Final Results - Part 1

British American Tobacco PLC
28 February 2001


BRITISH AMERICAN TOBACCO PLC

PART 1

      PRELIMINARY ANNOUNCEMENT - YEAR ENDED 31 DECEMBER 2000
                                 
                          SUMMARY
                                        2000     1999     Change
                                                          
   Operating profit pre-exceptionals   £2,575m  £2,022m    +27%
   Pre-tax profit                      £1,522m  £1,371m    +11%
   Adjusted earnings per share          57.87p   52.33p    +11%
   Dividends per share                  29.00p   26.20p    +11%
     

  *   Adjusted earnings per share (on a fully diluted basis)
      were 11 per cent higher at 57.87p.
      
  *   Operating profit was 27 per cent higher at £2,575 million,
      excluding goodwill amortisation and exceptional items, as
      a result of the inclusion of Rothmans and the impact of
      exchange.
      
  *   Operating profit in the fourth quarter was £649 million up
      11 per cent.
      
  *   Group volumes increased by 7 per cent to 807 billion.  On
      a comparable basis Group volumes declined by 2 per cent.
      Although the world market was basically stable during
      2000, the Group's international brand volumes have grown
      by 1 per cent.
      
  *   Since the merger with Rothmans was completed in mid 1999,
      the successful integration of the enlarged Group has been
      achieved with synergy savings ahead of schedule.
      
  *   The Board is recommending a final dividend of 20.0p, up
      12 per cent, which will be paid on 8 May 2001.  This will
      take the growth in dividends for the year to 11 per cent,
      which is in line with our policy of paying out at least
      50 per cent of long term sustainable earnings.
      
  *   The Chairman, Martin Broughton, commented 'Record volumes
      and record results in a year of tremendous change provide
      us with a sound platform for further growth.  In
      successfully pursuing all aspects of our strategy -
      organic growth, investment in new markets and acquisitions
      - we are building sustainable shareholder value.'


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               BRITISH AMERICAN TOBACCO p.l.c.
                               
    PRELIMINARY ANNOUNCEMENT - YEAR ENDED 31 DECEMBER 2000
                               
                            INDEX
                               
                                 
                                 
                                                              PAGE
    Chairman's comments                                        2-3
    Business review                                            4-8
    Dividends                                                    9
    Group profit and loss account                               10
    Statement of total recognised gains and losses              11
    Interest of British American Tobacco's shareholders         11
    Segmental analyses                                          12
    Quarterly analyses of profit                             13-14
    Group balance sheet                                         15
    Group cash flow statement                                   16
    Accounting policies and basis of preparation                17
    Imperial Tobacco Canada/Imasco                              17
    Rothmans International                                      18
    S.C.A. Tobacco                                              18
    Exchange rate effects                                       18
    Exceptional items                                           18
    Goodwill amortisation                                       19
    Sale of brands                                              19
    Interest and interest cover                                 19
    Taxation                                                    20
    Earnings per share                                          20
    Group reserves                                              21
    Cash flow                                                   22
    Contingent Liabilities                                      22
    Post balance sheet event - BAT Australasia                  24
    Annual report and accounts                                  24


  CHAIRMAN'S COMMENTS                                          2.
 
 Operating profit before exceptional items was 27 per cent higher
 at £2,575 million, as a result of the merger with Rothmans and
 excellent performances in many markets.  Adjusted earnings per
 share rose 11 per cent to 57.87p and the Board has recommended a
 final dividend of 20.0p per share, (17.9p in 1999) payable on
 8 May.  This makes the total for the year 29.0p, an 11 per cent
 increase.
 
 These strong results reflect the first full year of the enlarged
 British American Tobacco Group and have been achieved by meeting
 our objectives of growth in international brands, improvements in
 margins and synergies from the merger.
 
 Although the world market was basically stable during 2000, our
 international brand volumes have grown.  We have a clear focus on
 our international brands but with particular emphasis on our four
 drive brands - Lucky Strike, Kent, Dunhill and Pall Mall, which
 collectively grew volume by 7 per cent during the year.  The
 proportion of international brands in our portfolio has risen to
 over 30 per cent and our average operating margins have improved
 to over 22 per cent.
 
 Large corporate mergers have often attracted criticism for
 failing to deliver the benefits originally envisaged.  Our merger
 with Rothmans is different.  The savings in operating costs were
 around £230 million for 2000 and these synergies have come
 through more quickly and at a higher level than originally
 envisaged.
 
 Rationalisation programmes are inevitably difficult for all the
 people affected but the group is emerging from the process in
 better shape.  A number of factories were closed, including in
 the UK, Australia, Malaysia, South Africa, Switzerland and
 Cyprus.  The integration of the separate supply chains, from
 factory to market, in Europe and for European exports, has been a
 particular achievement.  In addition, we have successfully
 slimmed down our combined sales forces, most notably in Germany,
 Australia, Switzerland and Benelux, while increasing field
 strength.
 
