Good afternoon, ladies and gentlemen, and welcome to the Nichols plc Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, they can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet Company platform.
Before we begin, we would just like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to the Executive Management Team from Nichols plc. Andrew, good afternoon, Sir.
Thanks, Jay. Good afternoon, everybody. Welcome to our half-year results presentation, and thank you very much for taking time out today to dial in to listen to us. In terms of the flow we're going to follow today, I will kick off and look at half-year one from a strategic and operational perspective. I will then hand over to David, who's our Interim Finance Director, who will give you a deep dive into the numbers. I will come back and give you a forward outlook, and we are happy to open the floor to Q&A. In terms of today's presentation, the real highlight we'd like you to take away from today is that we're really pleased that we've been able to continue delivering against the key strategic initiatives that we outlined back at the capital markets day in November 2024.
Firstly, we're really pleased with one of those key initiatives, which was growth in Africa. In half-year one this year, we have delivered 17% revenue growth versus half one last year on the back of the move to the concentrate model in West Africa. After two years of hard work and planning, we very successfully went live with our new ERP system, SAP S/4HANA, and this was really the launch of our business transformation program that we'll look to derive benefits from over the next five to six years. Adjusted operating profit growth was 4% at the half-year, and this was absolutely in line with the plan we had when we set out this year. We're really pleased that our strong, well-diversified business model across U.K. packaged, international packaged, and out-of-home have again all contributed strongly to our performance, supported by a very healthy cash position.
We're very pleased to report that we fully expect our adjusted PBT expectations to be in line with forecasts, which lie at GBP 33.1 million. If I just spend a couple of minutes now reminding you of our key strategy, I'll just go back one slide, our key strategy. This is what we outlined at the capital markets day. From a headline perspective, first and foremost, we are looking to accelerate the growth in our higher margin package business, both in the U.K. and internationally, and drive bottom-line value from our much more simplified out-of-home division. We have four key strategic drivers. The first is more from the core.
Now, it's absolutely crucial that we don't take off our IFR core business, and we invest and drive distribution in our core brands across the core categories we operate in and in the channels and major geographies of the U.K., Middle East, and Africa. The second pillar for us is what we call First Venue. The first pillar there is around innovation, and that will predominantly be focused in the U.K. packaged area and the Middle East area where we're looking to innovate off the Vimto brand, where it already has strong equity and looks to move into new areas and new channels. Geographic expansion will always form a part of our growth in new spaces, and none more so than our recent launch into Malaysia.
As part of our capital allocation strategy, acquisition plays a role for us in U.K. packaged, where we are looking to buy brands that can complement our Vimto portfolio and take us into predicted fast-growing subcategories over the medium term. The third pillar for us is fuel for growth, and this is about how we can leverage our asset-light model to drive efficiencies that we can then reinvest back into our business. A couple of examples here over the last few years would be the strategic review we did in out-of-home and the additional bottom-line contribution that business is making now, how we reinvest that back in our packaged business. Also, initiatives like our strategic business transformation, where again we will look to drive efficiencies we can reinvest into the main business.
Our Happier Future program is a range of commitments we have from a sustainability perspective that we will look to deliver by 2030. All underpinned by three key foundations. We only focus on brands as a business, and that helps us to drive the healthy profit margins. Partnerships are crucial to our model, both in the U.K. and also internationally, and none more so than the example of where we work with the Aujan Coca-Cola bottling company in the Middle East, and we have done that for over 100 years. The third foundation for us is our people. We pride ourselves on the culture we create at Nichols that allows our people to deliver superior results day in, day out. If we just turn to the U.K. packaged soft drinks market and perhaps provide you a little bit of context in terms of what's happening in the market.
