Q3 & 9 Mths Results - Operating Profit Up 26%

BRITISH AMERICAN TOBACCO PLC
26 October 1999


QUARTERLY REPORT TO 30 SEPTEMBER 1999         

                          SUMMARY

     NINE MONTHS RESULTS          1999       1998      Change
                                                       
     Operating profit            £1,255m    £1,183m     + 6%
     Pre-tax profit              £1,219m    £  966m     +26%
     Adjusted earnings per        39.19p     38.80p     + 1%
     share

*    Pre-tax profit was 26 per cent higher at £1,219 million.
     However, results in 1999 and 1998 have been distorted by
     a number of items and adjusted earnings per share (on a
     fully diluted basis) were slightly up at 39.19p.

*    Operating profit was 13 per cent higher at
     £1,427 million, excluding goodwill amortisation and
     exceptional items, and benefited from the first time
     inclusion of four months results for Rothmans.  Progress
     with the merger has been excellent.

*    On a pre-merger basis, operating profit was around 6 per
     cent lower than last year but the third quarter showed
     the anticipated improvement, with profit down by 1 per
     cent compared to 9 per cent at the half year.

*    Group volumes continued to be affected by adverse
     economic conditions in a number of important markets,
     together with the significant price increases in the US
     and the cigarette export tax in Brazil.  Given the impact
     of these major factors, the Group's performance is
     encouraging.

*    Following the merger with Rothmans, these results reflect
     charges for both goodwill amortisation and the initial
     integration costs.  In addition pre-tax profit includes
     £88 million for sale of certain brands following the
     restructuring of the Australasian businesses.

*    The Chairman, Martin Broughton, commented 'In the Engle
     class action, we are confident that the Florida Appeals
     Court's written judgement that damages, if there are any,
     can only be awarded on an individual basis will
     ultimately prevail and we also expect that the class
     itself will eventually be decertified.'


ENQUIRIES:

INVESTOR RELATIONS:              PRESS OFFICE:
Ralph Edmondson  0171 845 1180   Fran Morrison/
Denise Hart      0171 845 1191   Jody Humble/
                                 Brian O'Connell  0171 845 2888

                BRITISH AMERICAN TOBACCO p.l.c.
                               
            NINE MONTHS REPORT TO 30 SEPTEMBER 1999
                               
                             INDEX


                                                         PAGE

Chairman's comments                                       2-3
Business review                                           4-8
Group results                                               9
Segmental analyses of turnover and profit                  10
Statement of total recognised gains and losses             11
Interest of British American Tobacco's shareholders        11
Accounting policies and basis of preparation               12
Rothmans International                                     12
Foreign currencies                                         13
Exceptional items                                          13
Sale of brands                                             14
Demerger and restructuring costs                           14
Net interest                                               14
Taxation                                                   15
Earnings per share                                         15
Dividends                                                  16
Segmental analyses:  Associated companies                  17
Millennium                                                 17

CHAIRMAN'S COMMENTS                                        2.

These are the first results for the enlarged British American
Tobacco reflecting the merger with Rothmans and I am pleased
to be able to inform shareholders that our progress with the
merger is excellent.

Pre-tax profit for the year to date rose by 26 per cent to
£1,219 million, while adjusted fully diluted earnings per
share increased slightly to 39.2p.

The third quarter showed the anticipated improvement, with
operating profit on a pre-merger basis down by 1 per cent,
compared to 9 per cent at the half year.

Group volumes continued to be affected by difficult trading
conditions in Asia-Pacific, by price increases to fund the US
tobacco settlements and by the cigarette export tax in Brazil.
Given the impact of these major factors, the Group's
performance is encouraging.

There can be no doubt that our principal management challenge
has been the smooth and rapid integration of the former
Rothmans businesses, involving the formation of new management
teams in a number of important markets.  Although it is
invidious to single out any particular areas, the merger
progress in Australasia, Malaysia and South Africa, all key
markets which also had to take account of the substantial
interests of minority shareholders, is especially heartening.

Shareholders have clearly been alarmed and may well be
confused by recent developments in the Engle class action in
which Brown & Williamson is a defendant.  On 3 September, a
Florida Appeals Court ruled in a written judgement that
compensatory and punitive damages, if there were to be any,
could only be awarded on an individual basis.  Last week, in a
purely procedural hearing, the Appeal Court declined, at this
stage, to order the Trial Judge to follow its previous ruling
but, much more importantly, it did not change its ruling on
the law.  We are confident that the ruling on 3 September is
the one that will ultimately prevail and we also expect that
the class itself will eventually be decertified.

