Nichols (LSE:NICL) — Preliminary Results

0:00 Good afternoon, ladies and gentlemen. Welcome to the NICHOLS PLC preliminary results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time just using the Q and A tab on the right hand corner of your screen. Just simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so. Before we begin, we would like to submit the following poll. And as usual, I'm sure the company be most grateful for your participation. And I'd now like to hand over to

0:31 CEO, Andrew Mill. Good afternoon. Thank you. Good afternoon, everybody. A very warm welcome to our full year twenty twenty three results presentation. And I really appreciate you taking the time to dial in today to to listen to our update. Just in terms of the flow for today, so I will spend the first ten minutes just reviewing from a strategic and operational point of view at the year of 2023. I will then hand over to David, our interim CFO, who will take you through all of the numbers 2023, And then I will come back and look forward then into 2024 on what our strategic focus will be. And then, yeah, as mentioned, really happy to take today questions and answer those questions.

1:25 In in we've adjusted PBT for the year has come out at 27,200,000. That's 8.7% above last year and above expectations. Really pleasingly and in line with our strategic intent, we have grown our higher margin package business sales by over 6% versus 22. And the real momentum there has been driven from our international package business where we've grown sales by 16.8% versus 22, and that is having delivered a similar level of growth in in '22.

2:12 As hopefully most of you are aware, we conducted a full strategic review of our out of home business over the last couple of years. During 2023, we have been implementing the key outputs of that, and we're really pleased post that strategic review. We have a much more simplified business now, and we've delivered accelerated bottom line contribution. As we entered the year, along with lots of our competitors, we faced significant inflation at double digit levels, and we're really pleased that we've mitigated that inflation through a number of cost initiatives and pricing initiatives. And really pleasingly, in our UK package division, which is still our largest division, we have held our gross margins, which we think is crucial for future years.

3:04 Whilst delivering all of this growth, we have continued to significantly invest in our business across our brands, our infrastructure, and our people. And that means we have a very healthy pipeline of innovation, for the future, but we've also built our capability and the capacity to give us strong foundations to grow in the future. And against the ESG commitments we outlined a couple of years ago, once again in '23, we've made really strong progress. I'd like now just to take a couple of minutes to remind you of our strategy and what that looks like. So, on the left hand side is our the overview of our full strategic operating framework. But I'd like you to focus on the right hand, area of the slides, and I'll just pull out some of the salient points we'd like you to take away.

3:54 So as a reminder, our absolute focus now is about driving the higher margin package business, accelerating our growth there while driving bottom line contribution from a much more simplified out of home business that is taking up a lot less time of senior management time now. There are four key growth pillars. Firstly, more from the core, and this is about accelerating organic growth on our core brands in the categories we play in, the channels we play in, and the key core geographies of The UK, The Middle East, and Africa. On the thirst for new pillar, this is about really driving strong incremental growth.

4:41 Our innovation pipeline is heavily focused on The UK package route to market and our Middle East route to market. And then we've got targeted acquisition, which is heavily focused in our UK Package Division, and then selective geographical expansion. Our third pillar is fuel for growth, and this is absolutely about where we're driving efficiencies in our business that started with our operational change program a couple of years ago and is now focusing on our business transformation program whilst all also leveraging the asset light model we have in our package business where we outsource all of our logistics and all of our manufacturing, to different partners.

5:27 And then the fourth pillar is happier future. So we are now very much embedding our sustainability decisions into our commercial decisions to mean that as we drive growth, it'll be done in a sustainable way as both our customers and our consumers are more demanding in this area, and we are seeing lots of legislation changes coming. That then is underpinned by three key enablers. Firstly, to remind everybody, we are all about brands. Some brands we own, like the Vimto brand, and then we have some real powerhouse brands on license such as Coca Cola and Pepsi in our out of home business. In our outsourced model, we have very long standing partnerships, not more so than with the company based out in The Middle East, who we've been in partnership with now for over ninety years and are are fundamental to our growth plans in The Middle East Region.

