Good evening, everyone. Thank you for being here. I'm Gaurav Jain, Barclays Global Tobacco and Cannabis analyst, as well as the head of EU Small and Mid-Cap. With me here is Kim Reed, President and CEO, Imperial US, and Peter Durman, Director of Investor Relations at Imperial Brands. Thank you so much for being here.
Thank you.
Thanks for having us.
Yeah. Thank you for-
We will have, you know, a set of questions from me, and then at the end, we will open it up for Q&A. So, Kim, let's just focus on the U.S. business to begin with.
Sure.
You know, a key topic in the sector is consistent decline in U.S., with volumes minus 9% year to date. That's on a comp, which was last year, also minus 9%. And you know, I think a lot of people thought that because oil prices were declining last year, volumes will be better, comps will get easier, but none of that has happened. So could you just help us understand what's happening, in your view, in the U.S. cigarette market, and when can we expect an improvement?
Hmm. Very good. First of all, good morning to all. You know, you're absolutely right. I mean, we're seeing very similar declines that you just talked about, the category being down anywhere from 8%-9%. And a lot of that has been driven by many of the macroeconomic challenges that we've seen across the marketplace. We've seen unprecedented inflation rates at a, as high as 9%. It's good to see those come down to the 3% level. We've seen, you know, government surplus or benefits be reduced to our consumers. And we've seen gas prices at one point at an all-time high, and it's started to see those come down as well. So a lot of those macroeconomic challenges have put a lot of pressure on our consumer, for sure.
I think there are some signals that, you know, that we will return back to historical levels. You know, the fact that we've seen inflation come down to the 3%, that's a great signal in terms of where, what the future holds. The fact that we've seen unemployment rates at a really great level, I think a great signal. And we still will continue to watch interest rates, still very high at this point. But all of that said, you know, we have fared very well, and I've been very pleased with the performance we've seen. We have performed much better than the industry decline, as evidence of our share performance. This is the fourth year in a row that I'm pleased to say that we've seen another 70 basis points of share growth.
And that is in great part due to we have a portfolio that ultimately meets the consumers' needs, wherever they may be in this stage, especially with these macroeconomic challenges in place. We've got a part of our portfolio that addresses the premium segment, if the consumer chooses to consume that part of our portfolio, all the way down to our deep discount part of our portfolio. So we feel we have a point of difference in the marketplace that plays across all price segments and ultimately meets the consumer where they are. So I think there's some early signals that the industry decline will eventually come back to historical levels. I think either way, we're poised either way, based on the portfolio offering that we provide to the consumers.
When you talk of historical volume declines, like, what exactly it is? Is it -5, -6, -7? You know, a lot of investors think that disposable e-cigarettes are now having a meaningful impact on cigarette volumes. ZYN growth could also be impacting. So what do you think is, is the secular?
Yeah. I mean, our internal forecasts believe it'll be somewhere around the 5.5% level-
Mm-hmm.
Based on all the factors that I just talked about. I think, again, I'll go back to, you know, we've done a lot of work on our portfolio, really over the last three years as a part of our strategy. Although none of us probably predicted coming out of COVID these unprecedented macroeconomic challenges, I'm pleased that we've done the work of, as a part of our strategy, to make sure we've got a portfolio that meets the needs of this consumer. We're offering them multiple choices, really across all segments that we offer, but specifically within our cigarette portfolio.
We've done a lot of work to make sure we've got the right focus brands across all those price segments, that we've got the right investment across those, and really have upped our RGM capabilities as well, to ensure that we've got the right value proposition across the segments as well as across the marketplace. So, you know, I think time will tell where the actual industry will go, but again, I feel good that we're poised to also meet the consumer wherever they are.
Sure. You know, you gained a lot of share in the last two years because of KT&G exit. Now, probably we are coming to an end of it, but you have also gained share in the premium, cigarette side of things. So it is not that you've just been gaining share on the value side of things. So can you just help us understand what you have done on the premium side of things as well? And I think Winston and Kool there-
Yeah.
and Salem as well, they are the three key brands.
Mm-hmm.
So, what has happened there, and why the performance has been so strong?
Yeah. So, first of all, I'll start with the KT&G piece. I mean, this is one, you know, we, we talk a lot about being a challenger within this industry. We are not the largest. We're the third-tier player within the US business. And we pride ourselves on having agility, but are quite the difference within the marketplace. And in this case, we had an opportunity with KT&G, quite frankly, within a day announcing they were exiting the marketplace. I was really pleased with how our commercial team came together and maximized that opportunity.
