AUDITED RESULTS FOR THE YEAR ENDED 31 JULY 2023

UP Global Sourcing Holdings PLC

31 October 2023

 

31 October 2023

Ultimate Products plc

(previously, UP Global Sourcing Holdings plc)

("Ultimate Products", the "Company" or the "Group")

AUDITED RESULTS FOR THE YEAR ENDED 31 JULY 2023

 Record revenue and profits

Ultimate Products, the owner of a number of leading homeware brands including Salter (the UK's oldest houseware brand, est.1760) and Beldray (est.1872), announces its audited results for the financial year ended 31 July 2023 ("FY23", or "Year"), that are in line with market expectations.

Financial highlights

·    Total revenue up 8% to a record £166.3m (FY22: £154.2m), achieved with no overall price inflation to keep our products at prices which are affordable to consumers:

o  Online revenue up 64% to £41.4m (FY22: £25.3m), with strong growth in both the UK and Europe

o  Sales to retailers down 3% to £124.9m (FY22: £128.9m), with growth returning in the second half of the year (H2: 8% growth, H1: 11% decrease)

·   Gross profit rose 11% to £42.7m (FY22: £38.4m), with gross margin increasing to 25.7% (FY22: 24.9%), driven by online sales growth and the fall in global shipping rates:

o  Our relentless focus on productivity improvements since FY18 has driven gross profit per employee from £83k in FY18 to £113k in FY23

·    Adjusted EBITDA* up 8% to £20.2m (FY22: £18.8m)

·    Adjusted profit before tax up 6% to £16.8m (FY22: £15.8m)

·    Statutory profit before tax up 4% to £16.0m (FY22: £15.4m)

·    Statutory EPS up 2% to 14.6p (FY22: 14.3p), with Adjusted EPS* up 4% to 15.4p (FY22: 14.7p)

·    Full year dividend per share up 4% to 7.38p (FY22: 7.12p)

·   Improved net bank debt/adjusted EBITDA* ratio of 0.7x (FY22: 1.3x), driven by improvements in working capital management and the phasing of trading during the second half of FY23

·  Strong cash generation from operating activities of £24.4m (FY22: £6.8m), representing a 121% operating cash conversion (FY22: 37%)

*Adjusted measures are before share-based payment expense and non-recurring items.

Operational highlights

·      Successful relaunch of Petra, the German kitchen electrical brand, into the German market

·      Renewal of the Group's Russell Hobbs licensing agreement on a rolling four-year basis

·      Launch of the Group's inaugural ESG Strategy

·      Continued investment in AI and robotics yielding positive results, and supporting operating margin:

o  Robotics programme now saving over 1,000 hours of employee time every week, allowing our talent to focus on higher value tasks

·      Post period end:

o  Opening of the Group's new European showroom in Paris

o  Rebrand of the iconic Salter label

o  Renaming of the Group from UP Global Sourcing Holdings plc to Ultimate Products plc, to better reflect the Group's purpose and core activities

Current trading and outlook

The Board anticipates that full-year performance for FY24 will be in line with current market expectations. Net debt is continuing to reduce as the Group de-levers following the transformational Salter acquisition at the end of FY21. In the current environment of higher interest rates, the Group's low net bank debt/adjusted EBITDA ratio, combined with its interest rate hedges, provides both a competitive advantage and growing optionality in the use of free cash flow.

Commenting on the results, Simon Showman, Chief Executive of Ultimate Products, said:

"I am delighted to report a record financial performance for Ultimate Products in FY23. This is a fantastic achievement for our business, particularly given the tough macroeconomic backdrop. Our homeware brands and products are used by households on a daily basis, and we have worked extremely hard to make sure that we maintain affordable prices for all consumers. We are hugely proud that we have achieved this despite persistent cost inflation.

Our online business was a standout performer in FY23, particularly in the UK. I am confident that the experience we have gained in optimising this part of our business will be hugely valuable as we continue scaling our European ecommerce business, where sales are already growing strongly. In addition, we are confident that our recently opened Paris showroom will help us attract new retail customers in the French market, as well as across the wider European continent."

For more information, please contact:

Ultimate Products [phone]

Simon Showman, CEO

Andrew Gossage, Managing Director

Chris Dent, Chief Financial Officer

Shore Capital [phone]

Mark Percy

David Coaten

Iain Sexton

Malachy McEntyre

Isobel Jones

Cavendish Capital Markets Limited + 44 (0)20 7220 0500

Carl Holmes

Matt Goode

Abigail Kelly

Charlotte Sutcliffe

Powerscourt [phone]

Rob Greening

Sam Austrums

Oliver Banks

Notes to Editors

Ultimate Products is the owner of a number of leading homeware brands including Salter (the UK's oldest houseware brand, established in 1760) and Beldray (a laundry, floor care, heating and cooling brand that was established in 1872). According to its market research, nearly 80% of UK households own at least one of the Group's products.

Ultimate Products sells to over 300 retailers across more than 40 countries, and specialises in five product categories: Small Domestic Appliances; Housewares; Laundry; Audio; and Heating and Cooling. Other brands include Progress (cookware and bakeware), Kleeneze (laundry and floorcare), Petra (small domestic appliances) and Intempo (audio).

The Group's products are sold to a broad cross-section of both large national and international multi-channel retailers as well as smaller national retail chains, incorporating discount retailers, supermarkets, general retailers and online retailers.

Founded in 1997, Ultimate Products employs over 370 staff, a significant number of whom have joined via the Group's graduate development scheme, and is headquartered in Oldham, Greater Manchester, where it has design, sales, marketing, buying, quality assurance, support functions and warehouse facilities across two sites. Manor Mill, the Group's head office, includes a spectacular 20,000 sq ft showroom that showcases each of its brands. In addition, the Group has an office and showroom in Guangzhou, China and Paris, France.

Please note that Ultimate Products is not the owner of Russell Hobbs. The Company has licence agreements in place granting it an exclusive licence to use the "Russell Hobbs" trademark for cookware (NB this does not include Russell Hobbs electrical appliances).

For further information, please visit www.upplc.com

BUSINESS REVIEW

Purpose & Strategy

Our core purpose is to provide beautiful and more sustainable products for every home. This purpose runs deep within our business and, over the past two years of surging inflation, has become even more relevant to our valued retail customers and consumers. The significance lies in those two overlooked words at the end of our purpose: 'every home'.

Our ambition is to provide desirable and affordable products to every household across the UK and Europe. In the current economic climate, where consumers are feeling the impact from cost of living price increases, we are extremely proud to have kept our prices flat year-on-year. Although our products are not as essential as food or energy, they are the products that consumers and their families use on a daily basis - the kettles and toasters that make breakfast possible; the scales and kitchen accessories that help bake a cake for the family; the air fryer used to cook dinner for the kids. Our products continue to be wanted and needed by millions of households, and this is why they are found in [80%]/[so many] of homes across the UK.

