Hello and welcome to the BAT pre-close trading update. My name is Jess and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you'll be connected to an operator. I will now hand over to your host, Mike Nightingale, to begin today's call. Thank you. Thank you. Good morning, everyone. I'm Mike Nightingale, Head of Investor Relations. With me this morning is Tadeu Marroco, our Finance and Transformation Director. Welcome to our 2022 first half pre-close conference call. I hope you're all well, and I'd like to thank you for taking the time to join us this morning. Before we begin, I need to draw your attention to the cautionary statement regarding forward-looking statements, as well as the notes and disclaimer contained in the trading update. I'll now hand you over to Tadeu, who will say a few words on current trading before opening it up to questions. Unless otherwise stated, our comments will focus on constant currency adjusted measures and all share data is year to date average to April 2022. Thank you, Mike. Good morning, everyone, and welcome. We are delighted to report this morning that BAT's transformation continues at pace. Our new category business is becoming an increasing contributor to group performance and is driving our faster transformation. This has been supported by robust pricing in combustibles and the continued benefits of our cost-saving program, Quantum. I would like to take this opportunity to express our deep concern and sadness for everyone affected by the devastating conflict in Ukraine. Our priority remains the safety and well-being of our people in Ukraine and across the wider region. As previously announced, given the continued conflict, we are working towards transferring our business in Russia in full compliance with international and local laws. In addition, this conflict is increasing global uncertainty and disruption, further exacerbating inflationary pressures on supply chains, impacting consumer consumption, and resulting in increased finance costs. While we are not immune to these pressures, we are confident in delivering on our current financial targets irrespective of the timing of the transfer of our Russian business. This is thanks to our well-established multi-category strategy, our strong portfolio of global brands, and our resilient, highly cash generative business. In new categories, we increased our adult non-combustible consumer base by 1.1 million to reach 19.4 million in Q1 and continue to grow. Our new category products are now available in 59 countries globally, with a total of 84 category market combinations, driving strong revenue and volume growth and market share gains in our key markets. We continue to expand and invest in our new category business with over GBP 1 billion invested in the first half alone. Our marketing spend effectiveness tool is allowing ever greater focus and targeting of our marketing spend, resulting in lower incremental spend increases in the current year. Benefiting from the strength of our three global drive brands across all categories, we have been able to increase price, reduce discounting, and leverage scale to drive cost reduction while lowering recommended trade margin across our key markets. As a result, we expect a market improvement in new category contribution in 2022. We are confident in delivering on our targets of GBP 5 billion new category revenue and profitability by 2025, and 50 million adult consumers of our non-combustible products by 2030. We continue to drive value through our combustible business and through Quantum, we are making good progress towards achieving at least GBP 1.5 billion of annualized cost savings by the end of 2022. With this continued good performance, we are confident in delivering on our full year guidance. We also expect another year of strong operating cash generation and to exceed our 90% operating cash conversion targets. In line with our more active capital allocation framework, and in addition to our growing dividend, we are on track to return GBP 2 billion to shareholders through our share buyback program in 2022. This demonstrates our commitment to delivering enhanced long-term value for shareholders. Turning now to our performance in detail. We continue to build on our global category leadership position in vapor, with Vuse achieving 34.4% value share in the top five vapor markets, up 1.1 percentage points. In April, Vuse achieved the number one value share position in the U.S., the number one vapor market. Vuse reached in that market 35.9% share, up 3.4 percentage points, and is now the market leader in 34 states. As a good lead indicator for of sustainable future growth, Vuse has maintained its device share leadership in closed systems in all top five vapor markets. BAT has been leading the pace of vapor innovation with eight successful launches in the past eight years. In May, we launched Vuse ePod 2+ in Canada, our first connected device. In the U.K., we launched Vuse Go, our new disposable offering with nine flavors, and we have further rollout plans in the second half. Vuse's own e-commerce continues to grow strongly, driving conversion, loyalty, and profitability. Total subscriber numbers are up 6% year-to-date, and now represents 34% of our total e-commerce revenue. Encouragingly, data indicates that subscribers have over seven times the lifetime value versus an average third-party retail customer. We are delighted to have received vapor market authorizations for Vuse Ciro and Vuse Vibe in Original flavor from the U.S. FDA