This is the Nielsen data, and it runs to the middle of June. There might be some slight discrepancies as our half-year runs to the end of June, but this is the most relevant data. If you firstly go down to the bottom left-hand corner, you will see again a very resilient soft drinks in the U.K. delivering 7.5% value growth off 5.1% volume growth. As you can see, that's probably 2.4 percentage points of inflation being taken through price in the market. We're really pleased with our progress, so value up at 4.9% and volume at 4.1%. In the four main subcategories we play in, in squash, we are the second biggest squash brand in the U.K., and we are pleased to have delivered value growth at 2.8% and volume at 4.3% as we have promoted a bit more heavily in half-year one to support our innovation launches.
In the ready-to-drink still juice section of our business, as you can see, we're really pleased to report over 20% value and volume growth on the back of our launch into kids' products. In flavored carbs, which is a much more promotionally driven and therefore lower margin section for us as we're up against some really strong competitors across the Coca-Cola portfolio, the Carlsberg Britvic portfolio, and AG Barr portfolio. We're not quite where we want to be at this stage, but we do have a heavyweight marketing campaign kicking in in the second half and further changes to come next year. On energy, which has been our latest launch, we are pleased that our value and volume growth are over 30% at the half-year.
In terms of some of the key initiatives we've had in place in the first half, if we start in U.K. packaged and more from the core. We've recently done a big piece of category strategy work called Fresh Thinking for Drinking that was driven through consumer insight. We then go out and talk to all our customers about how we see soft drinks growing over the next five years and how we can work together with our customers to grow our business and their business. Here there's an example of a great piece of customer collaboration where we've put branded bays into squash aisles in one of our retailers. This has meant we've doubled the amount of space to our product, and it's meant that we've driven better availability, better visibility, and on the back of it, very strong growth in the first half.
Our customer has also seen strong growth at the same time. A real win-win for both customer and supplier. On a first venue within U.K. package, we have launched a range of innovation. Our new functional squash, Wonderf uel, in three flavors has been launched in the first half. This is targeting new consumption occasions throughout the day with a particular focus on the breakfast occasion. Secondly, combining both sustainability and commercial opportunity, we have launched our Double C oncentrate, double- strength portfolio in two flavors across a range of retailers, driving both visibility and sustainability benefits. Within our energy portfolio, we have rolled out our GBP 1 price mark pack. That means via our wholesale partners, we are able to access more of the independent retail trade in the UK and continue our strong growth.
In our Beyond the Bottle concept, we are working in partnership with Applied Nutrition and the HUC Group. This means we are taking Vimto into health and wellness spaces through our brand licensing model across tablets, gels, and creatine powders. Further to feel in our international division, again in our more from the core strategic focus, we have again had a very successful Ramadan, celebrating being at the heart of over 100 Ramadans in the Middle East. You see the world-class execution there of our iconic bottle. We have had a multimedia advertising campaign, including going back on TV after four or five years off TV, and really leveraging the emotional connection that Vimto plays in the households of people throughout the Middle East. Across Africa, in our more from the core pillar, we have continued our rollout of our concentrate model.
Due to rising tariffs in West Africa, last year we decided to move our production from Spain into the markets of both Senegal and next year, Ivory Coast, with a key partner there who is building factories called the Millennium Group. They have their own product, 3X Energy, and we will be producing Vimto within their factories and then rolling out to the 11 key West African markets you can see there on the map. We have currently in the first half rolled out to Senegal, Guinea, and Mali. In the second half of this year, we will roll out to Guinea-Bissau, Gambia, and Mauritania. Next year, when the factory is complete in Ivory Coast, we will roll out to Niger, Burkina Faso, Ivory Coast, Liberia, and Sierra Leone over 2026 and early 2027.
We have also put some people into marketing roles within Senegal who are working with our partners to drive marketing activity. Going forward, this reduces supply chain risk for us as we are producing in country and also drives sustainability benefits as we won't be importing finished goods from Spain. In our third venue model internationally, we again are focused during our Ramadan campaign and throughout the rest of the year on driving more Zero products into our Middle East portfolio on the back of rising diabetes in the region. This is driving penetration into the category and bringing new users in who can't consume sugar but want the great and well-known taste of Vimto. We have also now launched into Malaysia with our one-liter squash proposition.
