Interim Results - Part 2

BRITISH AMERICAN TOBACCO PLC
3 August 1999


PART 2

ACCOUNTING POLICIES                                       16.

The financial statements comprise the unaudited results for
the six months ended 30 June 1999 and 30 June 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 interim
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
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 Preference Shares.

As this major acquisition was only completed in June, the
results of Rothmans International have not been consolidated in
these interim results.  The shares issued for the acquisition
are included in shareholders' equity and, together with
associated costs, Rothmans is shown as a separate asset in the
balance sheet.  Short term deposits also include £350 million
deposited with Rothmans to enable it to reduce external debt.
The trading results of Rothmans International from acquisition
in June will be included in the Group results for the nine
months ending 30 September 1999.

FOREIGN CURRENCIES                                        17.

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

Profit and loss and cash flow for the six months to 30 June
1999 at the average rates for that period.  The comparatives
for the six months to 30 June 1998 and the year to
31 December 1998 at the average rates for the year to
31 December 1998.

Balance sheets have been translated at the closing rates at
each balance sheet date.

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    30.6.99  30.6.98   31.12.98
                                                    
US dollar         1.620  1.657   1.576    1.669     1.664
Canadian dollar   2.419  2.459   2.333    2.454     2.556
Deutschmark       2.910  2.915   2.990    3.012     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.

Other settlement costs are charged as ongoing costs.
Operating profit before exceptional items for the six months
to 30 June 1999 is after charging costs of £399 million
(including £22 million for one-off settlement compliance
costs and liquidated legal fees) compared to £44 million in
the comparable period of 1998.

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.

DEMERGER AND RESTRUCTURING COSTS                          18.

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 this half year
includes £25 million in respect of this item.

TAXATION
                                             6 months to
                                        30.6.99    30.6.98
                                           £m         £m

   UK                                      21         52
   Overseas                               249        110
                                         ----       ----
   British American Tobacco and
    subsidiary undertakings               270        162
   Share of associates                     60         54
                                         ----       ----
                                          330        216
                                         ====       ====
   Effective tax rate                    49.9%      37.1%
                                         ====       ====

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 and the average number of shares in issue during the
period (excluding shares held by the Group's two Employee
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.

Earnings per share cont.                                  19.

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.

As Rothmans International results are not included in the
Group's results for this report, the basic and diluted
earnings per share calculations do not reflect the ordinary
and convertible preferences shares issued as consideration
for this acquisition.

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 ACT, an adjusted
earnings per share is shown below:

                                     Basic earnings per share
                                        6 months to     Year to
                                     30.6.99   30.6.98  31.12.98
                                     (pence)   (pence)  (pence)

Unadjusted earnings per share         18.09     19.58    22.17
Adjustment from net to nil basis                (0.58)   (0.32)
Effect of US tobacco settlements                 5.91    24.08
Effect of sales tax recovery          (0.83)    (2.37)   (2.37)
Effect of demerger and                                  
 restructuring costs                             1.67     2.95
Effect of US tobacco settlements on                     
 effective tax rate                    7.12             
                                     ------    ------   ------
Adjusted earnings per share           24.38     24.21    46.51
                                     ======    ======   ======

Similar adjustments would apply to diluted earnings per
share.  For the six months diluted earnings per share on an
adjusted basis would be 24.14p (1998 24.08p) compared to
unadjusted amounts of 17.92p (1998 19.48p).

DIVIDENDS

As previously announced, the Directors declared a special
interim dividend of 4p per share in respect of the first
three months of 1999.  This dividend was paid on 1 July 1999
and amounted to £62 million.

Dividend cont.                                            20.

The Directors have declared an interim dividend out of the
profit for the six months to 30 June 1999, for payment on
27 September, at the rate of 4.3p per share on both the
ordinary and preference shares.  This second interim dividend
amounts to £104 million.

Valid transfers received by the Registrar of the Company up
to 13 August 1999 will be in time to rank for payment of the
second interim dividend.

SEGMENTAL ANALYSES:  ASSOCIATED COMPANIES

  3 months to                               6 months to     Year to
30.6.99 30.6.98                            30.6.99  30.6.98 31.12.98
                                                           
   £m      £m                                £m       £m       £m
                 Turnover excluding duty,                   
                 excise and other taxes
  107     138    Tobacco                     362      358      721
  185     174    Financial services          364      338      693
  141      96    Other trading activities    259      258      714
-----   -----                             ------   ------   ------
  433     408                                985      954    2,128
=====   =====                             ======   ======   ======
                                                            
                 Operating profit                           
   45      55    Tobacco                     107      104      217
   25      22    Financial services           49       42       81
    3       7    Other trading activities     13       13       37
-----   -----                             ------   ------   ------
   73      84                                169      159      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.

Millennium cont.                                          21.

Following the merger the Rothmans International 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 90 per cent at the mid year 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
                         3 August 1999