9
April 2024
Ultimate Products
plc
("Ultimate Products", the
"Company" or the "Group")
INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 JANUARY 2024
Trading in line with market
expectations*
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
interim results for the six months ended 31 January
2024.
Financial highlights
·
Total revenue down 4% to £84.2m (H1 2023:
£87.6m)
o Supermarket ordering held back by well documented overstocking
issues (which are now easing), strong prior year comparatives
bolstered by the exceptionally strong demand for energy efficient
air fryers in H1 2023, and some modest revenue deferrals (£1.3m) at
the end of the period due to the recent disruption to global supply
chains
·
Gross profit rose 3% to £22.4m (H1 2023: £21.6m),
with gross margin increasing to 26.6% (H1
2023: 24.7%), driven by sales mix and the
fall in global shipping rates
·
Adjusted EBITDA** stable at £11.3m (H1 2023:
£11.2m)
·
Statutory profit before tax up 2% to £9.5m (H1
2023: £9.3m), as lower net debt reduced finance expenses
·
Adjusted profit before tax** up 2% to £9.6m (H1
2023: £9.4m)
·
Statutory EPS down 3% to 8.2p (H1 2023: 8.4p),
with Adjusted EPS** down 3% to 8.3p (H1 2023: 8.6p) due to the
impact of higher UK corporate tax rate (25% from 19%)
·
Interim dividend per share up 1% to 2.45p (H1
2023: 2.43p)
·
Improved net bank debt/adjusted EBITDA** ratio of
0.4x (31 July 2023: 0.7x), below the 1.0x
target set out in the Group's new capital allocation
framework
·
Strong cash generation from operating activities
of £14.4m (H1 2023: £12.8m), representing a 128% operating cash
conversion
·
The Group continues to trade in line with market
expectations for FY24*
* Consensus market expectations for
the financial year ending 31 July 2024 are revenues of £166.7m,
adjusted EBITDA of £21.5m and adjusted EPS of 15.6p
**Adjusted measures are before
share-based payment expenses and non-recurring items
Operational highlights
· Continued to drive productivity through focus on continuous
improvement, including the automation of hundreds of tasks across
the business
· Opening of the Group's new European showroom in Paris, ideally
located for hosting both existing and prospective customers across
the region
· Rebranding of the iconic Salter label, elevating its already
strong identity and consumer recognition
· Renaming of the Group from UP Global Sourcing Holdings plc to
Ultimate Products plc, to better reflect the Group's purpose and
core activities
· Appointment of Andrew Gossage as Chief Executive Officer,
taking over from Simon Showman, the Group's founder, who will
remain on the Board as Chief Commercial Officer
New
Capital Allocation Framework
· Maintain net bank debt/adjusted EBITDA ratio at around
1.0x;
· Continue to return around 50% of post-tax profits to
shareholders through dividends; and
· As
announced separately today, regulatory and shareholder approval is
being sought to commence a share buy-back of up to 10% of the
Group's issued share capital
Current trading and
outlook
The Group continues to trade in line
with market expectations for FY24.
Commenting on the results, Andrew Gossage, Chief Executive of
Ultimate Products, said:
"This has been another period of resilient performance for
Ultimate Products. Macro conditions remain challenging, but our
strategy of providing beautiful products at mass-market prices to
UK and European households is continuing to stand us in good stead.
We are now seeing the gradual resumption of normal ordering
patterns from our customers after the overstocking issues that were
brought about by the pandemic, and we have a range of initiatives
underway to improve operational efficiencies and deepen our
customer relationships. As a result, we continue to trade in line
with market expectations."
For more information, please
contact:
Ultimate Products +44 (0) 161 627
1400
Andrew Gossage, CEO
Chris Dent, CFO
Shore Capital +44 (0) 20 7408
4090
Mark Percy
Malachy McEntyre
David Coaten
Iain Sexton
Isobel Jones
Cavendish Capital Markets Limited +
44 (0)20 7220 0500
Carl Holmes (Corporate
Finance)
Matt Goode (Corporate
Finance)
Abigail Kelly (Corporate
Finance)
Charlie Combe (ECM)
Powerscourt +44 (0) 207 250
1446
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 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 Paris, France.
Please note that Ultimate Products
is not the owner of Russell Hobbs. The Group 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.upplc.com.
BUSINESS REVIEW
We are pleased to present the
Interim Report for the six months ended 31 January 2024, a period
in which, against an uncertain and highly challenging
macro-economic environment, we have continued to invest in our
strategic plans.
Our position in the supply chain
makes our business complex; we work with over 600 factories and
retailers, and deliver over 3,000 types of product to our end
consumers. While the level of service that we offer means our
business model cannot be simple, we consistently and seamlessly
navigate the intricacies of our model to guarantee an unbeatable
level of service for our retail partners. Our unrivalled execution,
combined with our beautiful, more sustainable products, make us a
strategic partner of choice to many of the UK and Europe's leading
retailers.
Our complex and diverse operations
increase the robustness of our business model. Dealing with a large
number of factories across many countries, and continuing to seek
to reduce our exposure to suppliers in China, both offer further
security, which in turn provide safeguards in the face of supply
chain volatility and quality control issues. Consciously choosing
to deal with a wide range of different customers also protects us
from the impact of fluctuating demand levels caused by overstocking
and the cyclical decisions of retailers (e.g. turning towards 'own
label'). The breadth of our offering avoids any overreliance on any
given product line, allowing us to maintain flexibility and an
ability to adapt to an ever-changing landscape. In short, our
complexity is a significant barrier to entry, increases the
resilience of the business and allows us to avoid overreliance on
any given supplier, customer or product.
Whilst we cannot make our business
simple, we can strive to make our business simpler. There is a balance to be struck between complexity
(which affords us resilience) and a focus on simplicity. Indeed,
simplicity enables us to become more focused on the areas where we
excel, and which have proven long-term growth potential.
In terms of our routes to market, we
concentrate on retailer partnerships with supermarkets,
discounters, and online platforms. Using
our proven strategy of 'land and expand', we build long-term
strategic relationships with our retail customers, including those
serving the sizeable European market (population: c.477 million),
within which our penetration is much lower than in the UK
(population: c.67 million), where we currently sell £1.72 of
product per capita. The financial effects of reproducing that level
of penetration in Europe would be transformational for our
business, and this was the reasoning behind two major decisions in
the first half of the year.
