Welcome to the
Home of Brands
UP Global Sourcing Holdings plc
Annual Report 2022
Salter Stock Pot
Stylish cooking from hob to oven
Updating Our Purpose
Our purpose is the centre of
everything we do. To embed ESG into
our culture, our purpose has been
adapted and re-communicated to be
more meaningful and demonstrate
our aspirations:
We provide beautiful
and more sustainable
products for every home.
With innovation and sustainability
at the forefront, we design,
develop and distribute quality
branded houseware for our
customers and consumers.
Passionate
about product
Strategic Report
01 Highlights
02 At a glance
03 Investment case
04 Chairman’s introduction
05 Our Culture and Values
06 Chief Executive’s review
08 Market overview
10 Business model
12 Strategic goals
14 Strategy in action
15 Key performance indicators
16 Environmental, Social and Governance Report
26 TCFD and environmental reporting
30 Section 172 statement
32 Chief Financial Officer’s review
35 Principal risks and uncertainties
37 Viability statement
Corporate Governance
38 Board of Directors
40 Chairman’s introduction
44 Audit and Risk Committee Report
47 Remuneration Committee Report
71 Directors’ Report and other statutory disclosures
75 Statement of Directors’ responsibilities
Financial Statements
76 Independent Auditor’s report
82 Consolidated Income Statement
82 Consolidated Statement of Comprehensive Income
83 Consolidated Statement of Financial Position
84 Company Statement of Financial Position
85 Consolidated Statement of Changes inEquity
86 Company Statement of Changes in Equity
87 Consolidated Statement of Cash Flows
88 Company Statement of Cash Flows
89 Notes to the financial statements
Shareholder Information
114 Shareholder information
115 Company information
Operational highlights
` Salter acquisition fully integrated.
` Petra brand relaunched and first
retailer orders for FY23 received.
` Successful management of
the global shipping crisis and
the associated supply chain
challenges.
` Major automated process
(robotics) programme launched
in Q4.
ESG highlights
` Launch of our new ESG strategy.
` Update of our purpose.
` Fully refurbished leading edge
UK head office and showroom
completed.
` Installation of solar panels as
part of our ESG journey.
` Grant of 2022 SAYE scheme
options.
For more information:
see pages 06–07
For more information:
see pages 06–07
Financial highlights
Revenue
£154.2m
+13% FY21: £136.4m
Adjusted EBITDA*
£18.8m
+41% FY21: £13.3m
Highlights
* Adjusted measures are before share-based
payment expense and non-recurring items.
Adjusted EPS*
14.7p
+32% FY21: 11.1p
Statutory EPS
14.3p
+54% FY21: 9.3p
Full year dividend per share
7.12p
+42% FY21: 5.02p
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UP Global Sourcing Holdings plc Annual Report 2022
For more information:
see pages 06–07
We are delighted that
despite another challenging
year, our team has delivered
record financial results.
Simon Showman
Chief Executive Officer
Strategic Report
At a glance
We employ
people across the business
300+
We sell to
retailers across 45 countries
300+
Ultimate Products is the owner of a number
of leading homeware brands including Salter
(the UK’s oldest housewares brand, est. 1760)
and Beldray (est. 1872).
As such, we manage, design, and develop a wide range
of mass-market focused consumer goods brands, focused
on the home. Our extensive range of original branded products
creates the opportunity for retailers to price our products
competitively compared to their own-label equivalents.
Who we are
Ultimate Products bring the best
branded homewares products on the
shelves, both in the UK and around the
globe. We provide well-known retailers
with the latest innovative products
across our premier brands.
From our global offices, we have built
strong working relationships with a
network of 230 factories manufacturing
and distributing exciting products for
over 300 valued retail partners in
45countries.
Our premier brands
From the initial concept right through
to the product on the shelf, creativity
and sustainability are key. Positioned
alongside other big names, our
marketing and branding set us aside
from our competitors, with sleek and
on-trend designs, excellent quality
photography and cutting-edge videos,
showcasing our bestselling products.
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UP Global Sourcing Holdings plc Annual Report 2022UP Global Sourcing Holdings plc Annual Report 2022
Salter Fern Kettle & Toaster
Coordinated and on-trend
countertop electricals
Compelling customer
proposition
Because we love our brands, we
develop ranges of products that
consumers want to buy. This, combined
with our willingness to go the extra mile
for our customers, makes us a partner of
choice for over 300 retailers.
Investment in our people
From our Board downwards UP
works as a team with a clear sense
of purpose. We are proud of how we
develop and invest in our diverse
team of people, through our graduate
programme, through our advancement
of our colleagues, and shared reward
betweenstakeholders.
Established international
presence
Whilst our heart is in Oldham, our
outlook is international, with our China
office ensuring strong relationships
with suppliers, and our European
sales offices providing new growth
opportunities with international retailers.
What sets us apart:
We are passionate
about product
Investment case
Our ambition is to be in every home
across the UK and Europe
Investment in systems
Our position in the supply chain
brings a complexity that must be
carefully managed. We see this as an
opportunity as it is a barrier to entry for
competition. We continue to develop
our systems with a relentless focus
ondriving productivity through the use
of automation.
Leading ESG approach
As a business we strive to do the right
thing. We care about our people, our
community, and our environment. As
such, we take our responsibilities in the
face of climate change seriously, led by
our ESG committee.
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Chairman’s introduction
This year has seen the company
make excellent progress towards its
environmental and social sustainability
agenda and ensuring ESG principles
are embedded into the foundations of
the business through a comprehensive
strategy being implemented across
the Group. Its importance has helped
redefine our purpose and enhanced our
core values, which will help us tackle
the impact that our business makes.
Our ambitions include clear targets, the
achievement of which over time aim
to make a difference to our business
but are also aligned to our customers’
needs, ensuring we can provide them
with an even greater service.
I am confident that we are now on our
journey to becoming a more sustainable
business, with an improved governance
structure and our commitment to
TCFD. It has been a pleasure to see
the engagement and passion from our
colleagues in this area of the business,
where new ideas are continually being
presented to the Board for consideration.
Head Office Investment
In September we welcomed
colleagues back to our head office,
Manor Mill, having completed our
£2.0m investment to provide a best-
in-class working environment and
additional capacity for future growth.
This investment is an important step
in the development of our talent
through collaborative working and the
interchange of ideas. It is an important
part of an overall approach whereby
we have created an effective post-
pandemic way of working, allowing
us to better serve our customers.
In addition, we have installed 1,150
roof solar panels which is a key
development to our commitment
toNetZero.
Employee Share Participation
The Group has a history of extending
equity participation to the wider
colleague base with the objective of
increased incentivisation and retention
of talent. During the year, share option
awards were granted under the PSP
to key managers and under the SAYE
Scheme to all qualifying colleagues
in the UK who wished to participate.
As substantial shareholders, Simon
Showman (CEO) and Andrew Gossage
(Managing Director) did not participate
in the schemes.
I am pleased to introduce
the Annual Report for FY22,
a year in which the business
again demonstrated its
resilience and adaptability
by delivering a record
financial performance against
a backdrop of a shipping
crisis, general supply chain
disruption and COVID-19.
This allows grants under the PSP
Scheme to be made to a wider group
of managers including those who are
up and coming, helping to secure the
Company’s future talent pool.
It is intended that the exercise of options
will be fully satisfied through ordinary
shares held in trust by the EBT. To this
end we commenced an EBT share
purchase programme with the objective
of mitigating the dilutive impact of
share option awards and through this
improving overall shareholder returns.
Board Changes
Chris Dent joined the Board on 4 April
2022 as CFO-designate, taking over
as CFO from Graham Screawn when
he retired from the Board on 1 August
2022. Chris joined the Group from
Franchise Brands plc and has extensive
public markets experience, and we look
forward to him playing a key role in
Ultimate Products’ ambitious plans for
the future.
Over the past 12 years Graham has
played an instrumental role in the
Group’s journey from a privately owned
business to a well-established quoted
company. We wish him all the very best
for his retirement and thank him for the
enormous contribution that he has made
to the Group’s success.
Dividends
The Board has an established dividend
policy of distributing 50% of the Group’s
underlying profit after tax. A final
dividend is recommended of 4.82p
per share (FY21: 3.33p) to give a total
dividend of 7.12p per share for the full
year (FY21: 5.02p), an increase of 42%.
Summary
FY22 was another year of challenge
in which the Group has once again
responded exceptionally well to the
various external pressures imposed upon
it. Whilst this response has been helped
by our flexible business model and strong
balance sheet, it would also not have
been possible without the efforts of our
remarkable colleagues.
Despite these challenges, the Group
has increased adjusted EPS by 32%
through the successful integration of
the Salter acquisition and delivering
stable revenues and margins in its
corebusiness.
Our purpose is to provide beautiful
and more sustainable products for
every home. We do this by designing,
sourcing and supplying quality
homeware products through our
innovative, sustainable and customer
orientated capabilities.
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UP Global Sourcing Holdings plc Annual Report 2022
Our Culture and Values
Our values are the foundations of the
Company and underpin our purpose,
shape our culture, and influence the
business decisions we make.
This year, a new value has been
introduced to reflect our ongoing
approach and align with our new purpose:
We care about the environment.
To experience their creativity, innovation,
passion, commitment, entrepreneurial
spirit and sheer hard work has once
more been an inspiration. On behalf of
all our stakeholders, I sincerely thank
them again for all they have done over
the past year.
In addition to our longstanding strategy
of developing our portfolio of beautiful
and more sustainable brands, both in
the UK and internationally, that focus on
mass-market and value-led consumer
goods for the home, the skillsets of
our colleagues are a key competitive
differentiator. The Board therefore
remains confident in the Group’s long-
term prospects.
James McCarthy
Chairman
2 November 2022
We are passionate
about product
We always strive to
do the right thing
We love our
brands
We invest in
our people
We care about
our community
We go the
extra mile for
our customer
We care
about the
environment
Our Values
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UP Global Sourcing Holdings plc Annual Report 2022
the medium term through the reversing
of the downward pressure on margins
that it represented and the additional
revenue opportunities that have arisen
from improved stockavailability.
Robotics Process Automation
As both a B2C and B2B supplier, our
position in the supply chain brings
complexity that must be carefully
managed to continue to provide the
best service to our customers. We see
this complexity as an opportunity as it
represents a significant barrier to entry.
We therefore continue to concentrate
on developing our systems with a
relentless focus on driving productivity
through use of automation. The next
step in this journey is the investment
in robotics across the entire business
to automate hundreds of tasks. This
investment has taken the form of
modest additional heads into our
process team, rather than significant
extra capital expenditure. Through this,
we expect to see increased productivity
and improved accuracy resulting in
enhanced operating margins and an
even better customer experience.
Petra Brand Update
During 2021, the Group purchased
Petra, the German kitchen electrical
brand. Founded in Bavaria in 1968, Petra
originally specialised in coffee machines
before expanding its range into other
kitchen electrical products. Market
research shows that it remains well
known to German consumers, despite
the limited brand investment from its
previous owner. Since the acquisition,
Petra has been refreshed with new
branding and a range of kitchen
electrical appliances. We are delighted
that the brand will be launched with
one of Germany’s largest hypermarket
groups in late 2022, with a substantial
initial order received for products
including waffle makers, air fryers
and multi-meal makers. This exciting
development underlines our belief that
Petra, with its German heritage and
reputation for quality and design, has
the potential in time to be a brand of the
scale of Salter or Beldray.
Russell Hobbs Licence
Post year end the Group renewed its
“Russell Hobbs” trademark agreement
which grants the Group an exclusive
licence in the United Kingdom, Europe,
Australia and New Zealand for non-
electrical kitchen and laundry products.
Chief Executive’s review
The new agreement is on a rolling
four-year basis, rather than the previous
fixed-term arrangement.
International
International revenue was ahead of last
year by 22% (£9.7m) to £53.1m (FY21:
£43.5m) with Germany continuing
to perform particularly well, up 39%
(£5.3m). From a low base, we are also
seeing strong growth in Rest of World
since we appointed our Australian
distributor, with revenue up 177% (£2.0m)
to £3.2m (FY21: £1.2m). The prospects
for our international business, which is
mainly focused on Europe, remain very
encouraging. The appointment of a
European Adviser to assist in opening
new major accounts is providing
additional strategic focus and know-how
to our international efforts.
Supermarkets
Our brands continue to resonate with
supermarket customers in both the UK
and Europe which led to robust growth
in FY22 with revenue up 32% to £51.5m
(FY21: £38.9m). The core business,
excluding the Salter acquisition, grew
by 20% to £46.6m (FY21: £38.9m).
The key contributors to growth in this
segmentcontinue to be the Salter,
Beldray and Russell Hobbs brands.
With Supermarkets now accounting for
33% of revenue (FY21: 29%), they have
overtaken Discounters as our largest
revenue channel. This performance has
been driven by improved consumer
awareness and perception of our brands,
allied with excellent service execution
and aligned ESG values.
Online Platforms
Online grew by 23% (£4.7m) in the year
to £25.3m (FY21: £20.6m) with our
core online business, excluding the
Salter acquisition, remaining broadly
level at £20.3m (FY21: £20.6m). Online
was adversely affected in H122 by the
tighter stock availability caused by
the disruption to shipping leading to a
decline in revenue of 13%. We saw this
as a temporary set-back in the rapid
and long-standing growth of our online
business. When availability returned in
H2 22 so did the growth with revenue
up 20% (£1.8m) on the same period
last year. We expect this strong online
momentum to run on into FY23 and
target for 30% of overall revenue to
come from online over the medium term.
Integration of the Salter
Acquisition
The acquisition of Salter, at the end of
FY21, was an exciting moment in the
history of Ultimate Products. Salter is
the UK’s oldest housewares brand,
dating back to 1760, and has long been
the market leader for bathroom and
kitchen scales in the UK with kitchen
electrical and cookware sold under
the brand by the Group under licence
since 2011. The acquisition substantially
strengthened our brand portfolio with
full ownership now enabling us to drive
growth of this brand in a way that we
could not have achieved when it was
licensed, with international expansion
representing a particular opportunity
given its substantial British heritage
credentials. Integration of the business
took place quickly and efficiently with
the significantly earning-enhancing
acquisition performing in line with
ourplans.
Shipping Crisis
During 2021, global shipping capacity
was severely constrained because of
worldwide port congestion. The drop in
capacity caused a substantial increase in
the cost of shipping leading to downward
pressure on gross margins, which
we were able to offset this byactions
elsewhere. During 2022 there has
been an improvement in availability and
reliability which has led to a softening of
rates, although these remain substantially
higher than historic norms. The Group
has successfully navigated the worst
of the shipping and wider supply chain
crisis and, as the situation continues
to normalise, we see this providing
significant upside to the business in
06
UP Global Sourcing Holdings plc Annual Report 2022
Progress Hot Chocoluxe
Hot Chocolate Maker
Indulgent and luxurious
Our Customers
01. International
We have scope to grow our sales
across Europe, with the aim that
they make up 50% of sales.
02. Supermarkets
Our brands continue to resonate
with supermarket customers in
both the UK and Europe.
03. Online Channels
We have a proven online strategy
in the UK, with sales doubling in
the past 3 years.
04. Discounters
In difficult economic times,
consumers will turn to
Discounters.
I am delighted with the
integration of the Salter
brand within the Ultimate
Products family, and am
excited to see how the
UK’s oldest housewares
brand will help us to grow
across Europe.
While the majority of our online
revenues will always come from sales
made through platforms, an exciting
development for growth will come from
our re-launched Salter and Beldray web
sites, which will also facilitate a more
direct relationship between our brands
and their consumers.
Discounters
Sales to discounters fell by 7% (£3.4m)
to £48.1m (FY21: £51.5m) with the core
business falling by 8% (£4.1m) to £47.4m
(FY21: £51.5m) with UK retailers that
remained open during lockdowns,
and therefore saw a pandemic-related
spike in demand, now moderating
theirordering as demand normalises.
In addition, the account management
of certain European discounters, who
often prefer to trade face-to-face
rather than via video conference,
was made more difficult because of
the travel restrictions during 2021.
Looking through the volatility that
has been caused by the pandemic,
discount remains, we believe, a growth
segment within overall retail. We will
continue to target it as one of our key
growth channels.
Operating Margins
Gross margin increased to 24.9% (FY21:
22.2%) driven by the benefits of the
Salter acquisition with the Salter licence
royalty now no longer payable and the
addition of the higher margin scales
business. Core gross margins remained
stable compared to last year which
was a significant achievement given
substantially increased shipping costs.
The combination of higher revenues,
higher gross margin and overheads
broadly stable relative to revenue led
to a 41.1% (£5.5m) increase in adjusted
EBITDA to £18.8m (FY21: £13.3m) with
adjusted EBITDA margin improving 2.4%
to 12.2% (FY21: 9.7%).
Current Trading and Outlook
The Board anticipates profit
performance for FY23 will be in line
with current market expectations.
Whilst the current cost of living crisis
represents a substantial challenge to all
consumer-facing businesses, the Group
is well placed to respond to this given
its relentless focus on delivering value
andgrowth.
Simon Showman
Chief Executive Officer
2 November 2022
For more information:
see pages 08–09
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Kleeneze 3 Tier Airer
Colourful and practical solutions
Market overview
Our successful growth
of Beldray shows what
is achievable from a
heritage brand, and will
be replicated with Salter
& Petra across Europe.
Jenny Stewart
Commercial Director
Seizing opportunity
Ultimate Products is the owner, manager, designer, and
developer of a wide range of mass-market value-led consumer
goods brands, focused on the home. Our extensive range of
original branded products create the opportunity for retailers
to price our products competitively compared to their own-
label equivalents.
Product Areas
` Small Domestic Appliances
` Cookware
` Laundry
` Audio
` Heating & Cooling
Premier Brands
` Beldray
` Salter
` Petra
` Progress
` Kleeneze
Our route to market is focused
around four key growth drivers:
` International Retailers
` Supermarkets
` Online Platforms
` Discounters
The overall global homeware
market was valued at around $1.4
trillion and is estimated to reach
$2.0 trillion by 2030. This increase
in an already large market is being
driven by long-term trends in
working patterns and changes in
lifestyle, which have resulted in
higher labour participation rates
and higher average household
income. Part of the changes seen
mean that as more time is spent at
work, consumers are increasingly
purchasing smart and advanced
home appliances for convenience
and comfort at home. In supplying
to this growing market, we choose
to concentrate our efforts around
five major product areas, and our
five premier brands:
08
2022 2021
20212022
2022
£’000
2022
%
2021
£’000
2021
%
Change
£’000
Growth
%
`
United Kingdom
101,050 65.5% 92,916 68.1% 8,134 9%
`
Germany
19,231 12.5% 13,882 10.2% 5,349 39%
`
Rest of Europe
29,700 19.3% 27,720 20.3% 1,980 7%
`
USA
990 0.6% 688 0.5% 302 44%
`
Rest of World
3,220 2.1% 1,161 0.9% 2,059 177%
154,191 100.0% 136,367 100.0% 17,824 13%
2022
£’000
2022
%
2021
£’000
2021
%
Change
£’000
Growth
%
`
Supermarkets
51,523 33.4% 38,914 28.5% 12,608 32%
`
Discount retailers
48,126 31.2% 51,526 37.8% (3,400) -7%
`
Online channels
25,321 16.4%
20,590 15.1% 4,731 23%
`
Multiple-store retailers
17,312 11.2% 15,578 11.4% 1,733 11%
`
Other
11,909 7.7 % 9,757 7.2% 2,152 22%
154,191 100.0% 136,367 100.0% 17,824 13%
International
We are a global business, already
selling into 45 countries worldwide
and with 32% of our revenues
coming from international customers.
However, we have significant room
to expand, especially within Europe.
With a population of 447m, our market
penetration is significantly less than
it is within the UK. Although there
are differences between the habits
of consumers in different markets,
we believe that our product offer
of branded general merchandise at
mass-market prices is compelling for
consumers in all territories, just as much
as it is in the UK. International expansion
will help to diversify our customer base
and provide further resilience in demand
for our branded products.
Supermarkets
We have long-standing trade
relationships with all of the major UK
supermarkets but, historically, our
penetration has been relatively low.
The largest 20 European retailers sell
£855bn of goods per annum, and we
sell £73m to them. We believe that
our branded products, competitively
priced compared to the own-label
equivalents, are very appealing to
supermarket customers. Our aim
is to provide supermarket retailers
with the same retail margin as their
own-label equivalent, with a more
attractive branded proposition for their
customers and plan to increase our
penetration of the UK supermarkets,
along with developing relationships
with international supermarkets, by
demonstrating the effectiveness of
our product offer in-store through a
highly efficient service proposition
andincreased LFL sales.
Online Channels
Online accounts for over 25% of non-
food retail sales in the UK. In FY22, online
channels accounted for 16% (FY21: 15.1%)
of our sales. Clearly there is significant
opportunity for further growth through
platforms such as Amazon, and our
objective is to grow this business to 30%
of revenue over the medium to long-
term. In addition, we believe that there
is further scope for growth via a roll-out
across selected international platforms.
Discounters
Branded products at mass-market prices
are also attractive to discount shoppers
and offer them a compelling proposition,
where own-label products may not be
an option. Discount is a fast-growing
segment of the UK and European retail
market for general merchandise. Our
strategy is to increase listings with
existing discount customers, benefit from
their store expansion plans and open
new European accounts in this sector.
International: 34.5% International: 31.9%
UK: 65.5% UK: 68.1%
Online: 16.4% Online: 15.1%
Other: 19.0% Other: 18.6%Discount retailers: 31.2% Discount retailers: 37.8%
Supermarkets: 33.4% Supermarkets: 28.5%
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UP Global Sourcing Holdings plc Annual Report 2022
Business model
We source
Our buying teams
derive products from 16
countries with over 95%
coming from China. We
have a sourcing office
in Guangzhou in China
which keeps us close
to our suppliers. To
protect our brands and
ensure the quality and
sustainability of what
we source, we have in-
house teams of quality
assurance professionals.
We are a member of
SEDEX and audit our
key suppliers to the ETI
Code of Conduct.
We develop
Spotting trends early,
being innovative and
developing new and
existing products at
pace is key for providing
competitively priced,
and more sustainable
product ranges that
consumers want in
their homes.
We brand
We are privileged to
own Salter the UK’s
oldest housewares
brand, established
in 1760, and Beldray,
established in 1872.
We also have a wide
portfolio of other brands,
such as Petra, Progress
and Kleeneze. We are
passionate that the
products we source
reflect the prestige of
these brands. Through
our innovation and
marketing we build
and grow awareness
of these brands.
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UP Global Sourcing Holdings plc Annual Report 2022
A model for growth
Our priorities when pursuing
our strategy are:
To generate
repeat business
and through this
deliver increased
revenue and
higher operating
margins.
To have a unique
product offering
achieved through
innovation and
a focus on
our brands.
For more information:
see pages 12–13
We sell
Our UK and European
sales teams sell to
over 300 retailers in 45
countries. In addition we
have a growing online
business with direct
to consumer offering.
Supply channels include
bespoke forward orders
as FOB or landed, along
with a growing direct-
from-stock option.
We distribute
Our supply chain team
ensure smooth service
for our customers,
helping navigate the
significant headwinds
that have been
experienced in shipping
and haulage through our
deep and long-lasting
relationship with trusted
partners. We have
developed systems and
applications that can
manage the complexity
of supplying retail and
online in a cost-effective
and scalable manner.
We invest
It is our people that
drive our business
model, from product
development, to buying,
to design, to QA, to
shipping. We are,
therefore, proud of our
investment in our people
and our sustainability. In
particular, our graduate
development scheme
has been key in building
our success.
We grow
At the centre of our
strategy is our desire
to become the leading
supplier of quality
homeware products
with an ambition to be
in every home across
the UK and Europe; this
leads to us increasing
sales & profits, and
growing value for our
shareholders.
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UP Global Sourcing Holdings plc Annual Report 2022
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATIONSTRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
To be focused
on our four
key growth
drivers.
To have best-in-
class execution
in everything
that we do.
To exercise
strong financial
disciplines in
management of
operating costs,
cash and risk.
Growing our
international
sales reach
Expanding our
online offering
Refining
our brand
and product
development
Investment in
our systems
and processes
In the last financial year, the Group’s International
revenue represented 34% of total sales, and
it currently sells into 45 countries worldwide.
Germany, where the Group has an office and a
showroom in Cologne, performed particularly well
with revenue up nearly 39% on the prior year.
In March this year, Ultimate Products also
announced that its Petra brand had received
its first substantial order from one of Germany’s
leading retailers.
In June the Group announced the appointment of
an external advisor to its European business.
Over the past five years, have seen significant
growth in our online business, as sales have grown
from £6.9m to £25.3m.
Overall online sales grew by 23% in the current
year. However, as a direct result of the shipping
crisis which reached its peak during the summer
of 2021, we held back sales of our online offering
direct to consumers to concentrate on supplying
our retail customers. This meant that despite
growing demand organically online sales slipped
1% due to lack of stock. When availability returned
in H2 22 so did the growth with revenue up 20.0%
(£1.8m) on the same period last year.
In the current year the business has sold over
3,100 different products, and has brought to market
909 new products over the last year, compared to
bringing 1,069 new products in FY21.
Our position in the supply chain brings a complexity
that has been carefully managed to provide the
best service to our customers. The complexity
represents a significant barrier to entry for our
competition. As part of this journey we have already
invested in a modest number of additional heads in
our process automation team, rather than through
significant capital expenditure.
Our product offer of branded general merchandise
at mass-market prices is compelling for consumers
in other territories, just as much as it is in the UK.
Europe is becoming an increasingly important part
of Ultimate Products’ strategy, and the Group has
a number of strong and growing relationships with
leading supermarkets in the region.
Our goal is to expand our geographical sales reach
so that international sales make up 50% of our
total revenues.
Online accounts for over 25% of non-food retail
sales in the UK. In FY22, online channels accounted
for 16.4% (FY21: 13.4%) of our sales. Clearly there is
significant opportunity for further growth through
platforms such as Amazon, and our objective is
to grow this business to 30% of revenue over the
medium to long-term. In addition, we believe that
there is further scope for growth via a roll-out across
selected international platforms.
One of the additional advantages 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 better,
refined number of products to market.
Our position in the supply chain between
manufacturers and demanding retailers brings
complexity. Our systems and processes allow us
to manage this complexity for our customers.
Therefore, a key part of the Group’s strategy for
developing our business is the automation of
as many of our processes and interactions as
possible. This will not only enhance customer
service and thereby increase sales, but also
improve corporate efficiency, reducing costs
andincreasing profitability.
GoalsStrategic pillars Progress
Our purpose is to provide beautiful and more sustainable products for
every home, and our strategy is to develop our portfolio of consumer
goods brands, lead by Salter, Beldray and Petra.
Strategic goals
12
UP Global Sourcing Holdings plc Annual Report 2022
60,000
50,000
1,400
2019
2019
2020
2020
2021
2021
2022
2022
20,000
30,000
600
40,000
1,200
1,000
800
400
10,000
200
0
0
30,000
25,000
2019 2020 2021 2022
10,000
15,000
20,000
5,000
0
14.0%
2019 2020 2021 2022
6.0%
12.0%
10.0%
8.0%
4.0%
2.0%
0.0%
International sales £’m
Online sales £’m
New products developed
Operating margin %
Our focus is to grow our Supermarket
business and increase market penetration
with leading retailers across the EU, by
establishing our brands and developing
strong relationships with retail buyers.
Our proven ability to cope with external
headwinds, whilst continuing to innovate
and adapt to the consumer needs, results
in excellent level of customer service,
which will help to foster relationships with
newcustomers.
To build these relationships we have evaluated
our hiring needs and plan to recruit European
sales executives with relevant retail expertise.
In addition, we expect that online will be an
important part of our European sales growth.
Over the upcoming year we are investing in
a number of international trade fairs including
IFA (Berlin) and Ambiente (Frankfurt) which
are crucial marketing tools to help boost our
brand awareness and allow us to introduce
our business to a wider EU market.
As our key priority we will deploy the highly
developed UK Amazon strategy across the
EU Amazon accounts, with a particular focus
applied to our electrical offer and the launch
of the Petra brand.
As a result, this enhanced focused approach
will increase the speed at which products
move from being sold by us on Amazon
marketplace to being sold by Amazon
directly, which increases the efficiency of the
online offering; and we will continue with the
enhancement of our online accounts aside
from Amazon, to provide resilience and a more
diversified consumer base. This includes a
focus on our own direct-to-consumer websites
of Salter.com and Beldray.com.
Our focus is to increase product lifespan,
allowing a reduction the number of new
products developed from 1,000 products to
600 products a year, in order to give each
product more development time which will
lead to better executed products, more in
tune with consumer desires. In addition, a
tighter focus on product development, allows
for more scalability of the business, bringing
operating efficiencies to the business as
itgrows.
The next step in this journey is the continued
investment in robotics across the entire
business to automate hundreds of tasks,
which we have already identified. Through
this, we expect to see increased productivity
and improved accuracy, resulting in enhanced
operating margins and an even better
customer experience.
Our ambition is to develop a best-in-class
process to provide seamless customer service.
Focus for next year Performance
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Petra Dual Air Fryer
Tasty and energy efficient way to cook
Launch of Petra
In recent years, the brand had
been less used by its current owner
although market research showed
that it remains well known to German
consumers. The acquisition sought
to repeat the success of our previous
brand acquisitions, most notably
Beldray, Progress and Kleeneze,
by relaunching Petra with a suite of
innovative new products and a dynamic
marketingstrategy.
During the first year of ownership,
we developed a new range of
products using our design team and
our suppliers. The Petra brand was
relaunched and refreshed with a new
range of kitchen electrical appliances.
Using our European sales team we
were able to secure a new order, worth
€1 million, for Petra kitchen electrical
items including waffle makers, air fryers
and multi-meal makers, which will be
available in the retailer’s stores in late
2022 or early 2023. Although sizeable,
this initial order is preliminary and there
remains significant potential for further
Petra sales growth with this customer in
the future.
The Petra brand has found a home
which can leverage its heritage and
reputation for quality. In addition,
the brand resonates with German
consumers, which helps our strategic
aim of growing internationally, especially
within Europe, to both retailers, and
direct to consumers online.
Strategy in action
In February 2021 Ultimate Products purchased Petra, a
German kitchen electrical brand. Founded in 1968 in Bavaria
as a manufacturer of electrical equipment, Petra originally
specialised in coffee machines before expanding its range
into other areas of kitchen electrical products.
14
180
20
500
2.0
25
100
2019
2019
2019
2019
2019
2019
2020
2020
2020
2020
2020
2020
2021
2021
2021
2021
2021
2021
2022
2022
2022
2022
2022
2022
120
150
10
300
1.0
15
60
15
400
1.5
20
80
30
60
90
5
200
0.5
10
40
100 5
20
0
0
0
0
0
0
123
10.7
465
1.3
22.1
98.9
116
10.4
368
0.4
23.0
98.8
136
13.3
415
1.4
22.2%
98.5
154
18.8
422
1.3
24.9%
97.3
Revenue £m
Adjusted EBITDA £m
Change:
+13%
Change:
+41%
Change:
+2%
Change:
-8%
Change:
+12%
Change:
-1%
Sales per Head £’000
Gearing ratio
Gross margin %
On Time Delivery %
Key performance indicators
Measure Description Performance
Revenue (£m)
The revenue in the period. Revenue is up 13%, driven by the acquisition
of Salter.
Sales per
Head (£’000)
Revenue for the period divided by the
average number of employees & relevant
temporary staff in the period.
Sales per head has increased by 2%, as
headcount increase has supported the increase
in revenue.
Gross Margin
Percentage (%)
Gross profit for the period divided by
revenue for the period.
GM% has risen to 24.9%, despite the headwind
of shipping costs being higher.
Adjusted EBITDA
(£m)
Profit before interest, tax, depreciation and
amortisation, excluding charges for share-based
payments and other non-underlying charges.
Adjusted EBITDA has increased 41% on the
back of the contribution by the Salter acquisition.
Gearing Ratio
Net bank debt at the end of the period divided
by underlying EBITDA for the period.
Gearing ratio has decreased from 1.4* to 1.3* on
this basis.
On Time Delivery
Percentage
Number of orders from retailers delivered on
time in the period divided by the total number
of orders delivered to retailers in the period.
Due to the global shipping crisis, our on time
delivery % has slipped during the year, however
the overall % is still very high.
15
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Ultimate Products has spent
over 20 years providing
“beautiful products for
every home” and our values
and culture are built upon
ethical practices, continuous
improvement, harnessing
talent and striving to do the
right thing within its business,
its stakeholders and the
localcommunity.
Our new strategy has given
us focus and motivation
on how and where we can
make a real difference in
the areas we are targeting.
Jill Easterbrook
Chair of the ESG Committee
So far, much of our ESG work has been
aligned to our core values and relates
togood governance, our community
work, ensuring an ethically compliant
supply base and the investment made
inour colleagues.
Our business model is to develop
branded household goods using third-
party overseas manufacturers and to
deliver them globally for consumers.
To achieve this, we use a global supply
chain function including many partners
and have growing operations across
Europe, with our two biggest sites in
Oldham. To make a real difference,
our focus must be to continue to
understand and then tackle the climate
change issues this business model
creates, whilst ensuring ESG principles
are integrated into all that we do. It is
important that we recognise our impact
on the world and set a plan to make
our own positive contribution from an
environmental and social perspective.
Environmental, Social and Governance Report
Updating our purpose
This year saw the development of a
strategic plan to focus our ESG efforts
onto a suitable roadmap for the future.
The strategic plan was developed by the
ESG Committee, approved by the Board
of Directors, and aims to:
• Set a course of action to ensure ESG
is further embedded into our culture,
business model and strategy.
• Explain and address our material
risks and opportunities by
refocussing our ESG work, setting
aims and clear targets, whilst
keeping to our core values.
• Introduce means to measure and
report our progress effectively,
ensuring necessary regulatory
compliance.
• Where possible, align our ESG work
and targets to those of our retail
customers to provide a best-in-
class service whilst enhancing our
reputation and competitive position.
During 2022, the strategy was
communicated to our wider stakeholders
and implemented internally across our
colleague teams. A summary of the
key changes created by the strategy
is detailed in this report, along with a
progress update against our non-financial
KPIs and key actions that have taken
place on our journey this year. For more
detailed information, you can find the
strategy document on our website at
www.upgs.com/investor-relations/.
16
Beldray Spot Buster
Remove tough stains, spills and messes
In the coming years we will continue
to monitor and complete regular
assessments of material issues as our
ESG journey develops with the ongoing
engagement of our stakeholders.
Our commitment to ESG starts at the
highest levels of our Company with
oversight from the Board of Directors
and Board-level committees, in particular
the ESG Committee. This Committee,
chaired by Jill Easterbrook, comprises
of a blend of main Board and operating
Board Directors with expertise and
sound knowledge of the organisation,
an ability to influence real change
internally and have sufficient and regular
engagement with external stakeholders
across all areas of the business to gain
feedback and necessary insight.
The Committee’s role has been refined
to ensure the Group is on course
to achieve the strategic aims and
targets, maintain governance oversight
of material ESG issues, along with
consideration of stakeholder feedback
and external market conditions.
Representatives from the ESG
Committee now act as a lead on relevant
ESG aims and areas to their role in the
Group. Their role is to drive positive
change and be a communicative link
between the Committee and wider
workforce during day-to-day activities
and within colleague committees.
The Committee is now supported by
an external partner, whose expertise
and up to date knowledge ensure that
the Committee is effectively guided
in advance on the latest external
requirements, regulation, and new
trends within the ESG agenda.
Our TCFD sub-committee was formed
this year and is chaired by our CFO,
Chris Dent. This group looks at climate
related risks and play an active part in
the necessary scenario planning needed
for the business to manage and mitigate
these risks.
Our Environmental Committee,
comprising passionate colleagues, will
help generate ideas, monitor progress,
and implement change within the
day-to-day activities of the business, all
contributing towards managing our risks
at colleague level.