The litigation front also saw the filing, in late September,
of the federal lawsuit against the US tobacco industry that
was first trailed by President Clinton in January.  The suit
is based on decidedly thin legal grounds.  It represents an
attempt to usurp the role of legislators in pursuit of public
policy goals by the misguided use of litigation.  It naturally
ignores the fact that federal and state taxes ensure that US
government makes about five times as much from a pack of
cigarettes as the industry does.
Chairman's comments                                      3.

That the tobacco industry's relationship with government does
not have to be adversarial can be seen from our recent
submission to the House of Commons Health Committee.  Although
our industry's relations with government in the UK has become
more difficult of late, probably because of misrepresentations
by pressure groups, for decades before that there was a
science based and co-operative approach to smoking and health.
Our submission is available on request.

At the time of our interim results, we announced our plans to
acquire the 58 per cent of Imasco that we do not already own,
in order to ensure that our Canadian business is focused on
tobacco in line with Group strategy.  The Board is grateful to
shareholders for their resounding support at the Extraordinary
General Meeting on 15 October.

The interdependent sale of Canada Trust to Toronto Dominion
Bank has already been agreed and the auction process for
Shoppers Drug and Genstar is proving robust.  This process
will demonstrate the real market values of these businesses
and should generate an increase in the Can$40 per share base
price.  We are confident that the acquisition is the only way
to deliver the full value of Imasco's assets to all its
shareholders, who we expect will vote on the proposal in
January.

The current wave of consolidation in the tobacco industry
initiated by our merger with Rothmans shows no signs of
abating.  The complexities of any merger require an enormous
amount of hard work and dedication from many people.  The
successful integration of our two groups over the past few
months is thus a credit to what is now a unified management
team, as well as to all the employees involved and I would
like to thank them wholeheartedly.

                                          MARTIN BROUGHTON

BUSINESS REVIEW                                             4.

Operating profit was 13 per cent higher at £1,427 million,
excluding goodwill amortisation and the exceptional items set
out on pages 13 and 14.  The profit benefited from the first
time inclusion of four months results for Rothmans. On a pre-
merger basis profit was around 6 per cent lower than last
year, but the third quarter was only 1 per cent down
reflecting the anticipated improvement.  Adverse economic
conditions in a number of important markets, together with the
significant price increases in the US and the cigarette export
tax in Brazil, led to volumes only 3 per cent higher despite
the inclusion of Rothmans since June 1999.

The good progress reported earlier this year in a number of
markets continued during the third quarter as, however, did
the impact of downtrading on our sales of international
brands.

Lucky Strike continued to demonstrate a strong performance in
its two largest markets of Germany and Japan but economic
conditions adversely affected sales in some other markets.
Kent also made strong progress in Japan but total volumes
declined due to economic difficulties in some Asian markets.

Prospects for Dunhill remain positive as the high market share
was held in a declining total market in Malaysia.  Elsewhere
there were volume and share increases in Australia, Africa and
South Korea.  Ongoing economic difficulties and counterfeit
issues in Asia continued to have a detrimental effect on State
Express 555 total volumes.  A continuation of the solid second
quarter performances in Africa, Australia and Arabia provided
Benson & Hedges with good results in key markets.

Volume for the Rothmans brand was adversely affected by a
general decline in major African markets, but shares within
the premium segment remained stable and the lights variants
continued to perform strongly.  Peter Stuyvesant's performance
was solid with continued strength in South Africa and other
southern African countries and a sustained position in Greece.
Pall Mall's impressive progress remained a feature of our
brand performance, with lights variants being a key driver of
brand success.  John Player Gold Leaf volumes are still being
hampered by economic difficulties in Bangladesh.

Following the merger with Rothmans, the Group is very much on
track to achieve the forecast cost savings of at least
£250 million per annum and has already announced the closures
of factories in Australia, South Africa and Switzerland and
the sale of a factory in New Zealand.

Business review continued                                5. 

Profit from the America-Pacific region was 9 per cent lower at
£376 million, with around half the reduction due to charging
£17 million for one-off settlement costs and liquidated legal
fees.  The 1998 comparative excludes the impact of the initial
settlement charges of £150 million as a result of the
Minnesota settlement (see note on page 13).  Regional volumes
declined by 10 per cent due to conditions in the US domestic
market.