We now have listings nationally in over 3,000 stores, and our big marketing campaign is kicking off alongside TV advertising that will hopefully drive rate of sale throughout the year and into next year as we grow our business in this key strategic region. On our fuel for growth focus, firstly, if we start in out-of-home, we have a much more simplified model. Part of that was to only sell ICEE into cinema chains in the U.K. I'm pleased to announce that we have taken on another cinema chain, Reel Cinemas, to complement the business we have with Cineworld and Showcase. That has been rolling out across their 16 cinemas in Q2 and will drive incremental growth for us over the next few years. We also are having a phased exit from our Starslush still product.
We have a partnership with Polar Crush, who will be distributing our product for us, and then in years two and three, manufacturing our product as they take ownership of this brand as we continue to simplify our business model. We continue to focus on driving consumption out of very profitable individual outlets that we can measure as we deliver direct to market. Our business transformation program that has been in place now as we've been planning for it for a couple of years saw the launch of our brand new SAP S/4HANA system during Q1. We had a very successful launch and have been able to trade successfully throughout the period. As we move into half year two and next year, we will look at how we realize benefits from this program to reinvest back into the business over a five-year payback period.
From a sustainability point of view, we have three pillars to our strategy. They are namely everyone matters, products we're proud of, and owning our climate impact. The success of these programs is very much where we combine commercial and sustainability programs. A couple of great examples will be where we've launched Double Co ncentrate and functional squash products that both drive sustainability through reduced plastic and nutrition through the vitamins we've added to our Wonderf uel products. On the right-hand side there, the moves we've made in West Africa reduce our impact on the environment as we no longer ship finished product all the way from Valencia into Senegal. I will now hand you over to David, who will step you through a detailed analysis of our numbers.
Thank you. Thank you, Andrew. Looking at financial highlights, a really good performance in the first half of the year. The business has delivered well and very much in line with our plan. I think our internal targets have always been weighted towards the second half year, and we are confident in meeting them. Just picking out the main points: group revenue GBP 85.5 million, + 1.8%. I'll go through more details later. A like- for- like progress on that is + 3.7%. Operating profit GBP 13.6 million, + 4.1%. That's half a million up, and that's really good progress given the phasing, particularly the phasing of the Middle East business in the first half. Operating profit margin + 0.3%, 15.9%. Good traction there.
PBT up GBP 1 million, slightly lower than the increase in operating profit, and that's because of lower interest receipts as interest rates fell and we had slightly less average cash. PBT margin 17.1%, a little bit low, but that's down to the interest reduction and is not problematic, and we're still effectively making progress towards our medium-term target of 20%. Cash GBP 61.6 million, lower than this time last year because of the payment of the GBP 20 million special dividend in the second half last year, but higher than expected. Good free cash flow at GBP 14.2 million against GBP 9 million last year, and that's really down to an inflow on working capital. I think that's really more of a timing issue, and will moderate in the second half. We still expect to have a bit more cash.
Normally, we grow cash principally in the second half, but we think it's come a little bit early. Return on capital very strong, 30.4%, up GBP 3.3 million. Following payment of the special dividend last year, we've now got a more efficient balance sheet with slightly less cash on that. Dividend, a small rise to GBP 0.15. We expect bigger growth in the second half, but I'll pick that up again later. Okay, having a bit more of a detailed look at revenue. Throughout this slide, I'll give some like for like numbers, which have an adjustment in them for the effect of moving to the concentrate model in West Africa. This has a calming effect on revenue growth without affecting the absolute profit we earn on that sale. Group 1.8%, like- for- like + 3.7%. U.K. package plus 3.7%. Within that, volume up 5%.
We haven't put through an inflationary price rise this year. We've had a little bit more promotional spend within the revenue line, maybe a little bit lower marketing below the revenue line. International - 2.5%. Like- for- like on that is up 5.7%. The principal reason for the fall is the earlier timing of Ramadan during the year. Some of the shipments that would have in the comparative period, we actually made in Q4 2024. Those of you who heard the presentation then will remember that we got good growth in the Middle East. We probably just shipped at least an extra container in terms of the timing in 2024 rather than earlier 2025. That is really offset by the shift to the concentrate model in West Africa. Middle East as a whole, off 53%.
