Nichols (LSE:NICL) — Full Year Results

0:01 Good morning, ladies and gentlemen, and welcome to the NICHOLS PLC Full Year Results Investor Presentation. Situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish our responses where it's appropriate to do so on the investor meet company platform. Before we begin, as usual, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from NICHOLS PLC. Andrew, good morning, sir. Good morning. Welcome, everybody, to our full year 2024 presentation, and and thank you very much for taking the time to dial in this morning to listen to the presentation.

0:57 So we will split the presentation into three to four parts, and it will probably take about thirty to thirty five minutes. So I will kick off just with a look back on 2024 in terms of our strategic and operational highlights. I will then hand over to David, our finance director, who will take you who will take you through all of the numbers. I will then come back on and just give you a flavor for what's to come in '25 and beyond, and then we're happy to take questions. Okay. So probably the key highlights to take away from today's presentation. Well, first and foremost, we are really pleased to be able to have delivered strong package revenue growth in our higher margin business, which is in line with the strategy that we outlined at our Capital Markets Day at the back end of twenty twenty four, and we grew that package business by 4.4% in the year.

1:55 A big focus for us in '24 was on our UK package division where we want to drive both value and volume after a number of years of of protecting our margins and and taking some volume losses. And I'm really pleased again that we grew value and volume. Value grew by 6.3%, and that was ahead of the market, which grew to 3.8%. Really pleasing was on our gross margin percentages. We improved that by over three percentage points across the business. And in all three of our divisions, so UK packaged, international packaged, and out of home, we move forward our percentage gross margins. On top of all of that performance, again, we significantly invested in our marketing both in terms of The UK Package Division and the international package division to drive in year promotions and innovation, but also to drive long term brand equity.

3:02 And after all of that, we managed to deliver adjust to deliver adjusted PBT growth, of 15.6% year on year. And on top of our ordinary dividend policy, which is two times cover and and was clearly progressive because we made more profit in the year, we also delivered £20,000,000 back to shareholders in a one off special dividend in a year. K. Thank you. So turning to a reminder of our strategy. So at a headline level, to remind you that our absolute focus is to accelerate growth in our higher margin package business in The UK and internationally, and it is to drive bottom line value from a simplified out of home business.

3:52 We have four key strategic drivers, more from the core, which is all about delivering growth organically in in in host of brands and in the channel and geographies we currently operate in. The second pillar is called First For You, and for us, this is about innovation. It is about appropriate geographical expansion, and it is about acquisition very focused on our UK package division where we believe we can bring a brand into complement Vintel that we can then add value to in the long term. Fuel for growth is all about how we are driving efficiencies across our business by utilizing and leveraging our asset light model and reinvesting those efficiencies back into our package business, predominantly into marketing to grow the business.

4:43 And then a happier future is is our set of commitments we've made from an ESG perspective across people, product, and planet. And all of those are underpinned by three key foundations of wall and we're a branded business and are very proud of strong brands we have across all three of our divisions. And our asset light model means the partnerships we have with customers and suppliers are very important to us. And I'm also then an example where in The Middle East, we partnered with the Yao Xiang Coca Cola bottling company, and we just, celebrated in 2024 our hundred and first Ramadan campaign. And then also, we're very proud of the culture we have in the business and the high engagement scores we have that provide, a culture where we believe our people can thrive in.

5:38 Okay. So what I'll do now is just give you a little bit of a context to what's happening in The UK package soft drinks market. Now this is Nielsen data to the end of December twenty four. And as a reminder, this is kind of the industry benchmark, but takes ECOLS sales from, the grocers and sample data from convenience wholesale channel. So sometimes you will see just some small discrepancies between what's reported here and our internal sales data, which is obviously what we're selling into the customers, whereas this data is about retail sales out of customers.

6:17 So, I think the first key important headline is, again, soft drinks market proved very resilient in The UK. If you look in the top left hand box, you will see there that the value grew 3.8% in the year to £13,500,000,000. And but really importantly and encouragingly, after a few years of volumes going backwards, you can see in the box below the volume grew by 1.4%. So the difference between those two show probably inflation running at about 2.4% in the year. There's about 15 or 16 subcategories in soft drinks. So the top three pull out really categories that perform very well in the year. So you can see water doing particularly well there.

7:04 And the insight there is we we believe that's on the back of, quite a lot of negative press around, tap water. Energy, which is now the second largest subcategory after cola at 2,200,000,000, and again, that strong strong value and volume growth. And then fruit juice performing well at a value less on volume, and that's where, you know, due to bad crops, the prices of juices have gone up, and that's then being pushed through onto consumers. The categories that have not fared as well on the bottom three level is sports category, which is down 20% as it lapsed the incredible success of prime in earlier years. And then mixes and lemonade as categories, which have seen declines down for a number of years with post COVID and continuing to trade down.