US domestic market contribution, before common overheads of
£183 million, decreased by 7 per cent compared to last year.
The decrease in profitability is attributable to lower
volumes, higher ongoing settlement payments and additional
compliance costs and legal fees, partially offset by higher
pricing.  Prices were increased from 31 August 1999, ahead of
next year's rise in both federal excise tax and ongoing
settlement payments.  Total industry shipments for the nine
months declined by about 10 per cent due to trade inventory
reductions, the emergence of grey market product and higher
prices.  The Group's shipment share for this quarter is in
line with the first two quarters, although lower than last
year as volumes, especially for GPC, were affected by
discounting pressures.

The Group's operations in Japan show higher sales volume in a
reduced total market.  On a comparable basis, the enlarged
Group's market share rose to 7.4 per cent from 7.0 per cent
reflecting growth in Kent, Lucky Strike and Kool which all
increased volumes and market share.  The beneficial effect of
the higher volumes resulted in the Japan market contribution
rising in local currency, but with unfavourable US$/Yen
exchange rates the contribution in US dollars was 18 per cent
lower.

The balance of profit in the Asia-Pacific region has improved
following the Rothmans merger, with a reduction in the
dependence on exports.  Although there were encouraging signs
in markets such as Malaysia, Australia and Indonesia, weaker
export volumes resulted in profits 4 per cent lower at
£193 million despite the inclusion of Rothmans since June.  On
a comparable basis, regional volumes were 18 per cent down.

Although volumes were lower in Malaysia, Dunhill performed
well and profits rose due to improved margins and cost
reductions.  The results from the mature Australasian markets
showed strong profit growth, compared to the same period last
year, as a result of the benefits arising from continued
management initiatives in cost control and improved margins.
Despite the sale of certain brands in Australia, the Group has
now become the leading tobacco company with a market share of
around 44 per cent.

Business review continued                              6.

Indonesia showed a good performance in difficult trading
conditions with sustained growth in both volumes and profits,
despite excise tax changes which had an impact on margins.  In
Singapore profits and volumes increased, while there was
strong growth by Craven 'A' in Vietnam.

Overall export volumes in the region continue to be weak,
impacted by macro-economic conditions and a significant
increase in counterfeit product.

Despite the economic uncertainties affecting the Latin
American region, profit was 3 per cent higher at £244 million,
if the benefit from the recovery of sales tax in Brazil is
excluded from the comparative figures (see note on page 14).
There were good financial performances in Mexico, Venezuela
and Central America, partly offset by difficult trading in
Chile and Argentina.  Regional volumes decreased by 15 per
cent, due to lower exports from Brazil.

In a reduced domestic market, Souza Cruz maintained market
share in Brazil, with improvements from Free and Carlton.
There was a good performance from the leaf business and total
profit also benefited from cost reduction initiatives.
However, despite an improving trend, profit for the nine
months was lower as export volumes fell significantly
following the introduction of a cigarette export tax.

In Mexico and Venezuela, profits increased as a result of
price increases, despite aggressive competitive activity in
the former market.  Profits in Chile were lower as down
trading followed swingeing excise increases.  Market share
increased in Argentina but the strong recession led to a fall
in volumes and slightly lower profits despite cost savings.

In Europe, on a comparable basis total volumes were marginally
lower than last year.  There was a decline in exports, partly
due to the war in Serbia, while volumes in Ukraine and Poland
continued to be affected by adverse economic conditions.
However, these reductions were largely offset by continued
higher sales of Yava Gold and Pall Mall in Russia, and
improved volumes in Germany and Romania.  In the German
market, on a comparable basis the Group's market share rose
from 24.5 per cent to 25.4 per cent led by the performance of
Lucky Strike.

Business review continued                               7.  

Total regional profit for the enlarged Group was up
£62 million at £220 million.  The increase in profit was due
principally to the inclusion of Rothmans companies, improved
volumes and mix in Russia, higher market contribution in
Germany and higher volumes in Romania.  These were only partly
offset by the discontinuation of EU duty-free, lower volumes
and profits in Hungary following last year's change in the
local excise structure and difficult trading conditions in
Ukraine and Poland.

