Hello, and welcome to today's event. I hope you are all keeping safe and well. I know the team would much prefer to be doing this in person, but we're taking our health and safety responsibilities seriously. We felt it was important to continue with the event, which is meant for all of us who are participating remotely from our homes, as I suspect many of you are. I was appointed chair of Imperial Brands a year ago, and since then, the board has been taking decisive action to strengthen our leadership capabilities and performance. We recruited our new CEO, Stefan Bomhard, and made a number of other executive committee and non-executive board appointments, providing us with fresh thinking and a leadership team with the broader skills and experience needed to best position Imperial for long-term success. From a board perspective, Pierre-Jean Jérôme Sivignon, Bob Kunze-Concewitz, and Alan Johnson bring a wealth of new expertise that will be invaluable to Imperial going forward, significantly strengthening our operational and financial, marketing, retail, and consumer capabilities. With Stefan at the helm, the new team has been leading a strategic review of the business, assessing all aspects of our strategy, business model, ways of working, and culture. Some elements of the review are ongoing. Our purpose, for instance, is being updated in line with the new strategy and will be co-created with employees. This more inclusive, collaborative approach highlights the way we have already begun to change our ways of working and culture. Engagement and communication with employees has been open and honest about the strengths and weaknesses of Imperial, and their feedback has helped shape the new strategic direction. Though some elements of the new strategy are a work in progress, the fundamental building blocks of how we will transform Imperial over the coming years have been clearly established. Stefan and the team will take you through each of these building blocks today. Our aim is to create a stronger, more agile, consumer-centric company, and we have a clear plan of action for delivering better and more consistent results over time. The board is supporting and overseeing the execution of this plan with an acute attention to risk management, performance metrics, our ESG agenda, and stakeholder engagement. We're optimistic about the future and very focused on continuing to make the necessary changes to unlock value for our stakeholders. Thank you for joining us today, and I'll now hand over to Stefan. Thank you, Thérèse. Hello, everyone. It's a pleasure to be able to spend the next few hours taking you through our new strategy. As Thérèse mentioned, all of us are presenting from our homes today via our laptops. This is the right approach given the current circumstances. This is an important presentation for Imperial and for our shareholders, which we did not want to delay. We hope the technology works for us. Please bear with us if there are any technical hiccups. I've been the CEO now for seven months. My time with Imperial so far has only reinforced my initial observations about the business. This is a company with huge potential. I am excited about the future. Yes, Imperial has not delivered on its potential in recent years, and a number of things need to change, but it also has some clear strengths that we're going to be building on as we embed the new strategy. This is our agenda for today. We'll take you through all aspects of the strategic review, how it was conducted, and what it means for our combustible and NGP operations. We'll also explain how new ways of working and a reshaped culture supports the strategy, and we'll set out how transforming Imperial will strengthen our financial delivery over time. We'll take a 10-minute break after the combustible section, and there will be plenty of time to put your questions to the executive team at the end of the session. If you wish to ask a question, you will need to dial in on the conference call numbers provided. As Thérèse said, we have a rejuvenated executive committee, and you will hear from all of them today, with the exception of Group Manufacturing Supply Chain Director Walter Prinz, who's retiring after an outstanding career with the company. Walter's successor, Javier Huerta, joins us next week from Unilever, where he was Executive Vice President, Supply Chain for Foods and Refreshment, and we look forward to welcoming him on board. Many of you know CFO Oliver Tant and Divisional Directors Dominic Brisby and Jörg Biebernick. Murray McGowan, Group Strategy and Transformation Director, joined Imperial last July and has a strong track record in strategy, having worked as a consultant at McKinsey and held senior strategic and operational roles in companies such as Costa Coffee, Yum! Brands, and Capri. Alison Clarke joined four months ago in the newly created role of Chief People and Culture Officer. This is an area that has not previously been represented at executive committee level. I worked with Alison at Inchcape, where she was the Chief HR Officer. Prior to that, she held senior roles at companies such as Whitbread, AS Watson, and United Utilities. There will be further changes to the executive committee, including the appointment of a new CFO following Oliver's decision to retire, and the creation of another new role, Chief Consumer Officer, which you will hear more about later. The steps we're taking to strengthen the executive leadership team illustrates our focus on ensuring we have the right expertise and capabilities to be able to take Imperial into a new era of growth. This is a snapshot of who we are. Imperial is a global consumer organization and the fourth largest international tobacco company in the world, operating across 120 markets. Following the sale of our premium cigar business, we have around 27,000 employees who continue to do a truly great job in keeping the business going during the challenges of coronavirus. My thanks to all of them for their hard work and support. Now, despite recent results and the obvious need for change, the fundamental financials of the business are sound, with annual revenues of GBP 8 billion, high operating margins, and strong cash flows. We have strengths and breadth in our portfolio with notable brands in all key tobacco and NGP segments. As I've said many times, Imperial has solid foundations on which we can build with our new strategic approach. Over time, our aim is to transform Imperial Brands to unlock value for our shareholders, employees, and all other key stakeholders. The new strategy will have a renewed emphasis on a more focused group of priority tobacco markets and a more disciplined execution in NGP. Strategic decisions will be informed by consumer data and insights. Our ways of working and culture are already changing to create a challenger mindset, which will strengthen delivery. Everything will be underpinned by a clear and compelling capital allocation framework that has been designed to create long-term sustainable value. This is the essence of the new strategy we'll be taking you through today, and we are excited about what it will deliver. Before getting into the detail, let me share some background on our strategic work. The first point to make is that this strategy has been defined by Imperial for Imperial. In other words, the approach has been rigorous and internally driven, making the most of the fresh perspectives and expertise I've already mentioned, and only using targeted external specialist support in specific areas. It's a credit to the team that we've been able to do this while also managing the issues and challenges presented by the ongoing pandemic. We also consulted extensively with other stakeholders, particularly shareholders, employees, and customers, as part of the strategy process. It has been fact-based with decisions underpinned by data and consumer insights. Throughout, we adhered to four clear guiding principles. First, co-creation. The strategy has been developed with the senior leadership team and reflects feedback from our employees. This is not something that's been purely born out of executive committee thinking. Second, we have focused on how to leverage our strengths. Acknowledging the mistakes of the past and how we can learn from them and not repeat them. Finally, we have evaluated all options to create value. Ultimately, this has enabled us to clearly define our future focus, areas where we have a Right to Win, something we'll talk more about later. I mentioned Imperial's strengths earlier, and here you see the business has a number of attractive qualities. We have a diverse market footprint with solid market share position in Europe and the U.S., and strong leadership in some key African territories. We have some good brands that provide opportunities across multiple categories, although historically, investments have been somewhat limited. Our approach to customer engagement is also a real strength, particularly as customers like to partner with us as our position as number two or number three in the market reinforces a beneficial competitive tension on shelf. I've previously spoken about our manufacturing supply chain capabilities. This is an area of real strength for Imperial, which has coped well with the challenges of the global pandemic. We know that NGP has so far not delivered. Nevertheless, we have a promising heated tobacco proposition with Pulze and in blu with a vapor offering that has strengths in the U.S. and Europe. Our people have really impressed me from the beginning. There's an energy and passion about them that will help us unlock value. They are ready for change and willing to embrace it. We briefly touched on the financials earlier with high operating margins and the strong cash flow we generate are longstanding hallmarks of Imperial. As much as the strategic review identified these solid business foundations, it also clearly highlights areas for improvement. I won't dwell on this slide too long, as I've touched on these points before, and many of them will be familiar to you. Needless to say, tobacco share performance has been disappointing for a number of years, with a lack of focus on our most valuable markets. NGP has also disappointed. The vapor business expanded too quickly and too broadly, with little consumer validation and poor investment decisions. There was also insufficient focus on heated tobacco. Performance management was limited, which led to a lack of agility and responsiveness to market dynamics. Data and consumer insights were not fully leveraged. Unsurprisingly, it created weakness in the company's capabilities and culture, and our ability to deliver. There's also been little focus on the consumer and central market expertise is under-invested. I have not observed in my first months in the business a consistency in utilizing data and insights to underpin decisions. Some very clear areas to target as part of our drive to transform the company. As you will appreciate, given some of the issues identified, this will take time, but we have developed a compelling five-year plan centered around three strategic pillars. First, a focus on priority combustible markets. Second, driving value from our broader market portfolio, and third, building a targeted NGP business. We will take you through the details shortly, but let me first make some headline comments. For our priority combustible markets, we will increase investment in our most appealing profit pools, with a focus on clearly defined strategic levers to unlock value. For the broader portfolio, we will manage markets more efficiently, implementing global processes and sharing best practice. Through this approach, we will identify markets that offer the best growth potential and selectively rationalize those that offer limited value. In NGP, we will be taking a different approach, more targeted and disciplined, driven by local consumer preferences. We will focus investment on heated tobacco in Europe and on vapor in the U.S. In order to deliver this plan, we are also changing our ways of working and culture. We will become a truly consumer-centric company, putting the consumer at the center of all our decisions. To achieve this, we'll need to develop new capabilities and address consumer needs. We are embedding a performance-based culture, one that holds our teams to account and rewards teamwork. Our ways of working will be fact-based and collaborative, driven by a challenger mindset to motivate our people to deliver a higher level of performance. We will invest in talent and create a more diverse and inclusive environment for employees to do their best work. Finally, we will simplify our operations driven by efficient global processes, underpinned by technology with a performance management framework that demands accountability at all times. This is a comprehensive plan for change that provides the opportunity for Imperial to differentiate its approach from both its past and from its peers. There's a theme of focus running through this slide. I want us to focus on selective battlegrounds and be more targeted with our investments. As I mentioned, we already have strong retail partnerships where our customers want us to succeed and provide good competitive tension. Becoming truly consumer-centric requires us to relentlessly focus on the consumer and ensure we meet their needs all the time. By virtue of our size versus our peers, we can become a successful fast follower, providing consumers with quality and choice in established categories. We are embracing our smaller size to become faster, more agile, and responsive in our decision-making, and we're beginning to create a culture that is very different from the past, a culture that challenges and does not tolerate siloed behavior and is open to change and collaboration. These changes to our culture and ways of working underpin my confidence in our ability to deliver a step- change in performance. The strategy will deliver a stronger business with a sharper focus behind tobacco and with clearly defined roles for its markets. Our commitment to Tobacco Harm Reduction will be evidenced through our new targeted and more disciplined NGP business. We'll have an energized and motivated organization that is focused on meeting consumer needs with a culture that is collaborative, agile, and focused on delivery. We will deliver stronger, more consistent revenue growth and generate sustainable profit growth that does not require a marginal reset in the short term. Our continued strong cash generation will provide funds to support the implementation of the strategy, debt reduction, and returns to shareholders. Before moving on to a more detailed look at the plan, I want to assure our stakeholders that throughout the strategic review, we have considered our sustainability and ESG responsibilities, and have concluded that both are aligned to and underpin our new business strategy. Our sustainability strategy remains focused on tobacco, NGP, and behaving responsibly. These three pillars of our strategy are designed to enable growth and create value. They also define the approach we're taking to managing our ESG priorities. We've clearly defined ESG priorities that have been validated with our stakeholders and are aligned with the United Nations Sustainable Development Goals, as shown on the slide. As much as we believe we now have a compelling strategy and are focused on the right issues, there's more we can do to help stakeholders measure our performance going forward. With that in mind, there will be great transparency with additional publicly available KPIs for climate and energy, farmer livelihoods, human rights, and waste. KPIs for consumer health will come later once we have reset our NGP business, and they will be fully aligned with the new NGP focus. We need to deliver a stronger NGP performance in order to realize our consumer health and Tobacco Harm Reduction vision, and that will take time. I want us to make a meaningful contribution to Tobacco Harm Reduction by building a targeted NGP business that meets consumer needs and is managed in a disciplined manner. I also passionately believe in diversity and inclusion. I want to see this become a key foundation of the new culture we are creating to deliver the strategy. Alison will talk more about this later. I look forward to sharing more about our sustainability agenda later in the year with you, when we relaunch our series of ESG webinars, starting with a deep dive on climate and energy. This is an area where we are performing well, with carbon targets validated by the Science Based Targets initiative and are focused on implementing the recommendations from the Task Force on Climate-related Financial Disclosures. Our environmental credentials have been externally recognized by securing a place on the CDP's prestigious A List for tackling climate change. CDP has also awarded Imperial an A-minus rating for minimizing water use, up from last year's B rating. As much as we're performing well against existing KPIs, there is room for improvement. As part of that greater transparency I mentioned, we now have an additional renewable energy KPI. As I say, clearly defined priorities that support the business, and we look forward to telling you more at a later date. Let's now move on to our combustible business, which to be honest, has been neglected in recent years as Imperial became overly focused on NGP. A key part of our plan involves refocusing on driving profitable growth from our tobacco portfolio, which is where we see the greatest opportunity for value creation. This will come from making some clear strategic choices to focus on our biggest profit-contributing markets. I should stress there's also a big opportunity in simply running our combustible business better, and we're already implementing a series of operational improvement measures. The outlook for the tobacco value creation model remains very positive. We expect pricing to continue to be more than offsetting volume declines. Affordability is still good across our footprint, reinforcing a positive pricing outlook, and we continue to benefit from strong brand loyalty. There are, of course, ongoing regulatory risks, but this is something we're well used to managing. Consumers are also continuing to trial NGP alternatives, but the overall level of penetration is still relatively low. This slide puts some data around our forecast for the key regions and demonstrates the value creation potential for combustibles. Volumes are expected to decline in most regions except for Africa. Europe is a mixed picture, with declines in Western Europe offsetting better trends in Eastern Europe. The pricing outlook underpins the opportunity for low single-digit revenue growth, with the exception of Australia, where cigarettes are relatively more expensive and there is a strong growth in the illicit trade. We'll come on to explain how we are adapting our approach for these markets. Since pricing is such an important value lever, we've looked carefully at the data behind affordability and price elasticities. Across our footprint, which is biased to developed markets, affordability remains very attractive, particularly in our two largest profit contribution countries of U.S. and Germany. The overall outlook for combustible tobacco remains attractive. Turning to Imperial, we recognize our performance has fallen short of expectation with relatively modest revenue and profit growth, coupled with share losses in nearly all of our largest