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Middle East brings foreign flavour to Nichols’ fortunes

Founded in 1908, Nichols plc is a soft drinks manufacturer headquartered in Newton-le-Willows, Merseyside. Nonexecutive Chairman, John Nichols, is grandson of the company’s founder. Nichols makes significant sales into foreign markets and is a true AIM blue-chip. The company produces still, carbonate and cordial products. The best known is Vimto. The drink is sold in over 65 countries. Vimto delivers 90% of UK turnover and 100% of foreign group sales. Vimto was created as a herbal tonic ‘for vim and vigour’ from ‘seriously mixed up fruit’ consisting of grapes, raspberries and blackcurrants. It has been consistently advertised since WW2. Nichols expenses all advertising costs above the line. The company sells a collection of other flavours under license. Nichols produces Sunkist under license in the UK from Sunkist Growers Inc. In 2010, Nichols added the license for Levi Roots’ Carribean-inspired flavours. The company’s ten year dividend

record illustrates Nichols’ success. From paying 8.8p per share for 2004, the payout has since increased year-onyear to hit 22.4p for 2014. In the last five years, the payout has increased by an average of 13.0% per annum. In that time, the shares have risen from 355p to 1,164p and 88.3p of dividends have been paid. This rise comprehensively beats the FTSE 100, which is up around 20% over the same period. For 2014, overall sales increased by 3.5% against a challenging UK market (79% of sales). Pre-tax profits before exceptional items increased

In the last five years, the payout has increased by an average of 13.0% per annum 14%. That 22.4p dividend was 14.2% ahead of the prior year, comfortably covered by earnings per share of 55p. The profit increase came from a combination of sales increases and margin improvement to 23% (2013: 21%). The latter is due to changes in the sales mix between home:overseas and carbonated:concentrate. The decreased sugar content of soft drinks (reflecting the trend toward health) assisted further. Earnings were enhanced by a lower tax charge of 21% (2013: 25%). On a constant exchange rate basis, overseas sales in 2014 showed a 7.3% increase. Concentrate sales to the Middle East rose 12.3%. In some of its markets, Nichols’ Vimto cordial

Nichols variations on Vimto

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April 2015 AIM Prospector  
April 2015 AIM Prospector  

Featuring five AIM companies: Benchmark Holdings, GVC Holdings, Jelf Group, idox and Top Pick: Nichols plc.