So yes, we did gain some share from, from being able to maximize, not only from a, brand equity standpoint, but also leveraging our expanded sales force to ensure we were able to, maximize that space on shelf. So that is, that's been a part of our share growth. But I, I have to tell you, part of our strategic initiatives as part of our new strategy has been investing on Winston and Kool, represents almost 60% of our portfolio. And those, you know, prior to our acquisition of those brands, really were in significant declines for many, many years.
We, you know, one of our main priorities has been starting with the consumer, and we've spent a lot of time engaging with that consumer, both on Winston and Kool, to understand, you know, what are their functional needs, but also there's an emotional connection as well to these brands. And I'll use Winston as an example. When we did a deep dive with the Winston consumers, what they told us is that we just weren't getting the level of trial that we had, you know, expected in the past. And ultimately, it was because the view was that this was an older person's brand, your grandfather's brand, your uncle's brand. Those are literally the words that our consumers would tell us. And so it was a matter of then doing a deep dive, what mattered to that consumer.
We revamped our strategy around both Winston and Kool, and so we have leveraged things like, you know, you know, quality and taste were very important to them. We really have talked a lot, both on package as well as in store, directly to the consumer about its simplest tobacco and water. That has resonated with the consumer in a really great way. This Winston consumer is all about freedom, and they're in the greatest country in the world. In their minds, that, you know, freedom, I can, I can do what I want. I can choose the brand I want. We've really captured that with America We Love, a campaign that, again, resonates with that Winston type consumer. We've changed our packaging. We've also really worked with our retail partners as well to leverage their loyalty adult database as well.
But as we build our own internal database, we've then been able to bring things like NASCAR as well, which is, again, a huge activation point for the Winston consumer. That's how Winston, you know, Winston's an iconic brand. It was discovered around Winston Cup Series. Obviously, regulations do not allow us to be able to advertise that any longer, but we can do some retail partnerships with that brand, and we've leveraged that to not only then be able to speak to those Winston consumers within our customers' adult databases, but then we can also speak directly to them within our own database. So that's just one example of how we have started over with our strategy, started with the consumer, understood what's mattered to them, and then revamped our strategy overall.
So we've seen actually, when you look across our entire portfolio and look where our share has come from, we're actually growing across all of our price segments, not just deep discount, not just the KT&G. We're growing in, from premium all the way to deep discount. So I'm pleased to say, when we talk about those simple basis points I just referenced a minute ago, there's only 14 basis points of that that represents KT&G. The rest of that is coming from the work we've done across the portfolio, to resonate with the consumer in a much more meaningful way.
Sure. And in terms of the California menthol ban, could you just talk about what has your experience been?
Yeah, you know, it's still, it's still a little early on, to really read the data, and there's a few reasons for that. The first, you know, pre-ban, we had a lot of consumers that stocked up a bit on, on their brands of choice. Then after the ban took place, and you see consumers then start to go to surrounding states to find their brand of choice. You see a bit of illicit trading, going on as well. So there's a lot of moving parts right now that's really, really hard to read the data. You know, we've really... This is an example where we've, we've leveraged our global community, which we stood up again a couple of years ago, led by Andy Gupta.
It's really been a part of understanding ultimately leveraging some of our European markets that have already gone through a ban, and we've essentially lifted and shifted that playbook within California as well. So we've introduced non-menthol variants around Kool and Salem. We've executed on shelf with those, with that, with that part of that portfolio. Ultimately, what we've learned from our European markets is that the consumer will eventually come back to their brand. It will take a period of time because, again, they will either go to surrounding states to find, you know, their menthol choice. They may try other categories, but eventually they will come back to their brand. It's just too early at this stage, though, because they're going through all those cycles right now.
I think it'll take at least another six months before all of the trends really settle, and then we'll have a much better read at that point in terms of how our portfolio is playing out in that market.
Sure. Now, just coming to the pricing side of your cigarette business, in the U.S. cigarette business.
Mm-hmm.
For some time, Imperial's pricing was lagging the industry leaders, and then we have seen the pricing pick up, and now there is quite healthy pricing happening in the discount and the deep discount cigarette side, not only for Imperial, but also, you know, your other competitors. Is this now the model for the next two years, that you have gained significant share in the U.S. cigarette market, and now you're looking to monetize the experience you have had?
