Chairman's Statement

British American Tobacco PLC
27 April 2000

                  Speech by Martin Broughton, Chairman,
 at the British American Tobacco Annual General Meeting held on 27 April
                                  2000.


Good morning, ladies and gentlemen.
It  is  my pleasure to welcome you to today's Annual General Meeting  of
British American Tobacco.

The highlight of 1999 was the merger with Rothmans International.  Not
only did the merger bring to the British American Tobacco Group a fine
business, strong brands and excellent management, but it also enhanced
your Board with the addition of Bill Ryan, Johann Rupert and Jan du
Plessis.  All were previously on the Board of Rothmans International and have
invaluable experience of the tobacco industry.

On my right, next to Ulrich Herter, is Bill Ryan, who was formerly Chief
Executive of Rothmans International, and is now Deputy Managing Director
of British American Tobacco.

On my left, next to Keith Dunt, is Johann Rupert, Chief Executive of
Richemont and Chairman of Rembrandt and of Gold Fields of South Africa.
On my far right at the end of the table is Jan du Plessis, Finance
Director of Richemont.  Both Jan and Johann are non-executive Directors
of your Company.

It is with sadness that I must report to you the death earlier this year
of Sir Alick Rankin, who served the B.A.T Industries Board in the early
1990s.


Since British American Tobacco was listed in September 1998, it has been
a continuing goal of your Board to ensure that individual shareholders
do not feel excluded in any way from the workings of the company.

The launch of our new web site last month at www.bat.com has been the
most significant step forward in communicating with all our stakeholders
- including, we hope, yourselves.  If you have not already visited the
site, I hope you will do so soon.

Amongst many features of the website, we have given much thought to
making the Investor Relations area appealing and relevant to individual
shareholders. We have also put our presentations to institutional
investors online to make them more widely accessible, and there is a
special section of 'Your Questions' for shareholders, addressing the
points you most often raise.

Our website enables us to build relationships with our shareholders, so
if you have web access, you can send us your comments or questions using
the Contact Us facility. You can also register for the e-mail alert
service that will advise you of news announcements and major website
updates.

The site offers unprecedented access to British American Tobacco's news
and views on the issues surrounding tobacco, including our views on
smoking and health and responsible marketing.  It covers the business
strategy, our contributions to communities, views from our employees,
the company's history, and for the first time publishes details of our
Environment, Health and Safety programmes with key performance
statistics.

The website is about communication. In its first month, it has achieved
1 million 'hits' - equating to over 36,000 individual visits, with
visitors viewing an average of 22 pages.

We believe the site will significantly enhance our ability to
communicate our news, views and values, to help balance the tobacco
debate, and to demonstrate how we are working to be, and be recognised
as, a responsible company in an industry seen as controversial.


The merger with Rothmans, accomplished with considerable speed and
efficiency, has brought us much closer to achieving our vision of
becoming the world's leading international tobacco company.

Our global market share has been growing steadily from 10.7% in 1994,
and the merger has now taken it to 15.4% - within a single point of
Philip Morris, our leading international competitor.

The unprecedented scale of the merger in our industry has arguably also
led the recent wave of consolidation across the competitive field, which
has seen Japan Tobacco acquiring RJR International, and the Seita /
Tabacalera agreement to merge as Altadis.

We recognise that leadership is not only about global market share. It
is also about British American Tobacco taking qualitative leadership. In
this area, I believe some other recent achievements represent real
progress.

In December, we were ranked as the leading UK company in the Food and
Beverages sector, in the global Financial Times and
PricewaterhouseCoopers survey of the world's most respected companies.
This was the first opportunity since we listed for British American
Tobacco to be ranked in this survey by its peers - business leaders in
75 countries.  We moved straight into 5th place in our sector, ahead of
Pepsico, Unilever and Philip Morris, and behind Coca Cola, Nestle,
Heineken and Procter & Gamble.

We have also achieved high ranking, for the third year running, in the
Index of Corporate Environmental Engagement, produced by Business in the
Environment, and recognised as the leading environmental benchmark for
UK listed companies.  Once again we were placed in the FTSE 100 'top
quintile' - and led the Food, Drink, Tobacco and Pharmaceuticals sector.

On safety management, we have the best performance in the tobacco
industry.

Meanwhile, our occupational pension scheme has again achieved
recognition, this time in an independent survey by trades unions.  It is
placed comfortably in the top five of 275 UK schemes on employee
benefits and employer contribution.