 As previously reported, on 30 October 2000 the UK Secretary of
 State for Trade and Industry announced the commencement of a
 confidential investigation under Section 447 of the Companies Act
 1985.  The Company stated at that time that it would be
 co-operating fully with the investigators but would be making no
 further comments during the course of their work.
 
  Chairman's comments....                                       3.
 
 We are well aware of the public policy challenges we face.  However,
 we are confident that we can manage them by reassuring reasonable
 stakeholders that we are running the business in a responsible way.
 
 The reality of a responsible tobacco group may never be accepted by
 some of our more impassioned critics but what does it mean for us in
 practice?  It is based on our recognition that along with the
 pleasures of smoking come the real risks of some serious diseases and
 that smoking can be difficult to quit.
 
 Given our acceptance of the risky nature of our products, we believe
 there are three key issues we need to address in order to meet
 stakeholders' reasonable expectations of a responsible tobacco group
 in the 21st Century:  risk information and understanding, risk
 reduction and business integrity.  We have developed a set of
 principles to guide our approach and we are committed to open and
 transparent dialogue about each of them with our stakeholders.
 
 I would like to thank all our people around the world for their
 efforts in a momentous year.  In particular, I also want to pay
 tribute to two doyens of the industry who will be retiring this year.
 Bill Ryan, Deputy Managing Director since the merger and before that
 Chief Executive of Rothmans for 10 years, retires in June and Ulrich
 Herter, who became Managing Director in 1992, retires at the end of
 the year.  Both have made a major impact on the tobacco industry.
 Bill has done so much to make the merger with Rothmans a success and
 Ulrich has given the business outstanding operational leadership for
 the last decade.  Shareholders have much to thank them for.  It is an
 understatement, as well as a cliche, that Ulrich will be a hard act to
 follow but I am confident that Paul Adams, who will succeed him,
 having been with the Group for about 10 years, has the right skills
 and experience to take the business forward in the next decade.
 
 Record volumes and record results in a year of tremendous change
 provide us with a sound platform for further growth.  Over the
 last 10 years, our group has grown considerably, by following the
 right strategy in a period when the total demand for tobacco
 products has been essentially flat.  In successfully pursuing all
 aspects of our strategy - organic growth, investment in new
 markets and acquisitions - we are building sustainable
 shareholder value.
 
            MARTIN BROUGHTON
 
  BUSINESS REVIEW                                               4.
 
 British American Tobacco is the second largest quoted tobacco
 Group with a world market share of over 15 per cent and annual
 shipments of more than 800 billion cigarettes. The Group has a
 share of more than 50 per cent in Latin America and very strong
 positions in other regions.  The Group, with its strong broad
 based portfolio of international, regional and local brands,
 remained focused on achieving global leadership of the tobacco
 business by growing share in the premium and lights segments.
 
 Operating profit, before goodwill amortisation and exceptional
 items, at £2,575 million was 27 per cent higher principally as a
 result of the inclusion of Rothmans for the full year compared to
 seven months in the previous year, synergy benefits realised as a
 result of the merger and the impact of exchange.  There was an
 excellent performance in a number of markets.  Profit in the
 fourth quarter was £649 million or 11 per cent higher.
 
 Group volumes of 807 billion increased by 7 per cent year on
 year.  On a comparable basis, Group volumes declined by 2 per
 cent.  Although the world market was basically stable during
 2000, the Group's international brand volumes have grown by 1 per
 cent.
 
 Operating profit from the America-Pacific region was
 £878 million, an increase of £30 million compared to 1999.  This
 was mainly due to the changed status of Imperial Tobacco Canada,
 improved contributions from Japan and Korea and exchange, partly
 offset by a lower contribution from the US domestic market.
 Volume for the region was 109 billion units, a decrease of 6 per
 cent, despite market share gains in Canada, Japan and Korea.
 Volumes were lower in Canada, as well as in the US where market
 share reduced.
 
 The profit contribution from Canada was £389 million, compared to
 a profit of £304 million last year. These results are not like
 for like due to the restructuring of the Canadian business
 explained on page 17.  However, the profit for the tobacco
 operations, on a comparable basis, increased by 5 per cent,
 mainly as a result of higher prices and operating efficiencies.
 Although Imperial Tobacco's domestic shipments have decreased by
 3 per cent,  market share slightly increased.  Imperial's strong
 lead in the cigarette segment is attributable to the success of
 du Maurier, Player's and Matinee.
 
 US domestic market contribution, before lower common overheads of
 £245 million, was down £106 million at £495 million due to lower
 volumes.  The benefit from higher pricing was partially offset by
 list price reductions on selected brands.
 
  Business review.....                                          5.
 
