Hello, welcome to the BAT first half 2023 pre-close conference call. Please note this call is being recorded. For the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Victoria Buxton, Head of Investor Relations, to begin today's conference. Thank you. Good morning, everybody. I'm Victoria Buxton, Group Head of Investor Relations. With me this morning is Tadeu Marroco, our Chief Executive. Welcome to our 2023 first half pre-close conference Call. I hope you're all well. I'd like to thank you for joining us and spending the time with 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. Unless otherwise stated, our comments will focus on our constant currency adjusted measures. All share data is year to date average to April 2023 versus full year 2022 average. I will now hand you over to Tadeu, who will make some introductory comments before opening the call up to Q&A. Thank you, Victoria. Good morning, everyone, and welcome. Let me begin by addressing a frequently asked question: Will there be a change in our strategy? The answer is no. I'm absolutely clear that our strategy is right and that we will execute on it successfully. I have been at the center of its formulation and implementation since 2019, and I'm confident that it will transform our business, and in doing so, deliver long-term multi-stakeholder value. Our commitment to building a better tomorrow by reducing the health impact of our business through our multi-category portfolio of reduced risk products remains. Smokers must have access to better choices. This is now a reality for many smokers who have already switched to our reduced risk products. It also represents a commitment to consumers who continue to smoke and are yet to make that transition. What is different now that I am Chief Executive? While I'm proud of our progress to date, rapidly building a GBP 3 billion new category revenue business with profitability to expect in 2024, in a fast-changing global environment, we must continue to evolve into an increasingly agile and progressive BAT. We will achieve this through sharper execution and greater emphasis on fewer, bigger priorities, guided by our market archetype model, which identifies different stages of new category maturity, ensuring our priorities deliver on our strategy and are well articulated with clear business outcomes defined. As a truly global business, we understand that markets vary significantly by both category maturity, driven by consumer tastes and preference, and importantly, by different regulatory environments. In addition to taking a more strategically guided approach to resource allocation, we will continue to increase our engagement with governments, regulators, and other key stakeholders on topics including access to new categories for smokers and regulatory enforcement. I have made it clear to my senior management team and the organization that we must operate to the highest ethical standards. This topic must remain a priority for both our employees and business partners. Building and developing collaborative and inclusive teams has always been at the heart of my leadership approach. My commitment as new Chief Executive will be to nurture that passion in BAT for our people, our consumers, and our brands. Turning now to the trading, where I'm pleased with our performance in a number of key areas. We have increased non-combustible consumer numbers by a further 9,000. GBP 900,000 to reach GBP 23.4 million in Q1, with continued good revenue growth and a further reduction in losses, meaning we are on track to deliver our GBP 5 billion revenue ambition in 2025 and profitability in 2024. Building on our strong momentum, we have committed to further incremental investment in new categories this year, with the phasing of our investment plans weighted to the second half of the year. In vapor, Vuse continues to extend our value share leadership to reach close to 40% share in key vapor markets, driven by further strengthening of our leadership position in closed systems year to date in the U.S. Our PMTA for Vuse Alto remains under FDA review. This application further builds on the foundational science of our successful submissions for Vuse Solo Zero, and Vibe, and we are confident that a successful outcome will be received by the end of 2023, in line with FDA's most recent projected timeframe. Globally, the modern disposable segment is driving incremental vapor category growth. We continue to approach this fast-growing segment in a responsible way, consistently implementing our global youth access prevention guidelines, and through initiating take-back schemes for responsible disposal. Vuse Go is now available in 40 markets, and our rapid geographic expansion continues. As part of our ambition to broaden accessibility of our reduced-risk products, we have recently launched Vuse Go in emerging markets, including Colombia and Peru, with encouraging early results. In THP, glo has had an underwhelming start to the year, with glo category volume share being down 1.1 percentage points in key THP markets. Continued category volume share momentum in some key European markets has been offset by highly competitive environments in Japan and Italy. Recent momentum is more encouraging, with our new glo Hyper Air platform launched in four key European THP markets, a step forward in what promises to be an exciting pipeline ahead. We expect that glo's performance will improve