Nichols (LSE:NICL) — Investor Presentation

0:02 Good morning, ladies and gentlemen, and welcome to the NICHOLS PLC 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 those responses where it is appropriate to do so. And before we begin, as usual, we would just like to submit the following poll. And if

0:33 you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to the executive management team from NICHOLS PLC. Andrew, good morning, sir. Thank you. Good morning, and a warm welcome to our NICHOLS PLC investor presentation. Thank you for taking time out of your diaries to dial in this morning. My name is Andrew Mill. I'm the CEO and have been the CEO here at NICHOLS for now about four years. And and joining me today is Richard Newman, who's our CFO. Okay. Yesterday, we held a full capital markets day with all of the senior leadership team from NICHOLS PRISENT, and they each talked through their strategies by business unit.

1:19 A live recording of the presentation and all the videos are available on our website for you to view and digest. So our plan today is to share with you a summary of the presentation and then spend time with you answering any questions you have. The key objectives of today's session is to share with you how we are continuing to deliver against our group strategic plans and then to outline to you a set of ambitious financial numbers we can believe we can deliver over the medium terms. So in terms of the flow of the session this morning, I I will I will start, and then I will hand over to Richard who will talk you through all the financials.

2:05 And then I'll just come back in at the end and summarize, and then we'll take questions. Okay. There are probably five key points that we would like you to take away from the session today. So firstly, over a number of years, we have seen the global soft drinks market now worth over $900,000,000,000 from both a volume and value perspective prove very resilient. Encouragingly, the market is forecast to grow double digit over the next five years. And we feel well positioned with our portfolio of brands and strong geographical reach to be well positioned to capitalize on this growth.

2:53 Secondly, over the last three to four years, we have invested heavily in our business, in our operational change program to ensure we have both the capacity and the contingency from a co packing perspective. We've invested with our logistics providers to ensure we can deliver strong service levels to all of our customers. We have awaited our purchasing function to enable us to buy better and ensure we have robust contracts in place with all of our key partners. And we are now four months away from going live with the new ERP system, SAP for HANA, that will drive efficiencies across our systems and processes.

3:39 I'm very confident that this investment phase has now ensured we have a strong platform in place on which we can deliver our ambitious growth plans. Thirdly, you will have seen from our results at the half year in July 2024, we have delivered strong volume and value growth, and as a result, taken market share in our UK package business. We firmly believe with the strong innovation that we'll be bringing to market over the next few years, coupled with strong investment plans against our core products, we can build on this momentum and continue to deliver growth and outperform the marketplace. Fourthly, for a number of years now, our international package business has been delivering strong growth numbers, and we are confident through organic growth opportunities, innovation, and geographical expansion into the likes of Malaysia, where we launched later this month, we can accelerate this growth further.

4:49 And the last point we'd like you to take away is, you know, at the half year, we delivered plus 18% adjusted PBT levels versus half year '23. And we believe this demonstrates we are building strong momentum in the business, and we will share with you today a set of financial numbers that we are challenging ourselves to deliver over the medium term.

5:16 K. We're very proud that our business has a rich heritage that dates back over a hundred and sixteen years to nineteen o eight. Up north in Manchester, John Noel Nichols created a brand called Vintonic that was a combination of fruits, herbs, and spices designed to give you vim and vigor.

5:37 If you fast forward a hundred and sixteen years, Vimto, as it is now called, continues to offer consumers a unique taste in products with the secret recipe still very much at the heart of the drink. The brand today comes in a variety of pack sizes, formats, and flavors that we offer across all three of our reach to market. As well as the Corvincho brand, we also have a broader portfolio of brands that are predominantly licensed products.

6:15 Okay. We take these brands to market in two ways. Firstly, in the higher margin asset light package business and then into our out of home business. Our package business is firmly where we are looking to drive the accelerated growth, and we are confident that we can deliver this growth with the current momentum we have. Our UK package business accounts for approximately 50% of our revenues, with the other 25% coming from the international route to market. But as a reminder, a large proportion of our international route to market is a concentrate model. This means that we send the Vinto concentrate overseas to our partners, and they then do all manufacturing of the products, the distributing of the products, the marketing of the products, and the selling of the products.

7:15 We also have an out of home business, now much simpler and focused following the strategic review we carried out and implemented post COVID. And it is driving strong bottom line progression, and we have doubled our margin contribution from this business.