and most profitable markets. This has been caused by underinvestment in the larger markets and brands, which too often in markets like Germany, are focused on short-term profit delivery at the expense of longer-term market performance. In recent years, this has been compounded by an increased focus on NGP and a lack of detailed performance management. You can see how we've lost volume share across our five largest markets by profit contribution, with the exception of the US, which has shown very modest growth. This has been made worse by the focus on short-term profitability, and as we're falling behind on some critical capabilities such as consumer insight, innovation, and marketing. There are multiple reasons for the recent share losses, but they can be grouped into four key themes. One, we have underinvested in key brands such as in Germany with JPS, West, and Gauloises. Two, we've often priced ahead of competition, for example, in the U.K. and Germany, with too much emphasis on short-term profit optimization of the top brands. Three, we have neglected some of our local jewel brands in favor of international brands, resulting in the subsequent need to reverse some brand migrations in markets like Spain. This has hurt our share performance given our relatively higher exposure local brands following our acquisition history. Four, we've often been too slow in responding to consumer trends such as crushball, menthol, or new pack forms. As I mentioned earlier, we have reviewed all of our combustible markets with really deep data dives on the large ones, assessing all major brands and price points, our presence in all channels, and reviewed consumer trends and our competitive position. This new strategy is built on a highly detailed and rigorous assessment of the market potential, our assets and capabilities, and ultimately our Rights to Win. What's different under the new plan? There are two key aspects. First, it is about making some very clear strategic choices to direct more investments to our five priority markets, also allocate our resources and capabilities in areas such as marketing and regulatory affairs. For each priority market, we have a detailed plan with very clear operational levers. We've also defined a clear role for each market in the portfolio to optimize resource allocation. Second, it is about improved operational excellence. This is a catch-up opportunity for Imperial versus its peer, where in my view, many of these activities and initiatives are already embedded. It is about having better consumer insights, using data to inform decisions, and driving a far more proactive and rigorous approach to performance management. I've already implemented these through monthly performance reviews for the divisions and top five markets with all the key individuals from the division and market in the room to speed up decision-making. These are all simple things, but they have not been happening on a consistent basis at Imperial. It's a theme we'll return to later when we talk about new ways of working and culture. We're also taking a different approach to brand management. Imperial has an attractive portfolio of local jewel brands, which has been neglected in favor of more international brands. In the past, many of these brands were migrated into international brands, resulting in share losses overall. One of the important is that brand portfolio decisions will be made at a local level based on clearly identified consumer need states, and the markets can ensure they have the most appropriate brands to suit local needs, whether international or local. This put the consumer at the center of the decision, rather than it being led from a manufacturing efficiency viewpoint. In addition, the level and variation of tobacco regulations by different markets mean that product and packaging synergies are far more limited in our industry than many other consumer categories that I've worked in. Let's first explore the strategic choices we're making in our combustible markets. We will drive disproportionate investment focus on our five priority markets: U.S., Germany, U.K., Australia, and Spain. These markets are our biggest profit contributors, representing 72% of tobacco profit. They have the greatest potential for value creation given their relative contribution, and I'm confident that there is an attractive revenue and profit growth potential for us. Naturally, there will be less focus on the rest of the portfolio. However, we've also reviewed all our other markets and identified clear roles for them. I would like to highlight an important difference about tobacco here. Because tobacco is so highly profitable, it means that many of our very small markets still contribute profit and cash. For the market portfolio outside the top five, this will be a more efficient resource allocation between the markets. Although their smaller scale means the profit upside is more limited, many are well-positioned and provide an attractive base to build on. First, a little more on the five priority markets. As these markets generate around 3/4 of our operating profit, managing these five markets better through some clear strategic investments and operational excellence generate the best opportunities for value creation following a period of underperformance. For the U.S., Germany, and Spain, these are attractive and growing profit pools, but we have scope to take a better share. The market outlook for the profit pools in the U.K. and Australia is more challenging. However, these are highly profitable markets where we can drive a better operational performance to protect and even grow our position. For our top five markets, we've identified six operational levers to strengthen performance. This is not about a single silver bullet. There are multiple clearly defined levers at a very local level, which we have grouped into these six themes. In cigarettes, our priority will be to increase our participation in the sub-premium segment, which has great margins and is a relatively stable segment. However, we typically under-index in this segment, and we have several brands that could play a better role here. We also see opportunities to rejuvenate our local jewel brands, where we can capitalize on the strengths of our local brand equity. At the same time, we will optimize our approach to the value segment in cigarettes and maximize our potential in the fine- cut tobacco category. Both of these can be used effectively to address down trading in certain markets, while also meeting consumer demand for Roll Your Own. With good brands and a strong Right to Win in these segments, but have lost share due to a lack of investment, inconsistent pricing, and being slow to react to consumer trends. The final two levers will enhance our channel and geographic coverage and also improve our key account management. We have identified areas where our sales force coverage is underrepresented, given the attractive margins. Our data demonstrates how increasing our sales force coverage and visit frequency is correlated to improved market share performance. Imperial, we're equipping the sales force with the right tools and capabilities. We're also often under-index in key accounts, so we see good opportunity to play a larger role there with the right investment. These route-to-market levers are expected to pay back quite quickly, typically within a year, whereas the brand-related investments require a little longer. We'll give you some examples of these six levers and refer back to them as we look at the specific markets. Across these five markets, we have identified more than 25 growth initiatives and even more sub-initiatives using these six operational levers. It is a highly detailed plan, so it's not possible to go into the full details today. We'll just give you some examples for each of the five markets. I'm going to ask Dominic to present on the U.S. and Australia, and Jörg to present on Germany, U.K., and Spain for Europe. First, Dominic, over to you. Thanks, Stefan. Hello, everyone. Let me start with the U.S. This is an attractive major market, second only in size to China, and with very high affordability supporting future pricing and value growth. For Imperial, the U.S. is our largest single market. It also has the highly attractive mass- market cigar segment, which has strong volume and price growth. In cigarettes, we are the number three with a 9% share and with a brand representation across the price tiers, with some strong brands such as Winston and Kool. Overall, our portfolio has a bias to the value- end, and we have presence in the fast-growing deep discount segment with Sonoma and Montclair. In cigars, we are the number two overall, with a good portfolio of brands addressing the different segments. However, we are number one in the fastest-growing natural leaf segment, with Backwoods very well- positioned as the market leader. Here you see our framework of the six operational levers, and I'm going to give just two examples from our U.S. plans. First is about how we will increase participation in the premium segment by leveraging the unique brand equity and positioning of Backwoods. Second is about driving performance in under-penetrated channels and regions by enhancing sales force coverage and effectiveness. Taking Backwoods first, we have a great opportunity to build on its differentiated premium position in the natural leaf segment. We have identified potential to extend Backwoods' regional presence into under-penetrated areas. Our investment program includes advertising at age-verified music festivals and comedy events, the use of brand influencers and product placements, as well as developing branded partnerships in alternative outlets such as bars and nightclubs with brand ambassadors. These initiatives are building on a tried and tested engagement program, which has successfully enhanced equity and awareness with its target consumer. We will also drive trial with smaller pack sizes and maintain interest with flavor extensions. Backwoods' reputation for quality will be reinforced through investment in leaf supply. Overall, we expect continued strong top and bottom-line growth from Backwoods. We have also identified an opportunity to enhance our U.S. sales force coverage and effectiveness. Our analysis shows we lag behind peers in terms of size and coverage, even after taking into account our smaller market share. Perhaps not surprisingly, we've been able to demonstrate that there is a strong correlation between the number of visits and market share achievement. We have already begun recruiting and training sales reps to increase our sales force by around 25%. This will deliver a higher penetration, more in line with our relative market position. In addition, we have improved our outlet segmentation, ensuring all the sales force are targeting the right outlets with the right service levels. We are improving their effectiveness through value-adding activities to help our reps become trusted consultants to our trade partners. We expect this to support our share position, and with a financial payback within a year. As a result, we have already begun hiring reps before fully completing the strategy, so we can get this initiative underway as quickly as possible. Let's now turn to Australia, which has a more challenging market environment. Significant excise increases have resulted in one of the highest price points per pack globally, and a highly profitable market. However, the downside is this has caused increased downtrading and relatively lower brand loyalty, as well as a rapidly growing illicit trade. The downtrading has led to the introduction of a new price tier, what we call the fifth price tier, which has impacted on the margins. Although this has been offset in the short term by some duty windfall profits. Despite these challenges, we are well-placed as a strong number two with a 33% market share and a strong presence in the lower price points, where we can benefit from the downtrading dynamic. Again, we have identified multiple operational levers to strengthen performance and protect our strong position. One of the key operational levers here is the opportunity to work our fine- cut portfolio harder to capture the growing trend towards Roll Your Own. We're reviewing the pricing and positioning of the portfolio and identifying opportunities for new brand launches and new pack formats and other innovations. This will build on the success of our Riverstone fine- cut brand, which we launched a couple of years ago. While the outlook remains challenging, I see attractive opportunities in our new plan to improve our market position. Let me hand over to Jörg to take you through his three priority markets of Germany, U.K., and Spain. Jörg? Thank you, Dominic. Hello, everyone. Germany is our second-largest market with an attractive outlook. It has relatively light regulation, with fewer restrictions on tobacco than many other European markets, and with very high levels of affordability and a relatively stable consumer base. As in many markets, there is some downtrading, although we are relatively well-positioned with our portfolio to meet this trend. Our market position is good. As the number two in cigarettes and the market leader in branded fine- cut. We have three key brands across the price ladder, as you know, with Gauloises, JPS, and West. We have multiple levers to pull in Germany, but I'm just going to cover a brand investment example and two route- to- market examples. First, on brand equity. We have not invested consistently or competitively behind our German brands, as we have often been pushed for profit over building a sustainable longer-term business. Our share in Germany has suffered, and I will talk through an example of how we plan to reposition JPS for growth. Second, on the route- to- market examples. We have identified areas where we are underrepresented in terms of channel and geography. This has been informed through a detailed analysis of where we've been losing share. There are opportunities to leverage our sales force better to increase our coverage of the retail universe. Our ability to connect to consumers through strong retailer partnerships will become even more important following the upcoming out of home advertising ban. Let's start with our JPS example, where we have undertaken extensive consumer research. For JPS to grow share, we will have to broaden the brand appeal to a slightly younger adult smoker group as the current franchise users skew towards older smokers. The work on a new brand positioning, campaign, pack design, and logo are already well- advanced, all thoroughly tested with detailed consumer studies. Examples of the new campaign are shown here. Stefan mentioned also that we were historically slow to react to demand shifts. Well, we're about to change this and lead, bringing out the first double pack of its kind to serve the trend for larger pack formats in a more convenient, affordable way. Before the launch of our new brand proposition, we're currently leveraging JPS's 50th anniversary in the market. All this brand work will be underpinned by several commercial enforcements, covering our field force effectiveness, the key account arena, and regional opportunities with additional investments. Let me highlight some examples next. As such, we plan to leverage our customer relationships better through a direct retailer incentivization program and by stepping up the scale and effectiveness of our sales force. In this example, we have already piloted a new partnership program in a test area, which introduced clearer common goals and supported simple pay-for-performance contracts. The pilot achieved a 20% average improvement in market share, with the best results in stores where we had a relatively lower starting presence. We plan to roll this out nationally now over the next six months, combined with the previously mentioned improved sales force coverage and other operational excellence steps up. Our analysis has demonstrated that we have typically been underrepresented in East Germany, as we are focused more on defending our presence in West Germany, and we know regional differences are quite common in tobacco. Looking over the past three years, the combustibles market in East Germany, and even South Germany, has outperformed Imperial's West German stronghold. Consumers in the East are more value-focused than anywhere else, so we would be well-placed to leverage our branded portfolio. We have already launched an initial activation program in fiscal year 2020 in the East, which has delivered some encouraging results in key channels. Our data indicates we have a Right to Win, and there is real potential for further uplift to allow us to reach our fair share also in the East. Turning now to an example from the U.K. As Stefan showed earlier, the U.K. has a more challenging outlook because cigarettes are relatively more expensive because of the history of above-inflation excise increases. This has then led to an illicit trade that normally represents around 20% of the market. However, the market is highly profitable, and we have a strong market presence with a 40% share and with an excellent portfolio of heritage brands such as JPS, Lambert & Butler, and Golden Virginia. Here we have also developed six clear operational levers to improve performance, and I'm going to outline just one of these. As I said, although we have a 40% share nationally, this varies significantly by region, and we typically have a weaker presence in the South in and around London. Our objective is to target this region to drive consumer trial and increase consumer advocacy. We will do this by leveraging our existing trade incentive programs, which have been independently recognized as best in class. Some of our brands have already tested well during consumer trials, reinforcing our view there is good potential to drive performance also in the South. Moving now to Spain, where the market outlook is stable with low single-digit value increases. Here, cigarettes are highly affordable, as there has been very limited excise increases in recent years. As a result, volumes are relatively stable, offset by modest pricing. We're well-positioned as the number two player with strong local jewel brands such as Fortuna and Nobel. These have been neglected in recent years in favor of international brands, contributing to our share losses. One of the operational levers in Spain is to simply leverage the full potential of these local jewel brands. As an example, we have already reversed the migration of Ducados into JPS and since stabilized that share. We're also increasing our investment behind Nobel, which has strong equity and national coverage. The investment will focus on brand building and awareness. This is already being supported by improved packaging, such as the limited edition packs for Nobel, as you can see here, designed by a well-known Spanish artist to reinforce the local jewel theme. I should stress these are only a few examples of the detailed growth initiatives for these priority markets in Europe. We believe this more focused and data-driven approach will strengthen our performance in Europe. Thank you. I'll now hand back to Stefan. Thank you, Jörg and Dominic. I hope that gives you some insight into the plans for the top five markets. We have developed highly detailed plans for all five, and we have a range of operational levers and sub-initiatives to improve performance. We cannot share all the details, but you've heard