Nichols (LSE:NICL) — Preliminary results for the year ended 31 December 2021

0:01 Good afternoon, ladies and gentlemen, and welcome to the NICHOLS PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab just situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. The company may not be in a position to answer every question they received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investment company dashboard, and we will

0:32 notify you by email when these are ready for your review. Before we begin, I would like to submit the following poll. And if you'd give that your kind attention, I'm sure the company will be most grateful. And I'll now like to hand you over to Andrew Mill, CEO, and David Rattigan, CFO. Good afternoon to you both. Good afternoon, everybody. Good afternoon. A warm welcome to our 2021 results presentation, and thank you for taking the time to dial in this afternoon. Okay. In terms of the flow today just move the slide up. Yes. Three parts of the presentation. So I will kick off giving you an overview of our strategic and operational performance in 2021. Will then hand over to David who will talk you through our financial numbers for the year and also give you a financial outlook.

1:20 And I will come back in and just clarify our strategy going forward and sum up. And then after about forty minutes, we will open up the floor to questions. Okay. So if I can kick off today, by first just giving you a top line executive summary of the key takeaways. So firstly, we're really pleased with the growth we've seen again in 2020 while on Vimto, both in The UK and across all of our key international markets. A particular standout for us would be the accelerated growth that we've seen in Africa where we've delivered 17% sales revenue growth versus the prior year. Again, in one of our major markets, The Middle East, back in December 2019, there was a sweetened beverage tax that was introduced that put 50% on the retail price of all of our products.

2:17 We decided to invest with our long term partner, the Aujian Coca Cola Bottling Company in that region to help mitigate the impact of that cost. And I'm really pleased to say, as we've exited 2021, we're really pleased with how we protected our market share in country during that period. Throughout 2021, we've invested heavily again in our VINCHO brand, both at home and abroad in a series of integrated marketing campaigns to drive the equity of our brand in the long term. We've also made strong progress on our happier future ESG strategy and outlined a number of commitments that we're delivering against, on that program. We've also, in 2021, started investing in what we're calling our operational change program, and that's to make sure that we've got the right infrastructure and the right foundations in our business to support the growth we want to deliver over the next few years to ensure great service levels and availability of our products.

3:24 We know over the last two years, our out of home business has been seriously impacted by the coronavirus pandemic through outlet closures, restrictions due to social distancing, and outlets and and outlet footfall reduction in that period. As a result of that, we have seen 70% growth '21 versus '20. But versus where we were in 2019, we are 30% behind that progress. So results of that, we've put an impairment review in place. We've impaired all the goodwill, on our balance sheet. And most importantly now, we've commenced a strategic review of that sector to ensure we grow back stronger and more profitably in the future.

4:11 Again, in '21, we've maintained a very strong cash position to similar levels that we've seen pre the pandemic, And the well publicized inflationary cost that are hitting the whole of the industry at the moment, we've put plans in place through cost reduction programs or appropriate pricing strategies with a range of our customers to help mitigate those costs. Okay. So those are the key headlines I'd ask you to take away today. What I'm now gonna do is just give you a bit of an update on what's happening in The UK package market using the Nielsen data, which measures EPOS brand value sales at retail. So the key takeaways from this slide would be, once again, in 2021, the soft drinks market has proved incredibly resilient, driving value growth of eight and a half percent.

5:08 We've seen shoppers buying soft drinks more often at higher prices, and you see that play out in the volume is up 2.3%, but value, as I say, at eight and a half. So that metric playing out. In terms of some of the subcategories within soft drinks, some of the real winners have been the energy category, which has grown at 15.9% through lots of innovation and flavor expansion. And coffee, we're a nation of tea drinkers in the home, but definitely a nation of coffee drinkers out of the home. And that cold ready to drink coffee category has shown great progression delivering over 32% growth during '21. The subcategories that have not performed as well has been squash, and that is due to it lapping a really strong 2020 as lots of us stayed at home and consumed more squash.

6:06 But over the two years, squash category has grown at seven and a half percent to prove resilient. Also, mixers, during 2020, lots of us consumed more gin and tonic in home. And during 2021, we've seen people return to the hospitality sector so that growth not come back. Okay. If we compare from a Neil perspective how we have performed, firstly, I'm really pleased to say that across the three subcategories we play in, that being squashed, fizzy flavored carbonates, or our ready to drink still juice drinks, we've delivered value growth across the piece. We've also, for the first time in our history, delivered over a £100,000,000 worth of brand value, and we've done that driving value at 6.3% versus volume at point 1% and may therefore making sure we've not given our margin away.