Our focus on providing beautiful and more sustainable products at a price that is appealing to both our retail customers and consumers has helped us maintain our position as a leading branded homeware supplier during times of household budgetary constraint. Our retail partners can earn an equivalent 'own label' margin whilst, at the same time, being able to take advantage of our world class sourcing and logistical capabilities. Meanwhile, our consumers can purchase, at affordable prices, beautiful products which they are proud both to use and to have on display in their homes.

Whilst we are proud to keep our prices low, we retain the ability to increase selling prices. The mechanism by which this is achieved is through constant innovation and bringing new products to market. Each year we aim to introduce around 600 new products, which is approximately 20% of the total amount of products we sell. These new products enable a resetting of price, which allows us to maintain healthy, but fair gross margin levels.

While our products are already highly prevalent across UK households, we also have strong European ambitions. In FY23, we generated sales of £49.6m in Europe, up 1% from the previous year. However, as sales in the UK grew faster, our overall percentage of sales from Europe fell slightly from 32% in FY22 to 30% in FY23. We continue to believe that our products are as attractive to our retail partners and consumers in Europe as they are in the UK, and view the continent as a key growth driver for the business. We currently sell £1.72 of product per capita in the UK (population: c.67 million). If we can repeat just a fraction of that level of penetration in Europe (population: c.477 million), the financial effects would be transformational for our business. To capitalise on this huge potential, we took the decision during the year to relocate our European showroom to Paris, which we expect will open up opportunities with both French and pan-European retailers.

Our Cologne showroom enabled us to showcase the quality of our products to German retailers in their home territory, and was therefore very important in helping us to achieve traction and growth in that market. As such, we have been able to win a number of large German retailers as customers across Europe, with German sales of £15.2m making up 30% of our sales into Europe. We regularly meet our German retail partners at their premises and at events, such as Ambiente, the largest consumer goods fair in Europe, so there is now less need for them to travel to our showroom. Therefore, as we look to increase our penetration with other large non-German retail customers, we took the decision to move our European showroom to a 16,500 sq. ft. space at the Homexpo Paris showroom complex, where the anchor tenant is JJA, one of France's largest home furnishing suppliers. The site, which is located near Charles de Gaulle airport, is not only convenient for hosting French retail partners, but also existing and potential customers from across Europe. To facilitate this international expansion plan, we have been delighted to welcome our new sales team in Paris, who complement our other sales teams in Germany and Poland.

While our outlook is increasingly international, the heart of Ultimate Products will always be Oldham, which we have been proud to call home since our inception. Our commitment to Oldham, from where we continue to recruit the majority of our talent, was reaffirmed during the year with the renewal of our lease at Heron Mill, our 240,000 sq. ft. warehousing facility.

Our Brands

	FY23	FY22			FY23	FY22
	£000	£000	Change	%	%	%
Salter	66,599	48,080	18,519	38.5%	40.0%	31.2%
Beldray	35,031	39,950	(4,919)	-12.3%	21.1%	25.9%
Russell Hobbs (licensed)	16,458	20,165	(3,707)	-18.4%	9.9%	13.1%
Progress	7,425	8,287	(862)	-10.4%	4.5%	5.4%
Petra	3,194	-	3,194	-	1.9%	0.0%
Kleeneze	3,378	2,835	543	19.2%	2.0%	1.8%
Premier Brands	132,085	119,317	12,768	10.7%	77.5%	77.4%
Other proprietorial brands	16,036	17,032	-       996	-5.8%	11.6%	11.0%
Own label and other	18,194	17,842	352	2.0%	10.9%	11.6%
Total	166,315	154,191	12,124	7.9%	100.0%	100.0%

In line with our desire to be the 'Home of Brands', we have developed our portfolio of proprietary consumer goods brands to become true leaders in their respective categories. Our brand journey over the last five years has seen us pivot from a licence holder to a brand owner, giving the business a resilient core from which we can expand and grow. 89% of our revenues are now derived from brands which we either own (79%) or have on long-term licence (10%), which is up from 60% in 2018.

As a key part of this journey, we were delighted to welcome Tracy Carroll to the newly created role of Brand Director in December 2022. Tracy is enabling us to refine and focus the development of our portfolio of brands. Her first major project is the ongoing rebrand of our key Salter brand, which was successfully previewed at the Exclusively Homeware event in June 2023.  We are delighted by the performance of Salter in the current year with its £66.6m of sales, representing a significant 39% step-up in the scale of what is the UK's oldest houseware brand.

In addition, we renewed our trademark licence agreement with Spectrum Brands, which grants us an exclusive licence to use the "Russell Hobbs" trademark in the United Kingdom, Europe, Australia and New Zealand for non-electrical kitchen and laundry products. The new agreement is on a rolling four-year basis, rather than the previous fixed-term arrangement. This change reduces the licencing risk, as the licence will always have four years to run. It also allows us to better focus on the long-term growth of the Russell Hobbs brand, which will increase the benefits of the partnership for both Spectrum Brands and Ultimate Products.

Finally, we have seen the highly successful relaunch of Petra, the German kitchen electrical brand, with sales surpassing £3m during the period. We have a tried and tested approach to reinvigorating and growing our heritage brands, of which Petra is just the latest, and most international, example.

Our Strategic Pillars

	FY23	FY22			FY23	FY22
Strategic Pillar:	£000	£000	Change	%	%	%
Supermarkets	49,116	51,523	(2,407)	-4.7%	29.5%	33.4%
Discount retailers	44,593	48,126	(3,533)	-7.3%	26.8%	31.2%
Online channels	41,449	25,321	16,128	63.7%	24.9%	16.4%
Multiple-store retailers	22,178	17,312	4,866	28.1%	13.3%	11.2%
Other	8,979	11,909	(2,930)	-24.6%	5.4%	7.7%
Total	166,315	154,191	12,124	7.9%	100.0%	100.0%

As a business we continue to diversify our customer base to mitigate risk and increase the predictability of our revenue. This year, we have seen the benefits of this strategy in full effect. During a period of significant uncertainty around consumer sentiment, Group revenues increased 8% to £166.3m (FY22: £154.2m), a performance that was achieved with no overall price inflation, in order to keep our products at prices which are accessible to all consumers.

Online channels were the main driver of revenue growth, and more than offset the temporary weakness we have seen in other areas. In the first half of the year, retail customers were understandably cautious in the size of forward orders, given the macroeconomic environment and high stock levels carried over from the pandemic. As a result, sales to retailers fell 11% in H1 FY23 against the corresponding period in FY22. The second half of FY23 saw an easing in the level of overstocking and sales returned to growth, increasing 8% against the corresponding period in H2 FY22. Although overstocking and uncertainty regarding the consumer environment continue to hold back retail ordering, confidence is steadily returning.

The exceptional 64% growth in FY23 online sales reverses the pattern seen in FY22, when, amidst a period of significant supply constraints, we made the strategic decision to prioritise orders made by our retail partners, meaning that sales through our online channels were necessarily constrained. Our online sales are mainly conducted through third-party websites such as Amazon and eBay, as well as through our own sites, Salter.com and Beldray.com. They have primarily been focused in the UK (FY23: 89% of online sales; FY22: 92%), where an optimised approach to third party platforms helped to grow sales by £13.8m. We are now using the experience gained in the UK to expand our online capabilities in Europe, where online sales grew 115% to £4.3m, clearly demonstrating the potential for future growth.

