Interim Management Statement

IMPERIAL TOBACCO GROUP PLC

INTERIM MANAGEMENT STATEMENT

Ahead of the Annual General Meeting to be held later today, Imperial Tobacco Group PLC (Imperial Tobacco) confirms that the overall operational performance and financial position of the Group for the financial year to 30 September 2011 is in line with the Board's expectations.

Summarising today's announcement Alison Cooper, Chief Executive, will say:

"We made a good start to the year with underlying tobacco net revenues up 5 per cent and increased cigarette and fine cut tobacco volumes, resulting in total stick equivalent volumes up 1.2 per cent. Our global strategic cigarette brands grew by 7 per cent with Davidoff, Gauloises Blondes and West continuing to perform strongly, particularly in emerging markets.

"We continue to drive sales across our total tobacco portfolio. In fine cut tobacco we maintained our positive volume momentum, particularly in our Rest of EU region and cigar volumes were also up with improved mix and strong results in the USA and emerging markets. In logistics, ongoing cost management initiatives have strengthened our operations.

"Our enhanced sales strategy is delivering tangible results. We continue to focus on strengthening our position in markets where challenges persist, particularly in Spain and Greece, and on building sales across our international footprint, whilst managing costs and effectively utilising our substantial cash flows."

Dividend

Reflecting our strong financial position, the Board envisages increasing the dividend pay-out ratio to 50 per cent of adjusted earnings in financial year 2011.

Tax

Following the favourable resolution of a number of outstanding matters with various European tax authorities, our adjusted tax rate for 2011 and subsequent years is expected to be around 24.5 per cent. In addition, in our reported results we will make a tax provision release of approximately £200 million.

Management Changes

Graham Blashill, Group Sales and Marketing Director, will retire from the Board today following our Annual General Meeting. Graham has been with Imperial Tobacco for 42 years and has played a leading role in developing our total tobacco portfolio.

Two external sales and marketing appointments have been made to our Operating Executive to further drive our sustainable sales growth agenda.

Arthur van Benthem, formerly Customer Management Director of the Metro Group, will be joining the company as Group Sales Director on March 1st 2011.

Arthur has a wealth of international FMCG sales experience. Prior to joining the Metro Group, he was with Royal FrieslandCampina. He also had a number of senior roles with Coca-Cola working in South Korea, New Zealand, Indonesia and The Netherlands.

He will work closely with Roberto Funari, who was appointed Group Marketing Director in November. Roberto also has a strong track record in international FMCG and joined from Reckitt Benckiser where he was a Global Category Officer having previously held a number of other senior roles in the business.

Trading Update

The following highlights of our trading performance relate to the three months ended 31 December 2010 unless otherwise stated. All market volumes and market shares are based on Imperial Tobacco estimates for the twelve months to December 2010. Market size and share tables are provided for the UK, Germany and Spain in the appendix.

* Underlying Tobacco net revenue excludes the impact of foreign exchange and other income growth in our Moroccan business.

** Stick equivalents reflects our combined cigarette and fine cut tobacco volumes.

We increased underlying tobacco net revenues by 5 per cent. In total our mature markets continue to provide good revenue growth whilst of our emerging markets, revenues in Eastern Europe and Africa & Middle East were particularly strong.

Total stick equivalent volumes grew 1.2 per cent with cigarette volumes increasing 0.5 per cent and fine cut tobacco volumes growing by more than 6 per cent.

Group cigarette volume growth was driven by strong performances in our Africa & Middle East and our Asia Pacific regions. Our global strategic brands had an excellent first quarter with new formats supporting their growth. We grew Davidoff volumes over 10 per cent, with very good performances in Saudi Arabia, Ukraine and Russia. Gauloises Blondes volumes were also up over 10 per cent with strong growth in the Middle East against a relatively weak comparator. We improved our West volumes by more than 3 per cent with Russia and a number of other Eastern European markets the main contributors. We increased volumes of our key regional brands Gitanes, Fortuna and in particular JPS, which grew by 24 per cent.

In fine cut tobacco we improved sales across our core European business, achieving very good growth in Greece, Italy, Poland, Portugal and Spain.

UK

UK market stick equivalent volumes were stable at 56.3 billion sticks and our cigarette share was stable at 45.3 per cent. JPS Silver and Windsor Blue continue to perform strongly with both holding a share above 5 per cent. Our value fine cut tobacco brands, Gold Leaf and Golden Virginia Yellow also grew share.