 Although total industry shipments for the year were similar to
 1999, Brown & Williamson's shipments declined and market share
 was lower at 11.7 per cent.  The company lost market share in the
 first quarter, but the rate of decline has slowed significantly
 after the list price reduction of GPC and Viceroy in April.  The
 share decline  was primarily in the discount segment where GPC
 and Misty lost share.  The company was affected by the extensive
 use of restrictive competitive retail contracts by competitors
 and, in some sectors of the retail trade, cheaper brands from
 some of the small manufacturers who receive preferential
 treatment under the MSA.
 
 On 20 September, Brown & Williamson announced a major cost
 cutting programme in order to improve its financial position and
 enable it to remain competitive.  The costs of £119 million for
 early retirement and redundancies and the write-down of fixed
 assets were charged in 2000 as an exceptional item.
 
 In Japan, where total industry volumes fell, the Group increased
 both volume and market share, with Kent, Lucky Strike and Kool
 driving the growth. The S.C.A. Tobacco Corporation was acquired
 during 2000 (see page 18) and the integration is proceeding well
 and contributed to the success of the business. These factors,
 together with favourable exchange rates, partially offset by
 increased marketing expenditure led to an increase in profit
 contribution. In Korea, market share rose due to an outstanding
 performance from Dunhill.
 
 In Asia-Pacific, profits were £361 million, £126 million ahead of
 last year.  The region benefited from the addition of Rothmans'
 businesses in Malaysia, Australia, New Zealand and Singapore,
 which led to an improved geographical balance of profits.
 Significant synergy benefits from the merger were realised, with
 the completion of factory rationalisation and distribution
 changes in key markets.
 
 Volumes increased marginally to 87 billion, with the growth held
 back by the merger related divestment in 1999 of brands in
 Australia and New Zealand and a drop in volumes in Indonesia.
 
 The Australasian businesses delivered strong profit growth
 despite the effect of the brand divestments.  In Australia,
 profits were up despite a double-digit reduction in total market
 size as a result of the 1999 change in excise system, further
 excise increases in 2000 and the implementation of a general
 sales tax during the year.  The increase in profits was driven by
 improved margins and growing market share in Winfield, Benson &
 Hedges and Dunhill, as well as significant merger benefits.  In
 New Zealand, higher profits were attributable mainly to synergy
 benefits and improved margins, partially offset by a decrease in
 volumes resulting from a one-off excise increase in May.  The
 South Pacific area recorded improved results despite the civil
 unrest in Fiji.
 
  Business review.....                                          6.
 
 Malaysia demonstrated strong performance as the economic recovery
 continued, with Dunhill increasing market share.  Operating
 profits grew mainly due to higher volumes and merger benefits.
 The rationalisation of factory operations in Malaysia has
 proceeded ahead of plan with manufacturing now consolidated onto
 one site.
 
 Indonesia saw a significant drop in total market share as a
 result of excise increases and the change in the excise system
 which particularly favoured the Kretek and small manufacturers.
 Operating profits were lower due to the decline in volumes,
 partially compensated by higher margins and lower marketing
 costs.  Given the significant reduction in volume, reorganisation
 is underway and will be completed in early 2001.
 
 Vietnam continued to show strong growth in volumes and profits as
 all brands improved share.  In Singapore, Dunhill performed well
 and gained share in the face of the overall market volume
 decline.
 
 The profits of £425 million in Latin America increased by
 £92 million mainly due to the strong performances in Brazil and
 Venezuela, partly offset by Argentina.  The inclusion of the
 Rothmans business in Jamaica also contributed to the increase in
 profits.  The regional volumes decreased slightly to 165 billion.
 
 In Brazil, Souza Cruz maintained its high market share, with
 increases in Hollywood offset by reductions for Derby, Free and
 Carlton.  However, the profit for the year was well ahead of 1999
 due to the favourable exchange rate and continued efforts to
 reduce overhead and operational costs.
 
 Whilst 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 were higher.  In Argentina market share rose,
 but profit was lower as a result of the delay between the
 introduction earlier in 2000 of a social assistance fund tax and
 price increases sufficient to maintain margins. However,
 profitability has now been restored.
 
 Great progress was achieved in Europe, benefiting from the
 Rothmans merger, as well as underlying growth, particularly in
 Central and Eastern Europe.  Volumes have increased by 22 per
 cent to 208 billion, with significant gains in many markets,
 while total profits at £541 million were £203 million higher than
 last year. The excellent results were achieved despite the
 abolition of the intra-EU duty free business in July 1999.
 
 Profits were higher in Germany due to price increases in October
 1999 with a better product mix. Lucky Strike and Pall Mall grew
 market share.  The loss of the contract for the manufacturing and
 distribution of Benson & Hedges in Germany and the increase in
 low price generics meant a decline in the Group's market share.
 
  Business review.....                                          7.
 
