9 Months Results - Part 2

British American Tobacco PLC
31 October 2000


PART TWO OF TWO


ACCOUNTING POLICIES AND BASIS OF PREPARATION             13.

The financial statements comprise the unaudited results for
the nine months ended 30 September 2000 and 30 September 1999
and the audited results for the twelve months ended
31 December 1999.

The unaudited Group results have been prepared under the
historical cost convention and in accordance with applicable
accounting standards using the accounting policies set out in
the Report and Accounts for the year ended 31 December 1999.

As described below, during the nine months a transaction was
completed whereby the holding in Imasco, an associated
company in Canada, was effectively replaced by shares in a
wholly-owned subsidiary comprising only the tobacco interests
of Imasco.  When an associate becomes a subsidiary the method
for calculating goodwill differs between the Companies Act
1985 and FRS2.  In order to give a 'true and fair' view, the
Group has complied with FRS2 in arriving at the figures shown
below.  If the Act had been followed the goodwill arising on
acquisition would have been some £1.65 billion lower, as it
would have been net of the revaluation surpluses on the
disposed businesses and the share of accumulated profits
while Imasco had been an associated company.

Following this change the results of the Canadian operations
are included within the America-Pacific region in the
segmental analyses and the comparative information has been
restated accordingly.  Previously the results of Imasco as an
associate were shown as a separate segment.

The acquisition of Rothmans was completed on 7 June 1999 and
the results for the year ended 31 December 1999 included a
contribution reflecting their consolidation for seven months.
The six months ended 30 June 1999 did not include any
contribution from the Rothmans businesses and consequently
the results for the three months to 30 September 1999
included the results of Rothmans for the period 7 June 1999
to 30 September 1999.

As a result of a reorganisation following the acquisition of
Rothmans, profit from the manufacturing operations located in
Southampton in the UK is included within the Europe region with
effect from 1 January 2000.  Previously it was included in Asia-
Pacific and the comparative information in the segmental analyses
has been restated accordingly.

CHANGES IN THE GROUP                                      14.

Following the agreement with Imasco, the acquisition of the
shares of that company not already owned by the Group,
representing approximately 58 per cent of its shares, was
completed on 1 February 2000.  This was followed immediately
by the completion of the sale of Imasco's CT Financial
Services Inc. business and Imasco's retailing business,
Shopper's Drug Mart.  The results of Genstar, Imasco's land
development company, have not been consolidated given the
intended disposal.  In June 2000 the US operations of Genstar
were sold for US$223 million, while the sale process for the
Canadian operations continues.

Consequently, the results from Canada for the nine months
ended 30 September 2000 comprise the Group's share of the
results of its associate for January and the consolidated
results of Imperial Tobacco for the eight months to 30
September 2000.  The results in the comparative periods
represent the Group's share of the results of its associated
company Imasco over those periods.

During the nine months, Imasco's discontinued non-tobacco
operations contributed £112 million of turnover and
£16 million of profit, while for the period the tobacco
operations were a wholly-owned subsidiary they contributed
£538 million of turnover and £246 million of profit before
goodwill amortisation.  In 1999 the discontinued non-tobacco
operations contributed £920 million of turnover and
£112 million of profit for the nine months and £1,286 million
of turnover and £155 million of profit for the year.

For the purpose of these results provisional figures have
been included in respect of this transaction.  The goodwill
arising of £2,114 million will be amortised over a period of
20 years.  The statement of total recognised gains and losses
for the period includes £1,269 million principally in respect
of the Group share of the surplus on revaluing Imasco's non-
tobacco businesses prior to their disposal.  As a result of
this revaluation, the profit and loss account does not
include any gain on these disposals.

On 3 February 2000 the Group sold its entire shareholding in
Rothmans Inc., Canada.  As the intention to dispose of these
operations was announced at the outset of the merger, the
results and assets of that business were not consolidated.
The investment was included as a current asset at net
realisable value and therefore the sale did not generate a
gain or loss in these results.

