UPGS.L

Ultimate Products plc
UP Global Sourcing - Final Results
3rd November 2022, 07:00
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RNS Number : 1397F
UP Global Sourcing Holdings PLC
03 November 2022
 

3 November 2022

 

UP Global Sourcing Holdings plc

 

"Ultimate Products" or "the Group"

 

FULL YEAR RESULTS FOR THE YEAR ENDED 31 JULY 2022

 

 A record financial performance

 

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), is pleased to announce its audited results for the financial year ended 31 July 2022 ("FY22").

 

Financial highlights

·    Total revenue up 13% to a record £154.2m (FY21: £136.4m)

International revenue up 22% to £53.1m (FY21: £43.5m)

Supermarket revenue up 32% to £51.5m (FY21: £38.9m)

Online revenue up 23% to £25.3m (FY21: £20.6m)

·    Adjusted EBITDA* up 41% to £18.8m (FY21: £13.3m)

·    Statutory profit before tax up 62% to £15.4m (FY21: £9.5m)

·    Adjusted profit before tax* up 42% to £15.8m (FY21: £11.2m)

·    Statutory EPS up 54% to 14.3p (FY21: 9.3p)

·    Adjusted EPS* up 32% to 14.7p (FY21: 11.1p)

·    Full year dividend per share up 42% to 7.12p (FY21: 5.02p)

·    Net bank debt/adjusted EBITDA* ratio of 1.3x (FY21: 1.4x) 

·    Facilities headroom at 31 July 2022 of £17.8m (31 July 2021: £16.2m)

 

Operational highlights

·      Salter acquisition fully integrated, and significantly earnings enhancing

·      German kitchen electrical brand Petra relaunched and first retailer orders for FY23 received

·      Successful management of the impact of the global shipping crisis and associated supply chain challenges

·      Major robotics process automation programme launched in Q4

·      Refurbishment of the office and showroom at Manor Mill, the Group's headquarters in Oldham completed

·      Installation of 1,150 solar panels on the roof of Manor Mill, expected to produce 40% of the building's energy requirements

·      Consumers increasingly investing in energy saving products, such as air fryers, with FY23 sales and order book already up 66% on total air fryers sales in FY22

·      Post period end:

Renewed the Group's Russell Hobbs licencing agreement (for non-electrical kitchen and laundry products) on a rolling four-year basis, rather than the previous fixed-term arrangement  

Planted one millionth tree in partnership with Ecologi

The Group's inaugural ESG strategy to be published shortly

 

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

 

Current trading and outlook

The Board anticipates profit performance for FY23 will be in line with current market expectations. Whilst the current cost of living crisis represents a substantial challenge to all consumer-facing businesses, the Group is well placed to respond to this given its relentless focus on delivering value and growth.

 

 

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

"In FY22 Ultimate Products has delivered record financial results, seamlessly integrated the Salter brand, and maintained the incredibly high levels of service that our customers have come to expect from us. It has been a year of exceptional financial and operational progress, all of which was achieved against the backdrop of global supply chain disruption and a deteriorating macroeconomic environment.

 

It is pleasing to see that our energy efficient products, such as air fryers, are performing well and helping consumers save on energy costs. This aligns with our wider purpose of providing beautiful and more sustainable products for every home.

 

Whilst the current cost of living crisis represents a substantial challenge to all consumer- facing businesses our proven resilience and adaptability, as well as the quality and value of our products, mean that we are well placed to continue delivering future growth."

 

For more information, please contact:

 

Ultimate Products +44 (0) 161 627 1400

Simon Showman, CEO

Andrew Gossage, Managing Director

Chris Dent, Finance Director

 

Shore Capital +44 (0) 20 7408 4090

Mark Percy

Malachy McEntyre

 

Powerscourt +44 (0) 207 250 1446

Rob Greening

Sam Austrums

 

 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 38 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 in Cologne, Germany.

 

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

 

For further information, please visit www.upgs.com


BUSINESS REVIEW

 

Strategy

 

Our purpose is to provide beautiful and more sustainable products for every home. We do this by designing, sourcing and supplying quality homecare products through our innovative, sustainable and customer-oriented capabilities. The Group's strategy is to develop its portfolio of brands for mass-market, value-led, consumer goods for the home focused on the following revenue channels:

 

·      International retailers;

·      Supermarkets;

·      Online platforms; and

·      Discounters.

 

This year has seen the Group make excellent progress towards its environmental and social sustainability agenda by ensuring ESG principles are embedded into the foundations of the business through a comprehensive strategy being implemented across the Group, full details of which will be published shortly. This has helped redefine our purpose and enhanced our core values, which will help us tackle the environmental impact that our business makes.  Our ambitions include clear targets, the achievement of which will make a distinct difference to our business. These goals are also aligned to our customers' needs, ensuring we can provide them with an even greater service.

