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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Up Global Sourcing Holdings Plc | LSE:UPGS | London | Ordinary Share | GB00BYX7MG58 | ORDS 0.25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 120.00 | 114.50 | 120.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMUPGS
RNS Number : 4657M
UP Global Sourcing Holdings PLC
30 April 2018
30 April 2018
UP Global Sourcing Holdings plc
"Ultimate Products" or the "Group"
INTERIM RESULTS FOR THE SIX MONTHSED 31 JANUARY 2018
Ultimate Products, the owner, manager, designer and developer of an extensive range of value-focused consumer goods brands, announces its interim results for the six months ended 31 January 2018.
Financial and operational highlights
-- Revenue decreased 28.9% to GBP48.4 million (H1 2017: GBP68.1 million), reflecting: a much tougher trading environment for general merchandise in the UK (against an unusually strong H1 2017 for the Group); and the one-off impact of revenue deferral due to a change in supply arrangements for a major European customer
-- Underlying EBITDA(1) down 49.5% to GBP4.5 million (H1 2017: GBP8.8 million), driven by lower revenues
-- Gross margin remained stable at 22.4% (H1 2017: 22.3%), mainly due to changes in customer mix and the business continuing to adapt to weaker exchange rates
-- Move to the Group's new distribution centre at Heron Mill in Oldham successfully completed in the period
-- Continued progress in Germany, where the Group has opened its new showroom and has already opened a number of major retail accounts with orders taken to date ahead of management's expectations
-- Net debt at 31 January 2018 of GBP6.7 million, down 34.9% (31 January 2017: GBP10.2 million)
-- Interim dividend of 0.83 pence per share, payable on 27 July 2018 to shareholders on the register on 6 July 2018
-- Current trading for FY 2018 in line with management expectations
Commenting on the results, Simon Showman, Chief Executive of Ultimate Products, said:
"This has been a tough six months for both Ultimate Products and the wider general merchandise sector in the UK, as discretionary spend has continued to come under pressure due to low consumer confidence. Our financial performance during the period reflects this market headwind.
While the UK looks set to remain challenging, we are pleased with the early progress that is being made in Germany and are delighted to have opened our new 10,000 sq ft showroom there earlier this month, which will provide a great showcase for our products to our European customer base.
More broadly, we are working hard to ensure that the company is positioned as strongly as possible to navigate its way through the current soft trading environment. We are more focused than ever on the execution of our strategy, and on improving operational efficiencies whilst not compromising in any way on the quality of our products and service. The Group is well invested, retains a strong balance sheet, and maintains comfortable levels of funding headroom within its bank facilities. As a result, we remain confident in our ability to deliver growth in the longer term."
For more information, please contact:
Ultimate Products +44 (0) 161 627 1400
Simon Showman, CEO
Andrew Gossage, Managing Director
Graham Screawn, Finance Director
Shore Capital +44 (0) 20 7408 4090
Mark Percy
Edward Mansfield
Cenkos +44 (0) 20 7397 8900
Harry Hargreaves
Nicholas Wells
Powerscourt +44 (0) 207 250 1446
Rob Greening
Sam Austrums
Notes to Editors
Ultimate Products is an owner, manager, designer and developer of a series of well-known brands focused on the home, selling to over 300 retailers across 38 countries. It has six product categories: Audio; Heating and Cooling; Housewares; Laundry; Luggage; and Small Domestic Appliances. Its brands include Beldray (laundry, floor care, heating and cooling), Intempo (audio), Salter (kitchenware), Constellation (luggage), and Progress (cookware and bakeware).
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 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 a newly established showroom in Cologne, Germany. In total, Ultimate Products now employs over 200 staff.
For further information, please visit www.upgs.com
Note:
1. Calculated after adding back exceptional items and share based payment charges as referred to in Note 10 below.
INTERIM STATEMENT
STRATEGY
The strategy of UP Global Sourcing Holdings plc ("Ultimate Products" or the "Group") is to develop its portfolio of brands focused on mass-market, value-led, consumer goods for the home focused on selling to:
(1) UK and European discounters;
(2) UK supermarkets;
(3) online platforms; and
(4) international retailers.
While the market for general merchandise in the UK is currently challenging, the Board is confident that remaining focused on the above strategy will deliver growth in the longer term.
TRADING
Revenue for the six months ended 31 January 2018 ("H1") was GBP48.4 million, a decrease of GBP19.7 million or 28.9% on the same period last year (H1 2017: GBP68.1 million). As noted previously, H1 2017 was an exceptionally strong period for the Group due to highly positive retailer sentiment (62% of FY 2017 revenue was delivered in H1 2017 as opposed to 53% and 54% in FY 2016 and FY 2015, respectively).
The decline reflects the much tougher trading environment for general merchandise in the UK, with wage inflation running behind general inflation. Discretionary spend has been under pressure and consumer confidence has therefore been lower than it has been for some time. As a consequence non-food sales have declined as consumers have prioritised food purchases. This decline in non-food has been particularly apparent in physical stores, which is our main market, as a result of the growing competition from online.