In the Amesca region, on a comparable basis volumes were 5 per
cent lower than last year largely due to civil war in the
Congo and the continued depressed economies in India,
Pakistan, Bangladesh and Africa.  Total regional profit was
£176 million, up £98 million, benefiting from the inclusion of
Rothmans companies as well as the change to quarterly
reporting at ITC, which results in the inclusion of their
profits at this quarter for the first time.

The results in South Africa showed profit growth despite a
declining market, benefiting from price increases and lower
costs, while Peter Stuyvesant increased market share.

In Uzbekistan, volumes were well ahead of last year resulting
in improved market share and profitability.  In India, good
profit growth was achieved from tobacco principally through a
combination of improved mix and price increases, although
there was a loss on disposal of non-tobacco interests.

The Middle East achieved profit growth with increased sales in
the premium sector of the market.  In particular, results in
Arabia were strong, as the sales mix improved with John Player
Gold Leaf and Benson & Hedges showing steady growth in share.
In Sri Lanka, excellent results were generated by a
combination of increased prices, cost reductions and the sale
of the CTC Eagle insurance operations in the second quarter.

The contribution to Group profits from Imasco in Canada at
£218 million, was 16 per cent higher than last year.  In the
tobacco business, profits rose 7 per cent to £106 million as a
result of higher prices and cost efficiencies, while an
increased market share was again achieved.  The total profit
from financial services increased by 15 per cent to
£75 million.  This is the result of the growth in revenues
together with strong cost control and higher productivity.
Profit from other trading activities was substantially higher
at £37 million.

Business review continued                               8.  

As explained in the interim report for the six months to
30 June 1999, the results of Rothmans International were
excluded from that period's results.  Consequently, this
period's report includes the results of Rothmans for the
period from 7 June 1999 to 30 September 1999 as part of the
three months to 30 September.  Integration of the businesses
is now well advanced, with many already being managed on a
unified basis.  The net turnover and operating profit
attributable to the Rothmans businesses during the period are
estimated at £920 million and £230 million respectively.



Group Cigarette Volumes

  3 months to                                         9 months to
30.9.99  30.9.98                                    30.9.99 30.9.98
                                                    
  bns      bns   Region                               bns     bns
                                                            
 23.7     25.3   America-Pacific                     64.4    71.7
 30.2     19.3   Asia-Pacific                        61.0    56.7
 41.1     48.2   Latin America                      121.3   143.0
 63.3     34.1   Europe                             126.5    97.9
 62.3     46.7   Amesca                             153.7   142.9
  8.2      8.5   Imasco                              23.8    23.9
-----    -----                                      -----   -----
228.8    182.1                                      550.7   536.1
=====    =====                                      =====   =====



GROUP RESULTS                                                     9.

  3 months to                                    9 months to     Year to
30.9.99 30.9.98                                30.9.99 30.9.98   31.12.98
   £m      £m                                     £m      £m        £m
                 REVENUE                                         
                                                                 
5,864   3,659    Subsidiary undertakings       12,876  10,687    14,584
  907     654    Share of associates            2,263   1,931     2,792
-----   -----                                  ------  ------    ------
6,771   4,313                                  15,139  12,618    17,376
=====   =====                                  ======  ======    ======
                                                                 
                 PROFIT                                          
                                                                 
  404     375    Subsidiary undertakings          972     939       676
------- -------  ---------------------------   ------- -------   --------     
                 after charging:                                 
                  US tobacco settlements*                (150)     (613)
  (81)            integration costs*              (81)           
  (91)            goodwill amortisation*          (91)           
                 after crediting:                                
                  sales tax recovery*                      74        74
------- -------  ---------------------------   ------- -------   --------
  113      85    Share of associates*             283     244       335
-----   -----                                  ------  ------    ------
  517     460    Total operating profit         1,255   1,183     1,011
   88            Sale of brands*                   88            
                 Demerger and restructuring                      
          (17)     costs*                                 (43)      (46)
-----   -----                                  ------  ------    ------
                 Profit on ordinary                              
  605     443     activities before interest    1,343   1,140       965
  (45)    (54)   Net interest*                   (108)   (159)     (204)
                 Share of associates                             
   (4)     (5)    net interest                    (16)    (15)      (23)
-----   -----                                  ------  ------    ------
  556     384    Profit before taxation         1,219     966       738
                 Taxation on ordinary                            
 (265)   (134)    activities*                    (597)   (350)     (277)
-----   -----                                  ------  ------    ------
  291     250    Profit after taxation            622     616       461
  (91)    (32)   Minority interests              (143)    (93)     (115)
-----   -----                                  ------  ------    ------
  200     218    Profit for the period            479     523       346
=====   =====                                  ======  ======    ======
                                                                 
