Nichols taking the hit in Middle East
The sugar tax in the Middle East will provide even more challenges for Vimto maker Nichols this year. A 50% tax on sweetened juice drinks was introduced on 1 December in Saudi Arabia and the UAE. The Middle East dominates international sales, with around four-fifths of sales in the region during Ramadan, which starts on 23 April this year.
The additional cost will be absorbed partly by Nichols and partly by a higher consumer price. The overall effect of the new tax will not be understood until the end of Ramadan. Management guidance is a pre- tax profit hit of between £2.5m and £4m.
N+1 Singer forecasts a 2020 pre-tax profit of £29m, assuming the worst-case scenario, before a steady improvement in subsequent years. Interim figures will be announced on 22 July and there will be more news about the effect of the Middle East tax by then.
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Ilika funds battery capacity upgrade
Advanced materials developer Ilika is taking advantage of a 40% increase in the share price so far this year to raise £15m gross at 40p a share. There is also an open offer at the same price to raise up to £2m more.
The cash will be invested in the development of battery products. There is £4m required to move the Stearex battery technology into a third-party fabrication facility. Given the potential demand for the battery technology, there may be more cash required to increase capacity.
Ilika already has demand for Stearex products. The new facility will not be up and running until 2022 and in the following financial year revenues from the facility could be more than £12m. The rest of the cash should cover the period until this happens.