For retailers, this has also coincided with imported cost price inflation caused by Sterling's weakness since the Brexit referendum, in turn leading to retail price inflation which has also dampened volumes.
The lower volumes available to non-food suppliers, along with retailers' desire to minimise increases in retail prices, has created an even more competitive trading environment than normal.
In addition to the challenging UK conditions, as previously noted, the period also saw a shift in supply arrangements for a major European customer from Free on Board ("FOB") to landed. As landed revenues are recorded as sales later than for FOB, this has led to revenue being deferred which has directly impacted H1 2018.
Despite the challenges set out above, gross margin has remained stable at 22.4% (H1 2017: 22.3%) which is mainly due to changes in customer mix and as the business continues to adapt to weaker exchange rates.
As a result of lower revenues, Underlying EBITDA(1) was GBP4.5 million, a fall of GBP4.3 million or 49.5% on last year (H1 2017: GBP8.8 million).
Note:
1. Calculated after adding back exceptional items and share based payment charges as referred to in Note 10.
BALANCE SHEET
Shareholders' equity was GBP6.8 million at 31 January 2018, up from GBP6.2 million at 31 January 2017. This movement was the net result of an increase in retained earnings of GBP1.4 million net of a movement in the hedging reserve of GBP0.9 million as Sterling strengthened during H1 2018. The main movements in retained earnings from 31 January 2017 to 31 January 2018 were:
(1) total Profit After Tax from 1 February 2017 to 31 January 2018 of GBP3.4 million;
(2) a one-off corporation tax credit of GBP2.1 million received in FY 2017 relating to the Initial Public Offering in March 2017; net of
(3) dividends paid from 1 February 2017 to 31 January 2018 of GBP4.2 million.
Net working capital at 31 January 2018 was GBP12.3 million, down from GBP15.9 million at 31 January 2017 - a reduction of GBP3.6 million or 22.5%. This was entirely driven by the fall in revenue in the period.
Net cash from operations for the period was GBP2.6 million, a reduction of GBP0.4 million or 11.0% (H1 2017: GBP3.0 million) as a result of lower EBITDA, partially offset by lower working capital.
Net debt at 31 January 2018 was GBP6.7 million, down from GBP10.2 million at 31 January 2017, a reduction of GBP3.5 million or 34.9%. The main drivers of this movement were:
(1) net working capital reduction (see above) of GBP3.6 million;
(2) a one-off corporation tax credit (see above) of which GBP1.6 million had benefited cash at 31 January 2018;
(3) total Profit After Tax from 1 February 2017 to 31 January 2018 of GBP3.4 million; net of
(4) dividends paid from 1 February 2017 to 31 January 2018 of GBP4.2 million; and
(5) investment in the new distribution centre at Heron Mill (see below) of GBP0.5 million.
The net debt/underlying EBITDA ratio at 31 January 2018 was 0.9x (31 January 2017: 0.9x) based on underlying EBITDA for the 12 months to 31 January 2018. The Group had headroom within its bank facilities of GBP8.0 million as at 31 January 2018 (31 January 2017: GBP9.7 million).
DISTRIBUTION CENTRE
The move to the Group's new 240,000 sq ft distribution centre at Heron Mill in Oldham was successfully completed in the period. The new facility is more efficient than previous arrangements, and the move has already enabled the Group to keep overall payroll costs in H1 2018 below the prior year despite the effects of the National Living Wage and general wage inflation.
Heron Mill includes a purpose-built single pick area to support Ultimate Products' growing online business, which continues to perform well.
GERMANY
In line with the international focus of its strategy, Ultimate Products opened its new 10,000 sq ft German showroom this month, showcasing our branded product ranges to Europe's largest retail market. The Group has already opened a number of major retail accounts there and orders taken to date are ahead of management's expectations. Given the promising early progress in Germany and the positive consumer data that is emerging from the region, the Board sees significant potential for long-term growth in this market.
DIVID
The Board has declared an interim dividend of 0.83 p per share, payable on 27 July 2018 to shareholders on the register on 6 July 2018.
CURRENT TRADING AND OUTLOOK
Current trading for FY 2018 is in line with management expectations.
The market conditions for general merchandise remain challenging and Ultimate Products, like many others, is faced with a more uncertain environment for consumers, retailers and suppliers. Despite these challenges, the Group is well invested, retains a strong balance sheet and maintains comfortable levels of funding headroom within its bank facilities. We remain more focused than ever on our strategy which the Board continues to believe will deliver growth in the longer term.