Our Product Categories

	FY23	FY22			FY23	FY22
	£000	£000	Change	%	%	%
Small Domestic Appliances	66,813	57,032	9,781	17.2%	40.2%	37.0%
Housewares	48,008	54,539	(6,531)	-12.0%	28.9%	35.4%
Laundry	18,163	14,799	3,364	22.7%	10.9%	9.6%
Audio	15,545	12,907	2,638	20.4%	9.3%	8.4%
Heating & Cooling	6,214	5,870	344	5.9%	3.7%	3.8%
Others	11,572	9,044	2,528	28.0%	7.0%	5.9%
Total	166,315	154,191	12,124	7.9%	100.0%	100.0%

Our Small Domestic Appliances (SDA) category has grown strongly in the year, supported by buoyant consumer demand for energy efficient and money saving products. Part of this growth was in air fryers, where continued strong sales following the pre-Christmas boom appear to indicate that this product line has found a permanent place on kitchen counters. As always, it is newness in product that maintains Ultimate Products' strong market position, and we have been delighted to take our first orders for the Salter combined air fryer-microwave, which will open up the air fryer market to new consumers.

Housewares have been hardest hit by retailer overstocking, with cookware in particular having seen a COVID-19 spike in sales, followed by a subsequent fall.

Our Geographies

	FY23	FY22			FY23	FY22
	£000	£000	Change	%	%	%
UK	115,580	101,050	14,530	14%	69.5%	65.5%
Europe	49,645	48,931	714	1%	29.8%	31.7%
Rest of World	1,090	4,210	(3,120)	-74%	0.7%	2.7%
Total	166,315	154,191	12,124	7.9%	100.0%	100.0%

As noted, growth in the current year has primarily been in the UK, where online sales were up 60%, and sales to retail customers were flat at £78m. Sales growth in Europe was subdued, with sales increasing 1% to £49.6m. Within this, we saw healthy growth in our online sales, which offset weakness in sales to European retailers who have not reduced overstocking as quickly as UK retailers. This performance reverses some of the strong growth we have seen, especially in Germany, which remains our largest overseas market. We continue to see the European market as a key area for long-term growth, demonstrated by our investment in a new European showroom in Paris. Our showroom in Cologne was very successful in helping to build strong relationships with retail buyers at German discounters and supermarkets. These relationships are now sustained through attending events such as Ambiente, Europe's largest housewares show, and visiting the premises of our retail partners. Our relocation to Paris aims to replicate the success we have had in Germany with both French retailers and other European retailers for whom our new showroom, located near Charles de Gaulle airport, is easier to visit than Cologne.

Revenues in the Rest of World ("ROW") declined from £4.2m in FY22 to £1.1m in FY23, as post-Covid overstocking impacted a key Australian customer. ROW remains a nascent part of the business, with a limited number of customers, which can inevitably lead to fluctuations in year-on-year revenue performance.

Investment in Productivity

Despite seeing a dramatic increase in the inflationary environment, we are proud that we kept our products at affordable prices for every consumer, a decision that helped support our sales growth of 8%. Although we kept our prices consistent, as a business we are not immune to cost inflation. To hire and retain the best talent we need to ensure that our wages continue to be competitive and attractive. Despite these cost pressures, we have been able to maintain our adjusted EBITDA margin at 12.2% and increase adjusted EBITDA by 8% to a record £20.2m.

We achieved this through the strength of our operating model, which is constantly being finetuned to optimise productivity, and this approach is directly linked to our ability to consistently provide the best service to our customers. We have therefore been relentless in developing the systems that underpin our business and, in recent years, have established a company culture that is intensely focused on driving productivity through automation. This focus has driven gross profit per employee from £83k in FY18 to £113k in FY23.

During the year, we embarked on the automation of hundreds of tasks across the business, which is saving over 1,000 hours of employee time every week. Our approach to automation is best characterised as a bottom-up approach by which our teams will come to us with problems, which our process development team will then solve. This demand-driven approach has allowed us to concentrate our efforts on the tasks that cause the most friction within our business. Solving them with automation increases productivity and improves accuracy, resulting in enhanced operating margins, an even better customer experience, and a more engaged workforce.

ESG Strategy Launch

Doing the right thing has always been at the core of everything that we do. As we continue to grow, we are acutely aware that our efforts and ambitions should be underpinned by a clear sense of responsibility and purpose. This ambition is reflected in our comprehensive ESG strategy which is at the heart of all company activity and ensures that our efforts and ambitions have a clear sense of direction to unite our colleagues and supply partners. We are cognisant of the impact that our business has on the world in which we operate, and we know that, to ensure long-term success, we must play our part in becoming a more sustainable business.

We also recognise that our retail partners need our help to achieve their own ESG ambitions where actions often involve immense scale and complexity. To facilitate this, we are working to ensure that the necessary infrastructure is in place to support our retail partners in going the extra mile, while continuing to provide them with an outstanding service. Being an ESG front runner is not only the right thing to do but will also enhance our competitive and commercial position.

Finally, we also recognise that an integral part of our long-term sustainability is the diversification of our supply chain. Over the next phase of our business development, we will look to diversify our supply lines away from their relatively narrow geographical concentration in China. As part of this journey, we have appointed a member of our Operating Board to head up the complex task of identifying new factories around the world which can meet the high standards of both the Group and its customers, but also support our key purpose of providing beautiful and more sustainable products for every home.

Financial Review

	FY23	FY22	Change
	£'000	£'000	£'000	%
Revenue	166,315	154,191	12,124	8%
Cost of sales	(123,568)	(115,836)	(7,732)	7%
Gross profit	42,747	38,355	4,392	11%
Other administrative expenses	(22,534)	(19,605)	(2,929)	15%
Adjusted EBITDA	20,213	18,750	1,463	8%
Depreciation & amortisation	(2,260)	(2,066)	(194)	9%
Finance expense	(1,132)	(842)	(290)	34%
Adjusted profit before tax	16,821	15,842	979	6%
Tax expense	(3,560)	(3,120)	(440)	14%
Adjusted profit after tax	13,261	12,722	539	4%
Share-based payment expense	(837)	(403)	(434)	108%
Tax on adjusting items	162	51	111	218%
Statutory profit after tax	12,586	12,370	216	2%

*Adjusted measures are before share-based payment expense and non-recurring items.

Revenue

Group revenue has increased by 8% to £166.3m in the period (FY22: £154.2m). Due to our ongoing focus on supplying the best products at the best price for our retail customers and consumers, prices have followed their long-term trend with no price inflation contributing to our top line growth. Our online business saw exceptional growth of 64% to sales of £41.4m, as the channel benefited from the normalisation of global supply chains, which had held back growth during FY22.

