Interim Management Statement for the nine months ended 30 September 2010

•  Good growth in revenue for the nine months
•  Volumes decreased by 1 per cent to 526 billion
•  On track for another year of good earnings growth

SUMMARY OF PERFORMANCE

Trading update

British American Tobacco continued to perform well in the nine months to the end of September 2010. The Group increased overall market share across its top 40 markets and Global Drive Brands continued to grow, although Group volumes were lower.

Group revenue for the nine months grew well, driven by the favourable impact of exchange rate movements, continued good pricing and the acquisition of PT Bentoel Internasional Investama Tbk (Bentoel) in Indonesia in June 2009, partially offset by disposals.

While the Group’s results continued to benefit from foreign exchange movements in the first nine months, this is expected to diminish in the fourth quarter.

Group volumes from subsidiaries were 526 billion, down 1 per cent. Organic volumes were 3 per cent lower than last year as a result of market size declines and an increase in illicit trade in some markets. Volumes were also impacted by the loss of sales in Pakistan after the floods.

The four Global Drive Brands continued their good performance and achieved overall volume growth of 8 per cent, flattered by increased consumer purchases in Japan ahead of a significant excise driven price increase. Dunhill was up 21 per cent mainly as a result of brand migrations in Brazil and South Africa, Kent and Lucky Strike grew 2 per cent each and Pall Mall increased by 7 per cent.

Trading environment

This good performance was achieved in trading conditions which continued to be challenging, with industry volumes markedly lower in a number of markets including Romania, Turkey, Pakistan, Germany and South Africa. In some markets, there was down-trading to illicit trade as a result of pressure on consumers’ disposable income, exacerbated by high excise increases. This particularly affected the low price segment.

The Group continues to improve its operating margin by addressing the cost base and, amongst other initiatives, has started the information and consultation procedures to close the Lecce factory in Italy.

Cigarette volumes

Enquiries

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Investor Relations

Victoria Buxton: +44 (0)20 7845 2012
John Harney: +44 (0)20 7845 1263