Nichols plc (NICL) Earnings Call Transcript

Good afternoon, ladies and gentlemen, and welcome to the Nichols plc Half Year Results Investor Presentation. [Operator Instructions] 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 will publish responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Nichols plc. Andrew, good afternoon, sir.

Thank you, Jake. Good afternoon, everybody, and a very warm welcome to the Nichols 2026 Half Year Presentation. And I'd like to thank you all for taking the time to dial in today. Our presentation will be about half an hour. The flow will be, I will look back over the first half of 2026 from both a strategic and an operational perspective. I'll then hand over to Matt, who will give you a deep dive on the numbers. I will then come back on and have a forward look at the strategy for the second half. And then after about half an hour, we'll open the floor to questions. Okay. So I can just start with the highlights we would like you to take away from today's presentation. So we're firstly really pleased to report that we have grown the top line revenue by 4.7% versus the same time last year. As identified at our Capital Markets Day presentation at the back end of 2024, the accelerator has been Africa, again, driving sales of 17% growth, and that's against comps of 17% growth in half 1 last year. So cumulative broadly 35% growth over the 2 years. We're really pleased with the strategic progress we've made on a number of fronts that we'll take you through throughout the presentation. We've seen record cash generation in Half 1, and we now have cash at over GBP 66 million that gives us strong firepower as part of our capital allocation strategy. Based on where we are in half year 1 and the momentum we're seeing into July on the back of a successful World Cup and hot weather, then we feel confident and are well placed to deliver our full-year expectations. And due to the extra earnings delivered and the change in our capital allocation strategy last year, where we moved from a 2x cover on our ordinary dividend to a 1.5x cover, we again will deliver strong returns for all our shareholders. So let's kick off with the strategic and operational review, and I'll just take a few minutes to remind you of our strategy. So really importantly, our main focus as a business is accelerating the higher-margin growth in our Packaged business, both in the U.K. and further afield internationally. In Out-of-Home, which is now far more simplified than it was a number of years ago, our focus there is on driving the bottom-line contribution and maintaining strong margins. We then have 4 strategic pillars that we focus on across the business. The first we call More from the Core. This is where we still believe we have strong headroom to grow the business in the brands we have today, in the channels we operate in, the geographies we operate in, and the categories we operate in. And hopefully, you've seen today from some of the results we are delivering on that front. The second pillar we call First for New. This is threefold. So firstly, it's about innovation of the Vimto brand, and that is predominantly focused both in the U.K. packaged space and the Middle East packaged space. We continue to expand geographically, and as well as having a strong presence in the Middle East and Africa, we've also moved into adjacent countries such as Malaysia. We also then, as part of our capital allocation strategy, will look at acquisition. Our acquisition is very targeted to U.K. packaged, entering categories that we see will grow in the long-term and places where you can't stretch Vimto to, and we'll talk more about that later in the presentation. The third area is Fuel for Growth. This is about where we can drive efficiencies in the business, mainly off the back of the SAP implementation we did last year after 3 years of work. And we then drive those efficiencies along with any that come with us being asset-light and reinvest them back into our marketing line to drive the top line. And our fourth pillar, we call Happier Future, and we have a range of commitments across people, product, and planet that we are working to deliver by 2030. The key foundations of our business then are threefold. So, we are a branded business and will remain a branded business. We do no private-label. We do no own label, and we have no plans to change that. In our asset-light models, our partnerships are paramount to our success. And a great example of that would be in the Middle East, where we work with the Aujan Coca-Cola Bottling Company, and we've been in partnership with Aujan for over 90 years. And then the third pillar for us is we're very proud of the culture we have at Nichols. Every 2 years, we do an anonymous engagement survey. We've just run one and our engagement scores are up over 90% Okay. So, just to give a bit of context for the U.K. package, I will share a slide now that looks at what's been going on in the market in the first half. This