examples of all six operational levers. We will provide performance updates on progress in our results meetings and other events going forward. The common theme is focus, a greater focus on the top five markets to deliver a stronger performance. By focusing our investments here, we'll also free up resources from the rest of the portfolio. While smaller, the rest of the portfolio has an important role to play. Many of these smaller markets have highly attractive margins and cash characteristics. They also have more limited resource requirements, with some operated through distributor arrangements. There are also significant benefits from being able to leverage our scale in manufacturing. Within this group, there are also some attractive market positions which we can leverage better to create future platforms for growth. For example, Africa, where there's growth potential with a supportive market backdrop. Going forward, it's about defining the role of the individual market and optimizing the value creation in these markets. We'll do this by ensuring our resources are effectively allocated, sharing best practices across markets, preparing future growth engines, and selectively rationalizing the portfolio if there's no case for value creation. Let me start with Africa, where we see a strong platform for future growth. Africa currently accounts for about 8% of combustible operating profit. The market environment is supportive and with improving affordability as incomes increase. We also have a leadership position across four of our top five markets and with strong brands and unparalleled route- to- market capabilities. Imperial has overlooked the region in the past, resulting in underinvestment and a performance that has not matched the market potential. As a result, we've now identified opportunities to drive growth in the region with a focus on the top five markets. Again, with multiple levers available through the better application of our global brands in more premium price tiers, leveraging our local jewel brands, filling gaps in the pricing ladder, and closing our sales coverage gaps. Our ambition is to turn Africa from an unloved asset to a platform for future growth. Similarly, looking at other top 10 European markets outside Germany, U.K., and Spain, we plan to assign clear roles depending on the market outlook and our assessment of our Rights to Win. For example, we see a more attractive outlook for Eastern Europe than for the West, and so we will adopt a focused approach, targeting our investment and resources more tightly. Finally, we've also considered the role of the broader tail markets and their contribution to the group. These are about 80 markets, which typically each generate GBP 25 million of operating profit per market. In aggregate, they represent around 8% of our combustible profit. They're spread across Europe, Africa, and the rest of the world. As I mentioned earlier, although these markets are small, they still generate profits and cash because of the very high margins in tobacco. In practice, many of some are very light touch from an Imperial perspective because they're purely distributor markets with no in-market Imperial overheads. We've carefully evaluated these markets, and for the significant majority, we see greater upside from managing them more effectively to optimize profit and cash generation rather than getting out. Clearly, we will always keep an open mind about whether we are the right owner for any of our assets with a clear priority to optimize our returns on capital. We've also assessed the opportunities for realizing value from selling parts of our portfolio, but in practice, the pool of buyers is limited. In addition, the significant antitrust constraints make divestments difficult or at valuations that are unattractive. We have identified a small number of markets where the economics are not so attractive, and we shall selectively trim these over time through market exits. However, for the majority of our smaller markets, we see more value to be obtained from managing the assets better and the more rigorous allocation of resources. To summarize, we've undertaken a detailed assessment of our combustible business and developed a comprehensive plan that will significantly improve our combustible performance over time. The level of detail and data-led analysis gives me a high level of confidence in our plan. It is not a one- size- fits- all approach. We have multiple initiatives in place across the various markets. Even if some of them don't deliver, we will still have other options. There are two elements to our approach. First, we have clarity on our strategic choices, informing our focus on our priority markets where we see good profit potential. With a clear set of initiatives across these markets with disciplined and targeted investments in value drivers and resource, as Dominic and Jörg have demonstrated. There's also a clear role for each individual market across the portfolio. Second, we have underperformed, and therefore, there's a real opportunity to deliver improved operational excellence by becoming more consumer-led, more data-driven, and managing performance more proactively and rigorously. These are all themes we'll come back to a little later. We'll now take a 10 minutes break before moving on to talk about plans for NGP. Welcome back. I would now like to turn to NGP, which absolutely has a role to play within Imperial. I want us to have a successful NGP business, one that delivers stronger returns and can make a meaningful contribution to Tobacco Harm Reduction. We have product offerings across all NGP categories, vapor, heated tobacco, and oral nicotine. In the past, our primary worldwide focus was on closed- system vapor, where many markets we invested and tried to create the market. With hindsight, an unusual and high-risk proposition for a number four industry player with limited marketing skills and track record of creating new market segments. We will take a different and more prudent approach going forward, one that is also more closely aligned with our capabilities. The NGP format we offer in an individual market will be much more consumer and data-led and driven by what NGP sector already exists in each individual country. Markets will be prioritized based on the strengths of our existing route- to- market and our ability to create a meaningful NGP business. As a result, we will dial up the focus on heated tobacco in Europe, where we see untapped growth opportunities to meet consumer demand. The focus for vapor will be the U.S., the world's largest vape market. For modern oral, we will continue to concentrate on selected European markets with a tradition of oral nicotine consumption. We will take a measured and disciplined approach that creates value over time, which is built around the consumer's preference in an individual country and our ability to offer consumers an attractive NGP choice. I will now hand over to Group Strategy and Transformation Director Murray McGowan to take you through the details. Thank you, Stefan, and hello, everyone. As you've heard, NGP has been a key component of our strategic review. We believe NGP presents considerable growth opportunities for our business in the years ahead, based, as Stefan says, on a measured and disciplined approach. We expect to see strong growth across all NGP categories over the next five years, and by 2025, expect NGP to have a sizable presence, accounting for around 20% of the total nicotine market. Looking across the different NGP categories, heated tobacco in particular offers very attractive growth prospects and appealing margins. When you look at NGP growth rates in recent years, as this slide clearly shows, heated tobacco has been the key driver of NGP category growth and is by far the strongest category. This is where we see the greatest value creation opportunities for Imperial. Whilst we have a good heated tobacco product in Pulze, our historic focus on vaping has meant that we have missed opportunities to benefit from the growth of this segment of NGP. In the years ahead, we expect NGP to make up a sizable part of four of our five priority markets, although the dynamics will be very different across these territories. As we look out to 2025, we expect NGP consumers in the U.S. and U.K. to continue to be heavily weighted towards vapor. Consumers in Spain and Germany will move more towards heated tobacco. Globally, we see heated gaining slightly greater traction over the next few years. In terms of profit pools, we see considerable growth opportunities across both our core NGP categories of vapor and heated. Vapor will be concentrated in the U.S., with the majority of NGP growth and value coming from heated tobacco in Europe. In terms of growth in global profit pools, by 2025, we expect heated to add GBP 4.8 billion compared to GBP 1.2 billion from vapor. This polarization is driven by specific market, consumer, and regulatory differences across regions. As we know, the U.S. has been a turbulent market for vapor in recent times, but is now starting to stabilize and is once again on a growth path. Heated tobacco, on the other hand, is expected to see much more growth trajectory in the U.S., at least for the next two or three years, due in part to the regulatory hurdles of introducing new products and the comparatively slow current uptake of existing offerings. The driving force behind the growth in NGP is the consumer and their desire to reduce their cigarette consumption by seeking potentially less harmful alternatives to tobacco. The key challenge, however, is that current NGP solutions do not adequately address the needs of adult smokers today, with key reasons for churn from the category, including lack of satisfaction, inadequate experience, and cost. We see NGP as a great opportunity for our business and a key part of our ESG agenda. Consumers want potentially less harmful products, we want to provide them with quality offerings. We have the size, the scale, and the capabilities to deliver. We understand the needs of adult smokers and have a good portfolio of NGP assets. We also have strong routes- to- market and benefit from close partnerships with retailers in all our priority markets. Our regulatory capabilities are also strong and widely spread. The key point for me to stress is that this will be a very different NGP business, one that has realistic and achievable objectives, and one that will support the long-term growth aspirations of Imperial. As part of our strategic review, we looked back and learned the lessons from the past. Our business was focused almost entirely on vapor, where it launched too quickly across too many markets and without sufficient consumer validation. This resulted in poor investment returns. In vaping, we have some good brand equity and engagement in blu to build on. In heated, although it's only received a limited investment and rollout to date, we have a promising product technology in Pulze, which I'll talk more about shortly. In modern oral, we've established a good position within Europe. We've often focused too much on the product and its features, and not enough on the whole proposition for consumers, such as the brand or the consumer communications. In practice, we have some promising products to work with, and we can do better at the brand building and the way we connect with the target consumers. These are the areas that we'll be addressing through the changes we're making. In defining our new NGP strategy, we've completed an in-depth analysis of consumer needs, of category drivers, and economics. We now have a much more realistic assessment of our NGP capabilities, both where we are today and where we can get to tomorrow. This has helped us to find a clear ambition the business can get behind. It's about being a challenger, not a leader, and redefining our category focus with significantly greater emphasis on heated tobacco. Our challenger mindset will be founded on four principles. First, we will define very clear category market combinations. These will be based on consumer insights, a clear understanding of demand outlook, and the strength of our existing route- to- market. Our priority focus will be on heated tobacco within their existing stronghold markets across Europe. Vapor will be concentrated on the U.S., with oral nicotine focused on Europe. Second, we will have a much more disciplined approach to investment. Initial investment levels will be modest as we drive targeted trials of our offer. Any category or market expansions will be grounded in research and consumer understanding. The success of our pilot initiatives will determine whether operations are scaled, and only if we are satisfied a growth opportunity exists, we will rapidly scale. Third, we will no longer aim to create categories where demand does not exist today. Instead, we'll take a fast follower approach in a consumer-centric manner in markets where proven demand already exists. This is about providing greater consumer choice through a differentiated approach in those markets we choose to target. Fourth, we will refine our ways of working, and you'll hear more about that shortly. Being a challenger requires a different approach and different capabilities. As an example, rather than trying to do everything in-house, we'll better leverage new and existing partnerships to accelerate and enhance our innovation and route- to- market capabilities. I'm conscious that the increased focus on heated tobacco is a departure from the past, and I want to spend time explaining the rationale. This is a strategic shift grounded in data, consumer insights, and a clear understanding of both our assets and capabilities. The reality is that heated tobacco is the largest, fastest-growing, and economically most attractive category. It has already surpassed the size of the closed vapor category and is expected to continue demonstrating strong growth. While the largest market today is Japan, followed by Korea, going forward, the majority of growth is expected to come from Europe. This is where we have both strong presence and route- to- market in our combustible business, which we can leverage to drive our heated tobacco offer. Levels of consumer satisfaction experience are also higher in heated. Brand loyalty is higher, longer-term consumer retention is higher, repurchase rates are higher, and churn rates are lower. The category also shows significantly more attractive economic potential, with average gross margins of between 70% and 80%, compared to around 50% in vapor. In addition, our strong tobacco heritage and expertise in areas such as manufacturing and supply chain and route- to- market are ideally suited to the heated category. In Pulze, we also have a good product proposition that has already been extensively tested with consumers in a number of our European markets. Feedback from these market research tests has been very promising. It's clear that consumers are responding well to our product differentiators. These include the ability to provide up to 20 consecutive smokes without recharging, the simplicity, touch, and feel of the Pulze device, and the faster heat up and charging times. Consumers also tell us that they like the taste and flavor profiles of our iD sticks and their lower odor levels. Feedback and purchase intent was also encouraging, all of which gives us confidence and underpin our share and growth aspirations for the coming years. In essence, we believe we've defined a realistic and feasible ambition for our heated tobacco future. We have a clear path forward aimed at building our market share in Europe over time. By 2025, we expect the category to be delivering a meaningful amount of group revenue and profit. Our confidence is underpinned by our scale and infrastructure in Europe, which we can leverage to drive growth. As previously mentioned, we'll take a pilot-based approach with the aim of launching two initial pilots in Europe this year, the results of which will be used to inform the scale and pace of rollout thereafter. Now, let me move on to vapor. This slide illustrates the importance of the U.S. vapor market, a key driver of our decision to sharpen our focus here. The vapor category experienced substantial growth between 2017 and 2019, followed by quite pronounced decline due to EVALI and regulatory changes, including the flavor ban. More recently, however, the market is recovering, which again gives us confidence. We expect to see a far more stable and sustainable growth trajectory over the coming years, with the U.S. remaining the largest vapor profit pool, accounting for 2/3 of the global market. To make the most of these growth opportunities, we clearly need to improve performance. Results and returns have been disappointing, with a lack of focus behind A&P spend, challenged levels of distribution, and poor in-store visibility of blu. We must address these issues and continue to enhance our product over time. The good news is that blu has strong brand equity, which I'll come on to. We must drive clearer targeting of our consumers, supported by more efficient and effective A&P spend, improved distribution, and greater visibility at the point of sale. We now have a stronger go-to-market strategy that will receive closer management attention, driving stronger execution. Again, we'll take a pilot approach, and then we'll scale up based on learnings. Planning for a pilot is already underway and will begin in a defined area within the U.S. later this year, with national rollout to follow. As in the case of heated, it's about taking a more measured and disciplined approach so that we do not repeat the mistakes of the past. As I mentioned, the blu brand equity still very much resonates with consumers, as you can see from this slide. Awareness levels are the second highest in the market, and initial conversion rates are promising. However, blu's relevance significantly declines when it comes to being the preferred brand for consumers. This tells us that although we have a strong brand proposition, we need to start deploying the new strategy to deliver an enhanced consumer experience, which in turn will drive higher long-term conversion rates. While we focus on turning our U.S. business around, we'll also drive performance of our core European markets. The U.S. will provide learnings and insights that we can apply to improve our wider operations. The priorities in Europe will be the U.K. and France, our core vapor markets, where we already have strong positions today. Other markets have a role to play, but some existing markets are simply not delivering sufficient value. We will exit these markets as part of the new focused and disciplined approach that we're embedding within NGP. Turning to oral nicotine. We're pleased with the results that we're generating from our European portfolio. Traditional tobacco-based oral nicotine is only available in a small number of European territories. Modern OND, which doesn't contain tobacco, is more widely available. We're well-placed in traditional OND. We're the clear number two in Europe with a 20% share in the largest market, Sweden, and a 40% share in the second largest market, Norway. Our growth has been strong and steady since we entered the category through the acquisition of the Skruf business, and we are confident in our ability to build on this track record in the years ahead. Modern OND is expected to grow rapidly, and as you can see from this slide, we've established some promising share positions