QC n : RIO DE JAlMnO
Item 'Al : Chairman's Introduction
Welcome delegates, especially Lord Armstrong, Barry 8ramley, -lartin
3roughton. 'like ;?Llson, David Allvey and Ulrich Harter attend' Ing for the
.Zirst Ci2e.
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11ank ?scar Rombaut -4or agreeing to host the conference in Rio and for
3rranging the facilities and administration.
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Me c,.o years slaca che last CAC in London have seen continuing progress in
the imaLameacacion of our agreed strategies and last year in particular was
marked by a major entry co the US insurance market through the acquisition
of ch* Farmers Group.
The results for L988 showed significant progress in financial services even
though these figures *=rude any contribution from ftrzars. --owever, as
the figures an cha !test slide show, the picture for the other activities
and in particular for Recail and Pap4r/Pulp is less ancouragi-ag. Although
the comparison becween 1997 and 1986 is complicated by the exchange factor,
this was not the case in 1988 and the lack of progress in Retailing and in
?aporl?ulp must be a caus; !cc concern. The potential !or growth in these
&cavities will be one of --he major issues on which we will need to focus
during this conference.
Many of the strategies which have been pursued since 1982 have now run
their course and it is no exagStration to say that 1999 represents a
watershed for che Group. -?ast successes in improving performance are no
guarsacee that we can sustain growth, In fact, the progress -.;* have made
in Paper/Pulp in focussing an a limited number of products has actually
made us zors vu-Iierable co change in the market for these products. The
likelihood that the growth in Carbonless will plateau and that competition
will intensify makes it essential that we should identify opportunities for
repositioning our businesses in other zarket segments with 'cotter prospects
for sustained, long term profitable growth.
In Retailing, we have strong positions in Argos in the UK, and in Saks and
Marshall Field's in the USA but only Argos has a track record !zr sustained
growth in sales and profits. We will used to review our scraztgies for
Sake and Marshall Field's and -is will also need to Look at the
prospects for Argos co ensure that growth Ls sustainable into :he long
tem. Zlsewharo in recailiag, we have problems in Ivey's, Bra-iners, Horton
and Peoples which we need :o address and we will also need to consider the
concribution that Whoppers Drug, Hardees and UCS can zs@ka to :te overall
strategy for Imasca.
I have concencraced first an Paper/Pulp and Recalling because '.@ otliavft
thee in both cases we need to review critically what contribution these
activities can and should zake to the longer tem development if. the Group.
Important though these issues are, however, we must also ramazber that in
terms of size the Group's 2aJor activities are Tobacco and Fi.-ancLal
services. It is vital to the future success of the Group thac the profits
from Tobacco continue Co grow and chac the activity concinues :o provide a
strong cash flow. It is equally vital chat we have a cl"r sz-.ac*gy and
have agreed the priorities foe the development of our Financial. Services NJ
activities. Thar* will be opportunities for a full discussion of both
these issues during the week.
The programme far the conference follows aiuch the same pactern as La NO
previous years. starting coday with an exchange of information an the Cr%
current status and medium term plans for each of our businesses.
BAT Industries document for Province Of British Columbia 22 April 1999

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Tomorrow morning, we will begin by reviewing the overall financial
Socecascs for the Group and this will be followed by an analysis of the
-main strategic issues which I,. Ls suggested we should discuss.
The following item, on manager development, Ls being taken earlier than in
previous conferences, emphasising the 1=partauce which is placed on this
subject as one of the keys to our future success.
Tom Long has written to the Chief executives of each operation suggesting
how this session might best be structuced and I hope that this will provide
a good basis for a discussion La which everyone will participate fully. I
also hope that the issues which emerge from the discussion will be borat in
mind La the later sessions when we will be discussing the issues relating
to Tobacco, Financial Services, Retail and Paper/Pulp.
llowing the indusrr,-l sessions, there will be an opportunity an Thursday
to discuss the main conclusions from the conference. ahead of my own
summing-up at the and of chat afternoon.
In my introduction co the last CAC, I said that we had been reasonably
successful in devising and implementing ;law to improve the profitability
of our existing businesses and that we had also succeeded in making a major
move Into Financial Services. 'Jhara we had a weakness was La being able to
identify opportunities for investing in growth either in our existing
businesses or in COMO I tmetc a r7 activities offering prospects for mating
-he Group's performance criteria for profitable, long term growth.
this is still the most critical Issue for the Group and I hope, therefore
that this conference can take us some way towards resolving it. To focus
our thinking, I suggest that we should aim to be in a better position by
the and of the week to answer the following six questions (SLIDE T.IX):-
How can we grow our Tobacco profits?
- What action do we need to take to secure or improve an the
forecasts for this activity?
2. How can we grow our %nancial Services businesses?
- What should be our strategic priorities?
3. Do we see realistic options -jzr growing Retail?
Can we add value to this activity and can we identify
opportunities for sustained profitable growth?
4. Row can we renew our Paper business?
- Can we identify opportunities for repositioning this
business for the tima when Carboulass begins to plateau?
S. Do we have a sufficient management resource in terms of
competence and style - ana if not how do we develop this?
6. How can we ensure that we add value to our busiaesses through
the Operating Groups?
Z! we can So away from here with a clearer view of the &=wars to these
questions, this will be a valuable concribution to formulating the new NO
strategies needed to take us into the 1990' S. C)
Let us start then by reviewing our current position and prospects,
beginning with the situation here La Brazil, described by Peter tombauc.
')or% AWOV-41 looks
Industries document for Province of British Columbia 22 April 1999
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