9 Months Results - Part 1

British American Tobacco PLC
31 October 2000


Part 1

QUARTERLY REPORT TO 30 SEPTEMBER 2000        

                          SUMMARY

  NINE MONTHS RESULTS                 2000     1999    Change
                                                       
  Operating profit pre-exceptionals  £1,921m  £1,437m    +34%
  Pre-tax profit                     £1,215m  £1,211m      0%
  Adjusted earnings per share         42.57p   39.40p     +8%
  


*    Operating profit before goodwill amortisation and
     exceptional items rose 34 per cent to £1,921 million, as
     a result of excellent performances in a wide range of
     markets.  Although the comparison is obviously flattered
     by last year's merger with Rothmans, the enlarged British
     American Tobacco made good underlying progress as well.

*    The integration of the Rothmans business into British
     American Tobacco is well advanced and synergy benefits
     continue to be delivered well ahead of schedule.

*    Group volumes were 9 per cent higher at 599 billion
     cigarettes.  The improvement in the quality of the mix
     continued, with both international and lights brands
     increasing volumes, which resulted in higher margins.  On
     a comparable basis, overall volumes were 3 per cent
     lower.

*    After goodwill amortisation and exceptional items,
     operating profit rose 6 per cent.  However, with higher
     interest costs, profit before tax was similar to last
     year.  Adjusted earnings per share (on a fully diluted
     basis) rose by 8 per cent.

*    The Chairman, Martin Broughton, commented 'Although the
     public policy arena remains challenging, the confidence I
     have expressed about our ability to make sustainable
     progress in a more stable world market is fully borne out
     by these results.  The integration of Rothmans is nearing
     completion and we are achieving a good increase in
     adjusted earnings per share'.




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                BRITISH AMERICAN TOBACCO p.l.c.
                               
             QUARTERLY REPORT TO 30 SEPTEMBER 2000
                               
                             INDEX
                                                         PAGE

Chairman's comments                                       2-4
Business review                                           5-9
Group results                                              10
Segmental analyses of turnover and profit                  11
Statement of total recognised gains and losses             12
Interest of British American Tobacco's shareholders        12
Accounting policies and basis of preparation               13
Changes in the Group                                       14
Foreign currencies                                         15
Exceptional items                                          16
Goodwill amortisation                                      16
Sale of brands                                             16
Net interest                                               16
Taxation                                                   17
Earnings per share                                         17
Segmental analyses:  Associated companies and joint
                     venture                               19
Shareholders' funds                                        19

CHAIRMAN'S COMMENTS                                        2.

Operating profit before exceptional items rose 34 per cent to
£1,921 million as a result of excellent performances in a wide
range of markets, including Australia, Brazil, Canada, Germany,
India, Japan, Malaysia, Russia, South Africa and Venezuela.

Although the comparison is obviously flattered by last year's
merger with Rothmans, the enlarged British American Tobacco made
good underlying progress as well.  After goodwill and exceptional
items, operating profit rose 6 per cent.  However, with higher
interest costs, profit before tax was similar to last year.
Adjusted diluted earnings per share, the best measure of the
Group's performance since the merger, increased by 8 per cent to
42.57p.

Trading conditions continue to be very difficult in the US domestic
business. Brown & Williamson has commenced a major cost cutting
programme in order to improve its financial position and enable it
to remain competitive.  We are wholeheartedly committed to the
market, one of the most profitable in the world.  The business is
benefiting from the list price reductions of GPC and Viceroy in
April.  In addition, the initial results from a test market for
Pall Mall are encouraging.

In the tobacco policy arena, we were pleased to be given the
opportunity to make two brief presentations at the recent World
Health Organisation (WHO) hearings in Geneva.  Although it remains
to be seen how influential our views will be, we hope to be able to
build on the discussions so far.  The WHO has a natural role to
play in supporting national governments, through providing funds,
through policy advice and through the sharing of best practice but,
in our view, attempts to impose supra-national legislation and
universal levels of taxation are invariably unworkable.

We would also like to be able to establish more of a dialogue with
the European Union (EU), especially in the light of the European
Court of Justice's (ECJ) decision to annul the EU Draft Directive
on Tobacco Advertising.  The Court has clearly told the European
legislature that it should only make laws in accordance with its
own constitutional rules.  Following the ECJ's decision, it is very
much to be hoped that legislators in the EU will take the
opportunity to reconsider the Draft Directive on Tobacco Control.