as we progress through the year, driven by activating commercial plans in Japan and Italy, and further market rollouts of glo Hyper Air plans in the second half. In Modern Oral, Velo has maintained its clear volume share leadership in 15 European markets, supported by our pipeline of innovative new products. While our global Modern Oral segment share was down 1.8 percentage points, mainly driven by the U.S., where we await the outcome of our PMTA for a new Velo product, our volume share of the total oral category was up 70 base points in key Modern Oral markets. We continue to unlock emerging market opportunities with strong growth in Pakistan and a national rollout in Kenya, following a successful pilot in key cities last year. I'm very clear that consistently driving value from our combustible brands is critical to generating value to fund further new category growth, and deliver substantial cash returns to shareholders. Our combustible brands outside the U.S. have been performing well, as we address portfolio gaps and optimize pricing, driving group volume share up 10 base points. However, group cigarette value share is down 40 basis points, mainly due to the implementation of commercial plans in the U.S. We are starting to see early signs of stabilization in the U.S. industry premium segment, and have built sequential volume share since the start of the year. Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S. We are taking action, although it will take some time to carefully and thoroughly implement our plans. Due to the first half impact of SAP-related inventory phasing in the prior year, we expect our full year volume performance in U.S. combustibles to be second half-weighted. In California, the long-term impact of flavor ban currently remains difficult to assess. Menthol products are reportedly still being sold illicitly due to the lack of enforcement, and we have also seen elevated flavored volumes throughout the state. We have anti-smuggling protocols in place and are doing our part to engaging with our stakeholders, including the State Attorney General's office, to crack down on illicit sales. Our FDA-authorized products introduced at the start of the year are performing well, as adult consumers of flavored tobacco products switch to legal, non-flavored alternatives. We continue to strongly believe that there are more effective ways to reduce tobacco harm by encouraging more smokers to switch to scientifically substantiated, reduced-risk products. Our active capital allocation framework considers the macro environment, potential future litigation and regulatory outcomes, and continued investment in our transformation. I'm pleased that we have now reached agreements with the DOJ and OFAC. In Canada, the CCAA mediation process is still ongoing, and we expect this to conclude over the medium term. Given this, the more challenging and dynamic macro environment, it's vitally important that we take a pragmatic approach to our balance sheet. At the same time, we understand the importance of cash returns to shareholders and remain committed to our 65% dividend payout ratio over the long term. I'm pleased that by continued strong cash generation, we are making good progress towards reducing our leverage closer to the middle of our 2-3x adjusted net debt, adjusted EBITDA range by the end of 2023. This will provide greater business resilience and support future financial agility, and I'm clear that once the middle of the range is reached, we will sustainably return excess cash to shareholders. To conclude, I'm honored to have been appointed Chief Executive. Throughout my 30-year career with BAT, developing teams that deliver strong performance through inclusivity and collaboration, has always been part of my leadership approach. I'm fully committed to enabling an increasingly agile, modern BAT, one that is driven by our strategy, guided by our purpose, and enabled by a focus on flawless execution. It will drive our transformation and deliver long-term multi-stakeholder value. I have great confidence that this can be achieved. We continue to maintain our full year 2023 guidance of 3%-5% organic constant currency revenue growth, with our performance expected to be second half-weighted. Mid-single figure constant currency adjusted EPS growth, impacted by the time of the transfer of our Russia business and Belarus, which we expect to close in 2023. Thank you for listening, and I will now open up the call to your questions. Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star one now on your telephone keypad. To withdraw your question, please press star two. The first question comes from the line of Rashad Kawan, calling from Morgan Stanley. Please go ahead. Hey, good morning today. Thanks for taking my questions today. Just a couple from me. Just the first on the U.S. I think the price increases you've been taking in cigarettes there have been, you know, seem to lag the industry a little bit. Should we read into that that that's a function of the revenue management actions you put in place last year around targeted promotions and all? You know, any update as to how these actions are playing out and whether you're starting to see it, you know, yield some benefit in terms of volumes? I know you talked about the premium segment kind of seeing some signs of stabilization, but any more color there would be, would be helpful. The second question around kind