British American Tobacco : Impact on British American Tobacco of new US tax legislation

British American Tobacco p.l.c. notes the approval of the US Tax Cuts and Jobs Act. We continue to work through the full impact of these changes on British American Tobacco and will give more detail in our preliminary announcement for the year ended 31 December 2017 in February.

For the year to 31 December 2017 the announced changes will have no impact on the Group's underlying effective tax rate, which we have previously said we expect to be around 30%. However, we anticipate that the changes will result in a non-cash exceptional tax credit as a result of the revaluation of deferred tax balances arising from the acquisition of Reynolds American Inc. (RAI).

For the year to 31 December 2018 we currently anticipate that the changes will reduce the Group's effective tax rate percentage to the high-twenties. All other things being equal, this would result in a benefit of 6% to full year 2018 earnings per share, supporting our commitment to high single digit earnings growth and increased investment in the roll out of Next Generation Products.

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