We were down three containers against the comparative, but we expect the second half to be level at 17 containers in both periods. Africa really stunned that performance + 16.9%. If you do a like- for- like on that, adjusting for the move to the concentrate model where the sales volume is around about a third of that of the finished product equivalent, it would have been 29% up. Really strong performance, but progress both on concentrate and on red can. Rest of the world down 13.6%. Restrained really in both Europe and the U.S.A. We expect to make progress in the second half of the year to recover that. In Europe, our distributor had one or two supply chain issues within their logistics, and the U.S., a bit of an effect from we think we're a little bit out high on price and obviously some effect from tariffs.
Overall packaged up 1.8%, but that's 3.7% in like- for- like terms. Out of home, + 1.9%. Good performance from what's now a much more simplified business. We expect to make a bit more progress in the second half. We did plan for revenue growth to be lower because essentially we slowed, particularly slowed the out-of-home business down while we went through the ERP SAP transition. Okay, moving on to business profitability, operating profit by business. As we see in overall, up half a million pounds to GBP 13.6 million, 4.1%. Operating margin 15.9%, up 0.3%. Really a really good performance building on the near 15% growth last year. We were really quite pleased with the progress over the 18-month period. Package profit + . I think importantly in terms of our targets, return on sales up 0.4% to 29.1%.
That's a really good return on sales from the business and very much in line with the strategy. Within that, U.K. performance was good. We've seen extra sales, maintained gross profit percentage has led to extra margin. As I said earlier, some additional promotional spend during the year in the sales line rather than marketing spend. Just a little bit of a switch between the two, but overall warmth in the U.K. I think in international benefits really of developing a spread of markets. We've obviously got the lower Saudi business in the first half, but that's really being balanced by the standard performance from Africa. Overall, gross margin percentage has been maintained. Out-of-home, profit + $0.1 million. Good steady performance. Sales a little ahead, profit a little ahead, good cost control within that business. Importantly, the return on sales ahead by 0.6%.
Our objective really for out-of-home is to improve profit rather than grow the business quickly. Central overheads in net terms up 2.3%. Within that, higher spend on operations. We have got a full period of the recruitment that went on through last year, and that's really investing in our procurement and supply chain teams. A little bit of extra spend in IT. The SAP S/4HANA system, the license fee on the SAP S/4HANA system is bigger than the license fee on the legacy systems that we worked on before. Increase in spend in IT. We've also had the increase in cost of living and extra NIC coming through in the first half. Overall, those investments and additional national insurance have been offset with savings elsewhere. Overall, really fairly well controlled. Profitability up 4.1%. We expect to make more progress in the second half.
Adjusted PBT, really same numbers but in a statutory format. As you can see, the group margin overall maintained at 44.1%. We expect the second half to be higher with a substantially increased number of shipments to the Middle East. We do see that moving forward. Distribution costs higher, a bit more volume there. We saw volume growth in the U.K., 5%. Admin spend generally well controlled and more balanced. Good progress at the operating profit line. As I've talked to earlier, finance income lower. We had generally lower cash on average during the period given the payment of last year's special dividend, and obviously interest rates were lower. We expect progress in the second half. Exceptional items, 2025, entirely the SAP S/4HANA implementation and business change program.
During the go live period in March, we had extensive support from our implementation partners, which was the SAP implementation partner and also the business design and transformation partner that we used. Second half, while the system is in and working and transactionally went very well, I don't think there was any interruption either to our purchasing processes or dispatch and invoicing, which you get with some SAP installations. Transactionally went very well. We're now bedding down the systems as a little bit of further spend come in the second half on completion of some of the integrated business and financial planning systems.