7:39 The various markets we operate in around the globe are diverse and differentiate us from our competitors. It also ensures it mitigates any risk we have by only operating in one country. Outside of The UK, our two major package markets are Africa and The Middle East, where we are distributed in various countries. Our rest of world business, sign posted up here, is predominantly an expat business operating in North America and Western Europe. So by way of reminder, we launched our group strategy last year and continue to remain focused on delivering against this plan.

8:29 Overarching our four group pillars is our focus on ensuring we drive growth in our higher margin package business, whilst improving the margin contribution as I've mentioned from our out of home business. Our first strategic pillar called more from the core. We continue to have headroom to drive growth in the channels, categories and geographies we operate in. And recent examples have been in The UK squash market, where we have delivered strong growth through additional distribution in key UK retailers or in The Middle East, where our outstanding Ramadan marketing programs have seen us drive growth in market share performance. Our second pillar, Thirst for New, has seen us accelerate our innovation pipeline both in The UK and Middle East, with us launching more new products into the markets to broaden our portfolios and enter new categories and ultimately become more relevant and important to our customers.

9:31 Under the fuel for growth pillar, the transformation program we've implemented over the last few years across operations and now with the imminent ERP rollout, means we have generated significant savings and benefits that we have reinvested back into our marketing and product programs to drive brand equity and strengthen our portfolios.

9:57 We have invested approximately £9,000,000 into the ERP system. This will have a five year payback, meaning we will look to generate savings of approximately £2,000,000 per year from 2026 onwards. And against our happier future pillar, we continue to make strong progress against our core priorities of people, products we are proud of and owning our climate impact. This strategy is underpinned by our strong portfolio of brands, long term partnerships such as the one we have in The Middle East where we have partnered with Aujian for over ninety years and highly motivated and engaged people.

10:44 Okay. I will now hand you over to Richard who will talk to you about the financials. Okay. Thank you, Andrew, and good morning, everyone. My name is Richard Newman, and I'm the CFO, a role that I've now been in for ten months having worked in FMCG organizations for most of my career. I'm delighted to have the opportunity this morning to share with you our financial ambitions for the group. But before I do that, I will just take the opportunity to remind you of our current year financial performance. So at our half year results presentation in July, I was able to share how our strategic focus was beginning to deliver improved financial results across all parts of the business.

11:36 Overall, adjusted profit before tax at the half year was ahead by 18%.

11:44 This reflected volume growth in The UK driven by innovation and increased distribution as well as improved gross margins across the whole business as pricing actions fully offset inflationary pressures that had built over the previous two years.

12:03 I explained how our international business revenue and profit performance would be weighted towards half two, given the timing of shipments in The Middle East related to Ramadan and tough half one comparatives in Africa where we had launched into Ivory Coast the previous year. I can confirm that trading in these markets during half two is evolving as we anticipated.

12:30 Also at the half year, I shared the successful completion of our out of home strategic review, which has resulted in a more focused business that is smaller in revenue terms, but significantly more profitable as we exited a number of accounts that were not value enhancing at the bottom line. We also announced a special dividend of £20,000,000 over and above the normal ordinary dividend that was paid in September, reflecting the overall strength of the balance sheet and the cash generative nature of the business.

13:05 So at the half year, we slightly updated and upgraded profit guidance for full year 2024. And yesterday, we confirmed that we continue to trade well and in line with that guidance.

13:24 So I'll now turn to our medium term ambitions. So we announced yesterday our financial ambitions for the medium term. When we talk medium term, we're really thinking about the next five year period.

13:40 I believe our strategy is very clear, and we're well positioned for both growth and margin progression in the years ahead. At a headline level, our ambition is to increase our revenues by almost a third to £225,000,000 improve our profit before tax margins by two fifty basis points to give a bottom line margin of 20% implying a 50% improvement in adjusted profit before tax growing to £45,000,000 over the period. And based on consistent corporate tax rates of 25%, this implies earnings per share growing to over 90p and this compares to our full year '23 earnings of 56p per share.

14:39 So from a growth perspective, we have positive momentum in the business across The UK and internationally. The importance, the importance of our accelerated innovation program and the opportunities that exist to exploit significant distribution headroom across various channels in existing markets were all highlighted in our event yesterday. We also highlighted the potential that exists in new international markets and the scale of opportunity that exists to work with selected partners in emerging markets around the world. We reconfirmed our commitment to invest and strengthen the Vimto brand through marketing and promotional campaigns to continue to build the brand's equity and drive a household penetration in all markets.