To capitalise on the potential that
Europe offers, in September 2023 we relocated our European showroom
to Paris, which has opened up opportunities with both French and
pan-European retailers. Our new European showroom is based at the
Homexpo Paris showroom complex, where the anchor tenant is JJA, one
of France's largest home furnishing suppliers. The initial results
have been very encouraging, with sales in France growing by 128%
(£3.4m) year-on-year.
The second decision we took was the
transition by Simon Showman from his role as CEO to the role of
Chief Commercial Officer. Simon, as the founder of the business,
has built a host of incredibly strong relationships with our retail
partners in the UK and in Europe and, in his new role, will oversee
the Group's commercial functions including sales, buying and
product development. As we build these long-term relationships
internationally, it is important that we do so at a strategic level
and Simon's wealth of experience and knowledge will continue to aid
our growth in the UK and across Europe.
The core of our strategic retail
partnerships is the innovative products that we supply to our
customers. We focus on providing beautiful and more sustainable
products at mass market prices that appeal to households across our
key markets. Our retail partners can earn an equivalent 'own label'
margin, whilst being able to take advantage of our ability to
simplify the buying process through our world-class sourcing and
logistical capabilities.
Over the past ten years, we have
simplified and evolved our business to become the Home of Brands.
Looking back to FY13, our business had revenues of £48.5m, EBITDA
of £1.5m, and an EBITDA margin of just 3%. At that point, our owned
brands made up just 20% of our business. The other 80% was
comprised of clearance stock and licensed brands. This largely
non-branded approach impacted our ability to generate repeat
orders.
In contrast, our FY23 revenues were
£166.3m, EBITDA was £20.2m, and our EBITDA margin hit 12%. 80% of
our revenue came from the brands we own, and 60% came from our two
principal brands, Salter (our scales and kitchen brand) and Beldray
(our laundry and floorcare brand). Between them, these two British
heritage brands have over 400 years of history and incredible
consumer recognition. Since hiring Tracy Carroll - our first Brand
Director - last year, we have refined the development of our
portfolio of brands in a more strategic manner, leading to further
simplification. This includes focusing our brand product
development on core categories, employing a more brand-led approach
to design, and concentrating our efforts on building brand equity,
which we use to drive sales volumes.
Over the past year, Tracy's
expertise has led to a more disciplined approach to our brand
management, which can be seen in the rebranding of the Salter label
during the year. Salter, the UK's oldest houseware brand
(est.1760), has a substantial amount of brand equity, built up from
consistently positive consumer perception and experience. To
protect this valuable brand equity, we must take every opportunity
to reinforce the brand's values; there are no hiding places, and
every touch point is an opportunity to strengthen the brand
perception. The recent rebrand gave us an opportunity to recognise
the importance of consistency across these touch points, achievable
by setting clear brand guidelines. Through a simplified style
guide, and the streamlining of internal processes, we have retained
Salter's clear brand identity and used this simplification to
strengthen its existing brand equity.
One of the benefits of concentrating
growth in international and online sales is the extension of
product life, as current product lines can be sold to new consumers
through different channels. This means that we can tighten our
product development process to bring a refined number of
higher-quality and more innovative products to market. It is the
strength and focus of our brand and product development that will
ensure consumers continue to buy our beautiful products, at a price
point that is affordable to the mass-market.
Initially, it is our appealing price
point that makes our products attractive to our retail partners,
allowing them to earn a margin that is equivalent to their own
label. However, what generates repeat orders is our unrivalled
execution, which builds trust and respect. Key to our execution is
making what we do as simple as possible. Our ability to grow sales
is directly linked to consistently providing the best service to
our retail partners. We have, therefore, been relentless in
developing our systems and, in recent years, have established a
strong company focus on operational simplification.
Our ability to do this is in no
small part the result of the energy and ability of our teams. We
take pride in being a talent led business that offers continuous
improvement to its colleagues through a multitude of opportunities
across all areas of the organisation. Our graduate scheme
aims to bring the best and brightest talent into the business and
provide them with an industry-leading training programme, which is
collegial and intellectually stimulating. Our workforce is unafraid
to challenge the status quo, and the way in which things are
done. This mindset is encouraged, as it allows us to nurture a
culture of continuous improvement.
This mindset can be summarised as
"do less, do it better". At the most rudimentary level, doing less
may mean challenging ourselves as to whether individual tasks are
necessary, but really it encapsulates a laser-focused approach to
all that we do. 'Do it better' can encompass a range of solutions,
which includes process change, robotic automation and AI. Over the
past year, we have automated hundreds of low-skill, low-reward
tasks, ultimately increasing the ability of our workforce to focus
on higher value activities. By solving issues with automation, we
are able to increase productivity and improve accuracy. This
results in enhanced operating margins, an even better customer
experience, and a more engaged workforce.
Performance
|
H1 2024
|
H1 2023
|
Change
|
Change
|
|
£'000
|
£'000
|
£'000
|
%
|
Revenue
|
84,179
|
87,606
|
(3,427)
|
-4%
|
Cost of sales
|
(61,816)
|
(65,976)
|
4,160
|
-6%
|
Gross profit
|
22,363
|
21,630
|
733
|
3%
|
Administrative
expenses
|
(11,113)
|
(10,397)
|
(716)
|
7%
|
Adjusted EBITDA*
|
11,250
|
11,233
|
17
|
0%
|
Depreciation &
amortisation
|
(1,069)
|
(1,136)
|
67
|
-6%
|
Finance expense
|
(598)
|
(711)
|
113
|
-16%
|
Adjusted profit before tax*
|
9,583
|
9,386
|
197
|
2%
|
Tax expense
|
(2,399)
|
(2,007)
|
(393)
|
20%
|
Adjusted profit after tax*
|
7,184
|
7,379
|
(195)
|
-3%
|
Share-based payment
expense
|
(96)
|
(128)
|
32
|
-25%
|
Tax on adjusting
items
|
24
|
29
|
(5)
|
-17%
|
Statutory profit after tax
|
7,112
|
7,280
|
(168)
|
-2%
|
*Adjusted measures are before share-based payment expense and
non-recurring items.