 

We are confident that we are now on our journey to become a more sustainable business, with an improved governance structure and commitment to the Task Force on Climate-Related Financial Disclosures ("TCFD"). It has been a pleasure to see the engagement and passion from our colleagues in this area of the business, where new ideas are continually being presented to the Board for consideration.

 

Performance

 

International

International revenue was ahead of last year by 22% (£9.6m) to £53.1m (FY21: £43.5m) with Germany continuing to perform particularly well, up 39% (£5.3m). From a low base, we are also seeing strong growth in Rest of World since we appointed our Australian distributor, with revenue up 177% (£2.0m) to £3.2m (FY21: £1.2m). The prospects for our international business, which is mainly focused on Europe, remain very encouraging. The appointment of a European adviser to assist in opening new major accounts is providing additional strategic focus and know-how to our international efforts.

 

Supermarkets

Our brands continue to resonate with supermarket customers in both the UK and Europe which led to robust growth in FY22 with revenue up 32% to £51.5m (FY21: £38.9m). The core business, excluding the Salter acquisition, grew by 20% to £46.7m (FY21: £38.9m). The key contributors to growth in this segment continue to be the Salter, Beldray and Russell Hobbs brands. With supermarkets now accounting for 33% of revenue (FY21: 29%), they have overtaken discounters as our largest revenue channel. This performance has been driven by improved consumer awareness and perception of our brands, as well as excellent service execution and aligned ESG values.

 

Online Platforms

Online grew by 23% (£4.7m) in the year to £25.3m (FY21: £20.6m) with our core online business, excluding the Salter acquisition, remaining broadly level at £20.3m (FY21: £20.6m). Online was adversely affected in H1 22 by the tighter stock availability caused by the disruption to shipping leading to a decline in revenue of 13% (£1.4m). We saw this as a temporary set-back in the rapid and long-standing growth of our online business. Growth returned in H2 22 when availability recovered, which led revenues to increase 20% (£1.8m) on the same period last year.

 

We expect this strong online momentum to continue into FY23 and are targeting 30% of overall revenue to come from online over the medium term.

 

While the majority of our online revenues will always come from sales made through platforms, our recently relaunched Salter and Beldray websites provide an additional avenue for growth, which will also facilitate a more direct relationship between our brands and their consumers.

 

Discounters

Sales to discounters fell by 7% (£3.4m) to £48.1m (FY21: £51.5m) with revenue from the core business (i.e. excluding the Salter acquisition) falling by 8% (£4.1m) to £47.4m (FY21: £51.5m). The performance of this channel was the result of the UK retailers in this category, who remained open during lockdowns, and therefore saw a pandemic related spike in demand, subsequently moderating their ordering as demand normalised. In addition, the account management of certain European discounters, who often prefer to trade face-to-face rather than via video conference, was made more difficult because of the travel restrictions during CY21. Looking through the volatility that has been caused by the pandemic, discount remains, we believe, a growth segment within overall retail and we will continue to target it as one of our key growth channels.

 

Operating Margins

Gross margin increased to 24.9% (FY21: 22.2%) driven by the benefits of the Salter acquisition with the Salter licence royalty now no longer payable and the addition of the higher margin scales business. Core gross margins remained stable compared to last year which was a significant achievement given substantially increased shipping costs.

 

The combination of higher revenues, a higher gross margin, and overheads broadly stable relative to revenue led to a 41% (£5.5m) increase in adjusted EBITDA* to £18.8m (FY21: £13.3m) with adjusted EBITDA* margin improving 2.5% to 12.2% (FY21: 9.7%).

 

 

OPERATIONAL REVIEW

 

Integration of the Salter Acquisition

The acquisition of Salter at the end of FY21 was an exciting moment in the history of Ultimate Products. Salter is the UK's oldest housewares brand, dating back to 1760, and has long been the market leader for bathroom and kitchen scales in the UK. Prior to the acquisition, the Group had had agreements in place granting it an exclusive licence to use the Salter trademark for kitchen electrical and cookware since 2011. The acquisition substantially strengthened our brand portfolio with full ownership now enabling us to drive the growth of this brand in a way that we could not have achieved when it was licenced, with international expansion representing a particular opportunity given Salter's substantial British heritage credentials. Integration of the business took place quickly and efficiently with the significantly earning-enhancing acquisition performing in line with our plans.

 

Supply Chain

During 2021, global shipping capacity was severely constrained because of worldwide port congestion. The drop in capacity caused a substantial increase in the cost of shipping leading to downward pressure on gross margins, albeit we were able to offset this by actions elsewhere. During 2022, there has been an improvement in availability and reliability, which has led to a softening of rates, although these remain substantially higher than historic norms.

 

The Group has successfully navigated the worst of the shipping and wider supply chain crisis, and, as the situation continues to normalise, we see this providing significant upside to the business in the medium term through the reversing of the downward pressure on margins that it represented and the additional revenue opportunities that have arisen from improved stock availability.