Jim McCarthy Simon Showman
Chairman Chief Executive
Consolidated Condensed Income Statement
Hot Features
Premium
Unaudited
Unaudited 6 months Audited
6 months ended Year
ended 31 Jan ended
31 Jan 2017 31 Jul
Note 2018 (Restated) 2017
GBP'000 GBP'000 GBP'000
------------------------------- ------- ------------ ------------ ----------
Revenue 7 48,408 68,086 109,953
Cost of sales (37,543) (52,881) (85,386)
------------------------------- ------- ------------ ------------ ----------
Gross profit 10,865 15,205 24,567
Administration expenses
before exceptional items
and share based payment
charges (6,647) (6,536) (13,444)
------------------------------- ------- ------------ ------------ ----------
Profit from operations before
exceptional items and share
based payment charges 4,218 8,669 11,123
------------------------------- ------- ------------ ------------ ----------
Exceptional administration
expenses 9 - (1,693) (3,152)
Share based payment charges 9 (96) - (80)
------------------------------- ------- ------------ ------------ ----------
Administration expenses (6,743) (8,229) (16,676)
------------------------------- ------- ------------ ------------ ----------
Profit from operations 10 4,122 6,976 7,891
Finance income - 21 -
Finance costs (180) (293) (464)
------------------------------- ------- ------------ ------------ ----------
Profit before taxation 11 3,942 6,704 7,427
Income tax 12 (818) (1,398) (1,852)
------------------------------- ------- ------------ ------------ ----------
Profit for the period 3,124 5,306 5,575
=============================== ======= ============ ============ ==========
Pence Pence Pence
------------------------------- ------- ------------ ------------ ----------
Earnings per share - basic 13 3.80 7.00 7.20
Earnings per share - diluted 13 3.80 7.00 7.10
=============================== ======= ============ ============ ==========
Ex-div date: 5 July 2018
Record date: 6 July 2018
Consolidated Condensed Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Jan 31 Jan 31 Jul
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- ---------
Profit for the period 3,124 5,306 5,575
Other comprehensive (expense)/income
Items that may be subsequently
reclassified to income statement:
Fair value movements on cash
flow hedging instruments
Hedging instruments recycled
through the income statement
at the end of hedging relationships (505) (133) (193)
121 - (441)
Foreign currency retranslation
(7) 8 1
---------------------------------------- ---------- ---------- ---------
Other comprehensive (expense)
for the period (391) (125) (633)
---------------------------------------- ---------- ---------- ---------
Total comprehensive income for
period attributable to the equity
holders of the company 2,733 5,181 4,942
======================================== ========== ========== =========
Consolidated Condensed Statement of Financial Position
Unaudited Unaudited Audited
As at As at As at
31 Jan 2018 31 Jan 2017 31 Jul 2017
GBP'000 GBP'000 GBP'000
Note
---------------------------------------------- ------- -------------- -------------- -------------
Assets
Property, plant and equipment 15 1,890 1,382 1,715
Deferred tax 144 164 162
---------------------------------------------- ------- -------------- -------------- -------------
Total non-current assets 2,034 1,546 1,877
Inventories 11,796 11,835 11,064
Trade and other receivables 16 11,557 20,576 11,745
Current tax 17 - 481
Cash and cash equivalents 122 119 91
---------------------------------------------- ------- -------------- -------------- -------------
Total current assets 23,492 32,530 23,381
---------------------------------------------- ------- -------------- -------------- -------------
Total assets 25,526 34,076 25,258
---------------------------------------------- ------- -------------- -------------- -------------
Liabilities
Trade and other payables 17 (11,745) (16,295) (12,516)
Current tax (242) (1,248) -
Borrowings 18 (4,132) (6,194) (1,518)
---------------------------------------------- ------- -------------- -------------- -------------
Total current liabilities (16,119) (23,737) (14,034)
---------------------------------------------- ------- -------------- -------------- -------------
Net current assets 7,373 8,793 9,347
Borrowings 18 (2,657) (4,163) (4,431)
---------------------------------------------- ------- -------------- -------------- -------------
Total non-current liabilities (2,657) (4,163) (4,431)
---------------------------------------------- ------- -------------- -------------- -------------
Total liabilities (18,776) (27,900) (18,465)
---------------------------------------------- ------- -------------- -------------- -------------
Net assets 6,750 6,176 6,793
============================================== ======= ============== ============== =============
Equity
Share capital 205 184 205
Share premium 2 2 2
Hedging reserve (577) 308 (193) Retained earnings 7,120 5,682 6,779 ---------------------------------------------- ------- -------------- -------------- ------------- Equity attributable to owners of the company 6,750 6,176 6,793 ============================================== ======= ============== ============== =============
Consolidated Condensed Statement of Changes in Equity
Share Share Hedging Retained Total
Capital Premium reserve earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------- ---------- ---------- ----------- ----------
As at 1 August 2017 205 2 (193) 6,779 6,793
Profit for the period - - - 3,124 3,124
Foreign currency translation - - - (7) (7)
Cash flow hedging movement - - (384) - (384)
--------------------------------- ---------- ---------- ---------- ----------- ----------
Total comprehensive
income for the period - - (384) 3,117 2,733
--------------------------------- ---------- ---------- ---------- ----------- ----------
Transactions with shareholders:
