Guidelines for TmLwo - July IM
Geneml
1. It is suggested that the primary objective for rmasco should be to provide
shareholders with an abomqvaage return on their investment in the Company
through dividends and capital appreciation measured in turns of the movement
of the share price relative to the TSE 300 Index.
2. In line with the Group's overall development, B.A.T Industries would prefer
Imasoo to achieve them objectives through a strategy based mainly on
maintaining Imperial Tobacco in a leadership position in its market and on
developing the Company's Financial Services activities.
3 . In evaluating Imasoo's strategies and plans, B.A.T Industries will apply
criteria similar to those applied to the other businesses within the Group. In
particular, it is expected that there will be an aim for each business within
Imasco either to be a leader or to be seeking to achieve leadership in markets
where it is possible to earn rates of return which will generate sufficient cash
both to pay a dividend and either support self-funded growth at above-average
rates or provide surplus cash for investment elsewhere.
Financial Guidelines
4. Profits should grow at the following avenge rates over the five years 1992-
1996, in each case measured from a 1991 base:-
% R.a.
Eamings from Operations (fall consolidation) I 1 (7)
Earnings Before Tax 16 (9)
Earnings for Common Shares 17 (10)
(Figures in brackets relate to the seven year growth rate from a 1989 base).
5. CT Flinancial Services should achieve growth of at least 15% per annum in
earnings from operations from a 1991 base.
6. Imasco should adhere to a target for operating cash flow each year to show a
substantial surplus after payment of taxes and dividends. this target should be
expressed as a percentage of the cm of common dividends.
7. Iniasco should aim to pay common dividends equivalent to at least 40% of
current year earnings per share; and for the rate of ir=ease to accelerate as
earnings recovw. 7be minimum pi-, c antage distribution diould be ravimed
with a view to kcreasing it when dm are =jor LW disposals.
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BAT INDUSTRIES CONFIDENTIAL. CATEGORY 1: MINNESOTA TOBACCO LITIGATION
BAT Industries document for Province of British Columbia 23 April 1999

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S. Imasco should continue to give priority to strengthening its balance sheet,
reducing the level of borrowings through generation of cash surpluses after
payment of tax dividends and disposal of Hardees as soon as practicable.
9. A target should be fuWised for an above-average shareholder return
performance. The measurement should be primarily by reference to the
performance of the TSE 300 Index.
SDeCirlC Priorities
10. Imperial Tobacco : Priority should continue to be given to the further
development of the Tobacco business and to achieving the forecast
improvements in market share.
11. There should be continuing strong pressure to obtain amendments or revisions
of the Tobacco Products Control Act and opposition to any further increases
in the level of taxation on cigarettes.
12. There should also be specific strategies for counteracting stick Wes by
competitors.
13. CT Financial : There should be a defined plan to optimise the method and
timing for the reduction in the shareholding in Canada Trust, required under
the Financial Services legislation, bearing in mind also B.A.T Industries' wish
to retain as large an interest as possible in Canada Trust. An agreement needs
to be reached be,ween Imasco and B.A.T Industries on how the proceeds from
the sale of 35 % of C7 Financial will be utilised.
14. Imasco should continue to strengthen the links with Canada Trust in order to
exercise as much influence as possible on the strategic direction and rate of
development in this business.
15. Particular emphasis should be placed on the need to develop (or acquire)
investment skills to complement their expertise in attracting deposits.
16. Tbem should also be a plan to strengthen CT's marketing to improve further
the ability to compete with the banks for retail deposits.
17. Hardee's : Plans should be developed for the divestment of Hardee's, and an
agreement needs to be reached on how ft proceeds ftom the sale of Hardee's
wM be utilised.
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BAT INDUSTRIES CONFIDENTIAL. CATEGORY 1: MINNESOTA TOBACCO LITIGATION
BAT Industries document for Province of British Columbia 23 April 1999

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18. Sboppers Drug : Mm plans for the drugstore business should include specific
programmes fbr prod octivi ty improvements through the introduction of
improved systzms. There should also be contingency plans to react. to
possible restrictions on the sale of Tobacco products.
19. UCS : While it is rCCDpised that UCS has value to Imasco in supporting the
development of Tobacco sales, there must also be a rigorous application of the
criterion that each business within the Group must operate at acceptable rates
of r=m, producing cub flow sufficient to pay a dividend and to support self-
funded growth at above-average rates.
HCB/djs
16th July 1992
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BAT INDUSTRIES CONFIDENTIAL- CATEGORY 1: MINNESOTA TOBACCO LITIGATION
BAT Industries document for Province of British Columbia 23 April 1999