Changes in the Group cont.                                15.

On 31 March 2000 the Group completed the purchase of S.C.A.
Tobacco Corporation (SCAT), which distributes the Group's
products in Japan.  Consequently, its results are
consolidated from 1 April 2000 and the amortisation relating
to the provisional goodwill of £62 million commenced from
that date.

In accordance with the terms of the convertible redeemable
preference shares, the holders of such shares gave notice of
the redemption of 50 per cent of the preference shares, at a
price of 575p per share.  An amount of £695 million was paid on
7 June 2000 to the preference shareholders.

FOREIGN CURRENCIES

The results of overseas subsidiaries and associated
undertakings have been translated to sterling as follows:

Profit and loss for the nine months to 30 September 2000 at
the average rates for that period.  The comparatives for the
nine months to 30 September 1999 and the year to 31 December
1999 at the average rates for the year to 31 December 1999.
The interest of British American Tobacco's shareholders have
been translated at the relevant period end rate.

For high inflation countries, the translation from local
currencies to sterling makes allowance for the impact of
inflation on the local currency results.

The principal exchange rates used were as follows:

                     Average          Closing       
                  2000   1999    30.9.00  30.9.99   31.12.99
                                                    
US dollar         1.538  1.618    1.479    1.647     1.612
Canadian dollar   2.264  2.405    2.225    2.420     2.339
Euro              1.634  1.519    1.676    1.546     1.608

EXCEPTIONAL ITEMS                                         16.

As part of the SCAT acquisition, the Group reacquired
cigarette stocks which had previously been sold to that
business.  A one-off accounting adjustment of £81 million is
charged against Group operating profit for the nine months to
remove the gross contribution previously recognised by the
Group on those cigarette sales.

Integration costs are the costs incurred in integrating
Rothmans into the British American Tobacco Group and the
consequential restructuring of the enlarged Group.

The Imasco restructuring costs relate to the Group's share of
pre-tax cost to Imasco of buying out share options together
with other employee deferred compensation and severance
arrangements consequent upon a fundamental change of control.

US tobacco settlement costs in 1999 are one-off settlement
compliance costs and liquidated legal fees relating to the US
cigarette companies' 1998 agreement with the Attorneys
General in 46 US States to settle outstanding Medicaid
recovery suits.  Other settlement costs are charged as
ongoing costs.

GOODWILL AMORTISATION

The goodwill amortisation has arisen from the Imasco
transaction and the SCAT acquisition described above,
together with the initial acquisition of Rothmans and
subsequent local restructurings during the second half of
1999.

SALE OF BRANDS

This comprised the profit on the sale in 1999 of certain of
British American Tobacco's brands in Australasia.  The sale
was required by regulatory authorities as a consequence of
the restructuring of the businesses in those countries.

NET INTEREST

The net interest charge for the nine months ended
30 September 1999 and the year ended 31 December 1999
included a benefit of £25 million, as the Group was able to
recover interest on the amounts which formed the basis for
the recovery of sales tax in Brazil in 1998.  These results
also included an £18 million gain on the cancellation of swap
contracts, together with a gain of £9 million on the sale of
investments.

Net interest                                              17.

Net interest now includes Imperial Tobacco Canada Limited as
a wholly-owned subsidiary for the eight months to
30 September 2000, during which period it incurred a net
interest charge of £29 million.  However, the net interest
charge for the nine months has benefited from a £25 million
gain on the cancellation of swap contracts.  The net interest
charge in 2000 also reflects the impact of financing the
redemption of the convertible redeemable preference shares
and the acquisition of SCAT.

TAXATION

                                             9 months to
                                        30.9.00    30.9.99
                                           £m         £m

   UK                                      25          4
   Overseas                               496        489
                                         ----       ----
   British American Tobacco and
    subsidiary undertakings               521        493
   Share of associates and joint
    venture                                36        103
                                         ----       ----
                                          557        596
                                         ====       ====
   Effective tax rate                    45.8%      49.2%
                                         ====       ====

The effective tax rate for the nine months ended 30 September
2000 was adversely affected by the goodwill amortisation
arising mainly from the Rothmans and Imasco transactions.  In
the comparable figures for 1999 only Rothmans was included
for four months.  The effective tax rate was also affected by
the profit adjustment arising from the acquisition of SCAT.

