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BAT Industries document for Province of British
Columbia 3 November 1999


General
Q&As
AU stakeholders
Subject Question
British-American Q: Will all the Board be based at
Staines or WoJang?
Toba=o Board/ A: Yes, with the exctotion ofthe
Regional Director, America-
other boardslother Pacific.
appo, ents
Q: How big will the central managementfuncrion be,
and will it
include peaplefrom all the current Operating
GroLps?
A- The crxicre's principal contribution to the
operations of British-
American Tobacco v-U be to provide strategic focus
and transfer
global best practice to all operating companies.
We aim to keep the
centre as small as possible. It wiU include people
from all parts of
the business.
Q.- What happens to the present tobacco Operating
Groups?
A: They wiR remain or become subsidiaries
ofBritish-American
Tobacco (Holdings), with their own boards of
directors, who will
retain their M legal responsibUities. The sam will
apply to all their
subsidiaries.
Q: What happens to those members ofthe current
BATCo
Board who are nor members ofthe British-American
Tobacco
(Holdings) BoarP Who are the new nwnber ones
qfSouza Cruz and
BAT (Germany) ?
A: These issues are addressed in separate
announcements.
Q: When wU1 the ne= appointments be announced?
A: The direct reports ofBoard members, their teams
and a small
tr=ition team, responsible to the Managing
Director for the
overall management of the implementation process,
will be
announced as soon as possible. In addition,
various project leaders
are to be appointed. These managers will be
accountable to the
appropriate Board member for the detailed
re-design of the various
business processes that will change during 19% and
beyond.
Other appointments v6ill be made as the details of
the re-design of
the various fimc:ions.and business processes
emerge.
Each Regional Director will have a small team to
support him in
running the opemdons in his region. CD
L31
U4
BAT Industries document for Province of British
Columbia 3 November 1999


General
B:~~sh-.Amcncan Q: Ifwe base most ofour senior
managers in the UK will we
Tc~acco Board' retain the best ofour
internationai=errise7
o6-- boarcivother A: Yes. The management -, of
most end markets will not
arrxintments change. Moreover, the people based in
the UK comprise various
(cc--L) nationalities and most have international
experience. It is our
intention that this should always be the case.
Q.- Why is Mick McGraw 'acring'Legal Director and
General
Counsel?
A: Mick McGraw will undertake this role on an
interim basis,
whilst retaining his responsibilities in the USA.
Locnion of HQ Q.- Isn't this little more than a
BATCo takeover?
A: No.
Q: Isn't this a reversal to the pre- 1980
structure ofBA I's
tobacco operations?
A: There are some similarities berw me the
proposed
morganisarion and our Ort-1980 structure. There
are also some
key differences. For example, it is envisaged
that, eventually,
m;st regional offices will be located in their
regions. Also,
there will be a much greater emphasis on marketing
than ever
before. The principal purpose of the c--n=e wHI be
to provide
strategic, not operationaL direction to the end
markets.
Q: Will there be a new head office and where will
it be?
A: The possibility ofa new head office has been
considered in the
course of the Proj eCt. However, it has been
decided that Staines and
Woking will be the headquarters of otr global
tobacco
operations.
Lom-don of the 0: Why arefour ofthe regional temns
based in the UK?
reEons A: There is an opportunity for sharing of
expertise and
experience between the central functions and the
regional
which makes this a solution which adds real value.
Q: Why is it envisaged that the European region
will be based in
the UK not elsewhere in Europe?
A: Europe is the only region where it is possible
to combine the
benefits of locaring the regional offic-- both at
the centre and r1j
within the region. CD
.D.
Q: Why is it envisaged that the AAESCA region will
be based in Ln
the UK? Ln
A: There is not a location within theAMESCA region
at which -Ctu
it is practical to base the regional tearm,
bearing in mind the I'D
limitations of the region's ULL-astrucrtire. Ln
X:-
BAT Industries document for Province of British
Columbia 3 November 1999