15:32 And whilst our medium term ambitions are based upon organic growth potential, we also continue to pursue any suitable acquisitions in The UK that complement our existing business strengths and provide access to emerging growth categories.

15:54 Then from a margin point of view, we're confident confident that we can continue to improve our margins at both the gross level and at a bottom line level. Firstly, from a price and mix perspective, we can see margin headroom. We are investing in more sophisticated tools to analyze and therefore better optimize our promotional spend, which effectively drives revenue and gross margins. We also believe we have some pricing headroom in our out of home business in certain UK regions.

16:30 We've also confirmed some changes to our business model in Africa, where we are converting some of our current finished goods export business into a concentrate business, improving margins, reducing import duties and acting as a catalyst for growth.

16:51 Secondly, within our cost of goods, we see additional margin opportunity. Our gross margins have suffered over recent years as inflationary cost pressures have been recovered over time through pricing. This is now behind us and the inflationary environment is more settled than it has been for some time.

17:12 The investment we're making to upgrade our ERP systems together with capability enhancements within our procurement team will significantly improve our planning and buying of materials. We are also consolidating our manufacturing base, bringing scale benefits without reducing contingency options. We also see benefits through our third party logistics and warehouse providers as we're better able to consolidate loads, increase direct deliveries to customers, and reduce stock cover levels. Then finally, within our administrative cost base, we will deliver efficiency benefits over time as our processes evolve and improve. We also believe there remains some opportunity to further optimize our out of home business.

18:03 And it should be noted that some of this margin improvement will be reinvested to boost brand marketing to ensure we can deliver both growth and profit profitability improvements over time. So finally, I'll turn to capital allocation where we've established a clear order of priority. So firstly, we will ensure that we fully service the day to day cash needs of the business, whether that be brand investment, capital expenditure, the completion of our ERP investment or day to day working capital requirements. Our asset light model has relatively low CapEx requirements, which are estimated at no more than 1,000,000 to £2,000,000 per annum on an ongoing basis.

18:59 Secondly, we will continue with our ordinary dividend policy, which remains at 50% distribution of adjusted earnings or two times cover. This policy should remain progressive growing each year in line with earnings and our medium term profit ambitions.

19:19 Thirdly, we remain active in pursuing potential complementary M and A opportunities. As I said, whilst our medium term ambitions are deliverable organically, the strength of our balance sheet will allow us to augment this should the right acquisition opportunity exist. So we anticipate holding £50,000,000 to £60,000,000 of cash resources to ensure we have the firepower to act quickly should the right opportunity arise. And then finally, given our strong cash delivery, we will return any surplus resources over and above the contingency I've just described to shareholders by way of special dividend or a form of buyback.

20:08 So hopefully, that's provided you with some context, around our ambitions and our Capital Markets Day. We remain confident in our short term term delivery, and we've set out the financial ambitions that you've just seen and we're very clear on our capital allocation policy.

20:28 So I'll now just hand you back to Andrew to conclude. Thank you, Richard. Okay. I'll just summarize now by just clarifying the priorities we have to drive the profitable growth in the medium term. So hopefully, you've taken from today is that our focus now is absolutely on the higher margin package business, and we believe we have good momentum here, and we can accelerate our growth. Across all the markets we play in, we believe we've got organic headroom, and we'll be investing accordingly to make sure we capitalize on that. Innovation and appropriate and targeted acquisition will allow us to expand into new categories that we can't currently stretch our portfolio of brands.

21:21 We've got some targeted geographical expansion opportunities, namely, firstly, are launching into Malaysia later this month and have a heavy focus on trying to open up South Africa in the short term. We've delivered margin improvements in our out of home business, now much simpler and focused, and we're confident we can continue to do this over the next few years. The transformation program we're going through and still going through as we launch new RP system, we believe will drive strong efficiencies in the business that we can reinvest. We've recently been externally accredited by Integrum for our ESG strategy, and that now is firmly embedded in our business and is a way of working.

22:13 We believe we are highly engaged people who have specialist knowledge based on many of the markets we operate in, and we're confident that those people can help us deliver these exciting and ambitious financial goals. Okay. Thank you very much for your time today and listening. And we're now happy to open up to questions. Perfect. Andrew, Richard, if I may just jump back in there. And thank you very much indeed for your presentation this morning. And what I'll do is I'll just bring back up your camera there for the q and a. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I 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 be accessed via your investor dashboard.