last month. Together with our Vuse Solo authorization from last year, this gives BAT the broadest portfolio of market authorizations provided to any company in the U.S. Additionally, it provides further confidence in our Alto PMTA, which shares the same foundational science. Subject to the ongoing FDA discretion, all Vuse products currently available in the U.S. may continue to be marketed. In THP, the continued strong performance of glo Hyper in Europe drove category volume share in the top nine markets, up 1.5 percentage points to reach 19.6%. Excluding Russia and Ukraine, our share of the top seven markets, representing around 7% of total THP volume, reached 18.7%, up 1.2 percentage points. The THP category has continued to grow in line with historical trends, with growth in Europe significantly higher than APMI. Glo continues to drive strong consumer acquisition, revenue, and volume growth. Our consumer conversion rate is now comparable to the industry. In Japan, Glo's share of the tobacco market reached a high of 7.4%, up 60 basis points, as smokers continued to switch to THP. In a highly competitive market, our THP category volume share was 20.6%, down 60 basis points. Glo continued to grow category volume share across all key European markets, with aggregate category share in the top seven markets reaching 20.1%, up 3.5 percentage points. Excluding Russia and Ukraine, our aggregate share of category reached 17.7%, up 5.1 percentage points. The success of Hyper is driving consistent improvements in Glo's brand power. This has enabled us to increase pricing in a number of key markets in Europe. In the first half, we expect to deliver THP revenue growth ahead of volume growth for the first time. Glo is continuing its geo expansion. It is now present in 26 markets, and in the second half, we have strong investment plans, including additional launches, supported by strong marketing activation initiatives. Turning to Modern Oral. In Europe, we continue to be market leaders in 15 Modern Oral markets. Aggregate share in our top five markets, excluding the U.S., was broadly stable at 69.3%. In Norway and Switzerland, we continue to strengthen our volume share leadership position in the Modern Oral category from a high base. Our share of total oral in Sweden continued to grow, reaching 9.7%, up 160 basis points. We continue to drive innovation across the category. Mini pouches are now available in 15 markets, and Max ranges available in 11, driving strong overall growth. We expect to launch Velo in further markets in the second half. In the US, Modern Oral remains only 1.5% of total nicotine value share. Current low-moisture product formulations continue to result in low levels of average daily consumption and high pouch usage. This is leading to a highly competitive price environment. Velo's share was 6.9%, down 4.8 percentage points, with our main focus remaining on Vuse in vapor. We continue to drive value through our combustible business, with value share up 10 basis points. Full-year global tobacco industry volume is now expected to be down around 3% versus our previous guidance of down around 2.5%. This is due to the impact of continued global macroeconomic uncertainty resulting from the ongoing conflict in Ukraine. With a well-balanced portfolio of brands across all key price tiers and the benefits of our digital revenue growth management tool, we believe we are well-placed to navigate the increasing inflationary pressures this is causing. While our combustible performance remains robust, the first half volume is expected to reflect the impact of the sale of our business in Iran in August last year, as well as the very strong prior year comparator in the U.S. First half pricing remains strong, partially offset by a continued geographic mix, driven mainly by the impact of the U.S. While we are seeing the re-emergence of illicit trade following the end of lockdown restrictions in certain markets, to date, we have seen no evidence of accelerated down trading in our portfolio. In the U.S., industry volume decline is returning to historical norms, with the first half additionally reflecting the impact of the prior year comparator. U.S. value share continues to be strong, up 40 basis points, driven by our premium brands, Newport and Natural American Spirit. In addition, in the first half, the unwinding of prior year U.S. inventory movements is now expected to be partially offset by the phasing of inventories ahead of the U.S. implementation of our group-wide SAP platform in July. In the second half, this inventory phasing around our SAP rollout is expected to fully unwind. This means full year results will reflect the unwinding of the prior year U.S. inventory movements. In conclusion, on our financial performance, we are, while we are not immune to our current global macroeconomic pressures, with our strong new category performance, our robust underlying performance in combustibles, and at least GBP 1.5 billion of savings from Quantum by the end of 2022, we are confident in delivering our guidance of 2%-4% constant currency revenue growth and mid-single figure adjusted diluted EPS growth. Applying current foreign exchange spot rates of 1.26, we expect a translational tailwind of around +2% on adjusted diluted EPS for the half year and around +5% on adjusted diluted EPS for the full year. While we recognize that there will be challenges ahead and that there is more work to do, our execution capabilities continue to evolve, and we are rapidly transforming the business. We are now in our faster transformation phase and making strong progress towards our purpose to build a better tomorrow. Driven by the strong growth of our new category business, we are continuing to reduce the health impact of our business while also delivering on our wider ESG targets. Key highlights in the first half include, we now have 18 certified carbon-neutral manufacturing commercial facilities, including a further two added in the first half as we continue our work towards achieving carbon-neutral operations by 2030. Our landmark one-year glo clinical study is completed, with full results expected to be published shortly. 