that we can continue to build over time. Imperial will continue to focus on OND within Europe, where we'll target both traditional and modern OND categories. The U.S. is a large and attractive market for OND, but we have no current plans to enter, and we will not seek to expand into other markets at this stage. This reflects the measured and disciplined approach we're now taking across NGP. In summary, we have a clear plan for significantly enhancing our NGP performance, driven by consumer insights, realistic ambition, clearer focus, and stronger discipline. We have revised our category prioritization based on market, category, consumer, and competitor insights, in addition to review of our own assets, capabilities, and market footprint. We will significantly increase our focus on heated tobacco within Europe. Vapor will be driven by the U.S. and core European markets, and we'll selectively exit markets that do not deliver value. OND will continue to be concentrated in Europe with no current plans for geographic expansion. Our NGP operations will be much more consumer and data-led, and going forward, we'll carefully select which categories and markets to target. There will be more precision and discipline around investment and in the general way in which we manage our NGP operations. In short, this is a new strategic approach designed to turn around our NGP business using a much more focused and disciplined approach to address the needs of consumers and create long-term value. Thank you. I'll now hand back to Stefan. Thank you, Murray. Having taken you through our three strategic pillars, you hopefully have a deeper insight in how we're going to enhance growth in our priority combustible markets, extract value from the broader market portfolio, and build a targeted and more disciplined NGP business. Now, we will look at how we are changing our ways of working and culture. As you heard earlier, the new strategy is underpinned by three critical enablers, putting the consumer at the center of the business, embedding performance-based culture and capabilities, and ensuring our operations are simplified and efficient. These are all absolutely critical to the successful execution of our five-year plan. My experience across the consumer goods sector has taught me how critical these factors are for sustainable success. Having now spent seven months inside the business, working with our people, and observing past behaviors and processes, I'm more convinced than ever that driving change in this area is really critical for our company to achieve sustainable success. I will now hand over to Chief People and Culture Officer, Alison Clarke, for a more detailed look at all these three areas. Alison? Thanks, Stefan, and hello, everyone. I'm going to start by talking about consumers. It's clear that there's been insufficient focus on the consumer at Imperial, and that will need to change. Historically, the business has operated in silos and has not had the right level of focus on the consumer. Consumer insights and market intelligence have not been represented or had a voice at executive level for the last four years, and therefore, innovation has not been grounded in consumer needs. Going forward, as you've heard several times today, the consumer will dictate everything. Decisions made will be truly consumer-centric, and the consumer will become part of the fabric of what we do at the center of our culture. We're starting to invest in capabilities that will provide significantly deeper insights into brand and portfolio management and marketing and innovation. You've already heard about the realignment of our NGP teams. This realignment will be built around clearly defined goals that will be based on the consumer and in competitor insights. We'll no longer pursue any new opportunities unless they have been validated by data and consumer insights. The appointment of a Chief Consumer Officer, a newly created executive committee role reporting to Stefan, this really shows how serious we are about placing the consumer at the center of everything we do. Recruitment for this position is progressing well, and we'll let you know when an appointment's been made. Now, the three core responsibilities of the Chief Consumer Officer are clearly defined on the slide. First, the CCO will oversee the company's drive to bring a far more coordinated approach to how we collect and use consumer and competitor insights and data. This will inform and enable faster and better decisions. Second, the role will ensure we have the right marketing, brand, and portfolio management and capabilities to support growth. Third, the CCO will also be accountable for a newly defined Innovation Program, making sure we have a pipeline of combustible and NGP products that our consumers will desire. Now, as you've heard, the strategic review has been examining the culture of the organization. Our insights on culture have been framed by employee feedback from a series of engagement surveys and Stefan's onboarding program, in which he hosted 300 meetings connecting with thousands of our employees around the world. These CEO engagement sessions were open and honest and transparent. Employee feedback has told us that this has not always been the case in the past. We encouraged employees to be as direct as possible about what it's like to be at Imperial and what works well and what doesn't. Their feedback has been instrumental in shaping our transformation plans. We're already taking that feedback and using it to design and embed performance-based culture and capabilities throughout the business. To achieve this, we need to build on Imperial's strengths, which we've already covered. The good news is employees are really open to embracing change, and with them, we've identified key areas for improvement. We're building a more integrated organization that will break down the silos and create a more efficient and effective business. A recent survey tells us employees had lost trust in their leaders because of the way the business was previously managed, and they feel disconnected from the strategy and our relationship with the consumer. On the right-hand side of the slide, you see the actions we're taking to start to embed performance-based culture and capabilities, and these are built around new behaviors, co-creation, teamwork, collaboration, and accountability. Employees will have a voice throughout the journey. One of the first things Thérèse did when she was appointed chair was to reinstate global engagement surveys. Among the first things I instated was Imperial's first ever global diversity and inclusion survey. This illustrates how serious we are about driving cultural change. For the first time, change will be co-created with our people to really motivate them to deliver the strategy. Another key element of performance-based culture is reward and incentives frameworks to drive the right behaviors. We've already made two important changes to the annual bonus. First is to create a greater alignment to the group objectives, so 80% of the annual bonus is now on group metrics. This is important to create integration and break down silos. Second is to change the market share metrics for the bonus to a weighted average for the five priority markets. This will ensure we're growing share of the market that will drive profit and value. We're also changing the long-term incentive plan metrics to reinforce the delivery of sustainable earnings growth, a strong balance sheet, improving returns on capital, and total shareholder returns. Now the strategy's in place, we'll continue to assess our incentives to improve accountability and align them with performance delivery. That's culture. Let's now look at our ways of working. The essence here is to develop simplified and efficient ways of working, in particular, building the right capabilities into our enabling functions to support the new strategy. Combustibles will now have the right level of resource and capabilities and will invest in assets that create the best value. A big change is that we've now already brought together our different NGP activities for vapor, heated tobacco, and modern oral within one distinct organization. Unifying our NGP operations will deliver leaner, more agile ways of working, built on a true entrepreneurial spirit, focused on meeting the needs of consumers, encouraging them to make that transition from tobacco. This integrated NGP organization will ensure a sharper emphasis on delivering a different business with a clearer focus. We will innovate faster, driving growth with a startup mindset and greater agility, and we'll embed the right capabilities and culture to deliver on this critical agenda. A key point to stress is that although this will be a separate integrated organization with all the benefits of focus and enterprise that this brings, it will not be detached from the wider group. It will be an integral part of Imperial with clear interfaces with the broader business. In this way, the new NGP organization will be able to draw on the strengths of the wider business. This slide gives the flavor of that, highlighting consumer insights, R&D, supply chain logistics, marketing and advertising, and route- to- market. The key takeout here is the need for the current disparate elements of our NGP operations to come together as one and leverage the capabilities of our global organization to enable us to compete effectively. Realizing this ambition will clearly require investment in a number of key areas, namely sales force, consumer and marketing, and upscaling the market support teams. These skills will need to be enabled through developing lean processes that will be underpinned by technology. This slide gives an indication of the cost and how this investment will be funded through efficiencies, generating annualized net savings of GBP 40 million- GBP 100 million a year. That's an overview of how we are changing our ways of working and culture to ensure a really successful execution of our new strategy. It's a big, exciting agenda, and we're looking forward to making it happen. Thank you. I'll now hand back to Stefan to introduce the financial section. I would now like to turn to the financial aspects of our new five-year plan. What has struck me coming fresh to this sector is the strength of the margins and cash flow, albeit with the slower growth rates in some other consumer sectors. This reflects tobacco's strong pricing power, the relatively low marketing costs, and modest CapEx requirements. As a result, Imperial has the capacity to deliver highly attractive cash returns to shareholders over time through a combination of ordinary dividends, special dividends, and by shrinking the capital base through share buybacks as appropriate. I'm confident that Imperial has significant potential to deliver growing cash returns for shareholders over many years. You've already heard today how our five-year plan will deliver the necessary changes to strengthen delivery, and Oliver will provide further details on the restructuring costs and savings. The key message I want to leave with you from this part of the presentation is that we'll be far more disciplined in how we allocate capital and manage returns. At the same time, our reporting and disclosure will be more transparent to make it easier to assess our performance and model Imperial going forward. This will all be set within a clear capital allocation framework, which I will outline shortly. Before that, we'll now go to Oliver to take you through the details. Oliver, over to you. Thank you, Stefan, and hello, everyone. In Combustibles, you've heard from the team about how we will prioritize our investment more tightly behind our top five markets. The big difference from the past is the level of detail underpinning our approach and the six operational levers through which we will direct investment to improve performance. In NGP, you've heard how we are now taking a very different approach from the past. From a financial perspective, near-term investment will be more targeted and disciplined behind specific market trials. Further investment will be carefully stage-gated and only increased on evidence of progress through clear consumer validation and data. We will be measured in our approach, applying more rigorous qualification techniques. As Stefan said, there will be no major margin reset because the additional investment in our top five markets and in NGP will be funded through underlying performance improvement, resource allocation, and cost savings. Alison has set out how we will be changing our ways of working to create the right organization to deliver our five-year plan. We will remove duplication and streamline the organization, thereby speeding up our decision-making, creating a leaner, more agile business. These actions are expected to realize annualized savings of between GBP 100 million and GBP 150 million by the end of FY 2023, with the bulk of the efficiency benefits landing in the next two years. To reshape the business behind our new strategy and deliver these savings for reinvestment, we need to invest, and we expect total cash costs of between GBP 245 million and GBP 275 million over a three-year period, as you can see on the slide. The majority of the spend will be in FY 2022, although some of the cash outflows will extend into the next financial year. In addition, we also expect to incur associated non-cash restructuring charges. We currently anticipate these will be around GBP 150 million, and we will be transparent in updating you on these as we report to you. We intend to implement all the initiatives by the end of FY 2022, although as I've said, there will be some cash costs that extend into FY 2023. I should stress this program is different from those of the past in that it is highly specific and time limited to deliver a step- change in organizational capabilities. As a result, we intend to treat these costs as an adjusting item to aid comparisons of our performance over time. Any additional restructuring charges beyond FY 2022 and those outside this defined program will not be treated as an adjusting item and will be reported within our adjusted operating profit. These programs we're announcing today exclude operational restructuring activities such as factory closures, which will be reviewed by Javier Huerta, who will arrive at the beginning of February. Javier's review is not part of the program we're announcing today, and the cost of any future right-sizing of our factory footprint over time will now be included as a charge within our adjusted operating profit and be highlighted as an impact. What do we expect the five-year plan to deliver? We see two distinct phases. The first two years are about investing to strengthen the business, to underpin delivery of our new strategy and realize efficiencies. During this period, adjusted operating profit progress will be limited as there will be additional investment, which will only in part be funded by reallocating resources and cost savings. In phase II, you will see the benefit of the investment returns, and we expect to deliver a profit growth CAGR over the three years in mid-single digits. Our combustible business will be the main contributor to this profit growth over that period. Revenue will improve gradually over the five years as the initiatives bear fruit. Overall, we expect to deliver a CAGR of 1%- 2% in net revenue over that period. I should stress at this point that our guidance for the current year is unchanged, as shown on this slide, which we've lifted from our results presentation in November. On an organic basis, excluding the impact of the premium cigar business sale, we expect to deliver a low- to- mid-single digit growth in adjusted operating profit at constant currency. I won't go through the details as they're unchanged. I should say, however, COVID continues to impose restrictions across our markets, although the business continues to perform within our original guidance. In addition, please remember for your models that we've assumed a higher tax rate with a 2% impact on earnings, with constant currency organic earnings per share expected to be slightly ahead of the prior year. We also expect there is likely to be further upward pressure on the tax rate in FY 2022, although less significant than in the current year. The cash characteristics of our business remain highly attractive, with low CapEx needs supporting annual operating cash flows of more than GBP 3 billion a year. Over the next five years, this could generate GBP 18 billion. Looking ahead, we will be disciplined in our use of capital with a continued focus on working capital, and this will support cash conversion over the medium term of between 90%-100%, which is consistent with that delivered in recent years. Moving on to Logista. This is the Spanish-listed European logistics business where we have a 50.1% stake. As the major distributor of tobacco products for the industry in Southern Europe, this is a relationship which is managed on an arm's length basis. Logista plays an important role in collecting excise duty payments in Spain, France, and Italy. Depending on timing, Logista can often have a significant duty creditor and positive cash balance. We have a commercial loan agreement in place with Logista that allows us to benefit through a daily cash pooling arrangement. If we take this past year, the average cash balance from the cash pooling arrangement was GBP 1.9 billion, with a figure varying from a high of GBP 3.9 billion to a low of GBP 0.5 billion. At the year-end, the cash balance from the Logista loan was GBP 2.4 billion. Our investment in Logista provides an attractive cash benefit to the group, as well as an exciting opportunity for growth. Turning to our balance sheet, our disappointing financial performance over recent years has slowed the pace of debt reduction, as shown here. This led to the board's decision last year to cut the dividend in order to accelerate deleverage. Debt reduction will remain a priority for the time being in order to achieve our target leverage, which is towards the lower end of a net debt to EBITDA range of between 2x and 2.5x. We believe a strong balance sheet will provide the business with greater flexibility for the future, improving resilience to manage uncertainties, increase our headroom within our credit metrics, and further underscore the defensive characteristics of our business. Deleverage is also necessary to our investment-grade rating, to which we remain fully committed. An investment-grade rating brings many benefits, including cost-effective access to an established debt investor base via the capital markets, better terms for our RCF, as well as reducing other costs, such as those related to pensions. The rating agencies assess companies on the basis of both commercial considerations and financial profiles. As I mentioned earlier, our pace of debt reduction has slowed. The business has lagged behind others in areas such as NGP, and we've seen persistent profit downgrades in recent years. This combination of factors has limited our ability to create headroom within our current rating. In addition, I think it's worth remembering that over the last two decades, we've run our balance sheet at the efficient end of our credit metrics, which has placed us at the bottom end of our rating. The new five-year plan, together with a focus on deleverage, will help to strengthen business performance and our financial profile over time, resulting