7:59 Across the three largest subcategories we operate in, so overall, we're pleased to report that our squash, blamed carbs, and RTD still juices, all of our brands are in value and volume growth. On squash and where we are the number two brand, so, second to Robinson's in the category, You know, good strong, solid growth there, and we've outperformed the market by 2.8 percentage points. On carbonates, although we're in growth relative to the market on value, we are we are behind. But it's just a follow-up there from our internal sales. Our our carbonates business is actually running 9% year on year. So that's just really highlighting sometimes the discrepancies we have on the data.

8:47 And in ready to drills ready to drink still juice products, you see that our value is from 5% relative to the market at three. And really, that's on the back of some strong compression on our 500 mil range and also the introduction of our new kids mini packs.

9:06 And if we look then to what's been happening in The UK, in our more from the core strategic pillar. So firstly, we've launched a new hat of new strategy during the year called fresh thinking for drinking. And this is where we've gone and did a lot of consumer research and identified over the next five years what will be the big trends that are going to be important in terms of growing your business. And we've talked to our customers around those, and they they welcome that insight. And, really, anything we do from an innovation or acquisition point of view will play to those growing trends because that's why we believe the growth will come in soft drinks over the next five years. An example there could be, you know, exciting new flavors, different pack formats, how do we exploit parts of the day when soft drinks are consumed less than other parts of the day, etcetera, etcetera.

10:02 From a brand investment point of view, we launched our biggest ever campaign in the year in The UK, Love the Taste or Your Money Back. That ran across 13,000,000 of our packs, and I'm really pleased to say we have, a tiny amount of, products, returned to us. So, hopefully, that says that people do love our our taste of our products, and that helped to build brand penetration across The UK. And then we followed the investment through store where we invested heavily in our packaging point of sale at store level, which encourages disruption and consumer pickup of our brands. And on the back of that, all of what I've talked about. I was really pleased that we we landed some really important big distribution wins this year across numerous of our customers both in the North and South and our call packs.

10:54 Okay. If we now just focus on our first for you in The UK. So firstly, we really accelerated the fourth car rental brand in the year, and and we have four big innovation focuses. So the new orange squash we launched, and the continuation year two of our launch of energy in the 500 mil can, a new sub brand called Discoveries on Vimto in carbs, and then the minis that I referenced.

11:23 On our license range, Levi's Slush Puppy, we took Levi into a can format. We also took it into a 500 mil energy can format and launched new flavors on Slush Puppy and and saw good growth, particularly on Levi's, which grew year on year 40%. And then we are very targeted from an M and A perspective. And as I mentioned, it's about UK package, and it's about areas and brands that didn't so can't play in and that we believe that we could we could buy and add value to over the medium to long term.

12:03 From an international point of view, again, I'm really pleased with our performance in The Middle East. You can see there an outstanding display in one of our stores. And and as a result of that focus, the marketing, and execution, we we delivered over 10% growth in the region, which was really pleasing year on year. In Africa, a big strategic move for us was to move the production of our red cans from Spain and closer to the point of consumption. So in partnership with a company called Millennium, we've built a factory in Senegal. We have now moved, phasing the move of some of our cans into market. This has benefits of it stops the distributors who distribute our products in market having then cash on working capital tied up by paying those duties, which means they can purchase more product from us and drive the product and drive market share.

13:06 And because we're not importing the cans from Spain all the way to into Senegal and then across the country, you know, our ability to get product to market quicker has improved, and there's less risk from a supply chain fragility. And, clearly, there are sustainability benefits of us not shipping finished products all the way around the world. And then to support that move, we've opened our first office in Senegal, where we've got people now on the ground driving key marketing activity to drive customer pull through and and pick up of our brand. From the first to new internationally, so again, we had good strong growth from new brands in the region.

13:52 So we launched new flavors such as the lemon berry. You can see in the picture there, we fortified our products with the addition of vitamins to build on growing trends in that region, and that was about driving penetration into the brands outside of the key Ramadan period. We launched into Sierra Leone, which is in West Africa. It's a country about eight to 10,000,000 in population. We launched with one of our key partners there, and the launch was heavily focused on driving RPT range to 300,000,000. You can see in the picture there, and we had a strong marketing campaign on the ground to launch that. And then finally, you know, after two to three years of of of work and identification of the right partners, We've launched into a new geography outside of Africa, Middle East, and Malaysian.

14:43 So that's a large country, 40,000,000 population, a well established squash category there already, which is in the moment so the consumers understand squash and cordial. And and purple fruits are well understood, and and some of our competitors operate in this

15:01 area. Again, important that consumers buy into that. So we launched in the back end of twenty four our one liter proposition. It's got 25% juice, which is akin to local trends. Our product in The UK is about 10% juice. And we launched exclusively with ninety nine Speedmark, who are a convenience chain situated nationally in Malaysia with about two and a half thousand stores. We had a strong marketing campaign, lots of sampling, in store POS to cause disruption. I'm pleased that we then rolled out to up to about 3,000 stores by the year end as we went into some of the different supermarket chains.