7:08 Over the last five years, we've driven growth through bringing new households into the brand, and you can see there are nearly 900,000 new households. And really importantly, 300,000 of those households have been in the South, which is where we've had a targeted approach to grow the brand. Across the portfolio of squash brands and the main players, we are now the number two squash brand behind Robinson's. And during 2021, we've been the fastest growing squash brand as well.

7:46 If we dive a bit deeper into our UK package performance, across The UK package arena, we have about 40% of our sales in grocery, 30% in discounters, and 30% in wholesale cash and carry, which means our risk is quite well spread within The UK market. Definitely at the corner of our growth this year has been the new branding we've rolled out. We fortified our squash ranges so they now have vitamin c and vitamin d and on the back of consumer research. And a few years ago, we only had our our original purple flavor and no added sugar. And we've extended that portfolio now to offer seven different variants.

8:31 And as you can see in the second picture there, that has really driven the visibility and availability of our brands in the marketplace. During 2020, our independent convenience stores often gave extra space to toilet rolls and pasta, and therefore, we lost distribution. And we've had a concerted fan sales push during 2021 to make sure we win that distribution back. And I'm pleased to report we've won over 13,000 points of new distribution both in independent retailers, but also in some big major forecourt retailers. We've also focused on driving weight of purchase during 2021, and we've awaited, our multipack cans to an eight pack in Asda.

9:20 And also for the first time, we've taken our flavor portfolio in squash into our two liter variants in Alstair, and we fully expect to see that rolling out further across subsequent years. And finally, through our category work, we've identified an opportunity in what we call the power up category, which is heavily focused on protein drinks and protein shakes. Some of the insight there has been that people enjoy those products but find the taste quite bland. So we partnered with the My Protein brand, which is owned by the Hut Group, and through their direct to consumer website, have done a brand licensing partnership where we've done limited edition flavorings on some of their protein drinks with Vimto, which have proved extremely popular, and I'm pleased to say some of those will return in 2022 with permanent listings.

10:16 We've also underpinned our campaign in The UK with a brand new fully through the line marketing campaign called Find Your Different.

10:26 It's been on TV, video on demand, right through to in store, And we've increased both awareness, consideration, and advocacy with our core consumer target of moms. And what I'd like to do now is just share with you one of the outbursts that aired live on TV in May this year.

10:51 They might like building duvet forts or rocking out in bands of sorts. And whilst they're trying different things, why not a squash with added vitamins? A squash which says to try it all, be it basket weaving or basketball. Bimto, find your different. Okay. Thank you. So as we look further afield and out to The Middle East, which is one of our key markets, what again we have seen in 2021 through the investment we've made as well around sweetened beverage tax is outstanding execution in marketplace. And whereas traditionally, the execution we've seen in Saudi Arabia, which is our major market, the picture you see there is in Kuwait.

11:40 So that execution reaching out to some of those broader markets. We've also, for the first time, made a move into a no added sugar, cordial product, and also, our Tetra packs have been in no added sugar. And as we move into 2022, we're going to be launching a Vimto Zero cordial and also Vimto Zero carbonate packs. And, again, we've seen a very strong and integrated marketing campaign around sweet togetherness, which is celebrating families coming together at that key Ramadan period. In Africa, where we've seen accelerated growth, that's been on the back of a fully integrated marketing campaign across Valentine's Day, Ramadan, Tabaski, and back to school.

12:31 We've rolled out our new branding across our African markets and, again, launched new flavors such as watermelon into new pack format. So that's our two liter carbonates pack that's being proved very successful and launched in Algeria midway through the year. In out of home, as I mentioned, we've had challenges there over the last two years on our product portfolio. We've made good progress in 2021, but due to where we were versus our projections as we come out of 2021, we have impaired all the goodwill on our balance sheet and now commence the strategic review to ensure by looking on how we go to market, our product portfolio, and the financial thresholds we have in place in this route to market, we will build this business back stronger and more profitably going forward.

