Good morning everyone, I am Nicandro Durante, Chief Executive Officer of American Tobacco and with me this morning is Finance Director, Ben Stevens and this morning we’ll be taking you through the interim results. Like last year, following this presentation, there will be the opportunity for you to ask questions, and now to the headlines. Once again I am very pleased to say that British American Tobacco has performed strongly although currency translation has impacted our reported numbers, on a constant currency basis, this is a good set of numbers. We have good growth in revenue, profits, operating margin and earnings per share. Our volume decline the first half has moderated from the rates of decline we have seen over the last few years. Cigarette volume was down just 0.4%. This is against an industry we expect to be down to 30% for a full year. The GDPs have continued their good performance with a strong growth in volume of 5.7%. As we highlighted at the prelims the timing of the price increases this year is more weighted towards the second half when compared to last year. So far we have achieved more than 75% of our planned pricing and we remain on track to achieve our revenue growth targets for the full year. Although industry pricing remains good, we are growing strongly into developing awards leading to a lower price mix. As a result, revenue grew 3% on a constant basis. We’re continuing to deliver good growth and operating margin, which was up 30 basis points to 39.2% and constant currency operating profits grew 4%. This was achieved despite a significant transactional Forex impact. Adverse currency translation led to a 7% decline in reported EPS. However, I am very pleased that on constant basis, we have again delivered on our commitment to high single figure earnings growth. We had an 8% increase in EPS. Although we continue to face significant Forex headwinds, I am very happy with how the business is performing and I am very confident we are on track for another year of good constant currency earnings growth. I will now hand over to Ben who will take you through the numbers in a little bit more detail.

Thank you, Nicandro, and good morning everyone. Looking at the Group's performance by region, Group cigarette volume was down 0.4%. This was driven by good performances from Aspac and EEMEA. It was a moderating volume decline in the Americas. Western Europe volume continued to be impacted by industry declines. It was also affected by one-off trade and [key] (ph) movements, which will unwind in the second half. Three of our four regions contributed to the good increase in revenue and profit, which at constant rates was 3% and 4% respectively. Western Europe revenue was 4% lower. This was largely driven by industry volume declines, inventory movements in Denmark and ongoing VAT and partial excise absorption in Italy and France. Adverse exchange rates affected all regions resulting in reported revenue and profit down 10% and 9% respectively. Before we look at the regions individually, I would like to briefly cover the impact of foreign exchange on the results. Currency headwinds have continued to increase since half one last year. This was driven by the weakness of most of our major operating currencies including the Brazilian real, Australian dollar, South African rand, Canadian dollar and Russian ruble against sterling. This marks an otherwise very good EPS performance with the underlying business growing 8%. Predicting Foreign exchange rate is a risky business, but I normally give some guidance on the impact on the full year results. If FX rates stayed exactly where they are today, the currency headwind on EPS would be around 12%. Now, turning to regions. Asia Pacific posted another good set of results. Revenue at constant rates was up 5% and profit was up 6%. Due to adverse exchange rate movements mainly in Australia, Japan and Malaysia, revenue and profit at current rates were both down 8%. Volume in the…

Thank you, Ben, and having gone through the detail of the numbers, I'll now like to take you through a few of my highlights of the year so far. Firstly volume; our volume is improving as we grow share and the overall industry decline rates begins to moderate. We’re continuing to outperforming Aspac. We have a strong growth in Pakistan, Bangladesh and Indonesia. In the Americas, the volume decline in Brazil is moderating as their large excise-driven price increases are now behind us and illicit trade begins to stabilize. In EEMEA, we have grown volume driven by strong performance in Ukraine, the Middle East and a better share position in Turkey. In Western Europe, we are starting to see early signs of an improvement in marketed volume as the economies begin to recover. Outdoor volume in Western Europe was down 8% in the first half, excluding inventory movements mainly Denmark and the underlying volume was down [technical difficulty] similar to the rate of the industry decline. However trading conditions remain challenging and we don’t expect meaningful improvement in the region and to probably the end of the second half. Nevertheless, overall Group volume is on improving trends. At the same time, industry pricing remains good with good price increases taking Brazil, Russia and Australia benefiting the first half. Recently, there has been some low price activity in a few markets. Turning to revenue, revenue in constant terms was 3% in the first half with price mix of 3% as a result of good pricing partly offset by negative geographic mix as we grow volume and share in the developing works. At Q1 we said we expect the time of price increases to be more second half weighted compared to the last year and we’ve already announced price increases that will…

[Operator instructions] And our first question comes from the line of Erik Bloomquist of Berenberg. Please go ahead. Your line is now open. Erik Bloomquist – Berenberg: Good morning. Can you hear me?