6:24 And then also our culture with our people where we're very proud of the engagement scores we have there, which are regularly in excess of 90%. Okay. So hopefully, that gives you a good clear view of our strategy. So now let's turn to see how that strategy has played out across 2023. So if we start with more from the call, so let's start in Africa. So we're really pleased that in Africa, we've driven growth of 17.6% year on year, and that was on the back of 15% growth delivered in 2022. If we stand back now from that business, we've grown that business at a revenue line by 70% over five years, predominantly through driving half the Red Cam portfolio you you can see on screen.

7:10 Our stronghold is in West Africa. We have a presence in 13 of the 16 countries, and we very much see this as a real area of growth for us over the next few years, which we'll talk to later. In The Middle East, we're really pleased to have delivered growth of over 10%. We celebrated a 100 of Vimto and Ramadan in 2023. We had an outstanding marketing campaign that really drove the iconic Ramadan dominance, and we deepened the consumer connections that we have with the plans we launched. And really pleasingly, during the season, we grew our cordial business by 9%, and that was 2% outperformance versus the rest of the market. And then in our UK package route to market, again, we grew our business by 1% to our highest ever brand value share of 107,000,000.

8:05 But our focus here was on margin protection, and and we're really pleased that we held our margins during the year. We did compromise some market share, but we felt that was right for our long term business. We did though increase our marketing investment quite significantly to protect our equity in the long term, and we are still firmly consolidated as the number two brand in the swash category. And during the second half of the year, as, the cost of goods softened slightly, we reinvested into our promotional programs that saw us gain some market share back.

8:44 If we now just turn to the first venue, and the strategy we had in action. So in Africa, we were really pleased that we partnered with a a new player in in the Ivory Coast, which is about 25,000,000 population country right in the half of our stronghold in West Africa. We saw exceptional growth throughout the year to the Ivory Coast now being a top five region for us in Africa, and that was driven by really strong marketing on the ground and key distribution wins. In The Middle East, one of our big strategic focuses is about increasing our all year round consumption on different packs outside of the cordial Ramadan dominance we have. We've launched a number of new flavors throughout the year, so a lemon berry flavor, a blue raspberry flavor, and we've also launched some zero ranges in the carbonate pack formats to really start capitalizing on the changing consumer needs in the region where where diabetes is is quite a challenge.

9:50 And and in the, as well as being very strong in cordial, where we're the number one brand, we are firmly consolidated as the number two brand in the kids category across the state. And then in UK package, as I mentioned, we were heavily focused on protecting our margins, but we made, two moves, from an innovation point of view. Firstly, we took our Vimto proposition into the fast growing energy category with the launch of two five hundred mil products in a can. Natural energy, so then the energy comes from from coffee beans. We fortified it with vitamins. Both products are under HFS guidelines and the sugar get levy guidelines, and we have a unique proposition where we blended the unique Bibto taste with that energy proposition, and and that proved very successful for us last year as well as taking the iconic Slush Puppy brand from a Slush portfolio into a package range now into our our UK business. And again, we launched two flavors very successfully throughout the year.

11:00 In our fuel for growth, three key highlights. One would be this simplified out of home business. So we grew our profit by 43% versus full year '22. I've improved our bottom line operating margin by broadly four percentage point, which is really pleasing for us. We've simplified the business off a lower sales line now as we've exited unprofitable accounts. We do have a very strong portfolio of brands here, Coke, Pepsi, Vimto, Slush Puppy, and we are confident that during '24, we can take this up to a 14 to 15% margin business. One key initiative we have in the business as Sage comes to end of life for us is implementing a new SAP, for HANA system.

11:50 This will transform our business from an efficiency point of view. We go live in the first quarter of twenty twenty five. We do believe we'll drive significant benefits, when we get to 2026 as the system and new processes settle down in the organization. And then on our operational change program that's been in play for a couple of years now, we we are now at full headcount in our procurement team, which we've taken from one person up to five. We are seeing some definite benefits in terms of the value we're delivering both from a cost point of view and but also from sustainability benefits and how we're buying, but also in terms of the service levels we're now getting as we've gone through the tender process on all our outsourced manufacturing and logistics, and that is delivering key benefits from service levels that is driving additional sales.