23:03 Guys, as you can see, 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, Andrew, Richard, 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. Yep. Okay. Thank you very much. So the first question we've had through is, have you considered listing on the LSE main market? So perhaps if I just cover the history and perhaps hand over to Richard for some thoughts, which are very pertinent based on the budget announcement. So probably as a reminder for people that the business was clearly a family business from nineteen o eight. The business did list on the main market in the sixties and and remained on the main market till about 2002 when it switched over to AIM. And the main reason at the time was at that point on the main market, you reported four times a year that was seen as quite onerous.

24:06 And I think, you know, obviously, before our time, but at that point in the sixties that the company felt there was a lot of administration and a lot of cost linked to being on the main market. So that's why they decided to switch to the a market. I'll send over to Richard with any thoughts. I think all I'll all I'll add is, I suppose, at the moment, we're not considering that clearly the announcement in the budget last week regarding, IHT relief. There was obviously some concern that that relief would be withdrawn. It was partially withdrawn, so I think that's a that's a better outcome than than might have been. So as I said at the moment, that's, you know, moving to the main market given the cost involves not high on the list of priorities. Thanks, Richard.

24:52 Okay. The the next question we've got is with Britfix coming to a takeover, do you think NICLLS has the scale to survive as a stand alone company? And I think I think, firstly, probably worth noting that, although probably no one expected that, when you think about it, not a major surprise. Few reasons for that. One was, the blurring of lines between alcohol and soft drinks. Now you're gonna go to work on the supermarket and the aisles are next to each other, and they're now absolutely going to each other. Also, Carlsberg are a bottler for PepsiCo as Britvic are in The UK as well. So there's some crossover there.

25:40 And I think in terms of where the brands are being sold, predominantly, they're going into similar outlets, whether that's into the license trade, into pubs, or whether that's into the supermarkets, etcetera. So, you know, that I I can see the logic in that in that takeover. I think from our perspective, you can you can never say never. I think our business is quite diverse, though, in a number of different countries. And, obviously, our our shareholder base, you know, the family have a third of the shares. So you you never say never, but I think we are slightly different to to to Britvic in some ways in terms of being taken over. I don't know if there's anything else you'd add, Richard, nope. Okay.

26:27 Okay. On the sustainability front, what measures, if any, can you take to reduce the single use plastic can Vimto be sold in cartons? So a couple of things. I suppose, first and foremost, all of our plastic bottles are recyclable, and 51% of our bottles come in what we call r pet, which is plastic that has been recycled. And we have a clear plan to get to a 100% r PET over the next few years. The reason we're not there yet is because, we feel it's really important that our recycled PT comes in a high quality state, but also it is sourced as close to The UK as we can make it. And the way we can do that is by supporting the rollout of the deposit return scheme.

27:28 Now the deposit return scheme is now due to go live in The UK in October 2027. We're working very closely as, through our membership of the British Soft Drinks Association with all the other retailers and manufacturers to find a solution to make the process as smooth as possible and learn lessons from Scotland. But what that will give us over time is an infrastructure in The UK where the plastic will be recycled in The UK back into the system, and then we can all achieve, a 100% recycled bottles without any negative impact on where we import those bottles from. Okay. Next question. That's one for yourself, Richard, is I very much enjoyed the special dividend.

28:15 What is the outlook for further capital return as the cash builds? Okay. I'll take that. First of all, I'm glad you enjoyed the special dividend. So I think we've worked quite hard and, I guess, clarified through the event yesterday and this morning what our capital allocation policy is. So, obviously, the the internal needs of the business first, restating our ordinary dividend policy two times cover, And then, I guess, bringing some clarity to the the the level of cash buffer that we think sensible to hold within the business. So 50 to £60,000,000 should the right m and a opportunity come along. And then over and above that, we'd look to redistribute, surplus cash back to shareholders. So special dividends do remain on the agenda, clearly dependent on whether acquisition opportunities come come around or not. So I think the only other thing I'd say on that is in deciding to do a special dividend, there's clearly other options about how you might return cash to shareholders.

29:26 Buybacks are are possible, but complicated given, our shareholding structure with with the with the family, holding. But the weight of opinion has been towards special dividends anyway. So that's certainly the favored structure at the moment. K. Thanks, Richard. So as consumers gravitate towards healthier options and functional beverages, how are you responding to this trend? And are you looking to develop new products in categories like low zero calories or plant based drinks? Absolutely. So, firstly, probably remind you that in The UK package space, all of the products we have are below the current UK sugar levy and also below the HFSS high in fat, salt, sugar guidelines.