180-day clinical study results have already showed that completely switching to glo from cigarettes resulted in positive change to all measure indicators of potential harm, with the majority of indicators similar to quitting. In summary, with our well-established multi-category strategy, strong portfolio of global brands, and our resilient, highly cash generative business, we are now in our period of faster transformations as we build a better tomorrow. Thank you, and I will now open to the call to questions. If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. The first question comes from the line of Richard Felton from Goldman Sachs. Please go ahead. Good morning, Tadeu, Mike. Two questions from me, please. My first question is on Vuse Go, which I'm seeing a lot around London, so it looks like the launch is going quite well. My question is, firstly, in the cities or regions where it has first been launched, can you say roughly how big Vuse Go has become as a proportion of your overall Vapour business? And then secondly, thinking about Vuse Go or disposables in Vapour more broadly, how should we think of those impacting the gross margin of your Vapour business? Will it be accretive to gross margins or dilutive over time? My second question is on combustibles in the U.S. Both BAT and the industry has taken a lot more pricing over the last three or four years, certainly than has been the case historically, which I would assume means that affordability is in a slightly different place today than it was a few years ago or when we had the last recession in the U.S., for instance. Given that step up in pricing and also all the headwinds that the consumer is currently facing, have you seen any shifts in elasticities compared to historical levels? Okay. Thank you, Richard, for your questions. Look, Vuse Go, we have just launched, so it's early days to make a reference in terms of how much this is the volume compared with our own portfolio. One thing that I can tell you is that the modern disposable is gaining a lot of traction in a number of markets. If you exclude the U.K., in the top Vapour markets, it's already above 20% of our overall market. U.K. is double than that. It's not a surprise that you see a lot of device on disposable. The fact that we have just launched our product, we are very positive in terms of the progress that we can make, 'cause we are the ones that have a well-established brand by this point in time. As you know, we are leader in Vapour in the U.K., and we are very confident that in this new segment that is opening up in a number of markets, in particular in the U.K., we'll be able to make a good inroad there. In terms of the margins, we expect to have similar margins that we currently have with our cartridge pod products. We are building the products cost to our margin. We have the margin in our minds. We are not expecting any potential derail of that. In these new products, we are very conscious about the margins that we want to achieve. Also in terms of the ESG elements, we'll be taking, you know, putting recyclable initiatives on that, and surely continue our responsible marketing, avoiding any type of sales for youth. These are the key elements that we always have in mind when we are launching these products in first in the U.K. Like I said in my opening, we are also rolling out for other markets in the second half of the year. In terms of U.S., you have to consider that, we are seeing some softness of volumes in the first half of the year. If you take the last three years and you make an average of that, you saw in 2020 we had even increasing volumes in the U.S. 2021 was a more, you know, normal expectation. This year is a bit less. At the end of the day, the average is not that much dissimilar to historical trends. The affordability is having a particular impact at this point in time because of the high levels of inflation. On the other hand, we also have a market where you have full employment and we have a wage inflation as well. That's why we are not giving any guidance at this point in time. We have to see how it performs. We expect in the second half that the comparators will be more benign for us. This year, this first half is a bit more complicated 'cause the comparator was very strong last year. In terms of elasticity, we are not seeing that much difference from the point forward that we always said. We believe that we are well positioned given the strength of our portfolio, the digital tools that we have in place. The non-big three, if anything, is growing in a pace that is even slower than the historical ones. Normally, you'll see the non-big three growing by 0.8%, 0.9% on a given year. What we have seen so far this year doesn't suggest this level of pace. We are not seeing, like as mentioned before, any type of downtrading. Our brands, Newport and Natural American