AGM Statement

British American Tobacco PLC
28 April 2005



                       Speech by Jan du Plessis, Chairman
             at the British American Tobacco Annual General Meeting
                             held on 28 April 2005

Good morning, ladies and gentlemen, and welcome to your Annual General Meeting.

This is my first AGM as Chairman of your company and may I say that, on taking
over the hot seat, I feel very good about what I have found.  The Group is in
good shape, our strategy is demonstrating its strength and I am greatly
impressed by the talent and energy of our people around the world, as they build
on the tremendous momentum achieved since British American Tobacco listed as a
stand-alone tobacco company on the London Stock Exchange in 1998.

2004 was a year of solid progress.  Your company continued to deliver
shareholder value through its strategy of focusing on growth, productivity and
responsibility, delivered by a winning organisation.  The Reynolds American deal
was completed, there was excellent progress in the new business in Italy, we
made big inroads into improved productivity and further embedded our approach to
corporate responsibility.

But before reviewing last year's performance, let me welcome your three new
Non-Executive Directors and pay tribute to those who have left us.  The sudden
death of K.S. Wong in February shocked us all.  KS was a valued member of your
Board and his passing is a great loss.  I'm sure you will wish to join me in
expressing sincere condolences to his family.

Admiral Bill Owens stepped down last year on becoming Chief Executive of Nortel
Networks and, of course, Martin Broughton retired as Chairman to take up the
joystick at British Airways.  I would particularly like to thank Martin for his
outstanding contribution to the Group over a career spanning more than 30 years.

It's my pleasant task to introduce to you Piet Beyers, Robert Lerwill and Sir
Nicholas Scheele.  Piet is an Executive Director of Richemont and a
Non-Executive Director of Remgro, with extensive marketing and management
experience in the food, drinks, luxury goods, tobacco and advertising
industries.  Robert's career has spanned Finance Director positions at WPP Group
and Cable & Wireless and he was recently appointed Chief Executive of Aegis
Group.  Nick has joined us after a long and distinguished career with Ford Motor
Company, most recently as President and Chief Operating Officer, and is
Chancellor of Warwick University.

I am delighted to welcome them and the broad range of skills and valuable
insights they bring to your Board.

2004 business review

Let me now turn to your company's performance last year.

Operating profit was up by 2 per cent at over £2.8 billion and, stripping out
the effects of foreign exchange, would have been up by 7 per cent.  Pre-tax
profit was up 20 per cent at almost £1.9 billion and earnings per share were up
10 per cent, reflecting, amongst other factors, the higher operating profit and
the share buy-back programme you have authorised.

At a time when shareholders are increasingly seeking income, your Board is
recommending a final dividend of 29.2p, increasing the year's total by 8 per
cent to 41.9p per share.  Since 1998, dividends have grown by about 75 per cent,
representing compound annual growth of 9.7 per cent.

Over the last three years, we have delivered total shareholder return of more
than 20 per cent a year on average, against 2.4 per cent for the FTSE 100.  If
you have held your shares for five years, that return is even greater:  a
remarkable 29 per cent a year, making you some four times better off than if you
had put your money in an index tracker.  I am sure you will agree that your
shareholding has proved a pretty good investment.  We remain firmly focused on
building sound and sustainable shareholder value for many years to come.

2004 was not, however, all plain sailing.  Although several markets performed
strongly, developments in some key markets, notably Canada, Japan, France and
Germany, adversely affected the Group's performance.

Our global drive brands, Dunhill, Kent, Lucky Strike and Pall Mall, grew by 2
per cent overall, following several years of 8 to 9 per cent growth.  Steep tax
rises in certain markets reduced overall industry volumes, affecting Dunhill and
Luckies.  But Kent was up by 10 per cent in its fifth consecutive year of
growth, to reach a new record volume of 33 billion, and Pall Mall gained share
across all regions, continuing to build its position as a truly global brand.

In geographic terms, four regions delivered results in line with strategy, to
offset significant declines in America-Pacific.  In short, progress during the
year was underpinned by the Group's geographical diversity and the fundamental
strength of our brands and strategy.