Following our September 2010 price increase we further raised prices in January across our portfolio following the rise in VAT.

Germany

German market stick equivalent volumes were stable at 119.5 billion sticks and our share of the cigarette market was stable at 27.0 per cent. We continue to leverage the strength of our JPS brand franchise, with further share growth in both cigarette and fine cut tobacco. JPS now holds almost 10 per cent of the cigarette market and has increased its fine cut tobacco share to over 8 per cent. Our total fine cut tobacco share was up strongly to 20.8 per cent, with Route 66 supporting the growth of JPS.

Spain

Spain remains challenging with market stick equivalent volumes down 10 per cent at 78.1 billion sticks. Cigarette market volumes and mix have been further impacted by a significant duty increase in the quarter and a ban on smoking in public places introduced in January is also affecting market volumes.

Our domestic blonde market share was 28.6 per cent and our fine cut tobacco share was 32.2 per cent. Both were, in part, adversely affected by competitor shipment patterns in December.

In the growing value segment, Ducados Rubio continues to perform well, increasing its overall market share. To strengthen our portfolio we launched Fortuna Red Line in November and are pleased with its initial progress, achieving a December spot share of 0.4 per cent of the domestic blonde segment. The newly launched Nobel Style queen size cigarette has also made an encouraging start.

We continue to leverage our total tobacco portfolio, with Ducados Rubio making further share gains in domestic fine cut tobacco and Coburn the clear market leader in eco-cigarillos.

Rest of European Union

Regional stick equivalent market volumes were down 3 per cent, impacted by declines in Greece and Poland. Excluding Greece and Poland volumes were down 1 per cent. We raised prices in a number of markets in the period including in France, which is our largest market in the region.

We grew our cigarette share in the majority of markets including Austria, Czech Republic, Greece, Hungary and Portugal. JPS was very strong in the region, growing volumes in a number of markets including Austria, France, Greece and Portugal.

In fine cut tobacco we achieved significant share gains in a number of markets in Central Europe, in particular in Austria, Czech Republic, Poland and Slovakia.

Americas

In the USA, cigarette market volumes declined 4 per cent, in line with the long term trend and our share was 3.9 per cent. Our brands performed robustly in a very competitive environment, with Fortuna growing share and we increased prices of most of our brands in December.

We grew cigar sales strongly in the quarter in both value and volume terms and significantly improved our mix. In natural wrapper cigars, our largest category, both Backwoods and Dutch Masters performed well.

Rest of the World

In our Rest of the World region, our stick equivalent volumes were up 4 per cent in the quarter, with cigarette volume growth in Africa & Middle East and Asia-Pacific.

We grew volumes of Davidoff, Gauloises Blondes and West in a number of markets, achieving particular success in emerging growth segments such as super slims and king size super slims.

We improved our quarterly cigarette volumes in a number of markets in Africa & Middle East, with strong growth from Davidoff and Gauloises Blondes. In Morocco our key local brand Marquise continues to perform well and improved its share to almost 62 per cent.

In Asia Pacific, we grew our quarterly cigarette volumes with good performances in Vietnam and Laos, as well as in South Korea following the launch of Davidoff in May. We grew or maintained cigarette share in all our key markets and made further gains in Australia, driven by growth in Superkings and JPS.

In our first quarter, cigarette market volume declines in Russia and Ukraine moderated. In Russia, Davidoff and West super slims and king size super slims variants continue to improve share supported by growth in Style. In Ukraine, we increased our share to over 22 per cent driven by Davidoff, Style and Prima.

Our luxury Cuban cigar business had an excellent first quarter, with revenue and volume growth in a number of markets including Russia, Brazil, the Middle East and Asia, with particular success in China.

Logistics

In Logistics, ongoing cost management, business integration and development of new services resulted in an increase in profits, despite declining tobacco volumes in Spain.

Appendix

*stick equivalents

Enquiries

Gerry Gallagher (Director of Investor Communications)

Telephone: +44 (0) 117 933 7014

John Nelson-Smith (Investor Relations Manager)Telephone: +44 (0) 117 933 7032

Alex Parsons (Director of Corporate Communications)Telephone: +44 (0) 117 933 7241

Simon Evans (Group Press Officer)Telephone: +44 (0) 117 933 7375

Copies of our announcements are available on our website: www.imperial-tobacco.com.