A diagram demonstrating how ESG is
managed within the Group is detailed
below:
We have engaged with our
stakeholders and carried out a
materiality assessment which
identified a top ten list of issues
within the Group’s business model
perceived as having the largest
negative impact. These issues
were overlayed with what are seen
as areas of the biggest opportunity
for positive change creating a
topfive:
Board
Representation
Environmental Committee
Katie Maxwell –
Trading Director
Tony Pole – Process
Development
Director
Craig Holden – Operations & HR Director
ESG Committee
operational lead
Audit & Risk
Committee
Nomination
Committee
Remuneration
Committee
Committee for TCFD
Main Board
ESG Committee
Means/colleague
engagement
ESG Areas
Environmental Social Governance
Employee
Consultation
Group
Ethical &
Modern
Slavery
Committee
Community
Committee
Chris Dent – Chief Financial Officer
1. The Energy/CO
2
consumption in our
operations and wider
supply chain
2. Product packaging
3. Product life cycle
and design
4. Product quality
5. Workforce diversity
and inclusion
17
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Environmental, Social and Governance Report continued
Developments in our Reporting
We have partnered with a carbon accounting specialist, who are assisting the Group with new data collation, completing a carbon
assessment, and building reporting functionality that enable the Group to accurately track our progress and meet necessary
reporting compliance. All progress will be based against a baseline year of financial year 2019 (the last stable year before COVID)
unless reasons relating to regulatory requirement or insufficient data prevents this. This new method of reporting will be fully
available by Autumn 2022.
Non-financial KPIs and targets
In support of our commitments, we measure a range of non-financial KPIs as set out in the table below that have been reassessed
and refined this year to ensure greater focus on our material ESG issues, whilst also meeting our aim of supporting our retail
customers through greater alignment to their ambitions. We have set most of our target dates within an initial 5–10-year period
which we believe are achievable, but also allow flexibility to adapt these as our business grows, evolves and market conditions alter.
Focus Areas KPIs
Aim: To Provide Beautiful and More Sustainable Products
• Product packaging
• Product quality & life span
• Product end of life
• Consumer education
Product Packaging
Plastic
• Reduce plastic packaging by 50% and maintain by 2025 compared to our baseline
• 100% of remaining plastic packaging to be recyclable or reusable by 2025
Paper
• 100% of card and paper product packaging to be FSC-certified by 2027
• 100% of cardboard and paper product packaging to be 100% recyclable by 2025
• Remove/reduce lamination on paper product packaging by 2025
Product Quality
• To maintain an average Amazon rating of 4.2 or above for all live products
Materials
• 100% of wooden products/components to be FSC-certified by 2027
Lifespan & End of Life
• To increase the number of SKUs with spare/replacement parts available for purchase.
• To provide consumer education through an increase in use of QR codes for easy access
to product care information, video guides and advice on responsible waste disposal
• To maintain a rate of below 5% for returns that go to WEEE waste or scrap
The above targets apply to all products under the Group’s brands only.
UN Sustainable Development Goals
The United Nation’s 17 sustainable development goals (UN SDGs) are an externally recognised global framework for driving
progress toward a more sustainable future. We have reassessed which of these goals are relevant to our ambitions and where
we can either directly contribute through our own actions or indirectly through the initiatives of Ecologi, our climate action partner.
The UN goals that are now relevant to our ambitions and aligned to our strategy are:
18
UP Global Sourcing Holdings plc Annual Report 2022
Focus Areas KPIs
Aim: To Have Net Zero Carbon Emissions from Manufacturing to Delivery
• Fuel & Energy consumption
in operations
• Far East Supplier base
• Logistic partners in supply chain
• Effective Carbon reporting
• Net Zero for Scope 1 & 2 by 2040
• Net Zero for Scope 3 by 2050
Aim: To be a Great Place to Work for All
• Diversity & Inclusion
• Colleague Engagement
• Training & Development
• Women in leadership
• Fair Pay
• Colleague well being
• 90% Great Place to Work score on engagement survey by 2025
• Gender balance in Leadership roles by 2030
• Maintain gender pay median at 5% differential or less
• 40% of Board representation (Op or Main) to be female by 2025
• 20% of the UK workforce to be from ethnic minorities by 2030
• An average of 40 hours training and development hours per person per year by 2030
Aim: To Ensure Safe Places to Work
• Ethical supplier base
• Modern slavery
• Safe working environments
• 100% Suppliers Audited by 2025
• 0 H&S Reported Incidents on the Group’s sites
• 0 Modern Slavery & Bribery reports within the Group and our wider supply chain
Aim: To Support our Communities
• Support vulnerable people
through local charities and
initiatives
• Support local youth to gain
access to education, further
training, and employment
• Support local job opportunities
• Provide £150k of charity support and fundraising by 2035
• 60% of UK workforce to live locally 2030
Our commitment to net zero will be
challenging, especially within our wider
supply chain. However, our reporting
software will give us insight to engage with
our partners on effective solutions to make
the positive changes needed.
Tony Pole
Process Development Director
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
Progress Knife and Chop Board
Make Progress in the kitchen
ESG Report – People
Much of our success relates to its talented people and providing them
with opportunities and an environment that is great to be a part of for all. The
Group has already taken many positive steps in achieving this and as such, the
targets and focus areas are a continuation of our ambitions around promoting
people development, diversity and inclusion, and fairness for all.
We care about our people
Gender Pay
Median
Training time per
person per year
Factories
Ethically Audited
Modern Slavery
& Corruption Reports
Health & Safety
Reported Incidents
Great Place
to Work
UK Ethnic Minority
Representation
Target 5% +/- 40 hours 100% 0 0 90% 20%
2022 1.14% 9.7 95.0% 0 1 85% 17.3%
2021 4.55% n/a 94.5% 0 0 86% n/a
Baseline 0.54% 9.7 87.2% 0 0 82% 17.3%
* Leadership roles are defined as Manager, Head of Department, Director or Main Board Director.
Diversity and Inclusion
To offer a great place to work for all, we
believe there needs to be consideration
for both gender and ethnicity to create
a fair, diverse, and inclusive workforce.
Having analysed our current gender
and ethnicity breakdowns we believe
we have made good progress on these
areas, with recruitment schemes like the
graduate scheme and distribution centre
structured salary scheme providing
excellent foundations as they have fixed
remunerations per role when joining
the Group irrespective of a person’s
background. As such our median gender
pay results remain within our targeted
differential this year.
The Group has a relatively diverse
workforce within its UK teams with
ethnic minority representation at
17.3%. However, having reviewed
the census data on ethnicity, (last
reported in 2011) ethnic minorities
are at 22.5% (in Oldham) and 16.3%
(in Greater Manchester), with these
areasnow being our two main pools
forUKrecruitment talent.
This year the Group has begun to adapt
its recruitment strategies to specifically
target talent within its local community
and surrounding postcodes of the head
office in Oldham to achieve its ethnicity
and recruit local targets. In addition,
members of the senior management
team, heads of department and the
recruitment team underwent external
training in relation to Unconscious Bias
in February 2022 which highlighted
the importance of being aware of the
potential role this may have in their
decision making.
This year we improved our policies
and procedures relating to our female
colleagues to ensure we are providing
an environment that encourages women
in the workplace and any specific needs
they may require to continue their
careers in the Group. We have improved
our maternity policy by offering more
support to expectant mothers before,
during and after their pregnancy and
return to work.
Our progress so far:
Women in
Board Roles
Gender in
Leadership
Roles* (F/M)
Global workforce by
gender (F/M)
Target 40% 50/50 50/50
2022 31.3% 37/63 51/49
2021 28.6% 31/69 48/52
Baseline 15.4% 31/69 49/51
Male Female
Total 196 203
Main Board 7 2
Operating Board 4 3
Board direct reports 56 59
Employees 129 139
20
This includes increasing our maternity
pay from statutory amounts up to a
maximum of 16 weeks full pay and
introducing better structure around
a returning mum’s transition back to
work using keep in touch days. We also
recognise that managing the effects of
the menopause at work is important for
both employers and their colleagues as
for those experiencing symptoms it can
be a difficult and stressful time. As such
the Group has introduced a new policy
in August 2022 around menopause
support that also includes access to
specialised help, support, and guidance
from a qualified person.
Training & Development
As a talent business that recruits largely
inexperienced people to join our Group,
we anticipate a continuing need to
provide dedicated formal training time
to our colleagues in order to meet
operational demands, retain our talent
and develop future leaders as the
business continues to expand.
In January 2022, our internal Training
Officer has developed a focused
training strategy that covers key pillars
including formal internal, external, and
digital training opportunities for all of our
colleagues. Our training has a primary
focus on people productivity, using
software and technology to maximise
time training and convenience to its
highest. As such we have rolled out a
new platform called “send my” which
has enabled us to convert all of our
standard training topics to a digital
platform and a means to effectively
report on the amount and quality of
the training from this point forward.
Going forward, we anticipate this will
provide more training opportunities
across our wider teams and include
our biggest divisions like buying and
the compliance teams as they build
their knowledge further around the use
and development of more sustainable
product packaging and anincrease
in specification changes to aid
productquality.
Safe Places to Work
A safe and compliant place to work
is an essential way of working across
our operations and wider supply chain.
Our ethical auditing team plays a key
part in auditing our supplier base and
the Ethical and the Modern Slavery
Committee continue to annually audit
our procedures around modern slavery
and workforce safety across our own
operations and wider supply chain.
The Group continues to have effective
and robust procedures within its own
operations around health & safety
including annual audits and continued
corrective action plans that continue
to keep health and safety incidents
onsite to the lowest possible levels. As
a member of Amfori BSCI and Sedex,
our factory auditing continues to be
at the highest possible standards with
our own internal ethical team (both in
UK and China) playing their part. As
COVID lockdowns have reduced in the
Far East, it has enabled our teams to
now increase visits to our factories back
to almost pre-COVID levels, ensuring
we can effectively manage the safety
of the working conditions in our wider
supplychain.
Our people are our
biggest asset and it
is important that we
listen and provide a
great place to work
where they can prosper.
Craig Holden
Group Operations
& HR Director
Engagement Survey
Giving our People a Voice
The annual engagement survey
continues to act as voice for our
growing workforce and a key method
for assessing our colleagues needs.
Initiatives this year arising from the
survey include:
• A commitment to fair pay, with all
of our UK permanent roles now
commanding a minimum of £10.50
per hour as a starting salary.
• New “nice touch” benefits which
offer support and recognition to
our colleagues as they encounter
special moments in their life.
Examples including a £250 starter
pack when buying a new home,
a £250 contribution to a wedding
cake and £150 maternity starter
pack for new parents.
• A continuation of our successful
Save as You Earn Scheme
(SAYE) into a second and third
year, enabling our colleagues
shared reward in the Group’s
futuresuccess.
• An effective Work from Home
policy that strikes a balance of
colleagues maximising their
productivity by working from home
to complete important tasks, but
without compromising important
time in the office for teamwork,
problem solving and collaboration.
We also anticipate our future work on
people productivity via the increased
use of robotics and automation of
tasks will positively influence this
target area in the coming years as it
enables our colleagues to truly focus
on the key aspects of their purpose
and role in the Group.
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
ESG Report – Community
Our community work is integral to our business and our core values and will continue as a
focus for us going forward. Having studied our community around our head office base, there
are clear needs around employment, providing opportunities for local youth and supporting
vulnerable people through local initiatives. To ensure the greatest impact, our efforts have
been re-focussed with our resource and time now allocated to partner with suitable local
organisations who help meet these needs.
We care about
our community
Our progress so far:
Charity Support & Fundraising UK Workforce to Live Locally
Target £150k 60%
2022 £47,000 47.2%
2021 £55,000 49.4%
Baseline £10,000 49.4%
Our Company Charity
Each year our UK colleagues are
asked to submit a recommendation
for a charity close to their heart, that
the Group will support over the next
financial year, following Board selection.
This year saw us support the MS Society
through a series of various internal
fundraising events including charity
sales of our products, baking events,
supporting our men’s football team and
this year over 50 of our UK colleagues
embarked on completing the Yorkshire
3Peakschallenge.
This year was our most successful to
date, raising a total of over £24k towards
funding research into the cures and
treatments of MS.
Our Group charity has already been
chosen for next year, being Oldham
Foodbank, who are part of a nationwide
network of foodbanks, working to
combat poverty and hunger across the
UK, with Oldham being a particular town
in crisis. We intend to support this charity
through fund raising, food donations and
enabling our UK workforce to complete
volunteering days over the course of
theyear.
Our Local Partner –
Positive Steps
This year we have further strengthened
our relationship with a charity that sits
in the heart of our local community.
Positive Steps is a local charitable
organisation that delivers a range of
targeted and integrated services for
young people, adults, and families
across our local community. Their many
services include family support, one-to-
one young care support, careers, and
job support opportunities to those who
need it.
This year we have supported Positive
Steps across multiple initiatives that they
are currently operating across the local
community, including:
• Helping young people to get into
employment and develop their
skillset through access to training,
we funded the renovation of a
hairdressing/beauty salon within
Positive Steps HQ. This gives the
young people the opportunity to train
towards hair, beauty, and customer
service qualifications, and will
ultimately increase their confidence
and employment opportunities within
these sectors.
• Funding of well-being workshops for
a group of young mothers who had
given up their children for adoption.
Accessed support for their mental
and emotional processing, improved
self-confidence and built supportive
network of young people going
through the same experience.
• Improving access to work
opportunities through the funding
of workplace equipment, including
tools and clothing. Pre-employment
certificates, i.e., health and safety/
site awareness (construction), DBS
checks or birth certificates to support
with securing a NI number. This is
to reduce barriers to employment
and give people equal opportunities
when trying to secure work.
22
UP Global Sourcing Holdings plc Annual Report 2022
Providing Job
Opportunities Locally
Offering job opportunities to our
local community has been something
we firmly believe in as the business
continues to expand. Keeping
employment local positively boosts the
local economy and aids in our own staff
retention. We have adapted our UK
recruitment methods, using our internal
recruitment team and recruitment
partners, to include a local focus and
there are three main postcodes of
interest, being OL, M24 and M35, that
surround both our head office site and
main distribution centre based in the
Oldham area.
This year has seen our targets
influenced through greater job
opportunities within our local distribution
centres as we decided to refocus our DC
Operative recruitment from a temporary
agency basis to a permanent, employed
team to meet operational needs. As
such we prioritised those who met our
job criteria and were locatedwithin
these three postcodes.
This has increased our live locally
percentage in the DC, however, a focus
is now needed on our office based roles
in order to achieve our target of 60%.
To do this, we have resurrected our
UP Academy recruitment model, which
provides office job opportunities to
those based locally and do not wish to
continue their education at university.
We have now piloted this scheme at an
additional school in the Oldham area
being North Chadderton High School
and aim to implement similar academies
at educational establishments in the
coming year including Blue Coats,
Oldham Hulme Grammar, and Oldham
College, covering a broad spectrum of
youths across the local community.
Following this, the academy will also
be expanded to include graduate
apprenticeships, work placements and
internships to ensure a breadth of career
opportunities are available to suit both
business and personal needs.
Our community work
continues to make a
positive difference to
those that need it the
most. We believe our
focus on supporting
youth and offering
employment will help
drive more sustainable
and long-term change.
23
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
ESG Report – Environment
We care about
the environment
As product is our purpose, this carries
the greatest long-term environmental
impact and climate-change risk. Our
focus and targets have been aligned
with the risks which have been
identified by our Committee for TCFD
as described on page 27.
Product packaging has a focus on
removing, reducing, or replacing plastic
and paper with more environmentally
friendly alternatives, a similar ambition
to that seen within our retail customers.
Our focus on product involves
prolonging the life span or, where
possible, changing to sustainably
sourced materials, such as FSC
certified wood. Product quality will also
be a focus as, if executed correctly,
this can have a material difference on
its life span. Amazon is increasingly
becoming a larger portion of our
business in terms of revenue, listed
products and market intelligence.
As Amazon reviews have become a
recognised method for determining
product quality, especially within a
consumer setting and therefore now act
as a key target area for the Group and in
influencing decision making on product
selection and future development.
Our progress so far:
Product packaging Product quality
Reduce Plastic Packaging
FSC Certified Paper
or Card Packaging Amazon Ratings
Wooden product
FSC Certified
Target 50% 100% 4.2 100%
2022 53.0% 3.5% 4.21 54.3%
2021 86.1% 0.4% 4.03 3.8%
Baseline 100% 0.0% 4.11 0.1%
Our other KPIs within the product and product packaging area will have a baseline year of FY23, as we refine our reporting
abilities later this calendar year and continue discussions with our manufacturing partners on new packaging solutions we can
utilise. However, we are confident we can achieve our targets as our product teams have already adapted their approach to
packaging specifications with it being a key area of focus within the Group. Especially as we have aligned our aims to that of our
retail customers in order to continue servicing them effectively.
Next year the teams will also be undergoing additional training on guidance around using recyclable packaging materials to
ensure we can achieve our targets effectively. We will continue to revisit our environmental KPIs as the business continues to
evolve and new developments occur within environmentally friendly packaging solutions.
The main driver for our environmental ideas and actions for change are our 4R’s:
Remove
To seek opportunities to remove any unnecessary
aspects to our operation or product ranges
that are negatively impacting the environment,
in particular carbon emissions, unnecessary
packaging, materials, or waste.
Reduce
To seek opportunities to reduce the use of non-
environmentally friendly materials and equipment
to the minimum requirements. This also includes
an ability to reduce our carbon footprint and
recycle where possible, especially within our waste
management or packaging.
Replace
To switch our materials, equipment, suppliers,
or resources with more environmentally friendly
solutions.
Rebalance
If we are unable to remove, replace or reduce we
must then find a solution to positively rebalance
our negative impact with a positive one.
24
UP Global Sourcing Holdings plc Annual Report 2022
Our primary focus is always on the first 3Rs but inevitably there will be parts of our
operation that will still generate carbon emissions even after acting, especially in the
earlier period of our journey to net zero. Therefore, we currently engage in a plant a
tree initiative under Rebalance using an external company, Ecologi, whose schemes
are accredited for global positive change and are also aligned to the UN SDGs.
Asummary of our recent work under the 4Rs includes:
Remove
• The removal of polystyrene in the inner and outer product packaging
of our floorcare ranges
• The removal of polybags from our cutlery ranges
• The single use of plastics on our sites
Replace
• The introduction of FSC packaging for our Salter Eco scales ranges
• The use of more environmentally friendly alternatives within our Audio
product packaging ranges
• Replacing our UK energy provider to a more environmentally sustainable
alternative
• Replacing the majority of the lighting across its operations with LED, sensor
alternatives
• Replacing our waste management partner for our UK operations with
B&M Waste services who are an award-winning carbon neutral waste
management solution
Reduce
• The use of non-recyclable packaging within in our product and outer
carton packaging
• The use of office paper across our UK operations
Rebalance
• Planting over 500,000 trees via Ecologi under our Plant a tree initiative
Product life span, end of life & consumer education
As a future focus area and to maximise the life of a product there will be an increase
in the number of SKUs that the Group holds spare or replacements parts which are
available for purchase. To help further educate the consumer, there will also increase
the use of QR Codes, product care advice, consumer video guides and access to
information on sustainable waste disposal. More reporting will become available on
these focus areas in future reports.
Our journey to net zero
As we have now made our commitments to achieve net zero within Scope 1 & 2 by
2040 and Scope 3 by 2050, like most businesses our priority this year has been to
establish our current position, using effective and accurate means. With the help of
our new carbon accounting partner, Normative, we have commenced the process of
completing a comprehensive carbon assessment across scopes 1, 2 and 3 from our
manufacturing base through our operations and to delivery to our retail customer.
This analysis will identify particular focus areas (‘hot spots’) and help us to set
achievable milestones on our journey to net zero. Normative’s methodology means
all reporting will meet TCFD standards, ensuring our carbon emissions data can be
appropriately and successfully audited. It is anticipated that this detailed assessment
will be completed by late 2022 and milestones set accordingly thereafter. In order
to achieve these milestones, key departments will complete actions with relevant
Heads of Department being set objectives which they will be remunerated against.
Solar Panels project
The Group had already made
significant capital expenditure
investment in its journey to Net Zero
by replacing its lighting installation
across its sites to more energy
efficient alternatives in the form of
LED sensored lighting. However,
webelieved that much more could
bedone.
Therefore we decided to install solar
panels on the roof of our head office
building in Greater Manchester. The
project supports our desire to achieve
net zero targets but also mitigates the
effects of surging global energy prices.
In total, 1,150 panels were installed
at a cost of £385k, covering
approximately 85% of Manor Mill’s
roof. It is anticipated that the panels
will produce up to 40% of Manor Mill’s
ongoing energy requirements and as
a result, the expected payback period
for the solar panels is approximately
3–4 years.
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
Case study
25
TCFD and environmental reporting
TCFD is a framework for companies
to report climate-related risks and
opportunities. We support the aims of
the TCFD, disclose consistently with its
recommendations, and aim to improve
the quality of our disclosure year-on-year.
We have made progress on aligning our
reporting to the TCFD recommendations
as set out by the FCA in Listing Rule 9.8.6
and will further develop our approach
during FY23.
Our Board of Directors is responsible
for oversight of our ESG initiatives and
this includes climate-related risks and
opportunities. From 2022, they will
receive an ESG update twice a year,
which will include updates on progress
made towards climate change targets
during the period. During the year the
Group has set up a new Committee for
TCFD which is chaired by our CFO, Chris
Dent, and includes Christine Adshead,
NED, and members of the Environment
Committee and ESG Committee.
With the impacts of climate change
being felt around the world, we
understand the importance of the role
we can play to help reduce this. We
have committed to reduce our GHG
emissions within our operations by
2040 and within our wider supply chain
by 2050, as part of the ambition of
the Paris Climate Change Agreement
as we recognise the importance of
reducing our own impact on the climate.
However, we are also aware that climate
change is going to have an impact
on our business, presenting risks and
opportunities over short, medium, and
long term.
Transition risk as a result of moving to
a low-carbon future may impact our
business model through changing
customer reference, changes in
technology or government regulation.
Physical risks include the higher risks
of climate-related short-term extreme
weather events such as flooding, or
long-term physical changes which
may result in permanent changes
intopography.
During the year our Committee
for TCFD, with support from the
Environment Committee held a scenario
planning day at which we reviewed a
number of difference climate risks and
opportunities which could impact our
business model and strategy.
Financial Impact Range
Revenue Costs
High >£10m >£1m
Medium >£5m >£500k
Low <£1m <£100k
Time Horizons
Time Period Years
Short 0 to 5 years Aligned to our viability period planning
Medium 5 to 15 years Medium-term transition risks are assumed to occur in this time scale
Long 15 to 30 years Longer-term physical risks are assumed to occur in this time scale
Non-financial statement
The information presented throughout this report provides the required content on key subjects covering environmental matters,
our people, community, and social matters, as well as setting out non-financial metrics. The report also explains compliance,
and, where relevant, non-compliance, with relevant Streamlined Energy and Carbon Reporting (‘SECR’) requirements and other
mandatory reporting regulations such as Task Force on Climate-related Financial Disclosures (‘TCFD’).
It is the ideas our people
are continually generating
which will act as the key
driver for change.
26
Risk Type Classification Time Horizon Description Financial Impact Potential Mitigations
Transition Policy & Legal Introduction of further plastic
taxes, especially in relation
to use of virgin plastics in
products.
Medium direct increase to
costs, which could lead to
an increase in prices, which
could in turn lead to lower
revenues.
Redesign of products to
use more sustainable and
environmentally friendly
materials.
It is assumed that some
costs could potentially be
passed on to our customers
and consumer to encourage
purchase of lower emissions
products.
Transition Policy & Legal
Banning on sales of products
which incorporate non-
sustainable materials (such
as non-recyclable plastics).
Medium Revenue loss/
opportunity. The Group has
the opportunity to be ahead
of the market in terms of
changing materials.
Redesign of products to
use more sustainable and
environmentally friendly
materials. We are working
with our suppliers to change
the materials we use over the
medium term.
Transition Market
Consumer behaviour
changes away from
products using plastics,
and non-essential products
to concentrate on only
essential and sustainable
products.
High revenue loss potential,
but an opportunity as we
change our product mix
overtime.
Over the long-term our
product mix will change;
currently we introduce 600
new products each year
out of the 3,000 we sell. As
consumer habits change, we
will change our product mix to
reflect their changed priorities.
Transition Reputation
A failure to fully commit to
moving to a low-carbon
business model leads to
reputational damage.
Consumers not using our
products (revenue loss)
employees not choosing to
work for us (increased costs),
and bank and investors not
choosing to fund us.
Ensuring that we continue to
commit to our ESG strategy,
and that we continue to work
with integrity in terms of our
carbon journey.
Physical Acute (2°C or
lower)
Increased likelihood of
flooding and drought or
other extreme weather
events leading to reduction
of production by supplying
factories.
Increased costs of goods,
and potential for low
revenue loss.
Working with our suppliers
to understand their risks, and
to create climate adaption
plans for them. Geographical
diversification of suppliers to
reduce risk from any given
extreme weather events.
Physical Chronic (2°C or
higher)
Increased competition for
basic resources due to
extreme weather events
leading to higher prices for
essential goods, leading
to lower demand for
discretionary items.
High revenue loss as
consumers move spending
from discretionary to
essential products.
Long-term diversification of
revenue base, expanding
worldwide to decrease
reliance on any single
geographical territory.
Concentration of product suite
on more essential sectors and
on sustainable products.
Short term Medium term Long term
27
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
TCFD and environmental reporting continued
Metrics and Targets
The greenhouse gas (‘GHG’) statement below provides a summary of Ultimate Products’ greenhouse gas (carbon) emissions each
year from 1 August 2021 to 31 July 2022. It gives a summary of emissions from fuel combustion and the operation of our facilities,
which includes our offices, Fleet & Grey Fleet (Scope 1) and our purchased electricity used during the year (Scope 2).
We have adopted the operational control approach, as defined in The Greenhouse Gas Protocol, a Corporate Accounting
and Reporting Standard (Revised Edition), 2004. As such, emissions associated with our rented sites are not included in this
statement, as they are considered to be outside of our operational control.
• Scope 1 covers activities owned or controlled by Ultimate Products that release emissions directly into the atmosphere,
i.e. gas boilers, vehicle operation, air conditioning etc.
• Scope 2 covers activities that are not owned or controlled by Ultimate Products but that create emissions as a result of our
activities, i.e. electricity consumption.
We intend to report in more detail across Scope 1, 2 and 3 once we have completed our carbon assessment towards the end of
2022 and have accurate data to report and assess.
Years
Baseline 2021 2022
tCO
2
e tCO
2
e/ FTEE tCO
2
e tCO
2
e/ FTEE tCO
2
e tCO
2
e/ FTEE
Scope 1
% UK
266.16
100%
288.28 0.97 279.73
100%
0.95 111.98
100%
0.31
Scope 2
% UK
303.55
75.5%
216.26 0.73 339.76
75.5%
1.15 225.56
75.5%
0.62
Statutory total (Scope 1 & 2) 505.54 1.69 619.49 2.09 337.54 0.92
Statutory total in KWh (Scope 1 & 2) 1,868,434 2,379,219 1,736,686
Full-time equivalent employee (‘FTEE’) 298 296 365
This year the Group has had a focus in switching the majority of its energy consumption from gas to electricity at its head office,
Manor Mill site in preparation for the switch to more greener solutions (i.e the solar panel project). In addition, there has been a
big focus on reducing unnecessary energy consumption across its two large UK sites by introducing more effective procedures
and systems around usage controls and equipment to prevent unnecessary heat loss including the installation of UPVC windows
at Manor Mill and more effective shutter solutions at Heron Mill. Each of these actions have had a positive material difference on
Scope 2 usage.
In addition, the lack of business related travel overseas due to the pandemic has seen a reduction in Scope 1 consumption across
the year. It is our aim to maintain this reduction through more effective use of business travel and virtual meetings going forward.
As a growing business, over the coming years, we shall also start to consider the use of Science based targets (SBTs) where
appropriate to the size and scope of our operation.
Assessment Parameters
Offices
Baseline year 2019
Consolidation approach Operational control
Boundary summary All facilities under operational control were included.
Consistency with the Financial Statements The use of the operational control approach causes a variation to our Financial Statements.
Third party locations utilised in our operations were not under our operational control and
are therefore not included in our emissions table. However, 1 fleet vehicle and 16 grey fleet
vehicles, which were under our operational control, appear in our emissions table but not in our
consolidated Financial Statements.
Emission factor data source DEFRA (October 2016).
Assessment methodology The Greenhouse Gas Protocol and ISO 14064-1 (2006).
Materiality threshold Materiality was set at Group level at 5%, with all facilities estimated to contribute >1% of total
emissions included.
Intensity ratio Emissions per FTEE.
28
UP Global Sourcing Holdings plc Annual Report 2022
TCFD Compliance Statement
This statement represents Ultimate Product’s first climate-related financial disclosures aligned with the TCFD recommendations
and recommended disclosures (as set out in Figure 4 of Section C of the report entitled ‘Recommendations of the Task Force
on Climate-related Financial Disclosures’ published in June 2017 by the TCFD). This statement covers the financial year 1 August
2021 to 31 July 2022. We have made progress on meeting all of the requirements, we are not yet fully compliant, and will look to
build on these disclosures in future years. The following table summarises what disclosures the Company has made within the
annual report, by reference to the 11 TCFD recommended disclosures.
Governance
a) Describe the board’s oversight of
climate-related risks and opportunities.
Our commitment to ESG starts at the highest levels of our Group with oversight from the Board
of Directors and Board-level Committees, in particular the ESG Committee. Full details of how the
ESG Committee operates and works within the overall governance framework can be found on
page 17, with further detail on page 26.
b) Describe management’s role in
assessing and managing climate-
related risks and opportunities.
The Group has both a Committee for TCFD led by our CFO, Chris Dent, and also an Environmental
Committee led by Katie Maxwell, Trading Director, and Tony Pole, Process Development Director.
Full details of the role this committee plays can be found on page 17.
Strategy
a) Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium, and
long term.
During the year our Committee for TCFD, with support from the Environment Committee
held a scenario planning day at which we reviewed a number of difference climate risks and
opportunities which could impact our business model and strategy. The risks and opportunities
identified are laid out on page 27.
b) Describe the impact of climate-
related risks and opportunities on the
organisation’s businesses, strategy,
and financial planning.
During the year our Committee for TCFD, with support from the Environment Committee
held a scenario planning day at which we reviewed a number of difference climate risks and
opportunities which could impact our business model and strategy. The impacts identified are
laid out on page 27.
c) Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario.
During the year our Committee for TCFD, with support from the Environment Committee held a
scenario planning day at which we reviewed a number of difference climate risks and opportunities
which could impact our business model and strategy. The resilience of the organisation are
described in the financial impact and potential mitigations sections as laid out on page 27.
Risk Management
a) Describe the organisation’s processes
for identifying and assessing climate-
related risks.
Our Committee for TCFD is specifically responsible for identifying climate-related risks and
opportunities and play an active part in the necessary scenario planning needed for the business
to mitigate these risks. Details of the role this Committee plays can be found on pages 17 and 26.
Result of the current year exercise can be found on page 27. During FY23 the ESG Committee will
further refine the risks (and opportunities) identification and assessment of physical, transitional,
liability and transboundary risks in relation to climate change.
b) Describe the organisation’s processes
for managing climate-related risks.
Our Committee for TCFD reports climate-related risks to both the ESG Committee and the Audit
& Risk Committee. The ESG Committee is responsible for the process of managing these risks by
developing strategies for mitigation.
c) Describe how processes for identifying,
assessing, and managing climate-
related risks are integrated into the
organisation’s overall risk management.
The Audit & Risk Committee has overall responsibility for identifying risk. Christine Adshead, NED,
is a member of both the Audit & Risk Committee and the ESG and Committee for TCFD. Chris
Dent, CFO, is Chair of the Committee for TCFD, a member of the ESG Committee and attends the
Audit & Risk Committee. They are responsible for reporting to the Audit & Risk Committee the
climate-related risks. Further details can be found on pages 17, 26, and 35.
Metrics & targets
a) Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with its
strategy and risk management process.
The metrics we use are described on pages 24, 27 and 28.
b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks.
Our current metrics are laid out on page 28, and the related risks to climate change are laid out
on page 27. As noted, we currently report Scope 1 and 2, but currently do not disclose Scope 3.
c) Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets.
The Group has both long-term and short-term targets. In the long-term we have made a
commitment to achieve net zero, as laid out on page 25. In addition, our strategy for managing
climate-change risks includes targets which are designed to mitigate transition risk, and are laid
out on page 24.
29
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Section 172 statement
Our Directors are bound by their duties under the Companies Act 2006 to promote
the success of the Company for the benefit of our shareholders as a whole, having regard
to our other key stakeholders.
We believe that in order to progress
our strategy and achieve long-term
sustainable success, the Board must
consider all stakeholders relevant to a
decision and satisfy themselves that any
decision upholds our culture of “doing
the right thing”. Our values, as set out on
page 5, are key to how we do business
and are closely aligned to the matters
the Directors must consider as part of
their Section 172 duties.
The Board recognises that stakeholder
engagement is essential to understand
what matters most to our stakeholders
and the likely impact of any key decisions.
Ultimate Products’ stakeholders are its
employees, customers, suppliers, and
shareholders & lenders and the Board
recognises the need to regularly review
and consider who its stakeholders are
as it makes decisions. We encourage the
development of long-term relationships
with our stakeholders in accordance with
our culture and values, with the ongoing
desire to be a trusted, best-in-class
partner to all of our stakeholders equally.
The Board is aware that in some
situations, stakeholders’ interests will
be conflicted and they may have to
prioritise interests. The Board, led by
the Chairman, ensures that as part
of its decision making process, the
Directors assess the impact of the
decision on our stakeholders and the
likely consequences of any decision in
the long term. Examples of some of the
principal decisions taken by the Board
during the year and an explanation of
which factors the Directors had regard to
when reaching such decisions, including
those set out in Section 172(1)(a) to (f) of
the Companies Act 2006, are set out on
the next page.
Stakeholders Importance to the Group How we engage Relevant Links
Employees
Our committed and dedicated
employees are our most important
resource. We aim to cultivate
and maintain a positive working
environment and provide learning
and development opportunities,
recognition and rewards.
• Employee Consultation Group.
• People engagement survey.
• SAYE and PSP schemes.
• Ask initiative.
ESG Report on
pages 16–29
Shareholders
& lenders
Our shareholders support the long-
term growth of the Group. We rely on
them to finance our development and
growth plans. Engaging with them
regularly to communicate progress,
understand their perspectives,
discuss long-term issues and ensure
feedback is taken into account is
critical to the long-term success of
the Group.
• Annual Report, Interim Report, trading
updates.
• Regular meetings with institutions and
analysts.
• For the current year end results we will
initialise utilisation of Investor Meets
Company.
Doing the right thing
is at our core
30
UP Global Sourcing Holdings plc Annual Report 2022
Stakeholders Importance to the Group How we engage Relevant Links
Customers
We are passionate about providing
the highest possible customer
service. Understanding the needs
of our customers, evaluating our
performance delivery against KPIs
and evaluating feedback helps us to
continually improve.
• Meeting at one of our showrooms in
Oldham, Cologne or Guangzhou where we
can showcase our wide range of products
and help them visualise how they may be
presented in store.
• We monitor product ratings and feedback
so that we can further improve products or,
for example, produce videos and “how to”
guides, helping consumers get the most out
of their purchases.
• We understand our customers’ needs,
markets and their customers, carrying out
in-depth research and conducting store visits
to support our understanding, so that we can
present the products that best exceed their
expectations.
see pages
08–09
Suppliers
Our suppliers provide us with the
highest possible quality of products
and services. This allows us to deliver
beautiful products to our consumers
and a first class service to our
customers.
• Our team of local sourcing, ethics and quality
colleagues in China has allowed regular
engagement with our suppliers.
• We have high expectations of our suppliers
but we recognise our responsibilities and
commit to prompt payment according to
agreed terms.
