Final Results

IMPERIAL TOBACCO GROUP PLC

PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED

30 SEPTEMBER 2010

HIGHLIGHTS

(1) White stick equivalents reflects our combined cigarette and fine cut tobacco volumes.

(2) Management believes that these non-GAAP measures provide a useful comparison of business performance and reflect the way in which the business is controlled. Definitions are included in our accounting policies within the notes to the financial statements. Reconciliations between adjusted and reported measures are also included in the relevant notes.

·; +11% adjusted earnings per share growth

·; +15% dividend per share growth

·; +3 % tobacco net revenue growth

·; +5% adjusted operating profit growth

·; Global strategic cigarette brand gains

·; Strong fine cut tobacco volume growth

·; Adjusted net debt reduced by £1.5 billion to £9.3 billion

Alison Cooper Chief Executive said:

"This strong set of results demonstrates the success of our strategy and the versatility of our total tobacco portfolio.

"We delivered some excellent brand and product performances in both mature and emerging markets, including further gains from our global strategic cigarette brands Davidoff, Gauloises Blondes and West.

"This was complemented by growth from a number of regional and local brands, particularly JPS which continues to go from strength to strength.

"We also delivered another very strong fine cut tobacco performance, growing our volumes by almost 9 per cent.

"Whilst driving sales across our balanced market footprint we have maintained our focus on cash generation, reducing our level of adjusted net debt by £1.5 billion to £9.3 billion.

"Our priority is to build on this strong performance and I am confident that our enhanced sales agenda, combined with our focus on cost optimisation and cash utilisation, will create further sustainable returns for our shareholders."

Notes to Editors

Imperial Tobacco Group PLC is a leading international tobacco company with a balanced market footprint and a unique portfolio that offers consumers high quality brands and products across all tobacco categories. The Group has 51 manufacturing sites and around 38,000 employees.

A live webcast of a presentation for analysts and investors will be available on www.imperial-tobacco.com from 10.30 am (GMT). An archive of the webcast and the presentation script and slides will also be made available during the afternoon.

Interviews with Alison Cooper, Chief Executive and Bob Dyrbus, Finance Director, are available in video, audio and text formats at: www.imperial-tobacco.com and www.cantos.com

High-resolution photographs are available to the media free of charge at:

www.newscast.co.uk +44 (0)20 3137 9137

Alison Cooper will host a media conference call at 7.30am (GMT), at which there will be the opportunity for questions.

Dial in number: +44 (0)20 7806 1951 (UK)

Dial in number: +34 91 788 9937 (Spain)

Dial in number: +33 (0)1 7099 4301 (France)

Dial in number: +49 (0)69 5007 1306 (Germany)

Confirmation Code: 2230341

A replay of this call will be available for one week. To listen, please dial:

+44 (0)20 7111 1244

Access code: 2230341#

Chairman and Chief Executive Statement

We delivered strong growth in earnings and dividends with our focus on organic sales growth, cost optimisation and effective cash utilisation continuing to create value for our shareholders.

Results and Dividends

We grew our tobacco net revenues by 3 per cent and our adjusted operating profit by 5 per cent to £3.1 billion. Reported operating profit grew by 8 per cent to £2.5 billion. Our adjusted earnings per share has risen by 11 per cent to 178.8 pence. Basic earnings per share was 148.5 pence (2009: 65.5 pence), as a result of movements on derivative financial instruments providing commercial hedges with gains of £210 million compared to losses of £660 million in 2009.

We also made considerable progress in reducing our adjusted net debt, which was down by £1.5 billion to £9.3 billion (2009: £10.8 billion).

The Board recommends a final dividend of 60.0 pence per share, bringing the total dividend for the year to 84.3 pence per share (2009: 73.0 pence), representing an increase of 15 per cent. This dividend will be paid on 18 February 2011, with an ex-dividend date of 19 January 2011.

2010 Performance Overview and Achievements

Sustainable Sales Growth

We drive sales growth across all markets with our global strategic brands complemented by our regional and local brand portfolio. We balance our market share targets with sustainable profit growth in mature markets, while our investment priorities target Eastern Europe, Africa, the Middle East and Asia to further build our position in emerging markets.

During the last year we have enhanced our focus on sales growth and aligning our brand and product portfolio to evolving consumer preferences. Price increases and a number of strong cigarette and fine cut tobacco performances more than offset the challenging environment in some markets.

Economic conditions have impacted consumer spending in Spain, the USA, Russia and Ukraine such that our overall cigarette volumes were down by 4.2 per cent. However, we delivered excellent growth in fine cut tobacco increasing volumes by 8.7 per cent and, when our fine cut tobacco volumes are combined with our cigarette volumes, our overall white stick equivalent volumes were down just 2.9 per cent.

Global Strategic Cigarette Brands

Our global strategic brands Davidoff, West and Gauloises Blondes comprise around 22 per cent of our overall cigarette volumes and performed well. We delivered 3 per cent volume growth in our premium brand Davidoff and 2 per cent growth in West. Gauloises Blondes also made positive progress, with volumes up by 4 per cent in the second half of the year following temporary supply disruption in the Middle East earlier in the year.

Davidoff

In Eastern Europe, we have grown volumes of Davidoff by 20 per cent with particular success in the growing superslims and kingsize superslims segments. We continued to grow Davidoff's market share in many markets including in Ukraine, Saudi Arabia and Greece.

