenue from the category), revenue declined 5.0% or 2.0% at constant rates of exchange, as price/mix was

insufficient to offset the volume decline of 8.9%, due to the continued Poly-use^ with Modern Oral.

Value share in the U.S. decreased 40 bps, with volume share down 40 bps, negatively impacted by consumer migration predominantly in the aspirational

premium segment, where Grizzly is positioned.

Outside the U.S., revenue grew 9.9% or 5.1% at constant rates of exchange as pricing more than offset a 10.3% decline in volume in 2025.

Due to the ongoing U.S. market dynamics, as discussed on page 131, in 2024, the Group recognised an impairment charge of £646 million in respect of the

carrying value of Camel Snus. This reflects the reduced sales as consumers switch to alternative products including Modern Oral. Commencing 1 January

2025, Camel Snus has been assigned a 20-year useful economic life and commenced amortisation from that date which approximates to £22 million annually.

^Refers to consumers consuming two or more tobacco and/or nicotine products.

Combustibles

Performance Summary


Proportion of Combustibles revenue by region	2025 £m	2024 £m
U.S.	9,218	9,094
AME	6,974	7,039
APMEA	4,009	4,552
Total	20,201	20,685

Group cigarette volume was down 7.9% to 465 billion sticks as volume growth in Türkiye, Nigeria, Indonesia and Brazil was more than offset by lower

volume in a number of markets, mainly driven by Bangladesh, the U.S. and Poland and market exits (including Mali).

Revenue from combustibles declined 2.3% to £20,201 million, up 1.0% at constant rates of exchange as the Group benefitted from a robust price/mix

(including U.S. excise duty drawback) of +9.1%. This was partly offset by the lower volume (down 8.1%).

Our revenue performance was driven by:

–the U.S., where revenue increased 1.4% or 4.6% at constant rates of exchange, as the positive impact of price/mix (including excise duty drawback) of

+12.3% more than offset a 7.7% reduction in volume, compared to the industry volume decline of 7.4%. Our volume share was down 10 bps while value

share was up 30 bps following the commercial actions taken in 2024 to deliver sustainable value;

–AME, where revenue was down 0.9% due to translational foreign exchange. At constant rates of exchange, revenue was 2.3% higher, largely driven by

higher volume and pricing in Türkiye, Brazil and Mexico. These factors combined with robust pricing in Romania to more than offset a reduction in revenue

in Canada (due to lower price/mix and volume) and Germany (driven by lower volume); and

–APMEA, where revenue was down 11.9% or 8.3% at constant rates of exchange, due to regulatory and fiscal challenges impacting combustibles in

Australia and Bangladesh, partly offset by higher combustibles revenue in Nigeria, Indonesia and Pakistan.

Value and Volume Share

Group cigarette value share was flat in 2025 despite growth in the U.S. (up 30 bps), Brazil and Mexico. This was offset by lower cigarette value share in

Germany and Romania.

Group cigarette volume share was down 10 bps in 2025. The Group grew volume share in Brazil and Mexico. However, this was more than offset by lower

volume share in the U.S. (down 10 bps) and reductions in Germany, Romania and Japan.

Volume and value share are based upon the Top cigarette markets which are defined as the Top markets by industry revenue, being the U.S., Japan, Brazil, Germany, Pakistan, Mexico and Romania, accounting for c.60% of

total industry cigarettes revenue in 2024.

Strategic Brand Performance

In 2025, strategic cigarette brands’ value share grew 10 bps:

–Dunhill’s overall value share was flat despite declines in Brazil and Romania. Volume was 2.7% lower, largely driven by Bulgaria and South Korea and our

exit from Mali;

–Kent’s value share was down 10 bps as growth in Brazil was more than offset by lower value share in Romania and Japan. Volume was up 1.8%. Kent

increased volume in Türkiye and Brazil, which was partly offset by lower volume in Japan and Romania;

–Lucky Strike’s value share grew 50 bps, as growth in the U.S. and Brazil more than offset lower value share in Germany and Mexico. Volume declined

2.0% driven by Japan and Germany. This more than offset higher volume in Indonesia;

–Rothmans’ value share was flat, as growth in Brazil was offset by lower value share in Romania and Pakistan. Volume was 5.7% lower due to lower volume

in Poland, Ukraine, Zambia and Colombia. This more than offset higher volume in Nigeria; and

–Pall Mall’s value share was 20 bps lower as growth in Romania, Pakistan and Mexico was more than offset by lower value share in Germany and the U.S.

Volume was down 7.7% driven by lower volume in Poland, Nigeria, Pakistan, Germany and the U.S.

The Group’s U.S. domestic strategic combustibles portfolio value share was up 40 bps driven by the performance of Lucky Strike and Natural American

Spirit:


British American Tobacco p.l.c. Form 20-F 2025

–Newport, with value share down 30 bps, and volume 9.9% lower;

–Natural American Spirit performed well with value share up 20bps. Volume was 3.7% down; and

–Camel, with value share down 10 bps and volume 13.5% down.

Volume of other tobacco products (OTP) declined 14.0% to 12 billion sticks equivalent, being 2.3% of the Group's combustible portfolio.

Beyond Nicotine

Btomorrow Ventures (BTV), the corporate venture capital arm of BAT, has completed 30+ investments since its launch in 2020.

BTV provides strategic value to the next generation of innovative companies, to support the Group’s purpose of creating A Better Tomorrow™.

In 2025, BTV’s Fund II, an additional £200 million second fund commitment from BAT announced in 2024, was repositioned.

Fund II now has a broader mandate, focusing on investments in:

–Smokeless nicotine products;

–business transformation and capability enablers;

–sustainability; and

–a continued focus on Wellbeing and Stimulation.

In 2025, BTV made five new investments, including Bloom Biorenewables and China Materialia Evergreen Fund.

In addition to this, BTV has continued to support its portfolio companies through seven follow-on rounds to the value of £7 million, including investments in

Awake, Mais Mu, Moment and Parallel Dots.

In November 2023, the Group announced the signing of an agreement for a further proposed investment in Organigram of CAD$125 million (£74 million),

payable across three tranches, with approvals received from the shareholders of Organigram on 18 January 2024.

In February 2025, we paid the last of the three tranches of the Group’s follow-on investment.

The Group’s equity position at 31 December 2025 was 36.8% (restricted to 30% voting rights).

The Group has continued to explore Beyond Nicotine organically through our subsidiary, The Water Street Collective Ltd.

Following a series of pilot launches of our own functional wellness shot brand, Ryde, we are continuing commercial expansion. Our scientifically formulated

range of Energy, Focus and Relax are available in three markets – Australia, Canada and the U.S. Our recent innovations of Sleep and Exercise shots are in

selected distribution across the U.S. and Australia.

While immaterial to the Group's results, Ryde is not sold in Canada by ITCAN but by another Group subsidiary. Accordingly, the performance does not form

part of the future settlement payments due as part of the Approved Plans, described in note 24 in Part III - Item 18 Notes on the Accounts.

Dividends

The Group pays its dividends to shareholders over four quarterly interim dividends. Quarterly dividends provide shareholders with a more regular flow of

dividend income and allow the Company to spread its substantial dividend payments more evenly over the year, aligning better with the cash flow generation

of the Group and so enable the Company to fund the payments more efficiently.

The Board has declared an interim dividend of 245.04p per ordinary share of 25p, payable in four equal quarterly instalments of 61.26p per ordinary share in

May 2026, August 2026, November 2026 and February 2027. This represents an increase of 2.0% on 2024 (2024: 240.24p per share, up 2.0%) and a payout

ratio, on 2025 adjusted diluted earnings per share, of 69.6% (2024: 66.3%).

The quarterly dividends will be paid to shareholders registered on either the UK main register or the South Africa branch register and to ADS holders, each

on the applicable record dates.

Under IFRS, the dividend is recognised in the year that it is approved by shareholders or, if declared as an interim dividend, by Directors, in the period that it

is paid.

The cash flow, prepared in accordance with IFRS, reflects the total cash paid in the period. Further details of the total amounts of dividends paid in 2025 and

2024 (with 2023 comparatives) are given in note 22 in Part III - Item 18 Notes on the Accounts.

Dividends are declared and payable in sterling except for those shareholders on the branch register in South Africa, where dividends are payable in rand, in

line with the requirements of the JSE. The equivalent dividends receivable by holders of ADSs in US dollars are calculated based on the exchange rate on the

applicable payment date.

Results for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023

The discussion of 2023 results that are not necessary to an understanding of the Group’s financial condition, changes in financial condition and results of

operations is excluded from this Operating and Financial Review and Prospects in accordance with applicable U.S. securities laws. Discussion of such 2023

metrics is contained in the Group’s Annual Report on Form 20-F 2024, which is available at bat.com/annualreport and has been filed with the SEC.

Information contained in pages 28 to 36, 42 to 59 and pages 395 to 410 of the Annual Report on Form 20-F 2024 are accordingly incorporated by reference

into this Form 20-F only to the extent such information pertains to the Group’s financial condition and results of operations for the fiscal year ended 31

December 2023.

Impact of Changes in Foreign Exchange Rates

The principal currency exchange rates used to convert the results of the Group's foreign operations to sterling, for the purposes of inclusion and consolidation

within the Group's financial statements, are indicated in the table below.

Where the Group has provided results at constant rates of exchange, this refers to the translation of the results from the foreign operations at rates of exchange

prevailing in the prior period, thereby eliminating the potentially distorting impact of the movement in foreign exchange on the reported results.


British American Tobacco p.l.c. Form 20-F 2025


Foreign Exchange Rates
	Average		Closing
	2025	2024	2025	2024
Australian dollar	2.045	1.937	2.017	2.023
Bangladeshi taka	160.886	147.803	164.432	149.662
Brazilian real	7.363	6.893	7.371	7.737
Canadian dollar	1.842	1.751	1.844	1.801
Chilean peso	1,253.837	1,206.394	1,212.663	1,245.543
Euro	1.167	1.181	1.145	1.209
Indian rupee	114.989	106.952	120.892	107.223
Japanese yen	197.243	193.583	210.830	196.827
Romanian leu	5.885	5.877	5.834	6.018
South African rand	23.562	23.423	22.287	23.633
Swiss franc	1.094	1.125	1.066	1.135
US dollar	1.319	1.278	1.345	1.252

Results on a Constant Translational Currency Basis

Movements in foreign exchange rates have impacted the Group’s financial results. The Group’s Management Board reviews certain of its results, including

revenue, revenue growth from New Categories, adjusted profit from operations and adjusted diluted earnings per share, at constant rates of exchange. The

Group calculates these financial measures at constant rates of exchange based on a re-translation, at prior year exchange rates, of the current year’s results of

the Group and, when applicable, its geographic segments. The Group does not adjust for the normal transactional gains and losses in profit from operations

that are generated by exchange movements. Although the Group does not believe that these measures are a substitute for IFRS measures, the Group’s

Management Board does believe that such results excluding the impact of currency fluctuations provide additional useful information to users of the financial

statements and are used by the Group’s Management Board as described above as they provide information regarding the Group’s operating performance on

a local currency basis. Accordingly, the constant rates of exchange financial measures appearing in the discussion of the Group results of operations

(beginning on page 30) should be read in conjunction with the information provided in note 2 in Part III - Item 18 Notes on the Accounts.

In 2025 and 2024, results were affected by translational exchange rate movements.

In 2025, at the prevailing exchange rates, reported revenue declined by 1.0%, revenue from New Categories increased by 5.5% and adjusted profit from

operations decreased by 2.7% versus 2024. At constant rates of exchange, reported revenue would have increased by 2.1%, revenue from New Categories

would have increased by 7.0% and adjusted profit from operations would have increased by 0.4%. This lower performance at prevailing exchange rates reflects

the negative translational impact as a result of the relative strength of sterling.

In 2025 and 2024, adjusted diluted earnings per share was affected by translational exchange rate movements.

In 2025, the adjusted diluted earnings per share of 352.1p, a decrease of 2.9%, would, when translated at 2024 exchange rates, have been 365.0p, an increase

of 0.7%. This lower performance, in 2025, at prevailing exchange rates, reflects the negative translational impact as a result of the relative strength of sterling.

See also notes 2, 19 and 26 in Part III - Item 18 Notes on the Accounts.

Non-GAAP Measures

In the reporting of financial information, the Group uses certain measures that are not defined by IFRS, the Generally Accepted Accounting Principles (GAAP)

under which the Group reports. The Group believes that these additional measures, which are used internally, are useful to users of the financial information in

helping them understand the underlying business performance.