Yes. Good morning. Erik Bloomquist – Berenberg: Firstly I was hoping you could expand on your comments on the NGPs and in particular two elements of that, one a little bit more about the product that you have nearing hopefully NHRA approval whether that’s [Nicodex] (ph) and then secondly, how you see the category evolving and I think you mentioned a heat-not-burn product. What do you see as the drivers shifting the category around and where do you see consumer preferences developing? Thanks.

Well. Let me start with your question on Vype, on NHRA. Yes we have a product -- in reality we have two products that are undergoing evaluation by NHRA for approval. We see that the first is going to be [indiscernible]. We understand that we’re the only company that is going through this process right now, it is a process we’re defining the protocols for approval. So it’s a lengthy process. It's taking a little bit longer than everybody expected at the beginning. We think that we are near the completion of the approval of one of the products and we think we can launch it next year at least pilot at the beginning of next year, but of course is subject to the approval by NHRA. The second product is still under the process. We don’t have a timeframe for approval. Regarding Vype and regarding tobacco heating devices, I think that these are two different categories. One is cigarette, it’s is a category that has been well developed already. We’ve a lot of products in the markets as you know. We launched Vype and we have learned a lot through the launch of Vype for extensive consumer research in order to allow to us to have the development of the products to win in the category. As I said six months ago, this category is around 1% to 2% in Europe. In some of the markets, this goes up to 5% to 6% like in Poland, some other markets is more than that, which is smaller than that with ceded rate of growth is slowing down. The reason for that is the one that I raised several times before. We don’t believe that the products that are in the market are delivering to the consumer expectation, but I think…

Thank you. Our next question comes from the line of Jonathan Leinster of UBS. Please go ahead. Your line is now open.

Good morning gentleman. Just a couple of things. First of all, on the pricing front, obviously you had previously said that price will be second half weighted but given some of the down trading in markets such as Australia and Turkey, do you remain as confident as previously that pricing will significantly pickup in the second half? And then secondly, just on Australia, could you give us some idea of the sort of difference in unit profitability between the Rothmans launch brand and the [wind] (ph) field and the Dunhill products within Australia. Just how big a difference is that unit profitability within Australia now?

Well, let me start with the pricing question. Yes we are confident that the price is going to be more skewed to the second half for the lot of reasons. First of all, you look at how the prices have being implemented in 2014 against 2013. We have a lot of pricing going through this day end of the second quarter, beginning of the third quarter, so we had seen these places like Russia, South Africa, Ukraine, GCC and Germany. So we have seen this happening between May, June and July. So we know that the price is going to be more weighted towards the second half. Regarding the price skirmishes that we have in several places in the world like Turkey or like in Australia. Well we have seen this before. This is not new in our category. In some of the price skirmishes we react some other of our brand franchise is strong enough. We don’t need to react. But in the case of Australia, we have seen brands under cutting our portfolio for more than one year. We decide to react now with the launch of Rothmans, which by the way has performed extremely well. We don’t think that this is relevant enough in terms of affecting our profitability in Australia and in our global bases. We still think that Australia is going to deliver a very, very strong profit growth in 2014. Regarding your second question about the margins by brands, well I don’t have the information here but we can talk about these outside of this call.

We are not going to quote individual margins for individual brands in Australia but I think you can be reassured that it’s not going to impact our Australian results.

But Rothmans would not be sort of breakeven -- it would Rothmans will be a profitable brand.

No. Rothman is a very profitable brand in Australia. How much more profitable it is against the others I cannot precise. No it's not a breakeven brand. No.

Okay. Thanks very much.

Thank you. Our next question comes from the line of David Hayes of Nomura. Please go ahead. Your line is now open. David Hayes – Nomura: Good morning gentleman. Just firstly on pricing in the EMEA region. You reported I think about 2.9% in the first half, we saw one of your competitors today, obviously with the Russian pricing coming in with a 20%. I know there is obviously other markets in that mix. So I was wondering whether you can be more specific about why that pricing was sort of that level than we were anticipating with the dilution effectively is coming from. The second question is on the U.S. agreement with Reynolds. As we understand it from Reynolds discussions yesterday you’re kind of still putting the fine detail together on agreement but can you some kind of idea do you think in terms of when the product may be available for sale in your markets and then again similarly on the NGP product development, when you might thinking that the U.S. will be opened for you to enter from that perspective? Thanks very much.