The landmark Reynolds American transaction in the USA, combining R.J. Reynolds
with the US business of Brown & Williamson, was completed successfully, giving
the Group a stronger presence in the world's most profitable cigarette market.
Integration is going well and our 42 per cent shareholding has a market value of
almost 5 billion dollars.

Our new Italian business, British American Tobacco Italia, successfully
completed its first year.  It now has a market share of about 30 per cent in one
of the EU's most profitable markets and profit was ahead of expectations.

We made good progress in enhancing productivity - finding smart ways to be
prudent with costs.  We saved £89 million in overheads and indirect costs, on
top of £64 million the year before, and have now raised our target to be saving
£320 million a year by the end of 2007.  We have also reduced our factory and
logistics costs by £240 million in the last two years and expect to increase
these supply chain savings further.





Transparency and accountability

Last year we produced our third Social Report and we will issue our fourth in
July.  As before, it will be published on our website bat.com, which in 2004
was, for the third year running, ranked as best website of the FTSE 100 in the
Financial Times Webranking survey.

External bodies continue to endorse our approach to transparency, accountability
and responsible management of the business.  We were again selected as the only
tobacco company in the Dow Jones Sustainability Indices, along with our
Malaysian subsidiary.  We won the PricewaterhouseCoopers Building Public Trust
Award for reporting on executive governance and remuneration, following the
previous year's award for stakeholder communication.  As shareholders, you may
also be pleased to see your company featured by the UK Department of Trade and
Industry in its best practice guide on corporate governance, entitled 'Building
Better Boards'.

The UK Business in the Community organisation ranked us amongst the 'Top
Companies that Count' in its Corporate Responsibility Index.  The assessors gave
us scores of 100 per cent in areas such as disclosure, corporate values,
business conduct and addressing labour rights in the supply chain, and ranked
our environmental management as outstanding.  Internationally, the United
Nations Environmental Programme and the SustainAbility organisation ranked us
fourth best in the world in non-financial reporting.

NGOs: dialogue or refusal to engage?

Many external bodies strongly endorse the way our social reporting is centred on
engaging with stakeholders in dialogue.  The dialogue is certainly bringing us
valuable insights into what stakeholders expect of us in living by our Business
Principles - Mutual Benefit, Responsible Product Stewardship and Good Corporate
Conduct - and it is helping us to focus on what really are the key issues in
managing our business responsibly.

This year I joined the dialogue, getting to grips with supply chain topics in
Kenya.  I believe everyone present felt it was constructive to extend the UK
dialogue overseas, so that both UK and local stakeholders could explore things '
on the ground' from all perspectives.  I was impressed by the willingness of the
many stakeholders who took part to engage candidly, to build two-way learning
and to seek solutions.

I am therefore disappointed that some of our most vocal UK-based critics
continue to decline invitations to dialogue.  I appreciate that dialogue takes
time and effort, which NGOs can find hard to commit.  But I question whether it
is always wise for NGOs to refuse dialogue, yet commit the resources they do
have to attacking multinational companies - often the very companies that are
working hardest to address their concerns.

Some of these criticisms seem to stem from an ideology that big business can
rarely, if ever, do any good.  Yet as Kofi Annan, the UN Secretary General, said
about achieving sustainable development:  "It is only by mobilising the
corporate sector that we can make significant progress."

I agree that alienating business is not the pathway to sustainable development,
and I speak as someone with a fair understanding of - and passionate interest in
- the development issues facing Africa.

I am sure that everyone here today would agree, as I do, that it is right and
necessary to address poverty, lack of skills, lack of social infrastructure and
lack of opportunity - huge problems for many developing countries.  However,
this vast and complex challenge needs an integrated range of constructive inputs
- from governments, communities, NGOs, development organisations and, of course,
from business.

Contributions of multinational business

It is often overlooked that the presence of multinational businesses in
developing nations is making real contributions to local development goals.  It
is helping governments to build on all three pillars of sustainable development
- economic, social and environmental.  A lasting way to tackle poverty is by
steadily creating employment, economic security and self-sufficiency.
Ultimately, only economic growth can provide the means to pay for environmental
improvements and social progress.

It is frequently multinational companies that introduce skills, training and
international standards, for example in labour practices, reducing environmental
impacts, improving workplace safety and providing community support.