With many such sound achievements in 1999, and a 13% rise in adjusted
earnings per share, it is a major disappointment to us all that the real
business progress in the year has not been reflected in our share price.

Of course we, like so many of the so-called 'Old Economy' stocks, have
suffered in recent months as investors have chased gains in the hi-tech
sector.  It is a major challenge for your Board to address the valuation
issue this year.  Clearly, we must achieve a more appropriate rating for
your company, reflecting its real value.

A number of developments in US courts have also depressed our share
price.


You  might assume from reading the press that litigation is all  one-way
traffic  against the tobacco industry. However nothing could be  further
from the truth.


The number of cases outstanding at the year end was well down on the
previous year and the overwhelming majority were individual claims.  It
is worth recalling that in five decades of litigation, Brown &
Williamson has had only two awards by juries of damages made against it,
and both were overturned on appeal.

The  US  industry made excellent progress last year in having the multi-
billion  dollar medical reimbursement cases and class actions dismissed.
A  very compelling track record has been established in trial courts and
appeal  courts in respect of these cases. Very simply, they  lack  legal
merit.

Nonetheless,  three  weeks ago the jury in the Engle  trial  in  Florida
reached a verdict against the tobacco industry in favour of two  of  the
three  sample  plaintiffs.  The way the verdict  differentiated  between
each   defendant   and   each   plaintiff   clearly   demonstrates   the
inappropriateness of the class action for tobacco litigation. As we  now
move  towards  the punitive damages stage of a trial that  should  never
have  been  certified in the first place, I am confident that the  Engle
class action will eventually be decertified.

We  do not suggest that litigation is going to go away.  But the message
I  would  like to leave with you is that most industries in the  US  are
subject  to  litigation. Although tobacco may face more  than  its  fair
share,  litigation is a cost of doing business in the US. The occasional
setback  or  loss  in  lower  courts  -  which  we  have  often  advised
shareholders to expect - should be viewed in this light, and not as  the
precursor to some doomsday scenario.

Turning to business performance, 1999 was a tough year, as we
anticipated.  However we have succeeded in managing the business on
strategy in a difficult trading environment.

For  the  first time, we saw a significant downturn in the world market,
with  a  decline of between 2 and 3 per cent.  That may not sound  much,
but  it  represents around 150 billion cigarettes. Of course,  with  the
benefit of the merger, our own volumes rose 5 per cent to 750 billion.

The  most  significant  achievement in 1999  has  been  the  integration
process  following the merger.  This has been highly complex,  requiring
regulatory approvals with limited disposals and corporate restructurings
in a number of key markets.

I am pleased to report that we have made great progress. The divestments
on  competition  grounds were kept to a minimum, and we anticipate  that
the  forecast  £250  million  of synergies will  be  achieved  ahead  of
schedule.

In  February  this year, we realised a long term goal to bring  Imperial
Tobacco  Canada  into  the Group as a subsidiary.  It  was  particularly
satisfying  to  do  so in a way that was beneficial  to  Imasco's  other
shareholders as well as to our own.

The  Rothmans  merger  has  improved the geographic  spread  and  profit
profile of the group significantly. Looking forward, our task is now  to
build on its success.

As  I  have mentioned, as a result of the merger our global market share
is  now  15.4%,  and  our share in the key premium  international  brand
segment  has  risen  from 11.3% to 17.6%, which has  improved  operating
margins.

Lucky  Strike  now  vies  with State Express 555  as  our  best  selling
international  brand.  Our  other main international  drive  brands  are
Dunhill, Kent, Benson & Hedges, Rothmans and Pall Mall.

The merger has made our operating numbers difficult to compare year on
year, so probably the best indicator of true improvement in 1999 was the
significant increase we achieved in earnings per share. Adjusted
earnings per share, on a fully diluted basis, rose 13 per cent to
52.33p.

The Board has proposed a final dividend for the year of 17.9 pence per
share, totalling 26.2 pence for the year - an increase of 9%.  This
reflects our commitment to pay at least 50% of sustainable earnings to
our shareholders.

This is a strong result for the business and for shareholders.  I would
particularly like to thank all our employees - some 90,000 people world
wide - for their unstinting efforts during a momentous year.  The ways
that so many have risen to the additional challenges are an impressive
tribute to their commitment.

At this time of year, I usually give shareholders some indication of the
Board's view about our prospects for the year as a whole.