The effective tax rate in 1999 was affected by charges
accrued in 1999 for certain of the US tobacco settlements not
being relieved for tax until the following year.  As future
years were expected to show the same pattern for such
payments and tax relief, under UK accounting standards there
was a distortion to the tax rate shown in 1999.

EARNINGS PER SHARE

Basic earnings per share are based on the profit for the
period attributable to ordinary shareholders and the average
number of ordinary shares in issue during the period
(excluding shares held by the Group's two Employee Share
Ownership Trusts).

Earnings per share cont.                                  18.

For the calculation of diluted earnings per share the average
number of shares reflects the potential dilution effect of
the exercise of employee share options and from June 1999 the
convertible redeemable preference shares.  The earnings are
correspondingly adjusted to the amount of earnings prior to
charging dividends and the amortisation of discount on the
convertible redeemable preference shares.

The earnings have been affected by a number of exceptional
items.  To illustrate the impact of the principal
distortions, as well as the effect of goodwill amortisation,
adjusted diluted earnings per share are shown below:

                                      Diluted earnings per share
                                         9 months to     Year to
                                      30.9.00   30.9.99  31.12.99
                                       pence     pence    pence
Unadjusted earnings per share          22.92     24.39    27.02
Effect of acquired stock                3.44             
Effect of goodwill amortisation        11.76      4.69     7.82
Effect of US tobacco settlements                  0.52     0.73
Effect of integration costs             2.46      3.30    11.27
Effect of Imasco restructuring costs    1.99             
Effect of sales tax recovery                     (0.67)   (0.63)
Effect of sale of brands                         (2.68)   (2.53)
Effect of US tobacco settlements on                      
 effective tax rate                               9.85     8.65
                                      ------    ------   ------
Adjusted earnings per share            42.57     39.40    52.33
                                      ======    ======   ======

Similar types of adjustments would apply to basic earnings
per share.  For the nine months to September 2000 basic
earnings per share on an adjusted basis would be 44.79p
(1999 40.63p) compared to unadjusted amounts of 23.25p
(1999 24.70p).

SEGMENTAL ANALYSES:  ASSOCIATED COMPANIES AND JOINT VENTURE      19.

  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
  184     306    Tobacco                     471      692      824
          189    Financial services           69      555      761
          131    Other trading activities     43      365      525
-----   -----                             ------   ------   ------
  184     626                                583    1,612    2,110
=====   =====                             ======   ======   ======
                                                            
                 Operating profit                           
   30      69    Tobacco                      83      170      225
           26    Financial services           12       75      103
           18    Other trading activities      4       37       52
-----   -----                             ------   ------   ------
   30     113                                 99      282      380
                 Imasco restructuring                       
                  costs                      (69)
-----   -----                             ------   ------   ------
   30     113                                 30      282      380
=====   =====                             ======   ======   ======

SHAREHOLDERS' FUNDS

                                                   30.9.00  31.12.99
                                                      £m       £m
                                                            
Share capital                                         575      605
Share premium account                                   6        4
Merger reserves                                     4,537    4,726
Capital redemption reserve                             30   
Other reserves                                        507      503
Profit and loss account                              (109)  (1,017)
                                                   ------   ------
Total shareholders' funds                           5,546    4,821
                                                   ======   ======

The reduction in the share capital and the establishment of a
capital redemption reserve reflects the redemption of 50 per cent
of the convertible redeemable preference shares in June 2000.

                            ******

Copies of this Report will be posted to shareholders and may
also be obtained during normal business hours from the
Company's Registered Office at Globe House, 4 Temple Place,
London WC2R 2PG.


                          Philip Cook
                           Secretary