ROMANIA TOP 100

British American TobaccoRomania

Gavin Little – Managing Director

Of the Top 26 rankingThese are the one’s I find

Interesting• Metro 6th• Connex 8th

• Orange 12th• Interbrands 13th• British American Tobacco

26th

From No 1 to 26 these are the only business’ that started from nothing

Organically built / Never State Owned

• Net Turnover / Volume• Total Shareholder Return• Corporate Reputation

Globally British American Tobacco

want “sustainable growth” in all markets where we operate:

Gross Revenue & Net Revenue

0

50

100

150

200

250

300

350

400

2001 2002 2003 2004 2005

Net Turnover

Govt Levies

GrossTurnover

This get’s BAT 26th Place

This is what you don’t see

242mUS$

373mUS$

Industry Turnover

2001 Turnover

Government Levies64%

Net Turnover36%

2005 Turnover

Government Levies71%

Net Turnover29%

Absolute % Change

GROSS TURNOVER

+45%

Excise +70%

VAT +47%

TOTAL PAID TO GOVERNMENT

+62%

NTO +15%

SHAREHOLDER VALUE

?

Industry

Volumes2001 Volumes

BAT

Other Legitimate

Duty Not Paid

2005 Volumes

BAT

Other Legitimate

Duty Not Paid

Absolute %

Change

Consumer Purchasing Power

5%

Volume Total Mkt

-3

Volume TAX PAID

-5%

Volume NO TAX PAID

+11%

BAT Share +6%

The Tax Take – What it Means

2001

11.4 sticks

2005

14.2 sticks

8.6 sticks

5.8 sticks

MANUFACTURER GOVERNMENT

Issues-some food for thought

CPP < Excise & Devaluation5% 15% + 6%

Managing the business•Planned in $•Transacted in ROL, •Excise Calculated in €

“Rabbit from Hat” Taxes / increases•2003

•26% increase in excise•Additional 7m$ of taxes applied

Doing Business in Romania and being judged

• Greatest return - PEOPLE

– high quality & professional with great potential• HOWEVER

– We want to be• Sustainable business player for the long term

– Not• An efficient tax collection vehicle

GROSS REVENUE IS NO MEASURE TO SUCCESS

NET TURNOVER IS THE KEY VARIABLE