                 Earnings per share                              
 8.23p  13.98p     - basic*                    25.03p  33.59p    22.17p
=====   =====                                  =====   =====     =====
15.90p  14.67p     - adjusted fully diluted*   39.19p  38.80p    46.12p
=====   =====                                  =====   =====     =====

                  *See notes on pages 12 to 17
SEGMENTAL ANALYSES OF TURNOVER AND PROFIT                             10.


  3 months to                                   9 months to     Year to
30.9.99  30.9.98                             30.9.99  30.9.98   31.12.98
  £m       £m                                  £m       £m         £m
                 Turnover excluding duty,                       
                 excise and other taxes
  860      670   America-Pacific              2,365    1,848     2,491
  399      265   Asia-Pacific                   822      763       959
  382      406   Latin America                1,050    1,223     1,671
  894      331   Europe                       1,666    1,057     1,552
  425      187   Amesca                         878      629       913
  401      369   Imasco                       1,147    1,078     1,662
-----    -----                               ------   ------    ------
3,361    2,228                                7,928    6,598     9,248
=====    =====                               ======   ======    ======
                                                                
                 Operating profit                               
  159      164   America-Pacific                376      404       535
   88       66   Asia-Pacific                   193      199       179
  106       81   Latin America                  244      236       309
  135       64   Europe                         220      158       164
  117       17   Amesca                         176       78       110
   84       68   Imasco                         218      184       253
-----    -----                               ------   ------    ------
  689      460                                1,427    1,259     1,550
                 US tobacco settlements                 (150)     (613)
  (81)           Integration costs              (81)            
  (91)           Goodwill amortisation          (91)            
                 Sales tax recovery                       74        74
-----    -----                               ------   ------    ------
  517      460                                1,255    1,183     1,011
=====    =====                               ======   ======    ======
                                                                
                 Operating profit restated                      
                  at comparable rates of                        
  521      460    exchange                    1,247    1,183     1,011
=====    =====                               ======   ======    ======
                                                                
The net turnover analysis is based on external sales in each region.
The figures for the nine months ended 30 September 1999 and 30 September
1998 based on regional location of manufacture would not be materially
different except for sales from Asia-Pacific to Amesca which amounted to
£246 million, 1998 £258 million.
The operations of subsidiaries are almost entirely related to tobacco.
The Group's share of the operations of associates, analysed by business,
is set out on page 17.



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES                   11.

                                        9 months to       Year to
                                     30.9.99    30.9.98   31.12.98
                                        £m         £m        £m
                                                          
Profit for the period                   479        523       346
                                                          
Differences on exchange                (140)       (93)      (69)
                                     ------     ------    ------
Total recognised gains related                            
 to the period (below)                  339        430       277
                                     ======     ======    ======
                                                          
                                                          
INTEREST OF BRITISH AMERICAN TOBACCO'S SHAREHOLDERS
                                                          
                                        9 months to       Year to
                                     30.9.99    30.9.98   31.12.98
                                        £m         £m        £m
                                                          
Balance 1 January                        64        (97)      (97)
                                                          
Total recognised gains related                            
 to the period (above)                  339        430       277
                                                          
Issue of shares                       5,089               
                                                          
Dividends from demerged businesses                 123       123
                                                          
Dividends*:                                               
   Ordinary shares                     (156)      (125)     (377)
   Convertible redeemable preference                      
   shares                               (10)
   Amortisation of discount on                            
   preference shares                    (12)
                                                          
Share options                             1         39        42
                                                          
Utilisation of ACT                                  45        96
                                                          
Other movements                         (18)              
                                     ------     ------    ------
Balance at period end                 5,297        415        64
                                     ======     ======    ======

*See note on page 16.

ACCOUNTING POLICIES AND BASIS OF PREPARATION                 12.

The financial statements comprise the unaudited results for
the nine months ended 30 September 1999 and 30 September 1998
and the audited results for the twelve months ended
31 December 1998.

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 1998.
The treatment of the acquisition of Rothmans International is
shown below.