The principal non-GAAP measures which the Group uses are adjusted profit from operations, adjusted operating margin, adjusted net finance costs, adjusted

taxation, adjusted diluted earnings per share, which are before the impact of adjusting items and are reconciled from profit from operations, operating margin, net

finance costs, taxation, diluted earnings per share. The Group also uses adjusted share of post-tax results of associates and joint ventures, and underlying tax rate.

Adjusting items are significant items in profit from operations, net finance costs, taxation, the Group’s share of the post-tax results of associates and joint ventures and

cash flow which individually or, if of a similar type, in aggregate, are relevant to an understanding of the Group’s underlying financial performance. Adjusting items,

as identified in accordance with the Group’s accounting policies, represent certain items of income and expense which the Group considers distinctive based on their

size, nature or incidence. In identifying and quantifying adjusting items, the Group applies a consistent policy that sets out the criteria an item must meet to be

classified as adjusting, as well at the types of items that are specifically excluded from being classified as adjusting.

The definition of adjusting items is explained in note 1 in Part III - Item 18 Notes on the Accounts.

The Group also supplements its presentation of revenue in accordance with IFRS by presenting the non-GAAP component breakdowns of revenues by product

category (including revenue generated from Vapour, Heated Products, Modern Oral, New Categories as a whole, Traditional Oral, Smokeless products as a whole

and combustibles), including by geographic segment (including revenue generated in the United States, Americas and Europe and Asia-Pacific, Middle East

and Africa).

Revenue, at Constant Rates of Exchange

Definition – Revenue before the impact of foreign exchange.

To supplement BAT’s revenue presented in accordance with IFRS, the Group’s Management Board, as the chief operating decision-maker, reviews revenue

at constant rates of exchange to evaluate the underlying business performance of the Group and its geographic segments. The Group’s Management Board

defines this measure as revenue retranslated at the prior periods’ rate of exchange.

The Group’s Management Board believes that revenue at constant rates of exchange provides information that enables users of the financial statements to

compare the Group’s business performance across periods without the impacts of translational foreign exchange. This measure has limitations as an

analytical tool. The most directly comparable IFRS measure to revenue at constant rates of exchange is revenue. Revenue at constant rates of exchange is not

a presentation made in accordance with IFRS, and is not a measure of financial condition or liquidity and should not be considered as an alternative to

revenue as determined in accordance with IFRS. Revenue at constant rates of exchange is not necessarily comparable to similarly titled measures used by

other companies. As a result, you should not consider this performance measure in isolation from, or as a substitute analysis for, BAT’s results as determined

in accordance with IFRS.

The table below reconciles revenue to revenue at constant rates based on a re-translation of revenue for each year, at the previous year’s exchange rates.


British American Tobacco p.l.c. Form 20-F 2025

Refer to note 2 in Part III - Item 18 Notes on the Accounts for further discussion of the segmental results and for the reconciliation of revenue at current and

constant rates of exchange, as applicable, to segmental revenue and to Group revenue for the years ended 31 December 2025, 2024 and 2023.


For the year ended 31 December	2025	2024
	£m	£m
Revenue	25,610	25,867
Impact of translational foreign exchange	804
2025 revenue re-translated at 2024 exchange rates	26,414	25,867
Change in revenue at prior year’s exchange rates (constant rates)	2.1%

Revenue by Product Category or Geographic Segment – Including Revenue from New Categories, at Constant Rates of Exchange

Definition – Revenue by product category, and at the prior year’s prevailing exchange rate, derived from the principal product categories of

Combustibles, New Categories (being comprised of revenue from Vapour, HP and Modern Oral), and Traditional Oral, including by the

geographic segments of the United States, Americas and Europe, and Asia-Pacific, Middle East and Africa.

To supplement BAT’s revenue presented in accordance with IFRS, the Group’s Management Board, as the chief operating decision-maker, reviews revenue

growth from the principal product categories of combustibles, New Categories and Traditional Oral, including from the geographic segments of the United

States, Americas and Europe, and Asia-Pacific, Middle East and Africa, to evaluate the underlying business performance of the Group reflecting the focus of

the Group’s investment activity. The Group’s Management Board assesses revenue by product category, including by geographic segment, at constant rates

of exchange, translated to the Group’s reporting currency at the prior period’s prevailing exchange rates, derived from the Group’s combustibles portfolio

(including but not limited to Kent, Dunhill, Lucky Strike, Pall Mall, Rothmans, Camel (U.S.), Newport (U.S.) and Natural American Spirit (U.S.)), the

Group’s New Category portfolio (being Vapour, HP and Modern Oral) and the Group’s Traditional Oral portfolio and the Group’s operations in the United

States, Americas and Europe, and Asia-Pacific, Middle East and Africa.

The Group’s Management Board believes that the revenue performance by product category, including by geographic segment, provides information that enables

users of the financial statements to compare the Group’s business performance across periods and by reference to the Group’s investment activity. Revenue by

product category, including by geographic segment, has limitations as an analytical tool. The most directly comparable IFRS measure to revenue by product

category, including by geographic segment, is revenue. Revenue by product category, including by geographic segment, is not a presentation made in accordance

with IFRS, is not a measure of financial condition or liquidity and should not be considered as an alternative to revenue as determined in accordance with IFRS.

Revenue by product category, including by geographic segment, is not necessarily comparable to similarly titled measures used by other companies. As a result, you

should not consider this performance measure in isolation from, or as a substitute analysis for, BAT’s results as determined in accordance with IFRS.

The table below reconciles revenue by product category to revenue by product category at constant rates based on a re-translation of revenue by product

category for each year, at the previous year’s exchange rates.

Reconciliation of revenue by product category to revenue by product category at constant rates of exchange (2025 - 2024)


For the year ended 31 December	2025					2024
Group	Reported £m	vs 2024 %	Impact of exchange £m	Reported at cc £m	Reported at cc vs 2024 %	Reported £m
New Categories:
Vapour	1,542	-10.4%	31	1,573	-8.6%	1,721
HP	914	-0.7%	16	930	+1.0%	921
Modern Oral	1,165	+47.4%	5	1,170	+48.0%	790
Total New Categories	3,621	+5.5%	52	3,673	+7.0%	3,432
Traditional Oral	1,043	-4.5%	30	1,073	-1.7%	1,092
Combustibles	20,201	-2.3%	686	20,887	+1.0%	20,685
Other	745	+13.2%	36	781	+18.7%	658
Revenue	25,610	-1.0%	804	26,414	+2.1%	25,867

Reconciliation of revenue by product category to revenue by product category at constant rates of exchange


For the year ended 31 December	2025					2024
U.S.	Reported £m	vs 2024 %	Impact of exchange £m	Reported at cc £m	Reported at cc vs 2024 %	Reported £m
New Categories:
Vapour	934	-6.4%	29	963	-3.4%	998
HP	—	—	—	—	—	—
Modern Oral	317	+297%	10	327	+310%	80
Total New Categories	1,251	+16.1%	39	1,290	+19.8%	1,078
Traditional Oral	1,006	-5.0%	31	1,037	-2.0%	1,058
Combustibles	9,218	+1.4%	295	9,513	+4.6%	9,094
Other	59	+23.2%	4	63	+27.5%	48
Revenue	11,534	+2.3%	369	11,903	+5.5%	11,278


British American Tobacco p.l.c. Form 20-F 2025


For the year ended 31 December	2025					2024
AME	Reported £m	vs 2024 %	Impact of exchange £m	Reported at cc £m	Reported at cc vs 2024 %	Reported £m
New Categories:
Vapour	543	-11.2%	(1)	542	-11.4%	611
HP	470	+6.2%	1	471	+6.2%	443
Modern Oral	800	+18.3%	(6)	794	+17.3%	676
Total New Categories	1,813	+4.8%	(6)	1,807	+4.3%	1,730
Traditional Oral	37	+9.9%	(1)	36	+5.1%	34
Combustibles	6,974	-0.9%	226	7,200	+2.3%	7,039
Other	485	+10.8%	20	505	+15.7%	438
Revenue	9,309	+0.7%	239	9,548	+3.3%	9,241


For the year ended 31 December	2025					2024
APMEA	Reported £m	vs 2024 %	Impact of exchange £m	Reported at cc £m	Reported at cc vs 2024 %	Reported £m
New Categories:
Vapour	65	-41.2%	3	68	-39.4%	112
HP	444	-7.0%	15	459	-3.8%	478
Modern Oral	48	+39.8%	1	49	+44.2%	34
Total New Categories	557	-10.6%	19	576	-7.6%	624
Traditional Oral	—	—	—	—	—	—
Combustibles	4,009	-11.9%	165	4,174	-8.3%	4,552
Other	201	+16.3%	12	213	+23.7%	172
Revenue	4,767	-10.9%	196	4,963	-7.2%	5,348

Note:

cc: constant currency – measures are calculated based on a re-translation of the current year’s results of the Group at the prior year’s exchange rates and, where applicable, its geographical segments or product

categories.

Adjusted Profit From Operations (APFO) and Adjusted Operating Margin

Definition – Profit from operations before the impact of adjusting items and translational foreign exchange; and adjusted profit from operations as a

percentage of revenue.

To supplement BAT’s results from operations presented in accordance with IFRS, the Group’s Management Board, as the chief operating decision‑maker, reviews

adjusted profit from operations and adjusted operating margin, which is defined as APFO as a percentage of revenue, to evaluate the underlying business performance of

the Group and its geographic segments, to allocate resources to the overall business and to communicate financial performance to users of the financial statements.

APFO and adjusted operating margin are not measures defined by IFRS. The most directly comparable IFRS measure to APFO is profit from operations. The most

directly comparable IFRS measure to adjusted operating margin is operating margin which is profit from operations as a proportion of revenue. The definition of

adjusting items is explained in note 1 in Part III - Item 18 Notes on the Accounts.

The Group’s Management Board believes that these additional measures are useful to the users of the financial statements and are used by the Group’s Management

Board as described above, because they exclude the impact of adjusting items which have less bearing on the routine ongoing operating activities of the Group, thereby

enhancing users’ understanding of underlying business performance and enabling users of the financial statements to compare the Group’s business performance across

periods. Additionally, the Group’s Management Board believes that similar measures are frequently used by securities analysts, investors and other interested parties in

their evaluation of companies comparable to the Group, many of which present an adjusted operating profit-related performance measure when reporting their results.

APFO and adjusted operating margin have limitations as analytical tools. They are not presentations made in accordance with IFRS, are not measures of financial

condition or liquidity and should not be considered as alternatives to profit for the year, profit from operations or operating margin as determined in accordance

with IFRS. These measures are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider these

performance measures in isolation from, or as a substitute analysis for, BAT’s results of operations as determined in accordance with IFRS.

The table below reconciles the Group’s profit from operations to APFO and to APFO at constant rates based on a re-translation of APFO for each year, at the previous

year’s exchange rates, and provides adjusted operating margin for the periods presented.

Refer to note 2 in Part III - Item 18 Notes on the Accounts for further discussion of the segmental results and for the reconciliation of adjusted profit from

operations at current and constant rates of exchange to segmental profit from operations and to Group profit for the years ended 31 December 2025, 2024 and

2023.


British American Tobacco p.l.c. Form 20-F 2025


For the year ended 31 December	2025	2024
	£m	£m
Profit from operations	9,997	2,736
Add:
Restructuring	66	—
Amortisation and impairment of trademarks and similar intangibles	1,584	2,279
(Credit)/charges in respect of Romania's other taxes	(15)	449
(Credit)/charges in respect of the Canada Approved Plans	(708)	6,203
Impairment charges in respect of Cuba's fixed assets	—	74
Impairment charges relating to the Group's head office in London	—	75
Impairment of goodwill	277	39
Charges in connection with disposal of associate	3	6
Pension liability management (buy-out)	28	—
Impairment on held-for-sale assets and associated costs	235	—
Charges in respect of DOJ investigation and OFAC investigation	—	4
Credit in respect of settlement of historical litigation in relation to the Fox River	—	(132)
Loss of a distribution facility in Ukraine	39	—
Other adjusting items (including Engle)	66	157
Adjusted profit from operations	11,572	11,890
Impact of translational foreign exchange	364
Adjusted profit from operations, translated at 2024 exchange rates	11,936	11,890
Change in adjusted profit from operations, translated at 2024 exchange rates	+0.4%
Operating Margin (Profit from operations as a % of revenue)	39.0%	10.6%
Adjusted Operating Margin (Adjusted profit from operations as a % of revenue)	45.2%	46.0%

Adjusted Net Finance Costs at Constant Rates of Exchange

Definition – Net finance costs before the impact of adjusting items, and translational foreign exchange.

