Chairman's comments on the half-yearly report to 30 June 2010

A word from Richard Burrows

In a difficult trading environment, I am pleased to report that British American Tobacco has had a good first half, with continued revenue growth and a very satisfactory increase in profit from operations. Revenue grew by 4 per cent at constant rates of exchange and by 8 per cent at current rates, while adjusted profit from operations improved by 9 per cent at constant rates and by 14 per cent at current rates.

As a result of the strong growth in profit from operations and favourable exchange movements, adjusted diluted earnings per share increased by 13 per cent to 87.1p. The Board has declared an Interim Dividend of 33.2p, up 19 per cent. As usual, the Interim Dividend represents one third of last year’s total dividend. It will be paid on 29 September to shareholders on the Register at 20 August 2010.

On 24 June, the Board announced that Nicandro Durante will become Chief Executive of British American Tobacco on the retirement of Paul Adams at the end of February 2011. In anticipation of his new role, Nicandro will become Chief Executive Designate on 1 September 2010. He will be succeeded in his current role as Chief Operating Officer by John Daly, also on 1 September. From the same date, Ben Stevens, Finance Director, will take on the additional role of Chief Information Officer.

The Board is delighted to have been able to choose such a strong and experienced internal candidate to succeed Paul, who has been an outstandingly successful Chief Executive.

In addition to the executive appointments, we also announced on 24 June that Kieran Poynter would become a Non–Executive Director with effect from 1 July 2010.

These results show that British American Tobacco’s business is in very good shape, with continued pricing momentum, increasing market share in key markets and improving organic volume trends. While the comparisons with 2009 will become tougher in the second half, shareholders should see another year of good growth in both earnings and dividends.

Richard Burrows
27 July 2010