 Particular progress was made in Russia, Ukraine and Romania.
 Increased volumes, especially Yava Gold, and an increased share
 of the higher margin segment drove the growth in profitability in
 Russia.  In Ukraine, where Prilucky Osoblivy has become the
 largest brand, and in Romania, where Viceroy and Kent increased
 volumes, there were better financial performances.
 
 France and the UK showed profit growth due to improved margins,
 despite small volume declines.  Profits in Italy progressed as
 market share grew.
 
 The results and volumes benefited from the inclusion of synergy
 savings and full year figures for the former Rothmans entities,
 particularly in the Benelux countries, France, Switzerland,
 Ireland and the UK.
 
 The Smoking Tobacco and Cigars operations maintained their strong
 position in the mainstream sectors of the major European fine cut
 markets as well as their pipe tobacco market leadership despite
 lower volumes. Improved cigar volumes largely offset these
 reductions, with operating profit higher.
 
 The Rothmans merger had a significant impact on the Amesca
 region, with volumes up 11 per cent to 238 billion and profit
 £102 million higher at £370 million.
 
 In South Africa, profits increased due to higher prices, good
 progress with the merger and a cost reduction programme.  The
 rate of total market decline continued to slow, with Peter
 Stuyvesant showing excellent growth and increased market share.
 Total volume in East Africa remained under pressure from
 difficult economic conditions in Kenya and Uganda and civil
 unrest in Congo.  In some markets, the Group launched value-for-
 money brands, such as Safari in Kenya and adjusted pricing in
 Uganda in response to consumer downtrading.
 
 Despite tough trading conditions throughout the Southern Africa
 area, total sales were only marginally down. Elsewhere in Africa,
 results have been adversely impacted by local currency
 devaluations.  British American Tobacco Egypt was incorporated
 and became operational in December.
 
 In India, the Group's associated company ITC increased market
 share and produced excellent results, primarily due to higher
 volumes and price increases. VST, also an associate, returned to
 profit after the loss in 1999 as a result of the disposal of its
 non-tobacco business.
 
  Business review.....                                          8.
 
 In Bangladesh, total volume and market share increases were
 driven by strong growth in John Player Gold Leaf which, together
 with a better mix and lower costs, led to a substantial profit
 increase.  In Sri Lanka, performance remained in line with last
 year, although volumes were lower, but prior year results
 benefited from the gain on disposal of an insurance business.  In
 Pakistan, total volume grew with market share higher, but
 restructuring costs affected the reported results.
 
 A shortage of foreign currency in Uzbekistan continued to
 severely limit production, with domestic sales volume down,
 affecting all brands.  Profit growth in the enlarged Middle East
 business is driven by merger benefits, while production has
 restarted in Yemen after a factory fire in 1999.
 
 Non-trading items

 The above results were achieved before accounting for any
 goodwill amortisation and exceptional items which are described
 on pages 18 and 19.
 
  DIVIDENDS                                                     9.
 
 The Directors will be recommending to the shareholders at the
 Annual General Meeting to be held on 2 May 2001 the payment on
 8 May 2001 of a final dividend for the year of 20.0p per ordinary
 share of 25p.
 
 Valid transfers received by the Registrar of the Company up to
 9 March 2001 will be in time to rank for payment of this
 dividend.  Ordinary shares go ex-dividend on 7 March 2001.
 
 The following is a summary of the dividends declared for the
 years ended 31 December 2000 and 1999.
 
                                          2000           1999
                                     pence          pence    
                                     per            per
                                     share     £m   share      £m
  (a)  On ordinary shares:                                   
  Interim                                                    
  - special 1999 paid 1 July 1999                      4.0     62
  - ordinary - 2000 paid               9.0    193            
               18 September 2000
             - 1999 paid                               4.3     94
               27 September 1999
  Final 2000 payable 8 May 2001       20.0    430            
        1999 paid 3 May 2000                          17.9    390
                                     -----    ---    -----    ---
                                      29.0    623     26.2    546
                                     =====    ===    =====    ===
                                                             
  (b)  On convertible redeemable                             
       preference shares:
  Interim 2000 paid                    9.0     11            
          18 September 2000
          1999 paid                                    4.3     10
          27 September 1999
  Final 2000 payable 8 May 2001       20.0     24            
        1999 paid 3 May 2000                          17.9     44
  Amortisation of discount                     22              20
                                     -----    ---    -----    ---
                                      29.0     57     22.2     74
                                     =====    ===    =====    ===
 
 The amortisation of discount on preference shares reflects the
 difference between the share price at the date of the Rothmans
 transaction and the redemption price in 2004, which is being
 amortised over the period to the redemption date.  The reduction
 in final dividends payable to preference shareholders and the
 amortisation reflects the redemption of 50 per cent of the
 preference shares in June 2000.

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