UP Global Sourcing Holdings PLC Trading Statement (2993Q)

TIDMUPGS

RNS Number : 2993Q

UP Global Sourcing Holdings PLC

11 September 2017

11 September 2017

UP Global Sourcing Holdings plc

"Ultimate Products" or "the Group"

PRE-CLOSE TRADING UPDATE

Further strong growth in a challenging consumer environment; promising early progress in Germany

Ultimate Products, the owner, manager, designer and developer of an extensive range of value-focused consumer goods brands, announces its trading update for the financial year ended 31 July 2017 ("FY17").

Financial overview

Group revenue increased by 39.1% to GBP110.0m (FY16: GBP79.0m), and continued to be driven by three main factors: growth in sales to discounters in the UK and in Europe (up 64.6% to GBP63.8m); increased sales from the main UK supermarkets (up 95.0% to GBP10.3m); and the emergence of online platforms as a new revenue for the business (up 63.6% to GBP4.6m).

The Board anticipates reporting underlying EBITDA and underlying PBT performances that are above market expectations, mainly driven by higher revenues. Net debt is anticipated to be lower than previously expected, due mainly to a one-off corporation tax credit of GBP2.1m received in FY17 relating to the IPO in March, as well as the current customer mix.

Operational overview

The key recent operational highlight has been the positive reaction that Ultimate Products is experiencing from German retailers to its product proposition. The Group has already opened a number of major retail accounts there and planning is now well advanced to open a showroom in Germany in early 2018, along with the expansion of the local sales force. Germany is Europe's largest retail market and, given the Group's promising early progress there and the positive consumer data that is emerging from the region, the Board sees significant potential for long-term growth in this market.

Elsewhere in its international operations, Ultimate Products has received a request from a major European customer to put in place new landed supply arrangements. As a result, the Group has seen the majority of the current Free on Board ("FOB") business with that retailer transferring to these new arrangements. This allows the Group to expand beyond its current limited product offering with the customer into other product categories, representing an exciting opportunity to continue to grow alongside one of the fastest expanding retailers in Europe and further cementing the Group's position as a key supplier to it. However, it should be noted that landed revenues are recorded as sales later than for FOB which in this case will result in approximately GBP4.0m - GBP5.0m of revenue now being recognised in FY19 rather than FY18.

A particular highlight of the Group's branded product portfolio during the period has been the performance of Progress, the cookware and kitchen electrical brand, which is now listed with several retailers including, as of January 2018, a major UK supermarket.

Finally, the refurbishment of Ultimate Products' new 240,000 sq ft warehouse at Heron Mill in Oldham has been completed to plan and is now the Group's main distribution facility. The Board anticipates that this will create improved operational efficiencies and significant additional capacity to manage the future growth of the business.

Outlook

The overall trading environment for general merchandise has become tougher, with wage inflation running behind general inflation. Consumers' discretionary spend is under pressure and confidence is therefore lower than it has been for some time, which is inevitably being reflected in purchasing behaviour. For retailers, this has also coincided with cost price increases in the wake of last year's sterling devaluation. As a result, retailers are generally exercising caution with regard to their non-food buying for Autumn/Winter 2017. This is manifesting itself in a reluctance to commit to purchasing too far forward, with retailers instead placing orders later or buying from stock.

For Ultimate Products, the fact that this retailer caution is occurring in the seasonally more important first half of the year (in FY17 61.9% of the Group's revenues were generated during this period) represents a significant short-term headwind for the Group. As a result, and notwithstanding the fact that the Group is only six weeks in to the new financial year, the Board currently anticipates that revenue growth for FY18 is unlikely. In addition, as outlined above, approximately GBP4.0m - GBP5.0m of FY18's revenue will now be recognised in FY19 as a result of the move from FOB to landed arrangements with a key European customer.

However, the Group is experienced in managing such dynamics, and its proven strategy of developing and building a portfolio of brands that are focused on mass market, value-led, consumer goods for the home means that the Board remains confident of continuing to deliver growth in the longer term.

The Group intends to announce its full year financial results on 7 November 2017.

For more information, please contact:

Ultimate Products [phone]

Simon Showman, CEO

Andrew Gossage, Managing Director

Graham Screawn, Finance Director

Powerscourt [phone]

Rob Greening

Nick Brown

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

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. Major customers include Action, Aldi, Amazon, Argos, Asda, B&M, Matalan, Morrisons, Original Factory Shop, Robert Dyas, Sainsbury's, Tesco and The Range.

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 sqft showroom that showcases each of its brands. In addition, the Group has an office and showroom in Guangzhou, China. In total, Ultimate Products now employs over 200 staff.

For further information, please visit www.upgs.com

This information is provided by RNS

The company news service from the London Stock Exchange

END

TSTQBLFFDKFEBBF

(END) Dow Jones Newswires

September 11, 2017 02:00 ET (06:00 GMT)