Okay. David I understand that your first question is about because the line was not very clear on your call. The first question is about Russia pricing and dilution, I think that is your question. If it is the question, we have a very strong price in Russia in 2014. Yes, we had some skirmishes at the bottom of the market but the reality is because of the way that the excise increases the structure, we see the bottom of the category moving prices much faster at a much higher percentage than in the premium segment, so what we see is some uptrading from the low price segment to the value for money and you’ll see some downtrading from the premium of aspiration of premium. So more concentration on the value for money aspiration of premium segment. Despite all these movements, the business in Russia in our case is extremely solid. We are growing 40 basis points very strong profit growth and our brand are performing quite well. Rothmans is having a stellar performance. Kent is still the leader of the premium segment and Dunhill had a good start. So we are very happy with the Russian business. The second question is about Reynolds. If I understood well your questions, I said the line was a little bit cut. You’re talking about the cooperation agreement. Well we’re very happy to have agreed to expand our existing cooperation of Reynolds that will cover future research probably on commercialization of each orders next generation products in both in cigarette and tobacco heating device. I think that’s a very good opportunity for both companies. I think that’s the answer for your point. David Hayes – Nomura: Just in terms of timing, I guess it's early days, but can you be more specific about where those products may be swapped over between the two parties in terms of I am guessing from others perspective and then to your point on product developments in the U.S. and I guess following on from the U.S. point actually, one of your competitors have said that they would seek modified risk status in the FDA before launching any heat-not-burn products or next generation products. I wonder whether at this stage you can again talk about what regulatory approvals you would seek before going into the U.S. market with new product development. Thank you.

David, we’re sitting now with Reynolds to discuss in detail how this cooperation is going to work. We’ve already a framework for technology share in Reynolds. We want to enhance this and use each other’s capabilities for launching products in respective markets but more importantly, it is to leverage our capabilities in terms of research and development and technology sharing. I cannot be precise now in terms of timing for launches but as I said, we think that you’ll hear a lot about that in the 12 months. So we have already some good plans in place but there is some way to go to finalize all these agreements. David Hayes – Nomura: Okay. Thank you very much. Thank you.

Thank you. Our next question comes from the line of Adam Spielman of Citi. Please go ahead. Your line is now open. Adam Spielman – Citi: Hello, it’s Adam Spielman here. If you can hear me well, can I follow-up David’s question with a specific question. You said you’ve got three platforms in heat-not-burn and one or more will be tested test marked in the next 12 to 18 months. I wonder if you could say where that is basically eclipsed to your point zero or build from the Reynolds product. So that's one specific question. The other question really is when can you say if the implementation of SAP in Asia and in some other markets has had any effect on these results and if so what it was and if you could interpret these results I suppose the whole of calendar 2014. That would be great. Thank you.

Okay. Let me answer the first question about [inbound] (ph). As is said we have a good pipeline in tobacco heating device. We have in reality four products under development now. We’re going to test probably two of the four in the next 12 to 18 months but as I said for competitive reasons, I don’t want to be specific about the products and their markets, but we would see in the next 12 to 18 months the pile up of these products. As soon as we launch them we will be releasing a statement explaining what they are about and how they’re going to work, so I don’t want to be precise right now.

Just going on to the SAP rollout, the benefits of SAP being realized through a number of years. In the eight years, we put in common processes as we put in shared service centers as we put in centers of excellence where we standardized the skills let's say taxation or treasury in individual places. We’re already on a global treasury platform in SAP and now about 26% of volume is actually already fully working in SAP. So there’ve been benefits coming through, benefits in Asia but benefits in the rest of the world as well and we expect to continue to see benefits both in the rest of the world and more benefits to come through from Asia in terms of cost reductions from SAP. Adam Spielman – Citi: Are you able to quantify that in any way at all?

No. Adam Spielman – Citi: Thank you.

Thank you.

Our next question comes from the line of Celine Pannuti of JPMorgan. Please go ahead. Your line is now open.