During the period, unaudited Group
revenues decreased 4% to £84.2m (H1 2023: £87.6m), with supermarket
ordering held back by well documented overstocking issues (which
are now easing), strong prior year comparatives bolstered by the
exceptionally strong demand for energy efficient air fryers in H1
2023, and some modest revenue deferrals (£1.3m) at the end of the
period due to the recent disruption to global supply
chains.
Channel
|
H1 2024
|
H1 2023
|
Change
|
Change
|
H1 2024
|
H1 2023
|
|
£'000
|
£'000
|
£'000
|
%
|
%
|
%
|
Supermarket
|
22,716
|
28,097
|
(5,381)
|
-19%
|
27%
|
32%
|
Online
|
20,874
|
22,904
|
(2,030)
|
-9%
|
25%
|
26%
|
Discounter
|
24,667
|
21,063
|
3,604
|
17%
|
29%
|
24%
|
Multiple
|
11,080
|
10,966
|
114
|
1%
|
13%
|
13%
|
Other
|
4,842
|
4,576
|
266
|
6%
|
6%
|
5%
|
Total
|
84,179
|
87,606
|
(3,427)
|
-4%
|
100%
|
100%
|
During FY22, it became clear that
many retailers were overstocked due to the rapid changes in
aggregate demand that occurred during COVID-19. The various
lockdowns caused by the global pandemic resulted in a shift in
consumption from services to goods, leading to spikes in demand.
Retailers restocked based on this information. However, when the
lockdowns finally ended, consumers shifted large parts of their
spending back to experiences and leisure, rather than physical
goods. Holidays were chosen over home hot tubs, restaurants over
egg chairs, and days out rather than board games at home. This
rapid change in consumer behaviour and demand led to significant
overstocks across retailers, which precipitated a reduction in
ordering as supermarkets and discounters focused on reducing
inventory levels.
Discounters cleared through their
overstocks during FY23, and returned to normal patterns of ordering
during FY24, as can be seen from the £24.7m of sales to discounters
in H1 2024, representing a 17% increase on the prior year. On the
other hand, supermarkets (especially those serving European
markets) have been slightly behind in terms of clearing their
overstocks. Our sales to European supermarkets fell 38% (£4.7m) in
the period, as a number of German supermarkets reduced their
forward orders. UK supermarket sales fell just 5% (£0.7m), and this
was primarily the result of a fall in demand for air fryers, rather
than overstocking issues.
Sales of air fryers, which primarily
took place via supermarkets and online channels, fell by 38%
(£4.6m) during the period. We were delighted that energy-efficient
air fryers were so sought after by UK consumers during the height
of the cost-of-living crisis, and this was reflected in their
exceptionally strong sales performance in the comparative period.
While air fryer sales could not continue at such high levels, and
demand is down from peak, we note that sales do remain at a
significantly higher level than their pre-FY23 average (H1 2022
sales were just £2.3m), suggesting that air fryers are now firmly
embedded in everyday consumer behaviour. That we were able to
service the exceptional and unprecedented demand for air fryers in
FY23 is testament to the Group's agility and sourcing capabilities.
And, as always, we maintain a diversified product
portfolio across numerous different brands and categories, which
means that we are not overly reliant on any one product type or
consumer trend, and are well-placed to take advantage of similar
trends in the future.
Territory
|
H1 2024
|
H1 2023
|
Change
|
Change
|
H1 2024
|
H1 2023
|
|
£'000
|
£'000
|
£'000
|
%
|
%
|
%
|
United Kingdom
|
58,150
|
62,569
|
(4,419)
|
-7%
|
69%
|
71%
|
International
|
26,029
|
25,037
|
992
|
4%
|
31%
|
29%
|
Total
|
84,179
|
87,606
|
(3,427)
|
-4%
|
100%
|
100%
|
Sales in the UK were down 7%
(£4.4m). The peak in air fryer sales was mainly a UK phenomenon,
and the fall in overall UK sales is primarily due to the fall in
air fryer sales through our online and supermarket
channels.
International sales, which continue
to be a strategically important growth area for the Group, were up
4%. This rise is especially pleasing given the backdrop of
overstocks at German supermarkets, where sales fell by 62% (£7.1m).
Excluding German supermarkets, other international sales were up
62% (£8.1m), driven by new customers in France following the
opening of our European showroom in Paris, and through growth with
international discounters.
Product
|
H1 2024
|
H1 2023
|
Change
|
Change
|
H1 2024
|
H1 2023
|
|
£'000
|
£'000
|
£'000
|
%
|
%
|
%
|
Small Domestic Appliances
|
33,175
|
36,695
|
(3,520)
|
-10%
|
39%
|
42%
|
Housewares
|
21,387
|
26,483
|
(5,096)
|
-19%
|
25%
|
30%
|
Laundry
|
10,204
|
8,621
|
1,583
|
18%
|
12%
|
10%
|
Audio
|
7,757
|
7,157
|
600
|
8%
|
9%
|
8%
|
Heating & Cooling
|
1,656
|
2,950
|
(1,294)
|
-44%
|
2%
|
3%
|
Clearance
|
5,914
|
2,602
|
3,312
|
127%
|
7%
|
3%
|
Others
|
4,086
|
3,098
|
988
|
32%
|
5%
|
4%
|
Total
|
84,179
|
87,606
|
(3,427)
|
-4%
|
100%
|
100%
|
Small Domestic Appliances (SDA)
include air fryers. It is no surprise, therefore, that this
category was down by 10% (£3.5m). Historically, our most popular
products among German supermarkets have been Salter and Russell
Hobbs branded cookware. The overstocking issues at these
supermarkets impacted demand for these products, which led to the
19% (£5.1m) fall in overall Houseware sales. A separate effect of
the overstocking issues can be seen in the growth of our small
Clearance division, which saw sales increase 127% (£3.3m). As
retailers and wholesalers have dealt with their overstock issues,
there has been opportunities to purchase and resell clearance
packages. As overstock issues resolve, the opportunities for this
division will recede.