15:43 And the fuel for growth. So two things to talk about here. Firstly, restructure we did in out of home on the strategic review means we have a much simpler model now, for that business and less senior management time spent in that area, run, very well by an experienced management team, and they have done a superb job in delivering profit growth year on year of 35% versus the previous year. And and the key focus for us there has been absolutely about the profitability by outlets, only putting capital where we believe we can do appropriate returns, and then reinvesting those savings back into our package business in The UK and internationally.

16:32 And then after two and a half years of work, I'm pleased to report that last week, we went live with our new SAP system in the business. We were able to dispatch stock last week. We were able to produce in our own factory. So that that went really well in terms of the launch. Clearly, with all these launches, you then I mean, I hope you kept for six to eight weeks, so we're working our way very carefully through that with lots of support. But really pleased with that that we've got live and the system is working. Okay. And then just finally for myself before I answer David, from a happier future point of view, good progress across all three pillars.

17:18 A couple of points to pull out. One would be, you know, we achieved an investor accredited sustainability rating through Integra, and we got a rating for the work we're doing in this area. So so we're really pleased with that external accreditation gave us confidence in in the approach we're taking. We have now moved all of the recycled PET in our bottles to 51%, and being sourced from good sustainable sources. And as I mentioned earlier, from a climate impact, we were very pleased with that move, of production to Senegal, so we're not shipping finished products all the way around the world.

17:57 Okay. I will now hand you over to David, who will talk through the numbers, and then I will come back and I look forward to 2025 and beyond. Thank you. Thank you, Andrew. Okay. Obviously, really good year of progress in terms of the financial metrics and very much in line with the ambitions that we

18:22 talked about as our Capital Market Day later on last year. I'll just figure out a few of the headlines. Revenue, up 1.2%. I think on a like for like basis, that's actually close to about 5.2 because we moved the concentrate model in North West Africa led to a lower revenue figure, but much the same profitability. And, also, we had obviously reduced our turnover in accordance with our planning out of home. So about 5.2% like for like. Importantly, profit up 15.6%, I think a little bit higher than we expected until later on last year.

19:07 So good performance there. Adjusted profit, the PBT margin, 18.2%. Obviously, we have a medium term target there to hit about 20% bottom line and made good progress on that this year. Earnings per share, up 13 and a half percent to 64 p.

19:28 Cash and cash equivalents are slightly lower figure than last year, but the 53,700,000 was after the 20,000,000 special dividend that was paid in September 2024. And also, it's quite a heavy investment investment in the e r new ERP system of about 7,600,000 in the year. We'll go through that in a bit more detail later. Adjusted return on capital employed, strong at 31%. I think good progress there, and I think that reflects both increased profitability and also a more efficient balance sheet. Obviously, we don't earn as much return off the cash we hold on the balance sheet as we do from the operating business, but a good increase there. Proposed final dividend, 17.1 p, up 9.6%, giving a total of ordinary dividend for the year of 32 p before the special dividend of 54.8.

20:24 So good shareholder return there. Okay. Looking a bit more detail at revenue movements.

20:34 Overall, group revenue up at 1.2. As I said, early early in like for like about 5.2% up. So where that's come from really is good strong growth in The UK package area where we've increased sales by 6.3%, and that's mostly an increase in volume rather than a significant price impact.

21:02 International, obviously, a little bit more complex. Headline number up by point 8%. Like for like, though, we we think it's close to 8.2% because of the moves to the West African concentrate model. Middle East, plus 9.6%, very good sales there. Probably a little bit more than we expected in the finish of the year in the pre Ramadan sales. So good performance there in both Saudi Arabia and with a bit of extra product going into the Yemen. Africa, line for line, plus 8.3%, So good performance there. And, obviously, as Andrew's mentioned, you know, we have opened our first marketing overseas marketing officer. And rest of the world, up 5.8%, you know, good performance in the smaller markets around the world. Overall, packaged business like for like up 7%.

21:57 Out of home down 8.2%, which is very much as expected. We did go through a fairly major restructuring of the out of home business during '22 and '23, and we expect it to reduce the scale of it. And the good news is we'll see on the slide over is while the turn while the revenue is down, our profitability is substantially improved in that business.

22:25 Thank you, Andrew. Looking at segmental profitability, good performance by all our businesses, again, in line with the overall group strategy and for the individual plans we have in place for each business. Looking first at the package business, operating margin up 2% to 30.6% operating margin. That yeah. A really good performance in in across package as a whole. I think that's coming really from strong gross margin growth in both The UK and international from overall volumes increasing, The some mix effects in there as well that you the international business is a bigger now a bigger proportion of package as a whole that tends to be more profitable for us.