 

Head Office Investment

In September 2022, we welcomed colleagues back to our head office, Manor Mill, having completed our £2.0m investment to provide a best-in-class working environment and additional capacity for future growth. This investment is an important step in the development of our talent through collaborative working and the interchange of ideas. It is an important part of an overall approach whereby we have created an effective post-pandemic way of working, allowing us to better serve our customers. In addition, we have installed 1,150 roof solar panels, which is a key development for our commitment to Net Zero.

 

Board Changes

Chris Dent joined the Board on 4 April 2022 as CFO-designate, before taking over as CFO from Graham Screawn when Graham retired from the Board on 1 August 2022. Chris joined the Group from Franchise Brands plc and has extensive public markets experience. We look forward to him playing a key role in Ultimate Products' ambitious plans for the future.

 

Over the past 12 years, Graham has played an instrumental role in the Group's journey from a privately owned business to a well-established quoted company. We wish him all the very best for his retirement and thank him for the enormous contribution that he has made to the Group's success.

 

Employee Share Participation

The Group has a history of extending equity participation to the wider colleague base with the objective of increased incentivisation and retention of talent. During the year, share option awards were granted under the PSP Scheme to key managers and under the SAYE Scheme to all qualifying colleagues in the UK who wished to participate. As substantial shareholders, Simon Showman (CEO) and Andrew Gossage (Managing Director) did not participate in the schemes. This allows grants under the PSP Scheme to be made to a wider group of managers including those who are at an earlier stage of their career, thereby helping to secure the Group's future talent pool.

 

It is intended that the exercise of options will be fully satisfied through ordinary shares held in trust by the EBT. To this end we commenced an EBT share purchase programme with the objective of mitigating the dilutive impact of share option awards and through this improving overall shareholder returns.

 

Robotics Process Automation

As both a B2C and B2B supplier, our position in the supply chain brings complexity that must be carefully managed to continue to provide the best service to our customers. We see this complexity as an opportunity that represents a significant barrier to entry. We therefore continue to concentrate on developing our systems with a relentless focus on driving productivity through the use of automation. The next step in this journey is the investment in robotics across the entire business to automate hundreds of tasks. Rather than significant extra capital expenditure, the initial investment has taken the form of modest additional headcount increases within our process team. Through this, we expect to see increased productivity and improved accuracy resulting in enhanced operating margins and an even better customer experience.

 

Petra Brand Update

During 2021, the Group purchased Petra, the German kitchen electrical brand. Founded in Bavaria in 1968, Petra originally specialised in coffee machines before expanding its range into other kitchen electrical products. Market research shows that it remains well known to German consumers, despite the limited brand investment from its previous owner. Since the acquisition, Petra has been refreshed with new branding and a range of kitchen electrical appliances. We are delighted that the brand will be launched with one of Germany's largest hypermarket groups in late 2022, with a substantial initial order received for products including waffle makers, air fryers and multi-meal makers. This exciting development underlines our belief that Petra, with its German heritage and reputation for quality and design, has the potential in time to be a brand of the scale of Salter or Beldray.

 

Russell Hobbs Licence

 

Post year end the Group renewed its trademark licence agreement with Spectrum Brands, which grants the Group an exclusive licence to use the "Russell Hobbs" trademark in the United KingdomEuropeAustralia 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 due to end in March 2023. This significantly reduces the licencing risk for the Group, as the licence will always have four years to run, rather than having a fixed end date. 

 

 

FINANCIAL REVIEW

 

 

 

 

2022

2021

Change

Change

 

£'000

£'000

£'000

Revenue

                154,191

         136,367

            17,824

13%

Cost of sales

              (115,837)

       (106,136)

             (9,701)

9%

Gross profit

                   38,354

            30,231

               8,123

27%

Administrative expenses

                (19,604)

          (16,940)

             (2,664)

16%

Adjusted EBITDA

                   18,750

            13,291

               5,459

41%

Depreciation & amortisation

                  (2,066)

             (1,623)

                 (443)

27%

Finance expense

                      (842)

                 (518)

                 (323)

62%

Adjusted profit before tax

                   15,842

            11,150

               4,693

42%

Tax expense

                  (3,120)

             (2,423)

                 (697)

29%

Adjusted profit after tax

            12,722

         8,727

        3,995

46%

Share-based payment expense

                (403)

           (228)

          (175)

77%

Non-recurring costs

                     -  

        (1,414)

        1,414

-100%

Tax on adjusting items

                    51

             228

          (177)

-78%

Statutory profit after tax

            12,370

         7,313

        5,057

69%








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

 

Revenue

Overall, Group revenue has increased by 13% to £154.2m in the period (FY21: £136.4m). This has been driven by the inclusion for the full year of the Salter scales business which was acquired during July 2021. In the full year the acquisition added £16.3m (FY21: £0.1m) of revenue to the Group, meaning that underlying revenue grew by 1% from £136.3m to £137.9m.