Yeah. So first of all, I'd say, you know, the U.S. is still... It's a competitive market, as you know. It's still an attractive market. I mean, I had the privilege of being able to lead it as our largest market across Imperial. And we have, you know, been able to leverage pricing power that still exists within the marketplace. And we've been able to do that across our entire portfolio now. You heard me talk a bit ago about the capabilities that we've sharpened around our RGM capabilities. That's been a really critical piece, a real critical capability that we've brought on as a part of building our strategy, as well as sharpening our portfolio. So being clear about the role that each of those brands plays... across the price segment, and do we have the right value proposition along the way?
That has been a part of determining what our pricing model will look like as well going forward. We have had solid price mix performance this year. We talked a little bit about that in the first half. I think you'll see some similar results as we get ready to report our results in October. But, you know, we want to be mindful of ensuring that, again, providing value across the portfolio for that consumer, especially in light of the challenges that with their wallets being tied with the macroeconomic issues. But we still, I think, got the right portfolio to offer a premium offer by the deep discount in this space.
Sure. Now, moving to the cigar side of your U.S. business, it's about a quarter of your U.S. business. Just to frame, you know, U.S. is about one-third of the entire company EBIT. The cigar side has seen pressure this year. And I think, you know, can you just talk about, first of all, the overall industry dynamics, what's happening? And then within that, what's happening for Imperial cigar business.
So, our cigar business is not only an important business for the U.S., but it's an important business for the entire Imperial. And I'm pleased to say, it's, you know, we refer to this, to our cigar business as our regional jewel, specifically led by Backwoods. It's a brand, again, when we talk about being consumer-centric, it's a brand that we know our consumers very well. We spend a lot of time doing consumer immersions with this, with this consumer. And so what I'll tell you is, you know, we have had a soft first half, and there's a few factors, a few factors behind that. The first is, it was Hurricane in Tampa a year ago.
Another hurricane here not too long ago, but that came a year ago, and that created a bit of destocking with many of our wholesalers and our retailers, with the belief, with the concern that, you know, we may be out of business for a few days. So we didn't have to unwind through that stocking. I'm pleased to say that we're in a much more stable and inventory is no longer a challenge. The second piece is that we had two unprecedented years with COVID, and so we're now... That's a very strong comparator that we're going up against as well. We also were in a much better position than our competitors in terms of inventory at the time, and so we're also going up against that as a comparator as well.
And then, you know, size and share had were a bit of a challenge because of lapping some of those inventory levels that I just spoke about. So those were a few of the drivers in the first half. I think when we announce our second half results, overall, it will still be a bit of a drag on the business, in great part because of the first half performance. What I will tell you is we have seen an improvement in the second half. And we'll, again, we'll share those details when we get into October. And as we've engaged with consumers, there's been three or four things that they've told us are important. Quality is very important, both in terms of color and texture, moisture.
So we're, we will continue to make sure we have the highest quality, especially because this is a premium brand for this consumer. Second thing is new news. They want to see innovation. So we've launched here in the second half, vanilla and grape. Just launched grape two weeks ago, having significant uptake from that. And then ensuring that we've got the right value, again, comes back to those RGM capabilities, and then ensuring that we're leveraging our expanded sales force, of 1,000 people in the marketplace to ensure it's on the shelf in the right places. So this business is not broken. It's somewhat of a recent year after going over, you know, lapping 2 significant years of COVID.
If you were to compare our results this year to the pre-ban levels, we're still in a growth pattern, and feel strongly this will continue to be a you know a big part of our business going forward. So a bit of a reset, but we feel good about that there's improved performance in the second half and feel very good about the future in this brand and this category for that matter.
Sure. Now, coming to the Modern Oral segment, and you have just acquired a business earlier this year.
Mm-hmm.
Can you just tell us your thinking behind why you did that, where we are with the PMTA process with that product? And also, like, do you think that you now have a complete portfolio in the U.S., or you need some other products to fill out-
Yeah.
your product portfolio?
Yeah. So I'm really excited about this new acquisition, just announced in June, that we are entering the Modern Oral nicotine segment. We acquired a brand from TJP Labs, and excited about entering this segment. It's a growth part of the segment, and it ties back to our strategy, which is NGP in leveraging NGP. And what's exciting about this is we have a very strong combustible business. You know, I'm sure we'll talk about vape here in a minute, but it gives us an opportunity to expand our NGP agenda and again, provide potentially less harmful options for our consumer. And so, you know, I mentioned this earlier, our strategy is we are not the largest, we are a challenger challenger company, so we will not lead with creating demand in any market.