23:19 Within international, it was higher margin markets that performed perhaps a little bit better, so some positive mix effects. Another big effect in there, though, was some benefits from reduced cost of goods sold and some wins there in terms of material procurement and in terms of reduced co packer fees from the reentering processes we've been going through. So really quite a good performance, which we hope to push forward. Overall, profit in the division, up 4,300,000. I think it's important to say, though, that that's after an increase in marketing spend of 1,900,000 in the package business.

24:05 We very much wanted to increase spend to support the brands, and that's had both a positive in year effect, and we think a continuing effect into the future. Moving on to the out of home business, very much a transformational performance for the business, if you like, that we as I said earlier, we have restructured that business with the aim of focusing it more on core profitability and profitable accounts and profitable product areas. And we're very pleased to say that the performance this year really supports the hopes that we had from that restructuring through a mixture really of increased management focus, taking cost down, particularly to overhead level, and some some price benefits as well where we've been able to we've managed to increase profitability in the outbound business by 1,700,000.

25:10 That's 35% up on last year. And, obviously, from the group's overall strategy, that 1,700,000 profit increase is really what's allowed us to reinvest in the package business where we see the main future growth opportunities. So really good performance from out of home. Central costs are a little bit higher. And, essentially, what that is underpinning is our forward investment plans. The big areas of increase have been in, for example, procurement and supply chain where we have both extended and improved our teams in that area. And I think you can see the the start of the benefits coming through there from cost of goods sold, one or two other areas of increase in terms of IT, in terms of our research and development. So very much a planned increase in cost and one which we expect to be an investment in improving future performance.

26:17 Overall, I guess, operating profit up from 14.8 to 16.7% margin. Good performance. A little bit more interest return. Obviously, we had quite a lot of cash across last year, and interest rates were quite good. We we obviously see that has been reducing a little bit this year with lower interest rates, but really pleased to get back over the 30,000,000 profit mark to 31,400,000 for the year. Same numbers probably in a slightly different format. I think what we wanted to do was just to illustrate how important the gross margin gain has been for delivering increased profitability, you know, that we've delivered £6,700,000,000 more of gross margin, a little bit of a decline in out of home, but very strong progress both in The UK and in international where the combined increase was around about £7,000,000.

27:21 Margin as a whole up by 3.5 percentage points and 9.4% in absolute terms. And that that is really something that we're really very pleased with because it does allow us to both maintain investment in the business and deliver a profit increase. So really good performance. And as you can see, the other areas, some increase in costs. I've talked about the admin expenses, but very much an investment in forward marketing as well. So good progress on profitability overall. Looking at exceptional items, we have chosen to well, we have to treat the investments in the new ERP system as a revenue cost. So cost of that 7,600,000 across the year, and that really covers both the development of the systems in terms of redesigning business processes, in terms of configuring the SAP system to those processes and the NICHOLS model and the start of the implementation phase. So quite a lot of cost in the year.

28:43 As Andrew said earlier, that system went live last week with good progress. We expect really good cost to continue through to early into the second quarter, but we would expect costs overall in that area for '25 to be much more similar to the '23 number than the '24 number. So quite a big investment for us, but we do see a lot of forward benefits on that with a overall payback of of a brand about five years. And that will be coming from very much closer integrate integration with our supply chain. You know, our systems now will talk directly to both serial suppliers and to our co packers.

29:32 So very strong integration there and also much clearer integration with our customer systems as well just to illustrate one of the potential benefits where we perhaps over order a product and then have to clear out as the stock becomes a little bit older and close to its sell by dates. Obviously, we get less money for that. So if we can manage residual sales better, we think we can get quite quite a nice margin increase of things like of things like that. So very much an important project to prepare the business for the next five to ten years. Net cash, obviously, as a company, we like holding cash on the balance sheet. We think it's good in terms of allowing us to invest going forward as a safety margin.

30:29 Started the year with 67,000,000. Good EBITDA, up 11.7%. But then spend on the on the new R and D system, 7,400,000. Obviously, really pleased to be able to return 31 a total of £31,200,000 to shareholders this year. And I think most of the other areas, pretty small in comparison. Working capital, well controlled. And overall, cash has remained pretty strong at 53,700,000. We would obviously expect to build that cash during 2025 again. So very much a business model that generates cash both for investment and for return to shareholders.

31:19 Finally, for me, just a confirmation. We talked about capital allocation policy before. Our first plan is always to reinvest in the business for profitable growth. And I think, you know, we've certainly done that this year, and we certainly plan to keep doing that going forward. We expect to continue to pay a progressive ordinary dividend. We have some plans for m and a, which Andrew would will pick up on later. Nothing particularly imminent, but, obviously, we would need cash to for the right opportunity but paying the right price. And then, ultimately, we'll then return any further surplus funds to shareholders as special dividends.