To supplement BAT’s performance presented in accordance with IFRS, the Group’s net finance costs are also presented before adjusting items (as defined in

note 1 and described in note 8(b) in Part III - Item 18 Notes on the Accounts) and before the impact of translational foreign exchange. The Group’s

Management Board believes that adjusted net finance costs provides information that enables users of the financial statements to compare the Group’s business

performance across periods. The Group’s Management Board uses adjusted net finance costs as part of the total assessment of the underlying performance of

all the Group’s business interests. Adjusted net finance costs has limitations as an analytical tool. It is not a presentation made in accordance with IFRS, is not

a measure of financial condition or liquidity and should not be considered as an alternative to the Group’s net finance costs as determined in accordance with

IFRS. The most directly comparable IFRS measure to adjusted net finance costs is net finance costs. Adjusted net finance costs is not necessarily comparable

to similarly titled measures used by other companies. As a result, you should not consider this performance measure in isolation from, or as a substitute

analysis for, BAT’s results of operations as determined in accordance with IFRS.

Adjusted net finance costs is also included in the calculation of Group’s presentation of adjusted diluted earnings per share, which is used within the Group's

incentive schemes, as reported under Item 6.B - Compensation.

The table below reconciles the Group’s net finance costs to adjusted net finance costs, and to adjusted net finance costs at constant rates based, on a re-

translation of adjusted net finance costs for each year, at the previous year’s exchange rates.


For the year ended 31 December	2025	2024
	£m	£m
Finance costs	(2,033)	(1,349)
Finance income	214	251
Net finance costs	(1,819)	(1,098)
Less: Adjusting items in net finance costs	170	(491)
Adjusted net finance costs	(1,649)	(1,589)
Comprising:
Interest payable	(1,715)	(1,759)
Interest and dividend income	214	251
Fair value changes – derivatives	(521)	(90)
Exchange differences	373	9
Adjusted net finance costs	(1,649)	(1,589)
Impact of translational foreign exchange	(27)
Adjusted net finance costs, translated at 2024 exchange rates	(1,676)	(1,589)


British American Tobacco p.l.c. Form 20-F 2025

Adjusted Share of Post-Tax Results of Associates and Joint Ventures, at Constant Rates of Exchange

Definition – Share of post-tax results of associates and joint ventures before the impact of adjusting items and translational foreign exchange.

To supplement BAT’s performance presented in accordance with IFRS, the Group’s share of post-tax results of associates and joint ventures is also presented

before adjusting items (as defined in note 1 in Part III - Item 18 Notes on the Accounts). The Group’s Management Board believes that adjusted share of

post-tax results of associates and joint ventures provides information that enables users of the financial statements to compare the Group’s business

performance across periods. The Group’s Management Board uses adjusted share of post-tax results from associates and joint ventures as part of the total

assessment of the underlying performance of all the Group’s business interests. Adjusted share of post-tax results of associates and joint ventures has

limitations as an analytical tool. It is not a presentation made in accordance with IFRS, is not a measure of financial condition or liquidity, and should not be

considered as an alternative to the Group’s share of post-tax results of associates and joint ventures as determined in accordance with IFRS. The most directly

comparable IFRS measure to adjusted share of post-tax results of associates and joint ventures is share of post-tax results of associates and joint ventures.

Adjusted share of post-tax results of associates and joint ventures is not necessarily comparable to similarly titled measures used by other companies. As a

result, you should not consider this performance measure in isolation from, or as a substitute analysis for, BAT’s results of operations as determined in

accordance with IFRS.

The definition of adjusting items is explained in note 1 in Part III - Item 18 Notes on the Accounts.

The table below reconciles the Group’s share of post-tax results of associates and joint ventures to adjusted Group’s share of post-tax results of associates and

joint ventures, and to adjusted Group’s share of post-tax results of associates and joint ventures at constant rates based on a re-translation of adjusted Group’s

share of post-tax results of associates and joint ventures for each year, at the previous year’s exchange rates.


For the year ended 31 December	2025	2024
	£m	£m
Group’s share of post-tax results of associates and joint ventures	1,681	1,900
Issue of shares and changes in shareholding	(5)	(18)
Other exceptional items in ITC	(333)	—
Gain on partial divestment of shares held in ITC	(898)	(1,361)
Gain on sale of land and property by VST industries Limited	(3)	—
Adjusted Group’s share of post-tax results of associates and joint ventures	442	521
Impact of translational foreign exchange	33
Adjusted Group’s share of post-tax results of associates and joint ventures, translated at 2024 exchange rates	475	521

Adjusted Taxation at Constant Rates of Exchange

Definition – Taxation before the impact of adjusting items and translational foreign exchange.

BAT management monitors the Group’s adjusted taxation to assess BAT’s underlying tax. The definition of adjusting items is explained in note 1 in Part III -

Item 18 Notes on the Accounts. Adjusted taxation is not a measure defined by IFRS. The Group’s Management Board believes that this additional measure is

useful to the users of the financial statements, and is used by BAT management, because it excludes the tax on adjusting items and adjusting tax (as described

in notes 10(d) and 10(e), respectively, in Part III - Item 18 Notes on the Accounts), thereby enhancing users’ understanding of underlying business

performance.

Adjusted taxation has limitations as an analytical tool. It is not a presentation made in accordance with IFRS and should not be considered as an alternative to

taxation as determined in accordance with IFRS. The most directly comparable IFRS measure to adjusted taxation is taxation. Adjusted taxation is not

necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider this measure in isolation from, or as a

substitute analysis for, the Group’s taxation as determined in accordance with IFRS.

The table below reconciles taxation to adjusted taxation and adjusted taxation at constant rates, based on a re-translation of adjusted taxation for each year, at

the previous year’s exchange rates.


For the year ended 31 December	2025	2024
	£m	£m
UK corporation tax
– current year tax expense	15	15
– adjustments in respect of prior periods	2	9
Overseas tax
– current year tax expense	2,355	2,571
– adjustments in respect of prior periods	(296)	108
Current tax	2,076	2,703
Pillar Two income tax	82	79
Total current tax	2,158	2,782
Deferred tax	(64)	(2,425)
Taxation on ordinary activities	2,094	357
Adjusting items in taxation	104	157
Taxation on adjusting items	240	2,049
Adjusted taxation	(2,438)	(2,563)
Impact of translational foreign exchange	(84)
Adjusted taxation, translated at 2024 exchange rates	(2,522)	(2,563)


British American Tobacco p.l.c. Form 20-F 2025

Underlying Tax Rate and Underlying Tax Rate at Constant Rates of Exchange

Definition – Tax rate incurred before the impact of adjusting items and translational foreign exchange and to adjust for the inclusion of the

Group’s share of post-tax results of associates and joint ventures within the Group’s pre-tax results.

BAT management monitors the Group’s underlying tax rate to assess the tax rate applicable to the Group’s underlying operations, excluding the Group’s

share of post-tax results of associates and joint ventures in BAT’s pre-tax results and adjusting items (as defined in note 1 in Part III - Item 18 Notes on the

Accounts). Underlying tax rate is not a measure defined by IFRS. The Group’s Management Board believes that this additional measure is useful to the users

of the financial statements, and is used by BAT management, because it excludes the contribution from the Group’s associates, recognised after tax but

within the Group’s pre-tax profits, and adjusting items, thereby enhancing users’ understanding of underlying business performance.

Underlying tax rate has limitations as an analytical tool. It is not a presentation made in accordance with IFRS and should not be considered as an alternative

to the effective tax rate as determined in accordance with IFRS. The most directly comparable IFRS measure to underlying tax rate is the effective tax rate,

calculated as taxation as a proportion of profit before taxation. Underlying tax rate is not necessarily comparable to similarly titled measures used by other

companies. As a result, you should not consider this measure in isolation from, or as a substitute analysis for, the Group’s effective tax rate as determined in

accordance with IFRS.

The table below shows the computation of the Group’s underlying tax rate for the periods presented and underlying tax rate at constant rates based on a re-

translation of underlying tax rate for each year, at the previous year’s exchange rates and the related reconciliation of profit before taxation to adjusted profit

before taxation, excluding associates and joint ventures, and taxation on ordinary activities to adjusted taxation and adjusted taxation at constant rates of

exchange.


For the year ended 31 December	2025	2024
	£m	£m
Profit before taxation (PBT)	9,859	3,538
Less:
Share of post-tax results of associates and joint ventures	(1,681)	(1,900)
Adjusting items within profit from operations	1,575	9,154
Adjusting items within finance costs	170	(491)
Adjusted profit before taxation, excluding associates and joint ventures	9,923	10,301
Impact of translational foreign exchange	337
Adjusted PBT, excluding associates and joint ventures, translated at 2024 exchange rates	10,260	10,301

Taxation on ordinary activities	(2,094)	(357)
Adjusting items within taxation and taxation on adjusting items	(344)	(2,206)
Adjusted taxation	(2,438)	(2,563)
Impact of translational foreign exchange on adjusted taxation	(84)
Adjusted taxation, translated at 2024 exchange rates	(2,522)	(2,563)

Effective tax rate	21.2%	10.1%
Underlying tax rate	24.6%	24.9%
Underlying tax rate (at 2024 exchange rates)	24.6%	24.7%

Adjusted Diluted Earnings Per Share (EPS), presented at both current and constant rates of exchange

Definition – Diluted earnings per share before the impact of adjusting items and after adjustments to the number of shares outstanding for the

impact of share option schemes whether they would be dilutive or not under statutory measures, presented at the current and the prior years’

rates of exchange.

BAT management monitors adjusted diluted EPS, a measure which removes the impact of adjusting items (as defined in note 1 in Part III - Item 18 Notes on

the Accounts) from diluted earnings per share. Adjusted diluted EPS is considered by the Group’s Management Board to be useful to the users of the financial

statements and is used by the Group’s Management Board, because it excludes the impact of adjusting items which have less bearing on the routine ongoing

operating activities of the Group, thereby enhancing users’ understanding of underlying business performance. The Group’s Management Board also believes that

adjusted diluted EPS provides information that enables users of the financial statements to compare the Group’s business performance across periods. Additionally,

the Group’s Management Board believes that similar measures are frequently used by securities analysts, investors and other interested parties in their evaluation of

companies comparable to the Group, many of which present an adjusted diluted EPS-related performance measure when reporting their result. Adjusted diluted

EPS is used by management as reported in note 11 in Part III - Item 18 Notes on the Accounts, as an indicator of diluted EPS before adjusting items.

Adjusted diluted EPS is not necessarily comparable to similarly titled measures used by other companies. Adjusted diluted EPS has limitations as an

analytical tool. It is not a presentation made in accordance with IFRS and should not be considered as an alternative to diluted EPS as determined in

accordance with IFRS. The most directly comparable IFRS measure to adjusted diluted EPS is diluted EPS.

The management also assesses adjusted diluted earnings per share (at current and constant rates) within the Group's incentive schemes, as reported under

Item 6.B - Compensation.

The table below reconciles diluted EPS to adjusted diluted EPS and adjusted diluted EPS, at constant exchange rates based upon a re-translation of adjusted

diluted EPS for each year, at the previous year’s exchange rate.


British American Tobacco p.l.c. Form 20-F 2025


For the year ended 31 December	2025	2024
	pence	pence
Diluted earnings per share	349.1	136.0
Effect of amortisation and impairment of goodwill, trademarks and similar intangibles	68.2	80.7
Effect of impairment charges in respect of the Group's head office	—	2.9
Effect of impairment charges in respect of the Group's operations in Cuba	—	1.6
Effect of settlement of historical litigation in relation to the Fox River	—	(4.9)
Effect of the changes in provision in relation to the Approved Plans in Canada and associated costs	(23.7)	205.0
Effect of charges in respect of DOJ and OFAC investigations	—	0.2
Effect of impairment of held-for-sale assets and associated costs	5.5	—
Effect of Romania other taxes	(0.7)	20.1
Effect of restructuring costs	1.8	—
Effect of other adjusting items in operating profit	5.1	5.3
Effect of adjusting items in net finance costs	4.9	(17.0)
Effect of gains related to the partial divestment of shares held in ITC	(40.8)	(61.1)
Tax associated with the partial divestment of shares held in ITC and hotels business demerger	1.6	1.6
Effect of associates’ adjusting items	(15.5)	(0.8)
Effect of adjusting items in respect of deferred taxation	(9.2)	(12.0)
Adjusting items in tax	4.5	4.9
Redemption of perpetual hybrid bond - difference in spot rates	1.3	—
Adjusted diluted earnings per share	352.1	362.5
Impact of translational foreign exchange	12.9
Adjusted diluted earnings per share, translated at 2024 exchange rates	365.0	362.5

Net Debt

Definition – Total borrowings, including related derivatives, less cash and cash equivalents and current investments held at fair value.