13:31 And then finally, before I pass back to David, we have our Feel Good brand, which is a brand we've launched this year into a a space that we can't stretch them to. So this is a a an all natural product, fruit sparkling water drink, very low calorie, with a very strong purpose ESG proposition to back it up. We've launched it into food service and out of home via listings with Brakes and Bid Foods who are, the route to market into that sector. And in q four, we listed the brand in a premium retailer, Sainsbury's, and our focus as we go into 2022 will be driving distribution and driving awareness of the brand to grow it over the long term.

14:19 Okay. I'm now gonna hand over to David who will give you, an overview of the numbers and then a financial outlook as well, and then I will come back and summarize. Thank you. Thank you, Andrew. In terms of revenue performance, we've seen revenues grow by 21.6% to $1.04 4,300,000 with strong performance across all three of our routes to market. This takes us broadly back to the 2019 pre pre pandemic levels of $1.04 7,000,000. We're delighted to report UK package growth of 8.5% with strong branded performance from both our Vinto and Levi's Roots brands. For Vinto, we saw continued progress in each of its subcategories with growth in squash, carbs, and stills.

15:12 Vimto brand value is now 13.2% larger than in 2019. In The UK, we've seen multiples and discounters grow again by 7% and seen convenience delivered wholesale and cash and carry recover back to 2,019 levels following the significant impact caused by outlet closures in 2020. 2021 saw a softer version of twenty twenty's coronavirus restrictions, and our out of home route to market recovered accordingly, growing 77.4% versus 2020. It was quarter four, though, before we saw anything like a return to 2019 rates of sale in out of home.

16:01 And overall, of home closed the year 31.4% down versus 2019. Our international business reported underlying revenue growth of 9.8% once adjustments are made for the year on year impact of our investments in The Middle East to mitigate the impact of the sweetened beverage tax, which is now complete. And we are delighted to report revenue growth of 17.1% in Africa and 14.2% across our European and US rest of world markets. Moving on to adjusted PBT. The group delivered 87.9% growth with adjusted PBT now at 21,800,000, which was at the top end of previous guidance and market expectations.

16:52 Our gross profit grew 15,600,000 versus 2020 and by 3.4 percentage points to 45.2%, broadly back to the gross margin seen in 2017 and '18 of 45.7%. Of that 15,600,000, 9,400,000 is a direct consequence of the volume growth seen year on year. The balancing 6,200,000, a combination of mix and margin management gains versus 2020. 2,700,000 of this being the unwind of the group's investments to mitigate the impact of the introduction of the sweetened beverage tax, as mentioned, now complete. In the year, our customer mix was richer from a gross margin perspective as in house and national out of home customers returned and margin that benefited from a more consistent coronavirus road map from the UK government, which combined with restructuring in q four twenty twenty meant that we have less downtime in our factory and planning for the coronavirus became more manageable.

18:02 Distribution costs increased 1,100,000 due to both volume and price. The UK driver shortages, and fuel cost increases impacting as might be expected. The group continues to invest in capacity to support the significant growth we are experiencing. And during the year, we signed a new five year distribution contract, which is already providing significant benefit to the group. The group continued to increase its marketing investments behind the Vinto brand with costs increasing 1,900,000 as a result of our successful delivery of the Find Your Different campaign. The campaign has supported significant distribution gains during the year. From an overhead perspective, costs were 900,000 adverse to 2020.

18:53 And thus reported at the half year and in 2020, the group had a 1,300,000 deferred consideration credit relating to the noisy drinks company and AML acquisitions, which created in 2021 an adverse comparison. Moving on to exceptionals. We've seen significant exceptional charges this year of 39,500,000 as the group updates its balance sheet following the impact of the coronavirus on its out of home route to market and also accounts for the previous contingent liability associated with historic incentive, schemes where the tax treatments have been previously challenged by the HMRC. More positively, and perhaps most importantly, the group charged a further 600,000 of costs to underpin capacity and capability development in its UK package supply chain, which continues to experience significant growth.