Gener-Al
Redundancies Q: Will the implementa.-ion ofProjec:
Barrai;ormecr
redundancies?
A: Cost cuning is not the focus ofProject
Battalion. 7hese
changes are designed to ensure that we make more
effective use
of our existing resources.
Terms and Q: Will I have a new contract ofservice?
conditions of A: The terms and conditions ofmost
staffwill continue to be
employment governed by their existing contracts.
If changes are neczssary, they
wW be discussed with the individuals concerned in
accordance with
normal procedures.
Company names Q: Will the names ofthe etisting
Operating Groups/operan .ng
companies change?
A- The value of a consistent global identity is
mcognised
throughout the company. It is intended to seek
ways of moving
towards such an identity, where it makes good
sense to do so.
Reporting lines Q: How will reporting lines work
in the new srruc.-we?
A: AD couatry management will continue to mpor,
directly to their
country number one, who in rum will report to the
Regional
Director. The Regional Director will be assisted
by a regional team.
Where the Regional Dim= is responsible for a large
number of
countries, we are in the process of
id=ff*g'clUSers' of markets,
which will report to the relevant Regional
Director. 7ais will allow
a greater degme of deceritralisation in mom
markets.
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BAT Industries document for Province of British
Columbia 3 November 1999


Gener2l
F=ncial reporting Q.- HOW Will reporting lines
change- I
A: The present finance directors o- the Operating
Groups cu.----.--',
report functionally to David Allvey. This will
change dur-ic t~.,- :~:r.
quarter of 1996. The Group ChiefAccountant, David
Pone-, '-d!
continue to operate the aggregation of the Group's
results as befor:
until the blueprinting of a new finance
organisaLion is concludec
during 1996.
Q: Will we still haw contact with Windsor House?
A: The present work carried out by B-A.T
Industries an the =.:1:s
of the Operating Groups will con =*UC for the
immediate future. Ln
line with many other Battalion implementation
plans, the changes zo
be implemented on I st January 1996 will have no
irnpac- on the day-
to-day contact points with V#rmdsor House until
well into 1996.
On man a ement reporting issues, it is important
to look at the
design fi-amework which will come from the other
functions be.;=
any changes in finance department structures and
reporting lines a:--
introduced. Hence the delay into 1996.
Q: Will the management reporting lines bi the same
as the
financial reporting lines?
A: With the changes to be implemented during 1996,
then will bie.
for at least a short while, some diSerences. The
transition Period ~~
likely to Ian around six to nine months. The
intention is to rnizi-i
any risk exposure we might incu: by being too
impatient and
introducing changes too soon.
Q: Timing ofchanges?
A: While it is intended that the reporting lines
of the present Ez=ce
directors will change during the n-M quarter of
1996, this %U
depend on how the formation of'new regional teams
and the
progress of the various working groups moves
for%%-ard. All
personnel in the financial function will be kept
fully up-to-date z:,_4
indeed, many will help us put together the
proposals that are aeeccd
to make these changes happen.
Manufacturing Q: Vill the number ofmanqfac.-uring
sites be decreased.?
A: No decision has been taken to close any
manufacturing
operations as a result of this proji ect.
Q: How will the re-structuring impact on local
production
schedules and modernisation programmes? C:)
A: No withdrawal from existing investment
programmes is 41--
anticipated. U-1
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all
BAT Industries document for Province of British
Columbia 3 November 1999


Gener2l
Exports Q: How will emports be managed?
A: A, the outset, responsibility for the
management ofexports will
remain where it is, but some reporting lines may
change. In the
longer terra, the whole area ofcxporLs will be
examined in dcWl.
Q: Who will be responsiblefor sourcing decisions?
A: Sourcing policy decisions will be taken by the
Operations
Director in accordance with a global s=egy agreed
by the Board
during 1996.
International I.---ds 0: W4 were Barclay, Kool and
HB nor selected as
international brands?
A: Barclay, Kool and AT are strategic brands, but
do not
straddle a large number of st:rategic global
markets.
Q: Will internadonal brands continue to be
managedfrom their
current base?
A: All brand groups are to remain in their present
locations,
except the US international brand group based at
Staines. which
will be disbanded. Alternative positions will be
offered to its
personnel. There will be intemational brand groups
responsible
for UK international brands, US international
brands and
Hollywood respectively. The US international brand
group and
the Hollywood international brand group will be
based in the
USA and the UK intemational brand group in the UK.
Strategy Q: During the management interviews. lack
ofstrategy was
perceived as the number one concern. What will the
new
organisation deliver in this respect?
A: The development and communication of the
strategic
imperatives have already provided a greater degree
of strategic
clarity.
The Board will provide a forurn for discussing and
resolving
strategic issues, as well as allocating clew
accountability for
delivering the strutegy.
The Business Development Director will drive the
process and,
in partnership with the regions and functions,
will provide the r%j
Board with recommendations for global s=mgy. C)
AM.
Decision 0: Will the decision makingprocess become
more complex? Lr1
A: No. A principal priority ofProjec- Battalion
was to establish LTI
where decision making pmcesses are complex and
cumbmome,
and to identify ways in which decisions could be
taken more
Lr1
speedily and closer to the end markets. --j
BAT Industries document for Province of British
Columbia 3 November 1999