Dividends payable - - - (2,872) (2,872)
Share based payments - - - 96 96
--------------------------------- ---------- ---------- ---------- ----------- ----------
As at 31 January 2018 205 2 (577) 7,120 6,750
================================= ========== ========== ========== =========== ==========
Share Share Hedging Retained Total
Capital Premium reserve earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------------ --------- ---------- ---------
As at 1 August 2016 184 2 441 567 1,194
Profit for the period - - - 5,306 5,306
Foreign currency translation - - - 8 8
Cash flow hedging movement - - (133) - (133)
Total comprehensive
income for the period - - (133) 5,314 5,181
--------------------------------- --------- ------------ --------- ---------- ---------
Transactions with shareholders:
Dividends payable - - - (199) (199)
--------------------------------- --------- ------------ --------- ---------- ---------
As at 31 January 2017 184 2 308 5,682 6,176
================================= ========= ============ ========= ========== =========
Share Share Hedging Retained Total
Capital Premium reserve earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------------ ---------- ----------- -----------
As at 1 August 2016 184 2 441 567 1,194
Profit for the year - - - 5,575 5,575
Foreign currency translation - - - 1 1
Cash flow hedging movement - - (634) - (634)
Total comprehensive
income for the year - - (634) 5,576 4,942
--------------------------------- --------- ------------ ---------- ----------- -----------
Transactions with shareholders:
Dividends payable - - - (1,530) (1,530)
Issue of shares - exercise
of share options 21 - - - 21
Share based payments - - - 80 80
Current tax on share
schemes - - - 2,086 2,086
As at 31 July 2017 205 2 (193) 6,779 6,793
================================= ========= ============ ========== =========== ===========
Consolidated Condensed Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Jan 31 Jan 31 Jul
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------------- ---- ---------- ---------- ----------
Net cash flow from operating
activities
Profit for the period
Adjustments for: 3,124 5,306 5,575
Finance income - (21) -
Finance costs 180 293 464
Loss on disposal of non-current
assets - 2 (5)
Income tax expense 818 1,398 1,852
Depreciation and impairment 237 143 394
Share based payments 96 - 80
Income taxes paid (95) (582) (678)
Working capital adjustments
(Increase) in inventories (732) (1,290) (519)
Decrease/ (increase) in trade
and other receivables 200 (4,497) 4,049
(Decrease)/ increase in trade
and other payables (1,179) 2,224 (1,790)
------------------------------------------- ---------- ---------- ----------
Net cash from operations 2,649 2,976 9,422
------------------------------------------- ---------- ---------- ----------
Cash flows used in investing
activities
Purchase of property, plant
and equipment (412) (557) (1,162)
Proceeds of disposal of property,
plant and equipment - - 28
Net cash used in investing
activities (412) (557) (1,134)
------------------------------------------- ---------- ---------- ----------
Cash flows (used in)/ from
financing activities
Issue of share capital - - 21
Proceeds from borrowings 811 2,137 -
Repayment of borrowings - (1,821) (4,085)
Debt issue costs paid - - (38)
Dividends paid (2,872) (2,449) (3,780)
Interest paid (139) (309) (451)
Net cash used in finance
activities (2,200) (2,442) (8,333)
------------------------------------------- ---------- ---------- ----------
Net increase/ (decrease)
in cash and cash equivalents 37 (23) (45)
Cash and cash equivalents
brought forward 91 136 136
Exchange (losses)/ gains
on cash and cash equivalents (6) 6 -
-------------------------------------------
Cash and cash equivalents
carried forward 122 119 91
=========================================== ========== ========== ==========
Notes to the Interim Results
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 the UK. The address of its registered
office is UP Global Sourcing Holdings 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 2017
were approved by the Board of directors on 6 November
2017 and delivered to the Registrar of Companies.
The comparative figures for the financial year
ended 31 July 2017 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 2018 has been
prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority
(previously the Financial Services Authority) and
with IAS 34, 'Interim Financial Reporting' as adopted
by the European Union. The consolidated condensed
interim financial information should be read in
conjunction with the audited financial statements
for the year ended 31 July 2017, which have been
prepared in accordance with IFRSs as adopted by
the European Union.
As referred to in note 8 of the financial statements
for the year ended 31 July 2017, the Directors
have taken the decision to reclassify to cost of
sales, certain costs that had previously been reported
as part of both distribution costs and administrative
expenses. The impact on the six months ended 31
January 2017 is the reclassification of GBP1,038,000
from distribution costs and the reclassification
of GBP500,000 from administrative expenses. The
result has been an increase in cost of sales of
GBP1,538,000, with no impact upon previously reported
equity.
Going concern basis
The Group meets its day-to-day working capital
requirements through its bank facilities. After
making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources
to continue in operational existence for the foreseeable
future. The Group's forecasts and projections,
taking account of reasonable sensitivities, show
that the Group should be able to operate within
available facilities. The Group therefore continues
to adopt the going concern basis in preparing its
consolidated condensed interim financial statements.
