Half Yearly report to 31 March 2011

Highlights

Delivering Sales Growth Through Total Tobacco Portfolio

• Group sales growth driven by a strong performance in emerging markets outside the EU
• Combined volumes of global cigarette brands Davidoff, Gauloises Blondes, West up 5 per cent
• JPS cigarette volumes up 16 per cent
• Fine cut tobacco volumes up 5 per cent
• Luxury handmade Cuban cigar sales up 16 per cent in non-EU markets
• Snus volumes up 19 per cent

Ongoing Cost Optimisation

• Disciplined investments supporting portfolio gains in consumer growth segments

Maximising Cash Returns: Dividend Growth and Share Buyback

• Interim dividend of 28.1 pence up 16 per cent with Board confirming intention of 50 per cent dividend payout ratio in 2011
• Post 2011 gradual increase in dividend payout ratio by steadily growing dividends per share ahead of adjusted earnings per share
• £500 million per annum share buyback programme effective from today

Alison Cooper, Chief Executive, said:

"I'm pleased with how we are driving sales growth through our total tobacco portfolio across our international markets. We've delivered good first half results with tobacco net revenues up 3 per cent, earnings per share up 7 per cent and dividends increasing by 16 per cent.

"Spain remains difficult but we made gains elsewhere in the EU and our growth in emerging markets outside the EU was excellent. Our ongoing cost focus continues and disciplined investments are supporting the strong sales we are delivering in consumer growth segments.

"Our success translates into further dividend increases going forward and a £500 million annualised share buyback programme which is effective from today.

"I'm focused on maintaining our sales growth momentum and delivering a strong performance in the second half. We have the assets, the capabilities and the opportunities to continue to create significant value for our shareholders."