Brand
|
H1 2024
|
H1 2023
|
Change
|
Change
|
H1 2024
|
H1 2023
|
|
£'000
|
£'000
|
£'000
|
%
|
%
|
%
|
Salter
|
32,104
|
35,219
|
(3,115)
|
-9%
|
38%
|
40%
|
Beldray
|
18,450
|
17,174
|
1,276
|
7%
|
22%
|
20%
|
Russell Hobbs (licensed)
|
5,787
|
10,546
|
(4,759)
|
-45%
|
7%
|
12%
|
Progress
|
3,449
|
4,005
|
(556)
|
-14%
|
4%
|
5%
|
Petra
|
1,754
|
1,932
|
(178)
|
-9%
|
2%
|
2%
|
Kleeneze
|
1,895
|
1,547
|
348
|
22%
|
2%
|
2%
|
Premier Brands
|
63,439
|
70,423
|
(6,984)
|
-10%
|
75%
|
80%
|
Other proprietorial
brands
|
8,505
|
8,789
|
(284)
|
-3%
|
10%
|
10%
|
Own label and other
|
12,235
|
8,394
|
3,841
|
46%
|
15%
|
10%
|
Total
|
84,179
|
87,606
|
(3,427)
|
-4%
|
100%
|
100%
|
Salter, as our scales and kitchen
brand, fell back 9% (£3.1m) as a result of the fall in air fryers.
As noted previously, Russell Hobbs branded cookware was the most
popular product sold into German supermarkets, meaning that their
overstocking issues led to a 45% fall (£4.8m) in sales of the
Russell Hobbs brand. The level of Own label and other sales
increased by 46% (£3.8m) due to the level of Clearance sales that
were made during the period.
Operating Margins
Gross margin increased to 26.6% (H1
2023: 24.7%) as we continue to benefit from the drop in freight
rates which helped to increase GM to 26.8% in H2 2023. The increase
in gross margin means that gross profit rose 3% to £22.4m (H1 2023:
£21.6m).
Administrative expenses rose 7% to
£11.1m (H1 2023: £10.4m). Although we have seen relatively low
levels of inflationary pressure on our cost of sales, and hence on
revenues, we have seen cost pressure in our operating costs.
Our wage bill, which makes up 70% of our other
administrative expenses, rose by 5% 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.
Our focus on increasing productivity means that our current head
count of FTE 361 is below the average for the first half of the
year (FTE 389; H1 2023: FTE 392).
We continue to invest in the
long-term growth of the business, increasing our spend on marketing
by £0.1m to £0.7m, and through the successful opening of our Paris
showroom, which had a one-off cost of around £0.1m.
The combination of resilient
revenues, improved gross margin, and slightly higher overheads has
led to a stable adjusted EBITDA at £11.3m (H1 2023: £11.2m), with
our EBITDA margin increasing from 12.8% to 13.4%.
Seasonality
The Group has historically had a
seasonal weighting towards H1, with retail demand being higher in
the peak Christmas trading period. However, over the past few
years, this pattern has become less pronounced, with sales growth
weighted towards the less seasonal online channels and sales to
supermarkets being focused more on ranges than seasonal promotions.
As a result, it is anticipated that the operating profits for the
second half of the year to 31 July 2024 will be only marginally
lower than for the six months ended 31 January 2024.
Adjusted & statutory profit
Depreciation and amortisation
decreased marginally by 6% to £1.1m (H1 2023:
£1.1m). The finance charge has decreased by 16% to £0.6m (H1 2023:
£0.7m) as the result of lower average net debt across the period.
Around £0.2m of the charge relates to fixed debt related costs and
imputed interest charges on capitalised lease liabilities. As a
result, adjusted profit before tax increased 2% to £9.6m (H1 2023:
£9.4m).
The tax charge for the period
increased by 20% as we saw the impact of a full period of the
increased UK corporation tax rate to 25% from 19%. The tax rate at
25% was in line with the UK statutory rate. The impact of the
change in tax rates led to a 2% decrease in statutory profit after
tax to £7.1m (H1 2023: £7.3m).
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 reduced following the successful vesting of
employee share options schemes. This has resulted in the weighted
average number of shares increasing 0.2% to 86,426,737 (31 January
2023: 86,234,633).
|
H1 2024
|
EPS
|
H1 2023
|
EPS
|
|
£'000
|
p
|
£'000
|
p
|
Adjusted profit after tax / Adjusted
EPS
|
7,184
|
8.3
|
7,379
|
8.6
|
Share-based payment
expense
|
(96)
|
(0.1)
|
(128)
|
(0.1)
|
Tax on adjusting items
|
24
|
0.0
|
29
|
0.0
|
Statutory profit after tax / Basic
EPS
|
7,112
|
8.2
|
7,280
|
8.4
|
As a result, both adjusted profit
after tax and adjusted earnings per share decreased by
3%.
Financing and cash flow
The Group generated cash from
operating activities of £14.4m (H1 2023: £12.8m), being a 128%
operating cash conversion. This meant that at the period end the
Group had a net bank debt/adjusted EBITDA ratio of 0.4x (31 July
2023: 0.7x), which represents net bank debt of £8.0m (31 July 2022:
£14.8m). 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.
During FY21 the Group increased its level of
borrowings to complete the transformational acquisition of Salter.
The acquisition debt of £15m has now largely been repaid, and the
Group intends to repay the remaining element of the Term Loan, with
remaining debt facilities being in place for the purpose of funding
working capital.
|
31 January
2024
|
31 January
2023
|
Change
|
Change
|
|
£'000
|
£'000
|
£'000
|
%
|
Cash
|
5,780
|
5,004
|
|
|
RCF/Overdraft
|
(5,767)
|
(7,097)
|
|
|
Invoice Discounting
|
(1,113)
|
(3,465)
|
|
|
Import Loans
|
(1,986)
|
(6,970)
|
|
|
Term loan
|
(5,000)
|
(7,000)
|
|
|
Debt Issue Costs
|
82
|
140
|
|
|
Net
bank debt
|
(8,004)
|
(19,388)
|
11,384
|
-59%
|
Capital Allocation Policy
It is the Board's intention to
maintain the net bank debt/adjusted EBITDA ratio at around 1.0x,
with the debt being used to fund the Group's working capital. The
Board believes that this level of leverage is an efficient use of
the Group's balance sheet and allows for further returns of capital
to shareholders. It is the Board's intention to continue to invest
in the business for growth, whilst returning around 50% of post-tax
profits to shareholders through dividends, and to supplement this
with share buybacks pursuant to a policy of maintaining net bank
debt at a 1.0x adjusted EBITDA ratio.