Spirit in particular perform extremely well. We are very well positioned in the U.S. market, independent of the pricing that we are taking. That's very helpful. Thank you, Tadeu. Okay. The next question comes from the line of Rashad Kawan from Morgan Stanley. Please go ahead. Hey, guys. Good morning, and thanks for this. Just one for me. Just wanted to get your thoughts on the implications to BAT from the Philip Morris Swedish Match deal. I mean, does that change the way you approach the U.S. NGP market at all? I mean, how much flexibility do you have to push heat-not-burn in the U.S. market, as an example, if IQOS is pushed aggressively there and starts gaining traction as a category? Thank you. Rashad, we are not seeing any implications. To be honest, I don't see any implications from BAT in terms of our strategy. We are very clear in terms of, first of all, it's interesting to see that everyone now is seeing what we have already seen many years ago, that the direction is the multi-category. We were the first ones to start saying that, and not just saying, but executing that. As a consequence of this, we are very well positioned already in Modern Oral, and we are well positioned in Vapour. The THP, in particular in the U.S., like you said, first of all, I think we have mentioned this before, we don't believe that really is a category that has a lot of potential, because we see the differentiation between the levels of tax on nicotine combustibles are really high compared with THP. We saw this in markets like Canada, which has a similar level of tax on nicotine combustibles. The industry, after trying for many years with very heavy investment in THP got nowhere in terms of presence in that market. We will be more as an insurance, making sure that we have our PMTA of Glo Hyper, that, by the way, has already been filed in the FDA. In the necessary, we're gonna activate that. But we still believe that this is pretty much a vapor-established market. Like we saw in France, like we saw in the U.K. When you have a very well-established market with a very high levels of tar and nicotine, the potential of THP is much reduced. That's the beauty of the multi-category. The fact that we are addressing different consumer needs in different geographies with different levels of offers in terms of nicotine enjoyment. Okay? Very clear. Thank you. The next question comes from the line of Gaurav Jain from Barclays. Please go ahead. Hi, good morning. Hi, Gaurav. It's been eight months now since the PMTA approval on some Vuse products in the U.S. Have you witnessed any change in the consumer acceptance of the product post the approval? No. In reality, the consumers are not even aware that the products get approved. That's an important point. The approval just give you the right to keep your products in the market. Once you get the approval, the marketing authorization, you cannot publicize that. You cannot advertise that for consumers. It's completely different. That's why we are not very precious about the timing of approval, for example, of the Vuse Alto. We were one of the last to submit our PMTA. We'll probably be seeing other approvals before us, but this wouldn't be a problem 'cause the consumers are unaware of what the FDA did in terms of approval or not. We feel very confident in our and that's the important bit. We feel very confident about the approval of Vuse Alto 'cause the science foundation of the product is exactly the same that we use in the other SKUs of the family. They all got approved, and we make sure that we took the learnings before from the others to give a robust dossier for Vuse Alto. We are confident that we get approved. Independent of the time of that, we can keep the product in the market and consumers will not perceive the difference once they finally get approved. Sure. Considering the ban on importation of IQOS in the U.S. while the ITC case is going on, what are your plans on heat-not-burn in the U.S. now? Well, our plans, like I said in the previous one, we don't believe that the category will be as strong as vapor. Our plan continues to focus on vaping. We spoke about Modern Oral before. Modern Oral is a category that is still lagging a lot of product features on that. The products that you see in the U.S. are the ones that had to be in the market before August 2016. As a consequence, the level of moisture is very low compared with the ones that you see outside the U.S., and is not really satisfying enough. That's the consequence of that, the level of poly users is very high. It's like 95% of the users Modern Oral are poly users, and their level of consumption is two to three pouches a day, while if you go to Scandinavia, it's between six to seven. The level of solo users is much higher. We believe that the Vapour category will still continue to be a very well-established category. Once we start getting approval from the FDA to more modern products in Modern Oral, better quality, similar to the ones outside the U.S., you'll probably see some more traction in that category. THP, we don't believe that will be as successful as you see in other parts of the world 'cause of the characteristics of the U.S. market, like I just mentioned before. It's a very high tar level of nicotine and tar in cigarettes. It's a market where the excise is 100%. You have difficulties in terms of commercializing, in terms of advertising. We don't see really a massive potential there. Saying that, like I mentioned before, we have applied for our PMTA with glo Hyper, and we are in the process of getting this approved. 