• Regular reviews take place to ensure a supply
chain free of slavery and human trafficking.
see pages
10–11
Board decision-making
Board Decision Directors’ consideration of factors in accordance with S.172(1)
Investment in our
Manor Mill head
office
During the year we completed our £2m investment in our Manor Mill head office, which includes a showroom, improved
state-of-the art office facilities, and the introduction of solar panels on the roof of the building. This was a significant
investment by the Group. However, we believe it will be beneficial for shareholders in the long run, as the showroom will
help to win and retain customers by offering them an opportunity to see our products in a store environment, the offices
will help us recruit and retain talented employees by giving them an enhanced working space. The solar panel project
will save the Group money in the medium term, especially in the light of increased electricity and heating costs, as well
as being good for the environment, and a step on our journey to net zero.
Long-term funding
of our EBT
During the year the Group saw the successful vesting of its first SAYE scheme, which began in 2019, and continued its
commitment to an ownership culture with staff by issuing new options under both SAYE and PSP schemes. As these
schemes are multi-year future schemes, the Board wished to ensure that the Group mitigated the dilutive impact of share
option awards and improved overall shareholder returns. Therefore the Board approved a framework to guide the long
term funding of our Employee Benefit Trust. As part of this framework the Group that, in its capacity as trustee of the
Ultimate Products Employee Benefit Trust, JTC Employer Solutions Trustee Limited would commence a programme to
buy ordinary shares of 0.25p each in the Company for the six-month period from 1 August 2022 to 1 January 2023, up to
an aggregate value of £325,000. The Board anticipates that the programme will continue in line with the framework to
balance the dilutive effect on shareholders with the desire to foster an ownership culture with our people that will drive
performance for both groups of stakeholders.
CFO succession The CFO is integral, with our CEO and MD, in delivering long-term value for all of our stakeholders. The Chairman and
MD, supported by the Nominations Committee, led the search for our new CFO, supported by a well-reputed executive
search firm in order to assess both internal and external candidates. The key selection criteria included in the candidate
profile required identification of an individual who aligned with the values of the Group, showed the capability and
capacity to drive change, and complemented the existing skills of the executive team. Following a thorough recruitment
and selection process that considered a long list of industry and non-industry candidates, along with extensive
psychometric and skills testing, the Board was delighted to announce the appointment of Chris Dent as CFO.
31
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Chief Financial Officer’s review
2022
£’000
2021
£’000
Change
£’000
Change
%
Revenue 154,191 136,367 17,824 13%
Cost of sales (115,837) (106,136) (9,701) 9%
Gross profit 38,354 30,231 8,123 27%
Other administrative expenses (19,604) (16,940) (2,664) 16%
Adjusted EBITDA* 18,750 13,291 5,459 41%
Depreciation & amortisation (2,066) (1,623) (443) 27%
Finance expense (842) (518) (323) 62%
Adjusted profit before tax* 15,842 11,150 4,693 42%
Tax expense (3,120) (2,423) (697) 29%
Adjusted profit after tax* 12,722 8,727 3,995 46%
Share-based payment expense (403) (228) (175) 77%
Non-recurring costs – (1,414) 1,414 -100%
Tax on adjusting items 51 228 (177) -78%
Statutory profit after tax 12,370 7,313 5,057 69%
Chris Dent
Chief Financial Officer
Revenue
Overall, Group revenue has increased by 13% to £154.2m in the period (2021: £136.4m). This has been driven by the inclusion
for the full year of the Salter scales business which was acquired during July 2021. In the full year the acquisition added £16.3m
(2021: £0.1m) of revenue to the Group, meaning that underlying revenue grew by 1% from £136.3m to £137.9m.
Acquisition
£’000
Core
£’000
2022
£’000
2021
£’000
Core change
%
Total change
%
Supermarkets 4,871 46,652 51,523 38,914 20% 32%
Discount retailers 715 47,411 48,126 51,526 -8% -7%
Online 5,004 20,317 25,321 20,590 -1% 23%
Other 5,757 23,463 29,221 25,336 -7% 15%
Total Revenue 16,348 137,843 154,191 136,367 1% 13%
Overall, the business has seen strong progress with supermarkets, which have now become our largest revenue channel with
sales of £51.5m, as we continue to diversify and extend our customer base, especially into European supermarkets. Discounters
are down slightly year-on-year, which is partially due to over-stocking by these retailers during FY21. Although overall online sales
grew by 23% to £25.3m, it was disappointing that organically online sales fell by 1%. This was as a direct result of the shipping
crisis which reached its peak during the summer of 2021. As producers were more difficult to secure, we prioritised our retail
customers, meaning the Group had a sub-optimal level of stock for servicing our online customers, which led to an H1 22 year-on-
year decline of 13%. When the supply chain issues eased and we were able to bring stock levels back to an optimal level, we saw
online sales grow 20% year-on-year in H2 22.
2022
£’000
2021
£’000
Change
£’000
Change
%
UK 101,050 92,915 8,134 9%
International 53,141 43,451 9,690 22%
Total Revenue 154,191 136,367 17,824 13%
In line with our international growth strategy, we have continued to see sales to international customers outpace the growth we
have seen domestically within the UK. Growth has been particularly strong in Germany, with sales reaching £19.2m (2021: £13.8m).
* Adjusted measures are before share-based payments and non-recurring items. The table above shows the reconciliation
between adjusted measures and statutory profit after tax. The statutory income statement can be found on page 82.
32
UP Global Sourcing Holdings plc Annual Report 2022
Gross Profit
Gross profit has increased by 27% to £38.4m (2021: £30.2m), reflecting an increase in gross margin from 22.2% to 24.9%. This
increase has been achieved despite a 2.2% headwind in freight costs, as new sales have come from higher margin channels.
Adjusted EBITDA
Gross profit increased 27%, whereas overheads only increased by 16% to £19.6m (FY21: £16.9m) resulting in a 41% increase in Group
EBITDA to a record £18.8m (FY21: £13.3m). The increase in overheads reflects our investment in building up our teams, with salary
costs increasing 9% to £14.6m (2021: £13.4m). In addition, we have seen costs coming back into the business which dropped
significantly in the previous years due to COVID restrictions, such as expenditure on travel and exhibitions.
Adjusted & statutory profit
2022
£’000
2021
£’000
Change
£’000
Change
%
Adjusted EBITDA 18,750 13,291 5,459 41%
Depreciation & amortisation (2,066) (1,623) (443) 27%
Finance expense (842) (518) (323) 62%
Adjusted profit before tax 15,843 11,150 4,693 42%
Tax expense (3,120) (2,423) (697) 29%
Adjusted profit after tax 12,722 8,727 3,995 46%
Share-based payment expense (403) (228) (175) 77%
Non-recurring costs – (1,414) 1,414 -100%
Tax on adjusting items 51 228 (177) -78%
Statutory profit after tax 12,370 7,313 5,057 69%
Depreciation and amortisation increased 27% to £2.1m (2021: £1.6m) as a result of the increase in the depreciation charge
following from our £2.0m investment in our head office, which significantly improved working conditions for our people, and
helped to ease the transition of our people back to the office post-COVID.
The finance charge has increased 62% to £0.8m (2021: £0.5m), due to the higher level of net bank debt due to the Salter
acquisition, which was financed through £16.7m of debt and £15m of new equity. The finance charge also includes interest on
capitalised leases as required by IFRS 16.
During 2021 the Group took non-recurring charges of £1.4m, being £0.9m of fees related to the acquisition of Salter, and
£0.5m being the repayment of the government’s Coronavirus Job Retention Scheme. There have been no non-recurring charges
in the current year.
The tax charge for the period at 21% (2021: 23%) was higher than the statutory rate of 19% due to the higher statutory rate
of tax paid on our European foreign branches in Germany and Poland.
As a result, the statutory profit after tax increased by 69% to £12.4m (2021: £7.3m).
Earnings per share
Although the Group has not issued any new shares within the year, in July 2021 the Group issued 7,142,857 shares at £2.10 to fund
the Salter acquisition, meaning that the weighted average number of shares increased from 78,465,192 to 86,353,827, resulting in
a 10% effective dilution in the current period.
2022
£’000
EPS
P
2021
£’000
EPS
P
Adjusted profit after tax/Adjusted EPS 12,722 14.73 8,727 11.12
Share-based payment expense (403) (0.47) (228) (0.29)
Non-recurring costs – – (1,414) (1.80)
Tax on adjusting items 51 0.06 228 0.29
Statutory profit after tax/Basic EPS 12,370 14.32 7,313 9.32
As a result, whilst adjusted profit after tax grew by 46% to £12.7m (2021: £8.7m), adjusted earnings per share increased by 32% to
14.73p (2021: 11.12p). Basic earnings per share increased by 53% to 14.22p (2021: 9.32p).
33
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Financing and cash flow
At the year end the Group had a net bank debt/adjusted EBITDA ratio of 1.3x (31 July 2021: 1.4x), which represents net bank debt
of £24.3m (2021: £18.8m). The Group maintains comfortable levels of headroom within its bank facilities, with headroom at 31 July
2022 of £17.8m (31 July 2021: £16.2m). The Group makes use of its term loan and revolving credit facility (‘RCF’) 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. At the year end the Group had £6.2m cash which for bank facilities
purposes nets against the £6.0m overdraft.
31 July 2022
£’000
31 July 2021
£’000
Change
£’000
Change
%
Cash 6,202 133 6,069 4563%
Overdraft (6,020) – (6,020) –
Term loan (8,000) (10,000) 2,000 -20%
RCF (2,217) (2,983) 766 -26%
Invoicing discounting (6,197) (3,290) (2,907) 88%
Import loans (8,179) (2,759) (5,420) 196%
Loan fee 155 234 (79) -34%
Net bank debt (24,256) (18,665) (5,591) 30%
The Group generated net cash from operations of £5.8m (2021: 11.7m), as cash has been used to fund an increase in our working
capital balances, especially our stock balances, which were at a sub-optimal level during the shipping crisis last year, and
consequently held back sales in the first quarter.
2022
£’000
2021
£’000
Change
£’000
2022
Working capital days
2021
Working capital days
Inventory 29,162 21,674 7,488 74 59
Debtors 32,194 26,544 5,650 60 57
Creditors (29,644) (29,451) (193) 65 70
Total working capital 31,712 18,767 12,945
Dividend
In line with our established dividend policy of distributing 50% of the Group’s adjusted profit after tax, the Board is pleased to
propose a final dividend of 4.82p per share (2021: 3.33p per share). This takes the total dividend for the year to 7.12p per share
(2021: 5.02p per share), an increase of 47%.
Subject to shareholder approval at the AGM on 16 December 2022, the final dividend will be paid on 27 January 2023 to
shareholders on the register at the close of business on 6 January 2023.
Strategic Report
The Strategic Report (which includes all of the content from pages 1 to 36) was approved by the Board on 2 November and was
signed on its behalf by:
Chris Dent
Chief Financial Officer
2 November 2022
Chief Financial Officer’s review continued
34
UP Global Sourcing Holdings plc Annual Report 2022
Principal risks and uncertainties
The Board is responsible for the Group’s risk management and internal control systems and for reviewing their effectiveness,
supported by the Audit and Risk Committee. We review our business regularly to identify and document key business risks. Once
identified, risks are assessed according to the likelihood and impact of the risk occurring and an appropriate mitigating response
is determined. This risk mitigation plan is then regularly monitored by the Audit and Risk Committee with periodic review and
discussion by the Board as a whole.
The table below sets out the Group’s principal risks as determined by the Board, the gross risk movement from the prior year and
the corresponding mitigating actions. This represents the Group’s current risk profile and is not intended to be an exhaustive list
of all risks and uncertainties that may arise.
Area Risk Mitigation Movement
Macro-
economic
factors
Macroeconomic trends affecting consumer
confidence and reducing non-food spending
such as inflationary pressures, higher
taxation, and higher interest rates, could
affect retail demand.
The Group’s international business provides
economic diversity and some protection against
a downturn in the UK economy. Despite the
challenging market conditions, the Group sees
the opportunity to increase its market share by
developing new customer relationships, particularly
internationally and through online channels.
The Group’s products, being mass-market and
value-led, are well placed in the event of an
economicdownturn.
Sourcing
A major loss of continuity in the supply of
goods for resale could adversely affect the
Group’s revenues. Heavy reliance on China
as a source of products. Any deterioration in,
or changes to political, economic or social
conditions in China could disrupt the supply of
goods or result in higher product cost prices.
The Group maintains close relationships with
its suppliers through regular factory visits and
interaction with its local teams. Wherever possible,
multiple sources of supply are sourced for major
products. The Group closely monitors developments
in China and continues to consider and use
alternative sources when practicable and viable.
Supply chain
management
Inefficient stock management could result
in overstocking, which may adversely affect
working capital. Conversely, understocking,
could limit the Group’s ability to maximise
revenue opportunities. Although there has
been an abatement in the recent shipping
and haulage capacity issues, any return in
these issues could affect the availability and
the costs of shipping.
Stock levels and purchasing are closely managed,
with all purchase orders being reviewed before
being placed. The Group’s systems facilitate
close management of the completion and timing
of purchase orders placed. Stock is categorised
between ‘free’ and (pre) ‘sold’ to ensure that
management focus on higher risk items. ‘Free’ stock
is reviewed and prompt actions are taken where
necessary. The Group has taken various steps to
mitigate the impact of increased shipping costs
and the reduction in shipping capacity, including
prioritising, rationalising and dynamically managing
the volume of imported product.
Margin
pressure
A tough retail environment, increased
shipping and road haulage costs and the
impact of weakened Sterling could put
pressure on gross margin.
The Group’s strategy of international growth,
expansion of online channels and increased
penetration of supermarkets continues to provide
greater diversity and a balanced-margin portfolio.
The Group also employs a combination of
margin-enhancing initiatives including monitoring
profitability of individual product lines, continued
product innovation and refreshing product ranges,
balanced against the need to ensure that our
products remain competitive. Furthermore, the
Group seeks to constantly develop and implement
productivity improvements. The Group actively
manages foreign exchange risk through use of
forward contracts.
35
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Area Risk Mitigation Movement
Protection
of brands
Failure to develop and enhance the product
range of our brands could result in loss of our
competitive advantage, which could impact
on the Group’s turnover. Failure to develop
or acquire new brands could restrict growth,
given the Group’s brand-led strategy. Failure
to renew or delays in renewing licences for
key brands could impact turnover.
A high level of new product development focus is
maintained and monitored by the Board. Buying
teams attend trade shows and carry out store and
factory visits to ensure that they are in touch with the
latest consumer demands and trends. The Group
continues to develop a “second tier” of brands
and monitors opportunities to acquire new brands.
The risk arising from the non-renewal of licences
has reduced significantly as a result of the Group’s
acquisition of the Salter brand. FY22 sales under
other licences amounted to 13.1%. The risk in relation
to these other licences is mitigated by maintaining
strong revenues to and good working relationships
with licensors. Post year end the Group renewed its
trademark licence agreement with Spectrum Brands,
which grants the Group an exclusive licence to use
the “Russell Hobbs” trademark for non-electrical
kitchen and laundry products.
Climate
Change &
Environmental
Climate change is a widely acknowledged
global emergency, with the need to act
faster becoming evident. Managing the
greenhouse gas emissions associated with
our supply chain is critical to reducing our
impact on climate change. The physical
and financial impacts of climate change are
already being felt and are set to intensify.
We have established a Group-wide ESG Committee
to extend oversight and governance for monitoring
the delivery of the Group’s climate commitments.
We have stated a strong commitment to be net
zero by 2050. This pledge is in the process of
being supported by road maps and targeted
decarbonisation plans. We are working internally
and with third-party organisations to developing this
suite of metrics to enable us to monitor progress. We
also continue to report our climate-related financial
disclosures (see TCFD section on pages 26 to 28).
Legal and
regulatory
Failure to comply with legal and regulatory
requirements, including environmental and
climate change developments, both in the
UK and in other countries in which the Group
operates, could result in fines or adverse
impact on the Group’s reputation.
The Board monitors the changing landscape of
laws and regulations. New legal and regulatory
requirements are discussed by the Audit and Risk
Committee whose members contribute insight
and experience of such matters. External technical
and consulting expertise is sought when required.
The Group has procedures for ensuring ongoing
compliance with legal obligations, including external
annual audits, and runs a programme of new-starter/
refresher annual training.
Human
resources
Failure to attract and retain high-
quality individuals, both in the UK and
internationally, could impact on the
delivery of the Group’s strategy.
The Group’s Graduate Development Scheme,
along with links to local universities, provides a
steady inflow of high-quality staff to support the
future growth of the Group, whilst the Group’s
Senior Management Development Programme
and its Introduction to Leadership courses aim to
create a succession of employees into senior roles.
A number of steps are taken to encourage the
retention of the employees, including the SAYE and
PSP share ownership schemes to incentivise its
workforce and to further improve retention.
Cyber security
Risk of cyber crime with the potential to
cause operational disruption, loss or theft of
information, inability to operate effectively,
loss of online sales or reputational damage.
The Group continues to review and invest, where
appropriate, in the development and maintenance
of its IT infrastructure, systems and security. An
external IT security audit is carried out on an annual
basis to ensure that any weaknesses in our systems
are identified and can be rectified. New employees
receive IT training to increase awareness of cyber
risk. Disaster recovery, business continuity and crisis
communication plans are maintained.
Principal risks and uncertainties continued
36
UP Global Sourcing Holdings plc Annual Report 2022
In accordance with provision 31 of
the UK Corporate Governance Code
2018, the Directors have assessed the
viability of the Group over a five-year
period to July 2027, taking account of
the Group’s current position and the
Group’s principal risks, as detailed in
the Strategic Report. Based upon this
assessment, and the assumption of
the banking facilities continuing as
referred to below, the Directors have a
reasonable expectation that the Group
will be able to continue in operation and
meet its liabilities as they fall due over
the five-year period to July 2027.
In making this statement, the Directors
have considered the resilience of the
Group in severe but plausible scenarios,
taking account of its current position and
prospects, the principal risks facing the
business, how these are managed and
the impact that they would have on the
forecast financial position. In assessing
whether the Group could withstand
such negative impacts, the Board has
considered cash flow, impact on debt
covenants and headroom against its
current borrowing facilities over the
three-year period. In such a scenario, any
return to shareholders would be reduced.
The Group currently has a £10m
amortising loan used for the acquisition
of Salter Brand Limited, which stood at
£8m at the year end and runs to October
2024. In addition, the Group has a suite
of working capital facilities with HSBC
including a £8.2m revolving credit
facility, a £23.5m invoice discounting
facility (both of which run until 2024)
and a £9.0m import loan facility, which
is repayable on demand and subject to
annual renewal. The Directors believe
that, in the ordinary course of business,
these facilities will continue throughout
the period to 31 July 2027 and this has
been assumed in making the statement.
The following three principal risks were
selected for enhanced stress testing:
• macroeconomic factors: the impact
of a significant economic downturn
and reduced consumer spending
arising out of matters including, but
not limited to, inflationary pressures,
higher taxation, rising energy
prices, the impact from recession or
reduced consumer spending, and
a further extensive and prolonged
lockdown due to COVID-19 in China;
• China sourcing: in particular a severe
restriction in product supply levels
due to potential power outages
and significantly reduced shipping
capacity; and
• margin dilution: including an even
greater increase in shipping and
road haulage costs as a result of
reduced capacity, and also the
effects of changes in exchange rates.
The adverse impacts of the stress
testing were reflected as reductions
in revenue and gross margin. In the
situations reviewed, the business
remained robust, with sufficient funding
and headroom and compliance with
key covenants, and able to remain in
operation over the period reviewed.
The stress tested also included
layering of risks, whereby multiple
risks occurred simultaneously. These
scenarios showed the limits of the
Group’s resilience. In each test a
number of mitigating operational and
financial actions were taken including
the suspension of the divided, lowering
of capital expenditure, the reduction
in discretionary operating spending,
and, in the case of a severe downturn
from reducing headcount. With these
mitigating actions, it was shown that
the Group would be able to remain
inoperations.
In addition to the enhanced stress
testing the Group has also considered
climate change as a key long-term
risk to our business model. This fuller
assessment of the climate-related risks
the Group faces, and our actions to
mitigate these risks is provided in the
TCFD-related disclosures on pages
26to28.
The Board considers that the Group’s
long-term relationships with many of its
customers and suppliers, its increased
diversification through new customer
relationships and international focus,
and its mass-market branded consumer
goods strategy offer the Group
protection from and the necessary
resilience to withstand such severe
scenarios materialising.
The Board selected the period of five
years to 31 July 2027 as an appropriate
period for the Group’s Viability
Statement, as management currently
use five-year forecasts as part of the
business planning process.
Viability statement
At the year end the
Group had a net bank
debt /adjusted EBITDA
ratio of 1.3x (FY21: 1.4x).
The Group maintains
comfortable levels of
headroom within its bank
facilities, with headroom
of £17.8m (FY21: £16.2m).
37
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Board of Directors
James has over 40 years’
experience in the fast-moving
retail industry, having previously
held the position of Chief
Executive Officer of Poundland
Group plc (‘Poundland’), a
single price retailer. He retired
in September 2016, after ten
years’ service having joined in
August 2006. During his tenure,
Poundland’s sales grew from
£300m to £1.3bn per annum.
The business was floated on
the London Stock Exchange in
March 2014 and was acquired
by Steinhoff International in
September 2016.
Prior to joining Poundland,
James was Managing Director
of Convenience at J Sainsbury
plc and was a member of the
operating, retail and investment
boards. His experience includes
10 years as Chief Executive
Officer of T&S Stores plc,
operating over 1,200 stores
and sold to Tesco plc in
2003, as well as holding the
positions of Managing Director
of Neighbourhood Retailing
(part of Next plc) and Managing
Director of Birmingham Post &
Mail Limited’s retail estate. Joined
the Company on 1 March 2017
when he was appointed Non-
executiveChairman.
Simon began his career working
for an auctioneer before founding
Ultimate Products in 1997. Initially
a clearance business buying
discontinued and excess stock,
with investment from Barry
Franks who became the majority
shareholder, Simon was able to
grow the business into the full-
service sourcing and importing
operation we see today. During
the early 2000s, Simon began
to source regular products from
countries around the globe such
as Portugal, Vietnam and, in time,
from China. This led to investment
by Lloyds Development Capital
(‘LDC’), enabling Simon to
become the Chief Executive
Officer and largest management
shareholder in 2005. As the
Company grew, Simon was able
to use his increasing knowledge
to change the focus of the
business in 2014, moving away
from own-label and unbranded
products to fine-tuning key
brands. This led to the buyout
of LDC’s shareholding using
personal money and support from
HSBC. Simon leads the Group’s
international expansion strategy
and is directly responsible for
the key trading functions of sales
and buying, continuing to be the
driving force behind the ongoing
development of the Group,
always striving for progression
and innovation. Appointed
as Chief Executive Officer in
2005, having been a Director of
Ultimate Products since 1997.
James McCarthy
Non-executive Chairman
Andrew Gossage
Managing Director
Simon Showman
Chief Executive Officer
Chris Dent
Chief Financial Officer
The Board of Directors has overall responsibility for the Group. Its aim is to
represent all stakeholders and to provide leadership and control in order to
promote the successful growth and development of the business.
Committee Membership Committee Membership Committee Membership Committee Membership
Andrew is a chartered accountant
and started his career with
Arthur Andersen where he held
positions in audit and transaction
support. In 1998, he transferred
into industry, taking on the role
of Finance Director & General
Manager of Mersey Television, an
independent television producer
of continuing drama including
Hollyoaks, Brookside and Grange
Hill. He was a key member of
their management team, which
was backed by private equity
investment from LDC in 2002,
leading the sale of the business
to All3Media in 2005. Andrew
joined Ultimate Products in 2005,
initially as Finance Director,
and was an integral part of the
management buyout team that
year. In 2014, together with Simon
Showman, he led the buyout
of LDC using personal money
and support from HSBC. At this
point, Andrew was promoted
to Managing Director. Andrew
is currently responsible for
online and non-trading functions
including process development,
supply chain, human resources,
IT and legal. Joined the Company
initially as Finance Director in
2005 before being promoted to
Chief Operating Officer in 2007
and Managing Director in 2014.
Chris has substantial accounting
and financial experience from his
time in the profession and as CFO
of publicly listed companies. Chris
began his career at Deloitte LLP
where he spent ten years within
audit, corporate finance and
transactional accounting services.
He subsequently spent four years
as CFO of AIM-listed 7digital
Group plc, and then five years
as CFO of AIM-listed Franchise
Brands plc. Chris is a Fellow
of the Institute of Chartered
Accountants of England and
Wales. He was appointed as Chief
Financial Officer of the Company
on 4 April 2022.
38
UP Global Sourcing Holdings plc Annual Report 2022
Corporate Governancev
Alan spent the majority of his
working career at HSBC plc,
joining in 1975 and gaining
broad experience through a
range of management positions
including credit and risk, retail,
commercial, large corporate and
global banking markets. Prior
to his retirement from HSBC, he
was Head of Corporate Banking
in Manchester between 2004
and 2014. In the three years to
December 2016, Alan provided
independent consultancy
services to private companies on
strategy, corporate transactions
and refinancing. Joined the
Company on 1 March 2017 when
he was appointed Senior Non-
executiveDirector.
Robbie is Chief Financial Officer
of Holland & Barrett, Europe’s
largest health and wellness
retailer. He was formerly CFO of
convenience retailer McColl’s
Retail Group, prior to which he
was Chief Executive Officer of
motorway services operator
Welcome Break Group, where
he oversaw its takeover by
Applegreen in 2018. From 2009
to 2017 he was CFO of building
materials retailer Screwfix Direct
Limited. Joined the Company
on 1 March 2017 when he was
appointed Non-executiveDirector.
Alan Rigby
Senior Independent
Non-executive Director
Jill Easterbrook
Independent
Non-executive Director
Robbie Bell
Independent
Non-executive Director
Christine Adshead
Independent
Non-executive Director
Audit and Risk Committee
Chair of Committee
Remuneration CommitteeNomination Committee ESG Committee
Committee Membership
Committee Membership
Committee Membership Committee Membership Committee Membership
Jill Easterbrook was previously
the CEO of Boden, the fashion
retailer, having formerly worked
at Tesco plc for 15 years in a
variety of senior roles including
Group Business Transformation
Director, Chief Customer Officer,
Managing Director of UK
and ROI Clothing, and Group
Strategy Director. Jill started
her career in merchandising
for Marks & Spencer Group plc,
and also worked for four years
as a Management Consultant
for Cap Gemini Ernst & Young.
Jill is a Non-Executive Director
of two FTSE 100 companies –
Auto Trader Group plc, the UK’s
largest automotive marketplace,
and Ashtead Group plc, the
international equipment rental
company. Jill is also non-
executive Chair of Headland
Consultancy Limited, and on 5
September 2022 was appointed
as a Non-executive director of
Tracsis plc. Joined the Company
on 21 September 2020 when
she was appointed Non-
executiveDirector.
Christine Adshead is a former
Partner at PwC, where she
spent nearly 20 years providing
transaction advisory services
across a range of corporate
activities and a variety of sectors,
including retail and consumer
goods. She was PwC’s London
region private equity leader, as
well as being a national leader for
mid-tier private equity. Christine
was also an elected member
of the PwC Supervisory Board,
the governance body for PwC
in the UK which represents the
interests of over 900 partners
and is responsible for providing
constructive challenge to PwC’s
UK Executive Board. Christine
is a Non-executive Board
Member of Hill Dickinson LLP,
an international commercial law
firm headquartered in Liverpool.
Joined the Company on 21
September 2020 when she was
appointed Non-executiveDirector.
39
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Chairman’s introduction
Information about the operation of
the Board and its Committees, and an
overview of the Company’s system of
internal controls are also included.
Corporate governance plays a crucial
role in helping to preserve value for
shareholders by providing a process for
decision-making which should ensure
that all major decisions are considered
in good time, that the Board is provided
with good-quality briefing materials which
cover all relevant factors and that our
deliberations consider the risks, as well
as the opportunities, in the issues before
us. It is for these reasons that the Board is
committed to achieving high standards of
corporate governance.
It has been a pleasure to be able to
resume holding meetings in person in
the current year. However, the Board
has continued to hold mid-month virtual
meetings to allow the whole Board to
remain well informed of the progress
of the business.
As a Company listed on the main market
of the London Stock Exchange, the
Company is required to comply with
the Code, Listing Rules, Disclosure
Guidance and Transparency Rules
and the Companies Act 2006. As
the Company is below the FTSE 350,
some provisions of the Code do not
apply. However, the Company intends,
wherever possible, to apply best
practice to maintain strong governance.
James McCarthy
Chairman
2 November 2022
I am pleased to present this year’s Corporate
Governance Report which describes our approach
to governance and sets out how the principles of the
2018 UK Corporate Governance Code (the ‘Code’)
have been applied during the year.
Compliance with the code
The Board is committed to maintaining
an embedded culture of good and
effective governance, to support the
sustainable success of the business for
the benefit of its members as a whole.
The Company is committed to applying
the principles of corporate governance
contained in the Code and to comply
with the provisions therein. Each of
the provisions of the Code has been
reviewed and the Directors consider that
the Company has complied throughout
the year ended 31 July 2022 with the
provisions of the Code.
The Board
On an on-going basis the Board has
eight members, comprising of three
Executive Directors, a Non-executive
Chairman and four Independent Non-
executive Directors. During the transition
period of our new CFO, Chris Dent,
coming into the business, the Board
had nine members, with our outgoing
CFO, Graham Screawn, remaining
on the Board to ensure a smooth
handoverprocess.
The Board reflects a good balance of
skills and a diversity of expertise from
operational, financial, sector-specific
and general business background. The
Board is committed to ensuring that
it continues to have an appropriate
balance of skills, experience and
knowledge of the Group and its sector
to enable it to discharge its duties and
responsibilities effectively.
The Executive Directors work solely for
the Company and the Board considers
that any other directorships held do not
interfere with their responsibilities to
the Company. The Board are satisfied
that other commitments of the Chairman
and of the Non-executive Directors
do not prevent them from devoting
sufficient time to the Company. The
Board considers each of the non-
executive Directors to be independent
for the purposes of the Code and free
toexercise independent judgement.
TheBoard considers that, at the time
ofhis appointment, the Chairman
was independent for the purposes
of theCode.
UP Global Sourcing Holdings plc Annual Report 2022
40
The roles of Chairman and Chief
Executive Officer are separate
and there is a clear division of
responsibilities between those roles.
The Chairman is responsible for the
leadership and governance of the
Board and ensures the effective
engagement and contribution of all
Non-executive and Executive Directors.
The Chairman also ensures that Board
meetings are conducted with openness
and challenge. The Chief Executive
Officer has responsibility for all
commercial activities of the Company
including product development,
sourcing and customer relationships,
whilst the Managing Director has
responsibility for the operational
elements including supply chain,
quality assurance, ethical and social
compliance, human resources and IT.
The Chairman maintains regular contact
with the Independent Non-executive
Directors to discuss and address any
issues or concerns outside of formal
Board meetings. The Chairman also
provides support to the Executive
Directors, where required.
The Senior Independent Non-executive
Director, Alan Rigby, provides a
sounding board for the Chairman and
is available to shareholders if they
have concerns that have not been
resolved via the normal channels of
Chairman, Chief Executive Officer or
the other Executive Directors, or where
communication through such channels
would be inappropriate.
Role of the Board
The Board is collectively responsible to
the Group’s shareholders for the long-
term success of the Group, determines
the strategic direction of the Group and
reviews operating, financial and risk
performance. The Board is required to
maintain strong governance processes
and oversight to help drive the culture of
the business so that it can deliver on its
responsibility to its wider stakeholders.
There is a formal schedule of matters
reserved for the Board which have been
reviewed, considered and updated
during the year, and such matters
include:
• the approval of the Group’s annual
business plan;
• the Group’s strategy;
• acquisitions;
• capital expenditure projects
above certain thresholds;
• Financial Statements;
• the Company’s dividend policy;
• changes to the capital and structure;
• borrowing powers;
• appointments to the Board;
• legal actions brought by or against
the Group above certain thresholds;
and
• the scope of delegations to Board
committees, subsidiary boards and
the management committee.
The Board is supported by a dedicated
and experienced Operating Board
in the delivery and execution of their
objectives. Responsibility for the
development of strategy and operational
management is delegated to the
Executive Directors with the support of
the Group’s Operating Board, which as
at the date of this report includes the
Executive Directors and seven senior
managers. The Board aims to meet with
the Operating Board once each year to
formally consider the strategic direction
of the Group. The latest strategy day
occurred in April 2022.
Evaluation of Board
performance
In line with the Code, a formal and
rigorous performance appraisal of the
Board, its Committees, the Directors and
the Chairman is conducted annually,
as we recognise that our effectiveness
is critical to the Group’s continued
long-term success. The Company’s
Articles require that every three years
the Board’s performance is externally
facilitated, with 2020 being the first
requirement for an external review.
Whilst the review found that the Board
and its Committees were functioning
well and are cohesive in their desire
for continuous improvement, the Board
agreed on a set of actions in order to
further improve its performance and
effectiveness. This year the evaluation
was carried out internally, led by the
Chairman, who conducted a detailed
and comprehensive evaluation process
using individual interviews and written
questionnaires. The results of the
evaluation were shared with all members
of the Board. Overall, the review found
that the Board and its Committees were
functioning in an effective manner and
performing satisfactorily, with no major
issues identified.
Training and development
There was one appointment to the
Board in April 2022. On appointment
to the Board, the new Chief Financial
Officer commenced a tailored induction
to introduce him to the Company’s
business, operations and governance
arrangements. This included corporate
governance training, provision of
strategic, financial, product and market
information and meetings with members
of the Senior Management Team.
To ensure a smooth handover, the
former CFO stayed with the business
for a period of four months whilst the
new CFO completed his induction
period. The Company will provide any
further training deemed necessary at
the direction of the Board member,
along with participation in strategic
and other reviews to ensure that the
Directors continually update their skills,
knowledge and familiarity with the
Group’s business.
The Directors are also able to take
independent professional advice, as
deemed necessary, to discharge their
responsibilities effectively. All Directors
have access to the advice and services
of the Company Secretary. The Non-
executive Directors have access to
senior management of the business.
Conflicts of interest
The Articles allow the Board to authorise
potential conflicts of interest that
may arise from time to time, subject
to certain conditions. The Company
has appropriate conflict authorisation
procedures, whereby actual or
potential conflicts are considered and
authorisations sought as appropriate.
Each Board meeting and Committee
meeting agenda includes conflicts of
interest to ensure that any potential
conflicts are identified and handled
accordingly, in advance of any
discussion on the identified matter.
41
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Committees of the Board
The Board has formally delegated
specific responsibilities for audit, risk
management and financial control,
Board composition and remuneration
to various committees, namely the
Audit and Risk Committee, Nomination
Committee, Remuneration Committee
and the ESG Committee. These
committees are all chaired by an
Independent Non-executive Director or
the Chairman, enabling them to take an
active role in influencing and challenging
the work of the Executive Directors and
Senior Management Team. Details of
the composition, responsibilities and
activities of these Committees are set
out below. The Terms of Reference of
each Committee are reviewed annually
and are available on the Company’s
website, www.upgs.com.
Audit and Risk Committee
The Audit and Risk Committee
assists the Board in discharging
its responsibilities with regard to
reviewing and monitoring the integrity
of the financial information provided
to shareholders, the Group’s system of
internal controls and risk management
(including climate-change related risks),
the internal and external audit process
and auditors, presenting a fair, balanced
and understandable assessment of
the Group’s position and prospects,
and the processes for compliance with
laws, regulations and ethical codes of
practice. The Audit and Risk Committee
is chaired by Robbie Bell with other
members being Alan Rigby and Christine
Adshead. The report of the Audit and
Risk Committee is included on pages
44to 46.
Nomination Committee
The Nomination Committee leads the
process for making appointments to
the Board and ensures that there is
a formal, rigorous and transparent
procedure for the appointment of new
Directors to the Board. The remit of the
Nomination Committee also includes
reviewing the composition of the Board
through a full evaluation of the skills,
knowledge and experience of Directors
and ensuring an effective succession
plan is maintained for appointments
to the Board and senior management
positions. The Nomination Committee
makes recommendations to the Board
on its own membership and that of its
other committees.
The Nomination Committee believes
and applies the concept that building a
diverse and inclusive culture is integral
to the success of the Group. Diversity
includes aspects such as diversity of
skills, perspectives, industry experience,
educational and professional
background, gender, ethnicity and
age. It is the Group’s aim to have the
appropriate level of diversity on the
Board to reflect the diverse nature of
the Group’s operations and provide a
wider perspective to decision making.