During 1998 the principal financial services businesses of
B.A.T Industries p.l.c. were demerged and British American
Tobacco p.l.c. became the listed parent company for the
retained businesses.  To comply with company law and
accounting standards the Group accounts for 1998 included the
results of the financial services businesses up to the date
of demerger.  However, to provide information which is
helpful to shareholders of British American Tobacco p.l.c.,
the Directors also presented financial information prepared
as if the demerger had taken effect prior to 1998.  As this
financial information is the basis which more clearly
reflects the ongoing operations of British American Tobacco
p.l.c., it is used for the comparatives in this quarterly
report.

In the segmental analyses published for 1998 the costs of the
headquarters for B.A.T Industries were shown separately.  To
provide 1998 comparatives on a more consistent basis with the
segmental results for 1999, the comparatives have been
restated to allocate these costs within the regional results.

ROTHMANS INTERNATIONAL

On 7 June 1999 British American Tobacco p.l.c. issued
604,336,627 ordinary shares and 241,734,651 convertible
redeemable preference shares in consideration for the
acquisition of Rothmans International.  As a result, Compagnie
Financiere Richemont AG and Rembrandt Group Limited together
indirectly own 35 per cent of the fully diluted ordinary share
capital of British American Tobacco p.l.c., comprising 27.8 per
cent of the issued ordinary share capital and 100 per cent of
the convertible redeemable preference shares.

Rothmans International cont.                          13.      

It was previously announced that following completion of the
initial acquisition of Rothmans, the Canadian interests of
Rothmans would be disposed of in due course.  As a result of
this decision, the results of those businesses are not
consolidated but their dividend payments are included in the
Group's investment income.

Goodwill has arisen on the initial acquisition of Rothmans and
subsequent local restructurings of the enlarged Group's
publicly listed subsidiaries in Singapore, Australia and South
Africa.  For the purposes of this period's results, a
provisional figure for the goodwill arising on these
acquisitions of £5,577 million is being amortised over a
period of 20 years.  The amortisation charge in this period
comprises £87 million in respect of the initial acquisition
and £4 million on the subsequent restructurings.

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 1999 at
the average rates for that period.  The comparatives for the
nine months to 30 September 1998 and the year to 31 December
1998 at the average rates for the year to 31 December 1998.
The interest of British American Tobacco's shareholders has
been translated at the relevant period end rate.

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

The principal exchange rates used were as follows:

                     Average              Closing
                  1999   1998    30.9.99  30.9.98   31.12.98
                                                    
US dollar         1.614  1.657    1.647    1.699      1.664
Canadian dollar   2.406  2.459    2.420    2.594      2.556
Deutschmark       2.936  2.915    3.025    2.840      2.771

EXCEPTIONAL ITEMS

The principal exceptional item in the year to 31 December
1998 was a charge of £613 million, comprising £463 million
for the US cigarette companies' agreement with the Attorneys
General in 46 US States to settle outstanding Medicaid
recovery suits and £150 million resulting from the earlier
agreement with the State of Minnesota and Blue Cross and Blue
Shield of Minnesota.

Exceptional items cont.                                  14.

Other settlement costs are charged as ongoing costs.
Operating profit before exceptional items for the nine months
to 30 September 1999 was after charging costs of £596 million
(including £17 million for one-off settlement compliance
costs and liquidated legal fees) compared to £74 million in
the comparable period of 1998.

Integration costs are the costs incurred in integrating
Rothmans into the British American Tobacco Group and the
consequential restructuring of the enlarged Group.  The
charge represented the first part of the approximately
£400 million estimate of such costs referred to in the
Circular to Shareholders issued for the Rothmans merger.

In the second quarter of 1998 the Group included a sales tax
recovery arising from a favourable decision taken by a
Regional Federal Court in Brazil, resulting in amounts being
recoverable which had previously been paid to the Government
as social contributions assessed on the basis of sales.

SALE OF BRANDS

This comprised the profit on the sale 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.

DEMERGER AND RESTRUCTURING COSTS

This comprised advisory and legal fees for restructuring the
B.A.T Industries group in 1998, involving the demerger of its
principal financial services businesses and the formation of
British American Tobacco p.l.c. as the parent company for the
retained businesses.

NET INTEREST

The Group is now able to recover interest on the amounts
which form the basis for the sales tax recovery in Brazil
(see above).  The reduction in net interest in the nine
months includes £26 million in respect of this item, as well
as gains on cancellation of swap contracts.