We expect to spend a further spend of around about GBP 750,000 million on that, and then the project will be complete, and we could look forward to capturing the benefits that we expect to come from that, which will be largely in better procurement and in better supply chain management. Net cash, obviously a really good performance supported the forward strategy. We always plan to be pretty strong on cash, and obviously that's still the case at the half year. I think it is a little ahead of where we would normally expect to be. Traditionally, we get a small increase in cash in the first half, but a bigger increase in the second half. We think this will therefore the outperformance in H1 will moderate in H2. Nothing substantially has changed within the numbers. I think it's just a bit of timing, but obviously a better place to be.
Principal change in cash has been low working capital demand of GBP 6.4 million. Probably a better performance on debtors than at the 2024 year end. We've received some delayed payments from Africa and the Middle East. Credit is a little bit higher, but that's generally timing and things like high VAT charge, VAT balance. Lower cash interest, normal tax charge and cash out, and obviously we've paid 2024's final dividend. We're really quite happy that we've got over GBP 60 million in the bank at present, so pleased with that. Finally, for me, a reminder of our capital allocation policy and a bit of information on the interim dividend. Obviously, as a business with a long-term perspective, the first call on our cash is always to support the business with investments in innovation, marketing, and widening our distribution, and that's obviously carried on through the first half.
Then supporting the business with CapEx and working capital. That's always the first course on from the business point of view. We then obviously want to pay a progressive dividend. I'll go on to the dividend later, but a small increase. After that, really it's supporting the current business with, I suppose what I'd term quality M&A. It's the right target in the categories that we can't access easily with the Vimto brand. Finally, returning surplus cash. Last year, we obviously paid out a GBP 20 million special dividend. I think the board has reviewed whether we should have declared one at the half year. We think it's a little bit early, but it will be considered again with full- year results. In terms of dividend, we operate a fairly rigid two- times covered dividend policy.
What that translates into with the earnings per share figure is a small increase to GBP 0.15 from GBP 0.149. Obviously, given the full year expectation of an improved profit, we'd expect to pay to generate more dividend growth in the final dividend paid next year. Thank you.
Thanks, David. Okay, just looking ahead, some of the key focuses for us in half- year two. On the back of our launch of Wonderf uel, which obviously targets kind of children in that breakfast occasion, we've got good distribution now across some of our key customers. The major marketing campaign kicks off in back to school in September, where we'll be making a significant investment into TV, digital, sampling, and shopper marketing across the piece. We're very excited about this launch. On the back of the success of our Vimto Love the Taste brand campaign, we will be going out with a bigger and bolder program in year two. That program is just starting in market now. We are increasing the number of packs. You will see it on to over 35 million.
The key here is that it's then supported across our retail partners, where we bring to life in store superb activation, drives interruption for consumers, and additional rate of sale. From an international perspective, we will be looking to move our production out to back into the market of the U.S.A. We currently have a business there mainly focused on expats from the Middle East and Africa. During COVID, we took our production out of the U.S.A., which challenges our partner there, and back into Spain. On the back of rising tariffs that obviously we've all seen in the press, we'll be looking to move our production of products back into the U.S.A., and we'll be doing that at the end of Q4 this year. We continue with a focus on innovation abroad. In the Middle East, we are launching a new flavor in our kids range of Blackcurrant.
We are launching a new can format. You see the purple can there, that's a 330 ml pack, both in original Vimto and Blue Raspberry, which is going to be a value offer to consumers. In West Africa, we are moving to a 250 ml can format across our Gambia country. Last but certainly not least is the continued rollout, as I mentioned earlier, to our supply of Red Can into three additional markets in the second half. Just to summarize for me, we are really pleased with where we are and absolutely on plan to hit the targets we outlined back in our capital markets day in November last year. They are to take turnover to about £225 million, a PBT margin of 20%, and PBT of £45 million.