is the Nielsen data. This is the industry benchmark, but this is retail sales value. So this is slightly to our own internal revenue numbers. And this data runs to the 11th of July, whereas obviously, our data runs until the end of June. But directionally, this should give you a feel about where the market is going and how we're performing. So if I can point you to the pink box in the left-hand corner, it's really important to say that in the first half, sales at over GBP 8 billion generated from soft drinks -- and again, a very resilient performance, value growing at 5.8% and volume at 3.4%. So you can see the delta there. There's just over 2% being taken in price across the market. We operate within 4 subcategories. So that's squash, ready-to-drink still juice, flavored carbonates, and energy. Three points to take from this slide. First is we're really pleased that in all 4 subcategories, we have driven value growth. We have taken market share by our value outperforming the market in both flavored carbonates, which is the first time for a while and also then in energy, where we've grown at double the rate of the market. If you look at RTDs, we are slightly behind the market. That has been driven really by some production challenges we've had in Q2 on some of our smaller packs -- we're now clear of those production challenges, and therefore, that gives us confidence for the second half. And just slightly off on squash, which is mainly this data now contains Aldi and Lidl. So the read on private-label squash in those retailers is where the faster growth is coming in the market. We're pleased with our performance in the grocery sector. We strategically choose not to play with Aldi. So what's been driving the growth? So as a reminder, we are the #2 brand in Squash in the U.K. We now have a very broad portfolio, a range of pack sizes, a range of flavors and a balance of both our original flavors and a growing no-added-sugar portfolio. Throughout the year, we've done a number of initiatives. So we've had some innovation where in our 2-liter pack format, which has only ever really been the original flavors and the -- no sugar flavor in original. We've now extended that into our raspberry variant and got good listings in our grocery customers. We've done extra value packs across the discounter and the wholesale channel to give our consumers more value and drive weight of purchase. With some of the European discounters, we do special buys. So we may do certain packs for 3 to 4 weeks, 2 or 3 times throughout the year to drive some incrementality. We've had good distribution gains again on our core packs with our customers, and this has been supported by a very strong media campaign that has kicked off in June and will run through July and August. On flavored carbonates, as I mentioned, good strong growth at circa 5% in the half. We've run a nationwide van sales campaign in half 1 and driven an incremental 9,000 distribution points across the independent trade. We've had good listings on some of our core packs across the retailers, wholesalers, and discounters. We've brought innovation through our limited edition flavors, our Fans' Edition, such as, as you can see there, Pina Guava. We've redesigned our bottles in 500 ml, so much more modern and contemporary looking bottle now that's giving good standout on shelf. And we've also run some ESG-focused packs, particularly with Tesco, where on our 6-pack multipacks, we've taken all of the plastic off. And as you can see in the middle picture there, just a cardboard layer on the top that will drive our goals on plastic reduction. On energy, as I mentioned, we've outperformed the category, growing double-digit versus the category at 10%, so we're at broadly 20% growth. That's been driven by the launch of a new Vimto multipack, as you can see on the screen there. And we've got good listings across the grocery trade in back-of-store that will drive weight of purchase and focus on in-home consumption. We brought excitement to the category again to complement our original Vimto SKU and our no-added-sugar product, we've also launched a topical Cooler flavor. We've now got good distribution of the energy portfolio across all the major wholesalers and retailers in the U.K. And again, we've complemented that with strong marketing activity in-store to drive visibility. In our Beyond the Bottle strategy, we have 2 very strong partners, Myprotein via The Hut Group and Applied Nutrition, 2 of the leading sport nutrition brands in the U.K. As you can see from the picture, we now have a very strong lineup of both powders, gels, and electrolyte tablets. These are growing distribution into some of the core channels we play in, but also with customers like Holland & Barrett, where we wouldn't have traditionally listed our drinks. The Myprotein Vimto Clear Whey is the #1 selling product in the Myprotein powder range. And we've got an exciting innovation pipeline built with both partners that we'll bring to market