19:52 The vast majority of this year's exceptional charge relates to a goodwill impairment in out of home of 36,200,000 and is entirely noncash. The impairment follows a review that highlights that future growth prox prospects for this route to market are expected to be slower than previously thought, and net margin is lower than anticipated. Significant opportunity exists in our out of home route to market, but it will require a more transformational approach than anticipated, and this strategic review has now commenced. In terms of cash, as we have referenced in previous presentations, we recognized early in the pandemic the unique circumstances we were facing and challenged ourselves to ensure we exited the pandemic with at least the same financial strength we entered it and a clear view of the strategic choices we needed to make.

20:48 Cash and cash equivalents closed the period at 56,700,000, up from 47,300,000 last year. Cash conversion remained very strong at 103% and held the cash gains from 2020, where working capital unwind as businesses went into hibernation through the various lockdowns. Working capital was largely neutral in the year despite a significant stock build in readiness for operational changes in h one twenty two as part of our UK package supply chain project. Higher financial return thresholds in out of home, limited CapEx spend, and all in all, we were delighted to deliver another strong free cash flow performance of 17,500,000, which despite the pandemic was broadly in line with historical averages.

21:41 Moving on to dividend. In 2020, the board advised the dividend policy of broadly two times cover, in line with historical averages. Final adjusted basic EPS is 46.15p for the year, and therefore, we propose a final dividend of 13.3p per share, meaning a full year dividend per share of 23.1p. The final dividend will be paid on the May 5 subject to shareholder approval. I'm delighted to say that the company's AGM this year will be a physical one again and will take place on the April 27 in Newton And Willows. Okay. As mentioned earlier, the group's revenue performance of $1.04 4,300,000 was broadly back to pre pandemic f y nineteen levels of $1.04 7,000,000.

22:35 It's been a challenging couple of years for us all. 2020 was uniquely impactful, and 2021 has seen significant recovery. As we now hopefully exit the pandemic, we thought it would be useful to contrast twenty twenty one's performance with 2019 as this will hopefully give a better sense of where the group is now and help you understand our direction of travel for the future. The soft drinks market has grown 11% since 2019, powered by segments like cola, energy, mixers, ready to drink coffee, areas where Vintel does not currently trade. Over the same period, our UK packaged revenues for NICHOLS have grown 12%, and Vimto's brand value has grown 13.2%.

23:27 We've seen significant distribution gains and very encouraging improvements across all brand awareness metrics in The UK. Internationally, despite some reporting turbulence associated with the sweetened beverage tax, revenues have progressed 11%. We've seen significant progress in Africa with growth of 26%. And The Middle East, while not seeing underlying volume growth, has remained stable despite the introduction of a 50% sweetened beverage tax. Where our Middle East and Africa consumers go, they want to drink Vimto. And whilst not the mainstream US and European markets, we are delighted with Vimto's progress there.

24:13 In terms of out of home, the pandemic has provided an opportunity to take stock and consider the route to market from an overall returns perspective. The heavier assets and overhead associated with this route to market have weighed heavily on the group over the last two years. And whilst we recognize that as the specter of COVID recedes and revenues return, overall returns will remain challenged without a more transformational approach. Moving on to adjusted PBT versus 2019. So whilst revenues have largely returned to 2019 levels, profits have not. Adjusted PBT is 10,600,000 lower. Whilst volume still accounts for 1,300,000 of the difference, gross margin in 2019 at 47.6% was a couple of percentage points ahead of both 2017 and 2018 levels.

25:13 Gross margin in 2021 is largely back to what we might expect for the group. Distribution costs for the group are largely UK based, and volume and inflation have played a part in the higher cost scene. The group has continued to increase its investments in future branded growth, and marketing and management costs associated with Vinto campaigns and feel good have increased. The group's pre pandemic investments in out of home assets have meant a largely fixed cost, including higher depreciation charge, have remained in situ without the supporting contribution. Revenues, as previously noted, remain 31% lower than in 2019.

25:59 The group also benefited in 2019 from a 1,100,000 credit associated with deferred consideration associated with the AML acquisition. We exit the pandemic with a different shape to our business. Financially, we have both significant opportunities for branded growth and an out of home route to market ready for transformational change. So what does all that mean for return on capital employed? Excluding the cash from the balance sheet, the business delivered a healthy 37% return from its capital employed in 2021. With significant firepower now in cash, reserves of 56,700,000, how that capital is allocated is a critical consideration for the group going forwards.

