To I;ir Patr-lek Sheehy
4r. B-P- Garraway
4r. M. F. Broughton
Ar. MeAs Burt
BATCo. Plan 1991-1995
The CPC is due to discuss the BATCD - Plan for 1991-1995 at a meeting
arranged for 9.00 a.m. on Wednesday, 2 3rd January.
A copy of the Guidelines is attached. Planning Department comments on the
Plan are as follows.
1. Profits Growth : The B.A.T Industries' Guidelines (6) suggest that
BATCo. should aim to increase profits by 152 P.a. throughout the Plan
but BATCo - (page 2) refer to a guideline of 10% P.&. from 1992-L995.
2. Had it not been for exchange variances (page 6, 2 -I ii i) , BATCo. would
have been close to achieving the budgetted trading profits for 1990
(-1363 million versus E365 million).
3. International Brands : The figures on page 25 appear to show
significant changes in the growth rates for 1990-1995 compared with
1985-1990:-
Z Growth D-a. 1985-i990 1990-1995
International Brands 6.9 3.6
BAT 4.2 6.5
Competitors 7.3 3.2
- BATCo - might be asked to comment on these trends and, in particular,
it might be questioned whether the overall potential for growth in
international brands may have been underestimated.
4. Similarly, BATCo . might also be asked to expand on expected competitor
developments in UK13, discussing whether the BAT gains shown in 14991
are expected to come from local brands or from competitor LTKIB
shares.
5. Product Quality : BATCo. might be asked whether it is intended to
establish timed targets for improvement based on the PQELS described on
page 43 (paragraph 2. 4. il) .
6. It might also be asked whether the PQRS will be applied to establish
the criteria for new developments (page 47, paragraph 3.1 i) .
7. Productivity : BATCo. might be asked how the productivity figures
shown on page 44 (paragraph 2.5.2) compare with other Group companies
and how they are thought to compare with competitors.
8. Employee Productivity (page 55, paragraph 5.4) : Because prices
are forecast to increase by only 0.4% p.a., an alternative measure of
increased productivity expressed as net turnover/employee would
increase by 8.3% p.a. Assuming reasonable wage increases, this would T1-j
suggest a celatively small increase in the ratio of net
turnover/employee costs. BATCo - might be asked to comment on this and
also on how employee produc t&,r I Ly 1:i thought to compare with
competitors.
cr%
BAT Industries document for Province of British Columbia 23 April 1999

9 TAmf Exports (page 5Z, paragraph 4.4) estimated for 1990 are in
line with the figures given in the 1990-1994 Plan, which showed a 45%
increase over the exports for 1989. This Plan also showed a JOZ
increase in 1991 and it might be asked how current estimates compare
with this.
10. Activities Outside Tobacco (page 56) % The 1990 results for
Arab-ftlaysian Eagle (AME) and CTC Eagle are better than was shown in
the 1990 Plan. The 1991 budget is also better for CTC Eagle Life and
Underwriting. However, it is not clear why AME is forecasting a
larger loss for 1991 or why the PBT for CTC Eagle is lower than the
underwriting profit.
II. The Not Caub Generated by BATCo. from 1991 to 1995 (page 68) is in
line with the forecasts given in the 1990-1994 Plan but the dividends
are higher, giving a reduced act surplus.
12. Individual Companies (pages 69-76) : Significant improvements
compared with the 1990-1994 Plan are shown for BATUKE, BAT Espana,
Nicaragua, Hong Kong and ITC. However, there are lower figures for
Australia, Argentina, Honduras, Kenya, Aureol, Zaire, Cameroon,
Uganda, Malaysia, Pakistan and Bangladesh.
t3- Board Summary : In 1990, the presentation to the Board consisted
of the executive overview, the summar7 and the tables.
R. Salter
RS/DJA
21st January 199L Enclosure
BAT Industries document for Province of British Columbia 23 April 1999