Management uses net debt to assess its financial capacity. Net debt is not a measure defined by IFRS. The most directly comparable IFRS measure to net

debt is total borrowings. The Group’s Management Board believes that this additional measure, which is used internally to assess the Group’s financial

capacity, is useful to the users of the financial statements in helping them to see how business financing has changed over the year. Net debt has limitations as

an analytical tool. It is not a presentation made in accordance with IFRS and should not be considered as an alternative to total borrowings or total liabilities

determined in accordance with IFRS. Net debt is not necessarily comparable to similarly titled measures used by other companies. In addition, it does not

exclude restricted cash (as set out in note 21 in Part III - Item 18 Notes on the Accounts) in the calculation. As a result, you should not consider this measure in

isolation from, or as a substitute analysis for, the Group’s measures of financial position or liquidity as determined in accordance with IFRS. A reconciliation of borrowings to

net debt is provided in note 23 in Part III - Item 18 Notes on the Accounts.

Item 5.B - Liquidity and capital resources

The Group’s cash inflows derive principally from its operating activities. They are supplemented when required by cash flows from financing activities,

typically to support general corporate requirements but also, from time to time, to support acquisitions. The principal sources of liquidity for the Group are

cash flows generated from the operating business and proceeds from issuances of debt securities described below under ‘Capital Resources – Borrowings and

Net Debt’.

Treasury, Liquidity and Capital Structure

The Board reviews and agrees the overall treasury policies and procedures, delegating appropriate oversight to the Chief Financial Officer and the Treasury

function. The Treasury function is responsible for raising finance for the Group and managing the Group’s cash resources and the financial risks arising from

underlying operations. Clear parameters have been established, including levels of authority, on the type and use of financial instruments to manage the financial

risks facing the Group. Such instruments are only used if they relate to an underlying exposure; speculative transactions are expressly forbidden under the Group’s

treasury policy. All these activities are carried out under defined policies, procedures and limits, reviewed and approved by the Board, delegating oversight to the

Chief Financial Officer and Treasury Function. The treasury policies include a set of financing principles and key performance indicators. The Group’s treasury

position is monitored by a Corporate Finance Committee chaired by the Chief Financial Officer. Treasury operations are subject to periodic independent reviews

and audits, both internal and external. See note 26 in Part III - Item 18 Notes on the Accounts for further detail.

It is the policy of the Group to maximise financial flexibility and minimise refinancing risk by issuing debt with a range of maturities, generally matching the

projected cash flows of the Group and obtaining this financing from a wide range of sources. The Group targets an average centrally managed debt maturity

of at least five years of which no more than 20% matures in a single rolling year. As at 31 December 2025, the average centrally managed debt maturity was

9.5 years (2024: 9.5 years) with the highest proportion maturing in a single rolling 12-month period being 15.1% (2024: 14.8%).

In order to manage its interest rate risk, the Group maintains both floating rate and fixed rate debt. The Group sets targets (within overall guidelines) for the

desired ratio of floating to fixed rate debt on a net basis (at least 50% fixed on a net basis in the short- to medium-term). The interest rate profile of liquid

assets included in net debt are considered to offset floating rate debt and are taken into account in determining the net interest rate exposure. At 31 December

2025, the relevant ratios of floating to fixed rate borrowings after the impact of derivatives were 24:76 (2024: 22:78). On a net basis, after offsetting liquid

assets and excluding cash and other liquid assets (including investments held at fair value) in Canada which were subject to certain restrictions under

Companies' Creditors Arrangement Act (CCAA) protection in 2024 (and were paid in the second half of 2025), the relevant ratio of floating to fixed rate

borrowings was 14:86 (2024: 13:87).

As part of the management of liquidity, funding and interest rate risk, the Group regularly evaluates market conditions and may enter into transactions, from

time to time, to repurchase outstanding debt, pursuant to open market purchases, tender offers or other means.

The Group continues to maintain investment‑grade credit ratings*, with ratings from Moody's, S&P and Fitch of Baa1 (stable outlook), BBB+ (stable

outlook), BBB+ (stable outlook), respectively.


British American Tobacco p.l.c. Form 20-F 2025

The strength of the ratings has underpinned debt issuance and the Group is confident of its ability to successfully access the debt capital markets.

For more info on liquidity and capital resources, please refer to notes 23 and 26 in Part III - Item 18 Notes on the Accounts.

*A credit rating is not a recommendation to buy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating should be evaluated separately of any other rating.

Available facilities

It is Group policy that short-term sources of funds (including drawings under both the Group US$4 billion U.S. commercial paper (U.S. CP) programme

and the Group £3 billion euro commercial paper (ECP) programme) are backed by undrawn committed lines of credit and cash. Commercial paper is

issued by B.A.T. International Finance p.l.c., B.A.T. Netherlands Finance B.V. and B.A.T Capital Corporation and guaranteed by British American

Tobacco p.l.c. At 31 December 2025, commercial paper of nil was outstanding (2024: nil). Cash flows relating to commercial paper that have maturity

periods of three months or less are presented on a net basis in the Group’s cash flow statement.

At 31 December 2025, the Group had access to a £5.0 billion revolving credit facility. This facility was undrawn at 31 December 2025. In November 2025, the

Group refinanced its existing £5.2 billion facility at the reduced amount of £5.0 billion comprising (i) a £2.5 billion 364-day tranche with two one-year

extension options and a one-year term out option and (ii) a £2.5 billion five-year tranche with two one-year extension options.

During 2025, the Group refinanced or extended short-term bilateral facilities totalling £2.7 billion. As at 31 December 2025, nil was drawn on a short-term

basis with £2.7 billion undrawn and still available under such bilateral facilities. Cash flows relating to bilateral facilities that have maturity periods of three

months or less are presented on a net basis in the Group’s cash flow statement.

In January 2025, the Group entered into a medium-term facility of £468 million (equivalent), which was fully drawn as at 31 December 2025.

Following the initial filing in 2019, the Group's shelf registration statement on Form F-3 was renewed with the SEC in 2022 and again in 2025, pursuant to

which B.A.T Capital Corporation, BAT p.l.c. and B.A.T. International Finance p.l.c. may issue debt securities guaranteed by certain members of the Group

from time to time. This forms part of the Group’s strategy to ensure flexible and agile access to capital markets and the registration statement is initially valid

for three years.

See also note 26 in Part III - Item 18 Notes on the Accounts.

Use of facilities

These facilities ensure that the Group has access to funding to supplement the cash available or generated by the business in the period to meet the

operational (including working capital) and general corporate requirements including, but not limited to, the timing of payments in relation to:

–dividends (2025: £5.2 billion; 2024: £5.2 billion);

–net capital expenditure (2025: £0.6 billion; 2024: £0.4 billion);

–Franked Investment Income Group Litigation Order (FII GLO) as described on note 10(b) in Part III - Item 18 Notes on the Accounts;

–Master Settlement Agreement and State Settlement Agreements in the U.S. (2025: £1.6 billion; 2024: £2.0 billion);

–refinancing obligations;

–share repurchase programme; and

–other corporate activity, litigation or acquisitions, as relevant.

Management believes that the Group has sufficient working capital for present requirements, taking into account the amounts of undrawn borrowing facilities

and levels of cash and cash equivalents, and the ongoing ability to generate cash.

Issuance, drawdowns and repayment in the period

–In March 2025, the Group repaid a €650 million bond at maturity and accessed the US dollar market under the SEC Shelf Programme, raising a total of

US$2.5 billion across three tranches;

–In June 2025, the Group repaid two bonds totalling an aggregate amount of US$3.0 billion at maturity;

–In August 2025, the Group repaid a £300 million bond at maturity;

–In September 2025, the Group accessed the US dollar market under the SEC Shelf Programme, raising US$750 million; and

–In October 2025, the Group issued two series of perpetual hybrid bonds, each in an aggregate principal amount of €600 million and concurrently launched

a tender offer for its outstanding €1.0 billion 3% perpetual hybrid bond (first callable in 2026). As a result, approximately 80.7% of the existing 3%

perpetual hybrid notes were repurchased at a slight premium, with the remaining 19.3% redeemed at their principal value in November 2025. Refer to note

22(d) in Part III - Item 18 Notes on the Accounts for further details.

Cash Flow

Please refer to note 21 in Part III - Item 18 Notes on the Accounts for further details.

Net cash generated from operating activities

Net cash generated from operating activities decreased by £3,783 million to £6,342 million in 2025 (from £10,125 million in 2024), largely due to the

payment of £2,560 million in the second half of 2025 in Canada as part of the Approved Plans.

2025 was also negatively impacted by translational foreign exchange due to the relative movements of sterling against the Group reporting currencies,

notably the US dollar.

In 2025, the decrease was also driven by:

–Lower dividends received from the Group's associates of £369 million (2024: £406 million), mainly related to ITC, largely reflecting the reduced

shareholding;

–An increase in tax paid of £2,926 million, compared to £1,854 million in 2024 as £678 million that was deferred in the U.S. from 2024 was paid in the first

half of 2025; and

–A payment related to the FII GLO of £479 million. The Group will make further payments of £222 million in 2026 and £41 million in 2027. Please see

note 10(b) in Part III - Item 18 Notes on the Accounts.

These were partly offset by the net impact of payments in 2024 of the following items that did not repeat:

–The final payment in respect of the settlement agreements with the DOJ and OFAC in the amount of £267 million;

–A payment of £390 million following an excise assessment in Romania; and

–The receipt of £132 million following the successful conclusion of litigation concerning the Fox River.

In 2025, other litigation payments (mainly related to Engle and other health-related claims in the U.S. and in respect of Canada) were lower at £101 million

(2024: £147 million).

Net cash from investing activities

In 2025, net cash from investing activities was marginally higher, up to £1,387 million inflow (2024: £1,375 million inflow).


British American Tobacco p.l.c. Form 20-F 2025

This was driven by the net movement from short-term investment products, including treasury bills, which were an inflow of £794 million in 2025, compared

to an inflow of £83 million in 2024 due to:

–the net proceeds of £318 million from the sale, in December 2025, of around 59% of the Group’s investment in ITC Hotels; and

–the liquidation of investments (£437 million) that were then included in the upfront payment in respect of Canada as part of the Approved Plans.

However, this was largely offset by lower net proceeds from the partial monetisation of our investment in ITC of £1,052 million compared to £1,577 million

in 2024.

Purchases of property, plant and equipment were higher than 2024, at £551 million (2024: £486 million).

In 2025, the Group invested £648 million in gross capital expenditure, an increase of 11.7% on the prior year (2024: £581 million). This included purchases

of property, plant and equipment related to the ongoing investment in the Group’s operational infrastructure, including the expansion of our New Categories

portfolio and enhancements to our Modern Oral capacity.

The Group expects its gross capital expenditure in 2026 to be approximately £750 million.

Net cash used in financing activities

Net cash used in financing activities was an outflow of £8,762 million in 2025 (2024: £10,632 million outflow), with the outflow in each year largely driven

by:

–Dividend payments (2025: £5,238 million, up 0.5%; 2024: £5,213 million). The movement was driven by the higher dividend per share. However, the

increase was partially offset by the reduction in the number of shares due to the share buy-back programme undertaken in 2025 and 2024;

–The net repayment of borrowings (2025: £118 million; 2024: £2,422 million) as described on page 48;

–An outflow of £380 million (2024: £128 million) related to derivatives;

–A net inflow from the redemption and subsequent issuance of perpetual hybrid bonds of £167 million; and

–The purchases of shares under the 2025 share buy-back programme of £1,112 million compared to £698 million in 2024.

In 2025, interest paid decreased by 4.2% to £1,631 million (2024: £1,703 million).

Please refer to note 26 in Part III - Item 18 Notes on the Accounts for further details.

Cash flow conversion

The conversion of profit from operations to net cash generated from operating activities may indicate the Group’s ability to generate cash from the profits

earned.

Based upon net cash generated from operating activities, the Group’s conversion rate was 63% compared to 370% in 2024, impacted, in both years, by the

provision recognised in respect of the Canadian settlement in 2024 and subsequent payment of cash and cash equivalents held in ITCAN during 2025.