over the next 2 years. Turning to our international business; so a real strong standout performance in Africa, again, 17% growth from 17% growth in half 1 last year. As a reminder for the audience, our business in Africa is broadly about 70 million liters. Half of that is in Red Can, half of it is in Purple product in both PET and glass. For many years, we've manufactured our Purple product in-market. But historically, we've manufactured our Red Can with the Font Salem/Damm Group in Valencia and exported into market because that has historically been limited production facilities in West Africa. The business in Africa is growing well. But as we look at the market on flavored cards across West Africa, we have about 1.5% share. So, still a lot of exciting headroom to capitalize on in this category. We're winning by a number of initiatives. One is the move from production in Valencia to in-market. The reason for that is there are growing tariffs and import duties when you import product into the country. We have a distributor model by country and a lot of their cash has been tied up on paying the duties as opposed to buying our product and then distributing it. So we are working with a company called Millennium, who have a brand in West Africa called 3X Energy, who have built a state-of-the-art factory in Senegal. So we've now moved production out of Valencia to 6 of our markets that are now being serviced in West Africa from the plant in Senegal. That is driving speed-to-market because our distributors drive to the factory gate in Senegal, pick the product up and then sell it on. It also stops their cash being tied up in duties, so more for them to invest in buying our products to sell on. There are also then ESG benefits because we are not shipping as much product over water from Spain into country. We still are importing into some regions in West Africa, one of them being Ivory Coast. And again, in half year 1, we have seen very strong growth in Ivory Coast, which has been the driver of the year-on-year 17% growth in country. Within the Middle East, against a very volatile backdrop with the war that is happening in the country, we're pleased that we've had a very successful Ramadan campaign, world-class execution, you can see there from the pictures, a really exciting new launch of a fabulous tasting product Rose Cordial to complement our Original Cordial and our Zero Cordial, and a very strong marketing campaign, resulting in volumes growing at 2.5% during Ramadan and value growing at 5% versus the market that's grown at 2%. So, good market share gains across Saudi Arabia, UAE, Oman, and Kuwait. As a reminder, our supply chain remains very resilient. So we don't use the Strait of Hormuz to get our product into market. As you can see from the map, we ship in via the Suez Canal. We go into Jeddah on the west side of Saudi, and then transport our concentrate overland into Dammam, where our partner, the Aujan Coca-Cola Bottling Company, produces all the product there and distributes across the Middle East region. We've not seen any disruption during the first half. Our partner has taken some concentrate early in half 1 versus half 2 for security of supply and we are also looking then to move from Q4 into Q3 with some shipments just to ensure the concentrate is in market. Clearly, though, we're working very closely with our partners to stay close as things develop on the ground. Our Out-of-Home business, now far more simplified and bottom-line-focused. We continue to make progress. So, we've driven revenue by about 2%, which is what we've indicated to the market, low single-digit growth in this market. We will now be fully exited from the Starslush brand in terms of comps. So we'll see a slight acceleration in half 2 to the top line, more like about 3% to 4% growth by the year-end. That is being fueled by a number of things. One is a real focus on premium food outlets where people are drinking soft drinks because it's a family occasion or people are choosing to drive. So, we've won the Rudy's pizza chain in the first half, 39 outlets nationwide, key food outlets with high-footfall. Our installations in those outlets with Postmix will complete by the end of July. So we'll see an acceleration during half-year 2. We've also won the Montpeliers Group up in Edinburgh, 5 big outlets such as Coco, Tigerlily, again, food-led outlets that will drive incrementality second half. And in the first half, we've had a very strong film slate that drives footfall into cinema and therefore, additional ICEE sales. So things like Toy Story 5 have been really strong in the first half, and we're excited that Spider-Man runs in the second half, and we will be doing the sponsorship in Cineworld, one of our big chains with a unique flavor for that film. So hopefully, you can see from the first half, very good progress strategically on a number of fronts across our routes-to-market. I will now hand you over to Matt, who will give you a deep dive into the numbers.