	FY23	FY22			FY23	FY22
By Strategic Pillar:	£000	£000	Change	%	%	%
Supermarkets	49,116	51,523	(2,407)	-4.7%	29.5%	33.4%
Discount retailers	44,593	48,126	(3,533)	-7.3%	26.8%	31.2%
Online channels	41,449	25,321	16,128	63.7%	24.9%	16.4%
Multiple-store retailers	22,178	17,312	4,866	28.1%	13.3%	11.2%
Other	8,979	11,909	(2,930)	-24.6%	5.4%	7.7%
Total	166,315	154,191	12,124	7.9%	100.0%	100.0%

This strength in our online business helped to mitigate the weakness which we saw in the first half of the year from retailers, when significant levels of overstocking led to a reduction in sales of 11% in H1. It is pleasing that, as the year progressed, the overstocks eased, leading to retail sales growing by 8% year-on-year in H2, resulting in FY23 sales to retailers falling just 3%. Although having eased in H2, overstocks continue to be a headwind, especially in Europe. This, tied with macroeconomic uncertainty, has led some retailers to change their buying patterns away from large infrequent forward orders to smaller but more frequent orders from current stock.

During a period of higher inflation, which has squeezed customer spending power, it is no surprise that sales growth was weighted towards energy efficient and money saving products. Consequently, Salter products, alongside our overall small domestic appliance offering (which includes air fryers), have proved especially popular in the period.

Operating Margins

Gross margin increased to 25.7% (FY22: 24.9%) as our sales growth was driven by higher-margin online sales. In the second half of the year, we also benefited from the fall in freight rates, which has helped to mitigate the weakness that we have seen in the value of Sterling. The increase in gross margin means that gross profit rose 11% to £42.7m (FY22: £38.4m).

Other administrative expenses rose 15% to £22.5m (FY22: £19.6m). Although we have seen relatively low levels of inflationary pressure on our cost of sales, we have seen pressure in our operating costs. Our wage bill, which makes up 77% of our other administrative expenses, rose by 13% in the period, as we increased salaries for our people to ensure that employee remuneration remains attractive enough to recruit and retain talent, a measure that both drives productivity within the business and mitigates the effects of the cost-of-living crisis. This is consistent with our intention to always do the right thing and to invest in our people. We are proud to continue to invest in our people, and they in turn have helped us to increase productivity, with gross profit per employee increasing from £83k in FY18 to £113k in FY23. It is these productivity gains that have allowed us to maintain operating margins, whilst at the same time appropriately rewarding our people.

We were able to invest in attendance at Ambiente, Europe's largest housewares show, which we had been unable to take part in during the Covid-19 pandemic. Attending Ambiente enabled us to exhibit our range of quality branded houseware products to new customers, consumers and suppliers, as we continue to grow brand awareness in the strategically important European market.

The combination of 8% revenue growth, improved gross margin, and inflation-impacted overheads has led to a stable operating margins at 12.2%, with adjusted EBITDA increasing 8% to £20.2m (FY22: £18.8m). 

Adjusted & statutory profit

Depreciation and amortisation increased 9% to £2.3m (FY22: £2.1m) as a result of the increase in the depreciation charge following our investment in solar panels at our Manor Mill head office during the summer of 2022.

The finance charge has increased £0.3m to £1.1m (FY22: £0.8m) due to the higher level of interest rates. The Group has benefited from the hedging instruments it entered into when interest rates were at historically low levels. These instruments cover an aggregate principle of £18.0m and are a mix of swaps and caps. These instruments, as well as careful management of net debt, have successfully limited the effect of higher interest rates.

The share-based payment expense increased by £0.4m to £0.8m as a result of the modification of the MIP scheme which was approved at the FY22 AGM and resulted in a one-off charge of £0.5m.

The tax charge for the period at 21.3% (FY22: 20%) was higher than the blended statutory rate of 21% due to the higher statutory rate of tax paid on our European foreign branches in Germany and Poland, with the overall rate increasing due to the increase in UK corporation tax from 19% to 25%.

As a result, the statutory profit after tax increased by 2% to £12.6m (FY22: £12.4m).

Earnings per share

Although we have not issued any new shares within the year, the number of shares held in our Employee Benefit Trust has changed over the year, resulting in the weighted average number of shares decreasing 0.1% to 86,310,315 (31 July 2022: 86,353,827).

	31 July 2023	EPS	31 July 2022	EPS
	£'000	p	£'000	p
Adjusted profit after tax	13,261	15.4	12,721	14.7
Share based payment	(837)	(1.0)	(403)	(0.5)
Tax on adjusting items	162	0.2	51	0.1
Statutory profit	12,586	14.6	12,369	14.3

As a result, both adjusted profit and adjusted EPS increase 4% to £13.3m (FY22: £12.7m) and 15.4p (FY22: 14.7p) respectively.

Financing and cash flow

The Group generated strong cash from operating activities of £24.4m (FY22: £6.9m), being a 121% operating cash conversion (FY22: 37%). This was significantly stronger than the previous year when the Group needed to invest in working capital due to the supply chain crisis during CY 2021. This meant that at the period end the Group had a net bank debt/adjusted EBITDA ratio of 0.7x (31 July 2022: 1.3x), which represents net bank debt of £14.8m (31 July 2022: £24.3m). The Group makes use of term loans for longer term funding, such as acquisitions, whereas our invoice discounting and import loan facilities are designed to fund our working capital, and automatically increase in relation to our levels of trading. With the Group's trading being seasonally weighted towards pre-Christmas consumer spending, working capital reaches a peak in the Autumn, and a low in the Spring. In the current year the low point for net debt was £8.0m (FY22: £21.1m)

	31-Jul-23	31-Jul-22	Change	Change
	£'000	£'000	£'000	%
Cash	5,086	6,202	(1,116)
Overdraft	(5,004)	(6,020)	1,016
Term loan	(6,000)	(8,000)	2,000
RCF	-	(2,217)	2,217
Invoicing discounting	(8,950)	(6,197)	(2,753)
Import loans	-	(8,179)	8,179
Loan fee	73	155	(82)
Net bank debt	(14,795)	(24,256)	9,461	-39%

Dividend

In line with our established dividend policy of distributing 50% of the Group's adjusted profit after tax, the Board is pleased to propose a final dividend of 4.95p per share (FY22: 4.82p per share). This takes the total dividend for the year to 7.38p per share (FY22: 7.12p per share), an increase of 4%. Subject to shareholder approval at the AGM on 15 December 2023, the final dividend will be paid on 26 January 2024 to shareholders on the register at the close of business on 29 December 2023 (ex-dividend date 28 December 2023).

Name Change

For many years the Group has traded under the name Ultimate Products, while the Company name UP Global Sourcing Holdings plc failed to truly reflect who we are. We spoke earlier of two easily overlooked words in our purpose - 'every home' - and now emphasise the two words that are most fundamental to who we are: 'Ultimate Products'. Our purpose is to provide beautiful and more sustainable products to every home, and we are delighted to announce that, to better align with this purpose, the Company has been renamed Ultimate Products plc with immediate effect.