West

We grew volumes of West in the value cigarette segment and delivered additional brand innovations with specialised filters and variants adding an extra dimension for consumers, resulting in particularly impressive growth in Turkey and Taiwan.

Gauloises Blondes

Gauloises Blondes has continued to consolidate its position, celebrating its centenary in 2010 with a series of limited edition packs and new variants which were well received by consumers. We have further extended the brand's reach, with a particular focus on Eastern Europe and notable early success in the Balkans.

Regional and Local Cigarette brands

Complementing our strategic brands is our versatile portfolio of regional and local cigarette brands with consumer insights driving our brand and product portfolio choices at a market level.

Our regional value brand JPS was a particular highlight and we have grown volumes by 13 per cent and delivered significant market share growth in a number of our major European markets including in the UK and Germany and in Australia.

Other notable performances include Fine and Excellence in Africa and Maxim in Eastern Europe.

Other Tobacco Products

We delivered an excellent fine cut tobacco performance in the year, growing volumes by 8.7 per cent. We made very good progress in Central Europe, with volumes growing strongly by 54 per cent across the region and Paramount up by 67 per cent. Another notable success during the year was the launch of Ducados Rubio in Spain, the first expanded make your own tobacco product in the market. Launched in June, it has since captured 5.8 per cent of the Spanish fine cut tobacco market.

We had another excellent performance with snus in Scandinavia, with volumes up 24 per cent, while in cigars, despite the challenging environment, we grew sales and profits with the ongoing recovery of our Habanos business.

Cost Optimisation

We have delivered our Altadis acquisition synergy targets and have continued to drive efficiency improvements throughout the business. In 2010, we delivered euro110 million incremental synergies bringing the total to date to euro300 million. We remain on track to deliver our previously announced synergy target of euro400 million cumulative synergies by the end of our 2012 financial year.

Effective Cash Management

We have generated £2.0 billion of free cash flow before dividend payments of £0.8 billion and made excellent progress in reducing our adjusted net debt, which was down £1.5 billion to £9.3 billion (2009: £10.8 billion) as at 30 September 2010. We maintained the improved working capital position we delivered last year and our cash conversion was 97 per cent, towards the top end of our target range of between 90 and 100 per cent.

Logistics

In logistics we delivered another positive result. Our tobacco logistics business performed robustly, with price increases and effective cost management key to maintaining our profit levels both in our tobacco logistics and our other logistics businesses.

People

Our thanks to our employees for their collective commitment to delivering high performance. They have embraced our enhanced sales focus and driven strong results, particularly given the challenging environment in some markets this year.

Outlook

Driving sustainable sales growth is at the heart of our shareholder value agenda. We will continue to build sales across our balanced geographic footprint, ensuring our versatile brand and product portfolio remains relevant and appealing to evolving consumer preferences.

Our focus on cost and efficiency continues, as well as effectively utilising the cash we generate. The combination of our people, our brands, our market footprint and our unique total tobacco approach offers us many opportunities to build long term sustainable growth across our business.

Financial Review

Revenue

We have grown our reported revenue as our results benefited from strategic cigarette brand gains, excellent fine cut tobacco volumes and strong pricing.

Group Earnings Performance

We grew adjusted operating profit by 5 per cent to £3,067 million (2009: £2,933 million) reflecting our focus on sales growth and cost optimisation. Leaf cost pressures remain which we continue to actively manage. Reported operating profit was up 8 per cent to £2,528 million (2009: £2,337 million). Adjusted net finance costs were 14 per cent lower than in 2009, reflecting our continued focus on working capital, debt reduction and active management of our financing. After net finance costs and tax, adjusted earnings per share grew by 11 per cent to 178.8 pence (2009: 161.8 pence). Reported earnings per share were 148.5 pence (2009: 65.5 pence), additionally reflecting fair value gains on derivative financial instruments and amortisation of acquired intangibles and other adjusting items in line with our usual practice.

Reconciliation of Adjusted Performance Measures

Results have been adjusted in line with our normal practice and a reconciliation is provided below.

The acquisition accounting adjustments of £24 million eliminates one-off costs incurred as a consequence of investigations into alleged foreign trading violations in the period prior to our acquisition of Reemtsma. Amortisation of acquired intangibles was unchanged at £451 million.

As explained in our accounting policies, our adjusted net finance costs exclude fair value gains and losses on derivative financial instruments providing commercial hedges. Movements in foreign exchange and interest rates have been less volatile in the current year and fair value gains on derivative financial instruments included in net finance costs were £210 million (2009: loss of £660 million).

The net financing cost of post-employment benefits amounted to £20 million compared with £32 million in 2009 and is excluded from adjusted net finance costs.

Geographic Analysis of Tobacco

UK net revenue increased by 2 per cent to £911 million reflecting price increases in cigarette, and a strong performance in our fine cut tobacco business. Adjusted operating profit rose 2 per cent to £614 million.

In Germany due to price increases and growth in fine cut tobacco volumes we delivered a 3 per cent increase in net revenue to £853 million and 7 per cent growth in adjusted operating profit to £432 million.

Net revenue in Spain declined by 3 per cent to £594 million reflecting challenging market conditions and lower cigarette and fine cut tobacco volumes. Adjusted operating profit declined by £7 million to £268 million. Excluding the impact of foreign exchange, profits were stable benefiting from price increases and cost synergies.

In the Rest of EU, we delivered good performances in a number of markets in the region with price increases and excellent growth in our fine cut tobacco volumes increasing net revenue by 6 per cent and adjusted operating profit by 13 per cent.