26:51 Over the last nine years, in addition to the 27,600,000 of acquisition spend, the group invested 26,400,000 in property, plant, and equipment, largely as we built the out of home route to market. Out of home growth projections, as noted, are now expected to be lower than previously estimated, and its overall financial proposition will undergo a transformational change over the coming years. From 2022, ROCE will become one of our key performance indicators as we believe efficient and effective capital allocation presents a significant opportunity for the group given our strong balances and highly resilient free cash flow. Whilst out of home investments will need to meet higher financial return thresholds, we see both significant organic growth opportunities for Vinto and new packaged soft drinks opportunities in adjacent categories.

27:49 So in terms of takeout then, 2019 revenues have largely returned, but without the full recovery of adjusted PBT. We end the pandemic with a different shape and focus for our business. Is the real long term winner. It has shown itself to be both flexible and resilient. We see significant headroom for organic growth in both The UK and internationally. Vinto will be supported to realize its potential, whether that be through investing with our partners for capacity and process improvements or marketing to ensure we reach new consumers and drive further distribution gains. The Vinto range will continue to be renovated, and innovation remains key to our future success.

28:40 We see significant long term soft drink market growth in adjacent categories in areas where Vinto does not trade and perhaps cannot easily stretch to. We continue to invest in the Feel Good brand and continue to assess acquisition opportunities in adjacent soft drinks categories or for brands that complement Vinto in existing categories in both The UK and internationally. We will only progress though if the business case makes sense over the long term from a Roky perspective. Our strong balance sheet will, for the right opportunities, mean we can invest for the future and play the long game. However, we do have some near term headwinds to navigate.

29:30 We've discussed the strategic review in out of home and the need for us to deliver a transformational financial proposition. We need to manage and mitigate the impact of inflation at 13.6% for 2022 versus 2021. We will do this in a number of ways, including through operational efficiency gains and through customer price increases. In 2023, the deposit return scheme commences in Scotland. And while this is a positive step in the ESG agenda, it initially brings operational complexity and significant cost. So finally, before handing back to Andrew, I would like to provide some financial guidance in terms of outlook for f y twenty two and f y twenty three.

30:20 Firstly, I would like to confirm that the adjust the group's adjusted PBT expectations for f y twenty two remain unchanged. The group has a firm focus on its strategic agenda, and we will continue to execute it at pace through 2022 whilst navigating the short to medium near term headwinds highlighted. In terms of f y twenty three, when all things are considered, we are pleased to be able to guide to high single digit adjusted PBT growth, continuing the momentum seen in both 2021 and 2022. Thank you. Thank you, David. Okay. I'm just going to now have a bit of a deep dive into our ESG strategy and then just sum up before we open the floor to questions.

31:14 So and from an ESG perspective then, we are currently focused in in three key areas. So the first pillar of our strategy is around everyone matters. And this starts with our own people, both in their well-being, but also in their difference. And it also focuses on how we support young people in the local communities where we operate who have perhaps not had for whatever reason the chance to fulfill their potential. The second pillar is absolutely about having products we're proud of, and that's threefold. It's about the liquid, it's about the packaging, and it's about how we responsibly source.

32:00 And last but not least, it's about owning our own climate impact, both in terms of the emissions that we're directly responsible for in our scope one and two, and how we decarbonize our supply chains in scope three, and then very much with the water we use as a soft drinks company, how we do that responsibly. And we have a lot of commitments out there that we're tied to and commitments that we believe as a management team will be able to deliver against, and we make them short term enough that we will still be here to do that. I'd just like to pull out some of the commitments that I've highlighted in bold. So we're not everyone matters. We're absolutely pledging by 2025 that we will help improve the future for over a 100 young people in our communities, and and we're going to launch our Nimto camps this year that will focus on developing those people.

32:57 And wouldn't it be wonderful if some of those people could actually end up working with us here at NICHOLS?

33:04 In October 2022, there is legislation coming into the market, which is called the HFSS compliance, which is high fat sugar salt legislation. If you're not in line with that legislation, you will no longer be able to display your products at till points or on gondola end during promotions. And I'm really pleased to say that all of our recipes now are compliant and that they're below the 4.1 grams per 100 mil of liquids, and they will be rolling out in the first half of twenty twenty two to ensure we're compliant by October. I'm really pleased to say that all of our PET packaging is recyclable, but we're making a firm commitment that by 2025, by supporting the rollout of the deposit return scheme in The UK, that will then give us a closed loop system that can operate in The UK, and we will have a 100% recycled PET in our products sourced from either The UK or Europe if it's not all available in The UK by 2025.