3. Accounting policies
The accounting policies applied are consistent
with those of the annual financial statements for
the year ended 31 July 2017.
4. 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
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.
5. 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 19-23 of the
Group's Annual Report for the year ended 31 July
2017, which is available on the group's website,
www.upgs.com.
The result of the referendum in favour of the UK
leaving the European Union resulted in a weakening
of sterling, creating imported cost price inflation
and, in turn, retail price inflation, leading to
a dampening of consumer demand. We are closely
following developments in this area and will adapt
our strategy as the impact of the UK exit from
the European Union becomes clearer.
The Group has an exposure to US Dollars for the
purchase of goods and this is partially hedged
by virtue of invoicing a proportion of its turnover
in US Dollars. In addition, the Group invoices
a proportion of its turnover in Euros and Canadian
Dollars and where necessary, the Group uses forward
currency contracts to further mitigate its foreign
currency exposure.
6. 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 condensed interim financial statements should
be read in conjunction with the Group's Annual
Report for the year ended 31 July 2017, as they
do 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.
7. Revenue
Geographical split by location: Unaudited Unaudited Audited
6 months ended 6 months Year
31 Jan 2018 ended ended
GBP'000 31 Jan 31 Jul
2017 2017
GBP'000 GBP'000
-------------------- ---------------- ---------- ---------
United Kingdom 38,810 50,073 79,534
Germany 1,036 712 1,356
Rest of Europe 7,432 15,451 25,929
USA 377 422 806
Rest of the world 753 1,428 2,328
Total 48,408 68,086 109,953
==================== ================ ========== =========
8. Seasonality of operations
Overall the Group's product range is not significantly
seasonal, however, retail demand is higher in the
Christmas trading period. As a result, it is anticipated
that the operating profits for the second half
of the year ending 31 July 2018 will be lower than
those for the six months ended 31 January 2018.
9. Exceptional items and share based payment charges Unaudited Unaudited Audited
6 months ended 6 months Year
31 Jan 2018 ended ended
GBP'000 31 Jan 31 Jul
2017 2017
GBP'000 GBP'000
-------------------------------- ---------------- ---------- ---------
Shareholder bonuses - 1,693 2,003
Initial public offering costs - - 1,149
Share based payment expense 96 - 80
Total 96 1,693 3,232
================================ ================ ========== =========
Shareholder bonus costs consisted of bonus payments
based on certain Group EBITDA performance targets.
These costs ceased to accrue after the year ended
31 July 2017.
Initial public offering costs related entirely
to the Group's IPO in March 2017 and therefore
are not considered to relate to the Group's underlying
performance. The costs incurred comprised principally
legal and advisory fees and listing costs.
The share based payment expense relates to the
non-cash charge arising on a share option management
incentive plan adopted immediately prior to the
IPO. The options have been valued using the Monte
Carlo option pricing model and are granted with
a three-year vesting period and can be exercised
up to seven years following the vesting date.
The above items have been shown separately in the
Income Statement to better reflect the performance
of the underlying business.
10. Operating profit Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Jan 31 Jan 31 Jul
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------------------------------- ---------- ---------- --------
The profit is stated after charging/(crediting) expenses as follows:
Exceptional items and share based payment charges - note 9
Depreciation of owned property, plant and equipment 96 1,693 3,232
Loss on disposal of property, plant and equipment 237 143 394
- 2 (5)
====================================================================== ========== ========== ========
EBITDA represents profit from operations before
depreciation and amortisation. Underlying EBITDA
represents EBITDA, as defined above, adjusted for
the exceptional items and share based payment charges
set out in note 9 above. The Directors use EBITDA
and underlying EBITDA as key performance indicators
of the Group's business.
The following table sets forth a reconciliation
of EBITDA and Underlying EBITDA to profits from
operations for the periods indicated.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Jan 31 Jan 31 Jul
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------------------------------------- ---------- ---------- --------
Profit from operations 4,122 6,976 7,891
Depreciation 237 143 394
Loss on disposal of property plant and equipment - 2 (5)
------------------------------------------------------------- ---------- ---------- --------
EBITDA 4,359 7,121 8,280
Exceptional items and share based payment charges - note 9 96 1,693 3,232
------------------------------------------------------------- ---------- ---------- --------
Underlying EBITDA 4,455 8,814 11,512
============================================================= ========== ========== ========
Underlying EBITDA margin 9.2% 12.9% 10.5%
============================================================= ========== ========== ========
11. Profit before taxation
The Directors also monitor the Group's performance
with respect to profit before taxation and underlying
profit before taxation. Underlying profit before
taxation represents profit before taxation adjusted
for the exceptional items and share based payment
charges set out in note 9 above.