As David has signposted, we're absolutely on plan at the half year, and we accelerate in the second half on the back of the Middle East phasing and the ERP rollout. We are part of a very growing and resilient soft drinks category, which is really, really positive. We have a clear and focused strategy to remind you to accelerate growth in our higher margin packaged business in the U.K. and internationally, to drive bottom line contribution from our simplified out-of-home business, and continue to drive efficiencies through operational change and business transformation to reinvest back into our business. We are confident that we will deliver in line with market expectations on adjusted PBT at GBP 33.1 million to continue to deliver further value for all of our shareholders. Okay, Jake, that wraps up the presentation. We're now happy to open up to questions.
Perfect, Andrew, David, that's great. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. While the team take a few moments to review those questions that have been submitted already, I'd 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 dashboards.
You can see that we have received a number of questions throughout your presentation this afternoon, and thank you to all of those on the call for taking the time to submit their questions. Andrew, David, at this point, if I could just ask you to read out those questions and give your responses where it's appropriate to do so. If I pick up from you at the end, that'd be great. Thank you.
Okay, thanks, Jake. I'll read the questions and then indicate whether I'll say that or David will pick that one up. I think the first one is a question here around beyond Senegal about other markets where local manufacturing could enhance flexibility, margin, or competitiveness. First, just to remind everybody that Senegal will serve six markets. That will be the ones I've highlighted around Mali, Guinea, Senegal, Guinea-Bissau, Mauritania, and I can't remember the sixth one. We will move to Ivory Coast next year, and the markets serviced out of there will be Ivory Coast, Niger, Sierra Leone, Burkina Faso. That is in the presentation, so there's 11 key markets.
As mentioned in the second part, we will be moving to local production back in the U.S. on the back of the rising tariffs. With not having that 15% tariff in place, it will make us more competitive with sustainability benefits as well. The next question, perhaps for David, is how do you manage currencies in the West African countries we operate in?
The policy we've had for some time is we trade with West Africa largely in euros. Obviously, there is a local currency, the West African franc, which would give, if we trade in that, would give us some issues. The euro is generally well understood and accepted there. Essentially, we would manage our currency exposure with a hedging policy where we'll hedge six to 12 months out on our net euro exposure. We also have some euro costs coming in. It's been managed on that basis for some time. I think one of the byproducts of the move to concentrate should be to give us some improvements.
We have historically had some problems, not major ones, in terms of receiving payment from some of our customers in West Africa simply because they've found it quite hard to access hard currency like the euro when there is a lack of euros in their banking system. Because the concentrate model is generally, while we don't lose any profit, the sales value is about a third of the model it replaces. It means they have to access less euros, hard currency, and so it should be easier for them to pay us. There's good benefit there.
Thanks, David. We have a question here asking us how we think we can improve growth as several commentators have reported it to be pedestrian. Twofold, I think it's really important here to, if we start with profit growth, and I'll talk about revenue growth. I think from a profit growth perspective, 4% at the half year was exactly where we planned to be. That is on the back of two things. The phasing of containers to the Middle East. If you remember what David said, 90% of our containers this year will be in the second half versus only 10% in the first half. We always knew growth was going to be stronger in the second half.
Also, from a profit point of view, we knew in the first half, the launch of ERP, we planned some activity not to be done, and we moved that into the second half. Things like new customers in out-of-home will be loaded for second half growth. I think it's really important to stress that we are absolutely where we said we were going to be at the half- year. I think from a revenue perspective, what's really important to remember is the changing model in Africa means that as we are sending concentrate and not finished goods, our revenue line is always going to look lower.
David, I think, covered quite nicely in his slides around you have to look at it on the like-for-like growth, which is just for that change. Probably really important to understand that part of our business, to understand that that growth isn't pedestrian. It's just weighted to the second half. The change in the model in Africa means revenue- lower, but overall profits should improve through the model we've talked about.
I think the additional thing to say is that, you know, we're looking at this over a five-year period. We know we actually achieved something like 14.7% last year. That was probably a little, I think we said at the time, that was probably a little ahead of where we wanted to be. Taking the two periods together, you know, we need to, you know, our target is to grow somewhere between 8%- 10% profitability each year. We'll still be in line, well in line with that at the year end if we hit the numbers that we want to. What we're not doing, what we don't want to do is shoot for the stars over a short-term period. We want to deliver for the long term.