The new name will be reflected by the London Stock Exchange and the Company's London Stock Exchange market ticker will change to 'ULTP' at 8.00 a.m. (BST) today. The Company's ISIN (GB00BYX7MG58) and SEDOL (BYX7MG5) will remain unchanged.

In order to reflect the Company's new name, the Company's website address has been changed to www.upplc.com .

Shareholder documents of title will be unaffected by the change of name and existing share certificates should be retained and remain valid. Any new share certificates issued will bear the new name, Ultimate Products plc.

Summary

FY23 has been a challenging year for the many retailers and consumers that we are proud to support; nonetheless, the Group has responded by remaining true to its core purpose, and this has led to a record financial performance. While this success is rooted in the resilient business model we have developed, it also depends on the huge daily efforts of our colleagues. They have once again met the challenges of the year with tenacity, creativity, and above all, passion. On behalf of all stakeholders, we thank them for all of the hard work they have undertaken over the past year.

We look to the future with optimism and excitement, knowing that we have a team of colleagues who will truly bring to life our UK and international strategy of developing our portfolio of beautiful and more sustainable brands.

Consolidated Income Statement

For the year ended 31 July 2023

	2023	2022
	£'000	£'000
Revenue	166,315	154,191
Cost of sales	(123,568)	(115,837)
Gross profit	42,747	38,354
Adjusted earnings before interest, tax, depreciation, amortisation, share-based payments & non‑recurring items ("Underlying EBITDA")	20,213	18,750
Depreciation	(2,238)	(2,044)
Amortisation of intangibles	(22)	(22)
Share-based payment expense	(837)	(403)
Non-recurring items	-	-
Total administrative expenses	(25,631)	(22,073)
Operating profit	17,116	16,281
Finance expense	(1,132)	(842)
Profit before tax	15,984	15,439
Tax expense	(3,398)	(3,069)
Profit for the year attributable to equity holders of the Company	12,586	12,370
All amounts relate to continuing operations
Earnings per share
Basic	14.6	14.3
Diluted	14.3	13.9

Consolidated Statement of Comprehensive Income

For the year ended 31 July 2023

	2023 £'000s	2022 £'000s
Profit for the year	12,586	12,700
Items that may subsequently be reclassified to the income statement
Fair value movements on cash flow hedging instruments	(1,329)	3,329
Hedging instruments recycled through the income statement at the end of hedging relationships	(3,445)	162
Deferred tax relating to cashflow hedges	875	-
Items that will not subsequently be reclassified to the income statement
Foreign current translation	(2)	11
Other comprehensive income	(3,901)	3,412
Total comprehensive income for the year attributable to the equity holders of the Company	8,685	15,782

Consolidated Statement of Financial Position

At 31 July

	2023 £'000		2022 £'000
Assets
Intangible assets	37,003	37,025
Property, plant and equipment	8,443	6,369
Total non-current assets	45,446	43,394
Inventories	28,071	29,162
Trade and other receivables	29,890	32,194
Derivative financial instruments	1,233	4,142
Cash and cash equivalents	5,086	6,202
Total current assets	64,280	71,700
Total assets	109,726	115,094
Liabilities
Trade and other payables	(30,005)	(29,644)
Derivative financial instruments	(1,806)	-
Current tax	-	(170)
Borrowings	(15,891)	(22,314)
Lease liabilities	(836)	(817)
Deferred consideration	-	(987)
Total current liabilities	(48,548)	(53,932)
Net current assets	15,742	17,768
Borrowings	(3,990)	(8,144)
Deferred tax	(6,797)	(7,585)
Lease liabilities	(4,262)	(1,940)
Total non-current liabilities	(15,049)	(17,669)
Total liabilities	(63,587)	(71,601)
Net assets	46,139	43,493
Equity
Share capital	223	223
Share premium	14,334	14,334
Employee Benefit Trust reserve	(1,989)	(1,571)
Share-based payment reserve	1,817	1,166
Hedging reserve	(660)	3,239
Retained earnings	32,414	26,102
Equity attributable to owners of the Group	46,139	43,493

Consolidated Statement of Changes in Equity

For the year ended 31 July

	Share capital £'000	Share premium £'000	EBT reserve  £'000	Share- based payment reserve £'000	Hedging reserve £'000	Retained earnings £'000	Total Equity £'000
As at 1 August 2021	223	14,334	(2,152)	1,024	(162)	18,788	32,055
Profit for the year	-	-	-	-	-	12,370	12,370
Foreign currency retranslation	-	-	-	-	-	11	11
Cash flow hedging movement	-	-	-	-	3,401	-	3,401
Total comprehensive income for the year	-	-	-	-	3,401	12,381	15,782
Transactions with shareholders:
Dividends paid	-	-	-	-	-	(4,830)	(4,830)
Share-based payments	-	-	-	142	-	(29)	113
Purchase/Sale of shares by the EBT	-	-	581	-	-	(208)	373
As at 31 July 2022	223	14,334	(1,571)	1,166	3,239	26,102	43,493
Profit for the year	-	-	-	-	-	12,586	12,586
Foreign currency retranslation	-	-	-	-	-	(2)	(2)
Cash flow hedging movement	-	-	-	-	(4,774)	-	(4,774)
Deferred tax movement					875	-	875
Total comprehensive income for the year	-	-	-	-	(3,899)	12,584	8,685
Transactions with shareholders:
Dividends payable	-	-	-	-	-	(6,255)	(6,255)
Share-based payments charge	-	-	-	837	-	-	837
Deferred tax on share-based payments	-	-	-	-	-	(88)	(88)
Transfer of reserve on exercise/ cancellation of share award	-	-	-	(186)	-	186	-
Transfer of shares by the EBT to employees on exercise of share award	-	-	297	-	-	(115)	182
Purchase of own shares by the EBT	-	-	(715)	-	-	-	(715)
As at 31 July 2023	223	14,334	(1,989)	1,817	(660)	32,414	46,139

Consolidated Statement of Cash Flows

For the year ended 31 July

			2023 £'000	2022 £'000
Net cash flow from operating activities
Profit for the year			12,586	12,370
Adjustments for:
Finance costs			1,132	842
Income tax expense			3,399	3,069
Depreciation			2,218	2,044
Amortisation			22	22
Loss on disposal of non-current assets			20	-
Derivative financial instruments			(199)	274
Share-based payments			837	403
Working capital adjustments
(Increase) in inventories			1,090	(7,721)
(Increase) in trade and other receivables			2,691	(5,649)
Increase in trade and other payables			559	1,221
Net cash from operations			24,355	6,875
Income taxes paid			(3,957)	(2,345)
Cash generated from operations			20,399	4,530
Cash flows used in investing activities
Acquisition of subsidiary- deferred consideration			(987)	(1,960)
Purchase of property, plant and equipment			(999)	(1,843)
Net cash used in investing activities			(1,986)	(3,803)
Cash flows used in financing activities
Sale of own shares			(532)	373
Proceeds from borrowings			3,767	14,347
Repayment of borrowings			(14,426)	(2,766)
Principal paid on lease obligations			(840)	(936)
Debt issue costs paid			(94)	(4,830)
Dividends paid			(6,255)	(4,830)
Interest paid			(1,147)	(850)
Net cash generated by finance activities			(19,527)	5,338
Net increase in cash and cash equivalents			(1,115)	6,065
Exchange gains on cash and cash equivalents			(1)	4
Cash and cash equivalents brought forward			6,202	133
Cash and cash equivalents carried forward			5,086	6,202