in a stronger balance sheet with less debt and more headroom within our credit metrics. Thank you. Now let me hand you back to Stefan. Thank you, Oliver. In talking to shareholders in recent months, I am aware we need to provide clarity over both our strategy, which we covered earlier, and our capital allocation. As part of our review, we have thoroughly explored and evaluated all aspects of capital allocation. My objective is to give you a clear and transparent framework that sets out our priorities for the coming years. My first priority is to strengthen the business by investing behind the new strategy. This is critical if we are to deliver the necessary performance improvements and rebuild trust and credibility. This will ensure the ongoing long-term success and viability of the company. Our second priority is to strengthen the balance sheet, to reduce leverage to the lower end of our target range to underpin our investment-grade credit rating. Third, we remain committed to a progressive ordinary dividend policy to provide a reliable, consistent cash return to shareholders. The dividend will grow annually from last year's rebased level, taking into account underlying business performance. Fourth, finally, I see the opportunity for returning surplus cash to shareholders. This will be considered once our target leverage has been achieved. Our strong cash characteristics will support additional returns via share buybacks or special dividends. Now, given the modest rating of our shares, we recognize that some of you would like to see a share buyback sooner than this. We have explored the options here and concluded that at present, we do not have the headroom to take on the necessary additional debt for a meaningful buyback without risking a credit rating downgrade. A downgrade would seriously reduce future financial flexibility to implement our strategy and lead to significantly higher costs. This is why we are committed to investment-grade credit rating and will be reducing our leverage further to reach our target level. I also want to emphasize our dividend payout ratio of around 54% is relatively low compared to our peers, which will give us significant flexibility around the nature of future surplus cash returns. I can assure you we will be disciplined in how we optimize these returns based on market conditions and the share price at the time. To summarize, we've set out a clear strategy that will strengthen the business through strong execution and consistent delivery. The strategy will unlock value for our shareholders, employees, and all other key stakeholders, supported by three clear strategic pillars. A renewed emphasis on our five priority tobacco markets, a clear plan to drive value from our broader market portfolio, and more disciplined execution in NGP, with an increased focus on heated tobacco. These strategic pillars are underpinned by our new critical enablers, placing the consumer back at the center of Imperial Brands' business, embedding a challenger mindset that embodies a performance-based culture, and implementing new ways of working to support an efficient and simplified organization. These will be exciting times for Imperial Brands as we transform and focus the company to strengthen our delivery in the years ahead. We also have a clear view of what our strategy will deliver over the five years. A stronger business with a sharper focus behind tobacco and clearly defined roads for our major combustible markets. Our commitment to Tobacco Harm Reduction will be evident through our new targeted and more disciplined NGP business. We will have an energized and motivated organization that is focused on meeting consumer needs with a culture that is smart, agile, and focused on delivery. We will be a stronger business, capable of delivering sustainable growth in revenue and profit with continued robust cash flows and a strong and efficient balance sheet. This will support a progressive dividend policy, delivering consistent, reliable cash returns to shareholders, while excess cash can be returned to shrink the capital base over time. What does this mean for shareholders? This creates a very different investment case for Imperial Brands. Our revitalized tobacco business will be the most significant contributor to value creation over the next five years. Our NGP business provides an additional opportunity for growth and with better prospects for success. We have a significant upside from self-help initiatives through operational excellence and performance improvements. This is just doing the basics better. We have a motivated team of employees who are ready and willing to embrace these changes to make this a successful business we can all be proud of. Most importantly, the business remains highly profitable and cash-generative, underpinning enhanced returns for shareholders over time. Thank you to all of you for listening to the team and me and giving us the opportunity to share our excitement about the future of Imperial. We'd now like to take a short 10-minute break before taking your questions. If you would like to ask a question, please dial into the conference call numbers provided, and we look forward to speaking to you shortly. Thank you. Welcome, everybody back. I hope you had a good break. We're now coming to our question and answer session. For that, actually, the whole executive team, all the presenters of the day are here to answer your questions. With that, I would suggest that we pass it over to the operator who is lining up your questions so we can get back to you. Thank you. The first question comes from the line of Gaurav Jain from Barclays. Please ask your question. Sure. Good afternoon. I'm not sure whether there's an echo in the mic. We can hear you, Gaurav. Okay, sure. A few questions from my side. The first is on the revenue guidance of 1%-2% CAGR which you have said. said. Historically, your tobacco growth has been 0%. What are the components of this 1%-2% revenue CAGR guidance which you have given? What is the contribution from tobacco and what is from NGP? Sure. Gaurav, as you rightly said, there is a bit of a halo in the line. I'll repeat your question as the way I've understood it. You wanted to understand what are the key components behind the top-line growth that we're forecasting behind this strategic plan. Yeah. I think the key driver of the revenue growth, like on the bottom line of our five-year strategic plan, is our core combustible business, driven by our five priority combustible markets. Yeah. They will, over time, especially towards the end, be a contribution also from our NGP business. Okay. Apparently, we can't hear me. Okay. Thank you. The next question comes from the line of Owen Bennett from Jefferies. Please ask your question. Your line is open. Afternoon, all. I have a couple of questions, please. First is actually a two-part question around NGP and the focus on heated. If we look at Philip Morris, heated tobacco clearly requires a lot of investment. Further, it's probably fair to assume that space is only going to get more avid. You've got BAT needing to take share, Japan Tobacco, KT&G, even China Tobacco now with heated tobacco ambitions. Linked to that, many would say your current heated product is inferior to that of BAT's and PM's. You've really struggled to get any success in Japan, where you were a fast follower, and there's obviously more freedom to advertise and build awareness there. You look at your heated in your core European markets. With the exception of Germany, it's not really seen much success. The first question is, why do you think you need to be in heated tobacco? The second one is, given that the outlook and the industry dynamics there, what makes you think you can have an impact without huge investment? Thank you. The next question comes from the line of Michael Lavery from Piper Sandler. Please ask your question. Your line is open. Thank you. I wanted to follow up on the beginning of the presentation when you mentioned looking at the Right to Win Imperial has. I know the following slide after that touched on some strengths and things like market shares that are often a reflection of some of what a Right to Win can drive. Would love to just maybe hear a little more explicitly what you consider your Right to Win to be, and how you think about that as a foundation for the strategy that you laid out. Dominic or Jörg. If you can hear me. Yep. Okay. Yeah. I didn't hear the question. You didn't hear the question? Yeah, unfortunately, we're having some technical issues. As we said, some hiccups would occur, as unfortunately have occurred. If you would be so kind to repeat the question, that would help me. Thank you. Sure, no problem. I can hear you now as well. Great. Thank you. I want to understand how you think about Imperial's Right to Win. I know you started by saying you assess that to drive the strategy. Just wondering maybe more explicitly, exactly how you define what that is. I know you mentioned some of the strengths the company has. Sometimes those are a reflection. That's the fruit of the Right to Win oftentimes. Just curious how you think about what the Right to Win is. Absolutely. I think I would start off as about if you look at where are our strong positions in the marketplace, therefore the clear focus on our top markets, on our top five markets. That is very clear where we hold strong route-to-market positions and also strong positions in the marketplace. Yeah. Here we clearly have identified this. These are the markets where we clearly have a Right to Win, where we have the strong positions outside. I think what is very fair to say in some of the smaller markets where we hold smaller positions, these are clearly the markets where we're saying we will become more selective in our investments. I guess I'm just curious, is there a capability or some differentiation you would point to as the Right to Win that drives those strong market positions, or do you consider it just to be the fact that you have that in place already? What is very clear, we have comparison with our competitors, like the consumer centricity and our ability to actually address consumer needs. That is clearly a catch-up opportunity, an opportunity for self-help to actually complement the strengths that we clearly have in our route-to-market capabilities. Okay, great. Just to follow up, I wanted to understand a little better when you talk about being a fast follower in heated tobacco, as you model out your next several years and expectations for yourselves, can you give us a sense of how much you think any gains in heated tobacco you could get would come from helping grow the category further, or is it from anticipating taking share from somebody like IQOS? I think it’s a great question. I think what is important about our plan, if we step back, what is the key distinctions of our NGP strategy going forward? Yeah. If you look at our track record, if you look at our core competencies, we as a company have a good track record of actually offering consumers choices in the markets. This is less about us building new markets. When you ask the question, so what our focus will be, where already there is a consumer market developing for an NGP product, the ambition is clearly to offer consumers choice in that market. To be clear, offering choice to consumers is one way of building the market versus being the pioneer in building a completely new NGP segment in the market. That is a different approach, to be clear, that we're taking versus our own past, and to be clear, that we will take in comparison to some of our competitors. That is what is captured in the more rigorous approach, in a clearly one that links better in our skillset. I'll also pass it over to Murray if he wants to add something from his side. Thank you, Stefan. I don't think we'll talk about the balance between share steal versus growing the category. I think we're very clear as we talked about in the presentation, that our product appeals to a very specific consumer segment, given the attributes of the product and how it differs versus competition. Versus the past, I think we've got a much clearer defined target to go after. For sure the categories are going to continue growing, for us it'll be a balance between both taking share within that specific consumer segment and benefiting from the growth of the category within the markets which we target. Stefan? I think hopefully that answers the question. Can we have the next question, please? Yeah. Hopefully the technology works now. Thank you. The next question comes from the line of Gaurav Jain from Barclays. Please ask your question, your line is open. Thank you. Earlier I couldn't ask all the questions because of the line issues, so hopefully now it will be better. Listen, I'd asked a question earlier on your long-term revenue growth projection, and you are arguing that that is well- underpinned. I guess the other question becomes on your guidance, and the way you have given the EBIT guidance, that FY 2022 is flat over FY 2021 because of investments. Then EBIT growth will accelerate to mid-single digits. Imperial Brands as a company, historically, it was missing guidance for quite a long stretch of time. How much confidence should we have in a guidance which is essentially post FY 2022, i.e., it is almost 18 months away from here? Sure. Gaurav, I think an important fact is what you hopefully have gotten the first impressions on is there is a very clear deep dive and a deep understanding of what are the key drivers of that performance. That's point number one. Point number two, you will have observed that a significant chunk of our guidance in the past was on the NGP business performing in a very significant way. I think if you look at our plan of today that we're presenting for the next five years, the key driver of that profit improvement that we see in the outer years is going to be driven by our core business. That is a much securer way versus the past of delivery. The second point is I think what you heard from Alison, as a management team, we looked at our past performance and why we didn't perform. One of the key elements is clearly about performance management, culture, also attention to understanding our consumers. There's a lot of things happening in the background that give us the confidence that we can deliver this set of numbers. Sure. A follow-up question on share buyback. If you have the confidence that Imperial will be growing at mid-single digit from FY 2022 onwards, and you yourself referenced that the stock price is very low. It might be true today that your balance sheet is stretched, but by September FY 2021, it will be much less stressed. It will be within 2x- 2.5x, and it will be growing rapidly to 2x by September FY 2022. If the stock price is where it is, would you be willing to look forward at where leverage is going and start commencing some form of share repurchase? Even a GBP 300 million share repurchase will meaningfully move your EPS growth. Yeah. It will still help you deleverage. It won't take away anything from deleverage. Gaurav, I think you're absolutely right. Hopefully, number one, what we shared with you today is a very clear capital allocation policy. At the same time, also being very transparent with you, what are the priorities within that, with a clear confirmation of our progressive dividend policy. But at the same time, also clearly letting you know, once we have achieved a deleverage, surplus cash will be returned back to shareholders. Yeah. I think one thing we shouldn't forget in this one, that in the reset of our dividend policy last year, our current payout ratio is 54%. Which is the lowest of any of the major players, which gives us, as a company, once we have achieved that deleverage that we talked about, significantly more flexibility to return cash to shareholders in whatever form is right at that point in time. I think we probably would all agree, if the share price would be where it is today, that would be in the form of a share buyback. Well, great. Thank you. Thank you. The next question comes from the line of Owen Bennett from Jefferies. Please ask your question, your line is open. Afternoon, all. Yeah, I've actually got two questions, please. I don't think you heard the one earlier. First one is a two-part question actually around NGP and the focus on heated again. If you look at heated in your core European markets, with the exception of Germany right now, it's not really seen much success. First question is, why do you think you need to be in heated? Second, what makes you think you will be able to take share as a fast follower without significant investment? I mean, that segment becoming increasingly crowded now with even KT&G and China Tobacco. The example we've got is Japan, where you were a fast follower and arguably there's more freedom to advertise and build awareness there, and you had a little success. Yeah, what makes you think you can take share without significant investment? Thank you. Yeah. Owen, very happy to answer your two questions together with Murray. Apologies that your question wasn't I couldn't hear it before. On your question, looking at what we've done in the last couple of months, looked at all the key data, also consumer interviews, understanding where the categories will go across our core markets. Yeah. It is very clear that we are observing that the heated tobacco category is gaining more traction across a number of European markets. Yeah. That's number one. Number two, when you look at the structural economics of heated tobacco with, as Murray referred to earlier, a significantly higher gross margin, that means also the break-even point is at a much lower level. It's also helped by the fact that the retention rate of heated tobacco today is superior to any EVP product. To your question about how can we compete in this space. One is the important because you bring up the Japan example. I think the Japan ex-m arket, as Murray referred to that, in our assessment and our observation about success or failures, there are three key elements that apply to NGP for success. The one is the product, the second one is the marketing communication, and the third one is the route- to- market. I think one thing we shouldn't forget, that in Europe, the route- to- market on heated tobacco is virtually just the majority of countries exactly as the same route- to- market to our classic combustible business. Yeah. It puts us at a competitive advantage in this area. It is very clear in Japan, while there were lots of learnings coming out of the Japan market, we have a 1% market share, so a relatively small route- to- market. To be honest, our knowledge of Japanese consumers is quite limited. It wasn't putting a product together with the right marketing mix and the right route- to- market. Good learnings to be learned, but the likelihood that Imperial would succeed in a market like Japan as the fourth entry into the market, in a market that is not one of the core markets of Imperial, I think we have to say, was not the highest likelihood of success. I think it is a different picture in our core European markets, and the feedback from consumer data that we have done, yeah, in our European markets, does indicate there's a consumer segment that actually has an appreciation for our product. When Murray outlined earlier today, there are some product features that for certain segments of heated tobacco users are actually quite relevant. Murray, you wanted to add anything from