We remain committed to ensuring that
recruitment and promotion of individuals
throughout the Group, including those
at Board and senior management level,
is based on merit and objective criteria,
always considering relevant skills,
experience, knowledge, ability and with
due regard for the benefits of diversity
and inclusion. At the date of this report,
female representation on the Board
was 25% and on the Group’s Operating
Board 30%, in line with the Board’s initial
target for gender diversity.
During the year the Nomination
Committee led the process of the
appointment of our new Chief
Financial Officer, Chris Dent. The initial
recruitment process was led using
an external agency providing a long
list of suitable candidates who were
assessed based on merit and objective
criteria, taking into account the skills,
experience, personal strengths,
knowledge and capacity of the
candidates with regard also to the wider
benefits of diversity. Following meetings
between the leading candidates and the
Executive Directors, further meetings
were arranged with the Chairman
and the Nomination Committee. The
candidates were psychometrically tested
using an external consultant. On the
basis of feedback from the meetings
and tests, the Nomination Committee
recommended to the Board Chris Dent
be appointed to the Board.
Succession planning is a key
responsibility of the Nomination
Committee, who continue to review
and provide feedback on the corporate
succession plan prepared for the
Board, senior management and other
key positions, along with consideration
of alternative leadership structures.
The plan addresses both emergency
cover and long-term succession. The
Committee believes that maintaining
an open dialogue with the Executive
Directors is crucial to support effective
succession planning and, to this end,
the Chairman held meetings with the
Executives to discuss and understand
their current thoughts for the future.
Under the guidance of the Nomination
Committee, the Group has continued
to support the Senior Management
Development Programme (the
‘Programme’), which aims to promote
the development of talent from within,
along with supporting the succession
planning and diversity objectives of the
Board. Colleagues on the Programme
periodically update and reassess their
personal skills matrix, their development
areas and training needs to allow them
to enrich their skills, experience and
development. Following the useful
feedback provided by the psychometrics
tests used in the CFO hiring process, the
Nomination Committee has commenced
a process by which all of the Operating
Board and Senior Management team
will undergo similar tests. In addition, the
Nomination Committee has put forward
two members of the Operating Board
to attend a two week external intensive
coaching and development course.
Remuneration Committee
The Remuneration Committee assists
the Board in fulfilling its responsibility
to ensure that the Remuneration Policy
and practices of the Company are fair,
responsible, linked to performance and
have regard to statutory and regulatory
requirements. The Remuneration
Committee is chaired by Alan Rigby and
its other members are James McCarthy,
Robbie Bell and Jill Easterbrook, with
an additional independent Director,
Christine Adshead, expected to join
in the near future. The Remuneration
Committee Report is included on pages
47 to 70.
Chairman’s introduction continued
42
UP Global Sourcing Holdings plc Annual Report 2022
ESG Committee
The ESG Committee assists the Board
in defining the Company’s strategy
relating to ESG matters and reviewing
the practices and initiatives of the
Company relating to ESG matters
ensuring they remain effective, up to
date and aligned to the overall business
strategy. This includes: the Group’s
impact on the natural environment
and its response to climate change,
including greenhouse gas emissions,
energy consumption, generation and
use of renewable energy, pollution,
efficient use of resources, the reduction
and management of waste, and the
environmental impact of the Group’s
supply chain; the Group’s interactions
with employees, customers, suppliers,
other stakeholders and the communities
in which it operates and the role of the
Group in society, including workplace
policies, working conditions and
employee opportunities, equality,
gender and diversity policies, ethical/
responsible sourcing, social aspects
of the supply chain (including modern
slavery), and engagement with and
contribution to the broader community
through social projects and charitable
donations, and the ethical conduct of the
Group’s business, including its corporate
governance framework, business ethics,
policies and codes of conduct, the
management of bribery and corruption,
and the transparency of non-financial
reporting. The ESG Committee Report is
included on pages 16 to 29.
Meetings and attendance
Board meetings are scheduled to be
held monthly. As required, additional
Board meetings (and/or Board
committee meetings) may be held to
progress the Company’s business. In the
year ended 31 July 2022, the number of
scheduled meetings of the Board and of
the Committees of the Board, along with
the attendance of individual Directors,
are set out in the table opposite:
Board
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
ESG
Committee
Number of meetings 12 7 4 3 4
James McCarthy 12 – 4 3 –
Simon Showman 12 – – 1* 4
Andrew Gossage 12 – 1* 1* 4
Graham Screawn 11 6* 3* 2* –
Chris Dent** 4 3* 1* – 4
Alan Rigby 12 7 4 3 –
Robbie Bell 12 7 4 3 –
Christine Adshead 12 7 2* 3 4
Jill Easterbrook 12 1* 4 3 4
* Denotes Directors who attended Board Committee meetings during the year by invitation.
** Appointed 4 April 2022.
In advance of their meetings, the Board
is provided with an agenda and all
relevant documentation, reports and
financial information in a timely manner
to assist them in the discharge of their
duties and to ensure that decisions
are well informed and made in the
best interests of the Group. No one
Board member has the power to make
a decision without the sanction of the
other members. If any member is unable
to attend a Board meeting, they have the
opportunity to discuss any agenda items
with the Chairman before themeeting.
Shareholder engagement
The Board is fully committed to open
and constructive engagement with
shareholders and, during the year, the
Executive Directors carried out two
investor roadshows to present to major
existing and potential shareholders and
to gain an understanding of their views.
Furthermore, the Board fully appreciates
the importance of private shareholders
and their need for reasonable
information and engagement. Therefore,
the Board continues to engage Equity
Development Limited to provide regular,
publicly available research notes on
the Group (also posted to the Group’s
website) along with video interviews and
hosting webinars to present results and
trading statements.
The Company is considerate of the
views of its major shareholders and
commits to providing an accessible,
professional approach and provision
of timely and accurate data in its
interactions with its shareholders. To
ensure that the whole Board develop
an understanding of the views of major
shareholders about the Company,
feedback is provided to the Board
following shareholder contact and
this understanding will continue to be
developed going forward.
All shareholders are entitled to attend
the AGM and can lodge their votes
by way of proxy and/or to attend such
meetings in person. They also have
the opportunity to ask questions of the
Board, including the Chairs of the Board
Committees and to meet informally with
the Directors to discuss any issues they
may wish to raise.
James McCarthy
Chairman
2 November 2022
43
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Audit and Risk Committee Report
Introduction
The Audit and Risk Committee
assists the Board in discharging its
responsibilities with regard to financial
reporting, internal controls and risk
management, the internal and external
audit process and auditors, including
reviewing and monitoring the integrity
of the Group’s annual and half-yearly
Financial Statements.
Governance
The Committee’s Terms of Reference
are published on the Group’s website
and were reviewed during the year. The
Board is satisfied that Robbie Bell has
recent and relevant financial experience,
as required by provision 24 of the Code
and has determined that the current
composition of the Committee as a
whole has competence relevant to the
sector in which the Company operates.
The meetings are attended by all of the
Committee members and, by invitation,
the Chief Financial Officer and other
senior employees of the Group, along
with representatives from the external
auditors. In addition, the Committee
has also met with the external auditor
without the Executive Directors present.
Role and responsibilities
The primary role of the Committee is to
assist the Board in fulfilling its oversight
responsibilities. This includes:
• monitoring the integrity of the annual
and interim Financial Statements and
formal announcements relating to
the Group’s financial performance,
and reviewing any significant
financial reporting estimates,
judgements and disclosures that
they contain;
• if requested by the Board, providing
advice on whether the Annual Report
and Accounts are fair, balanced and
understandable;
• reporting to the Board on the
appropriateness of the Group’s
accounting policies and practices;
• if requested by the Board, ensuring
that a robust assessment of the
principal risks facing the Company is
undertaken and providing advice on
the management and mitigation of
those risks;
• reviewing and monitoring the
effectiveness of the Group’s internal
control and risk management systems;
• whilst the Group has no internal
audit function, considering at
least annually the need for an
internal audit function, reporting
its recommendation and reasons
thereof to the Board;
With the impacts of climate change being felt
aroundthe world, we understand the role we can
playto help reduce this. However, we also understand
that climate change presents a risk to our business
model and strategy, and have therefore added it as
aprincipal risk.
Robbie Bell
Chair of the Audit and Risk Committee
• making recommendations to the
Board in relation to the appointment
and removal of the external auditor
and approving its remuneration and
terms of engagement;
• reviewing and monitoring the
external auditor’s independence and
objectivity and the effectiveness of
the audit process;
• reviewing the policy on the
engagement of the external auditor
to supply non-audit services;
• reviewing and monitoring the
appropriateness of the Group’s
whistle-blowing and anti-bribery
procedures; and
• reporting to the Board on how it has
discharged its responsibilities.
Activities of the Audit
and Risk Committee
During the year and the period to the
date of this report, the Committee has:
• reviewed and discussed with the
external auditor the key accounting
considerations, estimates and
judgements reflected in the Group’s
results for the six-month period
ended 31 January 2022;
• reviewed and agreed the external
auditor’s audit strategy memorandum
in advance of its audit for the year
ended 31 July 2022;
Committee Membership
Robbie Bell (Chair)
Christine Adshead
Alan Rigby
Number of meetings
held during the year
7
44
UP Global Sourcing Holdings plc Annual Report 2022
Significant issues
The significant matters and key accounting estimates considered by the Committee
during the year were:
Significant issues How the issue was addressed
Revenue recognition
The Group has various revenue streams
which have different recognition policies. The
Audit and Risk Committee sought assurance
that the Group’s revenue recognition policy
was appropriate and that it had been
consistently applied throughout the period.
The Audit and Risk Committee reviewed
and assessed management’s key internal
controls in relation to the recording of
revenue and were satisfied that the Group’s
revenue recognition policy had been applied
consistently throughout the year. Having also
liaised with the external auditors, the Audit and
Risk Committee was satisfied that revenue was
correctly recognised.
Customer rebates and discounts
Estimation is required in the determination
of the rebates and discounts provision at
the year end and the resultant reduction in
revenue. Estimates are required as there are
not always formal agreements in place and
calculations can be complex, with varying
criteria, such that estimation is required.
The Audit and Risk Committee has reviewed
and challenged management on the approach
taken to determining the level of provision
required for rebates and discounts. Having
also liaised with the external auditors, the
Audit and Risk Committee was satisfied with
the approach taken and the level of provision
included within the Financial Statements.
Review of risk management and internal financial controls
The Committee has conducted a robust
assessment of the principal risks faced by
the business and the mitigating factors in
force, along with a review of the internal
financial controls, including those that
would threaten its business model, future
performance, solvency or liquidity.
The Group maintains a register of
principal risks faced by the business,
as determined by discussions
with Executive and Non-executive
Directors and members of the Senior
Management Team. Once identified,
risks are assessed by the Committee
according to their likelihood, potential
impact and time horizon. Risks are
reassessed based on the strength of
mitigating controls in place and an
appropriate risk response is determined.
The risks are subject to ongoing
monitoring and review by both the
Board and the Committee, including
an update on the movements in impact
and likelihood of each and progress on
mitigating actions. The principal risks
and uncertainties of the Group and
their mitigation are included on pages
34 to 35 and the impact of these risks
has been considered in the Viability
Statement on page 36 and the Going
Concern assessment on page 89.
In the current year climate change has
been added to our register of risks.
Given the impacts of climate change it
is expected that the risk management
framework will be further developed to
ensure the framework aligns to climate-
related priorities.
The Group’s financial reporting process
is underpinned by the established
system of internal financial controls and
review procedures that form part of
the monthly Group reporting process.
The procedures are well established
and incorporate a thorough review of
performance, supported by appropriate
segregation of duties and defined
approval processes to minimise the risk
of misappropriation.
Each year, the review and assessment of
the Group’s internal control framework
is planned and prioritised taking account
of any developments during the year,
the business’s key risks as identified by
the risk register, and through discussion
with the external auditor regarding those
areas presenting the most significant
risk of misstatement. Accordingly, during
the year, the Group’s internal control
cycles were reviewed and key controls
were identified and tested.
The Group’s risk management and
internal control systems have been
in place throughout the financial year
and up to the date of approval of the
Annual Report and Financial Statements.
The Committee is satisfied that the
internal financial controls have operated
effectively for the period under review
and to the date of the Annual Report and
Financial Statements.
• reviewed the non-audit services
provided to the Group by the
external auditor and assessed its
independence and objectivity;
• agreed the terms of engagement
and fees to be paid to the external
auditor for the audit of the 2022
Financial Statements;
• received and reviewed reports from
management regarding their approach
to key accounting considerations,
estimates and judgements in the
Financial Statements for the year
ended 31July 2022;
• discussed the report received from
the external auditor regarding its
audit in respect of the year ended
31July 2022;
• reviewed the half-year and full-year
Financial Statements;
• considered the Group’s principal and
emerging risks, together with the
processes for mitigating these risks
and assigning appropriate actions with
reference to the external environment;
• discussed and considered the
Group’s exposure to the risk of fraud,
including the safeguards in place to
mitigate this risk;
• reviewed and approved the Group’s
viability statement, including the
approach and assumptions taken,
giving consideration to key risks;
• discussed and agreed the nature
and scope of the review and
assessment of the Group’s internal
control framework;
• reviewed the effectiveness of the
Group’s internal control systems,
including reviewing the key control
cycles and reviewing the results of
substantive testing of key internal
controls; and
• considered the effectiveness of the
Group’s IT Security in relation to
cyberattacks.
At the request of the Board, the
Committee also considered whether the
Annual Report and Accounts for the year
ended 31 July 2022, taken as a whole,
are fair, balanced and understandable
and provide the information necessary
for shareholders to assess the Group’s
position and performance, business model
and strategy. Following enquiry into and
discussion of management’s processes
in this regard, along with consideration
of the draft Annual Report and Accounts,
the Committee recommended to the
Board that it could make the required
disclosure as set out in the Directors’
Responsibilities Statement on page 75.
45
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Audit and Risk Committee Report continued
Auditors’ remuneration:
2022
£’000
2021
£’000
Fees for audit of the Company 40 44
Fees for the audit of the Company’s subsidiaries 42 46
Total audit Fees 82 90
Corporate finance services – 74
Other assurance services 18 13
Total non-audit Fees 18 87
The independence and objectivity of
the auditor is regularly considered
by the Committee, taking into
consideration relevant UK professional
and regulatory requirements. The
Committee reviews an annual
statement from the auditor detailing
their independence policies and
safeguards and confirming their
independence, taking into account
relevant ethical guidance regarding the
provision of non-audit services by the
external auditor. The Committee has
considered and approved the terms of
engagement and fees of the external
auditor for the year ended 31 July 2022.
Audit fees payable by the Group to
BDO LLP and its international network
in the year ended 31 July 2022 totalled
£82,000 (2021: £90,000). There were
no contingent fee arrangements. The
Committee reviewed the level of non-
audit services and fees provided by
BDO LLP. For the year ended 31 July
2022, these totalled £18,000 (2021:
£87,000) of which £18,000 (2021:
£13,000) related to half-year assurance
services and a further £nil (2021:
£74,000) related to corporate finance
services associated with the acquisition
of Salter Brands Limited. The ratio of
audit fees to non-audit fees, in total, for
the year ended 31 July 2022 is 4.5:1.
The Committee is required to consider
and review the effectiveness of
the external auditor on an annual
basis and report its findings and
recommendationsto the Board.
The assessment of effectiveness was
completed by means of an ongoing
process of review throughout the year
with the Committee seeking assurances
and understanding of the auditor’s
approach to the audit. In particular, the
Committee reviewed and approved the
external auditor’s plan for undertaking
the half-year review and year-end audit,
including the scope of their work and
their proposed approach to key risk areas
identified. The Committee also reviewed
the detailed reports prepared by the
external auditor setting out their findings
from the half-year review and year end
audit. This approach was supplemented
by the completion of a questionnaire
by the members of the Audit and Risk
Committee and senior members of the
finance team involved in the audit, which
included consideration of the audit
partner and team, as well as approach
and communication. The results were
reported to and discussed by the Audit
and Risk Committee. The Committee
reviewed the FRC’s report into the
performance of BDO, and challenged the
new audit partner on the improvement
process that BDO is enacting.
Considering the review of the
effectiveness, the independence and
the length of tenure of the auditors,
the Committee recommends that a
resolution for the reappointment of BDO
LLP as the Company’s auditor should be
proposed at the forthcoming AGM.
Robbie Bell
Chair of the Audit and Risk Committee
2 November 2022
Internal audit
The Committee is responsible
for monitoring and reviewing the
effectiveness of the systems established
to identify, assess, manage and monitor
financial risk. The Group does not have
an internal audit function. During the
year and the period to the date of this
report, the Committee reviewed the
results of the internal control cycles and
concluded that the controls employed
are appropriate, functioning as intended
and sufficient for the size and nature of
the Group. The Committee will continue
to review, on an ongoing basis, whether
the Group’s size and activities are such
that an internal audit function should be
established in the future.
External audit
BDO LLP has been the Group’s auditor
since 2016 and the senior statutory
auditor is Stuart Wood, who replaced
Gary Harding who rotated off the audit
during the year following his five-year
term. The Committee considers that
the auditor’s knowledge of the Group’s
business and systems gained through
experience has contributed to the
effectiveness of the audit process. The
Committee intends to comply fully with
the FRC Audit and Risk Committee
Guidance regarding the frequency of
audit tender and there is currently no
plan to tender the audit for the year
ending 31 July 2023.
46
UP Global Sourcing Holdings plc Annual Report 2022
I am pleased to present the FY22
report on remuneration on behalf of the
Remuneration Committee. The first part
of this report contains our Remuneration
Policy, which was approved by
shareholders at the December 2020
AGM and seeks to ensure that the
Group’s executives remain aligned
with the long-term interests of all of the
Group’s stakeholders. Committee is
satisfied that the Remuneration Policy
has operated as intended in terms of
performance and quantum in FY22 and
proposes no changes to the policy at
this time. The second part of this report
describes the remuneration of Directors
in 2022. The report complies with the
relevant provisions of the Companies
Act 2006 and Schedule 8 of the
Large and Medium-Sized Companies
and Groups (Accounts and Reports)
Regulation 2008 (as amended). The
Committee has prepared this report
in line with the recommendations
of the UK Corporate Governance
Code and the requirements of the UK
Listing Authority’s Listing Rules and
with consideration given to guidance
provided by investors including the
Investment Association’s Principles
ofRemuneration.
The Committee met four times during
FY22. The latter two of these meetings
were also attended by Christine
Adshead in preparation for her joining
the Committee in FY23. Christine was
formerly a Partner at PwC and is also
a non-executive board member of Hill
Dickinson LLP; it is considered that the
addition of Christine to the Committee
will further strengthen remuneration
oversight and strategy within the Group.
Each member of the Committee has
shown substantial commitment in their
roles on the Committee over the past
12 months and I thank them for their
valuable and insightful contributions to
all remuneration matters.
Our approach to remuneration
The Committee’s long-standing view
is that the remuneration of Executive
Directors should be competitive
without being excessive, aligned with
the Group’s corporate strategy and,
in the case of variable remuneration,
be accompanied by stretching and
relevant performance conditions
focused on delivering shareholder
value. The Committee has continued to
enjoy the backing and understanding
of the Executive Directors in this
approach, each of whom respect the
independence of the Committee.
Remuneration Committee Report
Our first SAYE scheme matured in FY22 and I was
delighted to see our employees enjoying the positive
gains over their three-year saving plans. It was also
pleasing to see strong participation from eligible UK
employees in our third SAYE scheme when this was
launched in May 2022.
Alan Rigby
Chair of the Remuneration Committee
Committee Membership
Alan Rigby (Chair)
James McCarthy
Robbie Bell
Jill Easterbrook
Number of meetings
held during the year
4
Context and key Remuneration
Committee decisions on
remuneration
Fixed remuneration
Following the Board’s decision to
appoint Chris Dent as the Group’s
new Chief Financial Officer his
remuneration package was determined
by the Committee. In line with the
Remuneration Policy the Group’s
contribution to his pension was set at 3%
of salary being a level which is closely
aligned to that awarded to the general
workforce. Following consultation with
the Group’s remuneration advisors and
having considered remuneration data in
comparable listed companies:
• the Remuneration Committee
increased the base salary of the
Chief Executive Officer by £26,798
to £368,178 (an increase of 7.9%) but
reduced his pension provision by
£13,143 to £27,822 (a decrease of
32.08%) resulting in a net increase
to his fixed remuneration of 3.6%;
• the Remuneration Committee
increased the base salary of the
Managing Director by £18,569 to
£255,120 (an increase of 7.9%) but
reduced his pension provision by
£9,107 to £19,279 (a decrease of
32.08%) resulting in a net increase
to his fixed remuneration of 3.6%;
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UP Global Sourcing Holdings plc Annual Report 2022
Remuneration Committee Report continued
Following Yorkshire Building Society’s
withdrawal from the share plans
market during FY22, the Committee
held a competitive tender process and
subsequently appointed Equiniti as the
new SAYE administrator.
The Committee was pleased to make its
annual awards under the PSP in June
2022, where one Executive Director
and 27 wider employees were made
awards over a total of 364,000 shares.
As in previous years, the Chief Executive
Officer and Managing Director informed
the Committee that they did not wish
to be considered for awards under the
Group’s long-term incentive plans and
that these should instead be focused on
the wider workforce; the Remuneration
Committee thanks them for their support
in this matter.
Prior to the 2022 grants, the Committee
made minor amendments to the rules
of the PSP to recognise the latest
corporate governance requirements
and to further limit the circumstances
in which employees leaving the Group
may benefit from their PSP awards; due
to the administrative nature of these
changes, shareholder approval was not
required for these amendments.
The Committee has commenced
its deliberations relating to the
performance conditions attached to the
awards made under the PSP in 2019,
including considering whether any
adjustments are required to account for
the acquisition of Salter Brands Limited
in July 2021. As at the date of this report
the vesting levels of the 2019 PSP
awards have not yet been determined,
and the eventual conclusions of this
process, together with a detailed
assessment of the performance
conditions attaching to these awards,
will be contained in the remuneration
report for FY23.
The Committee notes and endorses the
view of the Investment Association that
employee benefit trusts should not hold
more shares at any one time than would
be required in practice to match their
outstanding liabilities. To ensure that this
guidance is complied with, the Board
established an EBT share acquisition
framework in January 2022 and an
ongoing EBT funding programme in
July2022.
The Committee once again set
stretching performance targets for
the Executive Directors’ annual
bonuses for FY22. The Executive
Directors rose to this challenge and the
Committee recognises their exceptional
performance in the period, overcoming
significant challenges to deliver a strong
set of results for shareholders. As a
result, the adjusted EBITDA performance
condition (which acts as an underpin
in addition to a target) was satisfied to
Threshold level for FY22 and as such
the Remuneration Committee awarded
annual bonuses to Executive Directors
for the year in respect not of the
adjusted EBITDA target (as the Target
level was not satisfied) but in respect
of the personal targets (as the adjusted
EBITDA underpin was satisfied);
further detail on the assessment of the
performance conditions is contained
on page 62. For FY23, the Committee
began the process of determining bonus
levels and objectives for the Executive
Directors and Senior Management Team
in July2022.
At the time of the Company’s IPO in 2017
certain employees were granted awards
under the MIP which were, collectively,
entitled to 15% of the Company’s growth
in value above a hurdle set at 30%
above the IPO share price (166.4p, the
‘Hurdle’) capped at a value of 6.25% of
the Company’s issued share capital on
the date of the IPO. The MIP currently has
a termination date of 28 February 2024
(the ‘Longstop Date’); due to delivery of
the Group’s business plan being delayed
by COVID-19, the Committee has held
conversations with the Company’s
four largest shareholders to discuss
extending the time horizon of the MIP
by two years subject to an uplift in the
Hurdle to 193.02p. With major investors
supportive of this proposal, we intend to
seek shareholder approval at the 2022
AGM to extend the Longstop Date from
28 February 2024 to 28 February 2026
(with the higher Hurdle rate applicable
from 29 February 2024). The Committee
considers that extending the Longstop
Date, in conjunction with the increase
to the Hurdle, is a proportionate and
reasonable measure to continue to
incentivise the participants to drive
growth in value of the Group whilst
ensuring that the adverse impact on
investors of the delayed timescale is
properly reflected.
• the Remuneration Committee
increased the base fees payable to
the Chairman for his services from
£85,000 to £88,000 per annum, a
3.5% increase; and
• the Chairman and the Executive
Directors increased the base fees
of the Non-executive Directors by
£1,470 to £43,470 per annum (an
increase of 3.5%);
with the changes in each case
having effect from 1 March 2022. The
Committee recognises that its remit
extends beyond the remuneration of
the Executive Directors, and wishes to
ensure that the highest standards are
applied to remuneration arrangements
across the Group. The Committee
reviewed the employee remuneration
arrangements across the broader
workforce in December 2021 and June
2022 to ensure consistency and a
fairness of approach across the Group
and notes that the average base salary
increase across the business in the year
was 7.0%.
Following the establishment of the
Environmental, Social and Governance
Committee of the Board and the
appointment of Jill Easterbrook to chair
that Committee, the Chairman and the
Executive Directors determined that
a fee of £10,000 per annum shall be
payable for such role with effect from
1March 2022.
Variable remuneration
The Group’s first round of SAYE
options matured in March 2022 and
the Committee was delighted to see a
large number of employees at all levels
of the business exercise their options
over a total of 943,236 shares and enjoy
gains over their three-year savings
period. We view the high participation
levels in the SAYE as an endorsement
by employees of the Group and are
pleased that so many employees have
realised value on exercise of their 2019
options. To this end, the Group launched
its third round of SAYE invitations in May
2022, allowing all employees to elect
to participate in a three-year savings
arrangement in which they contribute
between £10 and £250 per month and
are granted options at a 20% discount
from the share price at the grant date.
48
UP Global Sourcing Holdings plc Annual Report 2022
Wider remuneration and
administrative matters
The Committee reviewed its Terms of
Reference in April 2022 and determined
that these continued to be appropriate
and as such proposed no changes to
such terms at the present time. The
Committee reviewed the Terms of
Reference of, and performance of, the
Group’s Employee Consultation Group
(‘ECG’) in January 2022 and determined
that the ECG remains well-represented
by all areas of the Company and is given
every opportunity to make is making a
significant and worthwhile contribution
to the Group’s remuneration policy.
The ECG’s views are given due weight
by the Committee, with the ECG’s
meeting minutes regularly shared with
and considered by the Committee and
representatives from the Chair of the
ECG made two formal presentations
to the Committee and the main Board
in December 2021 and July 2022. The
Committee continues to believe that
the ECG is the most effective means
of conducting engagement with the
workforce on remuneration matters
and in the event that areas of concern
relating to the remuneration of Directors
or the workforce were raised by the
ECG the Committee would engage with
the ECG to discuss these concerns; no
such concerns were raised in FY22 and
therefore no discussions of this nature
were held by the Committee.
The Committee continues to place the
highest of value on the views of investors
on remuneration matters and I would
encourage any of our shareholders who
wish to discuss any aspect of this report
to get in touch with me.
Alan Rigby
Chair of the Remuneration Committee
2 November 2022
49
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UP Global Sourcing Holdings plc Annual Report 2022
1. Introduction
The Group’s Executive Remuneration Policy is intended to enable the Group to attract, retain and motivate the Executive
Directors and other senior executives necessary to achieve the Group’s annual goals and long-term purpose, values and
strategy and deliver sustainable shareholder value. The Committee believes that:
• individuals should be properly rewarded where justified by the Group’s financial performance and their personal
contribution;
• the Group should pay no more than is necessary on remuneration;
• remuneration packages should be constructed so as to include stretching performance objectives linked to the long-term
success and strategy of the Group; and
• remuneration structures should discourage the taking of excessive risk that is not aligned with the long-term interests of
shareholder.
• The Ultimate Products Executive Remuneration Policy (the ‘Remuneration Policy’) has been designed to comply with
the Companies Act 2006, Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended) and the UK Listing Authority’s Listing Rules. Due consideration has also been given to the
recommendations of the UK Corporate Governance Code and to guidance provided by investors including the Investment
Association’s Principles of Remuneration. The Company’s current Remuneration Policy was approved by Shareholders at
the 2020 Annual General Meeting and is intended to operate for a three-year term. The Group will only make remuneration
payments to current or prospective Directors, or payments for loss of office if the payment is in line with the Remuneration
Policy. If the Committee wishes to change the Remuneration Policy within this period, or is required to do so, it will submit a
revised Remuneration Policy to shareholders for approval.
2. Summary of components of Executive Directors’ remuneration:
Fixed remuneration: Salary
Element, purpose
and link to strategy
To provide an appropriate amount of basic fixed income to enable the recruitment and retention of individuals who can
facilitate the achievement of the Group’s strategy.
Operation The Committee reviews base salaries on an annual basis, taking into account:
• absolute and relative Group profitability;
• any changes to the scope of each role and its responsibilities;
• any changes to the size and complexity of the Group;
• salaries in comparable organisations;
• pay increases elsewhere in the Group; and
• the impact of any increases to base salary on the total remuneration package.
Maximum
opportunity
The Committee has set no overall maximum on salary increases, as it believes that this creates an anchoring effect for
Executive Directors and other employees. In most circumstances, salary increases for Executive Directors will not exceed
the average increase awarded to other employees in the Group. Increases above this level will only be granted in
exceptional circumstances including (without limitation):
• a material increase to the responsibilities attaching to a role;
• a material increase in the scope of a role;
• a promotion to a different role;
• where a salary has fallen out of step with market norms; or
• where an Executive Director has been recruited on a below-market salary and the Committee is gradually transitioning
that person to a market rate.
In considering any increases to salary for Executive Directors, the Committee shall carefully consider the impact of such
changes on associated indirect costs including pension contributions.
Performance
measures
None, although the Committee takes into account individual performance, skills and experience when setting and
reviewing salaries.
Remuneration Committee Report continued
Remuneration policy
50
UP Global Sourcing Holdings plc Annual Report 2022
Fixed remuneration: Benefits
Element, purpose
and link to strategy
To provide market-competitive and cost-effective benefits to attract and retain suitable Executive Directors and where
appropriate, assist an Executive Director in the performance of his or her duties.
Operation The Group provides a range of benefits to its Executive Directors in line with market norms. These currently include the
provision of a company car (or a car allowance), sick pay and private medical insurance for the Executive Director and
his or her spouse and dependent children. Other than in respect of the Chief Executive Officer, for whom a life assurance
policy with critical illness cover is provided, the Group does not currently provide life assurance or permanent health
insurance to Executive Directors. However, the Remuneration Committee notes that the provision of such benefits
is common at comparable companies and if the Remuneration Committee in future determines that such provision
is necessary to attract or retain suitable Executive Directors, then it may elect to provide these to one or more of the
Executive Directors.
The Group reimburses reasonable work-related expenses to Executive Directors, such as business travel and
subsistence whilst on work trips, or expenses incurred in the performance of their duties along with any tax liabilities that
may arise.
Any additional benefits provided to Executive Directors are reviewed by the Committee and approved only if reasonable,
in line with good market practice and obtainable at a proportionate cost.
For Executive Directors based outside of the UK, the Committee may consider providing additional allowances where
this is in line with local market practice and expectations and is necessary in order to recruit or retain suitably skilled
individuals.
Maximum
opportunity
The maximum opportunity will depend upon the cost of providing the relevant benefits and individual’s personal
circumstances. The Committee has full regard to the cost of providing any benefits and is committed to only providing
benefits that are in line with market practice, cost-effective for the Group and appropriate to the requirements of a
specific role or individual.
Performance
measures
None.
Fixed remuneration: Retirement provision
Element, purpose
and link to strategy
To provide an income for Executive Directors in their retirement and enable the Group to recruit and retain suitable
individuals by aligning their overall package with those offered by competitors for talent.
Operation The Group operates a defined contribution pension plan in which the Executive Directors are eligible to participate and
may provide contributions to the Executive Directors’ personal pension arrangements or a cash allowance in lieu of
pension contributions.
Maximum
opportunity
The Executive Directors currently receive between 3% and 7.56% of basic salary as a contribution to their pension
arrangements (or as an equivalent cash allowance). This has been reduced in the year from 12% as part of a move
towards alignment with the standard pension scheme. For newly appointed Executive Directors, the contribution level
(or payments in lieu) will be aligned with those available to the Group’s broader workforce, other than in exceptional
circumstances.
Performance
measures
None.
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UP Global Sourcing Holdings plc Annual Report 2022
Variable remuneration: Annual bonus plan
Element, purpose
and link to strategy
To incentivise Executive Directors to deliver the Group’s corporate strategy by focusing on annual goals that are
consistent with longer-term strategic objectives and rewarding the delivery of exceptional performance.
Operation Annual bonus targets are reviewed and set on an annual basis to ensure that they:
• align with the Group’s long-term strategy;
• are focused on the Group’s immediate strategic priorities;
• are appropriate given broader market conditions; and
• remain stretching.
Pay-out levels are determined by the Committee after the year end, based upon a rigorous assessment of performance
against the targets.
To further align the interests of Executive Directors with those of shareholders, bonuses will be paid 70% in cash, with
30% deferred into shares that vest in three equal tranches after one, two and three years. To hedge against share price
increases and avoid dilution, the deferred element of the bonus is used to purchase shares in the market; these are then
held by an employee benefit trust until vesting. The value of any dividends during the deferral period will be payable to
the Executive Directors upon vesting.
In exceptional circumstances, the Committee may determine that the deferred element of the bonus is to be held as cash
rather than shares, where the Committee considers that such alternative arrangements would be in the best interests of
the Group and its shareholders, for example, if the acquisition of further shares by an Executive Director would trigger a
mandatory offer under Rule 9 of the City Code on Takeovers and Mergers.
Malus provisions apply for the duration of the performance period and to shares or cash held under the deferral
arrangements, allowing the Committee to reduce to zero any unvested or deferred awards.
Clawback provisions apply to cash amounts paid and shares or cash released for three years following payment or
release (as the case may be), allowing the Committee to claim back all or part of any amount paid or released.
Maximum
opportunity
The maximum annual bonus opportunity that can be earned for any year is capped at 100% of base salary in the case of
the Chief Executive Officer and Managing Director and 80% of base salary in the case of any other Executive Director.
Performance
measures
An annual bonus opportunity of up to:
• 80% of base salary in the case of the Chief Executive Officer and Managing Director; and
• 60% in the case of any other Executive Director, may be granted by the Committee, such bonus to be conditional
upon the achievement of an adjusted EBITDA-based target and such other financial target (if any) as the Committee
considers appropriate (subject always to an adjusted EBITDA underpin).
An annual bonus opportunity of up to a further 20% of base salary may be granted by the Committee, such bonus to be
conditional upon the achievement of stretching, specific and measurable strategic and/or individual objectives.
Irrespective of the achievement of the strategic and/or personal targets, no part of the bonus shall be payable unless a
threshold level of the adjusted EBITDA-based target is achieved.
Achievement of the maximum level of vesting will require significant financial out-performance above the budget set for
the year, with full vesting requiring performance 30% above target adjusted EBITDA levels.
In determining whether the performance measures have been satisfied, the Committee shall take account of the
extent to which the measured outcome reflects overall corporate performance and the experience of the shareholders
of the Company in terms of value creation. Where the Committee is of the opinion that the formulaic application of
any performance measure produces an outcome that is unjust to the Company, its shareholders or the Executive
Director it shall be entitled, acting in its absolute discretion, to make such adjustments as it sees fit to its determination
of whether (and, if relevant, to what extent) the performance measure has been satisfied, at all times having due
regard to the interests of shareholders of the Company. The Committee shall not exercise any such discretion to the
material advantage of an Executive Director other than in exceptional circumstances and following consultation with
key shareholders. The Committee is of the opinion that, given the commercial sensitivity of the detailed performance
measures used for the annual bonus plan, disclosing precise targets in advance would not generally be in the interests
of the Group or its shareholders. Actual targets, performance levels achieved, and the resulting payments made will
therefore be disclosed, in most circumstances, retrospectively at the end of the performance period.