conciliation of cash flow to the Group net debt position

		Overdraft £'000	Term Loan £'000	RCF  £'000	Invoice discounting £'000s	Import loans £'000s	Loan Fees £'000	Leases £'000	Total liabilities from financing activities £'000	Cash  £'000	Net  debt £'000
At 1 August 2022		-	(10,000)	(2,983)	(3,290)	(2,759)	234	-	(18,798)	133	(18,665)
Financing cash flows		(6,020)	2,000	766	(2,907)	(5,420)	-	-	(11,581)	6,020	(5,561)
Other cash flows		-	-	-	-	-	-	-	-	45	45
Other changes		-	-	-	-	-	(79)	-	(79)	4	(75)
At 31 July 2022		(6,020)	(8,000)	(2,217)	(6,197)	(8,179)	155	(2,757)	(33,215)	6,202	(27,013)
Financing cash flows		1,016	2,000	2,217	(2,753)	8,179	94	840	11,593	-	11,593
Other cash flows		-	-	-	-	-	-	-	-	(1,115)	(1,115)
Other changes		-	-	-	-	-	(176)	(3,181)	(3,357)	(1)	(3,358)
At 31 July 2023	(5,004)		(6,000)	-	(8,950)	-	73	(5,098)	(24,979)	5,086	(19,893)

NOTES TO THE FINANCIAL STATEMENTS

1.   GENERAL INFORMATION

 Ultimate Products plc ('the Company') and its subsidiaries (together 'the Group') is a supplier of branded, value for-money household products to global markets. The Company is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in England and Wales. The address of its registered office is Ultimate Products plc, Manor Mill, Victoria Street, Chadderton, Oldham OL9 0DD.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 July 2023 or 2022 but is derived from those accounts. Statutory accounts for Ultimate Products plc for the year ended 31 July 2022 have been delivered to the Registrar of Companies and those for the year ended 31 July 2023 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports. Their reports for the year ended 31 July 2023 and 31 July 2022 did not contain statements under s498 (2) or (3) of the Companies Act 2006.

2.   BASIS OF PREPARATION

The consolidated Group Financial Statements have been prepared in accordance with UK adopted international financial reporting standards. The consolidated Group Financial Statements and Company Financial Statements are presented in Sterling and rounded to the nearest thousand unless otherwise indicated. The Financial Statements are prepared on the historical cost basis, except for certain financial instruments and share-based payments that have been measured at fair value. The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and have not presented an income statement or a statement of comprehensive income for the Company alone.

Going Concern Basis

The Directors have adopted the going concern basis in preparing these accounts after assessing the principal risks and having considered the impact of severe but plausible downside scenarios, including pandemic type restrictions, supply chain issues and demand led falls in revenue due to inflation and rises in interest rates. The Directors have considered a number of impacts on sales, profits and cash flows, taking into account experiences learnt from previous business interruptions. The Directors have considered the resilience of the Group in severe but plausible scenarios, taking account of its current position and prospects, the principal risks facing the business, how these are managed and the impact that they would have on the forecast financial position. In assessing whether the Group could withstand such negative impacts, the Board has considered cash flow, impact on debt covenants and headroom against its current borrowing facilities. At the year end the Group had a net bank debt/adjusted EBITDA ratio of 0.7x (FY22: 1.3x), which represents net bank debt of £14.8m (FY21: £24.3m). The Group maintains comfortable levels of headroom within its bank facilities, with headroom at 31 July 2023 of £16.6m (FY22: £17.8m). The Group's banking facilities comprise a term loan of £6.0m (FY22: £8.0m), a revolving credit facility of £8.2m (FY22: £8.2m), an import loan facility of £9.0m (FY22: £9.0m), and an invoice discounting facility with a total limit of £23.5m (FY22: £23.5m).

The Group's projections show that the Group will be able to operate within its existing banking facilities and covenants. Therefore, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of approval of these Financial Statements and, as a result, they have applied the going concern principle in preparing its consolidated and Company Financial Statements.

3.   REVENUE

Geographical split by location:		2023 £'000	2022 £'000
United Kingdom		115,580	101,050
Germany		15,198	19,231
Rest of Europe		34,447	29,700
Rest of the World		1,090	4,210
Total		166,315	154,191
International sales		50,735	53,141
Percentage of total revenue		31%	35%

Analysis of revenue by brand:		2023 £'000	2022 £'000
Salter		66,599	48,080
Beldray		35,031	39,950
Russell Hobbs (licensed)		16,458	20,165
Progress		7,425	8,287
Petra		3,194	-
Kleeneze		3,378	2,835
Premier brands		132,085	119,317
Other proprietorial brands		16,036	17,032
Own label and other		18,194	17,842
Total		166,315	154,191

Analysis of revenue by product:		2023 £'000	2022 £'000
Small domestic appliances		66,813	57,032
Housewares		48,008	54,539
Laundry		18,163	14,799
Audio		15,545	12.907
Heating and cooling		6,214	5,870
Others		11,572	9,044
Total		166,315	154,191

Analysis of revenue by sales channel:		2023 £'000	2022 £'000
Supermarkets		49,116	51,523
Discount retailers		44,593	48,126
Online channels		41,449	25,321
Multiple-store retailers		22,178	17,312
Other		8,979	11,909
Total		166,315	154,191

4.   FINANCE COSTS

		2023 £'000	2022 £'000
Interest on bank loans and overdrafts		1,114	704
Interest on lease liabilities		134	74
Foreign exchange in respect of lease liabilities (net of hedging actions)		(81)	(11)
Other interest payable and similar charges		(35)	75
Total finance cost		1,132	842

5.   TAXATION

		2023 £'000	2022 £'000
Current period - UK corporation tax		3,040	2,390
Adjustments in respect of prior periods		(72)	(281)
Foreign current tax expense		431	467
Total current tax		3,399	2,576
Origination and reversal of temporary differences		5	351
Adjustments in respect of prior periods		(6)	81
Impact of change in tax rate		-	61
Total deferred tax		(1)	493
Total tax charge		3,398	3,069

Factors effecting the tax charge

The tax assessed for the current and previous years period is higher than the standard rate of corporation tax in the UK. The tax charge for the year can be reconciled to the profit per the income statement as follows:

	2023 £'000	2022 £'000
Profit before tax	15,984	15,439
Tax charge at 20.5% (2022: 19%)	3,277	2,933
Adjustments relating to underlying items:
Adjustment to tax charge in respect of prior periods	(78)	(200)
Effects of expenses not deductible for tax purposes	119	(9)
Impact of overseas tax rates	56	231
Effect of difference in corporation tax and deferred tax rates	15	88
Adjustments relating to non-underlying items:
Effects of expenses not deductible for tax purposes	171	77
Differences arising on tax treatment of shares	(162)	(178)
Effect of difference in corporation tax and deferred tax rates	-	127
Total tax expense	3,398	3,069

Corporation tax is calculated at 19% (2022: 19%) of the estimated assessable profit for the year.  In the 3 March 2022 Budget it was announced that the UK tax rate will increase to 25% from 1 April 2023. Deferred tax balances at the year-end have been measured at 25%.