Thank you, Andrew. I'm pleased to report another strong period of financial delivery for Nichols. In the first half, we delivered profitable growth, strong cash generation, and increased our shareholder returns. Over the next few slides, I'll take you through how we grew the top line, how that converted into strong profit delivery, how that was also converted into cash effectively, and how we delivered that back to shareholder returns. If there's 3 messages to take from this section of the deck, it would be that we have further delivered a consistent delivery that the business model really does convert cash -- convert profit into cash exceptionally well. And then our balance sheet gives us real optionality for the future through either dividends, M&A, and reinvestment into the business. And I'll take you through the capital allocation model as well. Starting with the top line. We were delighted with the revenue momentum in the first half. Group revenue grew 4.7%. And importantly, we saw channel growth across all channels. The packaged business grew 5.6%. International Packaged was the highlight, growing 12.8% with Africa driving 17% growth, primarily driven by Red Can, and 35% growth on a 2-year basis. There was no impact in the First Half on the Africa Concentrate Transition. Full year, there will be more concentrate going in than there was in the prior year. So that will lead to a short drag on reported growth in the second half. However, we expect performance to remain largely consistent with the first half overall for Africa. Middle East grew 6.3%. And as Andrew touched on, no impact from the conflict in the region. And the Rest of World grew 2.4%. U.K. Packaged grew 2.3%, and Andrew touched on there, how that arose across the different categories, and all 4 subcategories were in growth. And Out-of-Home delivered 1.6% growth despite that planned exit of Starslush, and adjusting for that, it would have been 5% growth, and we're pleased that the annualization of the Starslush exit is now complete. That top-line growth translated well into profit growth, and we saw great growth in our Packaged business and disciplined cost control that helped drive the earnings progression. Adjusted operating profit increased 3.7% to GBP 14.1 million, and divisional growth really leveraged that central investment. So, you can see the divisional packaged operating profit margin increased by 110 basis points, up to 30.2%. Out-of-Home dropped a little bit, reflecting the phasing impact of that Starslush withdrawal. And then central cost did increase. They increased driven by planned investment in IT and inflationary costs in people costs. However, that paid back in the dividend in the division. You can see that in distribution costs, which I'll come on to on the next slide. But the ERP investment is really yielding benefits in our divisional P&Ls. We are now in the benefit-realization phase of that ERP replatforming, and we're on track for a 5- to 6-year payback. If I look at how our profit delivery translated across the different lines of the P&L, you see gross profit increased GBP 1.6 million as gross margins were maintained and remained resilient in this inflationary market. Distribution costs, as I've touched, improved GBP 0.3 million. That was despite inflationary pressures in things like fuel. But that's where the ERP platform is helping us reduce storage costs by holding lower stock as an example and generate further procurement and logistics savings. Adjusted operating profit was up GBP 0.5 million or 3.7%. And net interest income only marginally down year-on-year, driven by the lower interest rate environment despite higher cash balances. So the gross profit and distribution efficiencies helped support adjusted PBT growing 2.7% and, with no exceptionals, the statutory profit grew 32% year-on-year. That profit performance then translated into excellent cash generation, and it was a record first half for the group in terms of cash generated with free cash flow of GBP 17.3 million across our first half of the year. We talked at year-end about having a working capital outflow and that, it would reverse in the first half, and we are pleased to confirm that did happen as guided. Cash conversion remains very high at over 150% in the first half of this year and last year. And that leaves us with a cash balance of just over GBP 66 million, GBP 10.5 million higher than year-end, and that gives us significant strategic flexibility for the future. I want to introduce here a Compounding Shareholder Value Model, which demonstrates how the asset-light model of Nichols really converts the top-line growth into cash and strong shareholder returns. If you look at the wheel on the left and start at 12:00, we've been delivering consistent organic revenue growth, and that remains the plan for the group. When you combine that with sustainable margin expansion, you generate really high returns