Clearly, there is now demand within the modern oral nicotine space. And so it made sense for this acquisition to happen for us. It aligns very much with the, with our strategy, and gives us now the opportunity now to create our own, brand equity. This is very similar work that I just described on Winston. We're doing the exact same consumer research to ultimately develop our brand.... and then also leveraging our go-to-market model of our expanded sales force, 1,000 people, to be able to take this into the marketplace. So it, it aligns very much with our NGP strategy of having an expanded portfolio. We will be launching in early 2024, and I'm excited about sharing more of the details as we get closer to, to that timeline.
But I think, to the second part of your question, this allows us to have a really complete portfolio now, right? When you think about our strategy, which is as part of our tier one market, to really have a strong combustible business, but at the same time, have a very strong NGP offering. And it gives us an opportunity as we start to see consumers, you know, drive a bit more poly usage, it gives us an opportunity to have a portfolio that, again, can meet them where they are. If they choose to continue to stay within combustibles, we've got the right cigarette and cigar portfolio, that we've done a lot of work on, to date. But it now gives us an opportunity to expand our NGP offering, both with vape as well as with modern oral.
So, we're feeling really, really great about this acquisition, and we've got some great plans ahead to be announced in 2024.
Sure. You know, a question on the recent U.S. Court of Appeals ruling that the FDA's MDO on myblu had failed to follow the law and that its denial of unflavored blu products was improper. So what does this all mean for the future of blu in the U.S.?
Yeah, this has been a long time coming. I'm glad to say I can actually answer to this question today. Just to take a step back, just for those that maybe aren't as close to it, April of 2022, the FDA made the decision to give us a MDO, a marketing denial order. We were obviously disappointed in that decision and, quite frankly, leveraged all of the legal levers that are at our disposal. First, went through the process of submitting an administrative appeal to the FDA, indicating that we ultimately did not agree with that decision. Secondly, we took legal action to the Fifth Circuit's Court of Appeals.
Taken about 14 months, but just a week or so ago, we did get the final unanimous ruling, that indeed, the FDA had acted in an unlawful way and did not have the data and the science to support that decision, because our portfolio indeed was meeting the regulatory standard, the high standards, and we as a councilman, have to agree with those standards. But our portfolio met those standards, and the FDA was unlawful in giving us that, market denial order. So at this state, the FDA has been vacated, and we're pleased and thankful that the courts have made that decision. And now we will, we'll continue working with our retail partners and many of those retail partners have continued to carry our products.
Prior to this MDO, in the midst of, you know, we had rolled out a new brand, brand equity program. We had, you know, packaging, a lot of point-of-sale in store. So we get back to business, with the continued of that strategy. So a lot more to come in that space, but we're really, really pleased with the decision. And, again, this goes back to our NGP strategy for the US, which will be focused around vape and now modern oral. So again, we think this gives us a holistic portfolio, to engage with the consumer, no matter where they may be across the spectrum.
Sure. So, Peter, now just talking about the overall Imperial. So, you know, there is a guidance in the multi-year guidance that has been laid out. And, you know, this year, the guidance is that EBIT growth will be somewhere around 3.5%, and then it accelerates next year, and then it accelerates further the year after. How confident do you feel about that, given all the volume pressures we have seen on the U.S. cigar side of things? And yes, you are doing better on the U.S. cigarette side of things because of share gains, but, you know, probably this does concern you somewhat, the overall state of the U.S. cigarette industry. So, how should we think about the multi-year guidance right now?
Sure. Yeah. I mean, we'll just as a reminder, we will get you a trading update on the beginning of October, fifth of October. But I mean, in terms of the multi-year, you know, we're still on track. We still believe that the things we're doing around the strategy is driving the operation improvement. If you stand back and think about what the strategy was on in part, it was about driving a better share performance, arresting the share declines in the top five markets. And we've done that. And we've managed as well alongside that to achieve pricing. So one of the big themes of this year has been sort of based on pricing that you've seen across the portfolio.
So although the volumes have been under pressure, you'll still see that the top line performance has held up, relatively well, and then that's translating down into the EBIT growth you're seeing. So, look, I think we, like Kim talked a little bit about the U.S., we hope that some of the volume pressures you see elsewhere will start to ease. Certainly that has been the case in some of the European markets already. Some markets still a bit of a challenge. The U.K., U.K. market, we know there's obviously higher excise and so on, the volume pressures there. Still, but on, on the whole, from these European markets and a little bit across the ACE region, those, those we have started to see volumes improve a little bit in the second half.