30:18 So, yeah, we we comply under those measures. Secondly, I would say about 60% of all our products now are completely, zero calories. And we're continuing to evolve this. So we continue to even though below the sugar levy, take sugar out of the products, the vast majority, if not all of our NPD, new product development, is in, low or zero calorie products. Few examples would be as well from a health perspective. We have fortified our Vimto products over the last few years. We've added vitamins to aid immunity, etcetera. We've recently launched an energy proposition in a zero format where all of the caffeine is from natural sources such as coffee beans, and we've even fortified that, those products as well with added vitamins to give us a point of difference and a health play.

31:17 What I would also add is, you know, we've touched an acquisition. If we are to make an acquisition, it will be in The UK. And the spaces we're looking at are very much in the health and well-being, vitamin fortification areas, kind of that next generation energy, things like ready to drink coffee or natural products or very much into evening premium adult products as well, that are seen as healthy. So, absolutely, that's where our focus is based on recent consumer trends and feedback. Okay. Another one for Richard here. What is your financial structure and debt headroom? So in terms of our financial structure, you know, we obviously have a a healthy balance sheet, high levels of of cash generation.

32:08 We are a high cash generative business. There's no great history of NICHOLS, having any debt. However, having said that, we we wouldn't be adverse to taking on debt if if we needed to to to fund an acquisition, for example. We maintain relationships with with a number of different banks. No. I don't think raising debt would be, particularly difficult for us given given the sort of credentials of the business and the fact that we generate and turn cash so quickly. So, no, we don't have any debt at the moment, but we're not averse to taking on debt in the right circumstances, but it would have to be the right circumstances. K. I think the next two are for for Richard. But, firstly, you specify medium term targets in your financial presentation.

32:59 What do you class as medium term in terms of number of years? Yep. So broadly, we're thinking over a over a five year term. So, that was the sort of basis on on which we set those targets. There there's been a question, how will The UK budget impact NICHOLS financially? So if I cover that as well. So I suppose there's a few things in the budget that were were pertinent to us. I guess, first of all, we're obviously interested in what happened to, IHT relief for shares, and that's that's clear in what Rachel Reeves has now done in in terms of where that relief now sits. I suppose from a cost perspective, National Insurance increasing.

33:48 As you're probably aware, we are a resource like business in terms of most of our manufacturing's outsourced. We, as a direct employer, we're just, under 300 people. So the impact of National Insurance is there. It's a few £100,000. It's not massive. It's, it's not particularly desirable, but like every other business, we'll do what we can to to mitigate that. I think the other area that's probably pertinent, there were some things in the budget around the the soft drinks levy in The UK. And probably just a reminder that all of our products within The UK are below the existing levy. So no changes to that don't actually impact us at the moment. Right. And There is a question here about whether we'll consider share buybacks or does a concentrated shareholder register limit this? That's probably been covered. Yeah.

34:43 So answer. I think I covered that. But just to reiterate it, it's it's it's not impossible to do, but it's it's more complicated given our shareholding structure. And I think at the moment, our preference, as we demonstrated last year, was to return cash via special dividend. Yeah. So there's there's a couple more here about price and volume. If I take the first one, maybe, Richard, the second one. So a lot of the growth appears to come from price versus volume. How realistic is this? Well, I think I think it's probably worth just reminding ourselves what's happened the last few years. So I think, you know, everybody has suffered from very strong levels of inflation. We did take price to recover this. We only ever took the the the cog movement. We we didn't use it to improve our gross margins.

35:33 And we worked very closely with our customers and suppliers to to do this in the best way. And we we also recovered, you know, some of that inflation through efficiencies within the business. And probably this year, particularly in UK packaged, you know, we've grown our our market share again by by reinvesting, whether that's in NPD, so new products, whether that's in more promotional participation, or, you know, certain products going back into customers that during inflation, we had to remove because we we couldn't make any money. And I think going forward, subject to the inflationary landscape staying a bit more stable as it is at the moment, then we would look to drive a lot of our growth through volume.