In the Americas, net revenue decreased by 9 per cent to £780 million, and adjusted operating profit declined by 15 per cent to £244 million reflecting cigarette and cigar market volume declines following substantial increases in federal excise tax last year, and a highly competitive market.

In the Rest of the World, though cigarette volumes were down in Eastern Europe, we performed well in Asia Pacific, Africa and the Middle East, benefiting from strong pricing and a favourable sales mix. We grew revenue by 9 per cent to £2,340 million and adjusted operating profit by 12 per cent to £693 million.

Restructuring and Synergies

Tobacco profits benefited from incremental synergies from the Altadis acquisition of euro110 million delivered during the year. Our cumulative synergies to date are in line with the schedule outlined at the time of the acquisition at euro300 million.

Included within restructuring costs are impairments of surplus properties mainly in Spain and the USA amounting to £45 million, reflecting current property market conditions in these countries.

Logistics

Against a difficult operating environment, particularly in Spain, our logistics business produced a good result with adjusted operating profit in line with last year at £176 million and an increase in adjusted distribution margin despite the impact of our initial investment in the Spanish lottery joint-venture.

Net Finance Costs

Adjusted net finance costs were £600 million (2009: £700 million). On an adjusted basis, our interest cover was 5.1 times (2009: 4.2 times). Reported net finance costs of £410 million (2009: £1,392 million) include post-employment benefits net finance expense of £20 million (2009: £32 million) and fair value gains on derivative financial instruments providing commercial hedges of £210 million (2009: losses of £660 million).

Taxation

The adjusted tax charge for the period was £637 million (2009: £581 million) representing an adjusted effective tax rate of 25.8 per cent (2009: 26.0 per cent). The reported tax charge was £596 million (2009: £268 million).

Foreign Exchange

Tobacco net revenue benefited by £33 million due to currency effects, mainly as a result of the appreciation of the Australian dollar against sterling. Logistics distribution fees were reduced by £3 million as a result of currency effects. While average US dollar and euro rates were similar to last year, the foreign exchange effect of the time lag between the purchasing and consumption of tobacco was the most significant factor in an overall reduction in Group adjusted operating profit due to currency effects of £44 million.

Dividends

The total amount of dividends payable in respect of 2010 is £855 million, an increase of 15 per cent on last year, which reflects growth in our adjusted attributable earnings to just over £1.8 billion. We have proposed a final dividend of 60.0 pence per share such that the total dividend for the year is 84.3 pence. Following approval by shareholders this dividend will be paid on 18 February 2011 with an ex dividend date of 19 January 2011.

Cash Flow and Financing

At the end of September 2010, we had committed financing facilities in place of around £11.9 billion. Some 30 per cent was bank facilities with the balance raised through capital market bond issues. We remain fully compliant with all our banking covenants and are committed to retaining our investment grade credit ratings.

At 30 September 2010, our reported net debt had reduced to £10.0 billion from £12.0 billion at 30 September 2009 reflecting our strong cash generation. Eliminating accrued interest, the fair value of derivatives providing commercial cash flow hedges and finance lease liabilities, our adjusted net debt was £9.3 billion (30 September 2009: £10.8 billion). The denomination of our closing adjusted net debt was 50 per cent euro, 23 per cent US dollar and 27 per cent sterling. Our all-in cost of debt was stable at 5.5 per cent (2009: 5.5 per cent).

Our business remains highly cash generative and we converted 97 per cent of our profit from operating activities after net capital expenditure into cash, towards the top end of our 90 to 100 per cent target range. After a very strong working capital inflow last year we retained our focus on this important aspect of cash management. There was a working capital inflow of £0.2 billion, half of which was due to the timing of sales made in our logistics business which is expected to unwind in the new financial year. Managing our working capital remains a key priority for us as we seek to maximise returns from effective cash utilisation.

Additions and Fixed Asset Disposals

Our cash outflows include gross capital expenditure of £283 million (2009: £253 million), reflecting our increased investment in machinery and equipment across our expanded footprint. Proceeds from disposal of fixed assets amounted to £26 million (2009: £69 million).

Robert Dyrbus

Finance Director

Operating Review

United Kingdom

(1) Imperial Tobacco estimates.

(1) Imperial Tobacco estimates.

Market Environment and Consumer Trends

We estimate that the duty paid cigarette market returned to its more usual trend of moderate decline and was down by 2 per cent to 44.5 billion cigarettes (2009: 45.3 billion).

UK consumers continue to look for value resulting in further growth in the economy cigarette segment. This segment now accounts for 22 per cent of the UK cigarette market by volume compared to 15 per cent a year ago.

In this context, fine cut tobacco market volumes have also continued to grow, up by 13 per cent, and we estimate a market of 5,050 tonnes (2009: 4,450 tonnes).

In April 2010, the Office of Fair Trading imposed a fine on Imperial Tobacco, Gallaher and a number of retailers for allegedly restricting competition. We strongly rejected this and have appealed the decision to the Competition Appeal Tribunal. As part of our appeal, we are asking for the fine to be quashed in its entirety. We are awaiting an appeal date to be determined.

Excise and Regulation

In his March 2010 Budget, the Chancellor raised tobacco duty by above inflation levels, resulting in an average increase of 15 pence per pack.

