british american tobacco p.l.c. annual report 2008 - Notes on the accounts: 2 of 31

ANNUAL REPORT 2009

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2 Segmental analyses

As the chief operating decision maker, the Management Board reviews external revenues and adjusted profit from operations to evaluate segment performance and allocate resources. Interest income, interest expense and taxation are centrally managed and accordingly such items are not presented by segment as they are excluded from the measure of segment profitability.

The Management Board reviews current and prior year information of subsidiaries and associates and joint ventures at constant rates of exchange which provides an approximate guide to performance in the current year if exchange rates had not changed from the prior year. The constant rate comparison provided for reporting segment information is based on a retranslation, at prior year exchange rates, of the current year results of the Group’s overseas entities. It does not adjust for the normal transactional gains and losses in operations which are generated by exchange rate movements. As a result, the 2009 segmental results are translated using the 2008 average rates of exchange. The 2008 comparative figures are also stated at the 2008 average rates of exchange.

The tables below represent the new regional structure effective from 1 January 2009, as previously disclosed in the Annual Report for the year ended 31 December 2008.

The analyses of revenue for the 12 months to 31 December 2009 and 31 December 2008, based on location of sales, are as follows:

The analyses of profit from operations and the Group's share of post-tax results of associates and joint ventures, reconciled to profit before taxation, are as follows:

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*The adjustments to profit from operations and the Group’s share of the post-tax results of associates and joint ventures are explained in notes 3(e) to 3(h) and in note 5, respectively.

Adjusted profit from operations at constant rates of £4,106 million (2008: £3,717 million) includes depreciation, amortisation and impairment of intangibles and property, plant and equipment, as follows:

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*Adjusted depreciation, amortisation and impairment is after taking account of depreciation, amortisation and impairment included within adjusting items as explained in note 3(e) and note 3(g).

Additions to non-current assets other than financial instruments, deferred tax assets and retirement benefit assets are as follows:

Although information on assets and liabilities is not reported to the Management Board, IFRS 8 requires a measure of total assets for each reportable segment to be reported. This is provided as follows:

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The 2008 comparatives have been restated for the new regional structure effective from 1 January 2009.

Total assets are reconciled to segment assets as follows:

External revenue and non-current assets other than financial instruments, deferred tax assets and retirement benefit assets are analysed between the UK and all foreign countries at current rates of exchange as follows:

Included in the external revenue from foreign countries is £1,529 million (2008: £1,361 million) attributable to Brazil, being the only subsidiary contributing more than 10 per cent of the Group’s external revenue in 2009 and 2008. Included in non-current assets are amounts of £1,805 million (2008: £1,884 million) attributable to the investment in Reynolds American and £682 million (2008: £638 million) attributable to the investments in the Indian associates ITC and VST. Further information can be found in note 11.