12:48 And then from a happier future point of view, lots of initiatives across our everyone matters pillar, products we're proud of pillar, and owning our climate impact pillar. We're now really embedding our everyday decisions, here, and a great example would be, as we've mentioned earlier in The Middle East, where we've launched a Vintel Zero range, which will drive both commercial benefits, but sustainability benefits as we reduce the amount of sugar in our products in that region. Okay. I will now hand over to David who will step you through the numbers, and then I will come back and talk to you about our future strategy. Thank you. Thank you, Andrew. Just before we run through the highlights, a summary of the year. We think it's a pretty good year. We delivered above early expectations.

13:38 I think first expectations were that profit would be flat against 2022. We've obviously delivered additional £2,000,000 worth of profit. And I think the important things there is that was despite there being a number of challenges to the business during the year. I think in the first half year, obviously, the business had to deal with high levels of input cost inflation, and I think that was passed over well into our and sensitively to our customer base. First half year, we had to reformulate our slush product to put sugar back into it, and that cost us round about £700,000 in additional costs. And I think certainly, again, later in the year, there's some uncertainty in Middle East markets, which I think we've managed that quite well.

14:30 Overall, made progress in all three routes to market. I think that was quite pleasing, especially given that the growth came from where we had planned it to come from. And I think, importantly, that profit number was achieved after increased investment in our packaged and packaged business unit both in UK and international. We spent something like an extra million pounds on marketing and probably 4 to £500,000 on additional sales sales and marketing staff within those within the package business. Revenue overall up 3.5%. Good performance. We'll spend a bit more time on that later. Adjusted profit up 8.7% to 27.2.

15:17 Obviously, an improvement in operating profit and interest receipts in there. PBT margin up to 15.9% from 15.1. We'd expect that number to maybe move a little bit further forward next year. Important part of the NICHOLS business, our ability to generate cash. Free cash flow during the year was 20,900,000, up from a slightly lower figure last year of 14.6. And we ended the year with £67,000,000 worth of cash on the balance sheet. We'll spend a bit more time on that later. Return on capital from the business still strong. Earnings per share, 56.4 p. And given the two times dividend cover, total dividend, 28.2, which gives us a final dividend of 15.6 p, up 2% on last year.

16:08 That 2% is obviously lower than the increase in PBT in common with other businesses. Corporation tax rates have gone up in the year, it's the corporation tax that makes the difference to that. Okay. At revenue, overall, 3.5 up. That's £5,800,000 worth of increase. I think we're pleased that that came mostly from the package business and standout performance was from international, which was up 16.8%. And once again, we achieved double digit growth in all our three main geographical areas. Middle East, up 10.3% Africa up 17.6%, and rest of the world up 26.5%.

16:56 Rest of the world is basically European and USA business, which is why it's a good business. It's not currently a strategic area of focus for us. UK up 1.3%. I think those of you who have followed us before will understand that we followed a value over volume strategy there that we were keen to protect our overall margins, and we were while we didn't wish to lose volume, that was likely to be a bit of an outfall, but we have protected margin in that area. Out of home was down 3.4%. That was in line with the expectations during the implementation of the restructuring. We have

17:40 closed one or two accounts where, obviously, they had a a decent sales figure, but we felt that because of the high cost of service, we weren't making appropriate bottom line margin from them. So an expected reduction there.

17:57 Looking at PBT, up 8.7% to 27.2. Gross profit was up to £72,200,000, about £1,200,000 higher.

18:14 Overall, gross margins were slightly lower at 42.3% against 43% last year. I think we're not overly concerned by that. That's mostly a function of mix within our businesses. UK margins were level. International margins were slightly lower. But remember from the earlier slide, we did grow sales quite substantially in West Africa. The West African business is generally lower margin than the Middle East concentrate business. So very much a mix change in terms of the geography there. Out of home, slightly lower margins. The national account business we walked away from is relatively high margin but with a high cost of service. So overall, margin is slightly lower. We expect that to rebuild during 2024, though.

19:06 Distribution costs. Distribution costs were 1,100,000 lower. I think that reflects two core things, lower volumes in UK and out of home, obviously reduced the carry carriage there. And we've also had lower fuel costs, particularly in the second half of the year. The fall in distribution cost is one of the outfalls of the operational change program. Our new procurement team went through a process of re tendering our logistics, and there's a number of benefits coming through from that in the new contract we've got. So good progress there. Admin costs up 1,700,000 to 37,400,000. Most of that is new investment in the business, if you like, that our people costs are higher. We've recruited some additional people, and, obviously, the cost of living rises.