The following table sets forth a reconciliation
of profit before taxation and underlying profit
before taxation for the periods indicated.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Jan 31 Jan 31 Jul
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------------------------------------- ---------- ---------- --------
Profit before taxation 3,942 6,704 7,427
Exceptional items and share based payment charges - note 9 96 1,693 3,232
Underlying profit before taxation 4,038 8,397 10,659
============================================================= ========== ========== ========
12. Taxation Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Jan 31 Jan 31 Jul
2018 2017 2017
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------- --------
Total tax expense 818 1,398 1,852
Tax on exceptional items & share based payment charges - 333 401
Tax expense on underlying profit before taxation 818 1,731 2,253
========================================================= ========== ========== ========
The interim period tax charge is accrued based
on the estimated average annual effective income
tax rate of 20.8% (six months ended 31 January
2017: 20.9%; year ended 31 July 2017: 24.9%).
The tax charge for the year ended 31 July 2017
was higher due to a higher level of expenses not
deductible for tax purposes included within the
exceptional items and share based payment charges
arising in the second half of the year ended 31
July 2017.
The effective income tax rates on the underlying
profit before taxation was 20.3% (six months ended
31 January 2017: 20.6%; year ended 31 July 2017:
21.1%).
The Chancellor announced in his Budget on 16 March
2016 that the main rate of corporation tax will
be reduced to 17% from 1 April 2020 and the future
current tax charges will reduce accordingly.
13. 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,
and uses the number of shares as if they had always
been subdivided from GBP1 shares to 0.25 p shares.
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
on the following:
Unaudited Unaudited Audited
6 months ended 6 months Year
31 Jan 2018 ended ended
GBP'000 31 Jan 31 Jul
2017 2017
GBP'000 GBP'000
-------------------------------------------- ---------------- ----------- -----------
Profit for the period 3,124 5,306 5,575
Number Number Number
Weighted average number of shares - basic 82,169,600 73,706,800 77,254,220
Share options - - 946,812
-------------------------------------------- ---------------- ----------- -----------
Weighted average number of shares - diluted 82,169,600 73,706,800 78,201,032
pence pence pence
Profit per share - basic 3.8 7.0 7.2
Profit per share - diluted 3.8 7.0 7.1
============================================ ================ =========== ===========
No dilution arises in the 6 months ended 31 January
2018 as the hurdle for the MIP Option Scheme (explained
further in note 25 of the financial statements
for the year ended 31 July 2017) was not achieved
based upon the interim measurement of the criteria
as at 31 January 2018.
The underlying earnings per share referred to below
is based on the underlying profit for the period,
which reflects the profit for the period after
adding back the exceptional items and share based
payment charges set out in note 9 above and the
tax effects as set out in note 12 above.
Unaudited Unaudited Audited
6 months ended 6 months Year
31 Jan 2018 ended ended
GBP'000 31 Jan 31 Jul
2017 2017
GBP'000 GBP'000
-------------------------------------------- ---------------- ----------- -----------
Underlying profit before taxation - note 11 4,038 8,397 10,659
Taxation on underlying profit before
taxation - note 12 (818) (1,731) (2,253)
-------------------------------------------- ---------------- ----------- -----------
Underlying profit for the period 3,220 6,666 8,406
Number Number Number
Weighted average number of shares - basic 82,169,600 73,706,800 77,254,220
pence pence pence
Underlying profit per share - basic 3.9 9.0 10.9
============================================ ================ =========== ===========
14. Dividends Unaudited Unaudited Audited
6 months ended 6 months Year
31 Jan 2018 ended ended
GBP'000 31 Jan 31 Jul
2017 2017
GBP'000 GBP'000
---------------------------- ---------------- ---------- ---------
Final dividend paid 2,872 199 199
Interim declared and paid - - 1,331
---------------------------- ---------------- ---------- ---------
2,872 199 1,530
============================ ================ ========== =========
Per share - adjusted pence pence pence
---------------------------- ---------------- ---------- ---------
Final dividend paid 3.495 0.27 0.27
Interim declared and paid - - 1.62
---------------------------- ---------------- ---------- ---------
3.495 0.27 1.89
============================ ================ ========== =========
The adjusted number of shares reflects the subdivision
of ordinary share capital from 205,424 GBP1 shares
into 82,169,600 0.25 p shares on 28 February 2017.
The final dividend declared in respect of the year
ended 31 July 2017 was paid in the 6 months ended
31 January 2018.
An interim dividend of 0.83 p per share was approved
by the Board on 27 April 2018 and will be paid
on 27 July 2018 to shareholders on record as at
6 July 2018.
15. Property, plant and equipment Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
------------------------ ------------- ---------- ---------
Opening net book value 1,715 970 970
Additions 412 557 1,162
Disposals - (2) (23)
Depreciation (237) (143) (394)
------------------------ ------------- ---------- ---------
Closing net book value 1,890 1,382 1,715
======================== ============= ========== =========
Additions to property, plant and equipment during
the 6 months to 31 January 2017 and the year ended
31 July 2017 substantially included expenditure
relating to the refurbishment of Heron Mill, the
Group's new warehousing facility. Such expenditure
in the 6 months to 31 January 2018 has reduced
and the refurbishment is now substantially complete.