General
Battalion Q: W-har no- happens to the Project
Battalion management team?
implementation A: It will be dissolved at the end
of 1995. Rgspoasibilirv for
implementation will pass to the Board, their
suppor reara, a small
transition Eeam and the project teams, who will be
accountable to
the appropriate Board member for the detailed
re-design of the
various business processes that will change during
1996.
Q: What will Windsor House's role in
implementation be?
A: The Chief Executive's Committee will con=ue to
oversee
impleinentzrion. for which the British-Ameiican
Tobacco Board
will be responsible.
B-A-T Industries, Q: How -ill the role ofBA T
Industries, Windsor House change
Windsor House posi-implementarion?
A: V.1indsor House will continue to fiLWI the role
of corporate
headquarters with responsibility to shareholders
for managin the
Group's overall tobacco and financial services
interests:
0 : Will the Group Managing Director. Tobacco
continue to be
based at Windsor House?
A: He %-ill maintain offices at both V-rmdsor
House and Staines.
Q: Will a similar exercise now be carried
ourforfinancial
services?
A: This is a matter for the CEC and the B-kT
Industries Board.
Demerger Q: Is this the first step towards
demerging BAT Industries'
tobacco andfinancial services operations?
A: No. It is an exercise to ensure that B.A-T
Industries and its
shareholde-s derive maximum value from its tobacco
interests.
US litigation Q: How does the new structure affect
our position in the various
lawsuits to which B& W is a parry?
A: It has no affect on BA.T Industries' exposure
in relation to
US litigation.
Product quality Q: Battalion sofar seems to be
about organisarion andprocess.
What steps will be taken to ensure that we offer
customers
cigarettes that compete with brands such as
INIarlboro and C:)
Camel? -0-
A: It is the principal purpose of Battalion to
establish an Un
organisation which will enable us to serve the
consumer even
better.
CO
BAT Industries document for Province of British
Columbia 3 November 1999


General
C- ---. Q: Will career opportunines ir-crease with
the im.plementation
c=crr-,--ities/ ofBartalion?
t: =---g A: Yes.
Q.- Ifthe centre is toprovide corporate
andfunctional training
programmes, will Operating Grouploperating
companies'
activities in this area be decreased?
A: No.
C-mduat: Q.- Should existing recruitment
programmes go ahead?
re=uittnent A: Yes.
Q.- What do we tell potential candidates?
A: That they are joining the company at an
exciting time, with
increased opportunities in a truly global
organisation.
Q: To whom do we now report?
minem all
C7 eradng Groups A: Your reporting lines do not
change.
E--2=iate Q.- R%ose expatriate package will I be
covered by?
= ployees, all A: In the short term nothing will
change.
C7 c-a=g Groups
R--A= and Q.- What will be the impacr onR&D
acftvides around the tobacco
&-eiopment business?
A: The critical importance of R&D has been
recognised. R&J)
will be m-, ed as a global resource with the
necessary
investment made available.
:::formation Q.- Is there any changeforeseenfor
the existing communication
:=!mology and information systems?
A: A common platform for the company's IT
infirastructure is
being developed for use throughout its worldwide
tobacco
operations. This will emize that we are able to
operate as a
single, integrated orgaisation.
L=f Q., R%o on the Board is responsiblefor leaJ7
r1J
A: The Operations Director, who will oversee the
Ice review CD
which is currently in progress within the
Battalion Project. This P.
process includes a review of all leaf operations,
distribution and ~_n
logistics. Un
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BAT Industries document for Province of British
Columbia 3 November 1999


General
Elaaalion costs Q: How much has Battalion cos.,.'
;;-r
.= wil.7 be rhe cost of
implementing Battalion?
A: The cost ofProject Banalion is no-, maten.'al
and will be
iasignificant in compwison to the b,==Ets that it
will deliver.
BAT Industries document for Province of British
Columbia 3 November 1999