Summary Cash Flow
	2025 £m	2024 £m
Cash generated from operating activities	8,899	11,573
Dividends received from associates	369	406
Tax paid	(2,926)	(1,854)
Net cash generated from operating activities	6,342	10,125
Net cash from investing activities	1,387	1,375
Net cash used in financing activities	(8,762)	(10,632)
Transferred to held-for-sale	(208)	—
Differences on exchange	(76)	(281)
(Decrease)/increase in net cash and cash equivalents in the year	(1,317)	587

Restricted cash

Cash and cash equivalents include restricted amounts of £268 million (2024: £2,072 million) in respect of ITCAN which was previously in CCAA protection

(note 32 and note 24 in Part III - Item 18 Notes on the Accounts). Accumulated cash and cash equivalents were paid into the Global Settlement Trust

Account as part of the Upfront Cash Contribution (each as defined in the Approved Plans, see note 24 in Part III - Item 18 Notes on the Accounts) in the

second half of 2025. Due to ongoing restrictions associated with the Approved Plans in Canada, cash and cash equivalents held by ITCAN continue to be

considered restricted. As at 31 December 2025, further restricted cash and cash equivalents of £67 million (2024: £339 million) were principally due to

exchange control restrictions.

Investments held at fair value through profit and loss included restricted amounts, at 31 December 2024 of £437 million due to investments held by

subsidiaries in CCAA protection which were subsequently included in the settlement payments made in 2025 in respect of the Approved Plans in the

Canadian litigation.

At 31 December 2025, further restricted amounts of nil (31 December 2024: £60 million) were subject to potential exchange control restrictions (see note 18

in Part III - Item 18 Notes on the Accounts).

Assessment as a Going Concern

In conjunction with the assessment of viability, the Directors have also assessed the short-term cash flow forecasts and debt refinancing requirements.

The Group has, at the date of this report, sufficient existing financing available for its estimated requirements for at least the next 12 months and beyond in

respect of general corporate purposes, including in respect of the Master Settlement Agreement and State Settlement Agreements due in the U.S. in 2026 and

other known liabilities or future payments (including interim dividends).

The Group has £72 million of future contractual commitments (2024: £67 million) related to property, plant and equipment, as discussed in note 13 in Part III

- Item 18 Notes on the Accounts.

After reviewing the Group’s annual budget, plans and financing arrangements, including the availability of a £5.0 billion revolving credit facility, the

Directors consider that the Group has adequate resources to continue operating and that it is therefore appropriate to continue to adopt the going concern basis

in preparing this Form 20-F.

Capital Expenditure

See discussion under Item 4.A.


British American Tobacco p.l.c. Form 20-F 2025

Hedging Instruments

As discussed in note 19 in Part III - Item 18 Notes on the Accounts, the Group hedges its exposure to interest rate movements and currency movements.

BAT’s cash flow hedges are principally in respect of sales or purchases of inventory and certain debt instruments. A certain number of forward foreign

currency contracts were used to manage the currency profile of external borrowings. Interest rate swaps have been used to manage the interest rate profile of

external borrowings, while cross-currency swaps have been used to manage the currency profile of external borrowings.

Capital - Borrowings and Net Debt Policy

The Group utilises cash pooling and zero balancing bank account structures in addition to intercompany loans and borrowings to ensure that there is the

maximum mobilisation of cash within the Group. The key objectives of treasury in respect of cash and cash equivalents are to protect the principal value of

the Group’s cash and cash equivalents, to concentrate cash at the centre to minimise the required long-term debt issuance, including perpetual hybrid debt

treated as an equity instrument, and to optimise the yield earned. The amount of debt the Group issues is determined by forecasting the net debt requirement

after the mobilisation of cash. Subsidiary companies are funded by share capital and retained earnings, loans from the central finance companies on

commercial terms or through local borrowings by the subsidiaries in appropriate currencies. All contractual borrowing covenants have been met and none

are expected to inhibit the Group’s operations or funding plans.

Borrowings and Net Debt

Total borrowings (which includes lease liabilities) decreased to £35,070 million in 2025 (2024: £36,950 million).

In 2025, translational foreign exchange, particularly related to the relative movement of the US dollar and Euro, was a tailwind of £1,810 million (2024:

£204 million headwind).

The movement in borrowings is impacted by the net repayment of bonds, as discussed on page 48, driven by the cash generated by the business after payment of

dividends to shareholders.

Total borrowings include £591 million (31 December 2024: £670 million) in respect of the purchase price allocation adjustments related to the acquisition of Reynolds

American Inc.

As discussed on page 48, the Group remains confident about its ability to access the debt capital markets successfully and reviews its options on a continuing basis.

Net debt is a non-GAAP measure and is defined as total borrowings (including related derivatives and lease liabilities) less cash and cash equivalents and

current investments held at fair value.

Net debt, at 31 December 2025, was £31,215 million (2024: £31,253 million), with the movement driven by:

–Net cash generated from operating activities , described on page 48;

–Net cash from investing activities, described on page 48;

–Net cash used in financing activities, described on page 49; and

–A foreign exchange tailwind of £1,121 million in 2025 (2024: £674 million headwind).

The following table sets out the Group’s long- and short-term borrowings as of the dates indicated:


				As of 31 December (£m)1
	Currency	Maturity dates	Interest rates at 31 December 2025	2025	2024	2023
Eurobonds2	Euro	2027 to 2045	1.3% to 5.4%	4,931	5,236	5,569
	UK sterling	2026 to 2055	2.3% to 6.0%	1,993	2,291	3,097
	Swiss franc	2026	1.4%	236	221	234
Bonds issued pursuant to rules under the U.S. Securities Act (as amended)2	US dollar	2026 to 2055	1.7% to 8.1%	26,655	28,268	29,913
Commercial paper2				—	—	—
Other loans				—	—	100
Bank loans				689	211	216
Bank overdrafts				37	138	103
Finance leases				529	585	498
Total				35,070	36,950	39,730

Notes:

1.The financial data above has been extracted from the Group’s consolidated financial statements.

2.The issuers of these debt securities are B.A.T. International Finance p.l.c., B.A.T Capital Corporation, Reynolds American Inc., or R.J. Reynolds Tobacco Company, as applicable. British American Tobacco

p.l.c. is the ultimate guarantor in each case.

Perpetual hybrid bonds issued by the Company have been classified as equity and therefore excluded from borrowings.

Please refer to note 23 in Part III - Item 18 Notes on the Accounts for further details.

Off-Balance Sheet Arrangements and Contractual Obligations

Except for certain indemnities, the Group has no significant off-balance sheet arrangements other than in respect of leaf purchase obligations. The Group has

contractual obligations to make future payments on debt guarantees. In the normal course of business, it enters into contractual arrangements where the

Group commits to future purchases of goods and services from unaffiliated and related parties.

It is anticipated that the Group will utilise a combination of cash generated from operations in the normal course of business, accessing available financing

facilities and the refinancing of existing debt.

The Group’s undiscounted contractual obligations as of 31 December 2025 were as follows:


British American Tobacco p.l.c. Form 20-F 2025


	Payments due by period (£m)
	Total	Less than 1 Year	1–3 Years	3–5 Years	Thereafter
Long-term notes and other borrowings, exclusive of interest1	33,970	2,639	6,608	4,259	20,464
Interest payments related to long-term notes1	571	571	—	—	—
Lease liabilities	529	153	179	82	115
Purchase obligations2	919	852	67	—	—
Total cash obligations	35,989	4,215	6,854	4,341	20,579

Notes:

1.For more information about the Group’s long-term debt, see note 23 in Part III - Item 18 Notes on the Accounts.

2.Purchase obligations primarily include commitments to acquire tobacco leaf. Purchase orders for the purchase of other raw materials and other goods and services are not included in the table, as the Group’s

operating subsidiaries are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders typically represent authorisations to purchase rather than

binding agreements.

The table above does not include any amounts that the Group may pay to fund its retirement benefit plans as the timing and amount of any such future

funding are unknown and dependent on, among other things, the future performance of defined benefit pension plan assets, interest rate assumptions and

other factors. The net retirement benefit scheme assets totalled £79 million as of 31 December 2025, which is net of pension assets of £6,302 million. The

Group expects to be required to contribute £22 million to its defined benefit plans during 2026. See note 15 in Part III - Item 18 Notes on the Accounts for

further information.

The above table also excludes any amounts in relation to service contracts which are disclosed in note 31 in Part III - Item 18 Notes on the Accounts. The

Group has £72 million of future contractual commitments (2024: £67 million) related to property, plant and equipment and £6 million of future contractual

commitments (2024: £5 million) related to intangible assets.

Retirement Benefit Schemes

The Group’s subsidiary undertakings operate defined benefit schemes, including pension and post-retirement healthcare schemes, and defined contribution

schemes. The most significant arrangements are in the U.S., the UK, Canada, Germany, Switzerland and the Netherlands. Together, schemes in these

territories account for over 90% of the total underlying obligations of the Group’s defined benefit arrangements and over 60% of the current service cost.

Benefits provided through defined contribution schemes are charged as an expense as payments fall due. The liabilities arising in respect of defined benefit

schemes are determined in accordance with the advice of independent, professionally qualified actuaries, using the projected unit credit method. It is Group

policy that all schemes are formally valued at least every three years. Contributions to the defined benefit schemes are determined after consultation with the

respective trustees and actuaries of the individual externally funded schemes, taking into account regulatory environments.

The present total value of funded scheme liabilities as at 31 December 2025 was £5,404 million (2024: £5,705 million), while unfunded scheme liabilities

amounted to £695 million (2024: £734 million). The fair value of scheme assets decreased to £6,302 million from £6,612 million in 2024. The overall position

for all pension and healthcare schemes in Group subsidiaries amounted to a net asset of £79 million at the end of 2025, compared to a net asset of £117 million

at the end of 2024.

In respect of the UK Pension Fund, on 19 September 2025, the trustee entered into a buy-out transaction with Pension Insurance Corporation plc, with a

premium of £28 million paid on 22 September 2025 by the trustee from fund assets at that time. Please see note 15 in Part III - Item 18 Notes on the

Accounts for further details.

Litigation and Settlements

As discussed in note 31 in Part III - Item 18 Notes on the Accounts, various legal proceedings or claims are pending or may be instituted against the Group.

Government Activity

The marketing, sale, taxation and use of tobacco products have been subject to substantial regulation by government and health officials for many years.

For information about the risks related to regulation, see page 23.

Summarised financial information

The following summarised financial information is required by the rules of the Securities and Exchange Commission and has been prepared as a requirement

of the Regulation S-X 3-10 in respect of the guarantees of:

–US$6.89 billion of outstanding bonds issued by B.A.T Capital Corporation (BATCAP) in connection with the acquisition of Reynolds American Inc.

(Reynolds American), including registered bonds issued in exchange for the initially issued bonds (the 2017 Bonds);

–US$10.12 billion of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on July 17, 2019, US$8.8 billion

of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on July 1, 2022 and US$0.75 billion of outstanding

bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on July 1, 2025 pursuant to which BATCAP, BATIF or the

Company may issue an indefinite amount of debt securities; and

–US$2.50 billion of outstanding bonds issued by BATIF pursuant to the Shelf Registration Statement on Form F-3 filed on July 17, 2019, and US$1 billion of

outstanding bonds issued by BATIF pursuant to the Shelf Registration Statement on Form F-3 filed on July 1, 2022, pursuant to which BATCAP, BATIF or

the Company may issue an indefinite amount of debt securities.

As of July 28, 2020, all relevant Group entities suspended their reporting obligations with respect to the US$4.6 billion (2024: US$6.7 billion) of Reynolds

American unsecured notes and US$22.1 million (2024: US$22.1 million) of Lorillard unsecured notes. As such, no summarised financial information is

provided with respect to these securities.

As described below, Reynolds American is a subsidiary guarantor of all outstanding series of BATCAP and BATIF bonds. Under the terms of the indentures

governing such notes, any subsidiary guarantor (including Reynolds American) other than BATCAP or BATIF, as applicable, BATNF and BATHTN, will

automatically and unconditionally be released from all obligations under its guarantee, and such guarantee shall thereupon terminate and be discharged and of

no further force or effect, in the event that (1) its guarantee of all then outstanding notes issued under the Group’s EMTN Programme is released or (2) at

substantially the same time its guarantee of the debt securities is terminated, such subsidiary guarantor is released from all obligations in respect of indebtedness

for borrowed money for which such subsidiary guarantor is an obligor (as a guarantor or borrower). Under the EMTN Programme, Reynolds American’s

guarantee is released if at any time the aggregate amount of indebtedness for borrowed money, subject to certain exceptions, for which Reynolds American is

an obligor does not exceed 10% of the outstanding long-term debt of BAT as reflected in the balance sheet included in BAT’s most recent publicly released

interim or annual consolidated financial statements.