your side? Yeah. Thanks, Stefan, and thanks for the question, Owen. I think the only add from me is just reemphasizing the pilot approach that we're taking to this, Owen. We'll have two pilots in Europe during this year. I think that will give us a chance to really test how robust our thinking is around the scale we can get to within the markets, both with the product, with improved execution, and with the real focus on a specific consumer target. In terms of the market development, we've done a lot of work trying to understand how we expect markets in Europe to develop over time. Clearly, as we look to consider rollout beyond the test markets, we'll look closely at the latest view in that expansion and use that to help amend our rollout plans thereafter. It's not a blind investment today and a commitment to scale across Europe if the market doesn't materialize. It's pilot approach to demonstrate the viability and the economics before we look to scale and increase significantly investment. Stefan? Yeah. Okay. Owen, I hope that answers your question. Okay. Yeah. That's very helpful. Thank you. Yeah. Thank you. Yeah. Thank you. Yeah. That's very helpful. I That's very helpful. I That's very helpful. I just have one second question, actually. Sure. Please. On the combustible assets outside of the core, and obviously the shift to a greater ESG agenda, and obviously within an ESG agenda, you want to move away from those legacy assets. You said unlikely to find buyers for the tail. However, you talked through the attractive trends on U.S. mass- market cigars, emerging market cigarettes in Africa, for example. It should be easier in theory to find buyers for these assets. I was just wondering, would you be open to selling these assets, especially given the ESG agenda? Thank you. Yeah. Owen, personally, I think it's a great question. I think number one, I think it is important our ESG agenda is about driving our business the right way and building a position in reduced harm. Our interpretation is not that disposing of specific combustible assets would be by an ESG agenda. Let me go to the specific questions you asked about mass- market cigars, U.S. and Africa. I think number one, hopefully what comes across from our plan that we presented to you today is that we do see significant opportunity to actually drive these brands and these market positions better versus the past. I mean Dominic shared with you the plan for Backwoods, for example. Yeah. It's also very clear, and if we stay on Backwoods and mass-market cigars, what I think might not be that visible from the outside, the route- to- market for mass-market cigars in the U.S. is exactly the same as for our FMC business. Very different to premium cigars. Actually, you would weaken our FMC business in the U.S. if you would be disposing of the mass-market cigar. The same customers, it's the same outlets. Yeah. We do believe there is a significant opportunity for value creation around the mass-market cigar business in the U.S. Yeah. We also believe that for our African business, this has been undermanaged, and there's a real opportunity to get a better place behind our African business. I also probably, as you will understand, our markets, this is an industry that is already highly concentrated, so the number of potential buyers is quite limited. Therefore, we do believe the best way of creating value for our shareholders is to look after our assets with this plan first. Okay. Yeah, that's very helpful. I appreciate your time. Yeah. Thank you. Can we have the next question, please? Thank you. As a general reminder, ladies and gentlemen, if you wish you to ask a question, please press star one on your telephone. The next question comes from the line of Adam Spielman from Citi. Please ask your question, your line is open. Thank you very much. Inevitably, I have several questions. Can I start with a helicopter view question? Do you think the cigarette market in the U.S., in Europe, globally, is going to go on declining in the way that it has declined recently? Or do you think there's a risk that next-generation products will accelerate that decline or, maybe even just fizzle out, and we actually get a slightly better trend? It's this really big-picture, high-level view about how you see the next 10 or 20 years for the cigarette market. Adam, I love the question. As you can expect, given the importance of the performance of our top five cigarette markets, and that includes the U.S., this has been an item we as an executive team have debated at length and looked at lots and lots of data. I think the important My feedback would be we put the consumer here. Yeah? Ultimately, this is all driven by consumers making a choice every day what product they actually want to use for getting their nicotine hit. Our observation is very clear. While there is a trend about consumer switching over to NGP, we can clearly see that at this point in time, there hasn't been really a massive acceleration in that trend. Yeah? Unless there is a very significant disruption from the regulators, which we cannot foresee at this point in time, especially focusing again on the top five markets. The answer would be, our plan today does foresee a continuous decline of the core combustible business, driven by consumer switching off in certain numbers to NGP offerings. We do not foresee a massive acceleration of this trend in the next five years. It's also a position that's slightly different market by market. I would just also invite Dominic to give his perspective from a U.S. side. Yeah, I think there is nothing to add, Stefan, actually. I think your analysis was absolutely correct and yeah, very much in line with what we see, Stefan. Just to focus on the U.S., because obviously it's so important to you. Altria, Philip Morris USA, is saying, has said, in 10 years, you could easily see half of the nicotine market move away from cigarettes to various forms of non-combustible. Yeah. Is that in line, w hich, by the way, if you're Altria, sounds really scary to me. Yeah How do you think? Do you think too aggressive, do you think that's about right? Adam, look, you will probably understand that it's Altria, our competitors, I have enormous respect for them. They have their business. We've done quite a deep dive from our side. Yeah? Yeah. We've looked at the pickup rates of vaping, [mentholation], and oral nicotine. These are the two offers for U.S. consumers in NGP. We've extrapolated, and we looked at all kind of different scenarios. We just, at this point in time, would not foresee where in that time frame you would have half of consumers having switched out of combustible products. Yeah. That's very clear and very helpful. Thank you. Yeah. Just turning this to a much more granular question. On your next- generation product strategy, you say again and again, we're looking at consumer data, and we've got these plans for heated tobacco in Europe, but it's gated plans. If they don't achieve what we hope, we won't roll it out. Obviously, any investor in Imperial would hope that you'd achieve. Clearly, you're highlighting a risk that actually your product doesn't work, or the current plans don't work. I was just wondering how we should think about that risk. I'm not looking for a sort of percentage chance on it, but what happens if, at the end of, I don't know, 12 months' time, you just think the product and the proposition isn't good enough for heated tobacco in Europe? Adam, number one, I think what is very important and I think a real departure from the past, the top and bottom line growth that we're presenting and committing to behind this strategic plan is primarily driven by our core business. I think that's a very important distinction versus the past. We have a much higher level of security about delivery of this plan. The second piece, and Murray touched upon it is very clear our plan, we're going in with the propositions, with test markets and qualifications. What is important, which I think is important to, we're committing to shareholders, we're not going to roll out propositions if we do not have the confidence level that they can achieve the targets that we're setting ourselves. What would happen in this case, as you asked very specifically, this proposition would then not be rolled out. We would be fine-tuning this proposition and see. At the same time, there's enough data generated in the last couple of months across a number of European markets that give us some confidence that actually our proposition, there's a consumer segment where what we can offer consumers is appealing. Murray, you wanted to add some color to this? Thanks, Stefan. I think just to build on it, the research we've done, I think the product definitely appeals to that very specific consumer set. I think it's a different product to what our competitors have, and I think there's points of difference of what we see people are attracted to, particularly within heavy users, which clearly is the most attractive consumer segment. We, at least at this stage now, prior to the pilots, we have confidence in the potential there, but clearly the pilots are going to be the thing we'll use to determine the pace and speed of rollout thereafter. If the pilots fail, we'll need to reset as to where we go next with it. Stefan? Yeah. Okay. Adam, any more questions from your side? A couple small, but I'll keep it to two more. In your detail presentation, you talked about top five markets, and you said there should be decent growth in three of them, but for various reasons, U.K. and Australia, you expect declining top line in the market for the next few years. I was just wondering if you think about the balance of your markets, so the other ones, is that a good rule of thumb, that three out of five of them should be growing, but two out of five of them won't be? Is that a reasonable way of thinking about the next, let's say, 10 markets down? I think I would want to focus on the top five, Adam. I think number one, if we step back and as you asked the question about bigger picture, the reality is when you look at our market portfolio, market number one, U.S., market number two, which together represent the bulk of the 72%, they are both falling in the category where actually we are seeing and our competitors are seeing still growth. I think what is reassuring that two of the five where we are forecasting shrinking market sizes do not belong to the top two markets. I think that's an important piece. I think when you look at, to answer the second part of your question, if you look at the next set of markets, I think we are reality less dependent on market growth. Reality, some of them are growing, some of them are not. I think it's about how do we compete in this market that would be a key value driver for us. I want to repeat the big value driver, the big opportunity for Imperial is to drive these top five markets, where the top two have significant even market growth opportunities to actually achieve better results in these markets by being more focused on them. That is the key driver strategic plan here. Okay. All right. Can I suggest we come to the next question? Okay. Okay. Is the operator still there? Okay. Sure. Yeah. Sure. I just want to let you know we're having a challenge right now to getting the operator who's actually putting the questions forward to us. We're working through that. If you please stay with us. I apologize for that. Okay. It looks like the operator is back. First, apologies from my side again for the technical difficulties, but over to the operator, the next person can please ask the question. I can hear you very, very soft only, but I will ask the next question. The next question comes from the line of James Edwardes Jones from RBC. Please ask your question. Your line is open. Hello, James. We can't hear you. Okay. Exactly. We'll come back to James later. Okay. I do apologize. Yes. Can you ask the next question? Yes. The next question comes from the line of Alicia Forry from Investec. Hello, your line is open. Alicia, if you can ask your question, please. I'm speaking. Can you hear me? Yes, we can hear you now. Thank you. Great. Thank you. Questions on the NGP business. The focus is welcome. Heated tobacco in Europe, vapor in the U.S., thank you for that. I'm wondering, does this mean that you will exit Japan? Second, is Russia considered to be part of the addressable market for heated tobacco in Europe for you? Also, I'm curious about your decision not to include any specific targets around NGP, whether penetration or absolute sales. Perhaps these will be wrapped up with the consumer health KPIs. Can you explain the thinking behind that decision? Very happy to do that, Alicia. First, thank you for the comment on the heated tobacco strategy and the focus within NGP. I think it links to answering your question. Behind the new strategy, the NGP in Japan will not be a priority for Imperial. The reasons are quite straightforward, because we are going to focus on the markets where we believe we have a Right to Win. That is clearly making sure that we have a good route- to- market as well as good marketing capability. On the question on Russia, it is clear that from a combustible perspective, Russia is not one of the top markets. It is a market where our route- to- market capability is not at the same level as some of our Western European markets. It is definitely despite the size of the heated tobacco market. To be clear, that is at a lower level of profitability versus some Western European heated tobacco markets. It is definitely not one of our top priorities at this point in time. I can press a button. Okay. Thank you. Alicia, hopefully you heard my answer. Yeah? Yes, I did. Yeah. Yes, I did. Yeah. The final on the third part on KPIs. Yeah. Now it is very clear as we reset the strategy, we didn't feel as today would be the right point to put KPIs out. It was more important to share with you the overall drivers and strategy behind our NGP business. What is clear, as we progress, and you've rightly picked up, it will form part also of our ESG commitment. There will be targets for our NGP business as we progress. You will have the opportunity, yeah, to follow whether we are making progress against our priorities and our objectives. Okay. That's very helpful. Thank you very much. Just one final question, if I may, and then pass it on. Sure. The restructuring, could you provide more detail about where the savings are coming from? I appreciate this may be sensitive, but whatever information you can provide would be useful. Sure. Alicia, I gave you an overview and Oliver will give you further detail. The overview is what is very clear, we've done a deep dive on the organization in the last six months, and it is very clear that the new strategy will drive different strategic priorities versus the past. Yeah. There are going to be certain areas of the business where we will be able to take some of our overheads out because they're not forming a key part of the strategy forward. Secondly, we've clearly identified that the silo perspective that Alison gave you, one of the challenges, there's a duplication inside the business. Yeah. That does not create value. One of the areas where we are clearly going to release investment back into the core markets is by running our back office significantly in a more effective way. Yeah. These are key elements of where the savings will come from. Oliver, you want to give some more color from your perspective? Yes. Thank you, Stefan. Yes. Historically, a lot of our restructuring was focused on our factory footprint and the implications of our brand portfolio in the context of that factory footprint. As Stefan has said, as we move into this particular strategic framework, we are much more focused on looking at efficiencies in the back office, and in our route- to- market structures to enable us to focus our investment right at the front end in the context of improving our in-market performance and satisfying consumer needs. Stefan. Thank you. Okay. Alicia, hopefully that provides, as you rightly say, there are certain limits, what we can talk about today. To be clear, the details of the plans are being worked. Sharing them with you today should give you a high level of confidence, yeah, that these are definitely deliverable plans. It's also to be clear where other companies have been able to generate efficiencies. Okay. Can we move to the next question, please? Thank you. The next question comes from the line from James Edwardes Jones. Please ask your question. Hello. Can you hear me? Yes, we can hear you. Great. Again, on NGPs quickly, can you give us some idea what the ongoing CapEx is going to be for NGPs and also what the P&L implications are going to be and reduced revenue investment in the NGP business? Secondly, what was it that convinced you that a progressive dividend policy would be preferable to a share buyback program? Okay, sure. Let me deal with the NGP question first. number one, I think what is important to understand is our NGP strategy will only trigger any meaningful CapEx investments once we are really convinced that we actually have a product market mix route- to- market for a specific market ready with success. Yeah. It is gonna be a very prudent and very rigorous approach on this front. To be clear also, and that might not be known to you, there has been a very significant CapEx investment in our heated tobacco capabilities in the company before. Our tobacco plan does not require us massive CapEx investments on this side. Yeah. At the same time, we do not foresee a massive increase of CapEx behind this plan. Yeah. If you think through what we have given overall as a business, including our combustible business for around GBP 300 million, is probably annually, is probably the right range. On your second question on consideration of the current dividend versus the share buyback, we have looked at all options. It's very clear, when we also spoke with our shareholder base, a reliable dividend income is important for a very significant majority of our shareholders. Having this security about our progressive dividend policy is clearly something that we have prioritized over a short-term share buyback funded by a cut by the dividend. Got it. Thank you. Okay. All right. Can we have the next question, please? Thank you. The next question comes from the line of Jon Fell from Ash Park. Hello? Jon Fell, can you hear? Sorry, I was on mute, I think. Just to come to James's question again, I think you answered why you're not cutting the dividends. I would quite like to know why, given that earnings growth looks like it'll be flat the next couple of years, you've committed at this stage to raise the dividends further when the yield is already so high. I think it was 8.5% at the start of today. It's nudged up nearer 9% this afternoon. Why with the share price already so low is increasing the dividend now a priority? Yes Secondly, I think you've got about GBP 10 billion of debt coming to maturity over the next six years. Yeah. You haven't accessed debt markets since the middle of 2019. Now looking at your reported redemption yields on those bonds and looking at how other companies have accessed debt markets at very low yields in the last year or so, why aren't you accessing debt markets more aggressively? If you had a longer debt maturity profile, would that make you a bit more relaxed about being able to do share buybacks more aggressively, perhaps? Sure. Okay, James, let me answer your