'Cause we believe that the having our way to a MRTP on THP in the U.S. would be very benign when you engage with regulators outside the U.S. That's our major driver to that. If needed, we can activate in the due time. Sure. Thank you. The next question comes from the line of Rey Wium from SBG Securities. Please go ahead. Hi, Tadeu and Mike. First of all, I want a clarification around the Russian business. Will you continue to account for it until you have successfully completed the sale or will it only be in for like the first two months of the year? Then just a follow-up on Russia. I mean, it is such a large market. How do you longer term think of basically re-entering the market or, you know, what plans are there? Because, I mean, just from my perspective, you know, by just exiting it and, you know, and basically open it up for competitors. I just wanna get just a bit of a steer of the Russian business. Okay. Thank you, Rey, for your question. Look, Rey, just to answer your question on the reporting, why is the exact time of the sale remains unclear? We under IFRS, we must continue to include our Russian operations in our reported numbers. Now we are, like we communicated back in March, we are working as fast as we can towards exiting our Russian business. But it's extremely complex process to fully separate the business from the group. Some of you probably know we have spent five years, for example, I've just given one example, integrating our ERP systems and creating this unique platform that we call Project TaO across all the group. So the Russian business is not different than others, so it's completely tied up for the mothership. To untangle all that takes a long and very complex steps to be done. Then you go through to the discussion around patents, around trademarks and all that. You can imagine the level of complexity and because in addition to the negotiation happening, we want to make sure that we remain compliant with all regulations and international sanctions. They are changing continually, which again translating to some adjustments to the term sheet. In terms of the future, it's difficult to predict now. I think that we'll be just speculating at this point in time if we'll be able to go back and to come back to the market. I think that is we have to see how it goes. The important thing is that we are working to get it done. The point that we made about our guidance is that irrespective of the timing of the Russia disposal, we are confident in deliver the revenue, the EPS guidance that we gave in the RNS today. That is what matters, and let's see what happen as we move along, because we are, like I said, it's a very complex process. Good. Maybe just a quick follow-up. Just in terms of, I mean, the uptakes around the vapor business, sounds quite positive. I just was wondering about the profitability in the U.S. You know, you talked about obviously trade margins reducing. I think you mentioned last year, the second half, Vuse turned profitable in the U.S. Mm-hmm. Is there a chance of, you know, getting to full profitability in the full year? We will be providing category contribution on a consolidated base from half year results. You will start seeing the progress we are doing in terms of reduction of losses. What I can tell you, so we are not providing disclosure by category or by market, but what I can tell you is that the U.S. has been one of the biggest drivers for us to reduce losses. We are very pleased with the performance. Yeah, you're absolutely right. From second half last year, we turned into positive contributor. What we have done in the U.S. is exactly the model that we are applying elsewhere. You note that we have started with very high levels of discounts in the end device to get our products in the hand of consumers, because we always believe that our products are better than competitors. This translate into more and more consumables being sold. We are in the phase now that we are able to increase the price, not just on the consumable, but also on the device. We do that using this digital tool that we have developed for combustibles, 'cause then we can play with different package. For example, we have package of one cartridge, two cartridge, four cartridge. We understand the elasticity in different geographies, different channels, and we are using all opportunities to get as much value as possible. We are also able now that we are leaders in 34 states to have a better negotiation in terms of trade margins. On top of that, we have just reviewed our supply chain, and we started moving production out of China to other locations to avoid import tariffs in China that also enhance profitability on the Vapour business. When you pull all this together, we are. It's clear and a creative business for us today in the U.S., and we are very pleased with that. Excellent. Thank you. Before we go to the next question, as a reminder, if you'd like to ask a question, please press star one. The next question comes from the line of Alicia Forry from Investec. Please go ahead. Hi. Thank you. Good morning, Tadeu and Mike. Hi, Alicia. A few questions. Thank you. A few questions from me. Just wondered if you could dig in a little bit into, you know, the confidence in reiterating guidance despite a little bit of, you know, increased macro pressures that you cite. You know, is this confidence based on kind of price increases that you've taken or internal cost savings that you see? Just a bit more