 

 

 

Acquisition

Core

2022

2021

Core change

Total change

 

£'000

£'000

£'000

£'000

 Supermarkets

   4,871

 46,652

      51,523

 38,914

20%

32%

 Discount retailers

     715

      47,411

     48,126

 51,526

-8%

-7%

 Online

5,004

      20,317

  25,321

 20,590

-1%

23%

 Other 

     5,757

      23,463

       29,221

 25,336

-7%

15%

Total Revenue

   16,348

 137,843

     154,191

 136,366

1%

13%

 

Overall, the business has seen strong progress with supermarkets, which have now become our largest revenue channel with sales of £51.5m, as we continue to diversify and extend our customer base, especially into European supermarkets. Discounters are down slightly year-on-year, which is partially due to over-stocking by some customers during FY21. Although overall online sales grew by 23% to £25.3m, organically online sales dipped by 1%. This was as a direct result of the shipping crisis which reached its peak during the summer of 2021. As products were more difficult to secure, we prioritised our retail customers, meaning the Group had a sub-optimal level of stock for servicing our online customers, which led to an H122 year-on-year decline of 13%. When the supply chain issues eased and we were able to bring stock levels back to an optimal level, we saw online sales grow 20% year-on-year in H222.

 


2022

£'000

2021

£'000

Change

 £'000

Change

%

 UK

         101,050

            92,915

               8,134

9%

 International

            53,141

            43,451

               9,690

22%

 Total Revenue

         154,191

         136,367

            17,824

13%

 

In line with our international growth strategy, we have continued to see sales to international customers outpace the growth we have seen domestically within the UK. Growth has been particularly strong in Germany, with sales reaching £19.2m (FY21: £13.8m).

 

Gross Profit

Gross profit has increased by 27% to £38.4m (FY21: £30.2m), reflecting an increase in gross margin from 22.2% to 24.9%. This increase has been achieved despite a 2.2% headwind in freight costs, as new sales have come from higher gross margin products and channels.

 

Adjusted EBITDA

Gross profit increased 27%, whereas overheads only increased by 16% to £19.6m (FY21: £16.9m) resulting in a 41% increase in Group EBITDA to a record £18.8m (FY21: £13.3m). 

 

The increase in overheads reflects our investment in building up our teams, with salary costs increasing 9% to £14.6m (FY21: £13.4m). In addition, we have seen costs coming back into the business which dropped significantly in the previous years due to COVID restrictions, such as expenditure on travel and exhibitions.

 

 

Adjusted & statutory profit

 

2022

2021

Change

Change

 

£'000

£'000

£'000

%

Adjusted EBITDA

18,750

13,291

5,459

41%

Depreciation & amortisation

(2,066)

(1,623)

(443)

27%

Finance expense

(842)

(518)

(323)

62%

Adjusted profit before tax

15,843

11,150

4,693

42%

Tax expense

(3,120)

(2,423)

(697)

29%

Adjusted profit after tax

            12,722

         8,727

        3,995

46%

Share-based payment expense

                (403)

           (228)

          (175)

77%

Non-recurring costs

                     -  

        (1,414)

        1,414

-100%

Tax on adjusting items

                    51

             228

          (177)

-78%

Statutory profit after tax

            12,370

         7,313

        5,057

69%

 

Depreciation and amortisation increased 27% to £2.1m (FY21: £1.6m) as a result of the increase in the depreciation charge following from our £2.0m investment in our head office, which significantly improved working conditions for our people, and helped to ease the transition of our people back to the office post-COVID.

 

The finance charge has increased 62% to £0.8m (FY21: £0.5m), due to the higher level of net bank debt due to the Salter acquisition, which was financed through £16.7m of debt and £15.0m of new equity. The finance charge also includes interest on capitalised leases as required by IRFS 16.

 

During 2021 the Group took non-recurring charges of £1.4m, being £0.9m of fees related to the acquisition of Salter, and £0.5m being the repayment of the Government's Coronavirus Job Retention Scheme. There have been no non-recurring charges in the current year.

 

The tax charge for the period at 21% (2021: 23%) was higher than the statutory rate of 19% due to the higher statutory rate of tax paid on our European foreign branches in Germany and Poland

 

As a result, the statutory profit after tax increased by 69% to £12.4m (FY21: £7.3m).

 

Earnings per share

Although the Group has not issued any new shares within the year, in July 2021 the Group issued 7,142,857 shares at £2.10 to fund the Salter acquisition, meaning that the weighted average number of shares increased from 78,465,192 to 86,353,827, resulting in a 10% effective dilution in the current period.