While the difficult conditions in the US domestic market look likely  to
continue, we expect to make progress in a more stable world market  than
the  one  we had to trade our way through in 1999.  We are confident  of
achieving a good increase in adjusted fully diluted earnings per  share.
Most importantly for all shareholders, as the uncertainty caused by  the
Engle  case  starts  to recede, the real value of  our  business  should
become more apparent.

Let  me  now  turn  to public issues.  As you know, we  are  working  to
achieve  leadership in our industry on taking a responsible approach  to
the issues surrounding our product.

In many countries, governments and regulators are willing to have
constructive dialogue with the industry. We have always very much
welcomed this. It is a basis for real progress.

The desire for such an approach is, regrettably, not universal.  We
believe it will not help good public policy-making if regulators and
legislators allow themselves to be swayed by the narrow interests of a
vocal minority, or by those who are more interested in attacking the
tobacco industry than in finding workable solutions.

In the UK, the House of Commons Health Select Committee has been
conducting an inquiry into the tobacco industry and the health risks of
smoking.  In line with our commitment to openness, we have made no fewer
than six substantial written submissions addressing a vast range of the
Committee's interests.  I also appeared before the Committee to answer
their questions as fully and helpfully as possible.

We approached the inquiry positively, to co-operate, to explain our
views, and to help set the record straight. We also took the opportunity
of the inquiry to propose a 'Third Way' for government, health
authorities and the industry to resolve tobacco issues on the basis of
dialogue and partnership, not conflict.

We followed this up with 'Twenty Suggestions for Progress' - specific,
practical proposals such as a forum to define responsible marketing
today, an action plan on under-age smoking, research into the effects of
lower tar cigarettes, and raising the legal age for tobacco purchase in
the UK from 16 to 18.

Ken Clarke and I returned to the Health Committee when it decided to
widen its enquiry to include the global smuggling issue.

It is difficult to see how a UK Health Committee can possibly be an
appropriate body to make effective recommendations on complex
international trade issues.  However, we presented clear explanations of
the realities of smuggling, and published them widely in our paper
'Smuggling: Our View'.  Copies are available for you here today.

We have made it clear that smuggling is far from unique to tobacco, but
is a major global problem affecting a host of manufacturers. Contrary to
some allegations, smuggling is not in our business interests. We would
like every market to be entirely rid of it.

Smuggling undermines our major investments in building well-managed
distribution networks.  It also facilitates the even more corrosive
problem of counterfeiting. Counterfeiters not only evade taxes but also
flout manufacturing and employment standards, produce poor quality
products and  damage the value that consumers place on genuine brands.

Because these problems are caused by tax differentials, weak border
controls, and import restrictions, only governments can tackle them
effectively.  However our companies are highly active in working with
governments and customs and excise authorities around the world to help
them eliminate smuggling and counterfeiting. These efforts have had
notable success in many markets.

You may be aware of serious allegations about smuggling made against the
company by anti-tobacco campaigners. For the reassurance of
shareholders, your Board has appointed an independent law firm with no
previous connections to the Group to review current business practice,
and to report their findings to the Board through a special committee of
all the independent directors.

Last year, I mentioned our efforts to seek co-operation and meaningful
dialogue with the World Health Organization on its proposed Framework
Convention on Tobacco Control.  We believe that despite our many
reservations about the WHO's approach, we share some common ground on
issues of mutual concern, such as tackling under-age smoking.

For some time, our approaches met no constructive response.  However,
there have recently been some potentially encouraging signs that the WHO
may now be accepting the need for greater inclusiveness.

This may in part be due to the strong public case that we - and others -
have made that it is a grave error for the WHO to exclude the interests
of consumers, tobacco growers, and the tobacco and related industries.
We have also pointed out that the WHO's approach risks undermining the
sovereign rights of governments to determine their own priorities.

I would like to conclude, ladies and gentlemen, by stating that I am
proud to lead this company.  Ours is a successful, lawful business,
generating huge revenues for governments, and selling a legal product
about which adults, wherever they are in the world, are perfectly
capable of making an informed lifestyle choice.

And, as I put it to the House of Commons Committee, 'Big Tobacco' is
also responsible tobacco. We recognise and accept our significant
corporate responsibilities, and aim to live up to the high standards
that we willingly set as our benchmarks.

We believe this is a sound foundation for building sustainable, long
term value for you, the shareholders.

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