color would be helpful. Maybe, as sort of part of that question, you mentioned illicit returning. I don't think that's a surprise post the crisis, but are you able to, you know, kind of detail where that's occurring? It sounds like it's not affecting your business, but perhaps you could confirm that. Mm-hmm. Thank you. Okay. Yes. Yeah, we are seeing a better environment price-wise. I'm talking here globally. Globally. It's not just particular markets, but worldwide, we are seeing a better price environment than we saw last year, which is a positive for us. This will be one element that we'll be using to navigate through the headwinds that we face. The savings, the fact that we had a well-established program to deal with, what we are doing is just really trying to leverage as much as possible the mobilization of the company around the cost savings to get it, you know, as stretched as we can so that we are very comfortable now to get above GBP 1.5 billion savings by the end of 2022. That will help the fiscal year of 2022. This will be together with the strength of our portfolio, the rollout of the revenue growth management tool I was referring to in the U.S. to other parts of the world. These will be the key elements that we'll be using to navigate through this turbulence. We are already 88% of the pricing that we need for the year. That's the level of confidence that I was referring to. For sure, the unknown in all that is the timing of the transfer of the business in Russia. You would expect that it takes longer down the year. We'll be more in the upper range of the range. Overall, we are very confident that we can be able to deliver that. On the illicit, because we are also doing quite well in the non-combustibles, which is another element that I spoke in the scripted. The combustibles, remember that we, for the first time last year, we reduced our loss by GBP 100 million, and we expect now to consolidate this trend moving forward in 2022 because of the initiatives that I was referring to during my opening. This will be also an element that will help us to go through this. Now, for sure that we will have some headwinds and, on top of the pressures we had to in the U.S., to lap a very strong quarter, first half this year. We have to. These stocks that needs to be unwound throughout the year that we referred to at the beginning of the year. When you pull all this together, we are very confident on the targets that we put for ourselves. We expect a more balanced result between first half and second half, subject to what happened with Russia for sure. Because the pressures that we'll be facing more on the combustibles side will be pretty much balanced out with the improvement we are doing in new categories. In the second half, we expect the pressure in combustibles to ease a bit because of the comparator, mainly in the U.S. On the other hand, we are investing more in the new categories. Like I said in my opening, we are going for new launchings, we are going for new marketing activations. We expect pretty much a more balanced half one, half two in 2022, subject for sure to what happens in Russia. In terms of illicit, we still have some legacy markets from COVID that are still doing quite well. We have Brazil, for example, where illicit continues to decline, which is very good news. This trend started with the COVID, with the close of borders. The government then started acting, and we haven't seen any excise increase for five years now, even states excising in Brazil, which is very helpful. We are also seeing improvements in places like Malaysia, which as you know, has a very high levels of illicit, and it continues to improve this year. We saw some reversal of this trend in places like South Africa since 2020. We see problems in KSA, in Saudi, for example. Like you said, overall, we are expecting a 1% increase in illicit this year. Illicit today is adding to something close to 12% of the total market, and we expect this to be pretty much on the 13%, when you consider places like the usual suspects like Pakistan or KSA, like I referred to, and some of that offset by the other markets that I was referring to you. Okay. Okay. Thank you. I think, I'll leave it there today. Thanks for that detail. Thank you. The last question comes from the line of Jared Dinges. Please go ahead. Hi, guys. Thanks for the questions. In recent years, you know, we've seen industry pricing ahead of inflation in the U.S., in cigarettes and, you know, given this year, you know, you actually have a very inflationary backdrop across other categories. Essentially you're seeing cigarettes becoming more affordable. Do you see any opportunity to kind of offset any U.S. downtrading through accelerated pricing even further? Or do you kind of prefer to take this year to make cigarettes relatively more affordable in the U.S.? That's the first one. Look, Jared, we. This is a continuous checking for us. We have these very sophisticated models to analyze the level of elasticity in a very granular basis. It's not that we take one initiative because we have to consider that, pricing is one thing, but the discount is what really matters in the U.S., and the discount varies a lot. You see the headline prices, but what the consumer end up paying at the end is what is, you know, offering him after discount. The levels of discount vary a lot, and this is a consequence of us analyzing exactly the point that you are raising, the level of affordability and this will vary between different states, for