32:09 This year's dividend, we've maintained our two times dividend cover on earnings of 64 p, which has given us 32 p total dividends. The final dividend of 17.1 p will, if approved, be paid on May 1. And just a reminder, we paid a a special 54.8 p in September. Thank you. Thanks, David. So I will just now pick up and spend a few minutes just focusing on '25 and beyond, and then we'll we'll open up to questions. So I think we start in our UK business first. What I'm really pleased about is we will continue with our focus on innovation. So we are really pleased to announce that we're going to be launching a new sub brand on our swap portfolio called Vimto Wonder Fuel.

32:58 So the proposition comes in three flavors, and it is targeted at children and the breakfast occasion because our insights have shown us through our category strategy work that the day apart when least can soon as our drinking soft drinks is between that breakfast and lunch part of the day. People tended to consume fruit juice, but will often dilute fruit juice down with water. So we're working with our big customers to look at how do we make this proposition of wonder fuel and fulfill that day part where less drinks are consumed. And and the product has 30% juice in it. So it's it's higher with juice and is fortified with a large bundle of vitamins.

33:48 We've also signed a partnership with Applied Nutrition who are working with us to take Vimto into the the on the bottle space. So we're really pleased to announce that we'll be launching energy gels, where you can see on the picture there, and also Vimto hydration tablets where you will take the tablet, put it into the water to flavor the water. And both of these products in conjunction with the plant nutrition will be listed in Holland and Barrett and Superdrug over the next few weeks and months. And we'll continue our focus on driving energy into the ever growing energy category. And the focus for us this year is we will launch our energy onto a price smart path that allows our wholesale convenience customers who only shop PriceSmart packs, to list the brands and drive more penetration.

34:45 And, again, we will heavily invest into our marketing campaigns. We will see the return of what the takes of your money back, but we will go on more than 30,000,000 packs this year, and the campaign will run for an extra four weeks, taking it from twelve weeks we saw in 2024 to sixteen weeks in 2025. Internationally, we will continue to, drive organic growth both at Ramadan and all year round with the launch of the new packs we got, and we will go back on TV in the region for the first time in six years. We have more innovation coming to capture the all year round opportunity with share packs and carbonates. And also in The Middle East, we've awarded the territory of the Yenan region to the Angiang Coca Cola bottling company who will hopefully then capitalize and grow that region distribution further.

35:44 In Malaysia, building all the launch we had at the back end of q four, and we're really pleased to announce that we'll not wait to advertise this year, and we're actually going on TV q one into q two. And in Africa then, to complement what we've done in Senegal, conjunction with the same partner, Millennium. We will open a second factory or they will open a second factory in the Ivory Coast, and they will then produce our product there as well. So what you will see from this next slide is just hopefully an explanation. So the scale of our business in Africa is about 60,000,000 meters with half of that in red cap and half of that in purple product across PET and glass.

36:33 And you'll see on the left there that we have 11 key markets in West Africa, where we sell the red can. And our strategic expansion will see Senegal service six of those countries, so Gambia, Guinea, Guinea, Bissau, Mali, Mauritania, and Senegal. And then when Millennium opened the second factory, and I'm re host probably in December 25, January 26, We will then phase the production for Burkina Faso, Liberia, Sierra Leone, Niger, and Ivory Coast out of that factory as well. And our goal here is to increase our market share, which is currently broadly about 8% to 12%. So a 50% increase over over the the the period of phasing that production through to 2728.

37:25 And then the enablers for that will be the local production concentrate model, which will enhance the margins, drive product availability, at a market share, the marketing programs to drive pull through, and the the mitigation of less risk in our supply chain, and clearly the benefits from a sustainability point of view. And we will continue our focus in the year with our happier future commitments. And and I won't go through all of these, but probably just to point you to the middle box where the deposit returns in DRS, is now being passed by government and will launch in The UK in October 2027. The current legislation says that we'll put 20p on the product of, anything in a plastic, container or an aluminum can, and and then consumers will pay the 20 p when they purchase the product, and then we'll return the vessel to, returnable vending machine and receive their 20 p pack.

38:32 And, ultimately, that should then allow us to be able to sub sustain, a 100% recycled PT in all of our products from from The UK, and we'll be preparing for that over the next couple of years. So just to finish, these are the targets we've put up with the capital markets then, clearly, with an AbbVie f y 24 actuals in. So as a reminder, we wanted over the medium term, which we call in five years, to increase our revenue, in '23 from a 170 up to two two five. We want to increase our margin from 15.9 up to 20, and we wanted to increase our profit from 27.2 up to 45.