of the CEO change. Can you give some insight into kind of the board's decision there? As you look into your tenure as CEO, and I recognize it's early, and I know you mentioned you know, you don't expect a strategy shift, what would you say are your, you know, top priorities kind of near and long term? Thank you. Hey. Yeah, look, thank you for the questions. On the U.S., let me give a kind of overview on the U.S. market first. The volume of cigarettes has been impacted clearly by the post-COVID normalization. What I mean about that is the absence of fiscal, federal, and the state stimulus. This has been exacerbated by the fact that we have a lot of macro pressures, which has resulted in a high single-digit market decline and some down trading that we saw many last year. More importantly, the price elasticity is still holding nicely at 0.35-0.4. So we also saw, like we comment on the trade updates, some levels of stabilization, some early signs of stabilization in the premium segment. The price we took, taking all those things into consideration, the U.S., you cannot forget that, the U.S. is the most affordable market in cigarettes, second to Japan. The elasticity is, like I said, still in, is similar to the pre-COVID period. We, you're absolutely right. We are taking into consideration the revenue growth management, we are taking much more smart and target pricing. We are committed to do some commercial adjustments in our portfolio as well, to cope with this new environment. We spoke in the past about price laddering that we are doing as we speak, and we are absolutely leveraging on the strong distribution force that we have in the market. I'm sure that we are seeing already some early signs of a share recovery if we compare the January positions to where we are now. This will probably take some more time, in order to get to the position where we want to be. All in all, I think that the message is that we don't see any reason why the volume decline in the U.S. cannot come back to the normal demographics declines of 4%-5% in any given year. We are in the market, which is very profitable and with still very benign levels of elasticity. Reynolds has a fantastic portfolio that needs some adjustment as we speak, to cope with the macro pressures that we are facing. We cannot forget that U.S. is more and more multi-category market. We have a vapor that accounts to almost 10% of the in the nicotine pool there in the U.S., and we are doing extremely well in vaping. The levels of incidence in vapor is 15%, so compared with 19 of cigarettes. We are doing extremely well. The progress that we are making in Vuse, not just on the, on the share side, but also on the profit side, as well as with the help of the restructurings and cost savings agenda that we have through Quantum, will help us to mitigate the pressures that we'll be facing on combustible. That's the U.S. In terms of the board decision, Yeah, look, yes, there was no single event behind that decision. The board unanimously thought that the they consider, I would say, the fast changing environment. We have a very different economic cycle. We have a heightened competitive activity, regulation, and the board took a this a view that there was a time to have a change in leadership and the leadership skills, and that's exactly what they have done in a short period of time to avoid disrupting the business. Like I said in my opening, I'm quite, you know, clear about at the fact that we have the right strategy. Will be a question more on how we deliver the strategy as opposed to what. The how will be much more. I'm an evidence-based person by nature, let's put it that way. I think that the how would be a much more sharpened way to do resource allocation in the group, would be leverage on the latest change that we have done in terms of marketing archetypes, should be precise in terms of where we invest and the best return we can get from our investments. We also want to have a more inclusive and collaborative leadership and culture across the group. I think that these will be two very powerful ingredients to take this company forward. Thank you very much. The next question comes from the line of Gaurav Jain, calling from Barclays. Please go ahead. Hi, good morning, Tadeu. Hi, Gaurav. Three questions from me. Yes. The first one is that, you know, you're saying BAT strategy is right, but if I look at the stock performance over any period of time, year-to-date, 1 year, 3 year, 5 year, 10 year, it has been the worst performing tobacco stock. What do you think BAT hasn't gotten right? Well, Gaurav, look, I'm not here to manage the share price per se. I think that the best way to address the share price weakness that you are referring to is really focus on persevering in what we are doing, because we are making big inroads. The strategy of BAT at the very early stage was more complex than others. We decided to tackle three categories as opposed to go one by one. This proved to be a much more lengthy and costly started strategy to start to pay back, but was absolutely right. Because we were convinced since day one that the consumers would be different, the regulatory environment would be different, the taste of cigarette would be different. What we are seeing today in the market is more and more poly users across all these categories. Today, we have a very strong position in terms of leadership in place, like vapor, which