Imperial Brands PLC

Good morning, everyone. Thanks for joining us for our half-year 26 results. Just a few housekeeping items before we kick off. For those of you in the room, there are no planned fire alarm tests today. So if it goes off, it is a real one. And you'll see the fire exit is just behind you there, lit up in green. And finally, I just wanted to draw your attention to the usual disclaimer in our R&S this morning and in the presentation, which we're just about to go through. So without further ado, I'll Hand over to Lucas.

Thank you very much. And good morning and a very warm welcome to this results presentation. Thank you very much for joining us here in the room and a very warm welcome to those who join us online. Today I'm joined by Mary McGowan, our Chief Financial Officer, and John Cross, our Director for Investors Relations. Mary and myself really look forward to presenting the first six months of our fiscal year 26 and also the first six months of our Evolve 2030 strategy. I'll start off with a few highlights. Mary will then take the stage and talk us through the financial performance and our expectations for the full year. I will then come back on stage and discuss in more details how we are delivering strong operational performance, while at the same time delivering self-help efficiencies and transforming our business to deliver long-term sustainable growth. With that, let me start the presentation. There are four things, overarching points, which Mary and I want to make in today's presentation. First, our consistent financial performance continues to deliver growth in net revenue and adjusted operating profit, driving cash generation of 2.6 billion over the past 12 months. And this is underpinning consistent capital returns, which includes our evergreen share buyback. Second, the progress we have made in the first half means we are well placed to deliver on our expectation for the full year. And we confirm the guidance we've previously given. Third, our strategic progress and operational delivery continues to be underpinned by our distinctive challenger approach, which is a source of sustainable competitive advantage. As you've heard us say before, This challenger mindset is about deep insights into our consumers and laser focus on the key drivers of growth and investing in agility so we can create more sustainable value in combustibles and build scale in NGP. Fourth, over the past six months, we have made significant progress in the strategic transformation of our business. These activities are delivering material efficiencies in the short term and building capabilities that will unlock long-term growth, helping us become an even stronger challenger business. So, let's look first at our half-year dashboard. In the center, you can see how operating performance is supporting top-line revenue growth and growth in earnings per share. we are on target to deliver our full year objective of at least high single digit growth in EPS. This is enabling sustainable capital returns, shown on the right. We have announced a 4% increase in the ordinary dividend, and we are on track with our 1.45 billion share buyback. Now, I recognize that at the half year point, The two numbers on the left will be a focus for some of you. Looking at the market share, the aggregate figure of our five priority markets is lower. And this reflects a deliberate choice to prioritize value over low return volume. And in NGP, where we have grown share and volumes in all categories, overall revenue growth is below our full year guidance of double digit. This is due to one of factors, particularly the timing of promotions over the year end in the US, which we do not expect to repeat. When I come back, we will get into the detail of what sits behind these numbers, and we will highlight the underlying strengths of our operations and our positive trajectory for the second half. While staying focused on delivering our fiscal year 26 commitment, we are also making purposeful progress on our strategic transformation. We are performing, and we are transforming, and we are delivering our in-year plans. At the same time, we are making progress on self-help efficiencies and developing the capabilities to enable sustainable long-term growth. On this slide, you can see how we are moving forwards on our strategic priorities across the top of the wheel, strengthening our combustible business and NGP business. We have also achieved key milestones in our strategic enables, which you can see on the bottom half. These are activities which either immediately and materially reduce our cost base. or underpin long-term growth through improved technology, processes, and consumer capabilities. When I come back, I will get into the detail of the actions we are taking and how they are already supporting delivery against the financial commitments we made last year at our Capital Markets Day. With that, I would like to hand over to Murray for him to take us through the financial performance and our expectation of the folio. Mary, over to you. Good morning, everyone.