39:20 And and so you can see that good growth. And at the bottom line, you know, our projection for '24 was $3,030,000,000. So that's up to 45 gains of 50% growth. And we've come in and, I think, made really good strong progress. So we've delivered PBT of 31 before, so ahead of where we wanted to have been. And the margin has grown up to 18.2% with us then targeting to get to 20% over the next few years. So we're we're pleased with the results. I'm pleased with the progress versus those ambitions. So to finish, to remind you, you know, we're on the top of that strong financial performance. We operate in a very resilient soft drinks category both in The UK and abroad.

40:07 Hopefully, our strategy is clear. It's it's accelerated growth in the high margin package business. It's from simplifying out of home business, focus on the bottom line, and continue to find efficiencies in the business to reinvest back to fuel that growth. And a good example there would be, you know, as we talked about, we've we've launched the ERP SAP system, and we've invested about £10,000,000 into that, and we will look to pay that back over five years starting in 2026. And with all of that together, we're confident in delivering those medium term financial ambitions and creating further shareholder value. Okay. That concludes the presentation. So happy now to go through the questions.

40:54 Perfect. Andrew, David, if I may just jump back in there. And thank you very much indeed for your presentation this morning. I'll just bring back up your camera there for the Q and A. Ladies and gentlemen, please do continue submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard. Andrew, David, as you can see there, we have received a number of questions throughout your presentation this morning. Thank you to all of those on the call for taking the time to submit their questions. But, guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you.

41:41 Yeah. Thank you. So I'll take the first few questions. So the first one is asking us under our only our plan impact, are we looking at introducing, the tethered caps, on our one and two liter cordial plastic bottles? So, yeah, there is legislation here in in parts of the EU. That's not legislation yet in The UK, but we are talking to all of our co packers in terms of doing the right thing about tethering the caps, that's something we're just reviewing, but also wanted to make sure that it's done in a way that means that people can still use the bottles quite easily. So, yeah, something we're discussing and reviewing at the moment.

42:29 I've been asked here just to give a bit of an update on the competitive environment in The UK. Have I seen any changes following the deal, and what's happening with brands that are launched into Aldi and Lindler coffee. So so yeah. So, mean, yeah, the the market in The UK, as we know, is is very competitive. I suppose what's positive as we saw in '24, soft drinks proved very resilient again and grew. And and, you know, January and February, I think, across all of The UK has been tough, but I think food and drink tends to fare pretty well compared to to GM and perhaps where people are reducing spend out of the home that then perhaps increase spend in in grocery and treat themselves in the home.

43:20 And I think I think what we have, you know, is a good balance in our business where we have a business in home, we have a business out of home, and we have our international business that helps us just spread our risk. And we've probably not seen any big changes at the moment from the Britvic Carlsberg deal. We obviously sell, Pepsi under license with with Britvic, and our relationship continues to be strong there, and we continue to sell their their products. And, yeah, I think in Aldi and Little, they have both launched a brand that looks very similar to Vimto in the last twelve months. But, again, you know, in some ways, take that as a compliment because they are they are seeing the value of our brand and people wanting it.

44:06 And, generally, though, we find that people can't replicate the unique taste of Vintel. That's one of our absolute USPs from a strategic point of view, and therefore, our loyal consumers who want the taste of Vintel don't tend to switch out. And can you provide more color on the increased category competition in The Middle East referenced in the RNS? So, yeah, I think what we are seeing again in The Middle East are more people trying to launch me too, video copy brands, particularly in our core deal pack formats to capitalize on Ramadan. And, you know, whereas we are absolutely never complacent, and we take every, competitor seriously.

44:51 Again, the challenges I've just mentioned over there is trying to replicate the unique Vuto taste is difficult. And, you know, Vimto has been now synonymous with Ramadan for a hundred and one years, and we just we're in the middle of our hundred and second campaign in 2025. Ramadan's live now, starts on the February 28. And, you know, it's pretty much a staple in people's home, during those important iftar meal occasions that occur every evening during Ramadan. How has the launch in Malaysia gone relative to expectations? Yeah. We're we're pleased. So as I mentioned, we launched that exclusively with 99 speed mark, a good strong what we would call below the line, so sampling POS type activity for launch to get people texting the product and to get it to stand out on shelf.

45:45 We've now widened our distribution to some of the more major supermarkets and really are stepping up a heavyweight marketing campaign. So pleased with the start, but excited for the year ahead. Do licensing deals such as Myprotein have the potential to make material profit contribution, one assumes they are high margin in nature. Yeah. I think I think, you know, our licensing business is very important to us. It allows us to go into areas with the brand that we're not experts in, And it also allows us to increase our visibility and availability of the VINCHO brand, which then has a strong halo effect onto the soft drinks business.