question also together with Oliver. On the question about dividend yield, I think one thing which is important, with the reset of the dividend last year, we're now at a 54% dividend payout ratio. I think what we felt important as the business progresses, and let's not forget, when you look at through the five-year strategic plan, you are looking in the later three years a mid-single-digit operating profit increase. I think that is how we see it coming together. I think that is also when we spoke with shareholders, and I understand there are different points of view out there, but that was what we understood was making a lot of sense for the majority of our shareholders. On the debt financing, I pass it over to Oliver, who can give you a more specific answer. Thank you, Stefan, and thank you very much for the question. We've obviously, over the last 18 months or so, been expecting some proceeds in from the sale of the cigar business. To some degree, therefore, we've been in a position where we have relatively strong short-term cash flows or the expectation of relatively strong short-term cash flows. We haven't needed to raise additional funding in overall terms, in relation to our current debt portfolio. We have refinanced our RCF facilities, so our banking facilities. They were refinanced at the beginning of this year, and we have at various stages put a number of bilaterals in place over the course of the last 12 months. Our cash flow has been strongly positive and therefore, actually the need to increase our overall debt levels hasn't been something that we've had to consider. We are obviously mindful of the current attractive rates in the market. We are mindful of the fact that there are opportunities for us in that context. Okay. Thank you, Oliver. Can we have the next question, please? Thank you. The next question comes from the line from Vivien Azer from Cowen. Please ask your question. Your line is open. Hi, can you guys hear me now? Yes, we can hear you. Okay, wonderful. I apologize. My line went dead as I was being introduced, and so I might have missed some of the content. My first question is on kind of the conservatism that's built into your outlook for a 1%-2% revenue CAGR over the next five years. In particular, the down-trading that you noted in key markets like Australia. Are you anticipating that down-trading to accelerate, or does your five-year forecast maintain kind of a status quo assumption about the marketplace? No, I think it's a great question. Number one, I think I say up front, as you well know our track record, it's very clear. What is important behind this five-year strategic plan is to rebuild credibility around our numbers. With our team, I think quite this approach, therefore when we had done our bottom-up analysis of all the different markets, this is range that we are committing to. Yeah. Would you always think what is important for us at this point in time is to rebuild that credibility as a business. Yeah. Number two, as you ask specifically on some of the markets, okay, as we're asking specifically on the Australia and the U.K., w e have forecasted a further decline in these markets, that is reflected in our numbers. Okay. That's helpful. Thank you. My second question is on blu in the U.S. I appreciate the consumer insights and brand equity work that you've done. I'm curious, with 64% having purchased, that makes sense given blu's kind of longevity in the marketplace. Did you dig into that and get a better sense of whether these were consumers that onboarded with blu when blu was earlier in the marketplace, call it 2012, 2013, 2014? Are you focused more on more recent consumer behavior? Thanks. Sure. I'll pass it over to Murray, but one thing, the data is actually data from September, October of last year. Yeah, it is quite recent data. Yeah. It does reflect the recent picture. Murray, you want to give some extra color on this, please? Yeah. The only thing is I'd, as Stefan says, it's a recent survey. It's not looking back as many years as when the audit launched, so it's a realistic view of performance now. We actually have got further consumer work in the market now that's going to help inform the testing that we're planning or the pilot we're planning for the U.S. this year as well. We're trying to be as realistic and as recent as possible in the aspirations for the market. Stefan? And to build on this point, I think what is important as you look at our plan, as Murray mentioned in the presentation, we will put a pilot test into the marketplace where we will test a different marketing approach and a different route- to- market. Because our assessment is that in these two areas, of the three elements that drive success in the NGP market, clearly neither our marketing approach in the past, nor our route- to- market have been optimal. That is what the plan is. At the same time, we assure you that if we scale up this then, this will be based on some very clear criteria before we make any major investments here. Which should give you the confidence that any investments will only come when we have some consumer-based and market-based evidence that this is an attractive proposition for us to invest in. Understood. Okay. Thank you very much. Thank you. Can we have next question, please? Thank you. The next question comes from the line of Sanath Sudarsan from Morgan Stanley. Please ask your question. Your line is open. Hello, thank you very much for the opportunity to ask questions. I've got two questions. One just carrying on from Adam's question and trying to approach it a bit differently. How do you think, Stefan, about your long-term consumer pool, let's say about your user base out into 2030? Do you see these consumers declining, or do you expect it to remain broadly similar, or do you expect it to add to the consumer base going forward? Just from a longer-term health of the business, how do you see this evolving? Secondly, just wanted to kind of come back on your guidance on also mid-single digit profit growth for 2023 to 2025. Can you just maybe run us through how you think about pricing, operating leverage, and maybe NGP profitability to kind of help you drive that 3%- 5% growth over that period? Thank you. Sure. Absolutely. I understood your question about the consumer pool that Imperial looks after. I think one of the things, as part of the strategy work we've done, we've actually looked at our consumer pool country by country. Yeah. For example, the work that Jörg talked about earlier, about paying more attention to local brands, local jewels, is part of the outcome of that work because we would have seen that we have purposefully walked away in the past from a consumer base that was linked to these brands. Actually reinvesting in our local brands is one of the areas where we actually want to more actively look after our consumer pool outset. Yeah. It is also very clear, you saw it also in the JPS work earlier about Germany, a clear identification that in the past, for short-term profit reasons, we have not invested in rejuvenating the consumer base for some of our core brands. Yeah. That is clearly part of the strategy we're putting in front of you. That's where a very significant chunk of the investments in marketing and sales capabilities go. Yeah. It is something we're very aware of. At the same time, we have enough examples in our portfolio where we can actually see in certain countries where we're actually being able to grow the consumer pool. I take Backwoods as a great example. If you look at the U.S., we have that capability, but we have not deployed that consistently throughout the company. Thank you. Yeah. This is the second one. Sure, please. Go ahead. I'm sorry. Okay. I think my question didn't come through. The second one just was trying to understand where between 2023, 2025, you guided for mid-digit profit growth. Could you just run us through what the kind of breakup is that in terms of pricing versus operating leverage versus NGP profitability? How should we think about those drivers to get that number? Sure. Absolutely. The most important piece, and I think that should reassure you, the single biggest driver of that profit improvement is the improvement of performance in our top five tobacco markets. That is something. It builds on our Right to Win. Only a smaller part of that will be driven by NGP performance. Yeah. It's also very clear, as in the presentation, it's not one lever that is the key driver. It is a combination of market share gains. It is also over time, clearly, a combination of becoming more efficient as an organization, which should give you the confidence that these numbers over time are deliverable. Thank you very much. Okay. Thank you. All right. Can we please move to the next question, please? Thank you. The next question comes from the line of Adam Spielman from Citi. Please ask your question. Your line is open. Thank you for allowing me back in. Can I just refocus on the last question or the second last question? Because you answered this in a certain way, but I suppose I was going to interpret the question in a bit of a different way. Not for your brands, because it's a total nicotine market. Do you think the total number of consumers is falling, flat, rising perhaps? Do you think there's any change of trend there? Okay. Adam, I had some difficulty hearing the question, so if I understood it correctly, you asked about the consumer pool in our core markets. What developments do we see in there? Yeah. I think we've done a deep dive- I can repeat it. Yeah. Sorry? Adam, sorry, I couldn't hear you. Let me answer the question as I understood it. We are clearly have done a deep dive in the top five markets of understanding the consumer pool. We are forecasting a certain decline across these markets overall in the consumer pool. At the same time, what we've clearly identified, the brands we have in these markets have not been fully leveraged to capture our share of this opportunity. The examples that you heard from Dominic and Jörg earlier, take the German example. We clearly see with brands like Winston, JPS, and West, an opportunity to capture more of the consumption in these markets for our brands. They are positioned in the right places, we have not made the right consistent marketing investments and the right consistent sales investments to actually capture the opportunity. Jörg, you want to add something from your side to that? Yeah, I hope you can hear me. Adam, if I understood your question, you're talking really about nicotine consumption and nicotine occasions. From that point of view, we've done extensive analytics and predictions, and actually, total nicotine consumption is not forecasted to go down significantly in the European footprint in the next coming years. That is, I think you asked the question on the regulatory side before. I can tell you, even in France, where the government has increased excise tax significantly, consumption actually has not slowed down. It's got replaced by travel retail, by inflows. In most other places, it's a dual usage, actually, that's starting to pick up between combustible and NGP categories, especially heated tobacco. Okay. Thank you. Thank you very much, appreciate that. Yeah. Yes. That answers the question. Can I ask a question for Oliver? This is about cost-cutting. As I understand it, in the past, your cost-cutting focus has mainly been around the factory footprint. This latest program is much more about back offices, but there might be another factory footprint sort of restructuring going forwards. I just want to check that that's right. You also said that it's somehow more specific and therefore you're treating it from an accounting prospect in a slightly different way, which I suppose, putting bluntly, seems odd to me, because I would have thought restructuring a factory was frankly easier than doing back office, but maybe I'm missing something. All right. question, really. No problem, Adam. I asked for the answer from Oliver. I pass it over to Oliver. Thank you. Thank you, Stefan, and thank you for the question, Adam. There are a couple of facets to this. Yes, historically, a lot of the activity in terms of where the cost savings originally, ultimately ended up was in terms of factory footprint changes. What I said in the presentation was that, as you are all aware, we are being joined by Javier at the beginning of next month, and Javier will have a look at our manufacturing footprint. Until that review has been completed, it would be premature to make any comments on what we may do in terms of overall factory footprint requirements. We have done significant reductions in our overall factory footprint and right-sized its capacity much more closely in line with current levels of demand. I think as regards the program that we are now announcing, there is quite a lot of activity for us which others have already undertaken, which we haven't done in the context of our back office operations, simplification of elements to it, focusing on where activity is undertaken, not just what's undertaken, which represent opportunities for us. That's really what this particular set of programs that we've talked about today is focused on. We are going to treat them in an accounting sense differently. The program that we've talked about today, we will incorporate as essentially an adjusting item. Any further factory footprint changes, we will take within our adjusted operating profit as a charge. From now on, any further changes outside of this existing program in factory footprint terms will be taken in adjusted earnings, and also any other restructuring activity outside the programs that we've announced to date will be taken as part of adjusted operating profit. Just if I can follow up on that. When other people have done, let's say, investments, but clearly you don't feel that's necessary to do that. I suppose that's really an observation. It's hardly a question. The other question is how are you doing it? I'm trying to make it a question. How are you doing this if it isn't a investment in a better- ERP system. It seems strange that you can just do it out of thin air, I guess. I think firstly, Adam Spielman, there are options other than instituting an entirely new bespoke ERP system, which you can use as a platform to create change. There are different ways in which we can do it. Inevitably, every organization will go through periods when it needs to invest in its structure and infrastructure and systems. A lot of what we'll be looking at is how we share that information more effectively between us. There are opportunities that come from the better data analytics capability around what our consumer is doing back to our core strategy, which is where we will be spending time investing to ensure that we are better prepared, basically, to deliver this strategy. Okay, thank you very much. Yes. I'm going to hand you back to Stefan. I think he's just got a brief. Adam, thank you for the question. Just to emphasize the comment from Oliver. We've looked very hard about what IT infrastructure investments are required to enable this, and that is in the program. It is, as Oliver expressed, that's quite limited because the reality is there have been investments in the past. What we do need to do, which is similar to what many other companies have done, is just leverage these investments that actually create a more integrated back office. Look, I've done this a couple of times in my career. Alison has experience in this area, so it is something. I think the foundation is clearly there. In the timeframe we've given you, I think it's imminently possible. Thank you. Okay. Thank you, Adam. Next question, please. Thank you. The next question comes from the line of Nik Oliver from UBS. Please ask your question. Your line is open. Hello, thanks a lot for the presentation. Apologies if this was asked earlier, just my line was quite weak at the beginning. Referring back to slide 53, when you talk about the NGP potential across the largest markets. Can you give us a few building blocks for markets like Germany and Spain with how you think NGPs will get from 2020 penetration levels to what you're forecasting for 2025? Linked to that, anything you can share on the Imperial pipeline, just to give us confidence that you can capture your fair share of that going forward as well? Sure. Nik, let me give that question to Murray. Yeah. Who can give you color of the work we've done looking at the European markets here from an NGP perspective. Murray? Great. Thank you. Thanks, Stefan. Yeah, we did quite a lot of in-depth modeling around the expected progression across each of the markets, Nik. I think I don't have the numbers to hand exactly on the year-on-year building blocks, if that's what you're looking at. We've looked at a range of scenarios, both external and our own internal modeling, to understand what the trigger points for development are for the category and how we expect it to evolve over time, which we've used as the basis for our projections. I think, as we said earlier on, the important thing to bear in mind, though, is we'll take a pilot approach first. We'll test, as we go through the pilots, we'll re-look at those markets and understand if those projections have changed at all. We'll be as fact-based as possible in terms of evolution. I think your second question, if I understand correctly, was asking about the pipeline. I'm assuming you meant the innovation pipeline. I think there's a couple of points here. Yes. Yeah. Look, I think we've got a good product today. Clearly, in this world, the products will continue to evolve. We've taken a hard look at our approach to innovation in the past, and there'll be a couple of key changes for us. One is a much stronger rooting in consumer insights to really drive the innovation agenda going forward. The second is a much closer focus on what we call Horizon 1, Horizon 2 innovation rather than Horizon 3, the more out there long-term innovation. I think it's more cost-effective, much more focused innovation program to continue that drumbeat of new use to the consumer, but not necessarily a massive step- change, at least in the short term, in terms of the product. We think that what we've got today is good. We've got product lined up ready for the pilots. We have improvements in mind, but focused on shorter-term evolution at this point in time. Stefan, anything to add? No, I think it captures it very well. Yeah. I think this rigorous approach, I think, is a very important one. Also, to be clear, I think we have to be humble. European consumers will decide about their NGP journey in the next five years. I think what our plan signals to you, we'll start with the consumer. What is their preference? We do have offers, and it's important that we actually match them up between what do consumers in a certain market want to have, what is the product offering from our side. It's fair to say our analysis clearly shows that we see a stronger growth on heated tobaccos and vaping in their European market footprint. Okay, great. Thank you both. Much appreciated. Yeah. Thank you, Nik. Can we move to the next question, please? Thank you. The next question comes from the line of Patrick Follmann from Redburn. Please ask your question. Your line is open. Hi. Thank you so much. NGP, I'm not sure if you addressed this earlier in the line breakout, but first, your focus on heated tobacco in Europe, you mentioned a meaningful contribution by 2025. Is there any number you have in mind