 

 

 

FY22

EPS

FY21

EPS

 

£'000

p

£'000

p

Adjusted profit after tax / Adjusted EPS

12,722

14.73

8,727

11.12

Share-based payment expense

(403)

(0.47)

(228)

(0.29)

Non-recurring costs

-

-

(1,414)

(1.80)

Tax on adjusting items

51

0.06

228

0.29

Statutory profit after tax / Basic EPS

12,370

14.32

7,313

9.32

 

As a result, whilst adjusted profit after tax grew by 46% to £12.7m (FY21: £8.7m), adjusted earnings per share increased by 32% to 14.73p (FY21: 11.12p). Basic earnings per share increased by 53% to 14.22p (FY21: 9.32p).

 

Financing and cash flow

At the year end the Group had a net bank debt/adjusted EBITDA ratio of 1.3x (31 July 2021: 1.4x), which represents net bank debt of £24.3m (31 July 2021: £18.8m). The Group maintains comfortable levels of headroom within its bank facilities, with headroom at 31 July 2022 of £17.8m (31 July 2021: £16.2m). 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.

 

 

31 July 2022

31 July 2021

           Change

      Change

 

£'000

£'000

£'000

%

Cash

 6,202

 133

 6,069

4563%

Overdraft

 (6,020)

 -  

 (6,020)

 -  

Term loan

 (8,000)

 (10,000)

 2,000

-20%

RCF

 (2,217)

 (2,983)

 766

-26%

Invoicing discounting

 (6,197)

 (3,290)

 (2,907)

88%

Import loans

 (8,179)

 (2,759)

 (5,420)

196%

Loan fee

 155

 234

 (79)

-34%

Cash

 6,202

 133

 6,069

4563%

 

The Group generated cash from operating activities of £5.8m (FY21: £11.7m), as cash has been used to fund an increase in our working capital balances, especially our stock balances, which were at a sub-optimal level during the shipping crisis last year, and consequently held back sales in the first quarter.

 


31 July 2022

31 July 2021

Change


2022

2021


£'000

£'000

£'000


WCD

WCD

Inventory

     29,162

    21,674

      7,488


    74

    59

Debtors

     32,194

    26,544

      5,650


    60

    57

Creditors

    (29,644)

  (29,451)

       (193)


    65

    70

Total working capital

     31,712

    18,767

    12,945




 

 

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 4.82 pence per share (FY21: 3.33 pence per share).  This takes the total dividend for the year to 7.12 pence per share (FY21: 5.02 pence per share), an increase of 42%.

 

Subject to shareholder approval at the AGM on 16 December 2022, the final dividend will be paid on 27 January 2023 to shareholders on the register at the close of business on 6 January 2023 (ex dividend date 5 January 2023).

 

 

James McCarthy

Simon Showman

Chairman

Chief Executive Officer

 


 

Consolidated Income Statement

For the year ended 31 July 2022

 

2022

2021

 

£'000

£'000

Revenue

        154,191

   136,367

Cost of sales

    (115,837)

  (106,136)

Gross profit

          38,354

     30,231

Adjusted earnings before interest, tax, depreciation, amortisation, share-based payments & nonrecurring items ("Underlying EBITDA")

18,750

 

     13,291

Depreciation

         (2,044)

      (1,607)

Amortisation of intangibles

             (22)

           (16)

Share-based payment expense

             (403)

         (228)

Non-recurring items

                    -  

      (1,414)

Total administrative expenses

      (22,073)

    (20,205)

Operating profit

          16,281

     10,026

Finance expense

             (842)

         (518)

Profit before tax

          15,439

       9,508

Tax expense

         (3,069)

      (2,195)

Profit for the year attributable to equity holders of the Company

 12,370

       7,313

All amounts relate to continuing operations


 

Earnings per share


 

Basic

          14.3

9.3

Diluted

           13.9

9.1

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 July 2022


2022

£'000s

2021

£'000s

Profit for the year

12,700

7,313

 



Items that may subsequently be reclassified to the income statement



Fair value movements on cash flow hedging instruments

3,329

(162)

Hedging instruments recycled through the income statement at the end of hedging relationships

162

961

Items that will not subsequently be reclassified to the income statement



Foreign current translation

11

(13)

Other comprehensive income

3,412

786

Total comprehensive income for the year attributable to the equity holders of the Company

15,782

8,099

 

Consolidated Statement of Financial Position

At 31 July


 

2022

£'000

 

2021

£'000

Assets



 

Intangible assets

37,025

36,929

 

Property, plant and equipment

6,369

5,719

 

Total non-current assets

43,394

42,648

 

 



 

Inventories

29,162

21,674

 

Trade and other receivables

32,194

26,544

 

Derivative financial instruments 

4,142

384

 

Current tax asset

-

62

 

Cash and cash equivalents

6,202

133

 

Total current assets

71,700

48,797

 

Total assets

115,094

91,445

 

 



 

Liabilities



 

Trade and other payables

(29,644)

(29,451)

 

Derivative financial instruments

-

(220)

 

Current tax

(170)

-

 

Borrowings

(22,314)

(7,951)

 

Lease liabilities

(817)

(771)

 

Deferred consideration

(987)

(990)

 