In line with this policy, an interim
dividend of 2.45 pence per share (H1 2023: 2.43 pence per share)
was approved by the Board on 8 April 2024 and will
be paid on 28 June 2024 to shareholders on record as at 31 May 2024
(ex-dividend date being 30 May 2024).
Furthermore, the Board announces
that it intends to seek regulatory and shareholder approval to
commence a share buy-back of up to 10% of its issued share capital.
Although the exact timing and magnitude of the share buy-backs will
be at the discretion of the Board, and will be, in part, dictated
by the working capital and capital expenditure needs of the
business, it is the current intention that the Group would
initially purchase around £1m of shares per quarter.
Andrew Gossage
|
Chris Dent
|
Chief Executive Officer
|
Chief Financial Officer
|
Consolidated Income Statement
|
Unaudited
6 months
ended
31 January
2024
|
Unaudited
6 months
ended
31 January
2023
|
Audited
year
ended
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Revenue
|
84,179
|
87,606
|
166,315
|
Cost of sales
|
(61,816)
|
(65,976)
|
(123,568)
|
Gross profit
|
22,363
|
21,630
|
42,747
|
Adjusted earnings before interest,
tax, depreciation, amortisation, share-based payments &
non‑recurring
items
|
11,250
|
11,233
|
20,213
|
Depreciation
|
(1,058)
|
(1,125)
|
(2,238)
|
Amortisation of
intangibles
|
(11)
|
(11)
|
(22)
|
Share-based payment
expense
|
(96)
|
(128)
|
(837)
|
Total administrative
expenses
|
(12,278)
|
(11,661)
|
(25,631)
|
Operating profit
|
10,085
|
9,969
|
17,116
|
Finance expense
|
(598)
|
(711)
|
(1,132)
|
Profit before tax
|
9,487
|
9,258
|
15,984
|
Tax expense
|
(2,375)
|
(1,978)
|
(3,398)
|
Profit for the year attributable to
equity holders of the Company
|
7,112
|
7,280
|
12,586
|
All amounts relate to continuing
operations
|
|
|
|
Earnings per share
|
|
|
|
Basic
|
8.2
|
8.4
|
14.6
|
Diluted
|
8.1
|
8.3
|
14.3
|
Consolidated Statement of Comprehensive
Income
|
Unaudited
6 months ended 31 January
2024
|
Unaudited
6 months
ended 31 January 2023
|
Audited
year
ended
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Profit for the
period
|
7,112
|
7,280
|
12,586
|
|
|
|
|
Items that may subsequently
be reclassified to the income statement
|
|
|
|
Fair value
movements on cash flow hedging instruments
|
(546)
|
(1,645)
|
(1,329)
|
Hedging
instruments recycled through the income statement at the end of
hedging relationships
|
1,274
|
(1,572)
|
(3,445)
|
Deferred
tax relating to cashflow hedges
|
(181)
|
-
|
875
|
Items that will not
subsequently be reclassified to the income
statement
|
|
|
|
Foreign
current translation
|
-
|
-
|
(2)
|
Other comprehensive
income
|
547
|
(3,217)
|
(3,901)
|
Total comprehensive income
for the period attributable to the equity holders of the
Company
|
7,659
|
4,063
|
8,685
|
Consolidated Statement of Financial
Position
|
Unaudited
as at
31 January
2024
|
Unaudited
as
at
31 January
2023
|
Audited
as
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Assets
|
|
|
|
Intangible assets
|
36,992
|
37,014
|
37,003
|
Property, plant and
equipment
|
8,039
|
5,606
|
8,443
|
Total non-current assets
|
45,031
|
42,620
|
45,446
|
|
|
|
|
Inventories
|
29,354
|
27,290
|
28,071
|
Trade and other
receivables
|
24,912
|
34,323
|
29,890
|
Derivative financial
instruments
|
647
|
913
|
1,233
|
Current tax
|
203
|
-
|
-
|
Cash and cash equivalents
|
5,780
|
5,004
|
5,086
|
Total current assets
|
60,896
|
67,530
|
64,280
|
Total assets
|
105,927
|
110,150
|
109,726
|
|
|
|
|
Liabilities
|
|
|
|
Trade and other payables
|
(29,766)
|
(31,376)
|
(30,005)
|
Derivative financial
instruments
|
(635)
|
(673)
|
(1,806)
|
Current tax
|
-
|
(705)
|
-
|
Borrowings
|
(13,784)
|
(12,934)
|
(15,891)
|
Lease liabilities
|
(796)
|
(636)
|
(836)
|
Deferred consideration
|
-
|
(494)
|
-
|
Total current liabilities
|
(44,981)
|
(46,818)
|
(48,538)
|
Net
current assets
|
15,915
|
20,712
|
15,742
|
|
|
|
|
Borrowings
|
-
|
(11,458)
|
(3,990)
|
Deferred tax
|
(7,182)
|
(6,928)
|
(6,797)
|
Lease liabilities
|
(3,865)
|
(1,717)
|
(4,262)
|
Total non-current liabilities
|
(11,047)
|
(20,103)
|
(15,049)
|
Total liabilities
|
(56,028)
|
(66,921)
|
(63,587)
|
Net
assets
|
49,899
|
43,229
|
46,139
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
223
|
223
|
223
|
Share premium
|
14,334
|
14,334
|
14,334
|
Employee Benefit Trust
reserve
|
(1,685)
|
(1,815)
|
(1,989)
|
Share-based payment
reserve
|
1,467
|
1,197
|
1,817
|
Hedging reserve
|
(113)
|
22
|
(660)
|
Retained earnings
|
35,673
|
29,268
|
32,414
|
Equity attributable to owners of the Group
|
49,899
|
43,229
|
46,139
|
Consolidated Statement of Cash
Flows
For the period ended 31
January
|
Unaudited
6 months
ended
31 January
2024
|
Unaudited
6 months
ended
31 January
2023
|
Audited
year
ended
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Net
cash flow from operating activities
|
|
|
|
Profit for the year
|
7,112
|
7,280
|
12,586
|
Adjustments for:
|
|
|
|
Finance costs
|
598
|
711
|
1,132
|
Income tax expense
|
2,375
|
1,978
|
3,399
|
Depreciation
|
1,058
|
1,125
|
2,218
|
Amortisation
|
11
|
11
|
22
|
Loss on disposal of non-current
assets
|
-
|
-
|
20
|
Derivative financial
instruments
|
91
|
(4)
|
(199)
|
Share-based payments
|
96
|
128
|
837
|
Working capital adjustments
|
|
|
|
(Increase)/decrease in
inventories
|
(1,283)
|
1,872
|
1,090
|
Decrease/(increase in trade and
other receivables
|
4,591
|
(2,129)
|
2,691
|
(Decrease)/increase in trade and
other payables
|
(288)
|
1,834
|
559
|
Net
cash from operating activities
|
14,356
|
12,806
|
24,355
|
Income taxes paid
|
(1,828)
|
(1,446)
|
(3,957)
|
Net
cash from operations
|
12,528
|
11,360
|
20,398
|