We oppose all unnecessary and disproportionate regulation of tobacco. Along with other tobacco manufacturers, we have applied for a judicial review of the proposed product display ban in England under the Health Act which will be considered in April 2011. There is no credible evidence to support the idea that children start smoking or that adult smokers continue to smoke as a result of the display of tobacco products. If this legislation is implemented it is likely that it will further fuel the growth in illicit trade. Our judicial review of the government's proposed ban on tobacco product sales in vending machines under the Health Act, was heard in October 2010 and we are currently awaiting a judgment.

Our Strategy

We are the market leader in the UK. In delivering sustainable sales growth, we are focused on balancing our market share targets with sustainable profit growth.

Our Performance

Net revenue was £911 million (2009: £893 million), with adjusted operating profit of £614 million (2009: £601 million) reflecting price increases in January and September and our strong performance in fine cut tobacco.

Lambert & Butler and Richmond remain our two best selling UK brands, with Lambert & Butler king size the number one brand variant in the UK. Our cigarette market share was 45.4 per cent (2009: 45.3 per cent). Our expertise in consumer value offerings has enabled us to further enhance market shares of JPS Silver and Windsor Blue which were up to 4.5 per cent and 4.4 per cent respectively (2009: 1.9 per cent and 2.6 per cent). Combined, these two brands now hold around 41 per cent of the growing economy segment.

In fine cut tobacco, our volumes grew due to our value brands Golden Virginia Yellow and Gold Leaf although not enough to offset the performance of our premium brands, such that our overall fine cut tobacco share decreased to 54.5 per cent (2009: 58.0 per cent).

Outlook

The UK is a key market for the Group and we continue to focus on improving our leading position. We will continue to drive sales growth by ensuring that our brands and products evolve in line with changing consumer dynamics.

Germany

(1) Imperial Tobacco estimates.

(1) Imperial Tobacco estimates.

(2) Restated to reflect a changed basis of calculation.

Market Environment and Consumer Trends

In Germany, we estimate that the duty paid cigarette market was down 2 per cent to 84.1 billion cigarettes (2009: 85.8 billion). The growing value for money branded cigarette sector now accounts for 31 per cent of the total cigarette market (2009: 27 per cent) as consumers continued to economise and seek value products and brands. The fine cut tobacco market was up 4 per cent to 25,450 tonnes (2009: 24,500 tonnes).

Excise and Regulation

We continue to proactively engage with the German government in the ongoing debate regarding potential tobacco tax increases. In Germany, with the exception of Bavaria, smoking restrictions by state are in place across the hospitality sector that allow some provision for smokers.

Our Strategy

Our strategy in Germany is to balance market share gains while improving our profits. We use our unique total tobacco approach to provide consumers with a wide range of fine cut and make your own tobacco products, reinforcing our leading position in this segment.

Our Performance

With a price increase in June across our value cigarette brands and strong growth in our fine cut tobacco volumes we grew our net revenue to £853 million (2009: £826 million), with adjusted operating profit up 7 per cent to £432 million (2009: £403 million).

A number of initiatives including new variants and soft packs have driven JPS market share up to 9.3 per cent (2009: 8.5 per cent). West, positioned in the mid-priced segment in Germany has continued to be impacted by consumers' downtrading, with our overall market share declining to 26.9 per cent (2009: 27.3 per cent). In line with our global brand strategy, new pack designs and variants for West have been recently introduced.. From 1 April this year Gauloises Blondes was incorporated into our distribution network and we have subsequently extended distribution with the "100 ans de Liberté" centenary special editions launched in the market.

Our total tobacco approach has enabled us to further consolidate the JPS brand franchise in the fine cut tobacco segment, with our overall market share up to 18.2 per cent (2009: 17.6 per cent). Route 66 make your own tobacco also performed well.

Outlook

We expect consumers to continue to economise and our strength in value brands and products means we are well placed to benefit from this dynamic. We will continue to leverage our portfolio to capitalise on growth opportunities, with a particular focus on building sales of our key brands JPS, West and Gauloises Blondes.

Spain

(1) Imperial Tobacco estimates.

(2) Market shares reflect the domestic blonde cigarette segment.

(1) Imperial Tobacco estimates.

Market Environment and Consumer Trends

The recession is continuing to have a significant impact in Spain and market conditions remain challenging.

Against this backdrop consumers have reduced their spending in almost every consumer category with the value cigarette segment now accounting for 26 per cent of the overall cigarette market (2009: 23 per cent). There has also been considerable switching into fine cut tobacco and in addition, tourism levels in Spain have declined, impacting travel retail purchases.

We estimate overall cigarette market volumes were down by 12 per cent to 73.9 billion cigarettes (2009: 83.6 billion), with fine cut tobacco volumes down by 4 per cent to 4,950 tonnes (2009: 5,150 tonnes). Within this the travel retail market has declined by 17 per cent in cigarettes and by 36 per cent in fine cut tobacco. In the domestic market, cigarettes were down by 10 per cent and fine cut tobacco grew by 39 per cent. The dark tobacco segment, in which we have a leading position, accounts for around 9 per cent of the overall market and has been on a declining trend for a number of years and was down 14 per cent in 2010.

Excise and Regulation

On 1 July 2010 the Spanish Government increased VAT to 18 per cent. Further restrictions in public smoking are expected to come into force early in 2011. Given the prevalence of increased smoking restrictions in other mature markets, we are experienced in managing such regulatory change. Although there may be a short-term impact in market volumes, our experiences show that the market returns to its normal trend in the medium term.