Total current liabilities

(53,932)

(39,383)

 

Net current assets

17,768

9,414

 

 



 

Borrowings

(8,144)

(10,847)

 

Deferred tax

(7,585)

(6,147)

 

Deferred consideration

-

(983)

 

Lease liabilities

(1,940)

(2,030)

 

Total non-current liabilities

(17,669)

(20,007)

 

Total liabilities

(71,601)

(59,390)

 

Net assets

43,493

32,055

 

 


 

 Equity



 

Share capital

223

223

 

Share premium

14,334

14,334

 

Employee Benefit Trust reserve

(1,571)

(2,152)

 

Share-based payment reserve

1,166

1,024

 

Hedging reserve

3,239

(162)

 

Retained earnings

26,102

18,788

 

Equity attributable to owners of the Group

43,493

32,055

 






 

 

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 2020

 

205

2

(2,155)

796

(961)

15,527

13,414

Profit for the year

-

-

-

-

-

7,313

7,313

Foreign currency retranslation

-

-

-

-

-

(13)

(13)

Cash flow hedging movement

-

-

-

-

799

-

799

Total comprehensive income for the year

-

-

-

-

799

7,300

8,099

Transactions with shareholders:

 

 

 

 

 

 

 

Ordinary shares issued

18

14,332

-

-

-

-

14,350

Dividends paid

-

-

-

-

-

(4,409)

(4,409)

Share-based payments

-

-

-

228

-

370

598

Purchase/Sale of shares by the EBT

-

-

3

-

-

-

3

As at 31 July 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

 

 

Consolidated Statement of Cash Flows

For the year ended 31 July




 

2022

£'000

 

2021

£'000

Net cash flow from operating activities





Profit for the year



12,370

7,313

Adjustments for:





Finance costs



842

518

Income tax expense



3,069

2,195

Depreciation



2,044

1,607

Amortisation



22

16

Derivative financial instruments



274

(678)

Share-based payments



403

228

Income taxes paid



(2,345)

(2,566)

Working capital adjustments





(Increase) in inventories



(7,721)

(368)

(Increase) in trade and other receivables



(5,649)

(8,091)

Increase in trade and other payables



1,221

9,031

Net cash from operations



4,530

9,205

Cash flows used in investing activities




Acquisition of subsidiary


(1,960)

(30,578)

Purchase of intangible assets


-

(111)

Purchase of property, plant and equipment



(1,843)

(2,260)

Net cash used in investing activities



(3,803)

(32,949)

Cash flows used in financing activities




Sale of own shares


373

2

Proceeds from borrowings


14,347

16,048

Repayment of borrowings


(2,766)

(1,144)

Principal paid on lease obligations


(936)

(713)

Proceeds from issue of new shares (net of costs)


-

14,350

Debt issue costs paid


-

(245)

Dividends paid


(4,830)

(4,409)

Interest paid



(850)

(335)

Net cash generated by finance activities



5,338

23,554

Net increase in cash and cash equivalents


6,065

(190)

Exchange gains on cash and cash equivalents


4

(5)

Cash and cash equivalents brought forward


133

329

Cash and cash equivalents carried forward


6,202

133










Reconciliation 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

Total liabilities from financing activities £'000

Cash

 £'000

Net bank debt

£'000

At 1 August 2021

-

-

(225)

-

(3,903)

136

(3,992)

329

(3,663)

Financing cash flows

-

(10,000)

(2,758)

(3,290)

1,144

245

(14,659)

-

(14,659)

Other cash flows

-

-

-

-

-

-

-

(196)

(196)

Other changes

-

-

-

-

-

(147)

(147)

-

(147)

At 31 July 2021

-

(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

-

-

-

-

-

-

-

49

49

Other changes

-

-

-

-

-

(79)

(79)

-

(79)

At 31 July 2022

(6,020)

(8,000)

(2,217)

(6,197)

(8,179)

155

(30,458)

6,202

(24,256)












 

NOTES TO THE FINANCIAL STATEMENTS

 

1.   GENERAL INFORMATION

  

 UP Global Sourcing Holdings 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 UP Global Sourcing Holdings 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 2022 or 2021 but is derived from those accounts. Statutory accounts for UP Global Sourcing Holdings plc for the year ended 31 July 2021 have been delivered to the Registrar of Companies and those for the year ended 31 July 2022 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 2022 and 31 July 2021 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 a severe but plausible downside scenario, including a further Covid restrictions, supply chain issues and demand led falls in revenue due to the cost of living crisis. 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 1.3x (31 July 2021: 1.4x), which represents net bank debt of £24.3m (2021: £18.8m). The Group maintains comfortable levels of headroom within its bank facilities, with headroom at 31 July 2022 of £17.8m (31 July 2021: £16.2m). The Group's banking facilities comprise a term loan of £8.5m (FY21: £10.0m), a revolving credit facility of £8.2m (FY21: £8.2m), an import loan facility of £9.0m (FY21: £8.7m), and an invoice discounting facility with a total limit of £23.5m (FY21: £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:


2022

£'000

2021

£'000

United Kingdom


   101,050

92,916

Germany


      19,231

13,882

Rest of Europe


      29,700

27,720

Rest of the World


4,210

1,849

Total


   154,191

136,367

International sales


            53,141

43,451

Percentage of total revenue


34.5%

31.9%

 

 

Analysis of revenue by brand:


2022

£'000

2021

£'000

Salter


               48,080

              28,379

Beldray


              39,950

               42,374

Russell Hobbs (licensed)


              20,165

               16,840

Progress


                 8,287

                 6,683

Kleeneze


                2,835

                 2,136

Premier brands


           119,317

               96,412

Other proprietorial brands


17,032

24,357

Own label and other


17,842

15,599

Total

 

154,191

136,367

   

 

Analysis of revenue by product:


2022

£'000

2021

£'000

Small domestic appliances


 57,032

48,715

Housewares


 54,539

35,898

Laundry


 14,799 

17,216

Audio


 5,870

6,937

Heating and cooling


 12,907

15,457

Others


 9,044

12,144

Total

 

154,191

136,367

 

 

Analysis of revenue by sales channel:


2022

£'000

2021

£'000

Supermarkets


 51,523

      38,914

Discount retailers


 48,126

      51,526

Online channels


 25,321

      20,590

Multiple-store retailers


 17,312

      15,578

Other


 11,909

         9,757

Total

 

 154,191

   136,367

 

 

 

4.   FINANCE COSTS



2022

£'000

2021

£'000

Interest on bank loans and overdrafts


704

412

Interest on lease liabilities


74

82

Foreign exchange in respect of lease liabilities (net of hedging actions)


(11)

(10)

Other interest payable and similar charges


75

34

Total finance cost


842

518

 

 

 

 

5.   TAXATION



2022

£'000

2021

£'000

Current period - UK corporation tax


2,390

1,591

Adjustments in respect of prior periods


(281)

(27)

Foreign current tax expense


467

641

Total current tax


2,576

2,205





Origination and reversal of temporary differences


351

43

Adjustments in respect of prior periods


81

(37)

Impact of change in tax rate


61

(16)

Total deferred tax


493

(10)





Total tax charge


3,069

2,195

 

 

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:

 



2022

£'000

2021

£'000

Profit before tax


15,439

9,508

Tax charge at 19.0% (2021 - 19.0 %)


2,933

1,807

Adjustments relating to underlying items:




Adjustment to tax charge in respect of prior periods


(200)

(9)

Effects of expenses not deductible for tax purposes


(9)

11

Impact of overseas tax rates


231

299

Effect of difference in corporation tax and deferred tax rates


88

2

Adjustments relating to non-underlying items:




Adjustment to tax charge in respect of prior periods


-

(55)

Effects of expenses not deductible for tax purposes


77

224

Differences arising on tax treatment of shares


(178)

(33)

Effect of difference in corporation tax and deferred tax rates


127

(51)

Total tax expense


3,069

2,195

 

Corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit for the year.  In the 3 March 2021 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:

 



2022

£'000

2021

£'000

Profit for the year


12,370

7,313



Number

Number

Weighted average number of shares in issue


   89,312,457

82,521,850

Less shares held by the UPGS EBT


(2,958,630)

(4,056,659)

Weighted average number of shares - basic


   86,353,827

78,465,191

Share options


      2,580,825

2,039,490

Weighted average number of shares - diluted


   88,934,652

80,504,681



Pence

Pence

Earnings per share - basic


14.3

9.3

Earnings per share - diluted


13.9

9.1

 

 

7.   DIVIDENDS



2022

£'000

2021

£'000

Interim dividend paid in respect of the previous year


-

906

Final dividend paid in respect of the previous year


2,844

2,183

Interim declared and paid


1,986

1,320



4,830

4,409





Per share


Pence

Pence

Interim dividend paid in respect of the previous year


-

1.16

Final dividend paid in respect of the previous year


3.33

2.795

Interim declared and paid


2.30

1.69



5.63

5.645

 

The Directors propose a final dividend of 4.82p per share in respect of the year ended 31 July 2022.