20:03 I think extra sales and marketing investment within the two package routes to market, Some out of home savings in out of home affecting that, but also the additional costs in the reformulation of the slush project product in h one. And we have put away a bad debt provision against some debt due mainly due from the Yemen in the second half year, and that's obviously increased costs in that area. We'd we'd hope that we would recover some of that cash going forward. Overall operating profit, 25,200,000, up 2.4%, and net finance income increasing by 1,600,000. Obviously, the icing on the cake that we are holding quite a lot of cash, and we've generally received better interest rates across the year. So good overall progress, 27,200,000.

21:03 A new slide. I think we first showed it at the half year. We've revised our segmental reporting to more clearly match the strategic plans going forward. So, hopefully, it gives a bit little bit more clarity on matching financial performance to forward bit forward business progress. I won't deal with sales as we've already talked about those. I'll I'll focus more on profitability within each of the segments. Within package, I think gross margin similar to last year, a slight degradation we talked about in international because of the red can business. But operating profit overall up around about £2,000,000 on package business. Operating margin maintained at a very healthy 28.6%.

21:57 Within that, considerable investment in distribution development within international in new products in both international and The UK as Andrew's outlined and in marketing and people generally. Slight negative of the bad debt provision in international within that number, but obviously, we're still pleased that we're achieving a 29 28.6% margin there. Out of home profit at 1.6% 1,600,000. Good performance really through the restructuring that we've achieved a profit increase on lower sales. That's really risen because of the withdrawal from accounts where, yes, we had decent sales, but there was a high cost of service. So pulling out of those has increased overall profitability.

22:46 We're seeing the benefits of the restructuring coming through both in terms of cost reduction. And I think importantly, in terms of business focus, it's now a much more streamlined business. There's a new management team in there and much easier business to run than the quite complex one we started the year with. Overall margin on out of home, 11.6% up from 7.8 last year. I think in medium term, our target there is to turn that into a 14 to 15% margin business. Clearly, not the same profitability as package, which is why package remains our principal area of focus, but it's certainly not the problem the the problematic business it probably was in 2022.

23:34 Central costs are higher. Been quite a lot of investment in the business that we've talked about. I think certainly, more people costs and cost of living rises within that bigger marketing spend and certainly investment into into IT in terms of increased security, into HR, and as we've talked about into our procurement team. The procurement team is starting to deliver against that cost against that investment

24:04 in there. So overall, most of that increase is in terms of targeting future growth in line with the strategy. Quick comment on exceptional items. There's three there. The out of home strategic review implementation is the charges have been, what, about 1,800,000 through the year. That really reflects redundancy costs, depot closure costs, and some stock write offs. So that project is now proceeding. Not a lot more cost to come through on that. Business change program and system development, 1,700,000. The program, really, what we've done on that this year is we've gone through the review phase. We've gone through the vendor selection phase, which is

24:56 obviously, we've chosen the SAP HANA pro suite and also the business design phase. I think remaining phases 2024 will be quite busy on this project that we've gotta do the fit to standard and development work. We've then gotta go through the date sort of data management builds and then fairly extensive training and testing. So we expect to spend about another 5,000,000 during 2024 on the business change program.

25:31 And finally, a credit offsetting nut. Those of you who've been invested in the company for a while will know that we had to wind up a historic incentive scheme and repay some tax to the to HMRC on that. That tax was recover is recoverable from the people who are in the scheme, and we're pleased that we've managed to recover start to recover the the cash under those indemnities. The 600,000 credits is a release of a provision we'd put against against irrecoverability there, so a net credit to profit.

26:13 Net assets and capital employed. I think overall, good performance. Cash has obviously gone up from 56 to 67,000,000. The elements of that EBITDA are slightly lower, but overall strong free cash flow. I think NICHOLS is a business that generates cash steadily.