on invested capital and consistently strong cash generation. And our Capital Allocation Policy, which I'll come through on the next slide, demonstrates how we will reinvest back in organic growth and then look at M&A optionality or returning cash to shareholders. Turning to the Capital Allocation then. We have a very disciplined Capital Allocation Model, and that strong cash generation supports us in reinvesting in profitable growth, dividends, and the optionality of M&A. We do go through these 4 buckets. So Priority #1 for the Board is investment in profitable growth in the business because that is where we believe we can generate the strongest returns. We then have the progressive ordinary dividend, now operating at 1.5x, as Andrew touched on earlier, and that's improved from what was 2x cover. And that leads to an interim dividend of 20.2p. That's up 35%, driven by both the earnings growth and that Enhanced Cover Policy. We then have the optionality for M&A. We have a very active M&A pipeline, but we remain incredibly disciplined in how that is deployed. We will only do M&A, if it is the right M&A, and we will not do M&A for the sake of it. And we've developed guardrails as a Board on the exact criteria that any M&A would have to meet. Should we not do the M&A, we will then return cash to shareholders, and the Board continues to review options on the appropriate way to do that optimally for our shareholders. Bringing this all together, this delivers a very compelling investment case for Nichols. We have strong brands, strong cash generation, and financial flexibility that enables us to create long-term sustainable value for our shareholders, and that's underpinned really by 5 key criteria. We operate in attractive markets, as Andrew touched on, on the first slide, first on the market share slide. Soft drinks continues to grow, and we have significant international opportunities, particularly in light of Africa. That international platform gives us a real scope for future growth, and we can scale that through innovation, through licensing and geographic expansion. Third pillar is high returns. So we are generating a ROCE of around 30%. And that's supported by this asset-light operating model, and with 1.5x dividend cover, there's a circa 5% dividend yield. Our strong cash generation continues to flow through, and that means our market cap is underpinned by GBP 66 million of cash on balance sheet. And we just have optionalities in how we return that capital to shareholders. So to summarize before I hand back to Andrew. Trading in the first half was in line with our expectations. We have really strong momentum exiting Q2 into the second half of the year. Revenue, profit, and margins all on track, strong and growing cash and 1.5x dividend cover with an active M&A pipeline. So that momentum is really strong. We continue to monitor and manage the inflationary backdrop, and we're well positioned to create long-term sustainable shareholder value. And with that, I hand back to Andrew for the look forward.

So let's start with U.K. Packaged. And what I'd like to do here is just take you through a slide that we talked to at the Capital Markets Day at the back end of '24. So one of the strategic focus areas for us is to grow our portfolio in U.K. Packaged and to complement the Vimto brand. And in terms of informing how we do this, we've done extensive research. And really, the big consumer trends that we see developing over the next few years are going to be kind of well being as a lifestyle. So people wanting healthier products become part of their everyday life and consumers, particularly Gen Zs, really looking for elevated experiences and are more willing to try different and new products; and also this premiumization where, again, people are willing to pay slightly more for products that have added benefits. And the hunting ground for us in terms of products that do this, and the categories we'd like to be in are functional health and wellness categories. Next-generation energy, so that's more clean energy or natural energy; and then this trend away from alcohol, where people still want a fabulous-tasting product that helps them relax and unwind. We then mapped the market, and we believe that by 2030, soft drinks will grow by GBP 2.2 billion. And there are 6 big strategic category spaces where we believe that growth will come. As you can see at the bottom of this slide, Vimto is well placed to operate in 3 of those, but there are also 3 where we don't believe Vimto can operates. And the first one we think is really interesting, which we call Enhance My Body and Mind. So this is all about health and wellness and that is going to be worth GBP 678 million of the GBP 2.2 billion forecasted growth. So as a result of that, we recently announced a couple of weeks ago a really exciting partnership with The Hut Group on the Myprotein brand, which is the world's leading online