16. Trade and other receivables Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
------------------------------------ ------------- ---------- ---------
Trade receivables 10,348 18,994 10,474
Other receivables and prepayments 1,209 1,582 1,271
11,557 20,576 11,745
==================================== ============= ========== =========
The Directors believe that the carrying value of
trade and other receivables represent their fair
value. Trade and other receivables are denominated
in Sterling, US Dollars, Euros and Canadian Dollars.
In determining the recoverability of trade receivables,
the Group considers any change in the credit quality
of the receivable from the date credit was granted
up to the reporting date.
17. Trade and other payables Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
---------------------------------- ------------- ---------- ---------
Trade payables 5,640 8,273 5,803
Accruals 5,057 7,533 6,207
Social security and other taxes 1,048 489 506
11,745 16,295 12,516
================================== ============= ========== =========
Trade payables principally consist of amounts outstanding
for trade payables and ongoing costs. They are
non-interest bearing and are normally settled on
30 to 60 days terms.
The Directors consider that the carrying value
of trade and other payables approximates their
fair value. Trade and other payables are denominated
in both Sterling and US Dollars. UP Global Sourcing
Holdings plc has financial risk management policies
in place to ensure that all payables are paid within
the credit timeframe and no interest has been charged
by any suppliers as a result of late payment of
invoices during the period.
18. Borrowings Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
Current
-------------------------------------------------- ------------- ---------- ---------
Bank overdraft and invoice discounting 1,321 4,067 1,016
Import loans 2,841 2,155 534
-------------------------------------------------- ------------- ---------- ---------
4,162 6,222 1,550
Less: Unamortised debt issue cost (30) (28) (32)
-------------------------------------------------- ------------- ---------- ---------
4,132 6,194 1,518
================================================== ============= ========== =========
Non-current
Revolving credit facility 2,698 4,227 4,499
-------------------------------------------------- ------------- ---------- ---------
2,698 4,227 4,499
Less: Unamortised debt issue cost (41) (64) (68)
-------------------------------------------------- ------------- ---------- ---------
2,657 4,163 4,431
================================================== ============= ========== =========
Total borrowings 6,789 10,357 5,949
================================================== ============= ========== =========
The earliest that lenders of the above borrowings
require repayment is
as follows:
In less than one year 4,162 6,222 1,550
Between two and five years 2,698 4,227 4,499
Less: Unamortised debt issue cost (71) (92) (100)
-------------------------------------------------- ------------- ---------- ---------
6,789 10,357 5,949
================================================== ============= ========== =========
The Group is funded by external bank facilities
provided by HSBC. The facilities run to July 2020
providing the ongoing funding of the Group and
comprise a revolving credit facility of GBP6.2
m, an import loan facility of GBP6.5 m and an invoice
discounting facility of GBP17 m.
19. Financial instruments
a) Principal financial instruments
The principal financial instruments used by the
Group, from which financial instrument risk arises
are as follows:
Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
----------------------------- ------------- ---------- ---------
Trade and other receivables 10,376 19,349 10,491
Trade and other payables 10,696 15,806 12,010
Borrowings 6,789 10,357 5,949
Cash and cash equivalents 122 119 91
============================= ============= ========== =========
b) Financial assets
The Group held the following financial assets at
amortised cost:
Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
--------------------------- ------------- ---------- ---------
Cash and cash equivalents 122 119 91
Trade receivables 10,348 18,994 10,474
10,470 19,113 10,565
=========================== ============= ========== =========
c) Financial liabilities
The Group held the following financial liabilities,
classified as other financial liabilities at amortised
cost:
Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
----------------- ------------- ---------- ---------
Trade payables 5,640 8,273 5,803
Loans 6,789 10,357 5,949
Other payables 5,057 7,533 6,207
17,486 26,163 17,959
================= ============= ========== =========
d) Financial assets /(liabilities)
The Group held the following financial assets/
(liabilities), classified as fair value through
profit and loss:
Unaudited Unaudited Audited
as at as at as at
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
---------------------------- ------------- ---------- ---------
Forward currency contracts (589) 309 (200)
Interest rate caps 17 40 13
Interest rate swaps 12 6 4
(560) 355 (183)
============================ ============= ========== =========
The following is a reconciliation of the financial
instruments to the statement of financial position:
Unaudited Unaudited Audited
as at as at as at
31 Jan 31 Jan 31 Jul
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------------------------------------- ---------- ---------- --------
Trade receivables 10,348 18,994 10,474
Forward currency contracts - 309 -
Interest rate caps 17 40 13
Interest rate swaps 12 6 4
Prepayments and other receivables not classified as financial instruments
1,180 1,227 1,254
Trade and other receivables (note 16) 11,557 20,576 11,745
============================================================================ ========== ========== ========
Unaudited Unaudited Audited
as at as at as at
31 Jan 2017 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
------------------------------------------------- ------------- ---------- ---------
Trade and other payables held at amortised cost 10,108 15,806 11,810
Forward currency contracts 589 - 200
Social security and other taxes 1,048 489 506
Trade and other payables (note 17) 11,745 16,295 12,516
================================================= ============= ========== =========
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 2018, the outstanding contracts all
mature within 12 months of the period end (31 January
2017: 7 months; 31 July 2017: 12 months). At 31
January 2018, the Group was committed to buy US$15,750,000,
to sell EUR8,950,000 and to sell CA$90,000, paying
and receiving respectively a fixed sterling amount
(31 January 2017: to buy US$4,000,000, to sell
EUR1,700,000 and to sell CA$225,000; 31 July 2017:
to buy US$11,650,000, to sell US$3,500,000 to sell
EUR7,050,000 and to sell CA$nil). The forward currency
contracts are measured at fair value using the
relevant exchange rates for GBP:USD, GBP:EUR and
GBP:CAD. The fair value of the contracts at 31
January 2018 is a liability of GBP589,000 (31 January
2017: GBP309,000 asset; 31 July 2017: GBP200,000
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.