Chairman's comments...                                        3.

The Directive and WHO's proposals are both based on a supra-
national approach to tobacco policy, whereas we believe that public
policy in relation to alcohol and tobacco should be nationally
based.  Under good regulatory practice, as recommended by the OECD
guidelines, national governments must be the entities that set
policies and laws in the best interest of all their citizens, while
the industries being regulated must be involved as well.  This is
even more important for proposals that extend well beyond public
policy and incorporate a plethora of prescriptive detail.

British American Tobacco can help national governments to keep the
public appropriately informed about the risks that accompany the
pleasure of smoking and can agree standards for the development of
reduced risk products acceptable to consumers.  We can also work
jointly on programmes to prevent people under the age of 18 from
smoking.  More rapid progress could be made if regulators who are
seriously interested in practical tobacco policy could come to see
the tobacco industry as part of the solution, rather than as part
of the problem.

In the US, the Federal lawsuit against the tobacco industry is a
good example of a flawed approach to tobacco policy.  It is
therefore encouraging that the key parts of the case have been
thrown out.

The increase in counterfeit goods around the world illustrates the
consequences of harassing the major tobacco companies who actually
represent the responsible part of the business.  Companies like
ours support sensible regulation and offer governments and
regulators a partnership in maintaining orderly markets for tobacco
products.  The stark choice facing regulators is whether to
continue with their battle against the industry leaders, cheered on
by a chorus of single issue pressure groups, or to engage in more
constructive debate and together win the war against disorderly
markets.

We are naturally disappointed that the UK Secretary of State for
Trade and Industry has announced the commencement of a confidential
investigation under Section 447 of the Companies Act 1985.  We
will, of course, co-operate fully with the investigators but will
be making no further comments during the course of their work.

Chairman's comments...                                    4.

Although the public policy arena remains challenging, the
confidence I have expressed about our ability to make sustainable
progress in a more stable world market is fully borne out by these
results.  The integration of Rothmans is nearing completion and we
are achieving a good increase in adjusted earnings per share.

The enlarged British American Tobacco is a higher quality business,
with an improved balance between the regions and much better
margins.  It is encouraging that these successes are being more
readily reflected in the value of the Group.

                                          MARTIN BROUGHTON

BUSINESS REVIEW                                             5.

OPERATING PROFIT AT £1,921 MILLION WAS 34 PER CENT HIGHER,
EXCLUDING GOODWILL AMORTISATION AND THE EXCEPTIONAL ITEMS SET
OUT ON PAGE 16.  EXCELLENT RESULTS WERE ACHIEVED IN A WIDE
RANGE OF MARKETS.  VOLUMES WERE 9 PER CENT HIGHER AT 599
BILLION.

THE CURRENT PERIOD ALSO BENEFITS FROM THE INCLUSION OF NINE MONTHS
OF ROTHMANS RESULTS COMPARED TO FOUR MONTHS IN THE COMPARABLE
PERIOD.  THE INTEGRATION OF THE ROTHMANS BUSINESS INTO BRITISH
AMERICAN TOBACCO IS WELL ADVANCED AND SYNERGY BENEFITS CONTINUE TO
BE DELIVERED WELL AHEAD OF SCHEDULE.

The significant increase in the total volumes resulted from
the inclusion of Rothmans volumes and, on a comparable basis,
volumes were 3 per cent lower.  The improvement in the quality
of the mix continued, with both international and lights
brands increasing volumes, which resulted in higher margins.
Strong performances were recorded by Lucky Strike, Viceroy,
Kent, John Player Gold Leaf and Dunhill, although there were
lower volumes for Peter Stuyvesant, State Express 555 and
Rothmans.

Global procurement initiatives continued to have a positive
impact on manufacturing costs.  There was also further
rationalisation of production facilities with the factory in
Costa Rica closed in August, and the cost reduction programme
in Pakistan and the closure of one factory in Zimbabwe
announced during the quarter.

Profits from the America-Pacific region for the nine months
were £21 million higher at £630 million, mainly due to the
inclusion of Imperial Tobacco in Canada as a wholly-owned
subsidiary and an improved contribution from Japan, partly
offset by a lower profit contribution from the US domestic
market.  Volumes for the region were down 7 per cent, with
lower total volumes in the US and Canada and a reduced market
share in the US outweighing the impact of market share gains
in Canada, Japan and Korea.