is still the best way to convert smokers out of cigarettes towards these less risky products. We are seeing the emergence of a modern disposable as a creative to the closed systems. We saw Modern Oral, that was at the beginning, a very niche product, gain more and more traction. You saw Sweden now being very close to a smoke-free market with 5% of incidence, because they started promoting basically snus many years ago. It's massive, the impact that this can have on society. THP, although we were late, and absolutely we were late to the largest competitor there, we are in a position that, moving forward, we are very confident that we have a good, strong set of pipelines to making inroads on that. If anything, the margins of all these products are even better sometimes than cigarettes. So I definitely believe that we are in the right place. We have a position in a, in terms of geographic position in the markets where a global company you would expect to be. The U.S., for example, is not just important because of the role of combustible in providing the funds to funding this, all this transformation, but also will be important towards our strategy of all these reduced risk products launch and even beyond nicotine in future. I definitely believe that we have the right strategy, and as we go along and we prove the point, I expect the share price to recover quarterly. Thank you, and my follow-up question is on the heated tobacco market, and where you are saying that, you know, you were a late entrant, but you have been in the market for five years, and your market share has been consistently around 20%. Can you create a business which has, like, a 40% margin in heated tobacco at this 20% market share, and that 40% is your cigarette margin? I'm just trying to understand, when does it break even and when can we see incremental profitability? Gaurav, the THP performance now that we are seeing that in the first quarter is also a consequence of the heightened competitive activity in markets, in big markets like Japan and Italy, where incidence of THP is very pronounced compared with others. One point that is very particular BAT in Europe, which is the market that is growing faster in terms of THP, is the fact that our cigarette portfolio in Europe is skewed towards the value for money and low. Which means that every time that we migrate smokers from a cigarette consumption towards our glo consumables, actually this is margin accretive. It's. Take the example of Poland, for example, where margins are almost five times higher in THP than they are in combustible when you compare our own portfolio of cigarettes, and we migrate to our products in THP. It's definitely the right direction. There are many considerations around THP that we have been addressing over this last few years. Like I said, I would like to focus more on that and be able to be more competitive, but I think that we have built some capabilities in the group now that will allow us to move forward on that particular category in future. Okay, sure. My last question is, you know, the impact of, you know, the menthol ban in California was much more negative than we thought. We are having a heated tobacco flavor ban in the next few months, and you have a 70% share of flavors in glo. First of all, what are the timelines right now with this flavor ban, and how will you approach that? Yeah, the menthol ban in California specifically, look, we were 45% of our portfolio in California was had to be delisted as a consequence of the menthol ban in that state. We have been seeing a decline around 25%. But, you know, if you consider the fact that we were already declining before the ban was introduced, as in every other state in the U.S., because of all the macro pressures that I spoke about. In terms of the real decline that was attributed to the menthol ban, we considered that we have a retention around 87% of our volumes. Because the no menthol SKUs that we have introduced has been very successful, and has been the case month after month. The other element is, which I allude to, is that we saw some menthol higher sales in the border. If you take the West sale area of the U.S., for example, our levels of retention from 8 to weight goes all the way up to the likes of 95. Because you have to take this into consideration, but the levels of enforcement in California are really not great. I think that we have proved in the U.S., in California, that we have solutions to deal with the potential menthol ban nationwide. We want to know more about these numbers that I'm quoting to you, as we move along, because the situation, like I said, in the trade updates, is still bit volatile because all these, you know, problems with the, with the enforcement and so on. The national regulation from the FDA, we are still waiting to see the final order, the proposal that they are come to the market. We are not sure if they will keep the timing that they were originally expecting to do. Maybe towards the second half of the year, more towards the end of the second half. We are not clear about that, but as you know, there is a long process to go on that particular regulation, because it's need to be science-based, it needs to be considered all the unintended consequence. There is a lot of material that was submitted for the FDA, addressing all these points that they have to go through. When they finally issue the resolution, the industry