Remuneration Committee Report continued
Remuneration policy continued
52
UP Global Sourcing Holdings plc Annual Report 2022
Variable remuneration: Annual bonus plan
Performance
measures
(continued)
Malus and/or clawback provisions may be triggered in the following scenarios:
• the Executive Director has participated in or was responsible for conduct which resulted in significant losses to a
Group company;
• the Executive Director has failed to meet appropriate standards of fitness and propriety;
• the Committee has reasonable evidence of fraud or material dishonesty by the Executive Director;
• the Company has become aware of any material wrongdoing on the part of the Executive Director;
• the Executive Director has acted in any manner which in the opinion of the Committee has brought or is likely to bring
any Group company into material disrepute or is materially adverse to the interests of any Group company;
• there is a breach of the Executive Director’s employment contract that is a potentially fair reason for dismissal;
• the Executive Director is in breach of a fiduciary duty owed to any Group company;
• an Executive Director who has ceased employment was in breach of their employment contract or fiduciary duties in a
manner that would have prevented the grant or release of an award had the Committee been aware (or fully aware) of
that breach, and of which the Committee was not aware (or not fully aware) at the relevant time;
• there was a material error in determining whether an award should be made or in determining the size and nature of
the award or in assessing the extent to which any performance measure was satisfied;
• a Group company misstated any financial information for any part of any year that was taken into account in
determining whether an award should be made or in determining the size and nature of such award or assessing the
extent to which any performance measure was satisfied; or
• a Group company or business unit that employs or employed the Executive Director, or for which the Executive
Director is or was responsible, has suffered a material failure of risk management.
Variable remuneration: Performance share plan (PSP)
Element, purpose
and link to strategy
To incentivise Executive Directors to focus on the long-term strategic objectives of the Group and to deliver sustainable
shareholder value, aligning their interests with the interests of shareholders.
Operation Awards may be granted annually under the PSP and will consist of rights over shares, calculated as a percentage of base
salary.
Vesting is subject to the Group’s performance, measured over three years and is currently followed by a holding period
in respect of 40% of the vested shares, of which one half are released after a one-year holding period and one half after
a two-year holding period.
For future PSP awards the vesting and holding profile shall be amended such that vesting continues to be measured
over three years. 60% of vested shares shall be subject to a holding period. 20% of the vested shares shall be released
each year for a further three years. Any shares purchased to satisfy PSP awards will be held by an employee benefit trust
until vesting. Dividend equivalents are payable in respect of the shares that vest.
Malus provisions apply for the duration of the performance period and shares held under the deferral arrangements,
allowing the Remuneration Committee to reduce to zero any unvested or deferred awards. Clawback provisions apply
until two years after the date upon which any entitlement becomes unconditional, allowing the Remuneration Committee
to claim back all or part of the value of any shares vested.
Awards may be structured as nil cost options, market value options, conditional awards of shares or may be delivered
through a joint share ownership plan structure, as the Remuneration Committee considers being most appropriate in the
circumstances. Senior employees and other employees identified as key to the business who are not Executive Directors
may be invited to participate in the PSP at the discretion of the Board.
Maximum
opportunity
The maximum PSP award opportunity per Executive Director, in respect of any financial year, is limited to rights over
shares with a market value at grant of 100% of base salary.
No Executive Director granted an award under the MIP (see below) may be granted an award under the PSP prior to 1
August 2018.
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UP Global Sourcing Holdings plc Annual Report 2022
Variable remuneration: Performance share plan (PSP) continued
Performance
measures
The vesting of all awards made under the PSP is dependent upon performance conditions based upon:
• EPS growth (50% weighting) and up to two strategic or individual objectives (up to a maximum of 25% weighting each).
The Committee believes the chosen metrics are suitably aligned with the Group’s strategy and are focused on delivering
long-term growth and shareholder return.
25% of an award vests for threshold performance. 100% of an award vests for stretch performance. For performance
between the threshold and maximum, an award vests on a straight-line basis.
In determining whether the performance measures have been satisfied, the Committee shall take account of the extent
to which the measured outcome reflects overall corporate performance and the experience of the shareholders of
the Company in terms of value creation. Where the Committee is of the opinion that the formulaic application of any
performance measure produces an outcome that is unjust to the Company, its shareholders or the Executive Director
it shall be entitled, acting in its absolute discretion, to make such adjustments as it sees fit to its determination of
whether (and, if relevant, to what extent) the performance measure has been satisfied, at all times having due regard
to the interests of shareholders of the Company. The Committee shall not exercise any such discretion to the material
advantage of an Executive Director other than in exceptional circumstances and following consultation with key
shareholders.
The Committee is of the opinion that, given the commercial sensitivity of the detailed performance measures used for the
PSP, disclosing precise targets for those conditions would often not be in the interests of the Group or its shareholders.
Actual targets, performance levels achieved, and the resulting payments made will therefore generally be disclosed
retrospectively at the end of the performance period, unless the Committee considers that any particular targets are not
commercially sensitive.
Malus and/or clawback provisions may be triggered in the following scenarios:
• the Executive Director has participated in or was responsible for conduct which resulted in significant losses to a
Group company;
• the Executive Director has failed to meet appropriate standards of fitness and propriety;
• the Committee has reasonable evidence of fraud or material dishonesty by the Executive Director;
• the Company has become aware of any material wrongdoing on the part of the Executive Director;
• the Executive Director has acted in any manner which in the opinion of the Committee has brought or is likely to bring
any Group company into material disrepute or is materially adverse to the interests of any Group company;
• there is a breach of the Executive Director’s employment contract that is a potentially fair reason for dismissal;
• the Executive Director is in breach of a fiduciary duty owed to any Group company;
• an Executive Director who has ceased employment was in breach of their employment contract or fiduciary duties in a
manner that would have prevented the grant or release of an award had the Committee been aware (or fully aware) of
that breach, and of which the Committee was not aware (or not fully aware) at the relevant time;
• there was a material error in determining whether an award should be made or in determining the size and nature of
the award or in assessing the extent to which any performance measure was satisfied;
• a Group company misstated any financial information for any part of any year that was taken into account in
determining whether an award should be made or in determining the size and nature of such award or assessing the
extent to which any performance measure was satisfied; or
• a Group company or business unit that employs or employed the Executive Director, or for which the Executive
Director is responsible, has suffered a material failure of risk management.
Remuneration Committee Report continued
Remuneration policy continued
54
UP Global Sourcing Holdings plc Annual Report 2022
Variable remuneration: Management incentive plan (MIP)
Element, purpose
and link to strategy
To reward and incentivise key employees through the IPO process and motivate them to deliver successful post-IPO
performance for investors.
Operation Awards under the MIP were made to the Executive Directors and other senior executives immediately prior to the IPO, as
disclosed in the IPO prospectus. The Committee is of the opinion that the MIP awards were an appropriate arrangement
for the Group at the time of the IPO, but the MIP is not an optimal arrangement for ongoing use and as such, no further
awards will be made under the MIP. The awards made under the MIP vested in 2020. A number of the awards were
exercised in 2022.
Maximum
opportunity
Holders of awards granted under the MIP are entitled, collectively, to 15% of the Group’s growth in value above a hurdle
set at 30% above Ultimate Products’ IPO share price. The total aggregate value of the awards is capped at a value of
6.25% of Ultimate Products’ issued share capital on the date of the IPO.
Performance
measures
None, other than Ultimate Products’ share price growth exceeding the hurdle, as disclosed under the ‘maximum
opportunity’ section of this table.
Variable remuneration: All-employee share plans
Element, purpose
and link to strategy
To align the broader employee base with the interests of shareholders and aid recruitment and retention.
Operation The Group operates an all-employee save-as-you-earn plan approved by HM Revenue & Customs under Schedule 3
of the Income Tax (Earnings and Pensions) Act 2003. Executive Directors are, as required by the relevant legislation,
entitled to participate on the same basis (and subject to the same maximums) as other Group employees.
Maximum
opportunity
In line with HMRC limits in force from time to time.
Performance
measures
None.
Variable remuneration: All-employee share plans
Element, purpose
and link to strategy
To align the broader employee base with the interests of shareholders and aid recruitment and retention.
Operation The Group operates an all-employee save-as-you-earn plan approved by HM Revenue & Customs under Schedule 3
of the Income Tax (Earnings and Pensions) Act 2003. Executive Directors are, as required by the relevant legislation,
entitled to participate on the same basis (and subject to the same maximums) as other Group employees.
Maximum
opportunity
In line with HMRC limits in force from time to time.
Performance
measures
None.
Other: Shareholding guidelines
Element, purpose
and link to strategy
To create alignment between the Executive Directors’ interests and those of shareholders.
Operation The Remuneration Committee expects all Executive Directors, within a period of five years from appointment, to build up
a meaningful shareholding in Ultimate Products.
Maximum
opportunity
The Chief Executive Officer and the Managing Director will be required to build up interests in the Group’s shares worth
250% of base salary. All other Executive Directors will be required to build up interests in shares worth 125% of base salary.
The Remuneration Committee requires that all Executive Directors continue to comply with a tapered shareholding
requirements for two years following termination of their directorship, whereby they shall reduce their holding from the
250% or 125% of base salary level by no more than 50% in year 1 and 50% in year 2.
Performance
measures
None.
55
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
1,500,000
500,000
1,000,000
1,000,000
300,000
600,000
1,250,000
400,000
800,000
750,000
200,000
400,000
500,000
100,000
200,000
250,000
0
0
0
£410,135
£159,861
£288,315
Minimum
Minimum
Minimum
Fixed pay Annual bonus PSP
Maximum
Maximum
MaximumIn line with
expectation
In line with
expectation
In line with
expectation
Maximum with
share growth
Maximum with
share growth
Maximum with
share growth
100%
£759,904
£268,611
£530,679
£1,125,388
£410,404
£783,926
£1,330,580
£493,361
£926,115
54%
34%
31%
34%
33%
28%
41%
33%
12%
100%
54%
34%
33%
28%
41%
33%
34%
31%
12%
100%
60%
27%
37%
28%
35%
32%
24%
44%
Simon Showman
Chris Dent
Andrew Gossage
Fixed Pay Annual Bonus PSP SAYE
Minimum performance
Fixed elements of
remuneration – base
salary, car allowance,
benefits and pension only.
Base salary is as at 31
July 2022 and the value
for benefits has been
calculated as per the
single figure table on
page 60.
No bonus No PSP vesting
No performance elements
to the scheme.
Each Director will receive
a number of share
options corresponding
to the amount that they
contribute to the scheme
per month.
Performance in line with
expectations
60% of base salary
for achieving target
performance (34% in
respect of Chris Dent).
25% of the maximum
share options will vest
if performance is in line
with the threshold target
in each of the conditions.
Between the threshold
and the stretch target, the
option shares will vest on
astraight-line basis.
Maximum performance 100% of base salary for
achieving maximum target
performance (60% in
respect of Chris Dent).
100% of maximum award
vesting if the stretch
conditions are met.
Maximum plus share
price growth
As for Maximum above, but with the value of 50% share price growth included within the PSP element.
Illustrations of application of remuneration policy
The charts below illustrate the potential value of the remuneration packages for the Executive Directors under the scenarios as
explained in the supporting table.
Remuneration Committee Report continued
Remuneration policy continued
56
UP Global Sourcing Holdings plc Annual Report 2022
3. Statement of consideration
of employment conditions
elsewhere in the Group
In designing the Remuneration Policy
and in making decisions in relation to
the remuneration of Executive Directors
pursuant to the Policy, the Committee
has and will continue to take into
account the remuneration of employees
across the Group. The Committee and
Executive Directors believe that the
success of the Group in meeting its
strategic objectives is highly dependent
upon the talents and performance of
the Group’s wider employee base.
The Group regularly reviews the
remuneration of Group employees in a
process led by the Group HR Director.
In line with the policy of the Committee
towards the Executive Directors, the
Group’s policy is to set competitive pay
levels that allow the Group to attract
and retain the talent necessary to thrive,
without paying more than is necessary
in the markets in which it operates. The
main pay review takes place in June
of each year, with an extra ‘hindsight’
review in December of each year. The
Group HR Director reports the results of
the pay review to the Committee.
Whilst the Committee does not have a
formal process for directly consulting
employees on the remuneration of
Executive Directors, it does take
full account of the pay, benefits
and employment conditions of the
wider workforce when setting the
remuneration of Executive Directors.
In particular, the Committee has
determined that in most circumstances,
salary increases for Executive Directors
should not exceed the average
increase awarded to other employees
in the Group. Increases above this
level will only be granted in exceptional
circumstances as set out in the policy
table under Fixed Remuneration:
Salary above.
The Group’s Employee Consultation
Group (‘ECG’), which is chaired by
the HR Director, is used as a formal
communication channel between
employees and the Executive Directors
to communicate and consult on matters
of importance both to and from the
employees in a constructive manner.
The ECG produces papers for the
Board at least twice per year, which are
discussed by the Board, and responded
to where required.
4. Statement of consideration
of shareholders’ views
The Committee actively welcomes the
input of shareholders in respect of its
remuneration policies and decisions
and is committed to engaging in an
open and transparent dialogue with
shareholders in relation to executive
remuneration.
In developing the Remuneration Policy,
the Chairman of the Committee sought
the views and input of the Group’s
key shareholders. The Committee
considered all views expressed by
shareholders in refining and developing
the Remuneration Policy and will
continue to engage with shareholders
in the year ahead. Shareholders
have expressed a strong preference
for the Committee to demonstrate
transparency in all aspects of the
operation of the Remuneration Policy,
and the Committee remains committed
to open and clear communication with
its shareholders. The Committee agrees
that such transparency is a legitimate
interest of shareholders, and intends
to provide maximum disclosure in all
circumstances except where such
disclosure would materially prejudice
the interests of the Group.
As a listed company, The Group strives
hard to build a long-term, two-way
relationship with its investors and will
consider their views in all areas of its
business, including on the remuneration
of its key employees.
5. Recruitment remuneration
The Committee will determine the
remuneration of new Executive
Directors in accordance with this
Remuneration Policy, taking into account
the individual’s skills, experience and
current remuneration package, together
with the responsibilities attaching to
the role concerned.
Where the Committee considers it
appropriate to offer a below-market
salary initially, for example where a
recruit’s current remuneration package
is considerably below the market
norm for the role that they are being
recruited to perform, a series of planned
above inflation, annual increases to
reach a market salary may be used.
Such increases may be made subject
to Group and individual performance.
In some circumstances, to recruit
individuals of an appropriate calibre,
it may be necessary to buyout their
variable remuneration arrangements,
which would be forfeited due to leaving
their previous employment. Where this
is done, the Committee will take into
account the form of any such award,
any performance conditions attaching
to it (including the likelihood of such
performance conditions being achieved)
and the period of vesting.
Any buyout payments made will generally
seek to reflect the structure and level
of the award it replaces, as far as
reasonably practicable. The Committee
will pay no more than is necessary to
compensate such individuals for the
awards they will be losing, taking into
account anticipated vesting levels. The
Committee would normally impose
clawback provisions on such recruitment
awards made to Executive Directors,
activated should such individual resign
or be summarily dismissed within two
years of joining the Group. Shareholders
will be informed of any such payments
at the time of recruitment along with the
reasons for making such payments.
The maximum level of annual variable
pay, which may be awarded to a new
Executive Director, will be in line with
the maximum amounts specified in
the Annual Bonus Plan and PSP, as
set out in the above, being a total of
200% of salary. For the avoidance of
doubt, this excludes the value of any
buyout payments associated with
forfeitedawards.
The Committee may approve the
meeting of an Executive Director’s
reasonable and proportionate relocation
expenses where this is considered
appropriate in all the circumstances.
Where an Executive Director is recruited
partway through a financial year, the
individual may be invited to participate
in the Annual Bonus Plan on a pro-
rated basis in that first year and may be
offered “in-flight” PSP awards pro-rated
on a suitable basis.
For the recruitment of an Executive
Director in a non-UK jurisdiction, the
Committee may approve the payment
of alternative or additional benefits and
pension arrangement in line with local
market practice. In some circumstances,
the Remuneration Committee may
agree to pay an expatriate allowance,
reimbursement of advisers’ fees and/or
offer tax equalisation arrangements.
57
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
6. Service agreements and
termination payments
It is the Group’s policy that Executive
Directors’ service agreements may be
terminated by no more than one year’s
notice by the employer at any time and
by payment of no more than one year’s
basic salary and other fixed benefits in
lieu of notice by the employer. Upon the
termination of an Executive Director’s
employment, in addition to considering
the terms of the individual’s service
agreement, the Committee has the
following policies:
• The Committee shall be guided by
the core principle of seeking an
outcome that is in the best interests
of the Group and its shareholders
and shall take into account all of the
circumstances of the termination.
• If the termination is as a result of
death, illness, disability, redundancy,
retirement or any other exceptional
circumstance that the Committee
considers to be analogous to the
foregoing (a ‘Good Leaver Reason’),
the Committee shall consider making
a payment to the Executive Director
under the Annual Bonus Plan. This
would normally be pro-rated for the
period worked during the financial
year and any amount of bonus
deferred (whether held in shares
or cash) will normally be released
immediately.
• If the termination is as a result of
anything other than a Good Leaver
Reason, no payment will be made
under the Annual Bonus Plan on
cessation of employment of an
Executive Director and any amount
of bonus deferred (whether held in
shares or cash) will normally not be
released until the end of the usual
deferral periods.
• If the termination is as a result of a
Good Leaver Reason, PSP awards
will normally vest at the normal
vesting date, pro-rated for time
served and remaining subject to the
original performance conditions.
Any shares held for the compulsory
holding period (i.e. after the end of
the performance period) will vest
immediately.
• If the termination is as a result of
anything other than a Good Leaver
Reason, any PSP awards will lapse
in full.
• In the event of a compromise
or settlement agreement, the
Committee shall consider agreeing
to reasonable payments in respect
of the settlement of legal claims,
including any compensation
relating to the breach of the
Executive Director’s statutory or
contractual rights and in respect of
any reasonable professional fees
incurred by the individual in relation
to the agreement.
The service contracts of Executive
Directors and the letters of appointment
of Non-executive Directors are available
for inspection at the Group’s registered
office during normal business hours and
will be available at the Annual General
Meeting.
7. Change in control
On a change in control, awards under
the Group’s incentive plans will generally
vest but in most circumstances, such
vesting will be subject to:
i. the extent to which the Committee
considers that the performance
conditions have been satisfied; and
ii. time apportionment in accordance
with the rules of each plan.
On a change in control, any shares
held under compulsory deferral
arrangements under the Annual Bonus
Plan or PSP (i.e. after the end of any
performance periods) shall normally
vest in full.
8. Fees retained for external
non-executive directorships
The Committee is of the view that
Executive Directors can, in some
circumstances, benefit by holding
non-executive directorships in other
companies. The Committee therefore
permits such non-executive directorships
and permits the Executive Directors to
personally retain the fees from such non-
executive directorships, providing that
the Committee’s advance permission is
sought and that such appointment does
not conflict with the Director’s duties and
commitments to Ultimate Products.
9. Discretion
The Committee has an element of
discretion in several areas of the
Remuneration Policy and has discretion
in some areas under the rules of certain
incentive plans. These discretions
include:
• selecting participants for each plan
and arrangement;
• determining the quantum of awards
under each plan or arrangement,
subject to the maximums stated in
the policy table above;
• selecting the most suitable timing
for granting awards and making
payments;
• assessing the extent to which
performance conditions have been
satisfied and thereby the extent to
which awards shall vest;
• setting the targets applicable to
the various performance measures
used in the Group’s plans and
arrangements;
• conducting an annual review of
performance measures and the
relative weightings thereof;
• determining whether a participant
shall be considered to be a Good
Leaver in exceptional circumstances,
outside of the prescribed
circumstances; and
• making necessary adjustments
to any plan or arrangement in
circumstances such as a rights
issue, restructuring, special dividend
or change of control (subject to
the rules of the relevant plan or
arrangement).
If an event occurs which means, in
the opinion of the Committee, that the
performance conditions or associated
targets are no longer an appropriate
measure of the performance of the
Group’s business or its adherence
to strategy then, in exceptional
circumstances, the Committee shall have
the discretion to adjust, supplement or
amend any performance condition or
target, subject always that the adjusted,
supplemental or amended performance
condition must be not materially less
difficult to satisfy. Other than in the case
of minor or administrative changes, any
such action would be taken only after
consultation with the Group’s major
shareholders and would be disclosed
in the subsequent Annual Report on
Remuneration.
Remuneration Committee Report continued
Remuneration policy continued
58
UP Global Sourcing Holdings plc Annual Report 2022
Specifically, in determining whether
the performance measures have
been satisfied for awards made under
the PSP or Annual Bonus Plan, the
Committee is required to take account
of the extent to which the measured
outcome reflects overall corporate
performance and the experience of
the shareholders of the Company in
terms of value creation. Where the
Committee is of the opinion that the
formulaic application of any performance
measure produces an outcome that is
unjust to the Company, its shareholders
or the Executive Director it shall
be entitled, acting in its absolute
discretion, to make such adjustments
as it sees fit to its determination of
whether (and, if relevant, to what
extent) the performance measure
has been satisfied, at all times
having due regard to the interests of
shareholders of the Company. The
Committee shall not exercise any such
discretion to the material advantage
of an Executive Director other than in
exceptional circumstances and following
consultation with key shareholders.
The Committee has the discretion to
amend the Remuneration Policy with
regard to minor or administrative matters
where, in the opinion of the Committee,
it would be disproportionate to seek or
await shareholder approval for such an
amendment.
10. Legacy agreements
In addition to payments provided for
under this Remuneration Policy, the
Committee may authorise payments
to honour commitments made prior to
its adoption to any current or former
Executive Directors. Where appropriate,
in the case of an internal promotion
to an Executive Director position, the
Committee may make payments to such
Executive Director in relation to terms
agreed with them at a time when the
relevant individual was not an Executive
Director of the Group – providing that
such payment was not in consideration
for the individual becoming an Executive
Director. Any such payments will only
be made with a view to transitioning the
Executive Director to terms compatible
with this Remuneration Policy as soon as
possible. Details of any such payments
will be included in each Annual Report
on Remuneration.
11. Terms and conditions
of Non-executive Directors
Non-Executive Directors are appointed
for an initial period of three years and
will stand for re- election at each AGM
of Ultimate Products. Thereafter, the
Board may invite them to serve for an
additional period of three years, again
subject to re-election at each AGM.
The fees paid to Non-executive
Directors are determined by the Board
in light of independent surveys of
fees paid to Non-executive Directors
of comparable companies and with
regard to the time commitment and
responsibilities involved. The Chairman
is paid a single fee covering all of his
responsibilities and other Non-executive
Directors receive a basic fee, with
Committee Chairs being paid additional
fees to reflect their extra responsibilities.
Non-executive Directors are entitled to
be reimbursed for reasonable expenses,
in relation to the performance of their
duties and for any related tax liabilities
that may arise.
The appointment of Non-Executive
Directors is terminable by either
party on one month’s written notice.
No compensation is payable upon
termination of their appointment and
they are not entitled to participate in
the Group’s share, bonus or pension
arrangements.
59
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UP Global Sourcing Holdings plc Annual Report 2022
Single total figure of remuneration for each Director (audited)
The table below sets out in a single figure the total remuneration, including each element, received by each of the Directors for
the years ended 31 July 2022 and 31 July 2021.
Basic
Salary/Fees
1 3
2022
£
All Taxable
Benefits
2022
£
Pension
2022
£
Total Fixed
2022
£
Bonus
2022
£
MIP, PSP and
SAYE
2
2022
£
Total Variable
2022
£
Total
2022
£
Executive Directors
S Showman 396,868 1,635 3,667 402,170 35,255 – 35,255 437,425
A Gossage 281,380 1,416 – 282,796 36,643 – 36,643 319,439
C Dent 51,071 170 3,249 54,490 – – – 54,490
G Screawn 149,830 2,009 – 151,839 24,970 319,486 344,456 496,295
Non-executive Directors
J McCarthy 86,250 – – 86,250 – – – 86,250
A Rigby 52,612 – – 52,612 – – – 52,612
R Bell 52,612 – – 52,612 – – – 52,612
C Adshead 45,863 – – 45,863 – – – 45,863
J Easterbrook 46,779 – – 46,779 – – – 46,779
1,163,265 5,230 6,916 1,175,411 96,868 319,486 416,354 1,591,765
Basic
Salary/Fees
1 3
2021
£
All Taxable
Benefits
2021
£
Pension
2021
£
Total Fixed
2021
£
Bonus
2021
£
MIP, PSP and
SAYE
2
2021
£
Total Variable
2021
£
Total
2021
£
Executive Directors
S Showman 390,472 1,618 – 392,090 202,485 – 202,485 594,575
A Gossage 274,407 1,399 – 275,806 157,846 – 157,846 433,652
G Screawn 148,230 2,066 – 150,296 74,052 – 74,052 224,348
Non-executive Directors
J McCarthy 85,000 – – 85,000 – – – 85,000
A Rigby 50,833 – – 50,833 – – – 50,833
R Bell 50,833 – – 50,833 – – – 50,833
C Adshead 37,893 – – 37,893 – – – 37,893
J Easterbrook 35,393 – – 35,393 – – – 35,393
B Franks 5,479 730 – 6,209 – – – 6,209
1,078,540 5,813 – 1,084,353 434,383 – 434,383 1,518,736
1 The salaries noted above include amounts for car allowance: S Showman £12,500 (2021: £12,500); A Gossage £12,500 (2021: £12,500); C Dent £3,295 (2021 –£ nil) and
G Screawn £10,000 (2021: £10,000), and the following amounts of pension contributions from the remuneration package that were paid as salary:
2022
£
2021
£
S Showman 31,827 40,496
A Gossage 24,595 28,062
G Screawn 14,981 14,810
71,403 83,368
2 The Group has three long-term incentive plans for the years ended 31 July 2022 and 31 July 2021; the MIP, PSP and SAYE. The 2019 SAYE scheme vested on 1 March
2022 and on 3 May 2022, G Screawn exercised options to acquire 22,784 shares at an exercise price of 39.5 pence per option, with a total net gain of £25,746 based on
the market value of the shares on the exercise date, less the exercise price. G Screawn also exercised his put option to sell his entire MIP interest on 2 November 2021,
with a total value of £293,740.
3 The remuneration noted above for C Adshead includes £3,250 received in respect of fees for delivering executive coaching sessions to the Group’s senior operating
managers in the year ended 31 July 2022 (2021: £2,500).
Remuneration Committee Report continued
Remuneration Report
60
UP Global Sourcing Holdings plc Annual Report 2022
Individual elements of remuneration
Base salary
The Remuneration Committee consulted with its remuneration advisers and considered market reports on remuneration data
from comparable listed companies when reviewing the base salaries of the Executive Directors, having regard to the scope of the
respective roles, the experience, performance and contribution of the relevant individuals and the markets in which the Group
operates. From 1 March 2022, the base salaries of the Executive Directors are as follows, including comparison to the previously
agreed rates:
Base Salary
1 March 2022
£
Base Salary
1 March 2021
£
Movement
%
S Showman 368,178 341,380 7.85%
A Gossage 255,120 236,551 7.85%
C Dent 145,000 – N/A
G Screawn 124,848 124,848 0.00%
In addition to the base salary set out above, car allowances are paid to the Executive Directors as follows: S Showman £12,500;
A Gossage £12,500; C Dent £10,000 and G Screawn £10,000. The car allowances have remained unchanged. The pension
contributions for S Showman and A Gossage were reduced from 12% to 7.56% in the year as part of a move towards alignment
with the standard pension scheme, with a corresponding increase in base salaries. There has been no increase to G Screawn’s
base salary or pension contribution due to his planned retirement later in 2022. C Dent receives a 3% pension contribution.
Taxable benefits
Each Executive Director is entitled to medical expenses insurance.
Pension benefits (audited)
The Group operates a defined contribution pension scheme, which the Directors are eligible to participate in. The Executive
Directors currently receive between 3% and 7.6% of their salary (excluding any car allowance) as a contribution to their pension
arrangements or the equivalent as a cash allowance. This has been reduced in the year from 12% as a result of an alignment
towards the standard pension scheme. Base salaries have been correspondingly increased. In the year ended 31 July 2022, each
of the Executive Directors took the option to receive a cash allowance as follows: S Showman received £31,827 (2021: £40,496), A
Gossage received £24,595 (2021: £28,062), C Dent received £nil (2021: £nil) and G Screawn received £14,981 (2021: £14,810). The
contracts of employment for the Executive Directors do not define a normal retirement age and given the arrangements in place,
the Executive Directors have not accrued pension entitlements at 31 July 2022 (2021: £nil).
Non-executive Director fees
The Non-executive Directors are subject to shareholder approval, appointed for an initial period of three years and will stand for
re-election at each Annual General Meeting of the Company. The period of service can be extended for a further three years
based upon Board approval.
The fees payable to the Non-executive Directors are determined by the Board in light of independent surveys of fees paid to Non-
executive Directors of comparable companies and with regard to the time commitment and responsibilities involved.
The Board considered remuneration data from comparable listed companies when reviewing the fees paid to the Non-executive
Directors, having regard to the scope of the respective roles, the experience, performance and contribution of the relevant
individuals and the markets in which the Group operates. With effect from 1 March 2022, the Board increased the base fees
payable to the Non-executive Directors for their services from £42,000 to £43,470 per annum.
61
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UP Global Sourcing Holdings plc Annual Report 2022
The fee for A Rigby is £43,470 per annum in respect of services as Senior Independent Non-executive Director and £10,000 per
annum in respect of services as Chair of the Remuneration Committee. The fee for R Bell is £43,470 per annum in respect of
services as Non-executive Director and £10,000 per annum in respect of services as Chair of the Audit and Risk Committee. The
fee for J Easterbrook is £43,470 per annum in respect of services as Non-executive Director, and £10,000 per annum in respect
of services as Chair of the Environmental, Social and Governance Committee. The fee for C Adshead is £43,470 per annum
in respect of services as Non-executive Director. The fee for J McCarthy is £88,000 per annum (2021: £85,000) in respect of
services as Non-executive Chairman.
Annual bonus scheme
Awards made in respect of the year to 31 July 2022
In accordance with the Remuneration Policy, the maximum bonus opportunity under the Annual Bonus Plan for FY22 was set
at 100% of base salary for S Showman and A Gossage (FY21: 100%), and 80% of base salary for G Screawn (FY21: 80%). The
Remuneration Committee attached performance conditions to each award, one based upon adjusted EBITDA and two based
upon personal strategic targets which were chosen to align with the Group’s strategic pillars. No payment in respect of the
personal strategic targets were permissible unless at least the threshold level of adjusted EBITDA was obtained.
Opportunity (assessed performance shown in red)
Performance condition Level S Showman A Gossage G Screawn
Adjusted EBITDA Threshold (£18.7m) 0% 0% 0%
Target (£20m) 60% 60% 40%
Stretch 1 (£21.5m) 65% 65% 45%
Stretch 2 (£23m) 70% 70% 50%
Stretch 3 (£24.5m) 75% 75% 55%
Stretch 4 (£26m) 80% 80% 60%
Personal Target 1
(subject to Adjusted EBITDA underpin)
Below Threshold 0% 0% 0%
Threshold 5% 5% 1%
Target 7.5% 7.5% 2%
Stretch 10% 10% 3%
Personal Target 2
(subject to Adjusted EBITDA underpin)
Below Threshold 0% 0% 0%
Threshold 5% 5% 5%
Target 7.5% 7.5% 10%
Stretch 10% 10% 17%
Total opportunity 100% 100% 80%
Total assessed (% of base salary) 10% 15% 20%
Total assessed (% of max. opportunity) 10% 15% 25%
As EBITDA for FY22 was £18.8m, the Threshold level of performance was delivered but the Target level was not hit, resulting in a
bonus of £nil being paid to the Executive Directors for this element. The Committee assessed performance against the personal
strategic targets as set out below. In each case, the Committee has sought to provide the maximum level of disclosure of the
nature of the targets without prejudicing the Group’s commercial interests or revealing sensitive commercial information.
• S Showman: Personal Target 1 related to the growth in international revenue at appropriate margin levels. Threshold was set
at gross international revenue of £52.5m; as international revenue for FY22 was £53.6m this Threshold target was satisfied,
resulting in an award of 5% of base salary in respect of this measure. In measuring margin levels for this and the other
performance conditions discussed below which incorporate a margin measure, the Committee utilises an internal metric
referred to as “system margin” (the details of which are not disclosed due to the highly commercially sensitive nature of
these targets) and in assessing the performance against system margin the Committee made certain adjustments to account
for shipping costs being higher than forecast due to macroeconomic factors. Personal Target 2 related to the development
and maintenance of relationship strategies to increase revenue generation from supermarkets and was assessed against
gross revenue from supermarkets at appropriate margin levels. Threshold was set at gross supermarket revenue of £51m; as
supermarket revenue for FY22 was £52.4m this Threshold target was satisfied, resulting in an award of 5% of base salary in
respect of this measure.
Remuneration Committee Report continued
Remuneration Report continued
62
UP Global Sourcing Holdings plc Annual Report 2022
• A Gossage: Personal Target 1 related to the development of online direct-to-consumer revenues at appropriate margin levels.
Threshold was set at gross direct-to-consumer revenue of £26.35m; as direct-to-consumer revenue for FY22 was £27.16m
this Threshold target was satisfied, resulting in an award of 5% of base salary in respect of this measure. During FY22 the
Group strategically diverted certain stock to wholesale customers and the Committee adjusted the direct-to-consumer
targets accordingly. Personal Target 2 related to leading and supporting the transition of the Group’s accounting and risk
management functions to a new CFO. The Committee were satisfied that by year end FY22 this process had been completed
to an exceptionally high standard with measurable benefits to the Group, resulting in an assessment of this target to Stretch
level and an award of 10% of base salary in respect of this measure.
• G Screawn: Personal Target 1 related to maintaining robust internal risk mitigation procedures. The Committee determined
that business risks had been proactively managed and monitored during FY22 and that engagement with the Audit and
Risk Committee and through broader Board discussions had resulted in a high impact of these procedures on business
performance, resulting in an assessment of this target to Stretch level and an award of 3% of base salary in respect of this
measure. Performance Target 2 related to the effective transition of all Group accounting and risk management functions and
responsibilities to the new CFO prior to 31 July 2022. The Committee determined that this transition had been managed well
in excess of expectations, resulting in significant benefits to Group performance and as such assessed this target to Stretch
level and an award of 17% of base salary being made in respect of this measure.
Long-term incentive plans (audited)
PSP
On 6 June 2022, options were issued to certain members of management with performance conditions attached. The PSP allows
for awards to be granted in various forms and these options took the form of both tax-advantaged CSOP options and unapproved
share options in order to maximise tax efficiency for the Company and employees whilst delivering, in effect, a nil-cost option
in line with the intention of the Committee and standard market practice. Under the PSP a total of 364,000 shares were placed
under option with an exercise price of £Nil to certain members of management under the rules of the PSP, of which C Dent
received 40,000. No awards under the PSP were made to any other Executive Director.
SAYE
On 27 May 2022 options were granted to 89 employees with options granted over 443,410 shares, of which G Screawn received
7,531. No other Executive Directors were granted options under the SAYE. As required by the HMRC rules governing SAYE
schemes, no performance conditions are attached to awards. The 2019 SAYE scheme matured on 1 March 2022 and options over
a total of 943,236 shares were exercised at 39.5p per share. 22,784 of these shares were acquired by G Screawn.
MIP
On 28 February 2017, immediately preceding the Company’s listing on the main market of the London Stock Exchange, a
Management Incentive Plan was adopted, of which the Executive Directors were eligible to participate in. The plan is structured
as an award of A ordinary shares in UP Global Sourcing UK Limited (‘Subsidiary Shares’). The rights attaching to the Subsidiary
Shares include a put option with a three-year vesting period that can be exercised up to seven years following the vesting date.