The operating profit contribution from Canada was £271
million, compared to a profit of £217 million for the same
period last year.  These results are not comparable due to the
restructuring of the Canadian business (see page 14).  The
profit of the tobacco operations, on a comparable basis for
the nine months, was 5 per cent higher, mainly as a result of
higher prices and operating efficiencies.  Although Imperial's
volumes were down by 2 per cent, market share increased in a
smaller total market.  This increase was led by du Maurier and
Matinee, while Players' market share was stable.

Business review continued                                 6.

The contribution from the US domestic market, before common
overheads of £173 million, decreased by £62 million to
£363 million.  This reduction was due to lower volumes, higher
federal excise taxes, and ongoing settlement and legal
expenses, partially offset by higher pricing and lower
discounting.

Brown & Williamson's market share declined by 1.8 share points
while industry shipments were in line with last year.  The
company lost share, primarily in the discount segment where
both GPC and Misty's shares were lower as a result of
competitive discounting, the rise in grey market activity and
the preferential treatment allowed to certain small
manufacturers under the MSA agreement.  Lucky Strike, Viceroy
and Capri showed small market share increases, while both Kool
and Carlton lost share.  The rate of decline in overall market
share has slowed significantly after the list price reduction
in April mainly affecting GPC and Viceroy.

On 20 September, Brown & Williamson commenced a major cost
cutting programme in order to improve its financial position
and enable it to remain competitive.  Work is proceeding to
finalise the detailed plans and the consequent restructuring
costs will be charged in the fourth quarter.

In Japan, there were increases in both volume and market
share, with  Kent, Lucky Strike and Kool driving the growth.
Following the acquisition of S.C.A. Tobacco Corporation, the
integration is proceeding well and contributing to the success
of the business.  These factors, combined with favourable
exchange rates, led to an increase in profit contribution of
8 per cent which was, however, limited by higher marketing
investment.

In Asia-Pacific, profits surged ahead 58 per cent to £270 million
and volumes rose by 8 per cent to 66 billion.  Following the merger
the geographic balance of profit in the region has improved.  The
region benefited from the addition of Rothmans businesses in
Malaysia, Australia, New Zealand and Singapore, and synergies from
the integration of markets, partially offset by the effect of the
brand divestments in Australia and New Zealand.

The Group demonstrated a strong performance in Australasia,
with profits significantly higher largely due to improved
margins, merger benefits in Australia and the South Pacific
and growing market share in the key brands.  In Australia,
Winfield, Benson & Hedges and Dunhill gained market share.
This improved performance is despite a significant fall in the
total market as a consequence of the November 1999 excise
change, further excise increases in 2000 and a general sales
tax introduced in July 2000.

Business review continued                                 7.

In Malaysia, volume continued the upward trend as the economy
recovered with Dunhill improving market share.  These volume
gains, coupled with merger benefits and cost reduction
initiatives, saw performance well ahead of last year.  In
Indonesia, volumes were lower due to the excise changes and
mandatory price increases earlier this year but this was
offset by higher margins.  In Taiwan, market share and profits
improved, with Dunhill demonstrating strong growth.

The profit in Latin America at £315 million increased by
£72 million, mainly due to the strong performance in Brazil
partly offset by Argentina. The inclusion of the Rothmans
business in Jamaica also contributed to the increase.
Regional volumes at 122 billion were in line with last year.

Souza Cruz in Brazil maintained its high market share, with
volumes slightly higher as Hollywood continued to increase
market share. Higher volumes and reductions in operating costs
contributed to the increase in profits.

Although the Group's volume and market share in Mexico
declined, operating profit was in line with last year
benefiting from higher prices and cost reductions.  In both
Venezuela and Chile, volumes and profits increased.  Nobleza-
Piccardo in Argentina gained market share in a market where
volumes declined.  However, profit was lower as a result of
the delay between the introduction earlier this year of a
social assistance fund tax and price increases sufficient to
maintain margins.

Profits in the European region have risen impressively, mainly
due to the inclusion of the former Rothmans business and
strong underlying performances in many markets.  Operating
profit increased by £181 million to £420 million, while
volumes increased by 27 billion to 154 billion. The excellent
results for the region were achieved despite the abolition of
intra-EU duty free business since July 1999.