Cash flows used in investing activities
|
|
|
|
Acquisition of subsidiary - deferred
consideration
|
-
|
(493)
|
(987)
|
Purchase of property, plant and
equipment
|
(654)
|
(362)
|
(999)
|
Net
cash used in investing activities
|
(654)
|
(855)
|
(1,986)
|
Cash flows used in financing activities
|
|
|
|
Sale/(purchase) of own
shares
|
135
|
(298)
|
(532)
|
Proceeds from borrowings
|
2,750
|
8,344
|
2,753
|
Repayment of borrowings
|
(8,837)
|
(14,426)
|
(13,412)
|
Principal paid on lease
obligations
|
(443)
|
(424)
|
(840)
|
Debt issue costs paid
|
(60)
|
(93)
|
(94)
|
Dividends paid
|
(4,289)
|
(4,157)
|
(6,255)
|
Interest paid
|
(460)
|
(649)
|
(1,147)
|
Net
cash used by finance activities
|
(11,204)
|
(11,703)
|
(19,527)
|
Net
increase/(decrease) in cash and cash equivalents
|
670
|
(1,198)
|
(1,115)
|
Exchange gains on cash and cash
equivalents
|
24
|
-
|
(1)
|
Cash and cash equivalents brought forward
|
5,086
|
6,202
|
6,202
|
Cash and cash equivalents carried forward
|
5,780
|
5,004
|
5,086
|
Notes to the Interim Results
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 the UK. The
address of its registered office is Ultimate Products plc, Manor
Mill, Victoria Street, Chadderton, Oldham OL9 0DD.
This consolidated condensed interim
financial information does not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 July 2023 were approved by the Board
of Directors on 30 October 2023 and delivered to the Registrar of
Companies. The comparative figures for the financial year ended 31
July 2023 are an extract of the Company's statutory accounts for
that year. The report of the auditor on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 (2) or (3) of the
Companies Act 2006.
This consolidated condensed interim
financial information is unaudited but has been reviewed by the
Company's Auditor.
2. Basis of
Preparation
This consolidated condensed interim
financial information for the six months ended 31 January 2024 has
been prepared in accordance with IAS 34, 'Interim Financial
Reporting', in accordance with UK-adopted international accounting
standards. The consolidated condensed interim financial information
should be read in conjunction with the audited financial statements
for the year ended 31 July 2023, which have been prepared in
accordance with UK-adopted international accounting
standards.
Going Concern Basis
The Directors have adopted the going
concern basis in preparing this Interim Results Statement after
assessing 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 borrowing facilities, which are
expected to be renewed by July 2024. The Group's projections, which
cover the period to July 2025, show that the Group will be able to
operate within its 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 the Interim Results
Statement.
Accounting Policies
The accounting policies and method
of computations adopted in the preparation of these condensed
consolidated interim financial statements are consistent with those
followed in the preparation of the Group's annual financial
statements for the year ended 31 July 2023.
Adjusted Performance Measures (APMs)
APMs are utilised as key performance
indicators by the Group and are calculated by adjusting the
relevant IFRS measurement by share based payments and non-recurring
items. The two main APMs which are used are Adjusted EBITDA and
Adjusted EPS. The reconciliation of these items to IFRS
measurements can be found in the Chief Financial Officer's Review.
APMs are non-GAAP measures and are not intended to replace those
financial measurements, but are the measures used by the Directors
in their management of the business, and are, therefore, important
key performance indicators (KPIs).
3. Operating
Segments
Operating segments are reported in a
manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker has
been identified as the Board. The Board is responsible for
allocating resources and assessing performance of operating
segments. The Directors consider that there are no identifiable
business segments that are subject to risks and returns different
to the core business. The information reported to the Directors,
for the purposes of resource allocation and assessment of
performance, is based wholly on the overall activities of the
Group. The Group has therefore determined that it has only one
reportable segment under IFRS 8. The results and assets for this
segment can be determined by reference to the statement of
comprehensive income and statement of financial
position.
4. Principal Risks
and Uncertainties
The Directors consider that the
principal risks and uncertainties, which could have a material
impact on the Group's performance in the remaining 6 months of the
financial year, remain substantially the same as those stated on
pages 36-37 of the Group's Annual Report for the year ended 31 July
2023, which is available on the Group's website, www.upplc.com.
5. Financial
Instruments
The Group's activities expose it to
a variety of financial risks: market risk (including foreign
exchange risk, cash flow and fair value interest rate risk and
price risk), credit risk and liquidity risk. The Group's exposure
to foreign exchange risk is mitigated by
entering into forward exchange contracts. Interest rate risk is
managed by maintaining a portion of borrowings under the protection
of interest rate swaps and caps. The
Interim Results Statement should be read in conjunction with the
Group's Annual Report for the year ended 31 July 2023, as it does
not include all financial risk management information and
disclosures contained within the Annual Report. There have been no
changes in the risk management policies since the
year-end.