Exercise of the put option is subject to the share price of UP Global Sourcing Holdings plc exceeding a hurdle set at a 30%
premium to the IPO price. At the point of exercise, the recipient will receive the value of the Subsidiary Shares in either cash or
shares in UP Global Sourcing Holdings plc (‘Plc Shares’), at the discretion of UP Global Sourcing Holdings plc, subject to a cap
of 6.25% of the issued share capital of UP Global Sourcing Holdings plc as at the date of the IPO. The table below shows the
maximum number of Plc Shares that could be issued in exchange for the Subsidiary Shares, based upon the share price of UP
Global Sourcing Holdings plc as at the relevant date had the put options been exercised at such time:
As at 31 July 2022
Subsidiary
Shares Held
Maximum Potential
Plc Shares at
31 July 2022 Face Value
Executive Directors
S Showman 48 – –
A Gossage 32 – –
As at 31 July 2021
Subsidiary
Shares Held
Maximum Potential
Plc Shares at
31 July 2021 Face Value
Executive Directors
S Showman 48 1,271,886 2,569,210
A Gossage 32 847,924 1,712,807
G Screawn 8 211,981 428,202
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Face value is calculated as the number of Plc Shares that could be acquired upon exercise of the put option, multiplied by the
average mid-market share price at the relevant year end date. The price at this date is taken as this is linked to the maximum
potential shares to be issued based upon the conditions at that time. On 10 December 2021, G Screawn exercised his put option
to acquire 149,722 ordinary shares at 196.19p per share and as such, has no remaining award under the MIP at 31 July 2022. As at
31 July 2021, the share price of UP Global Sourcing Holdings plc was above the hurdle price and the awards had vested, so the
put options were exercisable at such date. As at 31 July 2022, the share price of UP Global Sourcing Holdings plc was below the
hurdle price so, at that date, the put option would not be exercisable.
Service contracts
The following table sets out the key terms of the service contracts in place:
Date of appointment Date of service contract Notice period
Executive Directors
S Showman 28 July 2005 28 February 2017 12 Months
A Gossage 28 July 2005 28 February 2017 12 Months
C Dent 4 April 2022 4 April 2022 6 Months
G Screawn 16 December 2010 28 February 2017 6 Months
Non-executive Directors
J McCarthy 1 March 2017 2 November 2020 1 Month
A Rigby 1 March 2017 2 November 2020 1 Month
R Bell 1 March 2017 2 November 2020 1 Month
J Easterbrook 21 September 2020 21 September 2020 1 Month
C Adshead 21 September 2020 21 September 2020 1 Month
All other Outside appointments are disclosed in the Director biographies set out on pages 38 and 39 of the Annual Report.
Payments for loss of office (audited)
There have been no such payments made in either the year ended 31 July 2022 or the comparative period.
Payments to former Directors (audited)
Barry Franks was appointed president on 21 September 2020 following his resignation as a Director on 18 September 2020 and
received £28,333 in respect of his services in this role in the year ended 31 July 2022 (2021: £35,609).
Remuneration Committee Report continued
Remuneration Report continued
64
UP Global Sourcing Holdings plc Annual Report 2022
Directors’ shareholdings (audited)
The table below sets out the total number of shares held at 31 July 2022 by each Director of the Company.
A Ordinary shares
owned
1
Shares owned
outright
Shares
under option
Potential MIP
shares
1
Deferred bonus
shares
2
Executive Directors
S Showman 48 18,530,600 – – –
A Gossage 32 8,052,400 – – –
C Dent – 50,000 40,000 – –
G Screawn – 594,868 224,709 – 12,341
Non-executive Directors
J McCarthy – 935,000 – – –
A Rigby – 25,000 – – –
R Bell – 402,144 – – –
C Adshead – – – – –
J Easterbrook – – – – –
1 The A Ordinary shares held in UP Global Sourcing UK Limited give rise to a potential entitlement to acquire additional shares in UP Global Sourcing Holdings plc, as
explained in the “Long-Term Incentive Plan” section above. The share price at 31 July 2022 did not exceed the hurdle price and as such, the potential MIP shares at
31July 2022 were nil. G Screawn exercised his award on 10 December 2021.
2 Pursuant to the Remuneration Policy, 30% of the award payable under the Annual Bonus Plan to G Screawn in respect of the years ended 31 July 2019 was deferred into
shares that vested in three equal tranches after one, two and three years. The legal title to these shares was held under a nominee agreement by JTC Employer Solutions
Trustee Limited (formerly RBC Trustee Limited), the trustee of the Group’s Employee Benefit Trust. As requiring S Showman and A Gossage to defer a portion of their award
into shares would have triggered a mandatory offer under Rule 9 of the City Code on Takeovers and Mergers, the Remuneration Committee instead arranged (in compliance
with the Remuneration Policy) for 30% of their award to be held as cash, again under a nominee agreement by the trustee of the Group’s Employee Benefit Trust. The second
tranches of one-third of these deferred bonus shares/cash were released on 29 November 2021 with the final third remaining subject to the nominee arrangement. Similarly,
30% of the award payable under the Annual Bonus Plan to G Screawn, SShowman and A Gossage for the year ended 31 July 2021 were deferred inthe same way.
The table below sets out the change in the number of shares held by each Director of the Company in the period since 31 July 2022:
Shares owned
outright at
1 November 2021
Shares owned
outright
31 July 2022
Shares held under
share options
31 July 2022
Potential MIP shares
31 July 2022
Deferred bonus
shares
31 July 2022
Shares owned
outright at
3 November 2022
S Showman 18,530,600 18,530,600 – – – 18,530,600
A Gossage 8,052,400 8,052,400 – – – 8,052,400
C Dent – 50,000 40,000 – – 50,000
G Screawn 416,581 594,868 224,709 – 12,341 594,868
J McCarthy 935,000 935,000 – – – 1,000,000
A Rigby 25,000 25,000 – – – 25,000
R Bell 402,144 402,144 – – – 502,144
C Adshead – – – – – –
J Easterbrook – – – – – –
Shareholding requirement
Base Salary
1
£
Total
Shareholding
Shareholding
Requirement
as % of Salary
Shareholding
Requirement
2
Actual Shareholding
as % of Requirement
S Showman 368,178 18,530,600 250% 860,229 2154%
A Gossage 255,120 8,052,400 250% 596,075 1351%
C Dent
3
145,000 50,000 125% 169,393 30%
G Screawn 124,848 594,868 125% 145,850 408%
1 Base salary above excludes any amount in respect of a car allowance.
2 Salary divided by the 31 July 2022 share price of 107p, multiplied by percentage of salary.
3 C Dent was appointed on 4 April 2022 and is in the process of building up his shareholding to the required 125% of salary within the maximum period of five years as
required by the Remuneration Policy; the Committee will continue to monitor this process.
65
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
1.50
1.25
1.00
0.75
FTSE All Share UP Global Sourcing Holdings plc
1 March
2017
31 July
2017
31 July
2018
31 July
2019
31 July
2020
31 July
2021
31 July
2022
31 January
2018
31 January
2019
31 January
2020
31 January
2021
31 January
2022
0.50
0.25
0
Performance graph and CEO remuneration table
This graph illustrates the Group’s performance against the FTSE All Share since the date of the IPO, measured by Total Shareholder
Return. The FTSE All Share has been chosen as the appropriate comparator, as UP Global Sourcing Holdings plc is a constituent of
this index. This illustrates the movement in a hypothetical £100 invested in the Company from the date of the IPO.
Remuneration Committee Report continued
Remuneration Report continued
The table below sets out the remuneration data for the Director undertaking the role of CEO for the period since IPO:
Chief Executive Year
Single Figure
Remuneration
£’000
Annual Bonus
(% of maximum)
PSP Vesting
(% of maximum)
S Showman 2022 437 10% Nil
S Showman 2021 595 60% Nil
S Showman
1
2020 345 Nil Nil
S Showman 2019 710 79% Nil
S Showman 2018 382 Nil Nil
S Showman 2017 1,434 Nil Nil
1 It is noted that the single figure remuneration for 2020 includes the impact of a salary reduction that was taken by S Showman as a result of the COVID pandemic.
Relative importance of spend on pay
The table below illustrates the Group’s expenditure on pay in comparison to distributions to shareholders by way of dividends.
2022
£’000
2021
£’000
%
Change
Total employee costs (note 7 – Financial Statements) 15,106 13,284 13.7%
Dividends 6,359* 4,363** 45.8%
* Dividends declared and proposed in respect of the year ended 31 July 2022, including any such amounts waived
** Dividends declared and proposed in respect of the year ended 31 July 2021 including any such amounts waived
66
UP Global Sourcing Holdings plc Annual Report 2022
CEO pay ratio
New legislation came into effect in the year ended 31 July 2020 which required quoted companies with 250 or more employees
to publish information on the ratio of CEO pay to employee pay. In accordance with these requirements we have provided in the
table below the ratio of the Group’s CEO single figure remuneration as a ratio of the equivalent single figure for the lower quartile,
median and upper quartile UK employee.
Total pay ratio Method 25th percentile Median 75th percentile
Year ended 31 July 2021 A 24.7:1 22.0:1 15.4:1
Year ended 31 July 2022 A 17.6:1 15.3:1 10.8:1
As permitted by the legislation, we have calculated the ratio using Option A as this is considered to be the most statistically
accurate way. Under this option the full-time equivalent total remuneration has been determined for all UK employees for the
years ended 31 July 2021 and 31 July 2022. Representative employees have then been identified for each quartile using this
data. No assumptions have been used to estimate the full-time equivalent employees. The remuneration figure for the employee
at each quartile was determined with reference to 31 July 2021 and 31 July 2022. The total pay and benefits and the base salary
component of total pay and benefits are set out as follows:
Base Salary
2022
1
£
Total pay and
benefits
2022
£
Base Salary
2021
£
Total pay and
benefits
2021
£
CEO remuneration 352,546 437,425 337,476 594,575
25th percentile employee 21,336 24,802 19,831 24,047
Median employee 27,670 28,500 25,125 27,049
75th percentile employee 37,021 40,601 31,917 38,495
1 The base salary for the CEO excludes car allowance and pension payments taken as cash. These amounts are included in total pay and benefits.
Annual percentage change in remuneration of Directors compared to employees
This table shows the percentage change in salary, taxable benefits and annual bonus set out in the single figure of remuneration
tables, paid to each Director in respect of the financial years ended 31 July 2022 and 31 July 2021 compared to that of the
average pay of all employees of the Group.
Salary/ fees
% change
2022
1
Benefits
% change
2022
Annual
bonus
% change
2022
Executive Directors
S Showman 4.3% 1.1% -82.6%
A Gossage 4.2% 1.2% -76.8%
C Dent n/a n/a n/a
G Screawn 1.1% -2.8% -66.3%
Non-Executive Directors
J McCarthy 3.5% 0.0% 0.0%
A Rigby 3.5% 0.0% 0.0%
R Bell 3.5% 0.0% 0.0%
C Adshead 3.5% 0.0% 0.0%
J Easterbrook 3.5% 0.0% 0.0%
Average pay of all employees
2
7.6% -11.9% -11.8%
1 The salary used in the calculation excludes the pension contributions that were paid as salary but includes car allowances.
2 Average pay is determined using all employees in the Group, as the Parent Company has no employees. The calculations are based on all employees who were
employed throughout the relevant comparator.
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Salary/fees
% change
2021
1, 3
Benefits
% change
2021
Annual bonus
% change
2021
Executive Directors
S Showman +13.9% -3.9% +100%
A Gossage +13.9% -3.0% +100%
G Screawn +4.% -10.8% +100%
Non-executive Directors
J McCarthy +17.2% 0.0% 0.0%
A Rigby +5.2% 0.0% 0.0%
R Bell +5.2% 0.0% 0.0%
C Adshead n/a n/a n/a
J Easterbrook n/a n/a n/a
Average pay of all employees
2
+4.9% -2.3% +104.9%
Salary/ fees
% change
2020
1 3
Benefits
% change
2020
Annual bonus
% change
2020
Executive Directors
S Showman -10.5% -2.9% -100.0%
A Gossage -10.5% -26.2% -100.0%
G Screawn -2.0% -18.1% -100.0%
Non-executive Directors
J McCarthy -3.5% – –
A Rigby -1.7% – –
R Bell -3.3% – –
B Franks -3.3% -8.7% –
Average pay of all employees
2
+3.2% +3.0% -21.3%
1 The salary used in the calculation excludes the pension contributions that were paid as salary but includes car allowances.
2 Average pay is determined using all employees in the Group, as the Parent Company has no employees. The calculations are based on all employees who were
employed throughout the relevant comparator.
3 The salary used in the calculation for the year ended 31 July 2020 includes the impact of the pay reductions taken by the Directors as a result of the COVID-19 pandemic.
Remuneration Committee Report continued
Remuneration Report continued
68
UP Global Sourcing Holdings plc Annual Report 2022
Statement on implementation of remuneration policy in the following financial year
The Committee sought independent advice from its remuneration advisors RSM as part of its work reviewing the base salaries of
the individual Executive Directors on and considered this, together with other market reports on remuneration data from comparable
listed companies when reviewing the base salaries of the Executive Directors, having regard to the scope of the respective roles,
the experience, performance and contribution of the relevant individuals and the markets in which the Group operates. The Board
sought independent advice from RSM on the fees payable to the Non-executive Directors and subsequently considered the level of
those fees on the same basis. As noted above, as a result of this process and with effect from 1 March 2022:
• the Committee increased the base salary of the Chief Executive Officer and Managing Director by 7.9% but reduced their
pension provision by 32.1% resulting in a net increase to their fixed remuneration of 3.6%;
• the Committee increased the base fees payable to the Chairman for his services by 3.5%;
• the Chairman and the Executive Directors increased the base fees of the Non-executive Directors by 3.5%.
Following the Board’s decision to appoint Chris Dent as the Group’s new Chief Financial Officer his remuneration package was
determined by the Committee. In line with the Remuneration Policy the Group’s contribution to his pension was set at 3% of salary
being a level aligned with to that awarded to the general workforce.
Following the establishment of the ESG Committee of the Board and the appointment of Jill Easterbrook to chair that Committee,
the Chairman and the Executive Directors determined that a fee of £10,000 per annum shall be payable for such role with effect
from 1 March 2022.
As noted earlier in this report, the maximum potential bonus achievable for the Executive Directors is 100% of base salary for
both S Showman and A Gossage and 60% of base salary for C Dent. This is the same level as in the prior year (there is no prior
year comparator for C Dent although the maximum potential bonus achievable for G Screawn was 80% of base salary) and is in
accordance withset at or below the maximum levels set by the Remuneration Policy. The bonus is based partly on meeting or
exceeding a specified EBITDA target and partly on the individual exceeding specified strategic and/or individual objectives. No
part of the bonus will be payable unless a threshold level of the EBITDA target is met. In order for the full payment to be made,
EBITDA must exceed the prescribed target by 30%.
The targets for the year ended 31 July 2023 have been determined by the Committee. The Committee has decided that, given
the commercial sensitivity of the detailed performance measures used for the annual bonus plan, disclosing these targets
prospectively is not in the interests of the Group or its shareholders. The targets, performance levels achieved and resulting
payments will be disclosed retrospectively after the end of the performance period.
In the year ended 31 July 2022 the Committee determined that it was appropriate to make awards under the PSP and SAYE as
follows:
• on 6 June 2022, options were issued to certain members of management with performance conditions attached. Under the
PSP a total of 364,000 shares were placed under option with an exercise price of £Nil, of which C Dent received 40,000. No
awards under the PSP were made to any other Executive Director.
• on 27 May 2022 options were granted to 89 employees with options granted over 443,410 shares, of which G Screawn
received 7,531. No other Executive Directors were granted options under the SAYE.
The Committee will consider making further awards under the PSP in the year ending 31 July 2023. The maximum PSP award
opportunity per Executive Director, in respect of any financial year, is limited to rights over shares with a market value at grant
of 100% of base salary. Any vesting of awards made under the PSP will be dependent upon the satisfaction of stretching
performance conditions based upon EPS growth (50% weighting) and a maximum of two strategic or individual objectives (25%
weighting). The targets for the performance period will be determined by the Committee in advance of the awards being granted
and, given the commercial sensitivity of the detailed performance measures used for the PSP, the Committee has determined
that disclosing these targets prospectively is not in the interests of the Group or its shareholders. The targets, performance levels
achieved and resulting payments will be disclosed retrospectively after the end of the performance period.
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UP Global Sourcing Holdings plc Annual Report 2022
Consideration of matters relating to Directors’ remuneration
The following Directors were members of the Committee when matters relating to Directors’ remuneration were considered:
• A Rigby
• J McCarthy
• R Bell
• J Easterbrook
External advisers
The Committee was advised in relation to Directors’ remuneration by RSM UK Tax & Advisory Services LLP (‘RSM’). RSM were
appointed by A Rigby, after a competitive tender process, to provide advice in relation to the formal setting of remuneration
policies, including consideration of legislative matters and best practice, as well as assistance in drafting the annual Remuneration
Report. The Audit and Risk Committee consider RSM to have been objective and independent during the year, as there are no
conflicts of interest. The Committee is comfortable that the RSM engagement partner and team that provides remuneration advice
to the Committee do not have connections with the Company that may impair their independence. The Committee is committed
to regularly reviewing the external advisor relationship. RSM have charged fees of £11,500 for Committee matters in the year to
31July 2022.
Statement of shareholder voting
Shareholder voting in relation to the resolutions to approve the Directors’ Remuneration Policy (December 2020 AGM) and the
Directors’ Remuneration Report (December 2021 AGM), was as follows:
Resolution
For
(No. of shares)
For
(%)
Against
(No. of shares)
Against
(%)
Votes Withheld
(No. of shares)
To receive and approve the Directors’
Remuneration Policy
60,615,515 99.37% 381,321 0.63% 31,338
To receive and approve the Directors’
Remuneration Report
64,599,399 99.01% 646,958 0.99% 30
The Remuneration Report was approved by the Board on 2 November 2022.
On behalf of the Board
Alan Rigby
Chair of the Remuneration Committee
2 November 2022
Remuneration Committee Report continued
Remuneration Report continued
70
UP Global Sourcing Holdings plc Annual Report 2022
Directors’ Report and other statutory disclosures
The Directors present their report and
the audited consolidated Financial
Statements of the Group for the year
ended 31 July 2022.
Strategic Report
The Companies Act 2006 requires the
Directors to present a review of the
business during the year to 31 July 2022
and of the position of the Group at the
end of the financial year, together with
a description of the principal risks and
uncertainties faced. The Strategic Report
can be found on pages 1 to 37 and is
incorporated by reference into this
Directors’ Report.
Corporate governance
statement
The Disclosure and Transparency
Rules require certain information to be
included in a corporate governance
statement in the Directors’ Report.
Information that fulfils the requirements
of the corporate governance statement
can be found in the Corporate
Governance Report on pages 38 to 75
and is incorporated by reference into
this Directors’ Report.
Results and dividends
The Group’s profit after tax for the
financial year ended 31 July 2022, was
£12.4m (2021: £7.3m). In line with our
policy of distributing 50% of the Group’s
adjusted profit after tax, the Board is
pleased to propose a final dividend of
4.82p per share (2021: 3.33p per share).
This takes the total dividend for the
year to 7.12p per share (2021: 5.02p
per share). Subject to shareholder
approval at the AGM on 16 December
2022, the final dividend will be paid
on 27January 2023 to shareholders
on the register at the close of business
on6 January 2023.
Future developments
In accordance with s414A of the
Companies Act 2006, the Group has
disclosed future developments within
its Strategic Report on pages 1 to 37.
Directors
Names, biographical details and
appointment dates of the Directors of the
Company at the date of this report are
shown on pages 38 and 39. In addition
GP Screawn served as a Director of the
Company during the financial year ended
31 July 2022, and resigned from the
Board on 31 July 2022.
Subject to the Company’s Articles of
Association (the ‘Articles’) and any
relevant legislation, the Directors
may exercise all of the powers of the
Company and may delegate their
power and discretion to committees.
The powers of the Directors to issue
or repurchase ordinary shares are set
by resolution at a general meeting of
shareholders. The Articles give the
Directors power to appoint and remove
Directors. Under the terms of reference
of the Nomination Committee, any
appointment must be recommended
by the Nomination Committee for
approval by the Board. Additionally, the
Company may by ordinary resolution,
subject to the wider provisions of
the Articles, appoint a Director or the
Company may by special resolution, or
in accordance with the provisions of the
Companies Act 2006, remove a Director.
In compliance with the UK Corporate
Governance Code, the Articles require
all Directors to retire and submit
themselves for re-election at each
Annual General Meeting.
Directors’ indemnity provisions
As at the date of this report, indemnities
are in force between the Company
and each of its Directors under which
the Company has agreed to indemnify
each Director, to the extent permitted
by law, in respect of certain liabilities
incurred as a result of carrying out their
role as a Director of the Company. The
Directors are also indemnified against
the costs of defending any criminal
or civil proceedings, or any claim in
relation to the Company or brought by a
regulator as they are incurred, provided
that where the defence is unsuccessful
the Director must repay those defence
costs to the Company. The Company’s
total liability under each indemnity is
limited to £10m for each event, giving
rise to a claim under that indemnity.
Theindemnities are qualifying third-
party indemnity provisions for the
purposes of the Companies Act 2006.
In addition, the Company maintained a
Directors’ and Officers’ liability insurance
policy throughout the financial year and
has renewed that policy.
Political donations and
political expenditure
No Group company made any political
donations or incurred any political
expenditure in the year (2021: £Nil).
Post balance sheet events
Other than the Directors proposing a
final dividend, as set out in note 11 to
the Financial Statements, there were
no other relevant post balance sheet
events requiring disclosure.
Global operations
The Group’s head office and primary
distribution facilities are in Oldham. In
addition, the Group also has a presence
in China, Germany and Poland. The
registered Representative Office in
China strengthens the Group’s Far East
sourcing and quality functions, managing
orders with suppliers on a day-to-day
basis as well as providing a Far East
showroom. The registered branches
in Germany and Poland employ local
sales teams to support theGroup’s
international strategy.
Employee engagement
The Group places considerable value on
the involvement of its employees and
has continued to keep them informed
on matters affecting them as employees
and on the various factors affecting the
performance of the Group. Employees
are consulted regularly on a wide range
of matters affecting their current and
future interests and open feedback
from all employees across the Group
is encouraged through our Employee
Consultation Group (‘ECG’) and
employee annual People Engagement
Survey, which is led by the ECG.
Employment of disabled
persons
Suitable procedures are in operation to
support the Group’s policy that disabled
persons, whether registered or not,
shall be considered for employment
and subsequent training, career
development and promotion on the
basis of their aptitudes and abilities.
Where members of staff become
disabled, every effort is made to ensure
that they are retrained according to their
abilities and reasonable adjustments
are made to the working environment
toaccommodate their needs.
71
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UP Global Sourcing Holdings plc Annual Report 2022
Directors’ Report and other statutory disclosures continued
Substantial shareholdings
As at the date of this report, the Company had been notified under Rule 5 of the Financial Conduct Authority’s Disclosure and
Transparency Rules of the following interests in the Company’s ordinary share capital:
Number of shares % of voting rights Type of holding
Schroder Investment Management 13,582,548 15.2% Indirect
Ennismore Fund Management Limited 7,757,762 8.7% Indirect
Slater Investments Limited 3,646,756 5.1% Indirect
UP Global Sourcing Employee Benefit Trust 3,089,051 3.5% Indirect
Relationships with controlling
shareholders
Under Listing Rule 9.8.4R(14) the
Company has entered into a relationship
agreement with the controlling concert
party. During the period the Company
has complied with the independence
provisions in the agreement, and as far
as the Company is aware the controlling
concert party has also complied with
the independence provisions and the
procurement obligation in the agreement.
Share capital
At 31 July 2022, the Company’s entire
issued share capital comprised a
single class of 89,312,457 ordinary
shares of 0.25p each. Further details
of the Company’s issued share capital,
together with details of shares allotted
during the year, is shown in note 27
to the Financial Statements. All of the
Company’s issued ordinary shares are
fully paid up and rank equally in all
respects. The rights attaching to the
shares are set out in the Articles.
On a show of hands at a general
meeting of the Company, every holder
of ordinary shares present in person
or by proxy and entitled to vote shall
have one vote and, on a poll, every
member present in person or by proxy
and entitled to vote shall have one
vote for every ordinary share held. The
Notice of AGM gives full details of the
deadlines for exercising voting rights in
relation to resolutions to be passed at
the AGM. All proxy votes are counted
and the numbers for, against or withheld,
in relation to each resolution, are
announced at the AGM and published
on the Company’s website after the
meeting. Subject to the relevant
statutory provisions and Articles,
shareholders are entitled to a dividend
where declared and paid out of profits
available for such purposes.
There are no restrictions on the transfer
of ordinary shares in the Company
otherthan:
• those which may from time to time
be applicable under existing laws
and regulations (for example, insider
trading laws); and
• pursuant to the Listing Rules of the
Financial Conduct Authority, whereby
certain Directors and employees of
the Company require the approval
of the Company to deal in the
Company’s ordinary shares and
are prohibited from dealing during
closed periods.
A dividend waiver is in place in respect
of the Trustee’s shareholdings under the
UPGS EBT. Unless the Company directs
that the Trustee may vote on a particular
occasion, the Trustee abstains from
voting in respect of the shares it holds
for the benefit of the UPGS EBT. If the
Company directs that the Trustee may
vote, the Trustee may vote, or abstain
from voting, in the manner that it thinks
fit in its absolute discretion.
At 31 July 2022, pursuant to shareholder
resolutions passed on 10 December
2021, the Company had authority
to: (i) issue ordinary shares without
first offering such shares to existing
shareholders, up to a value of 5% of
the Company’s issued share capital;
and (ii) purchase up to 10% of its
issued share capital (subject to, if
necessary, a “whitewash” procedure
being undertaken prior to exercise of
such authority pursuant to Rule 9 and
37 of the City Code on Takeovers and
Mergers, as set out in the Explanatory
Notes to the AGM Notice for 2021). Such
authorities will expire at the conclusion
of the AGM of the Company on 16
December 2022. It is proposed that
such authorities are renewed at the AGM
for 2023, as detailed in the AGMNotice.
The Company is not aware of any
agreements between shareholders that
may result in restrictions on the transfer
of securities or on voting rights.
Change of control
As disclosed in the Directors’
Remuneration Report, awards under the
Company’s share incentive plans contain
provisions relating to a change of
control of the Company. The Company’s
banking facilities with HSBC Bank plc
may, at the discretion of the lender,
become repayable upon a change
ofcontrol.
Articles of Association
The Company’s Articles may only be
amended by a special resolution at a
general meeting of shareholders. No
amendments are proposed to be made
to the existing Articles at the 2022 AGM.
Carbon emission reporting
Disclosures regarding greenhouse gas
emissions, energy consumption and
energy efficiency action are included in
the Strategic Report on page 28. This
information is incorporated by reference
into this Directors’ Report.
Financial risk management and
internal controls
Information on the exposure of the
Group to certain financial risks and on
the Group’s objectives and policies for
managing each of the Group’s main
financial risk areas is detailed in the
financial risk management disclosure
innote 26.
72
UP Global Sourcing Holdings plc Annual Report 2022
Contracts of significance
The contracts of significance, as defined by Listing Rule 9.8, in existence during the financial year relate to the lease of the
Group’s offices, showroom and distribution facilities at Manor Mill and Heron Mill. The lease for Manor Mill, originally entered
into on 11 November 2016 by UP Global Sourcing UK Limited was extended on 21 January 2020 on normal commercial terms.
The lessor is Berbar Properties Limited, a company of which former Director Barry Franks is a director and sole shareholder. The
lease is for a term of ten years and the current rent is £180,000 per annum. The lease of Heron Mill was entered into by UP Global
Sourcing UK Limited on normal commercial terms on 14 April 2016 with Heron Mill Limited, which is controlled by its Directors
Simon Showman and Andrew Gossage and former Director Barry Franks. The lease is for a term of seven years and the current
rent is £335,000 per annum.
Going concern
The Financial Statements have been prepared on a going concern basis, as set out in the Statement of Directors’ Responsibilities
on page 75. Having considered the ability of the Company and the Group to operate within its existing facilities and meet its debt
covenants, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in
operational existence for the foreseeable future (being at least one year following the date of approval of this Annual Report).
Accordingly, they consider it appropriate to adopt the going concern basis in preparing the Financial Statements. The Group’s
Viability Statement is set out on page 36 of the Strategic Report.
Disclosure of information under listing rule 9.8.4R
The information required to be disclosed under Listing Rule 9.8.4R, where applicable to the Company, can be found in the 2022
Annual Report and Financial Statements at the references provided below:
Section Description Annual report location
(1) Interest capitalised Not applicable
(2) Publication of unaudited financial information Page 114
(4) Details of long-term incentive schemes Pages 47 to 70
(5) Waiver of emoluments by a Director Not applicable.
(6) Waiver of future emoluments by a Director Not applicable
(7) Non-pre-emptive issues of equity for cash Not applicable
(8) Item (7) in relation to major subsidiary undertakings Not applicable
(9) Parent participation in a placing by a listed subsidiary Not applicable
(10) Contracts of significance Page 72
(11) Provision of services by a controlling shareholder Remuneration Report
(12) Shareholder waivers of dividends Page 72
(13) Shareholder waivers of future dividends Page 72
(14) Agreements with controlling shareholders Directors Report
73
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UP Global Sourcing Holdings plc Annual Report 2022
Directors’ Report and other statutory disclosures continued
Directors’ statement as to
disclosure of information to
auditor
So far as each Director is aware, there is
no relevant audit information (as defined
by the Companies Act 2006) of which
the Company’s auditor is unaware.
Each Director has taken all steps that
ought to be taken by a Director, to make
themselves aware of and to establish
that the auditor is aware of any relevant
audit information.
Auditor
The Audit and Risk Committee has
responsibility delegated from the Board
for making recommendations on the
appointment, reappointment, removal
and remuneration of the external
auditor. In accordance with section
485 of the Companies Act 2006, a
resolution proposing that BDO LLP be
reappointed as auditors of the Group
and to authorise the Audit and Risk
Committee to fix their remuneration will
be proposed at the 2022 AGM.
Annual General Meeting
The Company’s AGM will be held at
14:00 pm on 16 December 2022 at the
Company’s registered office, Manor
Mill, Oldham, OL9 0DD. The Notice
of the AGM accompanies this Annual
Report and will be available on the
Group’s website at www.upgs.com. Two
resolutions will be proposed as special
business. Explanatory notes on these
resolutions are set out in the Notice of
the meeting.
Recommendation to
shareholders
The Board considers that all of the
resolutions to be considered at the AGM
are in the best interests of the Company
and its shareholders as a whole and
unanimously recommends that you vote
in their favour.
By order of the Board
Chris Dent
Company Secretary
2 November 2022
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UP Global Sourcing Holdings plc Annual Report 2022
Statement of Directors’ responsibilities
in respect of the financial statements
The Directors are responsible for
preparing the Annual Report and the
financial statements in accordance with
UK adopted international accounting
standards and applicable law and
regulations. Company law requires the
Directors to prepare financial statements
for each financial year. Underthat law
the Directors are required to prepare
the Group and Company financial
statements in accordance with UK
adopted international accounting
standards. Under company law the
Directors must not approve the financial
statements unless they are satisfied that
they give a true and fair view of the state
of affairs of the Group and Company and
of the profit or loss for the Group and
Company for that period.
In preparing the financial statements, the
Directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and accounting
estimates that are reasonable and
prudent;
• state whether they have been
prepared in accordance with UK
adopted international accounting
standards, subject to any material
departures disclosed and explained
in the financial statements.
• prepare the financial statements
on the going concern basis unless
it is inappropriate to presume that
the Group and the Company will
continue in business;
• prepare a Directors’ Report, a
Strategic Report and Directors’
remuneration report which comply
with the requirements of the
Companies Act 2006.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Company and
enable them to ensure that the financial
statements comply with the Companies
Act 2006.
They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable steps
for the prevention and detection of
fraud and other irregularities. The
Directors are responsible for ensuring
that the Annual Report and accounts,
taken as a whole, are fair, balanced,
and understandable and provides the
information necessary for shareholders
to assess the Group’s performance,
business model and strategy.
Website publication
The Directors are responsible for
ensuring the Annual Report and the
financial statements are made available
on a website. Financial statements are
published on the Company’s website in
accordance with legislation in the United
Kingdom governing the preparation and
dissemination of financial statements,
which may vary from legislation in other
jurisdictions. The maintenance and
integrity of the Company’s website is
the responsibility of the Directors. The
Directors’ responsibility also extends
to the ongoing integrity of the financial
statements contained therein.
Directors’ responsibilities
pursuant to DTR4
The Directors confirm to the best of their
knowledge:
• The financial statements have
been prepared in accordance with
the applicable set of accounting
standards, give a true and fair view
of the assets, liabilities, financial
position and profit and loss of the
Group and Company.
• The Annual Report includes a fair
review of the development and
performance of the business and
the financial position of the Group
and Company, together with a
description of the principal risks and
uncertainties that they face.
This Directors’ Report and responsibility
statement was approved by the Board
of Directors on 2 November 2022 and is
signed on its behalf by
Chris Dent
Company Secretary
2 November 2022
75
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Independent Auditor’s report
To the members of UP Global Sourcing Holdings plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
31July2022 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting
standards;
• the Parent Company financial statements have been properly prepared in accordance with UK adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of UP Global Sourcing Holdings Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 July 2022 which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive
Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of
Financial Position, Company Statement of Changes in Equity, Consolidated Statement of Cashflows, the Company Statement of
Cash Flows and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and as
regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion. Our audit opinion is consistent with the additional report to the Audit Committee.
Independence
Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 15 July 2016 to audit
the financial statements for the year ending 31 July 2016 and subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is seven years, covering the years ending 31 July 2016 to 31 July 2022.
Weremain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities,
andwe have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited
by that standard were not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting included:
• We read management’s assessment that supports the Board’s conclusions about the appropriateness of using the going
concern basis for the preparation of the financial statements and the disclosures made in the financial statements around
going concern;
• We considered the appropriateness of the forecasts prepared by testing their mechanical accuracy and assessing historical
forecasting accuracy by comparison of past forecasts to achieved results;
• We obtained an understanding of the financing facilities from the finance agreements, including the nature of the facilities,
covenants and attached conditions;
• We agreed the facility and covenant headroom calculations to the banking agreements and re-performed the calculations;
• We challenged the Directors on the key assumptions included in the stress test scenarios used by management including a
fall in revenue and margin reductions and looked at the residual working capital to consider whether the Group will remain a
going concern; and
• We reviewed the going concern disclosures in the financial statements, and assessed their consistency with the forecasts and
other information obtained during the course of our audit.
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UP Global Sourcing Holdings plc Annual Report 2022
Financial Statements
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
Overview
Coverage
99% (2021: 99%) of Group profit before tax
100% (2021: 100%) of Group revenue
99% (2021: 99%) of Group total assets
2022 2021
Key audit matters
Rebates
Inventory provisioning
Acquisition accounting
Acquisition accounting was considered to be a key audit matter in 2021 due to the acquisition
of Salter Brands Limited in the prior financial year.
We have re-assessed the risk level of inventory provisioning this year and no longer consider
this to be a key audit mater for this financial year.
Materiality
Group financial statements as a whole
£750,000 (2021: £560,000) based on 5% (2021: 5%) of Profit before tax (2021 – underlying profit before tax).
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
The Group operates through a number of legal entities, which form reporting components. The Group was deemed to have two
significant components, UP Global Sourcing UK Limited, the Group’s main trading company and UP Global Sourcing Holdings
Plc, the Parent Company of the Group, both of which are based at the Group’s registered office. The Group audit team have
completed a full scope audit on all UK based companies in the Group including the two significant components with coverage of
100 % (2021: 100%) of revenue, 99% (2021: 99%) of profit before tax and 99% (2021: 99%) of net assets. The remaining subsidiaries
were considered to be insignificant to the Group audit and no further work was undertaken on these.
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Rebates (note 4 and accounting policy in note 3)
The Group has a number of rebate agreements in
place with its customers. As described in note 4 the
estimation of the rebate charge and year end accrual
requires a level of estimation and judgement by
management, which includes estimation of revenue
until the end of the relevant period in the rebate
contract, and for uncontracted rebates the estimation
of further debit notes expected. These estimates are
based on past history and the level of recent sales
made to each customer. As a result of the level of
estimation and judgements applied in this area, we
considered rebates to be a key audit matter.