TAXATION                                                  15.

                                             9 months to
                                        30.9.99    30.9.98
                                           £m         £m

UK                                          4         84
Overseas                                  489        181
                                         ----       ----
British American Tobacco and
 subsidiary undertakings                  493        265
Share of associates                       104         85
                                         ----       ----
                                          597        350
                                         ====       ====
Effective tax rate                       49.0%      36.2%
                                         ====       ====

The effective tax rate increases in 1999 as a result of
charges accrued in 1999 for US tobacco settlements not being
relieved for tax until the following year.  As future years
are expected to show the same pattern for such payments and
tax relief, under UK accounting standards there will be a
distortion to the tax rate shown in the accounts for 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).  For periods prior to the demerger of the
financial services businesses in 1998, the average number of
shares in issue is based on 50 per cent of the average number
of B.A.T Industries ordinary 25p shares in issue, reflecting
the issue of one ordinary share in British American Tobacco
p.l.c. for every two ordinary shares of B.A.T Industries
p.l.c.

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 in 1999 the
convertible redeemable preference shares.

Earnings per share cont.                             16.

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
and ACT, adjusted diluted earnings per share are shown below:

                                     Diluted earnings per share
                                        9 months to      Year to
                                     30.9.99   30.9.98   31.12.98
                                     (pence)   (pence)   (pence)
Unadjusted earnings per share         24.70     33.42     21.98
Adjustment from net to nil basis                (0.89)    (0.32)
Effect of goodwill amortisation        4.69              
Effect of US tobacco settlements                 5.88     23.89
Effect of integration costs            3.30              
Effect of sales tax recovery          (0.67)    (2.36)    (2.35)
Effect of sale of brands              (2.68)             
Effect of demerger and                                   
 restructuring costs                             2.75      2.92
Effect of US tobacco settlements on                      
 effective tax rate                    9.85              
                                     ------    ------    ------
Adjusted earnings per share           39.19     38.80     46.12
                                     ======    ======    ======

Similar types of adjustments would apply to basic earnings
per share.  For the nine months basic earnings per share on
an adjusted basis would be 40.41p (1998 38.98p) compared to
unadjusted amounts of 25.03p (1998 33.59p).

DIVIDENDS

As previously announced, a special interim dividend of 4p per
share was paid on 1 July 1999 and a further interim dividend
of 4.3p per share was paid on 27 September 1999.  The latter
dividend was payable on the cumulative redeemable preference
shares as well as the ordinary shares.  In 1998 the Directors
declared a single interim dividend of 8.0p per share paid on
5 January 1999 and a final dividend of 16.0p per share paid
on 1 July 1999.

The amortisation of discount on preference shares referred to
on page 11 reflects the difference between the share price at
the date of the Rothmans transaction and the redemption
price, which is being amortised over the period to the
redemption date.

SEGMENTAL ANALYSES:  ASSOCIATED COMPANIES                   17.

  3 months to                               9 months to     Year to
30.9.99 30.9.98                            30.9.99  30.9.98  31.12.98
                                                 
   £m      £m                                £m       £m       £m
                 Turnover excluding duty,                   
                 excise and other taxes
  300     232    Tobacco                     668      590      721
  188     176    Financial services          554      514      693
  139      85    Other trading activities    393      343      714
-----   -----                             ------   ------   ------
  627     493                              1,615    1,447    2,128
=====   =====                             ======   ======   ======
                                                            
                 Operating profit                           
   70      53    Tobacco                     171      157      217
   26      21    Financial services           75       63       81
   17      11    Other trading activities     37       24       37
-----   -----                             ------   ------   ------
  113      85                                283      244      335
=====   =====                             ======   ======   ======

MILLENNIUM

As noted in the 1998 Annual Report and Accounts, the Group
has reviewed the impact of the millennium date change on its
systems and business environment.  The Directors, having
regularly reviewed the Millennium Programme, believe that it
provides maximum protection against disruption, although this
is an area where absolute guarantees are not possible.

Following the merger the Rothmans millennium strategy is now
being managed as part of our programme.  The latest estimate
for expenditure to tackle the issue of the millennium date
change across the merged Group worldwide is £90-100 million,
most of which has already been spent.  As a result, Group
companies are reporting a compliance level of over 99 per
cent for the required systems.


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