for heated tobacco by 2025? In terms of modern oral, what is behind your decision-making with no pro forma graph or expansion? Yes, it is a competitive category, modern oral, as we know, has the quickest payback period of all NGP products. Wondering what you're thinking behind those. Thanks. Okay, sure. Patrick, let me deal with the first part of your question, then hand it over to Murray on oral nicotine. It is very clear, we at this point in time wouldn't want to publish a number about what is our ambition for heated tobacco in the year 2025. I think we come back to this rigorous approach. It has to pass through the tests first, and only when we have met these success criteria will we scale up and work through that. I think that is the right approach also, given our track record in this area. Yeah. Murray, over to you on oral nicotine. Thanks, Stefan. In terms of oral nicotine, explicitly what we said in the presentation was there no immediate plans for geographic expansion in oral nicotine. As we look to markets where we see a nascent version of the category today, it's clear that it takes a while for the category to evolve and develop. It's quite a different habit of nicotine consumption for the consumer versus cigarettes or vaping or heated tobacco. I think for us, as I said, we're not going to go into markets where we'll be creating a category. We will keep a close eye on development with the category within Europe, and if we see opportunity, we'll test and potentially go after it. At this point in time, especially look at our key categories, our key markets in Europe, the category is so small and so niche, we don't think this is the right time for us to invest to help create the category at this early stage. Stefan? Yeah. I think, Patrick, this hopefully demonstrates to you the more rigorous approach, the fast follower approach, the focus of Imperial, of actually tapping into markets that exists, move away from the desire that we had sometimes in the past, trying to create markets. We don't have that skill set, to be clear, and this has led to the very significant investments that you would have seen in our past that have not been successful. Yeah? That is a very material shift in our NGP strategy that I think makes a lot more sense in the light of what our capability is and where we have a Right to Win. Okay. Thank you. Thank you. The next question comes from the line from Jon Leinster from Société Générale. Thank you. Afternoon, gentlemen. Couple questions. First of all, back to heated tobacco. Just to be clear on the strategy, it sounded from the comments that the strategy seemed to be led by the actual device having some advantages over other devices in the category. Is that correct? Or is it that the iD stick is interchangeable with the an IQOS device, or is that both strands or different strands of the same strand, sort of overall strategy? Sure. Jon, first, let us just explain. When we referred to is about our product has some unique features. One is clearly, primarily about you can have a lot more sticks consumed as a consumer with one battery load with our product than with the majority of other devices. Yeah. I think what we want to refer to, and I think that's an important piece to understand our strategy going forward, is about this is about making sure identifying the consumer group out there, whether it's in heated tobacco or whether it's on the vaping side, where our product features, our marketing capabilities, our marketing communication is more relevant to them to a competing product. I think that's a philosophical change. Yeah. The philosophical change is not to have the best product in the marketplace for all consumers. I don't think that is the right approach for where we are in our industry. What is our ambition, which is exactly what we've done in our combustible business, finding a group of consumers where what we have to offer as Imperial is superior to what the competition has to offer. Yeah? That's the ambition. It is not built on interchangeability where you're right, our, today, our Pulze product, our iD product is interchangeable with another product from a competitor. That is not the key driver here. Murray, you wanted to add something from your side? Yeah. I'd just emphasize on the differentiation of the product. I think, first and foremost, it's an all-in-one product. It's simpler to use, we find, than competitor products. Stefan mentioned the charging time is quicker, the 20 consecutive smokes, and then the iD sticks themselves have a lower odor profile, which consumers tell us they prefer. We think there are points of distinction of the product. The important thing to bear in mind as we go- to- market with this, the actual going harder the route- to- market and be clearer on the execution, the focus on the consumer and how we bring the brand to life will be equally important for us in terms of how we think we can make a success of these pilots and hopefully eventually scaling up within Europe. Stefan? Okay, thanks. I've got a second question, if I may. On the combustible side, on the traditional side, am I correct in thinking that some of the investments and some of the opportunities that you see will involve brand repositioning and price cuts, basically to achieve cheap value status within the markets? Is that a key part of it? It's one of the levers, Jon, but I want to be clear. We shared a whole set of tools. I think the one reference that Jörg made in his presentation earlier today, one is the, w hen we looked at the past, what has gone wrong? It is very clear, and I think that's a factual statement, our pricing strategy on some selected brands in the German market increased the price gap of some of our brands versus the competitor reference to a level that has lost to share losses. That is the fact, yeah, because we can track that in our data. Yeah. I wouldn't necessarily read into that we'll reposition pricing of our brands. What we want to impress on you is that we have looked through the consumer lens, brand by brand, customer segment by customer segment, price segment by price segment, and we have identified that there's quite a number of levers that we can pull in our core five tobacco markets to actually achieve a better market share position for Imperial. Yeah? That should give you the confidence that what is the core of our five-year strategic plan, which is a better performance in our core five combustible markets, is actually well-grounded in detailed plans, but is also focusing on the strongholds of Imperial. Okay. Thank you very much. Okay. Thank you. The next question comes from the line of Gaurav Jain from Barclays. Please ask your question. Hi. Thank you for taking my question. Again, I had one question on interest expense. You have this GBP 1 billion bond coming up for maturity in February 2022, which has a 9% coupon. If you refinance it, that will lead to a massive interest saving, so that should drive your EPS growth in FY 2022 despite flat EBIT growth. Is that a fair way to think about that? Okay. Gaurav, I pass this question to Oliver. Oliver, please. Gaurav, thank you for the question. Over time, we have obviously engaged on occasions in various interest rate swaps out of fixed into floating and back again. There is an element of us having mitigated some of these costs over time. Clearly, we would hope over time, given the current environment, to see both the reduction in interest charge from reduced levels of leverage. Also, we have a number of debt instruments that have been relatively expensive for us that were raised back in the financial crisis in 2007 to 2008, of which the one you refer is an example, and those are beginning to mature over the coming years, and we would expect that to have a positive effect on our overall interest cost. Is it possible for you to quantify that, Oliver? I think it would be dangerous to do that at this. How much? Sorry, Gaurav. I think it would be a little dangerous to do that at this stage, because we haven't replaced those debt instruments, and we will do so over the coming 18 months or so. It will partially depend on the costs that are applicable in the market at that particular point in time. As I say, I would expect our interest rate charge to reduce over time as a result of both the deleverage and an active attempt to reduce the coupon cost on the instruments we raise. The other issue that we're obviously thinking about is the maturity profiles of our debt as well, which will play a factor in that judgment, and we will look at the entirety of those issues over the coming months and year to end up with the appropriate debt portfolio to meet the needs of the business over the coming 5 to 10 years. Sure. Thank you. Thanks a lot. Thank you. Next question, please. The next question comes from the line from Michael Lavery from Piper Sandler. Please ask your question. Your line is open. Thank you. Good afternoon. I just wanted to follow up on the 70%-80% heated tobacco gross margin color that you gave, and curious about a couple of things, partly to understand how your margins in the space could compare. When you say on one of the slides that it's in the top three markets, is that your top three priority markets, or is that the top three markets for heated tobacco as it exists today? Also, just curious, your price point assumptions that shape the 70%-80%, is that current market pricing, and if so, would you expect to align your pricing with that as well? Sure. Michael, I think the key piece. I think you picked up on one of the key themes. One, let's be clear, the key driver is consumer preference. Yeah? We are clearly observing a number of European markets, consumers are having a preference for heated tobacco. That's why the market is bigger. It's also very clear from a comparative, there's structurally a higher level of gross margin in heated tobacco products, which have to do with the fact a smaller universe of competitors, because you do need to have tobacco technology, which we clearly have. Yeah? I can't tell you whether the heat margin in two or three years' time will be exactly at this level. What I think we recognize, there's a structural reason why margins in heated tobacco, gross margins, should be higher. To be clear, we won't be compromising of our competitors. The important piece is, we have seen some significant price discipline in this market in the past. Yeah? I think we inherently believe when you look at the things that we see happening in the marketplace, yeah, that the heated tobacco market over time will have a more attractive gross margin than actually the vaping market. That has been the case for quite a period of time. The difference is that Imperial has not participated in the heated tobacco market despite having a significant route- to- market in some of our key European markets. That's helpful. Just to echo what I think you're saying is that you want to take advantage of the premium pricing and enjoy that for yourself rather than try to compete on price because of the dynamics of the consumer and this segment. Is that fair? I don't Michael, just as you would expect, I will not make any comments, yeah, on our pricing strategy going forward. Yeah. I think I would just come back to the point, it's a structurally more attractive margin here. Okay. Thank you very much. Thank you. The next question comes on the line from Jared Dinges from JP Morgan. Please ask your question. Your line is open. Hi, guys. Two questions from me, please. First on NGP, can you please confirm your expectations on NGP investment levels in the P&L, at least maybe over the next year or two? Just thinking versus full-year results back in November when you guys talked about holding investments stable, but now you're talking about investing behind U.S. vapor and clearly the heated tobacco rollout in Europe. I'll ask a second question after. Thanks. Sure. Just the basic point is about the investment levels in the short term are not going to be materially different versus what was communicated before because we're talking here about three pilot markets. Just to reassure you, yeah, so that is not a material change. Again, that comes back to that rigorous approach. Before we would be scaling up behind this, we as a company need to be satisfied that the marketing mixes and the products that we have actually have hit our expectations, and then we would roll them forward. Murray, you wanted to give more color from your side here? I think Stefan answered it right. I mean, we're not expecting in the short term with the pilot market focus, a significant step- up in investment levels. I think with post those pilots, we'll have a much clearer view of the pace of expansion and the breadth of expansion, which I think at that point, we'll be able to communicate clearer targets to the market on the expectations of investment and on targets of what we expect in terms of returns or performance. Stefan? You got it. Yeah. The only point I would add to the outer years. That might not be coming clearly through. The strategic change away from building markets towards participating in markets that exist already, would, when we look at it, lead to a different investment profile versus what we would have done in the past. I think that's an important piece to understand. It's just the rigor on the one side, but you're also going to participate in markets where actually you can already observe what the size is and what the level of investment is to compete in these markets. That is a different profile versus our investments in NGP and Imperial's past. Got it. That's clear. The second one, can I push you guys a bit on the net debt EBITDA target of the low end of 2x-2.5x net debt EBITDA? I mean, considering you guys do run a tobacco business with very stable cash flows, do you really feel it's necessary given your cost of debt versus your cost of equity to be at the low end of that range? Or are you just being extra conservative there? Thank you. Let me kick off. Oliver will provide more detail. Number one, we have looked at all options. I just want to reassure you about this. The fact is that what we express with the target range to you is the right level for this company. We have run a very efficient balance sheet in the past. I think it is a key part to allow us to get the flexibility that we do need as a business down the road. Yeah. Oliver, you wanted to provide more detail here? Yes. Thank you, Stefan, and thank you for the question. I think we need to be mindful of the fact that we have always run, as Stefan said, a very efficient balance sheet in terms of quite high levels of leverage. Our rating has been lower than some of our competitors, given the sort of balance between business performance and leverage on our balance sheet. It's critically important, and we've done a lot of modeling on this. We've talked and been through it with the board, that we maintain investment grade status. That in order to achieve that, we need within our current rating, to be heading towards the lower end of that range. I think if we deviate from that and have higher levels of debt, we do run the risk of a downgrade at some point in time. Therefore, actually that profile is important to us in terms of maintaining that rating. Why is that rating important? We will see step-up costs, and access to capital restrictions if we went sub-investment grade. We're not in danger of that today because we have been pretty steadfastly committed to that objective. Therefore, actually maintaining that steadfast commitment, I think is an important commitment to the debt markets to ensure that we retain access to the opportunities that come from being investment grade. I think that our models show that clearly is in the interest of our shareholder group, given the impact of that step-up cost and the restriction in available sources of funding that would come in the event that we were to see a downgrade. Thank you. Okay. All right. Thank you, guys. Thank you. The next question comes from the line of Alicia Forry from Investec. Please ask your question. Hi. Thank you for the follow-ups, and I'll be brief because I know it's late. Two questions. One, can you update on the Auxly cannabis partnership and Secondly, picking up on Patrick's question earlier on the role of modern oral for you. Clearly, that is very popular in the markets where you operate, so you have a footprint advantage there. There's ESG angles that are favorable with modern oral, and the margin profile is quite positive, at least at gross margin level. Just maybe if you could address a little bit more why it's not as significant an opportunity as some of the other categories. Sure. Alicia, happy to address your both questions. On the question of cannabis and our indirect investment in Auxly. Number one, it's there. I think it's very clear. We looked at all options, but it is very clear for us that given how the cannabis market has developed, yeah, and also the footprint where the market is actually legally accessible, the overlap with our current market footprint is not there. There's an optionality about cannabis at a later point in time. As we look at the facts that we have in front of us today, yeah, we see a bigger priority, to be fair, in our core business, our core combustible business to focus upon, and in the NGP options that we have between heated tobacco, vaping, and oral. Yeah. Which brings me to modern oral. I think what is important to reassure you about is in the markets where there is a modern oral market, which is primarily the Nordics markets and part of Germany, Austria, Switzerland, yeah, these are focus markets for Imperial. I think we are privileged, based on the past acquisition strategy of growth, to actually having, in several of these markets, strong positions that we have every intention to exploit. However, what is an important distinction, Imperial has not the ambition to build an oral nicotine market beyond the natural footprint of an oral nicotine market, because our consumer observation is to switch consumers over, yeah, to a very different way of consuming nicotine is a very long-term effort, and the skills that Imperial has built over many years is not a good suit for that. Read into it, oral nicotine is a priority for Imperial in the markets where there's an oral nicotine habit. The only exclusion, as Murray shared earlier, we do not foresee to enter the U.S. market because, again, the entry costs we foresee here are not the right level for us. We have many other opportunities in our portfolio that I think we can more reasonably and more cost-effectively exploit. Hopefully that gives a more complete answer on oral nicotine. Yes. Thank you. Yeah. Thank you. No more question at this time. Okay. Well, first, a big thank you to all of you, yeah, for some really great questions. I apologize again for some of the challenges that we had with getting the questions across. Now, hopefully what you have appreciated, yeah, this strategy is all about running the business more effectively. It's a core focus, yeah, on our combustible business and getting closer to our consumers. Yeah. Hopefully what has come across also, there is a real focus on the core combustible business, yeah, that we feel very comfortable to deliver. There is optionality in our NGP portfolio, but a much more rigorous approach versus what we would have done in the past. Yeah. Thank you for staying with us 3 hours+. Really appreciate it. We will update you on our strategy progress in the meetings to come. Thank you.