We obtained assurance over the rebate charge and accrual by:
• Agreeing the calculation of a sample of rebate charges to the underlying rebate
agreement and revenue for the year. Where this involved estimation, we reviewed
the basis of such estimates by agreeing the revenue recognised in respect of these
rebates up to the year-end date for these customers and recalculating estimates for
any future sales within the rebate period;
• We have reviewed the level of non-current rebate accruals held by the Group and
using past history of supplier invoices estimated the level of accrual required at the
year end;
• Comparison of the rebate charge and accrual to our expectations based
on the revenue in the year and past history to identify any variances above
15% of performance materiality which were then substantiated to supporting
documentation, such as post year claims and payments; and
• Determination of the accuracy of the estimation of the prior year rebate accrual by
agreeing them to claims received during the year and the rebate history.
Key observations:
Based on the procedures completed we found the estimates made by management
in calculating the rebate charge and year end accrual to be reasonable.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Group financial statements Parent Company financial statements
2022 £000’s 2021 £000’s 2022 £000’s 2021 £000’s
Materiality 750 540 390 300
Basis for determining
materiality
5% of Profit before tax. 5% of Profit before tax
after adding back one-off
underlying items.
Set at 2% of investments
value, rounded down.
Capped at 55% of Group
materiality.
Rationale for the
benchmark applied
In the current year materiality was determined
using 5% of profit before taxation (2021 – underlying
profit before tax). This was deemed to be measure which
would be considered most important to the
users of the Financial Statements as one of the
Group’s key statutory KPIs.
Materiality has been set
based on investment
valuation as given this is
a holding company this is
the principal metric within
the financial statements.
Calculated as a
percentage of Group
materiality for Group
reporting purposes
given the assessment of
aggregation risk.
Performance
materiality
562 405 290 225
Basis for determining
performance materiality
75% of materiality
This was set based on the low level of adjustments identified in previous years
and management’s attitude to these adjustments.
Independent Auditor’s report continued
78
UP Global Sourcing Holdings plc Annual Report 2022
Component materiality
We set materiality for each component of the Group based on a percentage of between 52% and 95% of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged
from £13k to £710k. In the audit of each component, we further applied performance materiality levels of 75% of the component
materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £26,000 (2021:
£19,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual
Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern
and longer-term
viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment
covers and why the period is appropriate.
Other Code
provisions
• Directors’ statement on fair, balanced and understandable;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks;
• The section of the Annual Report that describes the review of effectiveness of risk management and
internal control systems; and
• The section describing the work of the Audit Committee.
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UP Global Sourcing Holdings plc Annual Report 2022
Independent Auditor’s report continued
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic Report
and Directors’
Report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Matters on which
we are required
to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:
Based on our understanding and accumulated knowledge of the Group and the sectors in which it operates we considered the
risk of acts by the Group which were contrary to applicable laws and regulations, including fraud and whether such actions or
non-compliance might have a material effect on the financial statements. These included but were not limited to those that relate
to the form and content of the financial statements, such as the Group accounting policies, international accounting standards,
the UK Companies Act 2006, the Listing Rules and the UK Corporate Governance Code; and industry related such as compliance
with health and safety legislation, employment law and taxation legislation. We communicated relevant laws and regulations to all
team members, including component audit teams, to ensure they were aware of any relevant regulations in relation to their work.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the
risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries, revenue
being recognised in the incorrect period around the year end and management bias in accounting estimates.
80
UP Global Sourcing Holdings plc Annual Report 2022
Our audit procedures included, but were not limited to:
• Obtaining an understanding of the control environment in monitoring compliance with laws and regulations;
• Agreeing the financial statement disclosures to underlying supporting documentation;
• Testing a sample of revenue transactions around the year end to supporting documentation (including invoice and proof of
delivery) to assess if the revenue had been recorded in the correct period;
• We reviewed the minutes of Board meetings throughout the period to identify any issues which were pertinent to the audit
and held further conversations with relevant employees such as the Group CFO to ensure that we were aware of any potential
instances of non-compliance;
• We discussed among the Group engagement team, how and where non-compliance with laws and regulations and fraud
might occur in the financial statements and any potential indicators of fraud. The Engagement Partner has accumulated
extensive knowledge of the industry in which the Group operates.
• We addressed the risk of management override of internal controls, considered to be in connection with the posting of
inappropriate journals and bias in significant management estimates and judgements, through testing journal entries
processed during the year by agreement to supporting documentation, including journal entries posted with unusual account
combinations or including specific key words and evaluating whether there was evidence of bias in setting significant
estimates and judgements by the Directors that represented a risk of material misstatement due to fraud.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
Stuart Wood (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Manchester, UK
Date: 2 November 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
81
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Consolidated Income Statement
For the year ended 31 July 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2022
Note
2022
£’000
2021
£’000
Revenue 5 154, 191 136,367
Cost of sales (115,837 ) (106, 136 )
Gross profit 38,354 30,231
Adjusted earnings before interest, tax, depreciation, amortisation, share-based
payments & non-recurring items (‘Adjusted EBITDA’)
Depreciation and loss on disposal of fixed assets 6 (2,044 ) (1,607 )
Amortisation of intangibles 6 (22 ) (16 )
Share-based payment expense 24 (403 ) (228 )
Non-recurring items 6 – (1,414 )
Total administrative expenses (22,073 ) (20,205 )
Operating profit 6 16,281 10,026
Finance expense 8 (842 ) (518 )
Profit before tax 15,439 9,508
Tax expense 9 (3,069 ) (2, 195 )
Profit for the year attributable to equity holders of the Company 12,370 7 ,313
All amounts relate to continuing operations
Earnings per share
Basic 10 14.3 9. 3
Diluted 10 13.9 9 .1
2022
£’000s
2021
£’000s
Profit for the year 12,370 7 ,313
Items that may subsequently be reclassified to the income statement
Fair value movements on cash flow hedging instruments 3,239 (162 )
Hedging instruments recycled through the income statement at the end of hedging relationships 162 961
Items that will not subsequently be reclassified to the income statement
Foreign currency translation 11 (13 )
Other comprehensive income 3,412 786
Total comprehensive income for the year attributable to the equity holders of the Company 15, 782 8,099
82
UP Global Sourcing Holdings plc Annual Report 2022
Consolidated Statement of Financial Position
At 31 July
Note
2022
£’000
2021
£’000
Assets
Intangible assets 13 37 ,025 36,929
Property, plant and equipment 14 6,369 5, 719
Total non-current assets 43,394 42,648
Inventories 17 29, 162 21,674
Trade and other receivables 18 32, 194 26,544
Derivative financial instruments 22 4, 142 384
Current tax asset – 62
Cash and cash equivalents 6,202 133
Total current assets 71, 700 48, 797
Total assets 115,094 91,445
Liabilities
Trade and other payables 19 (29 ,644 ) (29,451 )
Derivative financial instruments 22 – (220 )
Current tax (170 ) –
Borrowings 20 (22,314 ) (7 ,951 )
Lease liabilities 21 (817 ) (771 )
Deferred consideration 15 (987 ) (990 )
Total current liabilities (53,932 ) (39,383 )
Net current assets 17 , 768 9,414
Borrowings 20 (8, 144 ) (10 ,847 )
Deferred tax 16 (7 ,585 ) (6, 147 )
Deferred consideration 15 – (983 )
Lease liabilities 21 (1,940 ) (2,030 )
Total non-current liabilities (17 ,669 ) (20,007 )
Total liabilities (71,601 ) (59,390 )
Net assets 43,493 32,055
Equity
Share capital 23 223 223
Share premium 23 14,334 14,334
Employee Benefit Trust reserve 23 (1,571 ) (2, 152 )
Share-based payment reserve 23 1, 166 1,024
Hedging reserve 23 3,239 (162 )
Retained earnings 26, 102 18, 788
Equity attributable to owners of the Group 43,493 32,055
These Financial Statements were approved by the Board of Directors and authorised for issue on 2 November 2022 and signed
on its behalf by:
Simon Showman Chris Dent
Chief Executive Officer Chief Financial Officer
Company registered number: 5432142
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Company Statement of Financial Position
At 31 July
Note
2022
£’000
2021
£’000
Assets
Investments 12 19,974 19,706
Trade and other receivables 18 33,151 32,000
Total non-current assets 53,125 51,706
Trade and other receivables 18 431 2,264
Current tax asset 106 44
Total current assets 537 2,308
Total assets 53,662 54,014
Liabilities
Trade and other payables 19 (11,204) (3,931)
Borrowings 20 (1,937) (1,937)
Deferred consideration 15 (987) (990)
Total current liabilities (14,128) (6,858)
Net current liabilities (13,591) (4,550)
Borrowings 20 (8,434) (10,549)
Deferred consideration 15 – (983)
Total non-current liabilities (8,434) (11,532)
Total liabilities (22,562) (18,390)
Net assets 31,100 35,624
Equity
Share capital 23 223 223
Share premium 23 14,334 14,334
Share-based payment reserve 23 1,166 1,024
Hedging reserve 23 268 27
Retained earnings 15,109 20,016
Total equity 31,100 35,624
The Directors have taken advantage of the exemption available under s408 of the Companies Act 2006 and have not
presented an income statement for the Company. The Company’s loss for the year was £338,000 (2021: £97,000) and the total
comprehensive income for the year was a loss of £97,000 (2021: £67,000).
These Financial Statements were approved by the Board of Directors and authorised for issue on 2 November 2022 and signed
on its behalf by:
Simon Showman Chris Dent
Chief Executive Officer Chief Financial Officer
Company registered number: 5432142
84
UP Global Sourcing Holdings plc Annual Report 2022
Consolidated Statement of Changes in Equity
For the year ended 31 July
Note
Share
capital
£’000
Share
premium
£’000
EBT
reserve
£’000
Share-based
payment reserve
£’000
Hedging
reserve
£’000
Retained
earnings
£’000
Total
Equity
£’000
As at 1 August 2020 205 2 (2, 155 ) 796 (961 ) 15,527 13,414
Profit for the year – – – – – 7 ,313 7 ,313
Foreign currency retranslation – – – – – (13 ) (13 )
Cash flow hedging movement – – – – 799 – 799
Total comprehensive income for the year – – – – 799 7 ,300 8,099
Transactions with shareholders:
Ordinary shares issued 18 14,332 – – – – 14,350
Dividends paid 11 – – – – – (4,409 ) (4,409 )
Share-based payments 24 – – – 228 – 370 598
Purchase/Sale of shares by the EBT – – 3 – – – 3
As at 31 July 2021 223 14,334 (2, 152 ) 1,024 (162 ) 18, 788 32,055
Profit for the year – – – – – 12,370 12,370
Foreign currency retranslation – – – – – 11 11
Cash flow hedging movement – – – – 3,401 – 3,401
Total comprehensive income for the year – – – – 3,401 12,381 15, 782
Transactions with shareholders:
Dividends paid 11 – – – – – (4,830 ) (4,830 )
Share-based payments 24 – – – 142 – (29 ) 113
Purchase/Sale of shares by the EBT – – 581 – – (208 ) 373
As at 31 July 2022 223 14,334 (1,571 ) 1, 166 3,239 26, 102 43,493
85
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Company Statement of Changes in Equity
For the year ended 31 July 2021
Note
Share
capital
£’000
Share
premium
£’000
Share-based
payment reserve
£’000
Hedging
reserve
£’000
Retained
earnings
£’000
Total
Equity
£’000
As at 1 August 2020 205 2 796 (3) 24,522 25,522
Loss for the year – – – – (97) (97)
Cash flow hedging movement – – – 30 – 30
Total comprehensive income for the year – – – 30 (97) (67)
Transactions with shareholders:
Ordinary shares issued 18 14,332 – – – 14,350
Dividends payable 11 – – – – (4,409) (4,409)
Share-based payments 24 – – 228 – – 228
As at 31 July 2021 223 14,334 1,024 27 20,016 35,624
Loss for the year – – – – (338) (338)
Cash flow hedging movement – – – 241 – 241
Total comprehensive income for the year – – – 241 (338) (97)
Transactions with shareholders:
Dividends payable 11 – – – – (4,830) (4,830)
Share-based payments 24 – – 142 – 261 403
As at 31 July 2022 223 14,334 1,166 268 15,109 31,100
86
UP Global Sourcing Holdings plc Annual Report 2022
Consolidated Statement of Cash Flows
For the year ended 31 July
Note
2022
£’000
2021
£’000
Net cash flow from operating activities
Profit for the year 12,370 7 ,313
Adjustments for:
Finance costs 8 842 518
Income tax expense 9 3,069 2, 195
Depreciation 14 2,044 1,607
Amortisation 13 22 16
Derivative financial instruments 274 (678 )
Share-based payments 24 403 228
Working capital adjustments
(Increase) in inventories 17 (7 , 721 ) (368 )
(Increase) in trade and other receivables 18 (5,649 ) (8,091 )
Increase in trade and other payables 19 1,221 9,031
Net cash from operations 6,875 11, 771
Income taxes paid (2,345 ) (2,566 )
Cash generated from operations 4,530 9,205
Cash flows used in investing activities
Acquisition of subsidiary 15 (1,960 ) (30,578 )
Purchase of intangible assets – (111 )
Purchase of property, plant and equipment (1,843 ) (2,260 )
Net cash used in investing activities (3,803 ) (32,949 )
Cash flows used in financing activities
Sale of own shares 373 2
Proceeds from borrowings 14,347 16,048
Repayment of borrowings (2, 766 ) (1, 144 )
Principal paid on lease obligations (936 ) (713 )
Proceeds from issue of new shares (net of costs) – 14,350
Debt issue costs paid – (245 )
Dividends paid 11 (4,830 ) (4,409 )
Interest paid (850 ) (335 )
Net cash generated by finance activities 5,338 23,554
Net income/(decrease) in cash and cash equivalents 6,065 (190 )
Exchange gains/(losses) on cash and cash equivalents 4 (5 )
Cash and cash equivalents brought forward 133 329
Cash and cash equivalents carried forward 6,202 133
Reconciliation of cash flow to the Group net debt position
Group
Overdraft
£’000
Term Loan
£’000
RCF
£’000
Invoice
discounting
£’000s
Import loans
£’000s
Loan Fees
£’000
Total liabilities
from financing
activities
£’000
Cash
£’000
Net bank
debt
£’000
At 1 August 2020 – – (225) – (3,903) 136 (3,992) 329 (3,663)
Financing cash flows – (10,000) (2,758) (3,290) 1,144 245 (14,659) – (14,659)
Other cash flows – – – – – – – (196) (196)
Other changes – – – – – (147) (147) – (147)
At 31 July 2021 – (10,000) (2,983) (3,290) (2,759) 234 (18,798) 133 (18,665)
Financing cash flows (6,020) 2,000 766 (2,907) (5,420) – (11,581) 6,020 (5,561)
Other cash flows – – – – – – – 45 45
Other changes – – – – – (79) (79) 4 (75)
At 31 July 2022 (6,020) (8,000) (2,217) (6,197) (8,179) 155 (30,458) 6,202 (24,256)
87
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Company Statement of Cash Flows
For the year ended 31 July
Note
2022
£’000
2021
£’000
Net cash flow from operating activities
Loss for the year (338) (97)
Adjustments for:
Finance and dividend income (81) (188)
Finance costs 349 204
Income tax credit (73) (44)
Working capital adjustments
(Increase)/Decrease in trade and other receivables 53 39
(Decrease)/Increase in trade and other payables (1,251) 746
Net cash used in operations (1,341) 660
Cash flows from investing activities
Movement in loans from Group undertakings 9,539 8,437
Acquisition of subsidiary and repayment of vendor loan notes 15 (851) (30,578)
Costs of acquisition 15 – (949)
Dividends received 81 91
Interest received – 97
Net cash generated from/(used in) investing activities 8,770 (22,902)
Cash flows used in financing activities
Proceeds from borrowings – 12,671
Repayment of borrowings (2,178) –
Proceeds from issue of new shares (net of costs) – 14,350
Debt issue costs paid – (201)
Dividends paid 11 (4,830) (4,409)
Interest paid (421) (169)
Net cash (used in)/generated by finance activities (7,429) 22,242
Net increase in cash and cash equivalents – –
Cash and cash equivalents brought forward – –
Cash and cash equivalents carried forward – –
Reconciliation of cash flow to the Company net debt position
Company
Term Loan
£’000
RCF
£’000
Loan fees
£’000
Total liabilities from
financing activities
£’000
At 1 August 2020 – (13) – (13)
Financing cash flows (10,000) (2,671) 201 (12,470)
Other changes – – (3) (3)
At 31 July 2021 (10,000) (2,684) 198 (12,486)
Financing cash flows 2,000 177 – 2,177
Other changes – – (62) (62)
At 31 July 2022 (8,000) (2,507) 136 (10,371)
88
UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements
1. General information
Exchange and incorporated and domiciled in England and Wales UP Global Sourcing
2. Basis of preparation
The consolidated Group Financial Statements have been prepared in accordance with UK adopted international financial
reporting standards. The consolidated Group Financial Statements and Company Financial Statements are presented in Sterling
and rounded to the nearest thousand unless otherwise indicated. The Financial Statements are prepared on the historical cost
basis, except for certain financial instruments and share-based payments that have been measured at fair value. The Directors
have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and have not presented an
income statement or a statement of comprehensive income for the Company alone.
Going Concern
The Directors have adopted the going concern basis in preparing these accounts after assessing the principal risks and having
considered the impact of severe but plausible downside scenarios, including further COVID restrictions, supply chain issues and
demand led falls in revenue due to the cost of living crisis. The Directors have considered a number of impacts on sales, profits
and cash flows, taking into account experiences learnt from previous business interruptions. The Directors have considered the
resilience of the Group in severe but plausible scenarios, taking account of its current position and prospects, the principal risks
facing the business, how these are managed and the impact that they would have on the forecast financial position. In assessing
whether the Group could withstand such negative impacts, the Board has considered cash flow, impact on debt covenants and
headroom against its current borrowing facilities. At the year end the Group had a net bank debt/adjusted EBITDA ratio of 1.3x
(FY21: 1.4x), which represents net bank debt of £24.3m (FY21: £18.8m). The Group maintains comfortable levels of headroom within
its bank facilities, with headroom at 31 July 2022 of £17.8m (FY21: £16.2m). The Group’s banking facilities comprise a term loan
of £8.5m (FY21: £10.0m), a revolving credit facility of £8.2m (FY21: £8.2m), an import loan facility of £9.0m (FY21: £8.7m), and an
invoice discounting facility with a total limit of £23.5m (FY21: £23.5m).
The Group’s projections show that the Group will be able to operate within its existing banking facilities and covenants.
Therefore, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational
existence for at least 12 months from the date of approval of these Financial Statements and, as a result, they have applied the
going concern principle in preparing its consolidated and Company Financial Statements.
3. Accounting policies
The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated Financial Statements incorporate the assets, liabilities, income and expenses of the Company and entities
controlled by the Company (its subsidiaries) made up to the Company’s accounting reference date. Control is achieved when the
Company has the power over the investee, is exposed or has rights to variable return from its involvement with the investee and
has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the period are included in the
consolidated income statement from the date that the Company gains control until the date when the Company ceases to control
the subsidiary.
Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies used into
line with the Group’s accounting policies. All intra Group assets and liabilities, equity, income, expenses and cash flows, relating to
transactions between the members of the Group, are eliminated on consolidation.
The results of overseas subsidiaries are translated at the monthly average rates of exchange during the period and their
statements of financial position at the rates ruling at the reporting date. Exchange differences arising on translation of the opening
net assets and on foreign currency borrowings or deferred consideration, to the extent that they hedge the Group’s investment in
such subsidiaries, are reported in the statement of comprehensive income. All Financial Statements are drawn up to 31 July 2022.
89
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
3. Accounting policies continued
Operating segments
Operating segments are reported in a manner that is 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 that are different to
those of the core business. The information reported to the Directors, for the purposes of resource allocation and assessment
of performance, is based wholly upon 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 Income
Statement and Statement of Financial Position.
Employee Benefit Trust (‘EBT’)
As the Group is deemed to have control of its EBT, it is treated as a subsidiary and consolidated for the purposes of the
Consolidated Financial Statements. The EBT’s assets (other than investments in the Company’s shares), liabilities, income and
expenses are included on a line-by-line basis in the Consolidated Financial Statements. The EBT’s investment in the Company’s
shares is deducted from equity in the Consolidated Statement of Financial Position as if they were treasury shares.
Business combinations
The acquisition method of accounting is used to account for business combinations.
The consideration transferred is the sum of the acquisition date fair values of the assets transferred, equity instruments issued or
liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree.
For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate
share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting
policies and other pertinent conditions in existence at the acquisition date.
The difference between the acquisition date fair value of assets acquired, liabilities assumed and any non-controlling interest in
the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is
recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable
net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss
by the acquirer on the acquisition date, but only after a reassessment of the identification and measurement of the net assets
acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held
equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information
obtained about the facts and circumstances that existed at the acquisition date. The measurement period ends on either the
earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine
fair value.
Presentational currency
Items included in the Financial Statements are measured using the currency of the primary economic environment in which the
Group operates which is Sterling (£). Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or at an average rate for a period if the rates do not fluctuate significantly. Foreign
exchange gains and losses, resulting from the settlement of such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated.
Cash
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with
original maturities of three months or less. Bank overdrafts are shown within loans and borrowings in current liabilities on the
consolidated statement of financial position.
Non-underlying items
Non-underlying items relate to costs or incomes that derive from events or transactions that fall outside the normal activities of the
Group, and so have been disclosed separately to better reflect management’s view of the performance of the Group.
90
UP Global Sourcing Holdings plc Annual Report 2022
Revenue recognition
Revenue is recognised at a point in time on the satisfaction of each performance obligation as that obligation is satisfied.
Performance obligations relate to the sale of goods and revenue is recognised at the point when goods are delivered, and control
has passed to the customer. Revenue is measured as the fair value of the consideration received or receivable and represents the
amount receivable for goods supplied and services rendered, net of returns and expected returns, discounts and rebates given
by the Group to customers.
The Group has rebate agreements in place with certain customers. The rebates are treated as variable consideration and are
recognised at the point of sale as a deduction from revenue. Where the calculation of variable consideration including rebates and
contributions involves estimation, the expected charge is calculated based on past history of claims and expected revenue over the
rebate contract term. Revenue is only recognised to the extent that there is not deemed to be a significant chance of reversal.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when
declared by the Directors. In the case of final dividends, this is when approved by the shareholders at the AGM.
Intangible assets
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less
accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are
recognised separately from goodwill at the acquisition date where they are separable from the acquired entity or give rise to
other contractual/legal rights and it is probable that the expected future economic benefits that are attributable to the asset will
flow to the entity and the fair value of the asset can be measured reliably. Goodwill that arises on business combinations and the
acquisition of subsidiaries is stated at cost less any impairment losses. Trademarks are amortised over ten years so as to write off
the cost of assets less their residual values over their useful lives. Brands are considered to have an indefinite useful life and are
therefore not subject to amortisation.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost includes the
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Such assets acquired in a business combination are initially recognised at their fair value at acquisition date. Depreciation is
charged so as to write off the costs of assets over their estimated useful lives, on a straight-line basis starting from the month they
are first used, as follows:
• Fixtures, fittings and equipment 16–50%
• Motor vehicles 25%
• Right of use assets shorter of the lease term or the useful life of the underlying asset
Impairment
At each reporting end date, the Group reviews the carrying amounts of its intangible and tangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of fair
value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated
to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed
thecarrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss.
Investments
Investments in subsidiaries are carried at cost less impairment. The Group’s share option schemes operate for employees of
thesubsidiary company UP Global Sourcing UK Limited. As such, in accordance with IFRS 2, the share-based payment charge
inrelation to these options is shown as an increase in investments in the subsidiary company.
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Notes to the financial statements continued
3. Accounting policies continued
Inventories
Inventories are valued using a first in, first out method and are stated at the lower of cost and net realisable value. Cost includes
expenditure incurred in the normal course of business in bringing the products to their present location and condition. At the
end of each reporting period inventories are assessed for impairment. If an item of inventory is impaired, the identified inventory
is reduced to its selling price less costs to complete and sell, and an impairment charge is recognised in the income statement.
Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is
recognised as a credit in the income statement.
Taxation
The tax expense or credit represents the sum of the tax currently payable or recoverable and the movement in deferred tax
assets and liabilities.
Current tax is based upon taxable income for the year and any adjustment to tax from previous years. Taxable income differs from
net income in the income statement because it excludes items of income or expense that are taxable or deductible in other years
or that are never taxable or deductible.
Deferred tax is calculated at the latest tax rates that have been substantively enacted by the reporting date that are expected
to apply when settled. It is charged or credited in the Income Statement, except when it relates to items credited or charged
directly to equity, in which case it is also dealt with in equity. Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases
used in the computation of taxable income, and is accounted for using the liability method. Deferred tax liabilities and assets are
not discounted. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable income will be available against which the asset can be utilised. Such
assets are reduced to the extent that it is no longer probable that the asset can be utilised. Deferred tax assets and liabilities are
offset when there is a right to offset current tax assets and liabilities and when the deferred tax assets and liabilities relate to taxes
levied by the same taxation authority, on either the same taxable entity or different taxable entities, where there is an intention to
settle the balances on a net basis.
Share-based payments
The Group issues share-based payments to certain employees and Directors. Equity-settled, share-based payments are measured
at fair value at the date of grant and expensed on a straight-line basis over the vesting period, along with a corresponding
increase in equity. The incentives are offered to employees of subsidiary companies and as such the value of the share-based
payments are shown as additions to investments in the Parent Company Financial Statements. At each reporting date, the Group
revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting
conditions. The impact of any revision is recognised in profit or loss, with a corresponding adjustment to equity reserves. The
fair values of share options are determined using the Monte Carlo and Black Scholes models, taking into consideration the best
estimate of the expected life of the option and the estimated number of shares that will eventually vest.
Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in
the year to which they relate.
Financial instruments
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Group becomes party to
the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows from
the financial asset expire or when the contractual rights to those assets are transferred. Financial liabilities are derecognised
when the obligation specified in the contract is discharged, cancelled or expired.
Trade and other receivables
Trade and other receivables, and amounts owed by Group undertakings, are classified at amortised cost and recognised initially
at fair value and subsequently measured at amortised cost using the effective interest method (except for short-term receivables
where interest is immaterial) less provisions for impairment. These assets are held to collect contractual cash flows being solely
the payments of the principal amount and interest. Provisions for impairment of trade receivables are recognised for expected
lifetime credit losses using the simplified approach. Impairment reviews of other receivables, including those due from related
parties, use the general approach whereby 12-month expected losses are provided for and lifetime credit losses are only
recognised where there has been a significant increase in credit risk, by monitoring the creditworthiness of the other party.
Trade and other payables
Trade and other payables are initially measured at their fair value and are subsequently measured at their amortised cost using
the effective interest rate method. This method allocates interest expense over the relevant period by applying the “effective
interest rate” to the carrying amount of the liability.
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Loans and borrowings
Interest-bearing overdrafts and invoice discounting facilities are classified as other liabilities. They are initially recorded at fair
value, which represents the fair value of the consideration received, net of any direct transaction costs associated with the
relevant borrowings. Borrowings are subsequently stated at amortised cost and finance charges are charged to profit or loss
over the term of the instrument using an effective rate of interest. Finance charges, including premiums payable on settlement
or redemption, are accounted for on an accruals basis and are added to the carrying amount of the instrument to the extent that
they are not settled in the period in which they arise. Borrowings are classified as current liabilities unless the Company has an
unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Leases
The Group assesses whether a contract is, or contains a lease at inception of the contract. A lease conveys the right to direct the
use and obtain substantially all of the economic benefits of an identified asset for a period of time in exchange for consideration.
A right-of-use asset and corresponding lease liability are recognised at commencement of the lease. The lease liability is
measured at the present value of the lease payments, discounted at the lessee’s incremental borrowing rate specific to the term,
country, currency and start date of each lease. Lease payments include: fixed payments; variable lease payments dependent on
an index or rate, initially measured using the index or rate at commencement; the exercise price under a purchase option if the
Group is reasonably certain to exercise; penalties for early termination if the lease term reflects the Group exercising a break
option; and payments in an optional renewal period if the Group is reasonably certain to exercise an extension option or not
exercise a break option.
The lease liability is subsequently measured at amortised cost using the effective interest rate method. It is remeasured, with a
corresponding adjustment to the right-of-use asset, when there is a change in future lease payments resulting from a rent review,
change in an index or rate such as inflation, or change in the Group’s assessment of whether it is reasonably certain to exercise a
purchase or extension option or not exercise a break option.
The right-of-use asset is initially measured at cost, comprising: the initial lease liability; any lease payments already made less
any lease incentives received; initial direct costs; and any dilapidation or restoration costs. The right-of-use asset is subsequently
depreciated on a straight-line basis over the shorter of the lease term or the useful life of the underlying asset. At each reporting
date, the Group reviews the carrying amounts of its right-of-use assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any).
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the
modification. If the renegotiation results in one or more additional assets being leased for an amount commensurate with the
standalone price for the additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance
with the above policy. In all other cases where the renegotiation increases the scope of the lease (whether that is an extension to
the lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount rate applicable
on the modification date, with the right-of-use asset being adjusted by the same amount. If the renegotiation results in a decrease
in the scope of the lease, both the carrying amount of the lease liability and right-of-use asset are reduced by the same proportion
to reflect the partial or full termination of the lease with any difference recognised in profit or loss. The lease liability is then further
adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the
same amount.
Leases of low-value assets and short-term leases of 12 months or less are expensed to the income statement, as are variable
payments dependent on performance or usage, ‘“out of contract” payments and non-lease service components.
Derivatives
Derivatives are initially recognised at the fair value on the date that the derivative contract is entered into and are subsequently
remeasured at their fair value. Changes in the fair value of derivatives are recognised in the income statement within finance
costs or income as appropriate, unless they are included in a hedging arrangement. Derivatives are derecognised when the
liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
3. Accounting policies continued
Hedging arrangements
The Group applies hedge accounting in respect of forward foreign exchange contracts held to manage the cash flow exposures
of forecast transactions denominated in foreign currencies. Forward foreign exchange contracts are held to manage exchange
rate exposures and are designated as cash flow hedges of foreign currency exchange rates.
The Group also applies hedge accounting for transactions entered into to manage the cash flow exposures of borrowings. Interest
rate swaps are held to manage interest rate exposures and are designated as cash flow hedges of floating rate borrowings.
Changes in the fair values of derivatives designated as cash flow hedges, which are deemed to be effective, are recognised
directly in equity within a cash flow hedging reserve. Any ineffectiveness in the hedging relationship (being the excess of the
cumulative change of the fair value of the hedging instrument since inception of the hedge over the cumulative change in the
fair value of the hedged item since inception of the hedge) is recognised in the income statement.
The gain or loss recognised in other comprehensive income is reclassified to the income statement when the hedge relationship
ends. If a forecast transaction is no longer considered highly probable but the forecast transaction is still expected to occur,
the cumulative gain or loss recognised in other comprehensive income is frozen and recognised in profit or loss. Subsequent
changes in the fair value of the derivative are recognised in profit or loss. If, at any point, the hedged transaction is no longer
expected to occur, the cumulative gain or loss is reclassified from the cash flow hedge reserve to profit or loss immediately.
The effective portion of gains and losses on derivatives used to manage cash flow interest rate risk are also recognised in other
comprehensive income and accumulated in the cash flow hedge reserve. However, if the Group closes out its position early, the
cumulative gains and losses recognised in other comprehensive income are frozen and reclassified from the cash flow hedge
reserve to the profit or loss account. The ineffective portion of gains and losses on derivatives used to manage cash flow interest
rate risk are recognised in profit or loss within finance expense or finance income.
Accounting developments
The Group has adopted and applied the following standards and amendments in the year, which are relevant to its operations,
none of which had a material impact on the financial statements: IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (amendments). At
the date of authorisation of these financial statements, the Group has not applied the following new or revised standards and
interpretations that have been issued but are not yet effective: IFRS 3 ‘Business Combinations’ (amendments) references to the
Conceptual Framework; IAS 1 ‘Presentation of Financial Statements’ (amendments) classification of liabilities as current or non-
current and disclosure of accounting policies; IAS 12 ‘Income Taxes’ (amendments) deferred tax related to assets and liabilities
arising from a single transaction; IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ (amendments) definition
of accounting estimates; Annual improvement in IFRS Standards 2018–2020. The Directors do not expect that the adoption of the
standards, amendments and interpretations listed above will have a material impact on the financial statements of the Group.
4. Critical accounting estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect
the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and
expenses during the period. The nature of estimation means that actual outcomes could differ from those estimates. Each of
the following items contain judgements and significant estimates and have the most significant effect on amounts recognised
in the financial statements.
Inventory provisioning
The Group sources, imports and sells products across a range of categories, and is subject to changing consumer demands
and trends. As a result, it is necessary to consider the recoverability of the cost of inventory and the associated provisioning
required. When calculating the inventory provision, management considers the nature and condition of the inventory, as well
as applying assumptions around anticipated saleability of finished goods. The carrying amount of inventory provisions at the
balance sheet date is £0.4m (2021: £0.6m).
Customer rebates
The Group makes estimates of the amounts likely to be paid to customers in respect of rebate arrangements. When making these
estimates, management takes account of contractual customer terms, as well as estimates of likely sales volumes, to determine
the rates at which rebates should be accrued in the Financial Statements. The carrying amount of rebate accruals at the balance
sheet date is £2.1m (2021: £2.1m).
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UP Global Sourcing Holdings plc Annual Report 2022
Valuation of derivatives held at fair value
In estimating the fair value of an asset or a liability, the Group uses market observable data to the extent it is available. Where
Level 1 inputs are not available, the Group engages third-party qualified valuers to perform the valuation. The Group works
closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The carrying
amounts of derivatives and balance sheet currency exposures at the balance sheet date, together with sensitivities thereon are
disclosed in note 22.
Valuation of acquired intangibles
On acquisition of a subsidiary or business, the purchase consideration is allocated between the net tangible and intangible
assets other than goodwill on a fair value basis, with any excess purchase consideration representing goodwill. The valuation of
acquired intangible assets represents the estimated economic value in use, using standard valuation methodologies, including
as appropriate, discounted cash flow, relief from royalty and comparable market transactions. Acquired intangible assets are
capitalised and amortised systematically over their estimated useful lives, subject to impairment review. The assumptions used
are subject to management estimation.
Impairment Reviews
Goodwill and Brands with indefinite useful lives are subject to annual impairment reviews. An impairment is recognised if the
recoverable amount of an asset is estimated to be less than its carrying amount. The recoverable amount of the Group’s goodwill
and brands has been determined by a value-in-use calculation, the details of which are disclosed in note 13.
5. Revenue
Geographical split by location:
2022
£’000
2021
£’000
United Kingdom 101,050 92,916
Germany 19,231 13,882
Rest of Europe 29,700 27,720
Rest of the World 4,210 1,849
Total 154,191 136,367
International sales 53,141 43,451
Percentage of total revenue 34.5% 31.9%
Analysis of revenue by brand:
2022
£’000
2021
£’000
Salter 48,080 28,379
Beldray 39,950 42,374
Russell Hobbs (licensed) 20,165 16,840
Progress 8,287 6,683
Kleeneze 2,835 2,136
Premier brands 119,317 96,412
Other proprietorial brands 17,032 24,357
Own label and other 17,842 15,599
Total 154,191 136,367
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
5. Revenue continued
Analysis of revenue by product:
2022
£’000
2021
£’000
Small domestic appliances 57,032 48,715
Housewares 54,539 35,898
Laundry 14,799 17,216
Heating and cooling 5,870 6,937
Audio 12,907 15,457
Others 9,044 12,144
Total 154,191 136,367
Analysis of revenue by sales channel:
2022
£’000
2021
£’000
Supermarkets 51,523 38,914
Discount retailers 48,126 51,526
Online channels 25,321 20,590
Multiple-store retailers 17,312 15,578
Other 11,909 9,757
Total 154,191 136,367
6. Operating profit
Operating profit is stated after charging/(crediting):
2022
£’000
2021
£’000
Foreign exchange loss 1,472 581
Loss on disposal of fixed asset 6 44
Depreciation of owned property, plant and equipment 1,181 791
Depreciation of right of use assets 857 772
Amortisation of intangible assets 22 16
Auditors’ remuneration:
Fees for audit of the Company 40 44
Fees for the audit of the Company’s subsidiaries 42 46
Total audit Fees 82 90
Corporate finance services – 74
Other assurance services 18 13
Total non-audit Fees 18 87
No non-audit services were provided on a contingent fee basis. Corporate finance services relate to fees incurred in the acquisition
of Salter Brands Limited in the prior year were non-recurring. £66,000 of the corporate finance fees relate to permitted services and,
therefore, fall outside the 70% permitted fee cap.