46:32 So, yeah, it plays an important role for us, and and we're really pleased with the partnerships we we have there, my approach being with the whole group. Middle East remains a key market, particularly during Ramadan. How are you working to reduce seasonality and drive year round demand? So yeah. I think, hopefully, what we've shown in the presentation is we have launched a lot of new packs formats over the last few years. So we now have, four flavors across Tetris, four flavors across smaller range of kids packs, and we have a number two brand in Saudi. And we have four flavors now across cupboards in cans and glass bottle, and we are looking to launch some more share packs, so bigger PET packs in the region. And all of that, you know, brings in additional consumers and increases our penetration outside of that key Ramadan period. So really good strong progress there, I would say.

47:34 Next question. How much of maybe one for you, David. How much of the gross margin improvement was driven by the shift in the Africa model versus volume leverage in The UK beverage business? I think the I suppose the the main effect of the shift to concentrate model in West Africa is on the percentage margin. We don't earn a much higher absolute margin. The plan really behind it is that it does give cost benefit to our distribution partners in West Africa, and we now have an expectation from that with them that they will use that cost benefit from that comes from lower duties that they have to pay to invest in growing the distribution of the brand and in mark and and in marketing that they carry out, and we're obviously working very closely with them on that.

48:33 So, yeah, we're probably looking at something less than 1% of the gross margin in the international overall coming from that. It's it's a relatively small effect, but obviously important in terms of making our business easier to run there. So not major. I think, you know, in terms of the overall, but in terms of the market, quite quite substantial shift in in the margin once we've shifted all of that supply to the concentrate model. Thanks, David. And do you plan to increase development and marketing of nonalcoholic drinks to meet the growing demand in UK bars and restaurants?

49:21 So I think here we will, you know, we will work with our accountability strategy, fresh thinking of the drinking. We look at, you know, where we think the biggest opportunity will be. And then I think what's really important in any business is you then prioritize. And you think, well, you get the biggest growth. And, you know, I'm a big believer of investing well behind the big initiatives as opposed to trying to do everything and maybe not having the firepower to succeed. So I think that'll be one for us to to to think about. And I I also think as well within, you know, within bars and restaurants, space is always at a premium, behind the bar. So again, you have to think about how much space can I get relative to some of the very big competitors there, and will I get the growth for margin in that part of business relative to let's maybe try to go faster in Africa?

50:21 So we'll always be open minded, but I think it would be an absolute choice and return on investment prioritization for us. Okay. Hi. Hi. How will you set sustainability commitments for the overseas sales as those expand e g recycled content in ex UK bottles supply chain missions? Okay. Yeah. So yes. Trying to set the right commitments for our overseas business is is more challenging than in The UK. And, obviously, we we work in a lot of countries with a lot of different partners. And a lot of these that, you know, come into what we would call scope three. So I think we've done a lot of work, on scope one and scope two.

51:08 And we are at the moment building what our scope three emissions would be and how that plays out internationally. But I think we are making some good progress there. And we won't, you know, highlight to stay around at the move in Senegal, and then the further move to Ivory Coach really helps us in in delivering against some of those commitments. Perhaps one for you, David, here. What is the expected increase in costs as a result of the autumn budget in The UK, and are there plans in place to try and mitigate those? I think the, I guess the main the main increase in cost is obviously in the national insurance rises where I think we we've estimated it will cost us round about £400,000 in the full year.

51:57 The the effect is probably a bit smaller than you might expect because we we have relatively few people who are paid at the bottom end of the pay scale, if you like, that we have a few people in the out of home business in terms of the manufacturing units, in terms of some of the distribution roles that we have. But it's perhaps not as having as much impact as it might have in other companies. In terms of our overall cost base, I think, you know, what what it comes into is that we will mitigate that where we can through probably putting a little bit more price through. We're thinking about how we deal with price impacts.

52:44 I think the indirect effect on some of our supply chain where, you know, sort of we obviously buy a lot of fruit, does that is that impacted? We obviously have kind of manufacturers who manufacture most of our UK product for us. I think those have been priced into negotiations for the prices we're paying this year, so we we've got guaranteed prices on those. I think we'll see one, two effects coming through, but I think overall, it just probably means that we we're probably gonna put a bit of upward price pressure in than we would otherwise have liked to, but we haven't had significant push pushback from the customer base on that as yet. K. Thanks, David.

53:30 And there's a couple of questions here from a couple of people. So I'll I'll take these asking around there's been a little bit of a negative press recently and then some more this morning about the effect of slushie products on on children and as a result of it containing glycerol. So probably just to explain this to everybody. So firstly, we sell slush within our homes and home business. In our overall business, it probably now accounts for about 3% or 4% of our sales. And when the sugar let me came back in in 2018, all manufacturers of slush reformulated and took sugar out and replaced it with glycerol.