For example, British American Tobacco's programmes with farmers in 22 countries
- from whom we buy two thirds of our leaf - aim to help them become skilled
farmers overall, not only skilled tobacco farmers.  We provide training in crop
management, safer ways of working and good environmental practice, and pay
farmers promptly at prices that aim to ensure them a fair profit.

In Sri Lanka, our business has pioneered a pension scheme for farmers, where
none previously existed.  The British American Tobacco Nigeria Foundation is
working to reduce poverty through community projects to build sustainability.
We helped to establish the Elimination of Child Labour in Tobacco-Growing
Foundation, now making real inroads against child labour in more than ten
countries.  Our Biodiversity Partnership with four major NGOs is supporting
community conservation projects, and is also helping us to enhance our own
management systems in biodiversity conservation and forestry.

Confrontation or co-operation?

The key point is that few companies seeking to embrace today's changing ideas of
corporate responsibility can do so without constructive engagement, dialogue and
partnerships.  May I therefore thank those NGOs who do come to dialogue and who
work alongside us in projects on the ground, recognising that they can help
companies in many ways.

That's why our door is open, including to our critics.   We genuinely want to
listen and find solutions.  Like any large organisation, I am sure we deserve
criticism from time to time.  We take well-founded rebukes seriously and work to
put right things that really are wrong, and where we have a mandate to do so.

To those who criticise yet refuse to engage, I ask: is your insistence on
confrontation rather than co-operation really the best way to achieve your own
goals?

I find it ironic that companies that do embrace CSR are not only criticised by
some NGOs, but also by serious business commentators who argue that the only
proper goal of companies is the honest and legal pursuit of profit.  It has been
argued that the most important book on corporate responsibility is Adam Smith's
18th century 'Wealth of Nations', in which he wrote:  "it is not from the
benevolence of the butcher...or the baker that we expect our dinner, but from
their regard to their own interest".  In other words, the case is strongly put
that business achieves far more for society by being left to pursue enlightened
commercial self interest than by attempting to embrace any other ways of serving
society.

Getting CSR right is therefore not easy, especially for businesses like ours in
controversial sectors.  However, criticisms will not deter us from working to
balance our responsibilities to all our stakeholders, including our
shareholders, who have entrusted us with the management of their business.

The real risk is that frequent and sometimes ill-founded attacks on large and
committed companies will scare off those companies with limited resources and
who fear that they can only lose by embracing CSR.  Yet it is often smaller
businesses, and local businesses in developing countries, that should focus most
on raising standards.

There may be some anti-business campaigners whose agenda is not served by
business acting responsibly.  But I cannot believe that this is what those who
really seek progress actually want.

Harm reduction

There is one further topic I would like to touch on briefly before ending.

We are often asked by stakeholders: can you make a cigarette that causes less
harm?   We are certainly pursuing this actively in our research and development
work on reduced-exposure products.

However, the scientific challenges are considerable, and they require
constructive engagement with governments and their regulatory advisors, not
least about how measures of reduced harm might be established.

Some regulators are concerned that encouraging such products may discourage
consumers from quitting.  Some are simply reluctant to engage in discussions
with the tobacco industry.

However, we are starting to see some emerging scientific and regulatory opinion
that reduced-exposure products should be encouraged.

We therefore seek to work constructively with governments and their external
advisors to help set new standards for tobacco regulation that focus on harm
reduction, while preserving informed adult choice and a competitive business
environment.

Current trading and prospects

Finally, turning to what traditionalists would consider to be our real business,
the AGM usually presents an opportunity for comment on our prospects for the
current year.  Given that we will be announcing the first quarter's results next
week, it would not be appropriate for me to make any comments today on our
prospects for 2005.

Let me assure shareholders, however, that our long term goal remains to grow
earnings per share, on average, by high single figures and to pay out at least
half our earnings in dividends.  We look forward to the future of your company
with confidence.

Let us now move to the formal business of today's meeting.



                                   ENQUIRIES

                David Betteridge, Teresa La Thangue, Emily Brand

                     British American Tobacco Press Office

                        [phone] (24 hours)




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