Thanks, David. The question here is about asking, are we planning to stay on AIM? Yeah, absolutely, the intention is to stay on AIM. We think AIM serves our purpose very well. Although there have been changes, as we all know, to legislation, it's still very beneficial from an IHT perspective. We get good coverage because we sit right in that top echelon of the AIM market, which we wouldn't on the main market. With our strong family shareholding that sits at 36%, they are very keen for us to stay on the AIM market as well, while it's got the benefits it currently gives today. Yeah, absolute plan to stay on AIM. How much further potential is there to expand distribution for core brands in your mature markets in the U.K. and Middle East?
Yeah, I think in the U.K., we are confident that we can still grow our business strongly there. You've seen we've delivered strong volume and value growth this year again in the half year. Jake, just to let you know, on our screen, it said our camera has been disabled. I'm not sure if that's something you can turn back on for us. Thank you. In the Middle East, that market is more mature. Therefore, again, you know, Ramadan is important, but what we are doing is, as hopefully you've seen from the presentation, expanding our portfolio to new occasions outside of Ramadan. We are now the number two children's brand in the region. We have introduced Zero into our portfolio. As you saw, we are introducing NPD with the new 330 ml can into our carbonates portfolio.
We still believe we can grow in that region, even though, as you know, we have been there over 100 years. Perhaps one for David here. Are there any plans to revisit special dividends or share buybacks given your robust balance sheets?
Yes, there are. Our capital allocation policy is quite clear that, you know, we know roughly what cash we need to run the business and to invest in the business. I think the Board did consider it at the interims, but we felt it was a little bit too early. I mean, if you have a special dividend every year, it's not particularly special. I think it will be reconsidered at the year end when we can look at, you know, where we're up to in terms of central M&A, you know, where the cash generation coming off the businesses is and what the investment needs are. There is a plan to, you know, the position on special dividends will be reviewed every six months in line with the normal dividend review. If there is surplus cash, we would certainly consider both share buybacks and special dividends.
Thank you, David. There's a question here asking that it's two-pronged. One part of the question asks us about how do we choose which markets we expand in internationally, how quickly can we make returns, and is there real opportunity for returns. There's a separate question about the change in ownership of Britvic. I'll start with the new markets. We think long and hard and plan long and hard about what markets we go to because if you go into a market where you get it wrong, you can tie it up for a number of years. First and foremost, you've got to find the right partner. That's absolutely crucial. We do our research. Let me use Malaysia as an example. Why have we gone to Malaysia? It's a country that's large, so it's got 32 million population.
It's heavily Muslim population, very similar to our Middle East business that we know is successful. It's got a very well-established squash market with well-known berry players in that market. The consumers understand squash and understand dark fruits. That is why we choose to go there. Equally, we know that can be a platform for us for growth into Southeast Asia. Returns are not always quick. You do need to invest in marketing where the brand is not known. It will probably take two or three years to get into profit. We're always looking to the long term. If we hadn't gone into Africa 30 or 40 years ago, we wouldn't have been where we are today.
It's important we invest and go into these marketplaces, but we balance how many we do at once because we need to balance how much our P&L can take investing into new countries at the same time. In terms of the change at Britvic, just for everyone's benefit, Britvic has been taken over by Carlsberg. It's now the Carlsberg Britvic operation. We've still seen Britvic being very, very active in the marketplace during the first half. Most of our contacts and people we know at Britvic are still in place. I've not seen any changes there at the moment. Paging down. We have a question here about the Middle East saying it can perhaps be a little bit lumpy and volatile. Should we still expect sustained growth going forward? I think the key measure for us are in market sales.
