ASH release

BAT profits warning - reducing smuggling reduces profits

5^thDecember 2001 immediate

British AmericanTobacco today announced a profits warning [1] and attributed this in part tothe decision "to apply even more stringent criteria for the supply ofproducts to trade customers, especially in the area of duty free sales"

ASH said this wasthe early sign that BAT was under pressure to stop supplying the smugglersthrough third parties and treating the black market as if it is just anotherdistribution channel.    BAT iscurrently facing a DTI investigation into internal documents that ASH says showthe company had a controlling and managing role in large scale global smugglingof its cigarettes.  The company alsofaces racketeering (RICO) legal action in the US courts over its role insmuggling in Colombia.

Clive Bates,Director of ASH said:

"BATmakes hundreds of millions in profit from cigarettes sold on the black marketby smugglers, but they are coming under real pressure to clean up their act.  The profits warning shows that tacklingsmuggling hurts their bottom line, and that explains why they have never donemuch to tackle smuggling and plenty to encourage it.

"BAT'sinternal documents certainly don't suggest any stringent checks on theintegrity of trade customers - in fact we believe they show that BAT werechoosing their business partners on the basis of who could run the biggest andbest smuggling operation while remaining under arms-length control ofBAT."

"Thisis the first sign that whole transit smuggling business is beginning tounravel.  This could cost them verydearly in the next few years."

Contact CliveBates 020 7739 5902 - 077 6879 1237

[1]  BAT profits warning

5th December 2001

CONFIRMATION OF EARNINGS ESTIMATES

British AmericanTobacco will shortly be meeting analysts and investors prior to the end of its

financial year andis therefore making the following statement. The Board is re-affirming its

confidence indelivering high single figure earnings growth in line with market estimates for2001 and, at current exchange rates, for 2002.

This continuedgrowth should be achieved despite an expected reduction of some 2-3% in volumesin 2002. Economic conditions will have an impact on Group performance in thecoming year and the Group's operational management have reviewed theirprocedures and decided to apply even more stringent criteria for the supply ofproducts to trade customers, especially in the area of duty-free sales.

The net impact isthat the rate of operating profit growth is likely to be lower than marketestimates. As mentioned above, however, adjusted diluted earnings per shareshould still increase in line with market expectations of high single figuregrowth, as a result of improvements in the net interest, minorities and taxcharges.

The businessremains buoyant and the Board is confident of continuing to generate similargrowth in earnings per share over the medium term and expects dividend growthto continue at current levels.