Our Strategy

Recognising the current economic situation in Spain we are focused on ensuring that our value cigarette and fine cut tobacco portfolio is aligned with consumer preferences. We have made a number of management changes in recent months to improve our sales excellence and strengthen our competitive position.

Our Performance

Net revenue was down to £594 million (2009: £610 million), reflecting challenging market conditions and lower cigarette and fine cut tobacco volumes, with adjusted operating profit down to £268 million (2009: £275 million).

We are market leaders across all tobacco segments in Spain and have strengthened our position in the growing value cigarette segment with soft pack launches and repositioning of variants of Ducados Rubio. In addition, we increased our distribution of JPS. However, despite the strong performance of our value brands, our domestic blonde market share was 29.0 per cent (2009: 30.6 per cent), as a result of downtrading pressures on Fortuna. We are introducing a new variant to the Fortuna brand family, Fortuna Red Line to strengthen our portfolio.

In fine cut tobacco, our overall market share declined to 32.3 per cent (2009: 42.6 per cent), impacted by our significant travel retail position and increased competition from cigarette branded fine cut tobacco products. In June we extended the Ducados Rubio brand family with the launch of the first expanded make your own product in Spain, which has since captured 5.8 per cent of the total fine cut tobacco market. The launch of Golden Virginia Yellow has supported the overall performance of the Golden Virginia brand family.

We repositioned our cigar brand Coburn and have increased distribution, growing its share to 11.7 per cent (2009: 0.9 per cent).

Outlook

We expect the ongoing economic challenges of the Spanish market to persist. We remain focused on the success of the brand and product initiatives we have undertaken to ensure our total tobacco portfolio is aligned with consumer trends and are well placed to further develop our business in this important market.

Rest of EU

(1) Imperial Tobacco estimates.

(2) Market shares reflect the domestic blonde cigarette segment.

(3) Restated due to changed basis of calculation.

Our Rest of EU region comprises the EU member states plus Norway, Iceland, Liechtenstein and Switzerland. It excludes UK, Germany and Spain which are reported separately.

 (1) Imperial Tobacco estimates.

 (2) Restated due to a changed basis of calculation.

Regional Environment and Consumer Trends

We estimate that regional cigarette volumes were down by 2 per cent to 361.7 billion cigarettes (2009: 370.4 billion). Regional fine cut tobacco volumes were up 5 per cent to 40,600 tonnes (2009: 38,800 tonnes). The main consumer trend across the region has been to seek value brands and products.

In France, a key market for us in this region, the cigarette market was broadly stable at 55 billion cigarettes with the fine cut tobacco market up 3 per cent at 7,700 tonnes (2009: 7,500 tonnes).

Regulation and Excise

The new tobacco taxation directive was published by the European Commission in March 2010 with the minimum excise tax structure on cigarettes changing from 2014. Fine cut tobacco minimum excise duty will also increase progressively between 2011 and 2020. In September, the European Commission launched a public consultation on the revision of the EU Tobacco Products Directive 2001. Views are being sought on a number of issues including smokeless tobacco, pictorial health warnings, plain packaging, ingredients reporting and display and vending bans and we are preparing our submission.

Our Strategy

This region presents us with considerable growth opportunities. Our total tobacco approach ensures our brands and products continue to evolve in line with consumer requirements.

Our Performance

We delivered strong growth in a number of markets in our Rest of EU region and excellent growth in our fine cut tobacco portfolio, growing net revenue by 6 per cent to £1,577 million (2009: £1,490 million) and adjusted operating profit by 13 per cent to £638 million (2009: £566 million).

In France, despite growth from News, JPS and Fortuna our domestic blonde cigarette share was down slightly at 23.6 per cent. We are market leaders in the dark cigarette segment which continued its declining trend, impacting our overall share which was 28.2 per cent (2009: 28.8 per cent). We grew our cigarette shares in a number of markets including in Austria, the Czech Republic, Greece, Hungary and Portugal. Brand highlights include a strong performance from JPS in Portugal and Austria and Route 66 in Czech Republic and Poland.

In fine cut tobacco we grew our volumes by 19 per cent, gaining share in Austria, Czech Republic, Hungary, Ireland, the Netherlands, Poland and Portugal. Our consumer insight and innovation expertise has enabled us to capture the leading share of the roll your own and make your own tobacco segments in Central Europe. The largest market for fine cut tobacco in the region is the Netherlands and we grew Zilver, following its repositioning in the value segment, and Van Nelle. In Scandinavia, we have grown volumes of our snus brands Skruf and Knox by 24 per cent and we will be able to capitalise on our strong performance further with our new snus factory fully operational from February 2011.

Outlook

The strength of our portfolio and agile approach leaves us well placed to benefit from consumer shifts. We remain focused on further improving our cigarette positions across the region while building on the momentum of the considerable growth we have achieved with our fine cut tobacco and snus portfolios.

Americas

(1) Imperial Tobacco estimates.

(2) USA market volumes for 2009 have been restated due to a changed basis of calculation.

Market Environment and Consumer Trends

Our primary market in the Americas is the USA, where we estimate that the overall cigarette market declined by 7 per cent to 298.5 billion cigarettes (2009: 319.1 billion). The USA is the second largest cigarette market by volume after China, accounting for a significant percentage of tobacco industry global profits. The USA market remains competitive, impacted by the federal excise tax increases in April 2009, with significant promotional activity, discounting and brand repositioning by competitors. In cigars, although the large cigar market has declined consumers have continued to seek value with the trend towards smaller sized cigars and cigarillos.