6. Revenue
|
6 months ended 31 January
2024
|
6 months
ended
31 January
2023
|
Year
ended
31 July
2023
|
Geographical split by location:
|
£'000
|
£'000
|
£'000
|
United Kingdom
|
58,150
|
62,569
|
115,580
|
Germany
|
4,557
|
8,825
|
15,198
|
Rest of Europe
|
20,676
|
15,642
|
34,447
|
Rest of the World
|
796
|
570
|
1,090
|
Total
|
84,179
|
87,606
|
166,315
|
International sales
|
26,029
|
25,037
|
50,735
|
Percentage of total revenue
|
30.9%
|
28.6%
|
31.0%
|
|
|
|
|
|
6 months ended 31 January
2024
|
6 months
ended
31 January
2023
|
Year
ended
31 July
2023
|
Analysis of revenue by brand:
|
£'000
|
£'000
|
£'000
|
Salter
|
32,104
|
35,219
|
66,599
|
Beldray
|
18,450
|
17,174
|
35,031
|
Russell Hobbs (licensed)
|
5,787
|
10,546
|
16,458
|
Progress
|
3,449
|
4,005
|
7,425
|
Kleeneze
|
1,895
|
1,547
|
3,378
|
Petra
|
1,754
|
1,932
|
3,194
|
Premier brands
|
63,439
|
70,423
|
132,085
|
Other proprietorial
brands
|
8,505
|
8,789
|
16,036
|
Own label and other
|
12,235
|
8,394
|
18,194
|
Total
|
84,179
|
87,606
|
166,315
|
|
|
|
|
|
6 months ended 31 January
2024
|
6 months
ended
31 January
2023
|
Year
ended
31 July
2023
|
Analysis of revenue by product:
|
£'000
|
£'000
|
£'000
|
Small domestic appliances
|
33,175
|
36,695
|
66,813
|
Housewares
|
21,387
|
26,483
|
48,008
|
Laundry
|
10,204
|
8,621
|
18,163
|
Audio
|
7,757
|
7,157
|
15,545
|
Heating and cooling
|
1,656
|
2,950
|
6,214
|
Others
|
10,000
|
5,700
|
11,572
|
Total
|
84,179
|
87,606
|
166,315
|
|
|
|
|
|
6 months ended 31 January
2024
|
6 months
ended
31 January
2023
|
Year
ended
31 July
2023
|
Analysis of revenue by sales channel:
|
£'000
|
£'000
|
£'000
|
Discount retailers
|
24,667
|
21,063
|
44,593
|
Supermarkets
|
22,716
|
28,097
|
49,116
|
Online channels
|
20,874
|
22,904
|
41,593
|
Multiple-store retailers
|
11,080
|
10,966
|
22,178
|
Other
|
4,842
|
4,576
|
8,979
|
Total
|
84,179
|
87,606
|
166,315
|
7. Seasonality
The Group has historically had a
seasonal weighting towards H1, with retail demand being higher in
the peak Christmas trading period. However, over the past few
years, this pattern has become less pronounced, with sales growth
weighted towards the less seasonal online channels and sales to
supermarkets being focused more on ranges than seasonal promotions.
As a result, it is anticipated that the operating profits for the
second half of the year to 31 July 2024 will be only marginally
lower than for the six months ended 31 January 2024.
8. Finance
Costs
|
6 months
ended
31 January
2024
|
6 months
ended
31 January
2023
|
Year
ended
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Interest on bank loans and
overdrafts
|
461
|
740
|
1,114
|
Interest on lease
liabilities
|
126
|
35
|
134
|
Foreign exchange in respect of lease
liabilities
|
22
|
8
|
(81)
|
Other interest payable and similar
charges
|
(11)
|
(72)
|
(35)
|
Total finance cost
|
598
|
711
|
1,132
|
9. 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:
|
6 months
ended
31 January
2024
|
6 months
ended
31 January
2023
|
Year
ended
31 July
2023
|
Profit for the year
|
7,112
|
7,280
|
12,370
|
|
|
|
Number
|
Weighted average number of shares in
issue
|
89,312,457
|
89,312,457
|
89,312,457
|
Less shares held by the UPGS
EBT
|
(2,885,720)
|
(3,077,824)
|
(3,002,142)
|
Weighted average number of shares -
basic
|
86,426,737
|
86,234,633
|
86,310,315
|
Share options
|
879,020
|
1,924,065
|
1,576,409
|
Weighted average number of shares -
diluted
|
87,305,757
|
88,158,698
|
87,886,723
|
|
Pence
|
Pence
|
Pence
|
Earnings per share -
basic
|
8.2
|
8.4
|
14.6
|
Earnings per share -
diluted
|
8.1
|
8.3
|
14.3
|
10. Dividends
|
6 months ended
31 January 2024
|
6 months
ended
31 January 2023
|
Year
ended
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Final dividend paid in respect of
the previous year
|
4,289
|
4,157
|
4,157
|
Interim declared and paid
|
-
|
-
|
2,098
|
|
4,289
|
4,157
|
6,255
|
|
|
|
|
Per share
|
Pence
|
Pence
|
Pence
|
Final dividend paid in respect of
the previous year
|
4.95
|
4.82
|
4.82
|
Interim declared and paid
|
-
|
-
|
2.43
|
|
4.95
|
4.82
|
7.25
|
An interim dividend of 2.45p per
share was approved by the Board on 8 April 2024 and will be paid on
28 June 2024 to shareholders on record as at 31 May 2024
(ex-dividend date being 30
May 2024).
11. Borrowings
|
As at
31 January 2024
|
As at
31 January 2023
|
As
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Current
|
|
|
|
Bank overdrafts
Invoice discounting
Import loans
Term loan
|
5,767
1,113
1,986
5,000
|
597
3,465
6,970
2,000
|
5,004
8,950
-
2,000
|
Less: Unamortised debt issue
cost
|
13,866
(82)
|
13,032
(98)
|
15,954
(63)
|
|
13,784
|
12,934
|
15,891
|
|
|
|
|
Non-current
|
|
|
|
Revolving credit facility
Term loan
|
-
-
|
6,500
5,000
|
-
4,000
|
|
-
|
11,500
|
4,000
|
Less: Unamortised debt issue
cost
|
-
|
(42)
|
(10)
|
|
-
|
11,458
|
3,990
|
|
|
|
|
Total borrowings
|
|
24,392
|
19,881
|
|
|
|
|
The earliest that lenders of the
above borrowings require repayment is as follows:
|
|
|
|
In less than one year
Between one and two years
Between two and five
years
Less: Unamortised debt issue
cost
|
13,866
-
-
-
|
13,032
11,500
-
(140)
|
15,954
2,000
2,000
(73)
|
|
13,866
|
24,392
|
19,881
|
The Group is funded by external bank
facilities provided by HSBC. The total drawn and undrawn facilities
comprise a revolving credit facility of £8.2m (31 January 2023:
£8.2m; 31 July 2023 £8.2m), an invoice discounting facility of
£23.5m (31 January 2023: £23.5m; 31 July 2023 £23.5m) and a term
loan of £5.0m (31 January 2023: £7m; 31 July 2023: £6m), all
running to 2024, along with an import loan facility of £12m (31
January 2023: £12m; 31 July 2023: £12m) which is subject to annual
review. Bank facilities are expected to be renewed by July
2024.