26:37 So the free cash flow, 20,900,000. Working capital was stable. There was a reduction in inventory, but a slight increase in debtors. CapEx, quite quite a low year for CapEx. The biggest historically, the biggest demand for CapEx in the business has been the out of home business, and we're now moving to a phase where, you know, we we plan not to invest significantly in there. We do think overall

27:05 that CapEx will be slightly higher in 2024. I think the 500,000 is a very low figure, but it it it shouldn't it it won't be going back up to historic levels. Return on capital is still good. Thank you. Okay. Finally, on to dividend, split this into two halves. Our standard dividend policy remains at wanting to have a broadly two times cover, and we've maintained it exactly two times this year. Earnings per share of 56 p gives us total dividend of 28.2 p and

27:43 which points to a final dividend of 15.6 p, up about 2% on last year's final. As I said earlier, that's lower than the PBT rise because of the increase in corporation tax. And just moving on to capital allocation, I think the the board has been reflecting on whether the levels of cash that we're holding on our ongoing cash generation gives us the right sort of outfall. You know, we we have 67,000,000 in cash. We generated another 20,900,000 this year. I think historically, over the last ten years, free cash flow has been something around a £180,000,000, averages about £18,000,000 a year, and we paid out in terms of dividends and share buybacks round about a £110,000,000.

28:36 So we have been accumulating cash. I think the business is aware of wanting to strike the right balance between ensuring that we've got the cash for future investments in the business, both in terms of organic growth and acquisition, but they're also not holding too much cash. Obviously, we earn a good return off our business investments, but we're we're only getting market rates of interest. So it's not particularly efficient for us to hold high levels of cash. The board is going through a process of assessing how much cash we need to hold going forward, how much cash we need to hold for our investments, we believe that that there will be a level of surplus cash, which we would intend to

29:26 return to shareholders at some point during 2024. I think, overall, though, there'll be further information on that when we do the interim numbers probably in late July, early August. Excellent. Thank you. Thank you, David. Thank you, Andrew. Okay. So I will now just spend ten minutes perhaps looking ahead to what we've got planned for 2024. So the key strategic growth drivers I outlined earlier will will remain. And what I'm gonna do is just perhaps pull out three or four of the key initiatives that are in play next year against those drivers. So if we start in in more than the core. So first, we're gonna just focus on on Africa. So as a reminder, and as you can see from from the map there, we have strong presence in in West Africa, about 13 countries there where where we currently operate.

30:19 As I said earlier, we've driven 70% growth from those at the region over the last five years, predominantly through our Red Cam portfolio. What we are seeing on the ground though is competition is intensifying. Import tariffs are forever increasing, which reduces the cash available for investment by our distributors and partners in country. And and more and more, we are seeing supply chains becoming more fragile. We currently produce our product in in Europe, and costs are going up there, and it's becoming more challenging to import into the country. So we are reviewing opportunities to, move the production of our cans closer to the point of consumption in the market.

31:07 That will put increased value into the overall chain to to drive growth. Clearly, from a sustainability point of view, we will not be shipping lots of finished product across the water, but we'll be driving more of a concentrate model. And to support that, we're, for the first time, also invested in putting some of our own people on the ground and set up a a new legal entity, NICHOLS PENEGAL, where we will have people working in conjunction with our partners to drive key marketing activities. And and we see this this part of the business as a key focus for us and a key driver of growth over the next three to five years. From a thirst for new point of view, as I outlined earlier, we see innovation being crucial to our UK package business and our Middle East business.

31:59 If we start in The UK, there's a twofold strategy here. Firstly, is to launch innovation to protect the categories we operate in, but also then drive innovation into new subcategories that are predicted to grow strongly in the future. So if we start in UK carbonates where there is, you know, competition is very tough, and here, a lot of big, big competitive players in this market. But we have a program last year where we're going to launch a new sub brand called Vimto Discoveries, which is about combining new and exciting flavors with well known flavors and to allow our consumers to discover those new flavors. That will launch in a 500 mil and two liter PT format. And we are going to take our successful Levi, brand into cans for the first time as cans are fast growing.

32:53 And we've rebranded all of our packs, and that is launching during q one. And on the back of the success we have with the Slush Puppy brand, last year, we are launching a new, sour apple flavor in a one pound PriceSmart pack. And we are doing our biggest ever, on pack offer across over 30,000,000 packs where we're daring our consumers to love the taste of our products or we guarantee them their money back, and that is heavily focused on, bringing new consumers into the brand. In squash, we're launching a new blood orange, lemon, and lime variant that will give us an eight strong, lined up now, which really increases our visibility and availability on shelf. And then the big try me hot campaign in the winter months, which capitalizes on the outside of the key summer trading period.