Excise and Regulation

The Food and Drug Administration (FDA) assumed regulatory control of the USA tobacco industry in June 2009 and has subsequently issued a number of regulatory requirements for tobacco including ingredient testing and reporting requirements.

The Tobacco Products Scientific Advisory Committee (TPSAC) of the FDA is currently debating the future of menthol in cigarettes. The committee has until March 2011 to present a report and recommendations to the FDA. The TPSAC will also be considering the testing and disclosure of tobacco product constituents.

The disparity in federal excise tax between pipe and fine cut tobacco has come under congressional scrutiny. Definitions for these categories are under development and tax harmonisation is also being considered.

Our Strategy

Given the size of the market and our relatively small position, the USA provides us with a unique long-term opportunity to grow our business. We are developing our sales force and our distribution capabilities, as well as investing in our brands and in a number of promotional activities to build our market share. Our cigar strategy focuses on growing our sales value in line with customer demands and maximising our profitability.

Our Performance

As a result of market volume declines following the substantial increases in federal excise tax last year and a highly competitive market, net revenue was down by 9 per cent to £780 million (2009: £861 million), and adjusted operating profit decreased to £244 million (2009: £288 million).

Our USA cigarette market share has been broadly stable for a number of months, although for the year it was at 3.9 per cent (2009: 4.2 per cent). We have invested in our key discount brands USA Gold and Sonoma which continue to be well positioned, with new packaging recently introduced. We have also continued to grow volumes of Fortuna. Further investment in our sales force and extending our distribution capabilities has enabled us to cover significantly more customers.

Our USA cigar business remains strong and we have grown our sales in value terms. In the natural wrapper segment we have performed well. We have grown Dutch Masters in the cigarillo size segment and continued to expand our distribution. In the homogenised wrapper segment, we have undertaken a number of promotional and new product and packaging initiatives, particularly with Phillies cigarillos delivering a positive performance. In our premium handmade cigar business, we outperformed the market with our luxury brands Montecristo and Romeo y Julieta.

Outlook

We remain focused on further growing our cigarette and cigar position in the USA. Our priority is further expanding our distribution and building our position in the value segment through continued brand rejuvenation as market volumes revert to their long-term trend.

Rest of the World

(1) Imperial Tobacco estimates.

(2) Restated due to a changed basis of calculation.

(3) Restated due to a change of source.

Regional Review

Our Rest of the World region comprises a broad range of markets which offer considerable opportunities for us to grow and develop our business. Our cigarette volumes in the year have been impacted by market declines in Russia and Ukraine, both down by 10 per cent, and by temporary supply disruption in the Middle East in the first half of the year.

Regulation and Excise

Levels of regulation and excise vary across our diverse Rest of the World region. We focus on monitoring developments and participating in debates through our proactive engagement activities.

We are particularly focused on the situation in Australia where the government has announced plans for the plain packaging of tobacco products with effect from July 2012. Plain packaging legislation has never been implemented by any government in the world and we are robustly challenging this proposal which would lead to a significant rise in counterfeit product, adversely affecting governments, retailers and consumers as well as the legitimate tobacco industry.

Our Strategy

We drive sales by maximising the growth potential that the geographic diversity of this region offers. We particularly focus on building sales of our key global strategic brands, complemented by our local and regional brands with local consumer insights supporting our brand choices. Developing partnerships is also an important element of our strategy for growth in this region.

Our Performance

We delivered an excellent performance across this region, benefiting from strong pricing and a favourable sales mix. We grew net revenue by 9 per cent to £2,340 million (2009: £2,138 million), and adjusted operating profit by 12 per cent to £693 million (2009: £617 million).

Africa and Middle East

We had a good year in Africa and increased our market share in a number of markets. Fine and Excellence, two important regional brands, continued to build on their volume growth trends. In Morocco, with the monopoly in tobacco manufacture and distribution ending this year, we continue to be well positioned and have further enhanced the position of our international brand portfolio, particularly Gauloises Blondes. In the Middle East, we again grew our market shares notably with Davidoff in Saudi Arabia, while in Turkey we posted gains with West driving market share higher.

Eastern Europe

In Eastern Europe, cigarette volumes in our major markets of Russia and Ukraine have declined, impacted by rising unemployment due to the economic conditions and duty increases. However, pricing has been positive throughout the region and we delivered strong revenue growth. In Russia, although our overall market share was down to 8.3 per cent (2009: 8.6 per cent) impacted by declining volumes of our low margin value brand Balkan Star, we have delivered a positive performance with Davidoff supporting our increased share of the superslims segment and with Maxim in the value cigarette segment. In the Ukraine, we have also had success with Davidoff with volumes up almost 50 per cent and our overall market share improving to 20.8 per cent. Other regional brand highlights include growth in West and Style.

Asia Pacific

In Asia Pacific, we have delivered an excellent performance with market share, volume and profit growth. In Australia and New Zealand, we posted market share growth to 17.5 per cent and 18.5 per cent respectively (2009: 16.2 per cent and 18.3 per cent), driven by JPS. We have recently introduced a number of new JPS variants to further build on this momentum. We grew share in Cambodia and Laos. In Taiwan, we have delivered market share growth to 11.0 per cent (2009: 9.9 per cent) with Davidoff, West and Boss.