12. Financial
Instruments
a) Principal financial
instruments
The principal financial instruments
used by the Group, from which financial instrument risk arises are
as follows:
|
As at
31 January 2024
|
As at
31 January 2023
|
As
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Trade receivables - held at
amortised cost
|
23,613
|
32,421
|
28,175
|
Derivative financial instruments -
assets
|
647
|
913
|
1,233
|
Trade and other payables
|
(27,134)
|
(27,835)
|
(27,995)
|
Derivative financial instruments -
liabilities
|
(635)
|
(673)
|
(1,806)
|
Borrowings
|
(13,784)
|
(24,392)
|
(19,881)
|
Lease liabilities
|
(4,661)
|
(2,353)
|
(5,098)
|
Deferred consideration
|
-
|
(494)
|
-
|
Cash and cash equivalents
|
5,780
|
5,004
|
5,086
|
b) Financial assets
The Group held the following
financial assets at amortised cost:
|
As at
31 January 2024
|
As at
31 January 2023
|
As
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Cash and cash equivalents
Trade receivables
|
5,780
23,613
|
5,004
32,421
|
5,086
28,175
|
|
29,393
|
37,425
|
33,261
|
c) Financial
liabilities
The Group held the following
financial liabilities, classified as other financial liabilities at
amortised cost:
|
As at
31 January 2024
|
As at
31 January 2023
|
As
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Trade payables
Borrowings
Lease liabilities
Other payables
Deferred consideration
|
21,010
13,784
4,661
6,124
-
|
20,122
24,392
2,353
7,713
494
|
19,024
19,881
5,098
8,971
-
|
|
45,579
|
55,074
|
52,974
|
d) Derivative financial
instruments
The Group held the following
derivative financial instruments, classified as fair value through
profit and loss on initial recognition:
|
As at
31 January 2024
|
As at
31 January 2023
|
As
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Forward currency
contracts
Interest rate swaps
Interest rate caps
|
(351)
193
170
|
(605)
323
522
|
(1,372)
315
484
|
|
12
|
240
|
(573)
|
The following is a reconciliation of
the financial instruments to the statement of financial
position:
|
As at
31 January 2024
|
As at
31 January 2023
|
As
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Trade receivables
Prepayments and other receivables
not classified as financial instruments
Current tax asset not classified as
a financial instrument
|
23,613
1,299
-
|
32,421
1,902
-
|
28,175
1,328
387
|
Trade and other receivables
|
24,192
|
34,323
|
29,890
|
|
As at
31 January 2024
|
As at
31 January 2023
|
As
at
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Trade and other payables
Other taxes and social security not
classified as financial instruments
|
27,134
2,632
|
27,835
3,541
|
27,995
2,010
|
Trade and other payables
|
29,766
|
31,376
|
30,005
|
Derivative financial instruments - 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 January 2024,
the Group was committed to:
|
As
at 31 January 2024
|
As at 31 January 2023
|
As at 31 July 2023
|
|
Buy
|
Sell
|
Buy
|
Sell
|
Buy
|
Sell
|
USD$'000
|
51,900
|
-
|
59,100
|
-
|
54,300
|
-
|
EUR€'000
|
-
|
29,700
|
-
|
19,350
|
-
|
24,700
|
PLN'000
|
-
|
600
|
-
|
300
|
-
|
4,600
|
CNY'000
|
5,453
|
-
|
1,431
|
-
|
6,340
|
-
|
At 31 January 2024, all the
outstanding USD, EUR and PLN contracts mature within 12 months of
the period end (31 January 2023: 12 months; 31 July 2023: 12
months). The CNY currency contracts, which are held as a partial
hedge of 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:CNY and GBP:PLN. The fair
value of the contracts at 31 January 2024 is a liability of
£351,000 (31 January 2023: £605,000 liability; 31 July 2023:
£1,372,000 liability).
Forward currency contracts are
valued using level 2 inputs. The valuations are calculated using
the period end exchange 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 on the changes in the future cash flows, based
on 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 of the
financial statements for the year ended 31 July 2023.
Derivative financial instruments - 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 January 2024, protection was in place
over an aggregate principal of £9,016,000
(31 January 2023: £18,200,000, 31 July 2023:
£18,300,000).
All of the interest rate swaps meet
the conditions for hedge accounting, as set out in the accounting
policies contained in the financial statements for the year ended
31 July 2023. Hedge accounting is applied in respect of the
interest rate caps to the extent that their current valuation
exceeds their amortised cost.
Interest rate swaps and caps are
valued using level 2 inputs. The valuations are based on 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 on the current valuation of
the present saving or cost of the future cash flow differences,
based on the difference between the swapped and capped interest
rates contracts and the expected interest rate as per the lending
agreement.
13. Related party
transactions
|
6 months ended
31 January 2024
|
6 months
ended
31 January 2023
|
Year
ended
31 July
2023
|
|
£'000
|
£'000
|
£'000
|
Transactions with related companies and businesses:
Lease payments to Heron Mill
Limited
|
194
|
168
|
358
|
Lease payments to Berbar Properties
Limited
|
90
|
90
|
180
|
Statement of Directors' Responsibilities
The Directors confirm that these
consolidated condensed interim financial statements have been
prepared in accordance with International Accounting Standard 34
Interim Financial Reporting, in accordance with UK-adopted
international accounting standards. The interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
• an
indication of important events that have occurred during the first
six months and their impact on the condensed set of financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
•
material related party transactions in the first six months and any
material changes in the related party transactions described in the
last annual report.
For and on behalf of the Board of
Directors
Andrew Gossage
Chief Executive Officer
8 April 2024
|
Chris Dent
Chief Financial Officer
8 April 2024
|