33:48 We're also going to launch into the kids fixture with two packs in a six times two fifty mil format in both tropical and and now original. And this is a really important strategic move as we bring kids into our brand at an earlier age. And then on the success of our launch into energy with Vimto, which we will drive hard in the year, we're also bringing out a Levi energy product. It's in a 500 mil pack cam format, a one pound price mark pack launch, adding Caribbean Crush with hint of ginger and our well known Jamaican sunset with a hint of chili into into the fast growing subcategory of energy.

34:38 In The Middle East, we have a number two position in the kids fixture, and we are going to launch our lemon berry flavor into the PT 200 mil format and also blue raspberry into our Tetra business, giving us a a much stronger line up across all of those platforms. On the back of the changing consumer, takes within the region, we will again put a strong emphasis on our cordial zero format and squash and and with the launch of a brand new marketing campaign. And in carbonates, we are building on the success of the launch of the Vimto Zero. We've seen in, '23 And in '24, we're going to have an all year round value offer where we're offering three thirty mil cans for the price of two fifty mil to drive penetration into this category.

35:33 Continuing in first venue, we are continuing our drive on geographical expansion. So we are going to launch into Sierra Leone, which you can see there on the map colored in green, which is a 10,000,000 population country in the heart of West Africa, and that will take place during the first half of twenty four. In Central Africa, where we're less dominant, we are looking to launch into The Congo in the second half of twenty four, and and then we are making really good strong progress on trying to launch in South Africa. It's a 60,000,000 population, very high levels of capital consumption there, and and we are hoping to launch there, like I say, in the second half of, 2024.

36:21 From an acquisition point of view, as a key pillar of that capital allocation strategy, our focus here is about UK package. We are looking to launch into categories that are predicted to grow faster than the soft drinks category over the next five to ten years. And we are looking to acquire brands that have done a lot of the hard yards and and kind of got to that 8 to £10,000,000 of revenue with a reasonably strong gross margin. But we then feel we can scale those brands with our sales and marketing reach, but it also will give us a stronger portfolio and, therefore, strengthen our relationship with our customers, as we we go into categories where Vimto can't stretch.

37:11 In happier future, we will continue our strong focus on everyone matters, products we're proud of, owning our climate impact. Our sustainability decision making is embedded into our commercial decision making. A great example will be in that middle pillar next year where we're looking to accelerate what we do in our squash portfolio and how we how we increase our concentrate levels to reduce plastic in in the in the packaging to to to move away from more plastic in our in our products. Okay. So just to finish then and summarize before we take questions. So we're really pleased with where we've ended up and really pleased that the soft drinks category in total remains very resilient in '23 and has continued to perform well in 2024.

38:05 We have a very clear and focused strategy now about accelerating growth in our higher margin package business, driving bottom line value from our out of home business and driving hard efficiencies through our operational change and business transformation program to reinvest back into our business to accelerate growth. We continue to be profitable and then improve all of our margins, and as David outlined earlier, generate cash. 2024 trading has started well and in line with our expectations. And based on all of this, we are very confident in delivering our long term growth ambitions both in 2024 and beyond. Okay. We thank you for listening, and we will now open open up to questions. Thank you. That's great. Andrew, David, thank you very much indeed for your presentation, and I will now just bring up your camera for the the q and a. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. Just wanted David and Andrew to take a few moments to review your questions that you submitted already. I'd just like to remind you that the recording of this presentation along with a copy of the slides and the published Q and A, will be available via your Investor Meet company dashboard.

39:17 Andrew, David, you've had a number of questions from investors. So thank you firstly to everybody for your engagement this afternoon. And if I may just hand back to you, Andrew, just to read those questions where it's appropriate to do so, and I'll pick up from you in the end. If you just hit escape, and hopefully, that will bring up the q and a tab for you on the right hand side of your screen. If you just scroll to the top, and then, I'll pick up from you at the end, sir. Yeah. Okay. Thanks, Mark. So the the the way we'll approach this is, I'll I'll read out the question, and then between David and myself, we'll we'll we'll look to answer that. So the first question we've had here is could you provide more details on your investment plans for the next for the next twelve months? So, yeah, absolutely.