Following our agreement signed with KT&G earlier this year, we are pleased with the progress we have made with Davidoff in South Korea. In addition, in India our import and distribution agreement for Davidoff signed in May has made a positive start.

Cigar

We have made encouraging progress with our luxury Habanos cigar portfolio and have grown volumes, sales and profits. Despite the economic climate we have achieved good results in a number of markets in Western Europe, Africa and the Middle East and Asia Pacific and launched a number of limited editions and exclusive series, enabling us to continue to build on the positive momentum we have achieved.

Outlook

There are many opportunities for us to grow sales and profits in this region. In Eastern Europe, we are investing to develop our sales force and distribution capabilities. We will continue to build on the momentum we have achieved with Davidoff, while ensuring our product portfolio is positioned to maximise our growth in growing segments such as superslims and kingsize superslims. In Africa, we continue to develop our important regional brands such as Excellence and Fine, while in the Middle East we are focused on further enhancing Davidoff and Gauloises Blondes in the region. In Asia Pacific we are further building our position in our two major markets of Australia and Taiwan.

We will continue to effectively leverage our portfolio across the many markets in this region, while seeking to use our partnering credentials to add to our market footprint.

Logistics

Overview

Our logistics business comprises operations in Spain, France, Italy, Portugal and Poland which cover several products and channels. Our logistics business is one of the largest of its kind in Europe, with more than 40 million deliveries per year and reaching around 300,000 delivery points across Europe. The points of sales served include tobacconists, convenience stores, bakeries, grocery stores, kiosks, bookshops, pharmacies, hospitals and petrol stations.

Our strategy is to further consolidate our leading positions and focus on our core profitable activities while widening the product offer to the points of sale that we reach and increasing the channels and countries that we access. Current economic conditions have presented us with challenges and we have continued to effectively manage these with our diligent approach to cost management.

We offer services across the whole logistics value chain to our customers, including order reception, storage and stock management, order preparation, transport and distribution, invoicing and collection and customer services.

Tobacco logistics delivers products for domestic and international tobacco manufacturers, including Imperial Tobacco, to tobacconists and other sales outlets in Spain, France, Italy, Portugal and Poland. The business is run on an operationally neutral basis, providing individual customer solutions based on our cutting edge technology and our specialised network. The high quality of the service we provide has allowed us to achieve a market share above 90 per cent in the distribution of tobacco in Spain, France and Italy and just under 20 per cent in Portugal.

Our integrated logistics services can assure full traceability throughout the entire logistics value chain, from pick-up and transport of the product at customers' factories to post-sale service. We can also provide specialised services for customers in a number of different sectors in Spain, Portugal, France and Italy including convenience, telecommunications, transportation, pharmaceutical, publishing, lottery and others.

We are market leaders in the distribution of convenience products to petrol stations in Spain, Portugal and France. Convenience products are also distributed to other points of sales in these countries and Italy including tobacconists, bakeries and grocery stores.

We have an e-transaction business with our own technological platform for e-recharge, installed in the main network of points of sale including in tobacconists, kiosks and convenience shops in Spain, Portugal and France. In this area, different products are offered including telephone cards and transport tickets.

We are present in the transportation segment, through courier and industrial parcel activities in Spain and Portugal. Our long distance transport network across Europe allows us to provide our customers with an integral solution for their logistics needs covering all services, from their factories to the point of sale. In addition, our logistics business is the leading logistics provider in Spain and Portugal in different sectors including pharmaceutical and publishing.

Our Performance

Distribution fees were £936 million (2009: £964 million) with adjusted operating profit of £176 million (2009: £177 million).

Given current economic conditions, our overall logistics business has performed robustly.

In tobacco logistics, in spite of volume declines, our business has been resilient. In Spain, we have offset market declines with price increases and cost saving initiatives, performing ahead of our expectations. In France, we delivered a good performance with market volumes broadly stable and in Italy our results benefited from a price increases.

In other logistics, our focus continues to be on maintaining our profitability while continuing to seek opportunities to profitably grow our operations. We have continued to gain market share in our French wholesale business and we achieved strong volume growth of 15 per cent in our pharma division. Following the signing of our joint venture last year to provide a range of services to one of the Spanish Lottery companies, we have made an upfront investment and commenced operations in the second half of the year.

Outlook

We will consolidate further our leading positions and focus on our core profitable activities in currently challenging market conditions. With our ongoing emphasis on enhancing our service levels to existing customers while seeking opportunities to extend our logistics footprint combined with cost saving initiatives, we believe our logistics business will continue to be effectively positioned.

Financial Reporting

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as adopted by the European Union (collectively IFRS) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Financial Statements

The figures and financial information for the year ended 30 September 2010 do not constitute the statutory financial statements for that year. Those financial statements have not yet been delivered to the Registrar, nor have the Auditors yet reported on them. The financial statements have been prepared in accordance with our accounting policies published in our financial statements available on our website www.imperial-tobacco.com.

Cautionary statement

Certain statements in this announcement constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement. As a result, you are cautioned not to place any reliance on such forward-looking statements. The forward-looking statements reflect knowledge and information available at the date of this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast.

Consolidated Income Statement

for the year ended 30 September 2010

All activities derive from continuing operations.