And then coupled with the very strong pricing that you saw in the first half, and that's carried on into the second half, that's also helping to offset that. So I think, you know, one of the things we've done through the strategy is improve the resilience, I think, of the business. But it's better able to manage some of these shocks than we might have been in the past. That's a function of this very disciplined approach we've had across every market, like the US, but also our other top five markets we have, or I think the other four markets in the top five.
Sure, and let's, if we just talk about a few of these key markets.
Yeah.
So you highlighted U.K., market volumes are still under a lot of pressure, down 15% probably right now.
Mm.
Then next year, again, there will be a RPI plus 3% sort of excise tax increase, which is in the formula-
Yeah
by the UK government. So that market seems to be under structural pressure.
Yep.
And in Germany, which is your second largest market after the US, you continue to lose share, even but the market growth is itself quite strong right now. So I think that is just helping all the manufacturers grow in Germany. And then Australia seems to be coming back after, you know, a few years of pressure, and Spain continues to hold on pretty well.
Mm.
So when we add, in aggregate, all these different percentages, you know, do you think outside the U.S., the business can grow low- to mid-single digits? Because the U.S. business, the way we think, is something which can grow mid- to high single digits because of all the share gains which have happened, on the cig side of things.
Yeah, I think we do. So I think that, again, it's worth sort of separating out the markets a little bit. So, with the UK and Australia, just because of the dynamics of those markets, we've always taken... Even when we set out the plan, if you go back to the strategy documents we set out in January, January 2021, you'll see there we took a relatively cautious assumption about those market outlooks. We actually expected the overall, sort of revenue pool to shrink over time, partly because of the volume pressure and the increasing challenge of offsetting that through pricing.
Actually, in the UK market this year, we did lead on pricing in the UK, and it did have an impact on share, but it has meant that the value take in the market has been good, and that follows two years of share gains. So I think always this, there's always this balance, isn't there, between, you know, what we do with share and what we do in terms of pricing. And having had two years of share gains, we were able to monetize some of that share gain with leading, you know, pushing through on price in the full knowledge that would have pressure on share. Spain has been really encouraging because we've had now two years of price increases for the first time in a long time, which is really good.
Germany, the overall market remains very attractive, as a cigarette market. Volume declines are relatively modest, and the ability to take pricing in that market has been good. So the overall characteristics of the market is very good. Cigarettes remain very affordable. The challenge, as you say, is that we've, we've lost share, we continue to lose share, and that's turning that share around has been a bit more of a challenge than the other markets. But that was what we always said. You know, if you go back to the strategy when we set it out in January 2021, we always said that Germany would be the toughest to turn. It's the one that had been declining for the longest, declining for more than 10 years.
And but the things we're doing in Germany are no different from the things we're doing elsewhere. So all the sort of playbook that we've been using in, in the U.S., you heard about, very similar initiatives, we're playing there. It's just taking longer just because of the scale of the sort of historical underinvestment. You know, the challenge is making, driving through some of the changes, which has taken a little bit longer in, in a market like Germany versus a market like the, like the U.S. So I think overall, to come to your question, I think we're, we're still feel confident that the top... focus on top five is right. The things that we're doing in those markets is, is good, is driving.
You know, if you remember as well, we had a relatively cautious assumption that our objective was to hold our share in those top five markets. Actually, we've, if anything, been doing a bit better than that in terms of growing share. And we've always said, you know, we won't grow market share in all of them any one year. It's, it's always a bit of... There's always a portfolio. Some will be a bit ahead, some will be behind. But I think on, in terms of where we are, where we thought we were going to be, we're, we're very much on track and if anything, slightly ahead. And that gives us the confidence that we can sustain that into the future.
Sure. Coming to NGPs-
Yeah.
-it's about, you know, GBP 200-250 million in revenues. It is growing nicely. You know, you have launched heated tobacco products in a number of countries. You know, e-cigarettes, you launched blu bar in a number of countries, and then you also have the oral business, which seems to be growing quite nicely in Europe, along with what's happening within the category. So how should we think about your NGP business, and is that something which can continue to grow in aggregate at this 20%, you know, top line, for the next few years?
Yeah. So I think, so the NGP is, the developing a sustainable growing business is another key pillar of our strategy. And I think it's important perhaps to take a little bit of a step back. You know, if you think back to the beginning when we started on this new strategy, I think one of the things that was very clear is we had to test and learn a lot about the products. We had to test, you know, do we have products here that we can, that appeal to consumers sufficiently? Do we have a model that allows us to launch those into market successfully? And if you recall, you know, one of the big shifts of the strategy was to move, heated tobacco out of Asia, move it into Europe for the first time.