40:02 I think I'll start this and then perhaps perhaps bring David in on on some areas. So, yeah, I think I think from an organic growth point of view, yeah, we're we're we're very clear about accelerating our growth against the key pillars we've we've outlined. So in The UK packaged area and The Middle East area, it's very much around that innovation pipeline and driving innovation into to us to consolidate the positions in the categories we play in, but also then take our our plans into, you know, new categories. So that will be product launches, but then also supported with strong marketing campaigns both above the line in terms of advertising, but also on the ground then in driving driving pickup of our products in in stores and and outlets.

40:50 Geographically, we are looking to expand into the countries we've mentioned, so we'll be investing with our partners on the ground in their marketing campaigns, but also into resource as well in in those areas to make sure we we drive our marketing plans very, very hard. Again, as we've outlined, again, we've invested in people to drive our operational change program, and that will continue next year. And, although an exceptional cost, we will we'll invest heavily into, the business transformation program to to put the new system in place to drive benefits as we get into, 2026. I don't know there's anything else you you'd add to that, David, that we've not covered. No. I think it's really just to say that a lot of the investment we do is revenue investment because we operate an asset light model. We don't we don't believe we've got a very high CapEx requirement going forward.

41:46 I think the largest single project is the business transformation project, which I think I said earlier, will we expect to spend about £5,000,000 this year, but that will be treated as an exceptional cost. It's not something we can put to the balance sheet. I think, you know, that we will be doing some CapEx, but it will be fairly limited. I think there'll be an investment into working capital as the business grows. I think though overall, though, it's very much around, you know, product range development and distribution development in in international. So I think, you know, sort of just picking a few figures up. This year, we invested a million pounds more into marketing, mostly going into new product development.

42:33 The intention is that to add a further million pounds to that in 2024. So I think coming back to, again, to one of the other points I made, you know, we're very clear that we want to reinvest profit back into longer term development. One of the outfalls of the out of home restructuring is that that is now providing more profit, and that profit will go back be reinvested back into the package business. David? Next question is, can you elaborate on any specific milestones or initiatives you anticipate achieving this year that will drive long term value for shareholders? Yeah. I I think I think some of the key ones there would be, obviously, the innovation that we've talked about. So I think that will be crucial into those especially those new categories and also some of the geographical expansion we've outlined as well. So so Sierra Leone, we talked about, and then the the DRC in the in the second half of the year.

43:40 Couple of questions here. So can you talk about the loss of sales to own branded products from the supermarket? Yeah. I think it's a category level. Squash is is a is a category that has quite a high level of own label products. So about 40% of all the sales in the squash category, that's about £500,000,000, goes to own label. And what we did see in 2023 was the own label sales did grow faster than branded sales and probably on the back of the cost of living crisis. I think as we come into this year, that started to slow down, and people have gone back into branded products. I think one of the advantages we have with our unique taste of Vinto brand, people find it very, very difficult to copy.

44:30 So we don't see a lot of switching out of our brand into those own label own label sales. So that that puts us in in quite a strong position. And next question here is what magnitude of special dividend should we expect. So, David, I don't know if you want to I mean, the I suppose you want that? Yeah. The short answer on that is that, you know, that number hasn't been particularly identified yet. We're thinking through the investment needs of the business in terms of organic growth, possible acquisitions. I think it's important to understand that one of the principles of NICHOLS as a company is we don't want to run a any gearing within the balance sheet. It we're quite traditional in those terms.

45:15 And I think that's what most shareholders are on board with that. So that really is subject to ongoing debate, and that's, you know, essentially that hopefully we'll resolve that over the next six months and be able to give further information with the half year figures. Third point there is do we have any trapped capital in Africa? This again, the short answer is no. We we don't have any cash there. I think there are other listed companies that are having trouble getting cash out of Africa. We do have we have seen a slight slowing of receipts from some of our customers. Those have been provided for in our accounts.

46:01 So yeah. But you you're talking about something in the hundreds of thousands rather than anything substantial. Pretty well well, all that $6,067,000,000 pounds is held in UK bank accounts. Okay. Thanks, David. There's there's a couple of questions here around M and A and how much is that part of our plan. So, yeah, as part of that capital allocation strategy, m and a is is is very much part of that, very much about The UK package space where we want to try and go into categories that Vimto can't stretch into, but we have identified through lots of consumer research and category analysis. We we see us gonna grow quicker than the overall soft drinks market in the next few years. So very much in the health and wellness space, I would I would suggest that's where we'll be looking as as part of that.