needs to assess that and see if it's a, you know, fit, and make their own view in terms of resolution. We believe that this is something that will not be concluded until at least, you know, the next, three, four years. Okay, sure. Thank you so much. Thank you. The next question comes from the line of Richard Felton, calling from Goldman Sachs. Please go ahead. Good morning. Two questions from me, please. The first one, just coming back to U.S. industry volume declines. I mean, the data's been a little bit weaker than I think most industry participants would have expected in the last 12 months. Even when we try and look through the unusual comp base, the rates of volume declines are a bit worse than historical rates. My question is: can you share any color on what's actually happening at the consumer level? You know, is this a case of smokers smoking fewer cigarettes per day? Is there an acceleration in smokers leaving the category? Any color or thoughts on the underlying dynamics that are actually driving the industry declines would be incredibly helpful. My second question is, just a point of clarification on your prepared remarks. When you think about capital allocation and share buybacks, do you want to be at the 2.5 times, so the midpoint of your target leverage range before you consider any share buyback programs? Thank you. Okay, look, on the U.S., every daily consumption has an impact coming from affordability. You know, at the end of the day, we are living in a period of time, like I said before, of a withdrawal of stimulus that were, you know, very important over the last I would say 18 months on the federal and state levels. Also, this combined with massive impact on cost of living that started mid-2022, with a very high levels of oil price that we know that gas price in the U.S. has a negative correlation to cigarettes. These things reverted over time. Was there already in the beginning, when we start seeing this trend, materializing, and then carry on from a number of other areas of the consumer, I would say, portfolio of... That they are submit to, you know, cost of energy bills and so on, so forth. There is a lot of pressure on the consumer side. I the commercial plans that we are trying to put in place is exactly to address this scenario. When we talk about laddering, for example, we were not well prepared as we saw some of the other brands. When you saw, for example, down trading, we not necessarily have all the answers to that, so we are putting those things in place. Also, we are making use of our revenue growth management to be much more targeted in terms of promotions, pricings, and so on. I think that is, like I said, it's a, it's a, it's a clearly period of time that will revert over time as soon as the macroeconomy starts, you know, improving. We are not seeing any fundamental structural change in terms of migrations or in terms of anything different from what you would expect in a, in a, in a recessionary environment. That suggests that we cannot see the volumes returning back to the levels of 4%-5% decline over time. That's on the U.S. In terms of capital allocation, just to remind all of us, the decision that we took to stop the buyback is basically coming from the fact that as soon as we have announced the buyback in the previous year, early in the previous year, we were put on a negative outlook from one of the credit rating agents, so this happened at that time. On top of that, we saw a massive increase in interest rates, in unprecedented, to be honest, the interest rates moving from the likes of 0.5 all the way to 5, 6, 7. Worse than that, we didn't know exactly where this would stabilize, 'cause the levels of inflation was still very high. Now we start to have a kind of feel about the, what the Fed of the Bank of England are doing in terms of interest rates. At that time, we had no idea about that. We also had to cope with the, with the latest negotiation, DOJ, that's now is already concluded and defined. We had, the business in Russia that we have announced the transfer. Independent of the transfer, the cash is completely trapped there. At the end of the day, we had to cope with all that. With all this environment, we thought that the best approach would be to stop the buyback and accelerate the deleverage of the company towards the middle of the range, to create some buffer for us to when we decide to restart the buyback, do in a sustainable way. Clearly, the buyback is part of the capital allocation decisions of the group moving forward. Will be more a question of how much rather than if it's there. The middle of the range is a reference point for us. Every year we'll be considering all these elements that I just spoke about. Some of that has developed already throughout 2023. As I said in the notes, we are happy with the progress we are making on the leverage, so this looks like we will be in a much stronger position in the years to come. Great. Thank you very much today. Okay, thank you. Next question come, calling from Kartikey Kaushik, calling from Aegon Asset Management. Please go ahead. Hi, thanks for taking my question. Your long-term rating target is a BBB+, and I think the share buyback reduction announcement will definitely help in that regard. If I look at your product matrix, they seem to be in line with BBB+, or that they should be in Moody's. Have you had any discussions with the agencies as to what exactly