sports nutrition brand, where we are going to launch 2 ready-to-drink 500 ml products, combining refreshments, functionality, and a trusted sports nutrition brand, Myprotein with a Vimto flavor and a second flavor, which is Raspberry Lemonade. So, we will produce these products with our co-manufacturers and take them to market and sell them. The concept has high protein with 15 grams of Clear Whey in it. They are low calories, so less than 60 calories with zero sugar. They really meet consumer demand for both functionality and fabulous-tasting products, really refreshing. We will be taking these to market at the end of September, so incrementality into Q4. And what's really exciting is we have built more products in adjacent health and wellness categories that we will look to launch with Myprotein over the next 18 months. We have recently just kicked off our big U.K. marketing campaign on Vimto. So for 2 years, we've run a campaign called, Love the Taste or We Will Give You Your Money Back. And we've now evolved that to a new campaign called Love at First Taste. This will drive penetration into the brand. And we will -- it will be on-pack across 28 million packs across 23 of our best-selling products, and we're investing over GBP 2 million in an above-the-line and below-the-line campaign that will see us get off-shelf in-store and drive incremental sales. Within the U.K., you may have seen there's been a lot of pressure on this. There will be the introduction of the Deposit Return Scheme. So across all plastic and metal sold aluminum drink containers ranging from a small 150 ml product right up to 3 liter, from October 2027, you will pay an additional GBP 0.20 on top of the cost of the product. When you consume it, you will take it back to the retailer, put it in a reverse vendor and then get your money back in the form of a voucher that can then be redeemed in store. The focus here is to drive recyclability within the U.K. It's to reduce littering. And ultimately, for all soft drinks manufacturers, it means that in time, we will have higher-quality and lower-cost recycled PET that can then be used in all of our products. We are currently, as a soft drinks industry, in consultation with governments deciding what the producer fee will be on an annualized basis because we invest to support the setting up of the scheme and we get the benefit back in that lower-cost recycled PET over time. For Nichols, we believe the cost will be about GBP 2 million that we will work closely to mitigate those costs, and with our retail partners to mitigate those costs. And we are just still working with the government to decide when those producer fees will be due, whether it will be at the start of the program starting or later down the line, 2 to 3 years later. Internationally, the big focus in the second half will be Phase 2 of our concentrate-move strategy in Africa. So we will have a second factory built by Millennium in the Ivory Coast during Q4. We will then start to migrate some more production of products out of Spain into Ivory Coast that will service Ivory Coast, Burkina Faso, Ghana, Liberia, and Sierra Leone over the next 18 months, as we've done in Senegal over the previous 2 years that we believe will continue to drive market share in-country through faster speed-to-market and ultimately, grow our revenue and profit. So, from the summary and outlook point of view, so we are really pleased with the progress that we've made in half 1. I'm very confident with the momentum we've got as we enter half 2. Strong progress against a number of our strategic priorities. We are managing inflation very closely and protecting gross margins. We have an excellent balance sheet over GBP 66 million to support our strategic ambitions. We continue to focus on costs and be very disciplined. Well positioned to continue to create shareholder value. And as a final reminder, our expectations for full year remain unchanged. I'll now hand it back to Jake before we open the floor to questions.

[Operator Instructions] But just while the team takes a few moments to review those questions that have been submitted already, I would just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your Investor Dashboard. As you can see, we have received a number of questions. So thank you to all of those on the call for taking the time to submit their questions. Andrew and Matt, at this point, if I may just hand back to you 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 would be great.

Thanks, Jake. So I'll read out the questions and then we'll answer where appropriate. So I'll read the first. This is probably one for Matt. So the question is asking, share price to date is similar to where it was in 2013. However, there's been big improvements in the business since then. So we've been asked, would we consider more share buybacks instead of, or in addition to, special dividends? And if not, why not?