Higher profits were achieved in Germany despite lower total
volumes, following price increases in October 1999 and gains
in market share for Lucky Strike and Pall Mall.  Elsewhere in
Western Europe, there were generally good performances with
higher profits in most markets.  In Russia, increased volumes,
particularly Yava Gold, and improved mix led to improved
profits.  Both Ukraine and Romania showed strong volume growth
from Prilucky Osoblivy and Viceroy respectively, leading to
improved financial performance.

Business review continued                                 8.

Both sales and profits from the Smoking Tobacco and Cigar
operations were up on a comparable basis.

The Amesca region benefited significantly from the Rothmans
merger with profit up £111 million to £286 million and volumes
14 per cent higher at 176 billion.

In South Africa, good progress with the merger and a cost
reduction programme, together with higher prices, resulted in
improved profits.  The rate of total market decline continued
to slow with Peter Stuyvesant achieving excellent growth in
volume and market share.  Elsewhere in Africa, results were
affected by the floods in Mozambique, local currency
devaluations resulting in reduced purchasing power, economic
decline and civil unrest.  In some markets the Group launched
selective brands or repositioned pricing in response to
consumer downtrading.

In India, improving economic conditions have helped in
producing excellent growth in profits from our associated
companies, with volumes and market share higher than last
year.  John Player Gold Leaf showed strong growth in
Bangladesh , generating volume and profit growth and an
increased market share.  Volumes were significantly higher in
Pakistan, but profits were affected by restructuring costs.

The shortage of foreign currency in Uzbekistan continued to limit
production and sales volumes.  Profit growth in the Middle East was
driven by a combination of merger benefits and improved margins.

With the changing structure of the Group, the currency
exposure is more evenly spread. The impact of the
strengthening of the US and Canadian dollar on the translation
of profit has been partly offset by the weaker euro.
Consequently the percentage growth in operating profit would
be only 3 per cent lower if profits were translated at prior
period rates of exchange.

Business review continued                                   9.

Group Cigarette Volumes

  3 months to                             9 months to       Year to
30.9.00  30.9.99*                      30.9.00    30.9.99*  31.12.99**
  bns      bns                           bns        bns       bns
                                                            
 27.9     31.9    America-Pacific       81.7       88.2      116.1
 20.9     30.2    Asia-Pacific          65.6       61.0       85.1
 40.1     41.1    Latin America        122.1      121.3      167.0
 54.2     63.3    Europe               153.6      126.5      170.4
 59.0     62.3    Amesca               175.5      153.7      213.9
-----    -----                         -----      -----      -----
202.1    228.8                         598.5      550.7      752.5
=====    =====                         =====      =====      =====


*  Volumes include four months in respect of Rothmans brands.
** Volumes include seven months in respect of Rothmans brands.

GROUP RESULTS - UNAUDITED                                         10.


  3 months to                                    9 months to     Year to
30.9.00 30.9.99                                30.9.00 30.9.99   31.12.99
   £m      £m                                     £m      £m        £m
                 REVENUE                                         
                                                                 
6,754   5,829    Subsidiary undertakings       17,973  12,805    18,798
  371     904    Share of associates            1,057   2,255     2,873
-----   -----                                  ------  ------    ------
7,125   6,733                                  19,030  15,060    21,671
=====   =====                                  ======  ======    ======
                                                                 
                 PROFIT                                          
                                                                 
  578     400    Subsidiary undertakings        1,388     966     1,099
------- -------  ---------------------------   ------- -------   --------
                 after charging:                                 
                  acquired stock                  (81)           
            5     US tobacco settlements                  (17)      (24)
  (31)    (81)    integration costs               (75)    (81)     (357)
  (96)    (91)    goodwill amortisation          (278)    (91)     (162)
------- -------  ---------------------------   ------- -------   --------
                 Share of associates and                         
   30     113     joint venture                    30     282       380
------- -------  ---------------------------   ------- -------   --------
                 after charging:                                 
                  Imasco restructuring costs      (69)           
------- -------  ---------------------------   ------- -------   --------
-----   -----                                  ------  ------    ------
  608     513    Total operating profit         1,418   1,248     1,479
           88    Sale of brands                            88        88
-----   -----                                  ------  ------    ------
                 Profit on ordinary                              
  608     601     activities before interest    1,418   1,336     1,567
  (96)    (45)   Net interest                    (198)   (109)     (170)
                 Share of associates'                            
   (1)     (4)    net interest                     (5)    (16)      (26)
-----   -----                                  ------  ------    ------
  511     552    Profit before taxation         1,215   1,211     1,371
                 Taxation on ordinary                            
 (232)   (266)    activities                     (557)   (596)     (673)
-----   -----                                  ------  ------    ------
  279     286    Profit after taxation            658     615       698
  (41)    (93)   Minority interests              (129)   (142)     (142)
-----   -----                                  ------  ------    ------
  238     193    Profit for the period            529     473       556
=====   =====                                  ======  ======    ======
                                                                 