British American Tobacco p.l.c. Form 20-F 2025

Reynolds American’s guarantee may be released notwithstanding Reynolds American guaranteeing other indebtedness, provided Reynolds American’s

guarantee of outstanding notes issued under the EMTN Programme is released. If Reynolds American’s guarantee is released, BAT is not required to replace

such guarantee, and the debt securities will have the benefit of fewer subsidiary guarantees for the remaining maturity of the debt securities.

Note:

The following summarised financial information report the unconsolidated contribution of each applicable company to the Group’s consolidated results and not the separate financial statements for each applicable

company as local financial statements are prepared in accordance with local legislative requirements and may differ from the financial information provided below. In particular, in respect of the U.S. region, all

financial statements and financial information provided by or with respect to the U.S. business or RAI (and/or RAI and its subsidiaries (collectively, the Reynolds Group)) are prepared on the basis of U.S. GAAP

and constitute the primary financial statements or financial information of the U.S. business or RAI (and/or the Reynolds Group). Solely for the purpose of consolidation within the results of BAT p.l.c. and the BAT

Group, this financial information is then converted to IFRS. To the extent any such financial information provided in these financial statements relates to the U.S. business or RAI (and/or the Reynolds Group), it is

provided as an explanation of the U.S. business’s or RAI’s (and/or the Reynolds Group’s) primary U.S. GAAP based financial statements and information.

The subsidiaries disclosed below are wholly-owned and the guarantees provided are full and unconditional, and joint and several:

a.British American Tobacco p.l.c. (as the parent guarantor), referred to as ‘BAT p.l.c.’ in the financials below;

b.B.A.T Capital Corporation (as an issuer or a subsidiary guarantor, as the case may be), referred to as ‘BATCAP’ in the financials below;

c.B.A.T. International Finance p.l.c. (as an issuer or a subsidiary guarantor, as the case may be), referred to as ‘BATIF’ in the financials below;

d.B.A.T. Netherlands Finance B.V. (as a subsidiary guarantor), referred to as ‘BATNF’ in the financials below;

e.Reynolds American Inc. (as a subsidiary guarantor), referred to as ‘RAI’ in the financials below; and

f.British American Tobacco Holdings (The Netherlands) B.V. (as a subsidiary guarantor of the 2017 Bonds only), referred to as ‘BATHTN’ in the financials

below.

In accordance with Regulation S-X 13-01, information in respect of investments in subsidiaries that are not issuers or guarantors has been excluded from

non-current assets as shown in the balance sheet table below. The ‘BATHTN’ column in the summarised financial information is only applicable in the

context of the 2017 Bonds. British American Tobacco Holdings (The Netherlands) B.V. (BATHTN) is not an issuer nor guarantor of any of the other

securities referenced in this note. None of the issuers or other guarantors has material balances with or an investment in BATHTN. Investments in

subsidiaries represents share capital acquired in relation to or issued by subsidiary undertakings.


	Summarised Financial Information
Year ended 31 December 2025	BAT p.l.c. £m	BATCAP £m	BATIF £m	BATNF £m	RAI £m	BATHTN £m
Income Statement
Revenue	—	—	—	—	—	—
(Loss)/profit from operations	(170)	(3)	—	—	—	3
Dividend income	7,432	—	1	—	6,111	44
Net finance income/(costs)	448	(35)	224	—	(561)	(65)
Profit/(loss) before taxation	7,710	(38)	225	—	5,550	(18)
Taxation on ordinary activities	(15)	9	4	—	125	(87)
Profit/(loss) for the year	7,695	(29)	229	—	5,675	(105)
Intercompany Transactions – Income Statement
Transactions with non-issuer/non-guarantor subsidiaries (expense)/ income	(167)	1	—	—	30	—
Transactions with non-issuer/non-guarantor subsidiaries net finance income	293	769	777	—	22	—
Dividend income from non-issuer/non-guarantor subsidiaries	7,432	—	—	—	6,111	44


	Summarised Financial Information
Year ended 31 December 2024	BAT p.l.c. £m	BATCAP £m	BATIF £m	BATNF £m	RAI £m	BATHTN £m
Income Statement
Revenue	—	—	—	—	—	—
(Loss)/profit from operations	(149)	(9)	(20)	—	—	1
Dividend income	6,477	—	—	—	5,263	185
Net finance income/(costs)	501	(81)	1,062	1	(496)	(34)
Profit/(loss) before taxation	6,829	(90)	1,042	1	4,767	152
Taxation on ordinary activities	(9)	(9)	(5)	—	111	(89)
Profit/(loss) for the year	6,820	(99)	1,037	1	4,878	63
Intercompany Transactions – Income Statement
Transactions with non-issuer/non-guarantor subsidiaries (expense)/ income	(152)	(9)	(17)	—	31	(1)
Transactions with non-issuer/non-guarantor subsidiaries net finance income	316	563	1,234	—	24	—
Dividend income from non-issuer/non-guarantor subsidiaries	6,477	—	—	—	5,263	185


British American Tobacco p.l.c. Form 20-F 2025


	Summarised Financial Information
As at 31 December 2025	BAT p.l.c. £m	BATCAP £m	BATIF £m	BATNF £m	RAI £m	BATHTN £m
Balance Sheet
Non-current assets	1,076	19,255	2,184	1,436	12	1
Current assets	12,062	23,153	47,989	50	1,364	7
Non-current liabilities	1,575	18,908	9,469	1,436	8,618	3
Non-current borrowings	1,571	18,813	9,295	1,436	8,572	—
Other non-current liabilities	4	95	174	—	46	3
Current liabilities	65	23,502	36,502	49	1,647	283
Current borrowings	32	23,471	36,261	49	195	1
Other current liabilities	33	31	241	—	1,452	282
Intercompany Transactions – Balance Sheet
Amounts due from non-issuer/non-guarantor subsidiaries	11,175	13,946	51,965	—	1,342	8
Amounts due to non-issuer/non-guarantor subsidiaries	2	2,728	36,622	—	1	1
Investment in subsidiaries (that are not issuers or guarantors)	27,234	—	718	—	23,892	1,549


	Summarised Financial Information
As at 31 December 2024	BAT p.l.c. £m	BATCAP £m	BATIF £m	BATNF £m	RAI £m	BATHTN £m
Balance Sheet
Non-current assets	1,917	18,996	2,292	1,358	292	77
Current assets	9,736	18,504	46,197	48	1,221	15
Non-current liabilities	1,577	18,503	11,526	1,358	7,707	20
Non-current borrowings	1,571	18,257	11,227	1,358	7,657	—
Other non-current liabilities	6	246	299	—	50	20
Current liabilities	72	19,010	32,984	47	3,257	129
Current borrowings	37	18,967	32,708	46	1,751	1
Other current liabilities	35	43	276	1	1,506	128
Intercompany Transactions - Balance Sheet
Amounts due from non-issuer/non-guarantor subsidiaries	9,690	15,082	50,595	—	1,478	15
Amounts due to non-issuer/non-guarantor subsidiaries	2	3,942	32,707	—	2	1
Investment in subsidiaries (that are not issuers or guarantors)	27,234	—	718	—	25,659	1,466

Perpetual hybrid bonds

On 27 September 2021, BAT p.l.c. issued two €1 billion perpetual hybrid bonds. During 2025, the Group repurchased €1 billion of perpetual hybrid bonds

and issued a further €1.2 billion of perpetual hybrid bonds. The perpetual hybrid bonds have been classified as equity as there is no contractual obligation to

either repay the principal or make payments of interest (note 22(d)) in Part III - Item 18 Notes on the Accounts.

BAT p.l.c.’s unconsolidated contribution to the Group’s consolidated equity results is shown below:

BAT p.l.c.


As at 31 December	2025 £m	2024 £m
Total equity	38,732	37,238
Share capital	577	585
Share premium	123	121
Perpetual hybrid bonds	1,893	1,685
Other equity	36,139	34,848

Item 5.C - Research and development, patents and licenses, etc.

Expenditure on research and development, including employee benefit costs and depreciation, was £358 million in 2025 (2024: £380 million; 2023:

£408 million), with a focus on products that could potentially reduce the risk associated with smoking conventional cigarettes.

Demonstrating the reduced-risk*† status of Smokeless products, compared to smoking, can only be done with robust science. Every year we invest significantly to

find innovative ways to contribute to THR.


British American Tobacco p.l.c. Form 20-F 2025

We use various analytical and pre-clinical techniques, specialised laboratory technology and expertise to test our products, and aim to ensure they meet high

quality standards. This is complemented by collaborations with global external researchers, and clinical research organisations, who bring

independent, specialist expertise that enhance our internal capabilities.

We are always innovating, experimenting, and delivering new THR solutions. This is why our Science and Product Innovation are so important,

accelerating pioneering approaches to our Smokeless products.

We invested approximately £276 million in 2025 on the research and development of New Category products. We continue to enhance our capabilities while

collaborating with researchers around the globe.

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

Patents and trademarks

Our trademarks, which include the brand names under which our products are sold, are key assets which we consider, in the aggregate, to be important to the

business as a whole. As well as protecting our brand names by way of trademark registration, we also protect our innovations by means of patents and

designs in key global jurisdictions.

Item 5.D - Trend information

As a global business, operating at scale within a rapidly evolving landscape, our markets are shaped by long-term consumer, economic,

cultural and social trends. We continue to respond to this changing environment by developing and advancing our strategy and long-

term priorities.

The trends in and their potential effects on our business are discussed throughout in Item 3.D Risk Factors, Item 4.B Business Overview, Item 5.A Operating

Results and Item 5.B Liquidity and Capital Resources above. In addition, we emphasize the trend of consumers increasingly accepting alternatives to

traditional cigarettes.

The Global Nicotine Market

The global nicotine market is evolving at a rapid pace, characterised by the growing presence of oral nicotine and heated products across multiple

jurisdictions, and the continued uptake of vapour products by smokers. This remains a complex and fast-moving landscape, as new Reduced-Risk Products

(RRPs)*† are developed and launched globally.

Global Market for Combustibles and Smokeless

The latest data indicates that the legal global tobacco and nicotine market was worth around US$939 billion in 2024. Combustible cigarettes remain, by a

considerable margin, the largest product category within this market.

Although cigarettes are among the most heavily regulated consumer products globally – and despite legal cigarette volumes being forecast to decline by around

0.2% over 2024-2029 – roughly 20% of the world’s adult population continue to choose to smoke.

Without access to suitable smokeless alternatives, a sizeable proportion of this group is likely to maintain their current patterns of consumption.

The U.S. combustibles industry continues to be negatively impacted by the adult nicotine consumer migration to alternative nicotine products (Vapour and

pouches). The level of poly-usage for combustibles consumers continued to increase as part of the consumer migration journey, reaching 53% in 2025, up 4

ppts from 2023. In addition, continued consumer affordability pressure resulted in downtrading to the deep-discount category (in which the Group is not

present).

Transformation Driving Quality Growth

Our corporate purpose is to build A Better Tomorrow™ by reducing the health impact of our business. To accelerate the next phase of our transformation, we

are committed to Building a Smokeless World. We will deploy our global multi-category portfolio to actively encourage adult smokers – who would

otherwise continue to smoke – to Switch to Better*† nicotine products, and continue to seek long-term opportunities Beyond Nicotine in Wellbeing and

Stimulation, realising the multi-stakeholder benefits of A Better Tomorrow™.

Our commitment is demonstrated by our ambition to become a predominantly smokeless business, with over 50% of our revenue from Smokeless products by

2035. Revenue growth in the global nicotine industry is accelerating through the development of New Categories.

We continue to make progress towards our target of 50 million adult consumers of our Smokeless products by 2030, adding another 4.7 million in 2025 to a

total of 34.1 million.

Prioritising where and which products to focus on within the largest profit pools guides our resource allocation decisions. Our New Categories business

continues to deliver profitable growth, on a category contribution basis. Category Contribution reflects the marginal contribution of the categories to the

Group’s financial performance. This measure includes all attributable revenue and costs.

We strive to continue to profitably and responsibly manage our transition away from combustibles, generating funds to further invest in our transformation

and deliver sustainable profit growth and cash flow over the long-term.

In order to achieve this, our refined strategic pillars will act as our executional compass, and we will measure performance using KPIs to track our journey.

A product transformation programme is underway to enable a simpler and rationalised product portfolio to enable adjusted gross margin growth.

As part of this, we continue to refine the number of tobacco leaf grades, blends, cigarette formats and stock keeping units (SKUs) in our portfolio.