46:56 Another question here about any plans to sacrifice margins to reclaim lost market share. I think I think there where we have lost market share last year was was perhaps where we we couldn't make the profit we wanted. We we are reviewing that at the moment. And, you know, as COGS soften, we will reinvest probably through promotional programs there. But we are also really pleased that we have already gained some distribution wins with some of our customers, particularly in the squash play space on the back of our performance next year. So it'll be a balanced approach there. There's a question here about can we give a little bit more detail regarding recovery expectations on the HMR scheme and over what timelines?

47:46 Yeah. Quite happy to answer that. The outstand the gross outstanding at the end of the year was about 1,100,000. We've recovered a fair amount of cash this year. That's due to be paid over certain the majority of that's due to be paid in 2024 with a little bit in 2025. We have contracts in place to recover the majority of that. So it's not just an indemnity. It's now backed by a contract, And we've got a remaining provision there of between 3 and £400,000. So at present, we're confident that provision shouldn't be needed. We're just keeping it down. You know, there might be a further release going forward. But at present, we think we've got we're the right side on that one.

48:34 K. Thank you. There's a question here asking what channels do we sell to in Africa and The Middle East. In in The Middle East, so, you know, the market is segmented. You know, it's called kind of modern trade, which for us means probably supermarkets and traditional trade. We we we do sell into into both there. Probably in in Middle East, we have really good presence in the major supermarkets with our with our cordial products and our kits and carbonate products. But equally, we have really good distribution into the into the traditional trade as well, so it's pretty much split there. In in Africa where we trade in West Africa predominantly, it's much more of the traditional trade there.

49:19 So that's, you know, people going into the wholesalers in the morning and literally selling day by day off kind of stalls on the market side or into, you know, more local kind of corner shop areas as well. So that's why we we trade in Africa. And then there's another question they're asking us about where do we see the biggest opportunity for volume growth. Well, you know, absolutely, in our package business, we absolutely won't be focused on volume growth in out of home because that's about bottom line. I think probably, overall, we see Africa as our biggest opportunity to to to grow those individual sales, but confident with our plans that, again, we'll grow volume back in in The UK packaged area and and Middle East area. But the accelerated growth I still see coming from that African business.

50:11 And I think I think there's one question here about any any worries about going into the energy category, and maybe that could damage the the family perception of our brand. You know, we thought long and hard about going into into energy. Firstly, energy is one of the fastest growing areas of the marketplace and has been for a number of years. I think we've thought carefully about how we go in. So we've launched that with a product that is a natural energy source. It's fortified with vitamins. It's is below the sugar levy in both our zero product and our original product. And our the caffeine levels in there from a natural source are are lower than what you would get from an average cup of coffee as well. So, we're we're quite comfortable there with, where we the proposition we've taken into that and don't don't think that will, will impact on, on our overall perception of the business.

51:13 Okay. I think that is all the questions that are posted at the moment. So, really, thank you for the questions, and hand back to Mark now. That that's great, Andrew. Thank you very much indeed. And, course, if any other questions make themselves available, we'll provide those to you after today's meeting. Andrew, David, I know investor feedback, as usual, will be very important to you. I'll shortly redirect those on the call to give you their feedback. But I wonder before doing so, if I may, Andrew, just come back to you just for a couple of closing comments. Yeah. Thank you. So, yeah, first and foremost to say, hope you found the presentation informative today. Really thank you for taking the time to dial in and listen. Thank you for the questions. And just to finish to say, you know, we're really pleased with our results and really confident in our strategy and confident that, you know, in the years ahead, we will continue to deliver profitable growth. Thank you very much. Thank you. That's great. Andrew, David, thank you very much indeed for updating investors. Ladies and gentlemen, could I please ask you not to close the session as we now automatically redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations. This will then take a couple of moments to complete, but I'm sure it'll be greatly valued by the company.

52:19 On behalf of the management team at NICHOLS PLC, we'd like to thank you for attending today's presentation and wish you all a very good afternoon.