54:16 What sugar does in slush is is allows the product to freeze, and glycerol was an alternative to sugar, so it's a sweetener, and that has the same effect. But what it means is then your products are much lower in sugar and calories and fall below the sugar levy, which was what we designed from the government to do to to drive into no added sugar or lower sugar products. And about two, three years ago, there was some negative press around glycerol, it had an impact on some children. So, basically, by consuming large amounts of the slush product and then being very, very active there afterwards led to some dehydration and some young children then collapsing and having to go to hospital.

55:12 We reacted very quickly to this. So in our Star Slush brand, which is the brand that is targeted at younger children and sold in places like trampoline parks and play barns, when children are there, will be very active afterwards. And we removed our product from the marketplace. We reformulated it. We put sugar back into the product and took away the glycerol. Now, you know, we did debate that taking the glycerol out and replacing the sugar does put calories back into the product. But what we felt was slushies are bought as a treat and tend to be bought, you know, on average by consumers once, twice, three times a year. So we felt very comfortable with that. We do have a little slash product, I see, which is available in cinemas.

56:03 And you can't sell serve in cinemas, so we now it has to serve it. And we have signs on the machines saying not to be consumed by young children, and we regularly order those cinema chains. We work very closely with the cinema chains to monitor that. And, essentially, when someone is consuming the slush product in a cinema, they are intending not to run them out because clearly they're sitting down and watching the film. So, you know, we take these concerns very seriously, but I'm just reiterating reacting very quickly, and we reformulated all of our Star Wars brands to take the glycerol out, put sugar back in to minimize any risk here. K. This question here asking for an overview of the SAP system. So I I I'd like to think we maybe did do that in the presentation, but probably just to reiterate a few points.

56:58 So we went live last week. It's the SAP four HANA we've put in, which is a licensed system. We've had a transformational project running in the business for two and a half years to get ready. We've put all our best people on this project. We've worked with external consultants on the project to help us. We went live last week, and, you know, the system is working, which is great news. We are now in hypercare for a number of weeks with our consultants staying in the business for a period, to help us. And then as and when we feel we're completely ready to come out of hypercare, we will do. But as I say, really pleased with where we are, and we are looking then to as a five year payback on that £10,000,000 started in 2026.

57:50 K. Perhaps I'll hit you, David. You have a surplus on the legacy pension scheme. What are the plans for the legacy pension scheme, e g, buyout or continuation? I think the, the overall plan is for a buyout, and the trustees have been taking on advice on that probably for about twelve to eighteen months. There is at present one remaining member who will be retiring shortly. So, yeah, basically, all the members will become either pension or deferred members, and it's much easier then to to wind up. I think it's it's a project that's underway. It's proceeding quite slowly and carefully. There's obviously a lot of legal work to do around it, but, yes, the intention is to buy out the scheme and then wind out the rest of it.

58:47 K. Thanks, David. Do you see a big drop off in sales of Vimto in The Middle East outside of Ramadan? So what I would say is, you know, the key period trading for us is Ramadan. So the four weeks on the builder when people are, you know, buying the product for the thirty days, and then people come back during Ramadan to buy the product. So I would probably say about now, 70% of our business is in that eight to ten week window. But as we mentioned earlier, we are launching lots of new products, flavors, pack formats, really, importantly, zero ranges in the region on the back of health trends there and fortification of our products and vitamins to drive that all around consumption, but we never take our eye off Ramadan.

59:34 Such an important trading period for us. I think perhaps the last question here, have you lobbied the government regarding halving the IHT tax relief on AIM listed stocks. I think what I'd say here is we talk to singers who are our nomads that we have to have when we're listed on the AIM stock market, and and that they really talk to governments on our behalf and and represent us at in this space. Yeah. I think just that in addition to that, we're only supportive of the QCA, the Credit Companies Alliance on this, and, obviously, they have been lobbying quite hard on behalf of main companies. Okay. And I think that answers all the questions that have been submitted.

1:00:19 Absolutely. Andrew, David, if I may just jump back in there. Thank you very much indeed for being so generous for your time then addressing all of those questions that came in this morning. But, Andrew, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great. Yeah. Thank you. So first and foremost, I'd just like to reiterate, we are very pleased with the financial results we've delivered across all of the metrics that David highlighted on his on his first slide. And, you know, we we went out and did our Capital Markets Day the first time we've done that in the back end of last year and set some ambitious targets. And, you know, we believed the results we've delivered this year means we are absolutely in line to be able to deliver on those over the next five years and continue to drive value for all of our shareholders.

1:01:16 So I'd just like to finish to say thank you for dialing in today and listening. You know, we we really do value you as our our retail investors and the time you take to listen to the presentation and for the questions that you submit as well that allows us to, you know, make this a two way conversation. So thank you very much, and look forward to updating you at the next roadshow. Thank you. That's great. Andrew, David, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of NICHOLS PLC, we would like to thank you for attending today's presentation.

1:02:06 That now concludes today's session. So good morning to you all.