34:19 And on our owning our climate impact, in terms of scope one and scope two, we're fully committed that by 2025, we will have reduced our direct emissions by 25%, and that by 2030, it will be reduced by 80%. So hopefully, some clear commitments there that we're going to deliver against in the next few years.

34:44 So hopefully, you will take from our presentation today, we have five very clear strategic imperatives that we're gonna focus on over the next few years. The first will be we'll be ruthlessly focused on our asset light package business both in The UK, but also further the field and particularly in Africa where we're seeing that accelerated growth. We're investing in our infrastructure to make sure that we can deliver that growth with our supply chain partners and deliver great service levels to our customers. Our strategic review in out of home will ensure we build that better and more profitably for the long term. ESG is at the heart of what we do, and we have clear commitments.

35:31 And from an m and a perspective, with that strength we have on the balance sheet, we will target branded acquisitions predominantly in The UK, but also maybe internationally, but only where the business case stacks up and we can add real value.

35:49 So in summary, I'm pleased to say that, we have a strong, diverse business both in The UK and abroad that is being powered and fueled by the momentum we've got on our Vinto brand. We remain highly profitable, cash generative with a very strong balance sheet and a clear strategic focus. Importantly, we are in line with our expectations for 2022, so no change there. And we're very confident of delivering profitable growth through the long term strategic plan we now have in place to deliver in the future. Okay. Thank you for listening today, and we will now open up to be able to take questions. Andrew, David, that's great. Thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions using the q and a tab just situated on the right hand corner of your screen. But just while the team take a few moments to review those questions submitted already, I would 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.

36:53 Andrew, David, I'm just gonna pop your camera back up. And as you can see, we've received a number of questions throughout today's event, and thank you to all investors for submitting those. If I could please ask you to read out those questions and give responses where it's appropriate to do so, and I'll pick up from you at the end. Thank you.

37:10 Great. Thank you. So, the first couple of questions, I'll summarize those by, we're being asked, do we see our growth firstly coming from m and a or organic growth? And I think, we definitely see our growth coming organically. The momentum we have on the Vimto brand in The UK and particularly in our squash portfolio, the squash category has grown by seven and a half percent in the last two years. We've grown squash by 30%. So the momentum there is very strong, and we expect that to continue and across the broader portfolio. If we look further afield, our African growth has been very strong and our Middle East growth has been very resilient.

37:59 So we now see with broader innovation in The Middle East, a broader portfolio, and that growth continuing as well. M and a is very important to us. We have the firepower on the balance sheet, and we very much hope it will come from m and a, but it will only come from m and a if we can find the right brands that we can add value to and that drive our ROCE measure. There's another question here saying about, are we overly reliant on The Middle East? And and hopefully, what you've seen from the presentation today, I think what we've done in The Middle East over the last two or three years where we've had significant challenges of the sweetened beverage tax that put the retail price up by potentially 50% and also the introduction of taxes to that region for the first time, like we've seen VAT come in.

38:54 The brand itself has proved very resilient, but broadly, in market sales are flat. So you can see that our growth has come from other areas, and a great example would be Africa. I would actually say at the moment, we're less reliant on The Middle East than we have ever been because the growth we're seeing elsewhere. We have a question here about inflation and supply chain, so I'll perhaps hand over to David as I read this out. The question is, have you experienced any supply chain issues, and how have you mitigated these? So perhaps, David, you can answer that. Yeah. Sure. So if you look at our overall financials for 2021, the largest single inflationary pressure was around the driver shortage and the various rate changes that needed to take place to to to manage those very difficult supply chain issues that all of The UK faced, in in in in the summer, particularly, and the early autumn.

40:00 Interestingly, we, at that time, we're entering into negotiations for a longer term contract with logistics providers, and we were able to secure we did have to pay a bit more, but we did secure a great, opportunity and and built capacity and has allowed us to, come out, through through that period with service levels now largely what they were before that issue hit us. So, some of the supply chain issues that everybody's seen through the summer or autumn, we would say have now started to ease, particularly around some of the driver shortages. There is still a challenge in the market, but we've been able to to come through that. Clearly, there have been, coming into 2022, a whole series of inflationary pressures that that that that have come to the business. And we've got ways that we plan to mitigate that as we referenced in the presentation.