example, or even between different channels. Overall, my point about the comment on the price is that we are seeing a better price environment than the previous year. We are not seeing, particularly in the U.S., at this point in time, a big difference in terms of elasticity from what we have seen in the previous years. Consumers are still spending similar amounts of money, but overall, I'm not just talking about cigarettes, but they are a bit more selective in terms of where they spend their money. We are using all this intelligence and follow up from consumers to understand where we need to apply the right levels of discount. We haven't seen the downtrend in our portfolio, like I said. The reason why we are growing 40 basis points in terms of value share is exactly the fact that we have brands like Natural American Spirit, which is a fantastic brand. That, by the way, is the only brand in the U.S. that has no discount at all. It's still continuing to grow. Also our Newport, which is our premium brand in the U.S. The fact that we have this strong portfolio combined with this level of knowledge from the digital tool is very helpful. You have to remember that the industry has this particularity that we can leverage the excise and the retail price, meaning that we are more resilient than other consumer goods. The characteristic of the excise and how much we pass on to the consumers and how much comes to the manufacturer itself, it makes this category very attractive and more resilient in an environment of a high inflation and other pressures. Got it. That's very helpful. Maybe to switch gears, but also in the U.S. Mm-hmm. You know, you guys have talked about, you know, in the past, the potential shakeout kind of post-PMTA. I think you quantified the size of that potential opportunity in the past. Mm-hmm. We've continued to see the disposable category grow. Like I know, you know, which brand winner within that is changing and it's become pretty fragmented, but it is combined fairly sizable now, and it's almost all flavored and primarily non-menthol flavored. You know, we've seen some PMTA denials come through. I know some of those are going through the court system. They're under review. Maybe you can give us an update on how big you think that opportunity is and will be, and when you think, you know, we'll finally see that shakeout. Mm-hmm. Maybe just to add to that, you know, how many of those consumers that are consuming kind of like the fruity flavored Vapor products, how many do you think would actually stay within Vapor, if it was only menthol and tobacco flavors being offered? Thanks. Look, you have to consider the bigger picture is that the FDA has 400 employees to deal with this massive amount of dossiers of submissions, millions of that. So they have provided some market authorization, some market denials. I think that they have something like 500,000 to a million cases still to be analyzed. They are really late on that. It's really not a surprise, pretty much not a surprise 'cause the amount of SKUs that exist in the market was, you know, very substantial vis-a-vis the capacity that they have to assimilate all that. That's the first thing. The second is, we are seeing more and more concentration in the U.S. for closed systems. Because all these open systems and liquids are having tremendous difficulty to get approved through the FDA, which again is not a surprise. As you move along, you expect this to materialize. One big loophole that existed that the FDA just recently acted on that is related to the disposable synthetic nicotine. Why I'm saying the loophole, because remember that they banned all flavors other than menthol and tobacco back in January 2020, but there was no mention to synthetic nicotine, but synthetic nicotine in principle was not subject to the remit of the FDA. This type of products grew to something close to 20% of the total market over the last couple of years. The FDA has just enacted the president actually enacted a mandate that the FDA are now having authorization to regulate these products as well. We expect the FDA to request PMTA in these products as they did for the other products in the market with tobacco. The question here is how long this will take and the level of enforcement that we will see for this to materialize. The size of the prize can be as big as 20% of the market, but it's very difficult to predict the timing of that. My point is not just a question of time, but it's also a question of enforcement. In terms of the consumers, we are seeing still a very good attraction in terms of menthol and tobacco. You saw that the category continued growing since January 2020 when the fruit flavors has been taken out. Okay. Got it. That's clear. Thank you, guys. Okay. There are no further questions, so I will hand the call back to your host for some closing remarks. Okay. Thank you all for listening and for your questions. I'd like to leave you with a few final comments from my side. We are very proud of the progress we are making transforming BAT, driven by the continuous strong momentum across all three new categories, driving value through our combustibles business and generating cost savings through Quantum. We are confident in delivering on our 2022 guidance, and with that, I look forward to update you further on our transformation at our half year 2022 results presentation on the 27th of July. Thank you very much and stay well. Thank you for joining today's call. 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