36:25 There may be some areas we choose to have discussions about price with our with our customers, but it'll be more about more about volume through new distribution, promotional participation, NPD, etcetera. There's a question here then. How does the revenue growth split between volume and price? I don't know there's anything else to add. Not really. I think just the emphasis is towards volume, but we're, I guess, we're making an implicit assumption that the inflationary environment will be more benign than it has been over the last couple of years. So yeah. Okay. There's a question here about ERP. So you talk about efficiency savings from a new enterprise resource planning system.

37:13 What brand of ERP system have you installed? Is it now live? And if not, when is it proposed to go live? Yeah. I'll take that. So we are implementing SAP for HANA. So that is the platform that we've we're moving towards. The project started some time ago. The anticipated go live date is spring of next year, so March, April time. Obviously, we're we're now firmly into the sort of the building of the the system is completed. We're now into testing, training, and all all that goes with that, and that's where we're sort of spending the next few months. So yeah. We we see next year really is getting it live, embedding it, and benefits starting to flow from full year '26.

38:06 Okay. Why have you reverted to car packaging in VIMTO six packs? Really, as part of our ESG strategy, you know, we work closely with our customers and, you know, removing plastic removing plastic was one of the focus areas we had, and and we did we did go into card. However, we have gone back to plastic as the as the question asked here, mainly through some challenges we've had with the card on the product and also other requests from customers to go back to plastic. So in the long term, we will look for solutions to go back to card and and away from plastic, but the move we made initially did didn't quite work for a number of operational issues we had.

39:06 Okay. I think that might be if any more questions, a few more maybe coming through now. Okay. Can you talk about what are the big input costs of the packaged products, and how do you measure performance of the in house sourcing in terms of the metrics you look at? So I can cover that. So in terms of input costs, I mean, first of all, it's probably worth saying that broadly, we see, you know, inflation for our business going forward is is low single digit. That's what we're anticipating. Within that, there is a bit of volatility, within some some of the key commodities that we buy.

39:54 Probably the biggest two, sugar, for example, at the price of sugar has has fallen somewhat. But conversely, aluminum, which is another big element that we buy, you know, we've seen prices there increase. But the blend across all of our sort of input costs is broadly neutral or, as I said, low low single digits. And one of the things that's happened over the last eighteen months is we have, really upskilled, our procurement team brought in some real specialists there, and we can see the benefits that they're they're bringing. When you combine that capability with our new ERP investment, we think there are some benefits to be out there in the future. K. Thanks, Richard.

40:41 So the next question here let me just page down so I can read it all. I don't know if you could just page that down for us as Jake. For some reason, it's not. Okay. Thank you. Okay. What gives you confidence of successful expansion in new markets, e g, Malaysia? How do you punch through crowded markets? Yeah. So, firstly, we spent a lot of time, do a lot of research, thinking about where we would want to go, what the barriers to entry are, what the likeliness of success is. And, also, we think long and hard about how much that distracts versus growing, the business organically through some of the core priorities we've outlined.

41:27 So we don't make this decision lightly. However, if we take Malaysia, we've been looking at this for two or three years. It's at a significant population, so circa 30,000,000. It's got a large cordial market similar to the likes of Saudi Arabia where we're very big. And red berries and fruit, squash based products are very prevalent there. You know, there's there's a lot of space given to them. It's a big market. We've done extensive consumer research, you know, the Vimto flavor was accepted very well, very strongly. So we've now also we then look at the partners available and the retail landscape and how we would go to market and what our investment needs to be. So we partnered with a very well established cordial producer in market called NutriBev, who already produce cordials and fruit juice products for the market.

42:26 We've partnered with a distributor who's very well established in selling FMCG type products into the big retailers. And we've also, partnered with a a very strong marketing agency and are investing with our partners there to to drive the brand. The great news is we've got an exclusive listing launch with, a convenience operator there that's got nationally 3,000 stores, ninety nine speed mart. And once that exclusivity period has finished in a couple of months, we have got confirmed listings already with all of the major retailers. So they are some of the reasons why we feel confident and how we can punch through the crowd with those listings and then backed up with a strong marketing plan.

43:16 Okay. Looking to The UK, where is the consumer demand from? Regional or national? Are supermarkets the major buyers? K. So just so you understand The UK landscape for us. Firstly, from a distribution point of view, we have 40% of our business with the supermarkets, 30% with the discounters, and 30% with wholesale convenience, which is very purposeful because we don't want all our eggs in one basket, so we spread our risk. I think it's fair to say that, you know, the penetration we have in the North and Northwest is is stronger because of the heritage of the brand in Manchester. So we're in about one in three households in the Northwest, whereas across across the country, we're more likely in about one in five households.