6.   EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share amounts are calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial year, adjusted for the effects of potentially dilutive options. The dilutive effect is calculated on the full exercise of all potentially dilutive ordinary share options granted by the Group, including performance-based options which the Group considers to have been earned. The calculations of earnings per share are based upon the following:

		2023 £'000	2022 £'000
Profit for the year		12,586	12,370
		Number	Number
Weighted average number of shares in issue		89,312,457	89,312,457
Less shares held by the UPGS EBT		(3,002,142)	(2,958,630)
Weighted average number of shares - basic		86,310,315	86,353,827
Share options		1,576,409	2,580,825
Weighted average number of shares - diluted		87,886,723	88,934,652
		Pence	Pence
Earnings per share - basic		14.6	14.3
Earnings per share - diluted		14.3	13.9

7.   DIVIDENDS

		2023 £'000	2022 £'000
Final dividend paid in respect of the previous year		4,157	2,844
Interim declared and paid		2,099	1,986
		6,255	4,830
Per share		Pence	Pence
Final dividend paid in respect of the previous year		4.820	3.33
Interim declared and paid		2.430	2.30
		7.25	5.63

The Directors propose a final dividend of 4.95p per share in respect of the year ended 31 July 2023.

8.   BANK BORROWINGS

				2023 £'000		2022 £'000
Overdrafts				5,004		6,020
Invoice discounting				8,950		6,197
Import loans				-		8,179
Term loan				2,000		2,000
Unamortised debt issue costs				(63)		(82)
Current				15,891		22,314
Revolving credit facility			-			2,217
Term loan			4,000			6,000
Unamortised debt issue costs			(10)			(73)
Non-current			3,990			8,144
Total borrowings			19,881			30,458
Cash			(5,086)			(6,202)
Net bank borrowings			14,795			24,256
Contractual maturities:
In less than one year					15,954	22,396
Between one and two years					2,000	2,000
Between three and four years					2,000	6,217
Less: Unamortised debt issue costs					(73)	(155)
Total borrowings					19,881	30,458

Current bank borrowings include a gross amount of £8.9m (2022: £6.2m) due under invoice discounting facilities, which are secured by an assignment of and fixed charge over the trade debtors of Ultimate Products UK Limited. Furthermore, current bank borrowings include an amount of £nil (2022: £2.8m) due under an import loan facility, which is secured by a general letter of pledge providing security over the stock purchases financed under that facility. Bank borrowings are secured in total by a fixed and floating charge over the assets of the Group. Total bank borrowings are net of £73,000 (2022: £155,000) of fees which are being amortised over the length of the relevant facilities. Interest on bank borrowings is payable at a margin ranging between 1.65% and 2.25% above the relevant bank reference rates. As the liabilities are at a floating rate and there has been no change in the creditworthiness of either of the counterparties, the Directors are of the view that the carrying amount approximates to the fair value.

9.   FINANCIAL INSTRUMENTS

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

	2023 £'000	2022 £'000
Trade receivables - held at amortised cost	28,175	30,643
Derivative financial instruments - carried at FVTOCI	900	3,899
Derivative financial instruments - carried at FVTPL	333	243
Trade and other payables	(27,995)	(28,095)
Derivative financial instruments -carried at FVTOCI	(1,783)	-
Derivative financial instruments - carried at FVTPL	(23)	-
Borrowings - held at amortised cost	(19,881)	(30,458)
Lease liabilities - held at amortised cost	(5,098)	(2,757)
Deferred consideration - held at amortised cost	-	(987)
Cash and cash equivalents - held at amortised cost	5,086	6,202

Financial Liabilities

The Group held the following financial liabilities, classified as other financial liabilities at amortised cost:

	2023 £'000	2022 £'000
Trade payables Borrowings Other payables	19,024 19,881 8,971	20,662 30,458 7,433
Lease liabilities Deferred consideration	5,098 -	2,757 987
	52,974	62,297

Derivative Financial Instruments

The Group held the following derivative financial instruments as financial assets/(liabilities), classified as fair value through profit and loss on initial recognition:

	2023 £'000	2022 £'000
Derivative financial instruments - assets Derivative financial instruments - liabilities	1,233 (1,806)	4,142 -
	(573)	4,142

The above items comprise the following under the Group's hedging arrangements:

			2023 £'000	2022 £'000
Foreign currency contracts			(1,372)	3,524
Interest rate swaps			315	261
Interest rate caps			484	357
			(573)	4,142

Forward contracts

The Group mitigates the exchange rate risk for certain foreign currency trade debtors and creditors by entering into forward currency contracts. At 31 July 2023, the Group was committed to:

	2023	2023	2022	2022
	Buy	Sell	Buy	Sell
USD$'000	54,300	-	57,050	-
€'000	-	24,700	-	23,200
CAD$'000	-	-	-	60
PLN'000	-	4,600	-	5,500
CNY'000	6,340	-	2,459	-

At 31 July 2023 & 2022, all the outstanding USD, EUR, PLN and CAD contracts mature within 12 months of the period end. The CNY contracts, which are held as a partial hedge on a lease commitment, mature until August 2026. The forward currency contracts are measured at fair value using the relevant exchange rates for GBP:USD, GBP:EUR, GBP:CAD, GBP:PLN and GBP:CNY.

Forward currency contracts are valued using level 2 inputs. The valuations are calculated using the period end forward rates for the relevant currencies, which are observable quoted values at the period end dates. Valuations are determined using the hypothetical derivative method, which values the contracts based upon the changes in the future cash flows, based upon the change in value of the underlying derivative.

All of the forward contracts to buy US Dollars and some of those to sell Euros meet the conditions for hedge accounting, as set out in the accounting policies in note 3. The fair value of forward contracts that are effective in offsetting the exchange rate risk is a liability of £1.6m (2022: asset of £3.4m), which has been recognised in other comprehensive income. This will be released to profit or loss at the end of the term of the forward contracts as they expire, being £1.6m within 12 months (2022: £3.4m within 12 months). The cash flows in respect of the forward contracts will occur over the course of the next 12 months.

Interest rate swaps and interest rate caps

The Group has entered into interest rate swaps and interest rate caps to protect the exposure to interest rate movements on the various elements of the Group's banking facility. As at 31 July 2023, protection was in place over an aggregate principal of £18.3m (2022: £18.3m). At 31 July 2023, the Group had borrowings of £nil (2022: £6.3m) not subject to interest rate protection. All interest rate swaps meet the conditions for hedge accounting, as set out in the accounting policies in note 3.