To deliver category contribution growth, we will focus on marketing spend optimisation and on simplifying our combustibles portfolio to enable the delivery of

a managed combustibles transition.

Building a Sustainable Future for Our Stakeholders

Building a Sustainable Future is about seeking to actively migrate smokers – who would otherwise continue to smoke – away from cigarettes and to

smokeless alternatives sustainably, responsibly and with integrity.

BAT’s vision is to Build a Smokeless World. As we transition to A Better Tomorrow™, we are committed to doing so responsibly – by reducing our reliance

on natural resources, managing our environmental impact and respecting human rights across our business operations and supply chain. Through these actions,

we are enhancing business resilience and positioning BAT for enduring success in a rapidly evolving landscape. At the same time, we strive to create meaningful

impact in the communities where we operate and empower our people to drive positive change. Our sustainability strategy is anchored in four interconnected

impact areas - Climate, Nature, Circularity, and Communities - beyond Tobacco Harm Reduction. By focusing on these impact areas, we aim to mitigate risks,

strengthen resilience, and create positive value across our value chain. As our 2025 targets reach maturity, we have set four clear targets under each strategic pillar

to guide our efforts through 2030 and beyond. These targets enable us to proactively manage sustainability impacts, regulatory changes, and evolving stakeholder

expectations. Action plans are already underway, and we are committed to tracking and transparently sharing our progress as our transformation continues. Our


British American Tobacco p.l.c. Form 20-F 2025

achievements to date, including significant reductions in GHG emissions, water use and waste, and value chain collaboration demonstrate our commitment to

deliver.

As we continue working towards reducing the health impact of our products and further embedding sustainability in our business, we seek to drive growth,

create shared value and build a stronger, more resilient BAT.

Our THR Approach

We aim to provide smokers – who would otherwise continue to smoke – with a choice of Smokeless products that deliver similar satisfaction to cigarettes in

their nicotine delivery, use, and sensorial experience. For example, while we are clear that our New Category products (excluding certain products within the

Modern Oral category) are not cessation products and are not marketed as such, some independent studies suggest that vapour products are more successful

than nicotine replacement therapy in helping people stop smoking2 by providing a satisfactory alternative.

With four global categories of reduced-risk*† products: Heated Products, Vapour Products, Oral Tobacco Products and Modern Oral Products, significant

progress has been made. It is estimated that there are now more than 115 million3 consumers of Smokeless products globally. The latest estimate of the

global number of vapour product consumers alone is over 86 million4.

Stakeholders increasingly expect us to demonstrate that we are a purpose-driven business, and to continue to make progress towards our ambition to Build a

Smokeless World.

Demonstrating the reduced-risk*† status of Smokeless products, compared to smoking, can only be done with robust science. Every year we invest significantly to

find innovative ways to contribute to THR.

We use various analytical and pre-clinical techniques, specialised laboratory technology and expertise to test our products, and aim to ensure they meet high

quality standards. This is complemented by collaborations with global external researchers, and clinical research organisations, who bring

independent, specialist expertise that enhance our internal capabilities.

We are always innovating, experimenting, and delivering new THR solutions. This is why our Science and Product Innovation are so important,

accelerating pioneering approaches to our Smokeless products.

THR substantiation

As most smokeless alternatives are relatively new to the market, they lack long-term epidemiological data that could show their overall impact on public

health. Therefore, it is necessary to take a 'weight of evidence' approach, using the best available data to draw conclusions.

Drawing on work by the U.S. Institute of Medicine, we use our nine-step risk assessment framework. This evaluates the emissions, exposure and risk profile of

our Smokeless products and compares them to cigarettes or other comparators.

In terms of THR scientific substantiation, our New Category products have been evaluated in peer-reviewed pre-clinical, clinical, and population level

research publications and journals, summarising significant reductions in emissions, exposure and risk markers versus smoking.

We aim to follow best practice and adhere to high standards of governance and ethics in all our scientific research. We publish our science, which undergoes

rigorous peer-reviews, and we participate at global scientific conferences. As of 31 December 2025, our scientists have published 276 scientific papers about

our Smokeless products.

Dynamic Business Making Active Choices for the Future

Our multi-category portfolio benefits from decades of consumer insights that have driven our No. 1 global revenue position in combustibles.

In addition, leveraging the benefits of our expertise in science and R&D, our manufacturing, distribution and marketing has enabled us to build three global

New Category brands, Vuse, glo and Velo, delivering over £3 billion of annual revenue.

Our long-standing experience operating within complex regulatory, legal and fiscal frameworks provides us with a compelling competitive advantage to

transform within the wider tobacco industry over the long-term. With our Corporate and Regulatory Affairs function we are driving a more proactive,

science-led engagement with all stakeholders.

We will continue to increase investment in new capabilities, including enhancing our innovation pipeline, leading responsible New Category development

and further leveraging our broad digital enablers. Our transformation will also be accelerated by a culture of inclusivity and collaboration, supported by senior

talent recruitment from a diverse range of industries. Together with our Chief People Officer, we are focused on developing a skills-enabled and performance-

driven organisation.

We continuously monitor and assess our capital allocation framework to:

–unlock shareholder value through investing in the right opportunities;

–optimise the return on our investments;

–maximise our cash generation;

–reduce our leverage; and

–generate sustainable cash returns for our shareholders.

Notes:

*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

3.Tobacco Intelligence, Regulatory & Market Intelligence for Alternative Tobacco & Nicotine Products, Nicotine Pouch Market Database, Quarter 1 Report. 2024.

4.WHO global report on trends in prevalence of tobacco use 2000-2024 and projections 2025-2030. Geneva: World Health Organization; 2025. Available at: www.who.int/publications/i/item/9789240116276.

Item 6 - Directors, senior management and employees

Item 6.A - Directors and senior management

Board of Directors

Note: * denotes external listed company appointments


British American Tobacco p.l.c. Form 20-F 2025

Luc Jobin

Chair (66)

Chair of the Nominations Committee

Nationality: Canadian

Appointed: Chair since April 2021; Non-Executive Director since July 2017

Experience: Luc was President and Chief Executive Officer of Canadian National Railway Company from July 2016 until March 2018, following his

tenure as Executive Vice President and Chief Financial Officer between June 2009 and June 2016. He was Executive Vice President of Power Corporation

of Canada, an international financial services company. Prior to this, Luc was Chief Executive Officer of Imperial Tobacco Canada, having previously

served as Executive Vice President and Chief Financial Officer. Luc also served as an independent Non-Executive Director of Reynolds American Inc.,

from 2008 until its acquisition by the Group

Relevant skills and contribution to the Board: Luc contributes deep financial, regulatory and M&A expertise and business transformation experience to

the Board. His extensive knowledge of North American markets and consumer businesses enhances the Board’s strategic perspective

External appointments: No external appointments

Tadeu Marroco

Chief Executive (59)

Nationality: Brazilian

Appointed: Chief Executive since May 2023; Director since August 2019

Experience: Tadeu was appointed Chief Executive in May 2023, having first joined the Main Board as Finance and Transformation Director in August

2019. Tadeu joined the Group in 1992 and joined the Management Board as Director, Business Development in 2014. He subsequently held roles on the

Management Board as Regional Director, Western Europe, and Regional Director, Europe and North Africa, and Director, Group Transformation, and

Deputy Finance Director

Relevant skills and contribution to the Board: Tadeu brings to the Board a wealth of strategic leadership, management, and innovation experience drawn

from finance and general leadership roles across the Group. His understanding of the business and proven ability to drive transformation position him to

lead the Group in delivering our ambition to Build a Smokeless World and create A Better TomorrowTM

External appointments: No external appointments

Holly Keller Koeppel

Senior Independent Director (67)

Member of the Nominations Committee

Nationality: American

Appointed: Senior Independent Director since April 2024; Non-Executive Director since July 2017

Experience: Until 2018, Holly was Senior Advisor to Corsair Capital LLC following her tenure as Managing Partner and Co-Head of Infrastructure. Prior to that, she

was Co-Head of Citi Infrastructure Investors, and held financial and general leadership roles at Consolidated Natural Gas Company and American Electric Power

Company, Inc. (AEP), where she ultimately served as Chief Financial Officer. She previously served as independent Non-Executive Director of Reynolds American

Inc., from 2008 until its acquisition by the Group and of Vesuvius plc

Relevant skills and contribution to the Board: Holly’s extensive international financial management experience across a range of industry sectors

enables her to make significant and informed contributions to the Board

External appointments:

–Non-Executive Director and member of the Audit and Risk Committee and the Sustainability Committee of Shell plc*

–Non-Executive Director and Chair of the Audit Committee of Flutter Entertainment plc*

–Director and Chair of the Financial Audit Committee of AES Corporation*

–Director and Governance, HS&E Committee Member of Core Natural Resources, Inc.*

Krishnan (Kandy) Anand

Non-Executive Director (68)

Chair of the Remuneration Committee; member of the Nominations Committee

Nationality: American

Appointed: February 2022

Experience: Kandy has held leadership roles across a number of major consumer goods companies. At Molson Coors Brewing Company he was Chief

Growth Officer, CEO of Molson Coors International and Head of Strategy, M&A and Transformation. He also held key positions at the Coca-Cola

Company, including President, Coca-Cola Philippines and Vice President, Global Commercial Leadership. Earlier in his career, Kandy held marketing

leadership positions at Unilever plc. Kandy previously served on the boards of Popeyes Louisiana Kitchen Inc. and Empower Acquisition Company

Relevant skills and contribution to the Board: Kandy brings valuable international expertise to the Board. His experience across the consumer goods

sector enables him to contribute key insights in commercial marketing, strategic growth and transformation

External appointments:

–Director of Wingstop Inc.*

–Chief Executive Officer of Igniting Business Growth L.L.C.


British American Tobacco p.l.c. Form 20-F 2025

Karen Guerra

Non-Executive Director (69)

Member of the Nominations Committee and Remuneration Committee

Nationality: British

Appointed: September 2020

Experience: Karen has held a range of senior executive roles, including President and Director General of Colgate Palmolive France, and Chair and

Managing Director of Colgate Palmolive UK Limited. She previously served as a Non-Executive Director of several leading international companies,

including RS Group plc (formerly Electrocomponents p.l.c.), Davide Campari-Milano S.p.A., Paysafe PLC, Inchcape PLC, Samlerhuset BV, Swedish

Match AB and Amcor p.l.c. (formerly Amcor Limited)

Relevant skills and contribution to the Board: Karen brings extensive international experience and commercial acumen to the Board, with particularly

valuable contributions in marketing, sales, and consumer goods insights

External appointments: Independent Director of Société Bic S.A.*

Uta Kemmerich Keil

Non-Executive Director (59)

Member of the Audit Committee and Nominations Committee

Nationality: German

Appointed: February 2025

Experience: Uta previously served as Chief Executive Officer, Personal Healthcare International at Procter & Gamble. Before that, Uta spent 19 years at

Merck Group in leadership roles including Chief Executive Officer and President, Consumer Health Division, and Chief Executive Officer, Allegropharma

and Global Business Unit Head, Allergy, as well as Head of Corporate M&A, Treasury and Finance. Earlier in her career, Uta was a Senior Financial

Auditor at Hoechst AG. Uta was previously Non-Executive Director at Affirmed N.V., Biotest AG, Gothaer Krankenversicherung, and Allgemeine

Versicherung

Relevant skills and contribution to the Board: Uta’s extensive transformational and M&A knowledge drawn from her experience across the consumer

goods and pharmaceutical sectors enable her to make valuable strategic contributions

External appointments:

–Non-Executive Director and Audit Chair of Beiersdorf AG*

–Non-Executive Director of Klosterfrau Healthcare Group

–Non-Executive Director of Schott AG

–Director of Farco Pharma GmbH

–Advisory board member of Röchling SE & Co KG

Véronique Laury

Non-Executive Director (60)

Member of the Audit Committee and Nominations Committee

Nationality: French

Appointed: September 2022

Experience: Throughout her career in international retail, Véronique has held a variety of leadership roles. From 2014 to 2019, she was Chief Executive

Officer of Kingfisher plc, an international home improvement company operating well-known brands across Europe including B&Q, Castorama, Brico

Dépôt, Screwfix and Koçtaş. During her 16-year tenure at Kingfisher she also served as Chief Executive Officer and Commercial Director at both B&Q

and Castorama. Véronique previously served on the Board of WeWork Inc.

Relevant skills and contribution to the Board: Véronique brings to the Board international experience across complex retail markets, along with valuable

expertise in consumer goods, strategy, transformation, and digital innovation

External appointments:

–Board member of Inter IKEA Holding B.V.