44:04 However, we are and historically, people like Aster and Morrisons have continued to have been our biggest customers. However, we have made great inroads over the last few years with some of the other big supermarket chains. We recently won a listing in Tesco Express of 1,300 express stores with our squash products. We just received another listing with Tesco that gives us more distribution in the South. And literally last week, we've got secured our one liter and two liter squash products in more stores with Waitrose as well, who are clearly more, Southern based. So, yeah, clearly strong in the North, but part of our strategy is growing nationally.

44:51 Any update on the relationship with Aujian in The Middle East and the effects of conflict in the region and the importance to half two results? So our our partnership has never been stronger than it is with Aujam today. I think we're in our 90. Historically, very close links with through the family, but also now, you know, we have touch points across their business and our business that work very closely together. They are doing very well as a company. They've recently brought in a new CEO and and strengthened their business across a number of areas, and, yeah, and we work very closely with them. Yes. The region is volatile, but we've been there for ninety six years.

45:36 We've been used to this, and most people in the region see the product as a a Saudi brand, a local brand. They don't see it as a a UK or a Western brand. And as we pointed out at the half year, a lot of our shipments were weighted to half two. I'm pleased to report that, that's all on track, and our results will be in line with expectations at the year end as as we signposted yesterday. K. If you could just page down. Jake, which which competitor do you admire and why? You know, what I would say is we have lots of competitors in soft drinks, and, you know, we respect and admire all of them. You know, it's a it's a fast moving, challenging marketplace that offers wonderful opportunities, though, but we don't we wouldn't comment individually on on different competitors.

46:34 Are there plans to grow Slush Puppy into Mainland Europe? I would say no. So, we launched Slush Puppy in The UK in the package product very much to target innovation and some excitement into the carbonates category. I think our license strategy going forward will be to to rotate, so we may partner with other licensed drinks that, you know, may become relevant at a certain time. But for us, Slush Puppy is is about The UK, whereas we believe in Europe, you know, we have an expat business. Most of our Vinto products are being sold in ethnic stores appealing to people from The Middle East and Africa who are, you know, based in Europe or or, across Europe. So, no, probably not looking to take such property into Europe.

47:31 I think there there there is sorry. There is one question here just about, availability in supermarkets and sometimes being off sales. So, I mean, we absolutely absolutely pride ourselves on our service levels to our customers. We work very closely with our customers, with our logistics partners. We actually have very high service levels over 98% availability, and then we regularly hit supermarket targets. If there's the odd instance where we're out of stock for a particular reason, then we move very quickly to address that. But we we don't actually have any issues that flag towards around availability. Because if if you are off sale, supermarkets let you know very quickly. Okay.

48:19 I think that's it. Jake, is it? I don't think there's any okay. There's one more just come through. So there's one here about acquisitions. Perhaps we'll we'll take this and then and then wrap up. So acquisitions can be expensive based on growth projections. How will you apply discipline to any acquisition decisions to be aligned or exceed ROCE? Yeah. I think, I think on on acquisitions, I suppose there's two things I'd say. One is just to remind everyone, you know, the targets we've outlined are based on our organic plans. So we, know, you we clearly believe there's strength in in the businesses that exist today. However, given the cash that we hold, acquisitions do remain on the agenda. We're very thoughtful and very careful about that.

49:08 We've got some very clear acquisition criteria, that we've further refined over the course of the the last few months. So we are very disciplined about it. We're very thoughtful about it. And at the end of the day, it needs to, you know, be margin enhancing for the business. So, yeah, we will keep looking for those opportunities. Okay. Well, that concludes. Perfect. Andrew, Richard, that's great. Thank you very much indeed for being so generous of your time there and addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform.

49:55 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, Jake. So, again, first, I'd just say thank you very much for taking the time to dial in today. We really appreciate it. Thank you for all the questions. And Hopefully, you found the presentations and discussion insightful. You know, we we really feel like after a strong investment phase, we've got good strong platforms to grow on. We're pleased with the momentum. You know, Richard outlined our half year results that we were really pleased with, and that momentum continues. And, you know, we're very confident with the plans we have in place now, the financial ambitions we've set ourselves, which are stretching, we believe we can deliver against.

50:47 Okay? Thank you very much. Perfect. That's great. Andrew, Richard, 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 that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure will 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. That now concludes today's session. So good morning to you all.