 

 

8.   BANK BORROWINGS

 

2022

£'000

2021

£'000

Overdrafts

6,020

-

Invoice discounting

6,197

3,290

Import loans

8,179

2,759

Term loan

2,000

2,000

Unamortised debt issue costs

(82)

(98)

Current

22,314

7,951

Revolving credit facility

2,217

2,983

Term loan

6,000

8,000

Unamortised debt issue costs

(73)

(136)

Non-current

8,144

10,847




Total borrowings

30,458

18,798






Contractual maturities:





In less than one year



22,396

8,049

Between one and two years



2,000

2,000

Between three and four years



6,217

8,983

Less: Unamortised debt issue costs



(155)

(234)

Total borrowings



30,458

18,798








 

Current bank borrowings include a gross amount of £6.2m (2021: £3.3m) due under invoice discounting facilities, which are secured by an assignment of and fixed charge over the trade debtors of UP Global Sourcing UK Limited. Furthermore, current bank borrowings include an amount of £8.2m (2021: £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 £155,00 (2021: £234,000) 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:

 

 

 

2022

£'000

2021

£'000

Trade receivables- held at amortised cost

30,643

25,372

Derivative financial instruments - assets subject to hedge accounting

3,899

47

Derivative financial instruments - assets not subject to hedge accounting

243

337

Trade and other payables

(28,095)

(27,921)

Derivative financial instruments - liabilities subject to hedge accounting

-

(220)

Derivative financial instruments - liabilities not subject to hedge accounting

-

-

Borrowings

(30,458)

(18,798)

Lease liabilities

(2,757)

(2,801)

Deferred consideration

(987)

(1,973)

Cash and cash equivalents- held at amortised cost

6,202

133

 

Financial Liabilities

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

 


2022

£'000

2021

£'000

Trade payables

Borrowings

Other payables

20,662

30,458

7,433

19,293

18,798

8,628

Lease liabilities

Deferred consideration

2,757

987

2,801

1,973


62,297

51,493

 

 

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:

 

 

2022

£'000

2021

£'000

Derivative financial instruments - assets

Derivative financial instruments - liabilities

4,142

-

384

(220)


4,142

164

 

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

 

 

 


 

2022

£'000

2021

£'000

Foreign currency contracts



3,524

97

Interest rate swaps



261

47

Interest rate caps



357

20




4,142

164

 

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 2022, the Group was committed to:

 


2022

2022

2021

2021


Buy

Sell

Buy

Sell

USD

000

57,050

-

54,875

-

€'000

-

23,200

-

23,575

CAD

##PRELOADED_STATE##
##REACT_QUERY_STATE##
##CHUNKS##
000

-

60

-

140

PLN'000

-

5,500

-

2,800

CNY'000

2,459

-

4,399

-

 

 

At 31 July 2022 & 2021, all the outstanding USD, EUR, PLN and CAD contracts mature within 12 months of the period end. The CNY contracts, which are held to hedge a lease commitment, mature over the length of that lease ending in August 2023. 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. The fair value of the contracts at 31 July 2022 is an asset of £3.5m (2021: £97,000).

 

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.

 

The fair value of forward contracts that are effective in offsetting the exchange rate risk is a liability of £3.4m (2021: £220,000), 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 £3.4m within 12 months (2021: £220,000 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 2022, protection was in place over an aggregate principal of £18.3m (2021: £15.6m). At 31 July 2022, the Group had borrowings of £6.3m (2021: £3.4m) not subject to interest rate protection. All interest rate swaps meet the conditions for hedge accounting.

 

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 £261,000 (2021: £47,000 ), 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 31 December 2022 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 £357,000 (2021: £20,000).

 

Reconciliation of the financial instruments to the Statement of Financial Position

 

 

Group

 

2022

£'000

2021

£'000

Trade receivables


30,643

25,372

Prepayments and other receivables not classified as financial instruments


1,551

1,172

Trade and other receivables


32,194

26,544

 

 

Group

 

 

2022

£'000

2021

£'000

Trade and other payables


28,095

27,921

Other taxes and social security not classified as financial instruments


1,549

1,530

Trade and other payables


29,644

29,451

 

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 FY22, 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:



 

 




2022


2021


Group



 

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000

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000

Trade receivables




11,276

15,679

Other receivables




990

729

Net cash, overdrafts and revolving facilities




7,364

34

Import loans




(9,965)

(3,836)

Invoice discounting




75

(910)

Trade payables




(21,310)

(19,984)





(11,570)

(8,288)









 

The effect of a 20% strengthening of Sterling at 31 July 2022 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 £1.3m (2021: £0.8m). 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 £1.9m (2021: £1.2m).

 

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



 

 




2022


2021

Group




 

€'000

€'000

Trade receivables




9,345

7,948

Net cash, overdrafts and revolving facilities




(125)

(24)

Invoice discounting




(5,617)

(3,091)

Trade payables




(612)

(235)

Lease liabilities




(810)

(283)





2,181

4,315

 

The effect of a 20% strengthening of Sterling at 31 July 2022 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 £262,000 (2021: £497,000). 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 £393,000 (2021: £746,000).

 

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 2021 will be posted to shareholders in the week commencing 14 November 2022 and will be available immediately thereafter on the Company's website at https://www.upgs.com/investor-relations/financial-reports/

 

11.          ANNUAL GENERAL MEETING

 

The Annual General Meeting of UP Global Sourcing Holdings plc will be held on 16 December 2022 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 14 November 2022.

 

12.          PUBLICATION ON WEBSITE

 

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

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