Derivative financial instruments - Interest rate
swaps
The Group has entered into an interest rate swap
to hedge the exposure to interest rate movements
on the Group's revolving credit facility. The swap
is based on a principal amount of GBP2,000,000
until 31 July 2018 and exchanges the exposure to
a LIBOR interest rate to a fixed rate of 0.39%.
The fair value of the swap at 31 January 2018 is
an asset of GBP2,000, (31 January 2017: GBPnil,
31 July 2017: GBPnil).
In addition, the Group has entered into an interest
rate swap to hedge the Group's exposure to interest
rate movements on the Group's invoice discounting
facility. The swap is based on a principal amount
of GBP1,000,000 until 31 December 2019 and exchanges
the exposure to Base Rate interest charges to a
fixed rate of 0.31%. The fair value of the swap
at 31 January 2018 is an asset of GBP10,000 (31
January 2017: GBP6,000 asset, 31 July 2017: GBP4,000
asset).
Interest rate swaps are valued using level 2 inputs.
The valuations are based on the notional value
of the swaps, the current available market borrowing
rate and the swapped interest rate. The valuation
is based on the current valuation of the present
saving or cost of the future cash flow differences,
based on the difference between the swapped interest
rate and the expected interest rate as per the
lending agreement.
Derivative financial instruments - Interest rate
caps
Along with the interest rate swaps referred to
above, the Group has entered into interest rate
cap agreements to protect the exposure to interest
rate movements on the Group's banking facilities.
The interest rate caps are measured at fair value,
being the market value of the cap at the balance
sheet date.
The Group has entered into an agreement to cap
LIBOR interest rates at 1% until 31 December 2019
on a principal amount of GBP4,000,000. The fair
value of the interest rate cap at 31 January 2018
was an asset of GBP8,000 (31 January 2017: GBP20,000
asset, 31 July 2017: GBP6,000 asset).
In addition, at 31 January 2018, the Group has
entered into further agreements to cap LIBOR interest
rates at 2% on a principal amount of GBP4,702,000,
reducing to GBP2,842,000 by 31 December 2019. The
fair value of the interest rate caps at 31 January
2018 was an asset of GBP9,000, (31 January 2017:
GBP20,000 asset, 31 July 2017: GBP7,000 asset).
Interest rate caps are valued using level 2 inputs.
The valuations are based on the notional value
of the caps, the current available market borrowing
rate and the capped interest rate. The valuation
is based on the current valuation of the present
saving or cost of the future cash flow differences,
based on the difference between the capped interest
rate and the expected interest rate as per the
lending agreement.
20. Events occurring after the reporting period
Interim dividend
As disclosed in note 14, an interim dividend of
0.83 p per share will be paid on 27 July 2018.
21. Related party transactions
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Jan 2018 31 Jan 31 Jul
GBP'000 2017 2017
GBP'000 GBP'000
Transactions with related companies and
businesses
Rent paid to Ultimate Apartments pension scheme - 90 163
Rent paid to Heron Mill Limited 120 121 241
Rent paid to Ultimate Apartments Limited - - 3
Rent paid to Berbar Properties Limited 90 - 17
------------------------------------------------- -------------- ---------- ---------
210 211 424
================================================= ============== ========== =========
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, as adopted
by the European Union. 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.
The Directors of UP Global Sourcing Holdings plc
are listed on pages 32 to 35 of the Group's Annual
Report for the year ended 31 July 2017, which is
available on the group's website, www.upgs.com.
For and on behalf of the board of directors
Andrew Gossage Graham Screawn
Managing Director Chief Financial Officer
27 April 2018 27 April 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEIFMWFASEFL
(END) Dow Jones Newswires
April 30, 2018 02:00 ET (06:00 GMT)
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