is the trigger they are looking for to move, I mean, to change the outlook and for Moody's to upgrade you by a notch? We, the way the rates, the credit rates, they calculate the leverage is not necessarily the ones that we do. For example, they have stripped out all Canada out of the numbers, 'cause the Canada cash is already trapped for some time. They did the same with Russia. As soon as we announced the transfer of the business or they saw what was happening in the market, they again, they adjust that. The ratio, although we have improved it in our own ratio from 3 to 2.9 last year, in the S&P ratio, for example, was going backwards. This was one of the reasons why they put us on a negative outlook in the first place. They review this outlook every two years, they have done that early last year, which means that they were supposed to be doing the same review early end of this year. The Fitch Ratings put us actually more recently on a positive outlook. We expect to make progress that will satisfy the way they also calculate the ratio by the end of the year. Okay, let me ask you this: If you do achieve the 2.5x target by the end of the year, do you think S&P will move to a stable outlook based on that number? Well, I cannot talk on behalf of S&P, you know, because they see the efforts that we are making in terms of the leverage of the company. We expect that under their own way to calculate the ratio, we will also make progress this year, and it's up to them to make a final call in terms of the outlook. More important is us creating this buffer in order to allow us to once we decide to restart restate buyback in future, we do it on a sustainable way, like I said. That's for me, is the most important thing. Understood. Thanks. Just one last one from my side. Did you say the retention rate in light of the California ban is 87%? Retention, yes. That's what I said. Yes. If you take the broader West Sale Area, which includes the neighboring states, our level of retention is around 95%. Understood. Thank you. The next question is from, Rey Wium, calling from SBG Securities. Please go ahead. Hello, Tadeu and Victoria. Thanks for the time. I just want to have a bit of a clarification just on your overall global volume outlook. It's, I think it's a bit of a deterioration from minus 2% to minus 3%. I just wonder if you can just clarify, you know, what has led to that softer guidance? That's my first question. Yeah. Well, this is basically Pakistan, and Pakistan had a massive excise increase happening early in the year. That translating to a big jump in terms of illicit trade, that today accounts for almost half of the market. We are very exposed to Pakistan, as you know, and the volumes are also very big. That's basically. When you round the numbers, you end up with 3% as opposed to 2% that we had before. Is it fair to assume that, I mean, you indicated your cigarette volume share, I guess that's globally is up 10 basis points, that, you know, give or take, your overall volumes for the year should probably be not too far from that sort of 3% decline level. Am I reading that right? Well, yes, the for sure, that, we are talking always organic here, though, because we don't know, and, the timing of Russia transfer. Mm. Parking this aside, your comments are broadly right. Sometimes we are a bit more exposed in one market to another, but wouldn't be that much different from what we are seeing in the industry-wise in terms of considering this level of volume share performance. Okay. Just in terms of the vapor trends, the AGM update sort of indicated a share of 39.4%. You're now talking 38.8%. I don't know if you can maybe just elaborate, you know, what, which markets have been a bit of a problem? Yeah, look, I wouldn't be much, you know, focused on these quarterly numbers of variation. Vapor, we have been doing extremely well. We have, we are for sure that this is also a consequence of the modern disposable that is growing substantially in some markets. You take, for example, U.K. and Germany. They are more than 70% of the market already, so takes some time for us to catch up. We were clearly leaders on the closed system. We have now a good offer in terms of modern disposable, though, it takes some time, so it's natural to see some variations. More important, out of our five key markets in vapor, we expect to be already profitable in terms of category contribution, four out of the five by the end of the year. Okay. Just finally, just a clarification. The guidance on the net debt EBITDA, you sort of say it should be closer to the midpoint, so towards 2.5. I just want to know the range. Does it mean below 2.75 or much closer to the 2.5x your target? We are targeting to be closer as opposed to the 2.5 times. That's our intention, and I think that we are gonna get a very good results by the end of this year as well. This is on the clarification on the net debt to EBITDA ratio. Okay, excellent. Thanks for that. Ladies and gentlemen, as a final reminder, if you'd like to ask a question, please press star one now. The next question comes from the line of Nik Oliver, calling from UBS. Please go ahead. Good morning, and thanks for the questions. Just two from me. One on the outlook, regarding organic sales of 3%-5%, and you mentioned that's H2 weighted. Does that also apply to profits in constant FX terms? I guess there's a lot of moving parts in terms of new category