We did it very much on a trial basis. So the start of the first year or two of our NGP story has been about testing. Testing, you know, trialing, pushing heated tobacco into Eastern Europe. It's been about trialing with blu, changing the proposition on blu there, and also trialing a new innovation approach. So we've again completely revamped how we do innovation. I think what you can see in this past year is the fruits of that starting to come through. So we've had a complete revamp of our portfolio this year. So we've launched new versions of the Pulze product, which is our heated tobacco product, new versions of our pod offer, which is blu 2.0, and also a completely new product-...
Disposable category which we didn't have before, and also new variants around the Modern Oral products. So the NGP portfolio is a complete refresh in the past year or so. And then on top of that, we've also started to scale in terms of product, in terms of market launches as well. So you've seen the step up in terms of market launches across each of those categories. So what's encouraging is we now started to see a broader base of growth across each of the categories and across geographically as well. And also, the other part we wanted to prove out is that we were able to do that with relatively modest incremental investment. It goes back to sort of this challenger approach.
You know, we're not seeking to develop markets from scratch, it's more about the offering consumers choice in existing markets. And that I think with this year, again, you'll start to see that prove out in the, in terms of what you're starting to see. You know, good top line growth with relatively modest additional investment to achieve that. So I think, you know, we're certainly on the right course, basically.
Sure. And coming to now the very interesting question around capital allocation. So dividend growth, you have said that it's going to be in line with EBIT growth, not EPS growth.
Yeah. I mean, we said, what we said is that the dividend policy is a progressive policy. That means the dividend will grow each year. And what we said, it will grow it taking into account underlying business performance. Now, the board, ultimately the board decide where it pitches that level, and whether it's near our EBIT growth or whether it's near EPS growth. For the time being, you'll see that the board has decided to pitch it nearer, operating profit growth, because that's a closer proxy to cash generation of the business. So it's a, that's a sustainable ongoing basis, but clearly, ultimately, the board can tweak it accordingly. But yeah, that's where we've been at the moment, in recent times. Yeah.
Sure. But then, because of share repurchases, which are now happening-
Yeah.
- Your EPS growth will be higher than, you know, dividend per share growth.
Yeah.
Which means that, you know, your dividend payout ratio keeps progressively reducing, and the gap between free cash flow and dividends progressively increases.
Yeah.
The free cash flow is also growing because your EBIT is growing.
Yeah.
So, you know, last year you did GBP 1 billion of share repurchase. So how should we think about share repurchases for FY 2024? And you know, would you like to maintain a constant leverage ratio of 2x, or will it drift down to 1.8, 1.7?
Sure. So I think maybe just take a step back a moment, just in terms of the overall four priorities. Obviously, alongside our strategy, we set out a very clear capital allocation priority, and the first of which is to invest in the business. That's mainly an organic strategy, relatively low CapEx requirements, but some bolt-on M&A. And we touched on it a bit earlier, the example, like the Modern Oral acquisition in the U.S. market. On your debt questions, second priority is about maintaining leverage at the lower end of our 2-2.5 times range. You know, we expect to be there at the end of this year, so around 2, it'll hover around the 2 level. Progressive dividend, we've talked about.
Then in terms of the buyback, really, the principle of buyback is that any surplus cash flow that we don't need for anything else, you know, meeting the first three, once we've met the first three priorities, we will seek to return it. The thing I would just highlight, though, is that we always have to keep a little bit of headroom in place for things like, you know, a little bit of M&A or those small bolt-ons, and also uncertainties as well. So it's balancing those things out there. And so I can't. Again, it's ultimately the board will decide where it pitches the buyback level. We did GBP 1 billion last year. There is scope to grow that this year.
I think at the moment, you know, there's quite a wide range of consensus, ranging from sort of GBP 0.5 billion to GBP 1.5 billion. I think most people are sort of sitting around the one billion to, sorry, yeah, GBP 1 billion to GBP 1.2 billion. I think the absolute average is about 1.1, 1.15. And I think, you know, what we want to do is do the right thing. We want to. The most important value you get from the buyback is not so much about whether it's 1.1 or 1.2, it's the fact that we've made this ongoing commitment, that we will consistently do a buyback every year, that will buy back a meaningful portion of the share capital.
And that's where we see the real value from the buyback coming.
Sure. I think we are out of time.
Okay.
Thank you so much. We will have a breakout in the next room, so please do join us.
Great.
Thank you so much.
Thanks. Thank you.