40:59 But that inflation has come really right across the the board. It's something that we've not seen in in, you know, probably a generation really, that kind of 13.6%. If you look at packaging, whether it be plastics, whether it be aluminum, whether it be card, all of these things have been in short supply, and pricing has been quite challenging. Obviously, we talked about distribution costs and labor shortages generally have put pressure in the system also. And ingredients in the summer of last year, there were a number of crop failures which put an awful lot of pressure in the system. So that 13.6% of inflation was unique, and, we see hitting us in 2022 versus '21.

41:51 But it's one of the great strengths of this brand at a time when we are seeing that kind of challenging inflation and a number of our peers and other companies in The UK are experiencing that, in fact, globally. The strength of our brand, the choices that we have, and the options that we have in terms of changing supply and moving things forward to mitigate a number of those areas. And given the growth and the strength of the brand in the right way, in the appropriate way, passing that through, to customers is something that we are trying very hard to manage, and that's something that we are playing through. So, yes, it is a very challenging inflationary environment, but we believe the company is well placed to manage that, over over this, immediate future.

42:39 Okay. Thanks, David. There's another question here that I will take. So the first bit is, can you add color on your prospects in The US? And then the second question from the same person is, are the energy and mixer markets too crowded for NICHOLS to launch in? So if I talk about The US, I think, as a reminder, our US business is very heavily focused in the ethnic market trade of where our Middle Eastern or African consumers travel and want to purchase those products. So we have seen good growth in that market over the last few years. Although, would be transparent to say, you know, The US contribution to our overall business is still below 5%. What we are seeing though is our our partner over there at the moment has had an injection of cash from private equity, and that's gonna give it some real firepower to go after acquisitions there that I think could open some routes to market for us. So we still expect growth in the ethnic channels, but I don't think that will be transformational for the group. And I don't see our brand moving into the very, very competitive main market there in carbon nuts because there isn't a squash market that exists in the main market in America.

43:57 In terms of mixes and energy, great question. It's interesting. It's interesting. In energy, 94% of the value in that market comes from three players, which is Monster, Red Bull, and Lucas Aid. So although, there's lots of players in that category, outside of those big three, it's it's very tough to win. So, I don't see energy as a big category growth for us. You you may enter it in some ways, but I don't see it as a big focus. And also mixers as well. I mean, we know the great job. We've done there over the years, but there's a lot of players now gone into that market. So, again, I see that's very crowded. I see other white spaces as a much better opportunity for us to go in and try and win.

44:45 Okay. The next question, just let me read the question. Yeah. So Do you want me to read that out? And then you No. It's okay. I I I can cover, Andrew. So the the question is with regards to the share buyback program that you no doubt would have all seen, in recent r and s's over recent months. The share buyback is a very tactical, process. I I I want to be, clear. It's not a a a strategic item in terms of trying to change the capital structure of the business or anything of that nature. It we have a save as you earn scheme and other employee share option schemes for the group going forward, and that is an area that we've needed to top up the shares that we own in order to satisfy those options for the future. And that share buyback is entirely for that purpose.

45:41 So it's should be viewed in that light. It's in order to provide those longer term share ownership options for employees of the group. There are no further plans to change the capital structure of the group in terms of numbers of shares at this stage. Okay. Thanks, David. I think that looks like Jake, the David. Yep. David, Andrew, thank you for addressing all of those questions that have come through from investors this afternoon. Of course, ladies and gentlemen, the company will have the opportunity to review all questions submitted today, and we'll publish those responses on the Investor Meet company platform when they're ready for your review. Perhaps before redirecting investors to provide you with their feedback, which I know is particularly important to the company, David, Andrew, if I could please ask you for a few closing comments to wrap up with. Thank you. No problem. So once again, just to say a big thank you for dialing in today.

46:37 Hopefully, you found the presentation interesting and insightful. If you're already an investor, we hope you remain an investor. If you're not an investor, we hope we've convinced you today to invest in the business as well. So thank you for your time. Andrew Andrew, David, thank you for taking the time to update investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure it'd 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, and good afternoon to you all.