investments, et cetera. The second one is just regarding the investment in ITC. You know, that's been asked quite a lot by investors recently, given the relative valuations. Just any comments on how you think about that investment and whether there's any scope to increase value from that investment over time? Thank you. Thank you, Nik. Look, yeah, thank thank you for the question regard. Just for me to clarify, the 3-5 is always organic numbers, i.e., excluding Russia. We are not taking consideration Russia impact, because we cannot predict by when Russia will be taking out of the numbers as soon as we conclude the transfer of the business. We said that, given the fact that the U.S. volumes will be impacted in the first half of the year, mainly from the SAP implementation rollouts that happened last year. This year will have an impact in the first half of the year, volume-wise, that end up impacting revenue and the total group revenue, given the weight of the U.S. We said that the weight of the revenue will be more second weighted this year. Okay? The 3%-5%, we expect to achieve 3%-5% in the full year, weighted in the second half, mainly driven by volume/revenues in the U.S., impacted by the SAP rollout the first half of last year. That's the first thing. The profit side, you're absolutely right, you cannot come to this level of conclusion, the profit side, because we are investing more in new categories in the second half. We are doing that at the back of these innovations that we are putting in the market. THP, for example, is a clear example. This glo Air device is the finest device that is out there in the market. One of the pain points that we have in our THP offer in glo is exactly the bulkiness of the device, we are trying to address that with the glo Air, and we'll be, you know, rolling out this in the second half of the... This should give an example of where the higher levels of investments in new categories will come in the second half of the year. You cannot come to this conclusion in terms of profit. The EPS number is a reported EPS number. The EPS number, when we mean about mid-single-digit EPS number, is as a range between three and a half and six and a half% EPS. Where we're gonna land is pretty much dependent on the Russia transfer of the business in the second half of the year, because we have just gone through the first half, basically. If it's earlier in the second half of the year, the delivery of the EPS will be more towards the end of the range. If it's more at the end of the year, then you're gonna see the levels of EPS being more in line with the middle of the range. That's because Russia, as you know, represents something like between 3% of group revenue and around 2%-2.5% at profit level. Okay. That's the... I would like to use your question just to clarify to everyone in the call here, to all these points about the guidance. Your another question on the ITC. Look, our staking ITC is regularly assessed by the board. There is one point that we have to take into consideration. There are a significant regulatory and bureaucratic hurdles to overcome. For example, we have a foreign direct investment ban in tobacco, in terms of regulation, RBI process. If you were to monetize some of our shareholding in ITC, is not as straightforward as you could imagine. That's the first point. The second is that for sure, that we consider the investment in ITC at this stage, more than a financial investment, we consider a strategic one. Why we do that? Well, first of all, because of the size of the Indian markets, the largest popular population in the world today, and, more importantly, the established oral markets that we have in India. Volume-wise, if you consider all the volume of the oral consumption in India, is higher than the consumption of oral elsewhere in the world, just to give an idea. We believe that we might have significant opportunities in terms of new categories, mainly on the oral space in India over time. For sure, that ITC is also doing extremely well, is a very valuable asset. We have been, you know, very pleased with the performance in terms of dividends, in terms of the share price. There is still a long gap in terms of valuation of ITC compared with other FMCGs in that market, which means that there is a lot of potential for growth in the future. I just want to make all these points clear for everyone in the call as well regarding ITC. Great. That is, super clear. Thank you for that, Tadeu. There are no further question. I will hand it back to your host to conclude today's conference. Okay. Thank you all for listening, for your questions. I would like to leave you with a final few comments. First of all, our transformation is well underway. We have reached a point where sharp execution and greater emphasis on fewer, bigger priorities are now required to ensure sustainable outcomes. I will do this by developing teams that deliver strong performance through increased inclusivity and collaboration. I'm confident that together, we will continue to transform BAT and deliver long-term multiple stakeholder value. A reminder that tomorrow, I will be participating in a fireside chat at the Deutsche Bank Global Consumer Conference at 8:15 A.M. U.K. time. Audio from the event will be streamed live on our website. With that, I look forward to updating you again on our progress at our half-year results on 26th of July. Thank you very much.