The past six months have been a period of broad-based growth. We delivered growth in our tobacco and NGP net revenue, growth in combustibles through pricing to offset volume declines, and growth in NGP through strong volumes and share gains across all three categories underpinning improvement in net revenue as we build scale. Our group adjusted operating profit growth of 0.6% reflects this, but also some headwinds out the Hista and some one-offs in the US and Australia, which I'll come on to later. We've delivered £2.6 billion of free cash flow on a 12-month basis. Leverage, at 2.4 times, was higher than the full year for the usual seasonal reasons, but it remains within our target range and flat year-on-year. Overall, we are on track to deliver against our plan for this fiscal year and meet our capital allocation priorities. These results are another good illustration of the tobacco value model in action. Strong pricing across our footprint, shown here in orange, more than offset volume declines, shown in grey, to deliver low single-digit tobacco net revenue growth in line with guidance. In Europe, our largest region, pricing of 6% outpaced volume declines. In the U.S., price mix of 5.7% driven by pricing both in cigarettes and mass market cigar portfolios. In ACE, volume growth reflects entry into new markets. Excluding Australia, ACE delivered 6.1% price mix, similar to Europe and the US. Tobacco operating profit growth was driven by strong performance in Europe, which grew 6.5%, and in ACE, excluding Australia, which grew 10.8%. In the US, growth in combustibles was offset by some one-offs, which I'll cover in the next slide. Whilst NGP losses increased slightly, this reflects the impact of zoned promotional activity in the US over the prior year end, which was more successful than we anticipated and was recorded in half one. This reduced NGP net revenue and increased NGP losses by around £13 million. Without this, US NGP net revenue growth would have been positive. At a group level, NGP net revenue growth would be double-digit, and total NGP losses would have reduced in half one year on year. It was also pleasing to see European NGP make a profitable contribution during the first half. Adjusted operating profit from La Hista declined, reflecting a reduced profit from tobacco inventory, which offset underlying growth in the business. As we said back in November, performance will be weighted to the second half, and I'll explain some of the drivers next. This slide shows some of the one-offs impacting half one performance. In combustibles, these were in the US and in Australia. In the US, tariffs on our mass market cigars were a drag. But given the changes to tariffs following the Supreme Court decision in February, this impact will reduce in half two. We'll see the full impact of pricing taken on MMC during the course of H1 support our H2 delivery. In Australia, We have seen accelerated volume declines of around 50%, which have impacted on AOP. There'll be less of a drag on year-on-year, now too, as we annualise those volume decreases and expect adjusted operating profit to stabilise. We will also see a benefit from the actions we've taken in the first half to resize and refocus our operations in Australia. We're driving growth through white space market entries, most notably in Syria, which are making a meaningful contribution and which will drive further growth in the second half. In NGP, we had the impact of the promotional activities in the US that I mentioned earlier. Given our clear focus on Modern Oral in the US, we've taken the decision to transition out of the US Vapor category. This move will help to reduce NGP losses in H2. As a reminder, Our US VAPE proposition, our legacy MyBlue device, first launched almost a decade ago, and it makes a small and declining contribution to revenue. So we expect a stronger NGP performance in H2 in both net revenue and AOP growth. Altogether, these one-offs have an impact of over £50 million in H1. This will be much reduced in H2, as I've explained. So this... combined with the usual benefits of price and operational gearing, means that we are confident of a step-up in performance in H2 and remain committed to our previous full-year guidance. Now, as CFO, I want to ensure we are always transparent about items that we classify as adjustments. Today, we are disclosing charges related to our 2030 strategy and historical legal cases. Charges related to our 2030 strategy are in line with guidance that we gave at our capital markets day back in March 2025 and relate to the rationalisation of our manufacturing footprint and our transformation programme. This includes our exit from Langenhagen. We'll start seeing benefits from this and the recently announced sale of our Taiwan factory coming through in the second half. We have hit the ground running in our long-term partnership with Capgemini. And in the second half, we'll start to prove the benefits of this new partnership. Lucas will discuss these in more detail later. Our transformation is ongoing and remaining costs will be adjusting items in future years. We also show charges related to the settlement of the Delaware case. All historical charges have been adjusted out. Cash costs will be reflected in our free cash flow in line with the payment schedule agreed. As a reminder... that's £150 million in half won this year, then the remaining £162 million in roughly equal instalments over the next three years. Our adjusted EPS reflects our operating profit growth and the reduced share count due to our ongoing share buyback. An increase in finance costs was offset by lower tax and minority interest charges. The adjusted effective tax rate at 23.5% remained flat on the same period a year ago. Turning to cash and capital allocation. Our operating cash conversion was 98% on a 12-month basis, reflecting our continued focus on working capital. And our cash flow performance compares well versus prior years. Disciplined capital allocation remains a key part of how we create value. Leverage at half-year remained flat year-on-year, and we're on track to be around the lower end of our target range at year-end. We've announced a 4% increase in our ordinary dividend, and we're on track with our £1.45 billion share buyback. Now, this is our fourth consecutive year of share buybacks, and brings the total capital returned to investors since the programme started to £4.8 billion. Taken alongside dividend payments, total cumulative capital returns from FY21 to half-year 26 now sits at £11.5 billion. This represents around 77% of our market capitalisation at the time of our Capital Markets Day back in January 2021. To remind you, as we stated at Capital Markets Day in March 2025, we are committed to an evergreen, always-on share buyback throughout this five-year strategic period. So, To close my section, we maintain our full-year guidance. We continue to expect full-year tobacco net revenue growth in the low single digits and double-digit NGP net revenue growth. Adjusted operating profit growth will be within our mid-term growth range target of 3% to 5%, and we expect at least high single-digit EPS growth for the full-year period, supported by profit growth and the ongoing share buyback, all at constant currency. we expect at least £2.2 billion of free cash flow, including the impact of cash costs related to Delaware settlement and the implementation of our 2030 strategy. On the Middle East, our position is similar to where it was when we issued our trading statement last month. We have not seen a material impact from the crisis in the Middle East to date. Clearly, the longer the situation persists, the more likely there could be a meaningful impact on input costs and consumer demand, including duty-free. Now, Our business has proven its resilience during past crises. We've managed through them before, and if necessary, we will take mitigating actions. At current rates, we expect foreign exchange to be a headwind of 0-1% to operating profit and EPS growth. And as usual, there's a slight dependency with guidance on specific items. We also remain committed to the medium-term guidance we set out at our CMD in March 2025. This means we remain well-placed to generate long-term value for our shareholders. Thank you. I'll now hand back to Lucas, who will give an update on operational performance.