Slight miss, new chairman and impairing Cigars Following the September profit warning, the big news in the FY19 results is the appointment of Senior Independent Director Theres Esperdy as Chairman. We appreciate she brings experience to the role, and has been on the Imperial Board since 2016, but our preference would have been for an external appointment. The results themselves are slightly below the recently lowered guidance. Although net revenue +2.2% in constant currency was in line, adj EPS -1.6% in constant currency disappointed (guidance was for flat), as NGP supply contract termination costs and other income were incremental headwinds since the September trading update. Only £55m of the £60m guided cost savings came through in FY19, with £60m to be delivered in FY20. NGP sales of £285m, +48% y-o-y, is in-line with the lowered guidance for around 50% growth. The FY20 outlook is for low single digit revenue and EPS growth; Factset consensus for adj. EPS is currently 289.7p in FY20E (+6% y-o-y), so we expect low single digit downgrades. Adjusted net debt was broadly unchanged from the previous year, at £11.4bn, and the dividend was raised 10% as previously guided; going forward the dividend will likely grow by less as the company focuses more on share buybacks. The share buyback programme resulted in £108m of shares repurchased in the FY19 year, with another £92m to be purchased by the end of calendar 2019. Imperial also took a £525m impairment on the Premium Cigars business, which is up for sale. The presentation and webcast will be held at 9am UK time. NGP investment cut for FY20 Both the US and Europe vapour categories slowed in H2, but blu still has leading positions at retail in markets including Germany, Spain and Italy. Pulze, Imperial’s heated tobacco product, is rolling out nationally in Japan, and will launch in more markets during FY20. Imperial took a £54m charge to terminate supply contracts, which led to the FY EPS miss. We are pleased to see management rein in NGP investment for the coming year, given significant uncertainty about the vapour market’s growth rate following the health scares in the US. The focus will be on oral nicotine, Pulze and cannabis products. Tobacco still delivering as expected Tobacco volumes fell by 4.4% over FY19 (an improvement from -6.9% at the H1 stage). Price/mix on Tobacco was +5.5%, and margins in this part of the business rose 60bps.