Yes good morning. In fact it’s a follow-up question on the cost savings, whether you can comment on will there be other cost savings coming through in the second half of the year and in the margin expansion and as well as I saw in your slide you commented on the level of marketing investment in the first half. Anything you can say as well on that for the second half of the year please. Thank you.

Yeah Celine and what you said is that we expect operating margins to be in range that we’re shooting for for the full year. That means the profitability in the second half will be higher than profitability growth in the first half and part of that is because as Nicandro said, price increases are becoming slightly more weighted to the second half of the year than the first half but also when we push a little bit more marketing investment into the first half to drive some of the very impressive share growth that we’ve had. So we can feel confident of that plus the cost savings program will generate a good improvement in operating margin for the full year.

Thank you.

Thank you. Our next question comes from the line of Martin Deboo of Jefferies. Please go ahead. Your line is now open. Martin Deboo – Jefferies: Good morning, gentleman, I guess this is a question for Ben so it relates to Celine’s question is on transactional FX. I can see what the overall FX impact on margin was in H1 but then if you could do any color on how much transactional FX was in H1 and then how you would be expect transactional FX to play out in H2, both on those on margin.

Yeah Martin. We didn’t have much transactional impact at all in the first half of last year, it’s about zero. So if you want to get a rough feel for operating profit growth including transactional FX at about 1.5% of the growth rate in operating profit for the first half. Second half we’ll see more transactional FX come through but because we had quite a chunk of transactional FX in the second half of last year the increase in transactional FX if you understand me is a little bit less than the second half. Martin Deboo – Jefferies: Okay. Yeah. Thanks Ben.

Thank you. Our next question comes from the line of James Bushnell of Exane. Please go ahead. Your line is now open.

Hi. Thank you and good morning. I had two questions for you. The first is a bit of a follow-up on the transactional FX question. In particular in Brazil you mentioned that it impacted Brazil and I just wondered if you could clarify for us exactly how that the dynamic works and whether that’s the main reason that margins in Brazil were a little bit lower in H1 than one might have thought from looking at the pricing going through. And then secondly, if you could just update us on the situation with illicit trade in both Canada and South Africa and so how it was trending and any enforcement actions, what effect they are having. Thank you.

I don't think illicit trade sorry -- transactional FX affected Brazil anymore than anywhere else and BATs are not really calling out Brazil as it was hit by transactional FX so obviously the real has declined during the course of the year. So it has been a significant weakening of FX. And of course the impact flows through in terms of the significant leaf business we have in Brazil but I wouldn’t highlight any specific discontinuity in the results from Brazil in transactional FX.

Okay, when I was asking Brazil margins, I guess I was -- I am obviously looking at the reporting through the crews but the cigarette EBIT margins, not including the leaf seem to be down in H1 and I just wondered if you could give us any color as to what that might be and whether it's something we could expect to continue.

I wouldn’t expect that to continue. We had provisional releases in the first half of last year in Brazil, which affected the first half comparative results. So I wouldn’t want you to read too much into that sort of half year result from crews.

Okay.

Okay. Also on the question of illicit trade, as I said several times, illicit trades is always -- that is two sides of the coin here because every year we have some markets in which illicit trade goes up and some markets that illicit trading goes down and this is mainly due to the government’s acting effectively against illicit trades because the best tool against illicit trade is law enforcement and that’s something that the governments have to do not the operating companies but talking about the two countries that you just mentioned, in the case of South Africa we saw in the first half of the year, significant decline of illicit trades. Illicit trade, when I was talking to you guys six months ago was around 27% in South Africa, now you talk about 20.5% so it’s a significant decline of 6.5%, so good work from the governments. There’s a long way to go in still 20% of the markets but significant improvement and this can be felt in terms of the volume that -- the volume in South Africa was almost stable despite the price increase that went through. In the case of Canada, we have some tax increases this year and the gap between illicit trade products and due paid products increased, so the illicit trading in Canada was just slightly up I would say stable, it’s slight flattish, was 0.5% up we estimate now that it's around 21% to 22% and six months ago we were talking about around 21 so it’s slightly up, almost stable.

Great. Thank you very much.

Thank you. [Operator instructions] And our next question comes from the line of [Raven] of Renaissance Capital.