Interest rate swaps and caps are valued using level 2 inputs. The valuations are based upon the notional value of the swaps and caps, the current available market borrowing rate and the swapped or capped interest rate respectively. The valuations are based upon the current valuation of the present saving or cost of the future cash flow differences, based upon the difference between the respective swapped and capped interest rates contracts and the expected interest rate as per the lending agreement.

The fair value of variable to fixed interest rate swaps that are effective in offsetting the variable interest rate risk on variable rate debt is an asset of £315,000 (2022: £261,000), which has been recognised in other comprehensive income and will be released to profit or loss over the term of the swap agreements. The agreements expire between 2 January 2024 and 28 February 2025. The cash flows in respect of the swaps occur monthly over the effective lifetime of the swaps. The fair value of the interest rate caps was an asset of £484,000 (2022: £357,000).

Reconciliation of the financial instruments to the Statement of Financial Position

Group		2023 £'000	2022 £'000
Trade receivables		28,175	30,643
Prepayments and other receivables not classified as financial instruments		1,328	1,551
Trade and other receivables		29,503	32,194

Group		2023 £'000	2022 £'000
Trade and other payables		27,995	28,095
Other taxes and social security not classified as financial instruments		2,010	1,549
Trade and other payables		30,005	29,644

The Group's activities expose it to certain financial risks: market risk, credit risk and liquidity risk. The overall risk management programme focuses upon the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. Risk management is carried out by the Directors, who identify and evaluate financial risks in close cooperation with key members of staff.

a)   Market risk: Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange rates.

b)   Credit risk: Credit risk is the financial loss to the Group if a customer or counterparty to financial instruments fails to meet its contractual obligation. Credit risk arises from the Group's cash and cash equivalents and receivables balances. Accordingly, the possibility of material loss arising in the event of non-performance by counterparties is considered to be unlikely. Cash at bank is held with banks with high-quality external credit rating.

c)   Liquidity risk: Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. This risk relates to the Group's prudent liquidity risk management and implies maintaining sufficient cash. The Directors monitor rolling forecasts of the Group's liquidity and cash and cash equivalents based upon expected cash flow.

Market risk

The Group's interest-bearing liabilities relate to its variable rate banking facilities. The Group has a policy of maintaining a portion of its banking facilities under the protection of interest rate swaps and caps to ensure the certainty of future interest cash flows and offering protection against market-driven interest rate movements. The Group's market risk relating to foreign currency exchange rates is commented on below.

Credit risk

The Group's sales are primarily made with credit terms, exposing the Group to the risk of non-payment by customers. The Group has implemented policies that require appropriate credit checks on potential customers before sales are made. The amount of exposure to any individual counterparty is subject to a limit, which is reassessed regularly by the Board. In addition, the Group maintains a suitable level of credit insurance against its debtor book. Over the course of FY23, on average, over 98% of its trade receivables were insured. Sales to uninsured accounts are monitored closely with weekly forecasts prepared and reviewed with appropriate actions to manage the exposure to credit risk.

Liquidity risk management

The Group is funded by external banking facilities provided by HSBC. Within these facilities, the Group actively maintains a mixture of long-term and short-term debt finance that is designed to ensure the Group has sufficient available funds for operations and planned expansions. Cash flow requirements are monitored by short and long-term forecasts, with headroom against facility limits and banking covenants assessed regularly. 

Foreign currency risk management

The Group's activities expose it to the financial risks of changes in foreign currency exchange rates. The Group's exposure to foreign currency risk is partially hedged by virtue of invoicing a proportion of its turnover in US Dollars and Euros. When necessary, the Group uses foreign exchange forward contracts to further mitigate this exposure. The following is a note of the financial instruments denominated at each period end in US Dollars:

						2023	2022
	Group					$'000	$'000
Trade receivables						11,342	11,276
Other receivables						369	990
Net cash, overdrafts and revolving facilities						2,640	7,364
Import loans						-	(9,965)
Invoice discounting						1	75
Trade payables						(17,324)	(21,310)
						(2,973)	(11,570)

The effect of a 20% strengthening of Sterling at 31 July 2023 on the foreign denominated financial instruments carried at that date would, all variables held constant, have resulted in an increase to total comprehensive income for the period and an increase to net assets of £0.3m (2022: £1.3m). A 20% weakening of the exchange rate, on the same basis, would have resulted in a decrease to total comprehensive income and a decrease to net assets of £0.5m (2022: £1.9m).

The following is a note of the financial instruments denominated at each period end in Euros:

					2023	2022
Group					€'000	€'000
Trade receivables					11,369	9,345
Net cash, overdrafts and revolving facilities					3,266	(125)
Invoice discounting					(6,573)	(5,617)
Trade payables					(1,217)	(612)
Lease liabilities					(638)	(810)
					6,207	2,181

The effect of a 20% strengthening of Sterling at 31 July 2023 on the foreign denominated financial instruments carried at that date would, all variables held constant, have resulted in a decrease to total comprehensive income for the period and a decrease to net assets of £0.7m (2022: £0.3m). A 20% weakening of the exchange rate, on the same basis, would have resulted in an increase to total comprehensive income and an increase to net assets of £1.1 (2022: £0.4m).

The Directors have shown a sensitivity movement of 20% as, due to the current uncertainty given the current economic climate, this is deemed to be the largest potential movement in currency that could occur in the near future. Financial instruments denominated in Canadian Dollars and Polish Zloty are not significant and therefore do not pose a significant foreign exchange exposure.

Capital risk management

The Group is funded by equity and loans. The Group's objective when managing capital is to maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long-term. The capital structure of the Group is managed and adjusted to reflect changes in economic conditions. The Group funds its expenditure on commitments from existing cash and cash equivalent balances, primarily received from existing bank facilities and profits generated. There are no externally imposed capital requirements. Financing decisions are made based upon forecasts of the expected timing and level of capital and operating expenditure required to meet the Group's commitments and development plans.

Fair value estimation

The carrying value less impairment provision of trade receivables and payables are assumed to approximate to their fair values because of the short-term nature of such assets and the effect of discounting liabilities is negligible. The Group is exposed to the risks that arise from its financial instruments. The policies for managing those risks and the methods to measure them are described earlier in this note.

Maturity of financial assets and liabilities

All of the Group's non-derivative financial liabilities and its financial assets at the reporting date are either payable or receivable within one year, except for borrowings.

10. ANNUAL REPORT AND ACCOUNTS

The annual report and accounts for the year ended 31 July 2023 will be posted to shareholders in the week commencing 13 November 2023 and will be available immediately thereafter on the Company's website at https://www.upplc.com/investor-relations/financial-reports/

11. ANNUAL GENERAL MEETING

The Annual General Meeting of UP Global Sourcing Holdings plc will be held on 15 December 2023 at the Company's registered office at Manor Mill, Victoria Street, Chadderton, Oldham, OL9 0DD, notice of which will be sent to shareholders with the annual report and accounts in the week commencing 13 November 2023.

12. PUBLICATION ON WEBSITE

A copy of this announcement and an investor presentation of these results are available on UP's website at https://www.upplc.com/investor-relations/.  

 

END