Consolidated Statement of Comprehensive Income

for the year ended 30 September 2010

Reconciliation from operating profit to adjusted operating profit

Reconciliation from net finance costs to adjusted net finance costs

Consolidated Balance Sheet

at 30 September 2010

In accordance with IAS 1 (Revised) Presentation of Financial Statements and as explained in the Accounting Policies note, previously reported figures for derivative financial instruments have been re-analysed between current and non-current classifications, and an additional balance sheet has been presented as at 30 September 2008.

Consolidated Statement of Changes in Equity

for the year ended 30 September 2010

Consolidated Cash Flow Statement

for the year ended 30 September 2010

Notes to the Financial Statements

1. Segment Information

Imperial Tobacco comprises two distinct businesses - Tobacco and Logistics. In addition to regularly reviewing results and plans for the Tobacco and Logistics businesses, the Chief Executive's Committee (which is the chief operating decision maker for the purposes of IFRS 8) regularly reviewed during the year the performance and plans of the Tobacco business analysed on a geographic basis, reflecting the importance of certain individual markets and geographic groupings. The segments presented below are therefore the Group's six Tobacco regions and the Logistics business.

The information provided to the Chief Executive's Committee is used as the basis of the segmental revenue and profit disclosures provided below, with the geographic analysis of Tobacco based on the location of customers, and central Group costs allocated consistently based on management's assessment of the level of support provided. The main measure of profit used by the Chief Executive's Committee to assess performance is adjusted operating profit. Segmental balance sheet information is not routinely provided to the Chief Executive's Committee.

The Tobacco business comprises the manufacture, marketing and sale of tobacco and tobacco-related products, including sales to (but not by) the Logistics business. The Logistics business comprises the distribution of tobacco products for tobacco product manufacturers, including Imperial Tobacco, as well as a wide range of non-tobacco products and services.

The Logistics business is run on an operationally neutral basis ensuring all customers are treated equally, and consequently transactions between the Tobacco and Logistics businesses are undertaken on an arm's length basis reflecting market prices for comparable goods and services.

For the purposes of the analysis below, European Union comprises the EU member states plus Norway, Iceland, Liechtenstein and Switzerland. The Cuban joint ventures are included in the Rest of the World. All of the Logistics business is located in the European Union.

Tobacco

Logistics

Revenue

Tobacco net revenue

Adjusted operating profit and reconciliation to profit before tax

2. Restructuring Costs

Restructuring costs in 2010 include charges for previously announced restructuring activity and further rationalisation and reorganisation of our manufacturing base, including the closure of our tubes factory in Woodstock, Canada and our cigarette factory in Tetouan, Morocco. Asset impairments in 2010 relate mainly to reductions in the carrying value of surplus property acquired through the Altadis acquisition to reflect current property market conditions.

The net charge of £64 million in 2010 includes £39 million of unused restructuring provisions reversed during the period, £38 million booked as additional restructuring provisions and £45 million booked as an impairment of property, plant and equipment. The remaining charge of £20 million was booked directly to the income statement as these costs did not meet the provisioning requirements of IAS 37.

Restructuring costs in the year ended 30 September 2009 related primarily to European Integration projects announced in June 2008 as part of the integration of Imperial Tobacco and Altadis. These projects affect sales and marketing, manufacturing and central support functions in a number of markets and are being implemented progressively over a period of three years. Costs in 2009 also included expenses related to the closure of our Tampa, Florida, USA cigar factory announced in June 2009.

The net charge of £145 million in 2009 included £23 million of unused restructuring provisions reversed during the period, £95 million booked as additional restructuring provisions, £15 million booked as an impairment of property, plant and equipment and £19 million booked against net retirement benefits liabilities. The remaining charge of £39 million was booked directly to the income statement as these costs did not meet the provisioning requirements of IAS 37.

Restructuring costs are included within administrative and other expenses in the consolidated income statement.

3. Net Finance Costs

Reconciliation from reported net finance costs to adjusted net finance costs

4. Taxation

Analysis of charge in the year

Reconciliation from reported taxation to adjusted taxation

The table below shows the tax impact of the adjustments made to reported profit before tax in order to arrive at the adjusted measure of earnings disclosed in note 6.

Factors affecting the tax charge for the year

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the UK corporation tax rate for the year of 28 per cent (2009: 28 per cent) as follows:

Movement on current tax account

Analysis of current tax account

5. Dividends

Dividend per share in respect of financial year

Final dividends are recognised as a liability in the period in which the dividends are approved by shareholders, while interim dividends are recognised in the period in which the dividends are paid. Consequently Imperial Tobacco Group's interim dividends are paid and recognised in the second half of the year, and final dividends in respect of a year are paid and recognised in the following financial period.

Amounts recognised as distributions to ordinary equity holders in the year

The proposed final dividend for the year ended 30 September 2010 of 60.0p per share amounts to a proposed final dividend payment of £609 million based on the number of shares ranking for dividend at 30 September 2010, and is subject to shareholder approval. If approved, the total dividend paid in respect of 2010 will be £855 million (2009: £740 million).

6. Earnings Per Share

Basic earnings per share is based on the profit for the year attributable to the owners of the parent and the weighted average number of ordinary shares in issue during the year excluding shares held to satisfy the Group's employee share schemes and shares purchased by the Company and held as treasury shares. Diluted earnings per share have been calculated by taking into account the weighted average number of shares that would be issued if rights held under the employee share schemes were exercised. No instruments have been excluded from the calculation for any period on the grounds that they are anti-dilutive.

Reconciliation from reported to adjusted earnings and earnings per share

7. Cash Flows from Operating Activities