–Board member of Eczacıbaşı Holding Company

–Board member of Société Bic S.A.*


British American Tobacco p.l.c. Form 20-F 2025

Darrell Thomas

Non-Executive Director (65)

Chair of the Audit Committee; member of the Nominations Committee

Nationality: American

Appointed: December 2020

Experience: Darrell most recently served as Vice President and Treasurer for Harley-Davidson, Inc., having previously held senior finance positions

including Interim Chief Financial Officer for Harley-Davidson, Inc. and Chief Financial Officer for Harley Davidson Financial Services, Inc. Prior to this, he

was Vice President and Assistant Treasurer, PepsiCo, Inc. following 19 years in banking focused on capital markets and corporate finance. Darrell was

previously an Independent Director of Pitney Bowes Inc.

Relevant skills and contribution to the Board: Darrell’s extensive operational and management experience and knowledge of capital markets, finance

and treasury enhances the Board’s strategic and financial oversight

External appointments:

–Non-Executive Director of Vontier Corporation*

–Independent Director of Dorman Products Inc.*

–Non-Executive Director of Scotia Holdings (US) Inc.

–Member of the Finance Committee of Sojourner Family Peace Center, Inc.

Serpil Timuray

Non-Executive Director (56)

Member of the Nominations Committee and Remuneration Committee

Nationality: Turkish/British

Appointed: December 2023

Experience: Serpil served on Vodafone plc’s Group Executive Committee from 2014 to June 2025, holding roles including CEO of Vodafone

Investments, CEO of Europe Cluster, Group Chief Commercial and Strategy Officer, and CEO of Africa, Middle East, Asia, Pacific. Prior to joining

Vodafone in 2009 as CEO of Vodafone Türkiye, Serpil was CEO of Danone Dairy Türkiye. Her career began in marketing at Procter & Gamble where she

was subsequently a member of their Türkiye Executive Committee. Previously, Serpil was a Non-Executive Director and Chair of the Corporate Social

Responsibility Committee at Danone plc, and held various Non-Executive Director roles in technology, including at TPG Telecom plc

Relevant skills and contribution to the Board: Serpil’s proven international CEO experience in delivering large-scale transformations and growth in

complex, regulated, and competitive markets across the technology, telecommunications and fast-moving consumer goods sectors enables her to contribute

valuable strategic, operational, and marketing insights to the Board

External appointments:

–Founding Chair of Change the Face Alliance

–Board member of World Economic Forum’s Digital Leaders of Europe

–Board member of World Turkish Business Council

Matthew Wright

Non-Executive Director (63)

Member of the Nominations Committee and Remuneration Committee

Nationality: British

Appointed: November 2025

Experience: From 1993 to 2013, Matthew held several senior roles at the global leadership consultancy Russell Reynolds Associates, including Chief

Executive, President, and Board Member. He also served as Head of Asia and Europe, and was a member of both the Global Executive Committee and the

Global Operating Committee. Earlier in his career, he held roles at Korn/Ferry International, Knight Wendling, and Cripps Leadership Advisors (formerly

Cripps Sears Ltd)

Relevant skills and contribution to the Board: Matthew brings extensive experience to the Board, having led and advised global organisations through

periods of growth and transformation. His proven leadership capabilities and strong people skills enhance the Board’s ability to foster a culture aligned with

BAT’s vision for a sustainable future

External appointments:

–Non-Executive Director of Berry Bros. & Rudd Ltd

–Chairman of Cripps Leadership Advisors

–Chair Designate and Senior Advisor of Movemeon

Independence

The Board considers the Chair and all Non-Executive Directors to be independent under the independence requirements outlined in the NYSE listing standards.

The Board considers all Non-Executive Directors to be independent, as they are free from any business or other relationships that could interfere materially with, or

appear to affect, their judgement.

Luc Jobin was determined by the Board to be independent on his appointment as Chair, as reported in the Company’s Annual Report and Form 20-F for

2020.

The Board has determined Holly Keller Koeppel to be independent, having taken into account her service on the board of Reynolds American Inc. (Reynolds

American) as an independent, non-executive director. Luc and Holly were originally appointed to the Board in 2017 following the acquisition of Reynolds

American and pursuant to the Agreement and Plan of Merger with Reynolds American.


British American Tobacco p.l.c. Form 20-F 2025

Management Board

For Tadeu Marroco’s full biography please refer to page 56 above.

Javed Iqbal

Interim Chief Financial Officer and Director, Digital and Information (53)

Nationality: Pakistani

Javed is currently Interim Chief Financial Officer, having been appointed on 26 August 2025. He also previously served as Interim Finance Director from

May 2023 to April 2024. Javed joined the Management Board as Director, Digital and Information in April 2022. He originally joined BAT in 1996 as a

Management Trainee, Finance. Since then Javed has held a number of senior roles, including Area Director for Middle East, South Asia and North Africa

James Barrett

Director, Business Development (51)

Nationality: British

James joined the Management Board as Director, Business Development in September 2023. He has been with BAT since joining as a Management

Trainee in 1996. During his career at BAT, James has held various senior roles in finance globally, including Group Finance Controller, Head of M&A and

most recently, Consumer Director, Beyond Nicotine

Luciano Comin

Chief Marketing Officer (56)

Nationality: Italian/Argentinian

Luciano was appointed Chief Marketing Officer in September 2024. He first joined the Management Board in 2019 as Regional Director, Americas and Sub-Saharan Africa,

and has since served in several roles including Marketing Director, Combustibles and Marketing Director, Combustibles & New Categories. Luciano has held a number of

senior regional marketing roles during his career at BAT, having first joined in 1992

Zafar Khan

Director, Operations (53)

Nationality: Pakistani

Zafar joined the Management Board as Director, Operations in February 2021. Having first joined BAT in 1996, Zafar has held senior roles including Regional

Head of Operations Asia Pacific & Middle East, Group Head of Plan, Service & Logistics, Regional Head of Plan and Service for Western Europe, Head of

Operations, Bangladesh, and Group Head of New Categories Operations

Dr Cora Koppe-Stahrenberg

Chief People Officer (60)

Nationality: German

Cora joined the Management Board as Chief People Officer in November 2023. Immediately prior to joining BAT, she was Global Head of Human

Resources at Fresenius Medical Care, a publicly listed global healthcare company. Earlier in her career she held senior HR leadership roles at various

multinational companies across the financial services sector

Paul McCrory

Director, Legal and General Counsel (53)

Nationality: Irish

Paul was appointed as Director, Legal and General Counsel on 1 January 2026. He first joined the Management Board as Director, Corporate and

Regulatory Affairs in September 2023, and has been with BAT since 2006. During his career at BAT, Paul has held a number of senior roles including

Head of Commercial Legal and Assistant General Counsel Corporate and Group Company Secretary

Pascale Meulemeester

Regional Director, Asia-Pacific, Middle East and Africa (46)

Nationality: Belgian

Pascale was appointed to the Management Board as Regional Director, Asia-Pacific, Middle East and Africa from 1 January 2026, having joined

BAT in September 2025. She previously held several senior roles at Barry Callebaut Group, a global chocolate and cocoa organisation, most

recently serving as President Western Europe. Earlier in her career at Barry Callebaut Group she led growth and transformation in different

geographies, including in the Asia-Pacific region. Prior to this Pascale spent several years at Mars Inc. following her time at Sara Lee Corporation


Title of each class	Trading symbol(s)	Name of each exchange on which registered

American Depositary Shares (evidenced by American Depositary Receipts)	BTI	New York Stock Exchange
each representing one ordinary share
Ordinary shares, nominal value 25 pence per share	BTI	New York Stock Exchange	*
3.215% Notes due 2026	BTI26	New York Stock Exchange
1.668% Notes due 2026	BTI26A	New York Stock Exchange
3.557% Notes due 2027	BTI27	New York Stock Exchange
4.700% Notes due 2027	BTI27A	New York Stock Exchange
2.259% Notes due 2028	BTI28	New York Stock Exchange
4.448% Notes due 2028	BTI28A	New York Stock Exchange
3.462% Notes due 2029	BTI29	New York Stock Exchange
5.931% Notes due 2029	BTI29A	New York Stock Exchange
4.906% Notes due 2030	BTI30	New York Stock Exchange
6.343% Notes due 2030	BTI30A	New York Stock Exchange
2.726% Notes due 2031	BTI31	New York Stock Exchange
5.834% Notes due 2031	BTI31A	New York Stock Exchange
4.742% Notes due 2032	BTI32	New York Stock Exchange
7.750% Notes due 2032	BTI32A	New York Stock Exchange
5.350% Notes due 2032	BTI32B	New York Stock Exchange
6.421% Notes due 2033	BTI33	New York Stock Exchange
4.625% Notes due 2033	BTI33A	New York Stock Exchange
6.000% Notes due 2034	BTI34	New York Stock Exchange
5.625% Notes due 2035	BTI35	New York Stock Exchange
4.390% Notes due 2037	BTI37	New York Stock Exchange
3.734% Notes due 2040	BTI40	New York Stock Exchange
7.079% Notes due 2043	BTI43	New York Stock Exchange
4.540% Notes due 2047	BTI47	New York Stock Exchange
4.758% Notes due 2049	BTI49	New York Stock Exchange
5.282% Notes due 2050	BTI50	New York Stock Exchange
3.984% Notes due 2050	BTI50A	New York Stock Exchange
5.650% Notes due 2052	BTI52	New York Stock Exchange
7.081% Notes due 2053	BTI53	New York Stock Exchange
6.250% Notes due 2055	BTI55	New York Stock Exchange


Section	Section name	Page

	General	4
	Forward looking statements	4

PART I	Section

Item 1	Identity of directors, senior management and advisers	N/A
Item 2	Offer statistics and expected timetable	N/A
Item 3	Key information	N/A
A	[Reserved]	N/A
B	Capitalization and indebtedness	N/A
C	Reasons for the offer and use of proceeds	N/A
D	Risk factors	4
Item 4	Information on the company	18
A	History and development of the company	18
B	Business overview	19
C	Organizational structure	27
D	Property, plant and equipment	28
Item 4A	Unresolved staff comments	N/A
Item 5	Operating and financial review and prospects	28
A	Operating results	28
B	Liquidity and capital resources	47
C	Research and development, patents and licenses, etc.	53
D	Trend information	54
E	Critical accounting estimates	N/A
Item 6	Directors, senior management and employees	55
A	Directors and senior management	55
B	Compensation	61
C	Board practices	75
D	Employees	82
E	Share ownership	83
F	Disclosure of a registrant’s action to recover erroneously awarded compensation	N/A
Item 7	Major shareholders and related party transactions	83
A	Major shareholders	83
B	Related party transactions	85
C	Interests of experts and counsel	N/A
Item 8	Financial information	85
A	Consolidated statements and other financial information	85
B	Significant changes	N/A
Item 9	The offer and listing	85
A	Offer and listing details	85
B	Plan of distribution	N/A
C	Markets	85
D	Selling shareholders	N/A
E	Dilution	N/A
F	Expenses of the issue	N/A


Section	Section name	Page
Item 10	Additional information	85
A	Share capital	N/A
B	Memorandum and articles of association	85
C	Material contracts	88
D	Exchange controls	90
E	Taxation	90
F	Dividends and paying agents	N/A
G	Statements by experts	N/A
H	Documents on display	93
I	Subsidiary information	N/A
J	Annual report to security holders	93
Item 11	Quantitative and qualitative disclosures about market risk	93
Item 12	Description of securities other than equity securities	93
A	Debt securities	N/A
B	Warrants and rights	N/A
C	Other securities	N/A
D	American depositary shares	93

PART II

Item 13	Defaults, dividend arrearages and delinquencies	N/A
Item 14	Material modifications to the rights of security holders and use of proceeds	N/A
Item 15	Controls and procedures	95
Item 16	[Reserved]	N/A
Item 16A	Audit committee financial expert	95
Item 16B	Code of ethics	95
Item 16C	Principal accountant fees and services	96
Item 16D	Exemptions from the listing standards for audit committees	96
Item 16E	Purchases of equity securities by the issuer and affiliated purchasers	96
Item 16F	Change in registrant’s certifying accountant	N/A
Item 16G	Corporate governance	97
Item 16H	Mine safety disclosure	N/A
Item 16I	Disclosure regarding foreign jurisdictions that prevent inspections	N/A
Item 16J	Insider trading policies	98
Item 16K	Cybersecurity	98

PART III

Item 17	Financial statements	100
Item 18	Financial statements	100
Item 19	Exhibits	193