                 Earnings per share                              
11.09p   7.91p     - basic                      23.25p  24.70p   25.25p
=====   =====                                  ======  ======    =====
16.33p  15.49p     - adjusted diluted           42.57p  39.40p   52.33p
=====   =====                                  ======  ======    =====

See notes on pages 13 to 19.

SEGMENTAL ANALYSES OF TURNOVER AND PROFIT - UNAUDITED                 11.

  3 months to                                   9 months to     Year to
30.9.00  30.9.99                             30.9.00  30.9.99   31.12.99
  £m       £m                                  £m       £m         £m
                 Turnover excluding duty,                       
                 excise and other taxes
  991    1,260   America-Pacific              3,062    3,506     4,804
  379      398   Asia-Pacific                 1,063      822     1,208
  379      381   Latin America                1,188    1,047     1,461
  764      882   Europe                       2,151    1,646     2,359
  441      424   Amesca                       1,165      875     1,350
-----    -----                               ------   ------    ------
2,954    3,345                                8,629    7,896    11,182
=====    =====                               ======   ======    ======
                                                                
                 Operating profit                               
  242      237   America-Pacific                630      609       848
   97       83   Asia-Pacific                   270      171       231
  115      104   Latin America                  315      243       333
  178      138   Europe                         420      239       342
  103      118   Amesca                         286      175       268
-----    -----                               ------   ------    ------
  735      680                                1,921    1,437     2,022
                 Acquired stock                 (81)            
             5   US tobacco settlements                  (17)      (24)
  (31)     (81)  Integration costs              (75)     (81)     (357)
  (96)     (91)  Goodwill amortisation         (278)     (91)     (162)
                 Imasco restructuring           (69)            
                 costs
-----    -----                               ------   ------    ------
  608      513                                1,418    1,248     1,479
=====    =====                               ======   ======    ======
                                                                
                 Operating profit restated                      
                  at comparable rates of                        
  585      513    exchange                    1,383    1,248     1,479
=====    =====                               ======   ======    ======
                                                                
The net turnover analysis is based on external sales in each region.
The figures for the nine months ended 30 September 2000 and 30 September
1999 based on regional location of manufacture would not be materially
different except for sales from Europe to Amesca and Asia-Pacific which
amounted to £440 million and £240 million respectively, 1999 £301 million
and £296 million.
The operations of subsidiaries are entirely related to tobacco.
The Group's share of the operations of associates and joint venture,
analysed by business, is set out on page 19.

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES - UNAUDITED       12.

                                        9 months to       Year to
                                     30.9.00    30.9.99   31.12.99
                                        £m         £m        £m
                                                          
Profit for the period                   529        473       556
                                                          
Differences on exchange                (178)      (134)     (268)
                                                          
Revaluation of associated company     1,269               
                                     ------     ------    ------
Total recognised gains related                            
 to the period (below)                1,620        339       288
                                     ======     ======    ======
                                                          
                                                          
                                                          
                                                          
                                                          
INTEREST OF BRITISH AMERICAN TOBACCO'S SHAREHOLDERS - UNAUDITED
                                                          
                                        9 months to       Year to
                                     30.9.00    30.9.99   31.12.99
                                        £m         £m        £m
                                                          
Balance 1 January                     4,821         64        64
                                                          
Total recognised gains related                            
 to the period (above)                1,620        339       288
                                                          
Issue of shares:                                          
  share options                           2          1         3
  Rothmans merger                                5,089     5,089
                                                          
Redemption of convertible redeemable                      
 preference shares                     (695)
                                                          
Dividends and other appropriations:                       
                                                          
  ordinary shares                      (196)      (156)     (546)
  convertible redeemable preference                       
  shares                                (11)       (10)      (54)
  amortisation of discount on                             
  preference shares                     (18)       (12)      (20)
                                                          
Other movements                          23        (18)       (3)
                                     ------     ------    ------
Balance at period end                 5,546      5,297     4,821
                                     ======     ======    ======

See notes on pages 13 to 19.


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