Cigarettes maker British American Tobacco (BAT) cheered up investors with plans to return £750 million to shareholders this year.

The promise came as the maker of Dunhill and Pall Mall cigarettes lifted profits seven per cent to £2.79 billion for 2006 on the back of a five per cent rise in like-for-like sales to £9.76 billion.

BAT chairman Jan du Plessis announced the 50 per cent increase in the company's share buy-back plans as the cigarette giant handed more cash back to investors by raising its dividend 19 per cent to 55.9p.

Citigroup analyst Adam Spielman said: "We are pleased to see more cash will be returned to shareholders."