Thank you, Andrew. I think we, hopefully, we answered this to some extent as we went through the presentation. We have clear Capital Allocation Policy where we invest first and foremost in the business. We will then have that Progressive Dividend Policy. We will do M&A if we can do and find the right target, and we can touch on the guardrails that the Board have developed there, and should it be right to do so. Then if we don't do M&A, we will return cash to shareholders, and all options for those are under review. So whether that is a special dividend, we obviously will consider share buybacks. We've looked at things like tender offers as well as a potential mechanic. But the Board continues to consider all options there and discuss with shareholders the most appropriate mechanism, and we'll do whatever we think is the best for our shareholders.

Thanks, Matt. So, the next question, and I'll just read it out. As you know, from April next year, energy drinks containing more than 150 milligrams per liter of caffeine will be illegal to sell to under 16s. Is there any way that Vimto's own energy drink products can be reformulated to reduce the caffeine to below those levels to avoid the ban, or will there be little point in doing so as the product would then, to all who intend to purchase, have no energy any longer? So, yes, so the ban does come in from April next year to under 16s. A couple of things I'd say. One is -- so our energy product is in the 500 ml can, it's fortified with vitamins. The energy source is natural, so it's from coffee beans and then it's got the great Vimto taste on it. We already, on the back-of-pack, along with many of our soft drinks, other manufacturers state not to be sold to children. And most of the retailers we work in with already signed up to the voluntary code of conduct not to sell the product to under-16s. Interestingly as well, if we actually look at the consumers who are buying our product, generally, it is not many people under-16 who are buying the product. So as the question intimates, we won't be reformulating because, as you say, it's no longer then an energy product, but we will continue to ensure we put on-pack that we don't support selling it to children, and it will be illegal come next April. Next question, given Middle East and Africa together are a meaningful share of the group revenue, has the '26 Iran war and Strait of Hormuz disruption affect the shipping cost timing, or demand in those markets so far this year? So again, hopefully, we've answered most of this. But to reiterate, we don't go via the Strait of Hormuz. We go down the Suez Canal into Jeddah and overland to Dammam. So as a result of that, we've had no disruption to logistics. In fact, some of the shipments have come earlier in half 1. And again, as I mentioned, will move from Q4 to Q3 for surety of supply. There have been some impacts on freight, and we just work very closely with all of our customers between us to mitigate those costs. Maybe one for Matt. I'll just read it out. Revenue has grown from GBP 117 million to GBP 175 million over the past decade, roughly 4% to 5% CAGR. Is this the right run rate to expect going forward, or are there specific catalysts 18 new markets, categories that could accelerate it?

So I think Andrew hopefully covered this earlier during the presentation, but we do see a number of catalysts to top-line growth. That is the kind of rate of growth that we are expecting. We outlined at the Capital Markets Day in 2024 the medium-term target of GBP 225 million of sales. We remain on track for that. There have been some slowdown in the sales-line because of the concentrate model shift in Africa. Hopefully, you can see there, you've got 35% 2-year growth in Africa and the model is a better model to drive in sales growth. When you combine that with things like the Myprotein launch, you can see how they're growing our product portfolio. It is a particular catalyst for the top-line and we're expecting that to add in the order of 100 basis points of growth next year. So the headline would be it is around that level would be the target that we'd expect on the go-forward, with sales reaching up GBP 225 million in the medium term, and that remains a target we're on track for.

Okay. There's one on acquisition here. I'll take them. And there's a couple for Matt on margins. The one on acquisition is asking which categories are we looking at. And I think hopefully, the slide I put in to show where we are taking Myprotein water brand is the same for acquisitions. So, Health & Wellness or Premium Socializing, as people move away from alcohol. And that's because hopefully, as I showed on the slide, GBP 2.2 billion worth of growth over the next 5 years, of which those 2 areas are big contributors. One here is saying, how will Nichols reach a 20% PBT margin because that's what we outlined in the Capital Markets Day we wanted to achieve over the next 5 years, when the current margin is broadly 17%. So Matt, perhaps you can talk about that.