Because Ramadan moves every year by 10 days, it can be lumpy, which I think the question is referring to in terms of when we send our shipments and which financial year they fall into. Importantly, we look at the Middle East over a two-year horizon. I think what we've always said is that we expect growth to be about 2%- 3% in this region every year, which will play out over the two years. I think it's a very profitable region for us. It's important that we protect the volumes we've got. I think it's asking here, should we still expect growth going forward? Yes, we won't go 2025 on 24 because of that phasing. Over the two years, as I say, we will grow. Back into 2026, we expect that 2%-3 % growth every year in that region.
Any progress concerning reentry of South Africa and linked to that, any plans to enter the markets of Australia and New Zealand? South Africa is a market we would love to enter. It does very high consumption of soft drinks per capita. It's a market very dominated by Coca-Cola. It's about finding the right partner there. We are having good conversations, but we'll only launch there as and when we find the right partner. In terms of Australia and New Zealand, we do have a small business there, which is generally our U.K. product going out there and being sold in some of the supermarkets in the export aisle. Our product is priced quite highly. We have looked at Australia and New Zealand. You'll always need to find the right distributor. It's hard to make a margin when you are exporting that far.
It's not in our immediate priority list at the moment, but at some point it may come onto it. Question here about out-of-home. Will we go to more distributors than our in-house business? For everyone's benefit, in out-of-home, about 50% of our business we do with our own in-house people. The other 50% is done through distributors who we sell the product to, and then they do all the distribution. We always keep an open mind here. The current model works for us well. If there were opportunities to go more in-house, if we couldn't find the right distributors, we may look at that. We would always consider things. Hopefully everyone can see from our results the current market we have in the current structure we have in place post our strategic review. It is working really well.
There's a question here around somebody who's tried our Wonderf uel product and somebody who's tried our Double Concentrate product. This individual prefers our Double Concentrate to our Wonderf uel and just saying, do we believe that Wonderf uel can be a success in the long term? Do we have much evidence of that? What I would say is, obviously our Wonder Fuel product is targeted at very young consumers. Hence, we're targeting back to school and the breakfast occasion. We had very, very strong consumer feedback from that age group about the taste of the product. Hopefully, perhaps it's different consumer ages and preferences that prefer that product. Thank you for the feedback on Double Strength. Again, we had good feedback there. We had some of our customers ask us to develop Wonder Fuel in conjunction with them. We've rolled it out.
We've had encouraging first sales, but really the big marketing campaign kicks off in September. When you launch a new brand, even if it's got the Vimto name on, it's crucial you market it strongly, you get people sampling the product. We're encouraged that we think this will work over the medium to long term. Let me just page down to the next question. One real question asking us here how we are performing against people like AG Barr. Obviously, we focus on our own business. AG Barr are going through lots of change at the moment, and have been reporting good numbers, but we're really pleased with our own numbers at the moment and where we are and how we are performing. Also a question about how do we perform against Ribena. Again, I'd say the same. We focus on our own performance. We're pleased with our own performance.
We don't see reported reports from Ribena, but we see in the marketplace that they're doing well in their own markets. I think, Jake, that's all the questions we can see. If that's everybody's questions, we should perhaps wrap up now.
Absolutely, guys. Thank you very much indeed for being so generous of your time and addressing all of those questions that came in from investors this afternoon. If there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. Andrew, perhaps before really now, just looking to redirect those on the call to provide their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great.
Yeah, no problem, Jake. First, I'd just like to say a big thank you to everybody again for dialing in today. We value your time, we value your questions, and we obviously highly value you as our retail shareholders. Thank you for your support. I'd like to say we are pleased that we are delivering against the promises we made from a strategic point of view in our capital markets day last year. Our numbers are bang on where they expect them to be at the half year. We fully expect our full year expectations around profit before tax to be in line with the expectations at just over GBP 33.1 million that keep us on track for our medium term targets of the GBP 45 million we've highlighted. Hopefully you'll see we are delivering against the targets we put out there.
We'd just like to thank you all again for your support. Thank you.
Perfect. That's great. Andrew, David, thank you once again for updating 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 for the management team to better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll 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. Good afternoon to you all.