Good morning, gentleman. I just want to get a brief overview just in terms of -- if we can talk about pricing, you indicated that it was an acceleration to the second half. I just want to know how previously you hinted price mix in the range of 5% to 8%. I am just curious if you would be able to achieve the lower end of that range or is there faster growth in the developing markets actually going to have a negative mixed impact on that and then just on the volume front, very good performance obviously in the first half, 1.4%. In terms of the second half, if there are any specific markets that may cause a bit of a deviation in this first half trend? Thank you.

Well. Let me start with the pricing question. We believe that we’re going to get -- we're going to reach the range that we have discussed previously. It’s going to be the low side of the range for the year as is our estimation, there are lot of prices which will come through so we have to wait and see and one of the main reasons that pricing has been solid but if you look at the geographic mix of our performance so far, we have been growing very fast in markets in which it has lower margin. So that’s why the mix impact in our number just because the geography has been hitting us a little bit stronger this year as compared to last year. So pricing is very strong. We should be reaching -- price mix should be hitting the 5% to 8% probably in the lower range of it. Regarding the volume; well, in the case of volume we think back to the overall industry decline for the full year, it’s going to be down to 2% to 3% as I have said before and there is no doubt for me because of the strong growth that we’re having this year and on top of the strong growth that we had last year -- the previous year, we’re going to keep growing market share for this year and by consequence we’ll be declining less than the industry. It’s very difficult to be precise with you now, what’s going to be the size of the market decline or our decline in the year, our volume performance in the year. But we start -- we have a very good start with 0.4 for six months. I think the concerns that I have for the second half of the year is one of the concern that I have is for example Russia. We had significant price driven excise increase at the beginning of the year. The market is down while we’re on 9% to 10%. We are going through new price increase now in the middle of the year so I am a little bit uncertain what’s the size of market decline in Russia despite effect as I’ve already said before, we’re doing quite well and when I was talking about share, we’re doing quite well but we’re doing quite well as well in the segments that we want to be. Our GDBs are growing 60 basis points and our premium share is growing 40 basis points, so we are growing the way we want to grow. So all in all, it has been a very good six months for the year. However, I’ll like to highlight that despite effects, that industry’s decline strongly Russia, profit is growing extremely well because we are moving on with pricing. So industries declined 9% to 10% but profitability of the Russian market is extremely solid.

Thank you.

We have time for one more question from the line of Michael Lavery of CLSA. Please go ahead. Your line is now open.

Good morning.

Morning Mike.

I was wondering if you could just clarify one remark that you made about the margins. Obviously the margin expansion in the first half was below the target but you said it would accelerate in the second half. Does that mean it might not hit the target but accelerate, it obviously could pick and still miss or do you think it actually still is on track for the full year to be in the 50 to 100 basis points range?

I think I said I was confident that it will be in the range this year.

Okay. Good. Okay. Just wanted to clarify and then one other question just on the Reynolds deal. I realize you said that it helps to fund the deal but yet other shareholders weren’t contributing to help make that happen even though everyone benefits. Can you just give some sense of your thinking on how you -- why you approached it that way and it obviously hit the cost of suspending the buybacks and digging on some debt, so what’s the thinking there. Is it something you can elaborate on a little bit more about why you would be interested in that?

Yeah and I think the first question’s probably better directed to Reynolds. On the buyback question you will understand obviously with the significant strength in sterling and then lot of our debt is in Euros, in dollars, in sterling so FX is pushing up on net debt to EBIDTA and we like to keep that in the sort of 1.5 to 2.5 times range. And we’ve also said that we will increase the dividend in sterling terms probably by pushing the payout ratio up if FX continues to be such a headwind this year. Reynolds will have cancelled that buyback. We want to maintain flexibility for other transactions that may or may not come along during the year and not signaling other transactions that are out there, but if they do we would want the ability to move quickly and decisively for those and we got to wrestle up $4.7 dollars to invest in Reynolds. So those are the reason why the buyback was cancelled in the end of July.

That’s very helpful. I guess what I meant is -- the part of it was just obviously one option could have been to allow your stake to get diluted instead of contributing the additional $4.7 billion. Did you consider that and how did you compare that versus the approach that you’re proposing?

We’re very happy with our investment in Reynolds. We support the management. We support the strategy that they have got and we think that our shareholding should stay as it is. There’s never really a debate for us.

Okay. Thank you very much.

I will now return the call to Nicandro Durante for closing comments.