The following costs have been drawn to the attention of the users of the accounts due to their nature and materiality within
the accounts.
2022
£’000
2021
£’000
Coronavirus Job Retention Scheme repayment – 466
Acquisition of Salter Brands Limited – 948
– 1,414
During FY20, the Group claimed £466,000 under the Government’s Coronavirus Job Retention Scheme and the Group took
the decision to repay this in September 2020. Costs incurred relating to the acquisition of Salter Brands Limited substantially
comprise legal and advisors’ fees. All costs noted arose wholly as a result of the transaction and will not recur.
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UP Global Sourcing Holdings plc Annual Report 2022
7. Employee costs
Group Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Wages and salaries 13,126 11,669 309 297
Social security costs 1,282 1,161 35 34
Other pension costs 294 226 – –
Share-based payments 403 228 – –
Total 15,105 13,284 344 331
The average monthly number of people employed (including Directors) was:
Average number of employees:
Group Company
2022
Number
2021
Number
2022
Number
2021
Number
Sales staff 80 69 – –
Distribution staff 77 56 – –
Administrative staff 208 171 6 6
Total 365 296 6 6
Details of Directors’ remuneration and pension entitlements are disclosed in the Remuneration Report on pages 47 to 70. Social
security costs payable in respect of the Directors were £166,000 (2021: £199,000).
8. Finance costs
2022
£’000
2021
£’000
Interest on bank loans and overdrafts 704 412
Interest on lease liabilities 74 82
Foreign exchange in respect of lease liabilities (net of hedging actions) (11) (10)
Other interest payable and similar charges 75 34
Total finance cost 842 518
9. Taxation
2022
£’000
2021
£’000
Current period – UK corporation tax 2,390 1,591
Adjustments in respect of prior periods (281) (27)
Foreign current tax expense 467 641
Total current tax 2,576 2,205
Origination and reversal of temporary differences 351 43
Adjustments in respect of prior periods 81 (37)
Impact of change in tax rate 61 (16)
Total deferred tax 493 (10)
Total tax charge 3,069 2,195
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
9. Taxation continued
Factors effecting the tax charge
The tax assessed for the current and previous years period is higher than the standard rate of corporation tax in the UK.
The tax charge for the year can be reconciled to the profit per the income statement as follows:
2022
£’000
2021
£’000
Profit before tax 15,439 9,508
Tax charge at 19% (2021: 19%) 2,933 1,807
Adjustments relating to underlying items:
Adjustment to tax charge in respect of prior periods (200) (9)
Effects of expenses not deductible for tax purposes (9) 11
Impact of overseas tax rates 231 299
Effect of difference in corporation tax and deferred tax rates 88 2
Adjustments relating to non-underlying items:
Adjustment to tax charge in respect of prior periods – (55)
Effects of expenses not deductible for tax purposes 77 224
Differences arising on tax treatment of shares (178) (33)
Effect of difference in corporation tax and deferred tax rates 127 (51)
Total tax expense 3,069 2,195
Corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit for the year. In the 3 March 2021 Budget it
was announced that the UK tax rate will increase to 25% from 1 April 2023. Deferred tax balances at the year-end have been
measured at 25%.
10. Earnings per share
Basic earnings per share is calculated by dividing the net income for the period attributable to ordinary equity holders by the
weighted average number of ordinary shares outstanding during the period. Diluted earnings per share amounts are calculated
by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during
the financial year, adjusted for the effects of potentially dilutive options. The dilutive effect is calculated on the full exercise of all
potentially dilutive ordinary share options granted by the Group, including performance-based options which the Group considers
to have been earned. The calculations of earnings per share are based upon the following:
2022
£’000
2021
£’000
Profit for the year 12,370 7,313
Number Number
Weighted average number of shares in issue 89,312,457 82,521,850
Less shares held by the UPGS EBT (2,958,630) (4,056,659)
Weighted average number of shares – basic 86,353,827 78,465,191
Share options 2,580,825 2,039,490
Weighted average number of shares – diluted 88,934,652 80,504,681
Pence Pence
Earnings per share – basic 14.3 9.3
Earnings per share – diluted 13.9 9.1
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UP Global Sourcing Holdings plc Annual Report 2022
11. Dividends
2022
£’000
2021
£’000
Interim dividend paid in respect of the previous year – 906
Final dividend paid in respect of the previous year 2,844 2,183
Interim declared and paid 1,986 1,320
4,830 4,409
Per share Pence Pence
Interim dividend paid in respect of the previous year – 1.16
Final dividend paid in respect of the previous year 3.33 2.795
Interim declared and paid 2.30 1.69
5.63 5.645
The Directors propose a final dividend of 4.82p per share in respect of the year ended 31 July 2022.
12. Investments
Company
2022
£’000
2021
£’000
Carrying value at beginning of the year 19,706 17,457
(Adjustment)/additions (135) 2,021
Share-based payments 403 228
19,974 19,706
The 2021 additions comprise the consideration in respect of the share capital of Salter Brands Limited along with associated
acquisition costs. The negative additions of £135,000 in 2022 represents the adjustment to the consideration in the current year.
At 31 July 2022 the Company owned the following subsidiaries:
Registered Office Holding
Proportion of
Voting Rights
and Shares Held Nature of Business
UP Global Sourcing
UK Limited
Manor Mill, Victoria Street,
Oldham OL9 0DD
Ordinary shares 100% Supply of branded
household products
UP Global Sourcing
Hong Kong Limited
Unit B, 13th Floor, Yun Tat Commercial
Building, 70–74 Wuhu Street, Hong Kong
Ordinary shares 100% Supply of branded
household products
Salter Brands Limited Manor Mill, Victoria Street,
Oldham OL9 0DD
Ordinary shares 100% Dormant
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
13. Intangible assets
Goodwill
£’000
Trademarks
£’000
Brands
£’000
Total
£’000
Cost
At 1 August 2020 – 111 – 111
Additions 9,676 111 27,072 36,859
At 31 July 2021 9,676 222 27,072 36,970
Adjustments 118 – – 118
At 31 July 2022 9,794 222 27,072 37,088
Amortisation
At 1 January 2020 – 25 – 25
Charge for year – 16 – 16
At 31 July 2021 – 41 – 41
Charge for year – (22) – (22)
At 31 July 2022 – (63) –
Net book value
At 31 July 2022 9,794 159 27,072 37,025
At 31 July 2021 9,676 181 27,072 36,929
At 1 August 2020 – 86 –
Intangible assets primarily relate to the Kleeneze and Petra trademarks, and the Salter brand and goodwill. No amortisation
is charged on the Salter brand as it is considered to have an indefinite useful life due to its proven longevity and anticipated
future profitability. The amortisation charge reflects the spreading of the cost of the Kleeneze and Petra trademarks over these
assets’ remaining expected useful lives of 5.8 years and 8.6 years respectively. Goodwill and brands acquired through business
combinations have been incorporated into the existing single segment of the Group as the acquired business from which they
arise is the same as the Group’s existing operating segment. The recoverable amount of the Group’s goodwill and brands has
been determined by a value-in-use calculation using a discounted cash flow model, based on a five-year projection period
approved by management, together with a terminal value. Key assumptions are those to which the recoverable amount of an
asset or cash-generating units is most sensitive. The following key assumptions were used in the discounted cash flow model:
• 10.6% pre-tax discount rate;
• 10% per annum projected revenue growth rate; and
• 5% per annum increase in operating costs and overheads.
The discount rate of 10.6% pre-tax reflects management’s estimate of the time value of money and the Group’s weighted average
cost of capital, the risk-free rate and the volatility of the share price relative to market movements. Management believes the
projected 10% revenue growth rate is appropriate and justified based on market conditions and knowledge of the previous long-
term trading history of the business. The results of the impairment testing indicate there is no impairment required. The Directors
do not believe that any reasonably possible changes in the value of the key assumptions noted above would cause the cash-
generating unit carrying amount to exceed its recoverable amount.
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UP Global Sourcing Holdings plc Annual Report 2022
14. Property, plant and equipment
Fixtures, Fittings
and Equipment
£’000
Motor Vehicles
£’000
Right of use assets
£’000
Total
£’000
Cost
As at 1 August 2020 5,184 77 4,772 10,033
Additions 2,263 – – 2,263
Disposals (788) (21) (9) (818)
As at 31 July 2021 6,659 56 4,763 11,478
Additions 1,843 – 176 2,019
Disposals (894) – (164) (1,058)
Lease modifications – – 198 198
As at 31 July 2022 7,608 56 4,973 12,637
Accumulated Depreciation and Impairment Losses
As at 1 August 2020 3,397 48 1,523 4,968
Charge for the year 778 13 772 1,563
Disposals (742) (21) (9) (772)
As at 31 July 2021 3,433 40 2,286 5,759
Charge for the year 1,168 13 857 2,038
Disposals (894) – (158) (1,052)
Lease modifications – – (477) (477)
As at 31 July 2022 3,707 53 2,508 6,268
Carrying Amount:
As at 31 July 2022 3,901 3 2,465 6,369
As at 31 July 2021 3,226 16 2,477 5,719
As at 31 July 2020 1,787 29 3,249 5,065
The Company held no property, plant and equipment. Included in property, plant and equipment are assets held outside of the UK
with a carrying amount at 31 July 2022 of £1.0m (2021: £0.9m).
Right of Use assets
Fixtures, fittings
and equipment
£’000
Motor vehicles
£’000
Property
£’000
Total
£’000
Cost 211 – 4,552 4,763
As at 31 July 2021 211 – 4,552 4,763
Additions 136 40 – 176
Disposals (164) – – (164)
Modifications – – 198 198
As at 31 July 2022 183 40 4,750 4,973
Accumulated Depreciation
As at 31 July 2021 168 – 2,118 2,286
Charge 44 13 800 857
Disposals (157) – – (157)
Modifications – – (478) (478)
As at 31 July 2022 55 13 2,440 2,508
Carrying Amount
As at 31 July 2022 128 27 2,310 2,465
As at 31 July 2021 42 – 2,434 2,476
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
15. Acquisitions
On 15 July 2021, the Group acquired 100% of the share capital of Salter Brands Limited from FKA Brands Limited. The total
consideration transferred was £33.5m in respect of the acquisition of the share capital and the acquisition of vendor loan notes.
During the year there was a final adjustment to the consideration of £135,000 based on the agreed completion mechanism.
£’000
Cost of the business combination 1,660
Consideration in respect of vendor loan notes 32,000
Adjustment to deferred consideration (135)
Total consideration 33,525
The cash flows in respect of the consideration can be broken down as follows:
£’000
Initial cash consideration (paid on completion) 30,578
Adjustment to initial consideration paid in the current year 1,109
Deferred consideration paid in the current year 851
Deferred consideration balance at fair value 987
Total consideration 33,525
The deferred consideration is payable in six-monthly instalments for 24 months following the acquisition. The acquisition was funded
by the combination of a £10m term loan facility, £15m from the issue of 7,142,857 ordinary shares of 0.25p each at a price of £2.10 per
share (which after costs amounted to £14,350,000) with the balance funded by capacity within the Group’s existing banking facilities.
The book values and fair values of the net assets acquired are made up as follows. This table includes the fair values of the vendor
loan notes and inventories acquired and have been updated to reflect the final adjustment to the consideration.
Book Value
£’000
Adjustments
£’000
Fair Value
£’000
Tangible assets 7 (7) –
Intangible assets – 27,072 27,072
Stock 5,323 (273) 5,050
Debtors 269 427 696
Vendor loan notes (32,000) – (32,000)
Creditors (2,004) (449) (2,453)
Deferred tax liability – (6,633) (6,633)
Total identifiable net liabilities (28,405) 20,137 (8,268)
Cost of the business combination 1,526
Goodwill 9,794
Intangible assets of £27.1m and a corresponding deferred tax liability of £6.8m have been recognised in respect of the Salter
brand which has been deemed to have an indefinite useful life. The Group has recognised residual goodwill of £9.8m.
Subsequent to the acquisition, the trade and assets of Salter Brands Limited were hived across into UP Global Sourcing UK
Limited at book value. The relevant book value was deemed to be the fair value measured at the acquisition of Salter Brands
Limited by the Company, adjusted for transactions in the period between the acquisition and the hive-across.
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UP Global Sourcing Holdings plc Annual Report 2022
16. Deferred tax
Intangibles
£’000
Accelerated
allowances
£’000
Hedging
£’000
Provisions
£’000
Share-based
payment
£’000
Total
£’000
As at 1 August 2020 – (4) – 110 – 106
Acquired in the year (6,633) – – – – (6,633)
Recognised through the statement of changes in equity – – – – 370 370
Credit/(charge) in the year – (142) – 12 140 (10)
As at 31 July 2021 (6,633) (146) - 122 510 (6,147)
Recognised through the statement of changes in equity - – (655) – (290) (945)
Credit/(charge) in the year (135) (399) - 14 27 (493)
As at 31 July 2022 (6,768) (545) (655) 136 247 (7,585)
The Directors consider that the deferred tax assets in respect of timing differences are recoverable based upon the forecast
future taxable profits of the Group. The Group has also unrecognised deferred tax attributive of £740,000 (2021: £630,000) in
respect of losses carried forward that are not anticipated to be utilised under current conditions.
17. Inventories
Group
2022
£’000
2021
£’000
Goods for resale 29,162 21,674
29,162 21,674
Inventories at 31 July 2022 are stated after provisions for impairment of £358,000 (2021: £595,000). Inventories are pledged as
security for liabilities, as referred to in note 20. Within the income statement of the Group £100.7m of inventories were recognised
as an expense within the year (2021: £92.0m).
18. Trade and other receivables
Group
2022
£’000
2021
£’000
Trade receivables 30,643 25,372
Other receivables and prepayments 1,551 1,172
32,194 26,544
Trade and other receivables are denominated in Sterling, US Dollars, Euros, Canadian Dollars and Polish Zloty. The Group’s
financial assets subject to the expected credit loss model (‘ECL’) are trade receivables. The Group maintains a high level of credit
insurance on its trade receivables and has a history of a low level of losses thereon. Under the credit insurance policy, insured
limits are applied for on a customer account level and each customer receivable balance is compared against the limit received.
Where the customer balance exceeds or is forecast to exceed the insured limit, the Group’s process for monitoring uninsured
accounts is applied. Therefore, in measuring ECL the Group has taken account of its low historic loss experience together with
its high level of credit insurance and reviewed the receivables on an item-by-item basis. The credit risk of Group undertakings is
estimated based on the expected recoverable amount, taking into account the creditworthiness of the other party at the year end
and any changes in credit risk during the year. The average age of these receivables at 31 July 2022 is 59 days (2021: 57 days).
103
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
18. Trade and other receivables continued
Group
2022 2021
Up to 1 month
past due
£’000
Over 1 month
past due
£’000
Total
£’000
Up to 1 month
past due
£’000
Over 1 month
past due
£’000
Total
£’000
Gross trade receivables (insured) 28,747 2,042 30,789 24,068 1,250 25,318
Expected credit loss – (381) (381) – (175) (175)
Net carrying amount 28,747 1,661 30,408 24,068 1,075 25,143
Gross trade receivables (uninsured) 231 11 242 227 5 232
Expected credit loss – (7) (7) – (3) (3)
Net carrying amount 231 4 235 227 2 229
Gross Trade receivables (total) 28,978 2,053 31,031 24,295 1,255 25,550
Expected credit loss – (388) (388) – (178) (178)
Net carrying amount 28,978 1,665 30,643 24,295 1,077 25,372
Ageing of past due but not impaired receivables
2022
£’000
2021
£’000
Less than 1 month 3,242 2,648
1–2 months 583 654
2–3 months 413 171
Over 3 months 669 252
Total 4,907 3,725
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable
from the date credit was initially granted up to the reporting date, taking into account the extent of credit insurance held on the
receivable. The largest trade receivables balance with an individual customer represents 15% of the total at 31 July 2022. The
concentration of credit risk in relation to this is mitigated by credit insurance. Details of the Group’s credit risk management policies
are shown in note 22. The Group does not hold any collateral as security for its trade and other receivables. The Group holds invoice
discounting facilities, which are secured against the Group’s trade receivables. Further information can be found in note 20.
Company
2022
£’000
2021
£’000
Amounts owed by Group undertakings – 2,158
Other receivables and prepayments 431 106
Current 431 2,264
Amounts owed by Group undertakings 33,151 32,000
Non-current 33,151 32,000
The credit risk of related parties is estimated based on the expected recoverable amount, taking into account the creditworthiness
of the other party. Any expected credit loss is calculated based on the general approach as set out in IFRS 9. The Directors have
determined that there has not been an increased credit risk within the year and no impairment charge has been recognised against
these balances.
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UP Global Sourcing Holdings plc Annual Report 2022
19. Trade and other payables
Group
2022
£’000
2021
£’000
Trade payables 20,662 19,293
Accruals 7,433 8,628
Other taxes and social security 1,549 1,530
29,644 29,451
Trade payables principally consist of amounts outstanding for trade purchases and ongoing costs. They are non-interest bearing
and are typically settled on 30 to 60 day terms. The Directors consider that the carrying value of trade and other payables
approximates their fair value. Trade and other payables are denominated in Sterling, US Dollars and Euros. UP Global Sourcing
Holdings plc has financial risk management policies in place to ensure that all payables are paid within the credit time frame and
no interest has been charged by any suppliers as a result of late payment of invoices during the period.
Company
2022
£’000
2021
£’000
Amounts owed to Group undertakings 10,971 2,438
Other payables 161 1,109
Accruals 72 384
11,204 3,931
20. Bank borrowings
Group
2022
£’000
2021
£’000
Overdrafts 6,020 –
Invoice discounting 6,197 3,290
Import loans 8,179 2,759
Term loan 2,000 2,000
Unamortised debt issue costs (82) (98)
Current 22,314 7,951
Revolving credit facility 2,217 2,983
Term loan 6,000 8,000
Unamortised debt issue costs (73) (136)
Non-current 8,144 10,847
Total borrowings 30,458 18,798
Contractual undiscounted maturities:
2022
£’000
2021
£’000
In less than one year 22,396 8,049
Between one and two years 2,000 2,000
Between three and four years 6,217 8,983
Less: Unamortised debt issue costs (155) (234)
Total borrowings 30,458 18,798
At the year end the Group had a net bank debt/adjusted EBITDA ratio of 1.3x (31 July 2021: 1.4x), which represents net bank
debt of £24.3m (2021: £18.8m). The Group maintains comfortable levels of headroom within its bank facilities, with headroom
at 31 July 2021 of £17.8m (31 July 2020: £16.2m). The Group’s banking facilities comprise of a term loan of £8.5m (FY21:£10.0m),
a revolving credit facility and net overdraft facility of £8.2m (FY21: £8.2m), an import loan facility of £9.0m (FY21: £8.7m), and an
invoice discounting facility with a total limit of £23.5m (FY21: £23.5m).
105
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
20. Bank borrowings continued
Company
2022
£’000
2021
£’000
Term loan 2,000 2,000
Unamortised debt issue costs (63) (63)
Current 1,937 1,937
Revolving credit facility 2,507 2,684
Term loan 6,000 8,000
Unamortised debt issue costs (73) (135)
Non-current 8,434 10,549
Total borrowings 10,371 12,486
Contractual undiscounted maturities:
2022
£’000
2021
£’000
In less than one year 2,000 2,000
Between one and two years 2,000 2,000
Between three and four years 6,507 8,684
Less: Unamortised debt issue costs (136) (198)
Total borrowings 10,371 12,486
Current bank borrowings include a gross amount of £6.2m (2021: £3.3m) due under invoice discounting facilities, which are
secured by an assignment of and fixed charge over the trade debtors of UP Global Sourcing UK Limited. Furthermore, current
bank borrowings include an amount of £8.2m (2021: £2.8m) due under an import loan facility, which is secured by a general letter
of pledge providing security over the stock purchases financed under that facility. Bank borrowings are secured in total by a fixed
and floating charge over the assets of the Group. Total bank borrowings are net of £155,000 (2021: 234,000) of fees which are
being amortised over the length of the relevant facilities. Interest on bank borrowings is payable at a margin ranging between
1.65% and 2.25% above the relevant bank reference rates. As the liabilities are at a floating rate and there has been no change
inthe creditworthiness of either of the counterparties, the Directors are of the view that the carrying amount approximates to the
fairvalue.
21. Lease liabilities
The Group’s lease portfolio comprises its principal properties along with certain other fixtures, fittings and equipment. All leases
consist of fixed future payment amounts. With the exception of the Manor Mill lease which incorporates a break option to provide
operational flexibility, all leases have fixed terms. Management consider the likelihood of exercising such break options when
determining the lease term. Accordingly, the lease term for Manor Mill was determined to be the full length of the lease, excluding
the break option. The Cologne and Guangzhou leases are denominated in Euros and Renminbis respectively, exposing the Group
to foreign exchange risk. Euro lease outflows are met by future Euro cash inflows generated by the business, whilst forward
currency contracts are taken out to hedge the Renminbi lease outflows.
Group
2022
£’000
2021
£’000
Lease liabilities less than one year 817 771
Lease liabilities greater than one year 1,940 2,030
Total discounted lease liabilities 2,757 2,801
Contractual undiscounted maturities:
2022
£’000
2021
£’000
Within one year 882 834
Greater than one year but less than two years 441 804
Greater than two years but less than five years 966 635
Greater than five years but less than ten years 668 750
2,957 3,023
106
UP Global Sourcing Holdings plc Annual Report 2022
Movement in leases in the year
2022
£’000
2021
£’000
Balance brought forward 2,801 3,514
New leases and lease modifications (note 14) 851 –
Repayments (1,010) (794)
Interest on lease liabilities 74 82
Foreign exchange revaluation 41 (1)
Balance carried forward 2,757 2,801
Amounts recognised in profit and loss
2022
£’000
2021
£’000
Depreciation expense on right-of-use assets 857 772
Interest expense on lease liabilities 74 82
Expense relating to leases of low value assets & short-term leases 161 93
Income from sub-leasing right of use assets (6) (6)
22. Financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
Group
2022
£’000
2021
£’000
Trade receivables – held at amortised cost 30,643 25,372
Derivative financial instruments – assets subject to hedge accounting 3,899 47
Derivative financial instruments – assets not subject to hedge accounting 243 337
Trade and other payables (28,095) (27,921)
Derivative financial instruments – liabilities subject to hedge accounting – (220)
Derivative financial instruments – liabilities not subject to hedge accounting – –
Borrowings (30,458) (18,798)
Lease liabilities (2,757) (2,801)
Deferred consideration (987) (1,973)
Cash and cash equivalents – held at amortised cost 6,202 133
Financial Liabilities
The Group held the following financial liabilities, classified as other financial liabilities at amortised cost:
Group
2022
£’000
2021
£’000
Trade payables 20,662 19,293
Borrowings 30,458 18,798
Other payables 7,433 8,628
Lease liabilities 2,757 2,801
Deferred consideration 987 1,973
62,297 51,493
107
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
22. Financial instruments continued
Derivative Financial Instruments
The Group held the following derivative financial instruments as financial assets/(liabilities), classified as fair value through profit
and loss on initial recognition:
Group
2022
£’000
2021
£’000
Derivative financial instruments – assets 4,142 384
Derivative financial instruments – liabilities – (220)
4,142 164
The above items comprise the following under the Group’s hedging arrangements:
Group
2022
£’000
2021
£’000
Foreign currency contracts 3,524 97
Interest rate swaps 261 47
Interest rate caps 357 20
4,142 164
Forward contracts
The Group mitigates the exchange rate risk for certain foreign currency trade debtors and creditors by entering into forward
currency contracts. At 31 July 2022, the Group was committed to:
2022 2021
Buy Sell Buy Sell
USD$’000 57,050 – 54,875 –
€’000 – 23,200 – 23,575
CAD$’000 – 60 – 140
PLN’000 – 5,500 – 2,800
CNY’000 2,459 – 4,399 –
At 31 July 2022 & 2021, all the outstanding USD, EUR, PLN and CAD contracts mature within 12 months of the period end. The
CNY contracts, which are held to hedge a lease commitment, mature over the length of that lease ending in August 2023. The
forward currency contracts are measured at fair value using the relevant exchange rates for GBP:USD, GBP:EUR, GBP:CAD,
GBP:PLN and GBP:CNY. The fair value of the contracts at 31 July 2022 is an asset of £3.5m (2021: £97,000).
Forward currency contracts are valued using level 2 inputs. The valuations are calculated using the period end forward rates
for the relevant currencies, which are observable quoted values at the period end dates. Valuations are determined using the
hypothetical derivative method, which values the contracts based upon the changes in the future cash flows, based upon the
change in value of the underlying derivative.
All of the forward contracts to buy US Dollars and some of those to sell Euros meet the conditions for hedge accounting, as set
out in the accounting policies in note 3.
The fair value of forward contracts that are effective in offsetting the exchange rate risk is an asset of £3.4m (2021: liability of
£220,000), which has been recognised in other comprehensive income. This will be released to profit or loss at the end of the
term of the forward contracts as they expire, being £3.4m within 12 months (2021: £220,000 within 12 months). The cash flows in
respect of the forward contracts will occur over the course of the next 12 months.
108
UP Global Sourcing Holdings plc Annual Report 2022
Interest rate swaps and interest rate caps
The Group has entered into interest rate swaps and interest rate caps to protect the exposure to interest rate movements on the
various elements of the Group’s banking facility. As at 31 July 2022, protection was in place over an aggregate principal of £18.3m
(2021: £15.6m). At 31 July 2022, the Group had borrowings of £6.3m (2021: £3.4m) not subject to interest rate protection. All
interest rate swaps meet the conditions for hedge accounting, as set out in the accounting policies in note 3.
Interest rate swaps and caps are valued using level 2 inputs. The valuations are based upon the notional value of the swaps and
caps, the current available market borrowing rate and the swapped or capped interest rate respectively. The valuations are based
upon the current valuation of the present saving or cost of the future cash flow differences, based upon the difference between
the respective swapped and capped interest rates contracts and the expected interest rate as per the lending agreement.
The fair value of variable to fixed interest rate swaps that are effective in offsetting the variable interest rate risk on variable rate
debt is an asset of £261,000 (2021: £47,000), which has been recognised in other comprehensive income and will be released to
profit or loss over the term of the swap agreements. The agreements expire between 2 January 2024 and 28 February 2025. The
cash flows in respect of the swaps occur monthly over the effective lifetime of the swaps. The fair value of the interest rate caps
was an asset of £357,000 (2021: £20,000).
Reconciliation of the financial instruments to the Statement of Financial Position
Group
2022
£’000
2021
£’000
Trade receivables 30,643 25,372
Prepayments and other receivables not classified as financial instruments 1,551 1,172
Trade and other receivables (note 18) 32,194 26,544
Group
2022
£’000
2021
£’000
Trade and other payables 28,095 27,921
Other taxes and social security not classified as financial instruments 1,549 1,530
Trade and other payables (note 19) 29,644 29,451
The Group’s activities expose it to certain financial risks: market risk, credit risk and liquidity risk. The overall risk management
programme focuses upon the unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group’s financial performance. Risk management is carried out by the Directors, who identify and evaluate financial risks in
close cooperation with key members of staff.
a) Market risk: Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign
exchange rates.
b) Credit risk: Credit risk is the financial loss to the Group if a customer or counterparty to financial instruments fails to meet its
contractual obligation. Credit risk arises from the Group’s cash and cash equivalents and receivables balances. Accordingly,
the possibility of material loss arising in the event of non-performance by counterparties is considered to be unlikely. Cash at
bank is held with banks with high-quality external credit rating.
c) Liquidity risk: Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. This risk
relates to the Group’s prudent liquidity risk management and implies maintaining sufficient cash. The Directors monitor rolling
forecasts of the Group’s liquidity and cash and cash equivalents based upon expected cash flow.
109
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
22. Financial instruments continued
Market risk
The Group’s interest-bearing liabilities relate to its variable rate banking facilities. The Group has a policy of maintaining a portion
of its banking facilities under the protection of interest rate swaps and caps to ensure the certainty of future interest cash flows
and offering protection against market-driven interest rate movements. The Group’s market risk relating to foreign currency
exchange rates is commented on below.
Credit risk
The Group’s sales are primarily made with credit terms, exposing the Group to the risk of non-payment by customers. The Group
has implemented policies that require appropriate credit checks on potential customers before sales are made. The amount of
exposure to any individual counterparty is subject to a limit, which is reassessed regularly by the Board. In addition, the Group
maintains a suitable level of credit insurance against its debtor book. Over the course of FY22, on average, over 98% of its trade
receivables were insured. Sales to uninsured accounts are monitored closely with weekly forecasts prepared and reviewed with
appropriate actions to manage the exposure to credit risk.
Liquidity risk management
The Group is funded by external banking facilities provided by HSBC. Within these facilities, the Group actively maintains a
mixture of long-term and short-term debt finance that is designed to ensure the Group has sufficient available funds for operations
and planned expansions. Cash flow requirements are monitored by short and long-term forecasts, with headroom against facility
limits and banking covenants assessed regularly.
Foreign currency risk management
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates. The Group’s exposure
to foreign currency risk is partially hedged by virtue of invoicing a proportion of its turnover in US Dollars and Euros. When
necessary, the Group uses foreign exchange forward contracts to further mitigate this exposure. The following is a note of the
financial instruments denominated at each period end in US Dollars:
Group
2022
$’000
2021
$’000
Trade receivables 11,276 15,679
Other receivables 990 729
Net cash, overdrafts and revolving facilities 7,364 34
Import loans (9,965) (3,836)
Invoice discounting 75 (910)
Trade payables (21,310) (19,984)
(11,570) (8,288)
The effect of a 20% strengthening of Sterling at 31 July 2022 on the foreign denominated financial instruments carried at that date
would, all variables held constant, have resulted in an increase to total comprehensive income for the period and an increase to
net assets of £1.3m (2021: £0.8m). A 20% weakening of the exchange rate, on the same basis, would have resulted in a decrease
to total comprehensive income and a decrease to net assets of £1.9m (2021: £1.2m).
The following is a note of the financial instruments denominated at each period end in Euros:
Group
2022
€’000
2021
€’000
Trade receivables 9,345 7,948
Net cash, overdrafts and revolving facilities (125) (24)
Invoice discounting (5,617) (3,091)
Trade payables (612) (235)
Lease liabilities (810) (283)
2,181 4,315
110
UP Global Sourcing Holdings plc Annual Report 2022
The effect of a 20% strengthening of Sterling at 31 July 2022 on the foreign denominated financial instruments carried at that date
would, all variables held constant, have resulted in a decrease to total comprehensive income for the period and a decrease to
net assets of £262,000 (2021: £497,000). A 20% weakening of the exchange rate, on the same basis, would have resulted in an
increase to total comprehensive income and an increase to net assets of £393,000 (2021: £746,000).
The Directors have shown a sensitivity movement of 20% as, due to the current uncertainty given the current economic
climate, this is deemed to be the largest potential movement in currency that could occur in the near future. Financial
instruments denominated in Canadian Dollars and Polish Zloty are not significant and therefore do not pose a significant
foreign exchange exposure.
Capital risk management
The Group is funded by equity and loans. The Group’s objective when managing capital is to maintain adequate financial flexibility
to preserve its ability to meet financial obligations, both current and long-term. The capital structure of the Group is managed
and adjusted to reflect changes in economic conditions. The Group funds its expenditure on commitments from existing cash
and cash equivalent balances, primarily received from existing bank facilities and profits generated. There are no externally
imposed capital requirements. Financing decisions are made based upon forecasts of the expected timing and level of capital and
operating expenditure required to meet the Group’s commitments and development plans.
Fair value estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate to their fair values
because of the short-term nature of such assets and the effect of discounting liabilities is negligible.
The Group is exposed to the risks that arise from its financial instruments. The policies for managing those risks and the methods
to measure them are described earlier in this note.
Maturity of financial assets and liabilities
All of the Group’s non-derivative financial liabilities and its financial assets at the reporting date are either payable or receivable
within one year, except for borrowings as disclosed in note 20 and lease liabilities as disclosed in note 21.
23. Share capital & reserves
Allotted, called up and fully paid
2022
£’000
2021
£’000
2022
No. of shares
2021
No. of shares
At 1 August 223 205 89,312,457 82,169,600
Placing – 18 – 7,142,857
At 31 July 223 223 89,312,457 89,312,457
0.25p Ordinary shares carry rights to dividends and other distributions from the Company, as well as carrying voting rights.
• Share Premium: Consideration received for shares issued above their nominal value net of transaction costs.
• EBT reserve: The cost of shares repurchased and still held at the end of the reporting period by the UPGS EBT.
• Share-based payment reserve: The cumulative share-based payment expense.
• Hedging reserve: Gains and losses arising on forward currency contracts and on fixed to floating interest rate swaps
that have been designated as hedges for hedge accounting purposes.
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UP Global Sourcing Holdings plc Annual Report 2022
Notes to the financial statements continued
24. Share-based payments
The Company has established a number of different long-term incentive plans in the form of an equity settled share option
schemes. Awards are granted and approved at the discretion of the Remuneration Committee. Further details of these schemes
are set out in the Directors’ Remuneration Report. Currently 157 (2021: 139) members of staff hold options for shares in the
Company under the scheme. The share-based payments expense recognised in respect of employee services received during
the year was £403,000 (2020: £228,000). This all arises on equity-settled share-based payment transactions.
Sharesave scheme (SAYE) 2022
Weighted average
exercise price 2021
Weighted average
exercise price
Outstanding at the beginning of the period 1,576,012 £0.51 1,147,254 £0.40
Granted during the period 443,410 £1.20 531,595 £0.74
Lapsed during the period (46,874) £0.90 (97,268) £0.41
Exercised during the period (938,817) £0.40 (5,569) £0.40
Outstanding at the end of the period 1,033,731 £0.89 1,576,012 £0.51
Exercisable at the end of the period – £0.00 – £0.00
Performance share plan (PSP) 2022
Weighted average
exercise price 2021
Weighted average
exercise price
Outstanding at the beginning of the period 1,760,000 £0.00 1,120,000 £0.00
Granted during the period 364,000 £0.00 – £0.00
Lapsed during the period – £0.00 655,000 £0.00
Exercised during the period – £0.00 (35,000) £0.00
Outstanding at the end of the period 2,124,000 £0.00 1,760,000 £0.00
Exercisable at the end of the period – £0.00 – £0.00
The fair value of the SAYE and PSP options granted is estimated at the date of grant using a Black-Scholes model, after
taking into account the terms and conditions upon which they were granted. For options outstanding at the end of the
period the range of exercise prices was 0.25p–120p (2021: 0.25p–74p), and the weighted average remaining contractual
life was 6.0 years (2021: 5.7 years).
The Black-Scholes pricing model is applied on the granting dates of options.
Black-Scholes option pricing model
PSP
2022
6 June 2022
SAYE
2022
6 June 2022
PSP
2021
14 Dec 2021
SAYE
2021
31 July 2021
Closing share price, £ 1.34 1.34 1.14 1.00
Exercise price, £ 0.0025 1.20 0.0025 0.74
Risk-free interest rate 2.07% 2.07% 0.96% 0.27%
Expected life of option (years) 3–6 3 3–6 3
Volatility 49.6% 49.6% 76.6% 76.6%
Dividend yield 3% 3% 4% 4%
The 2017 MIP is structured as an award of A ordinary shares in UP Global Sourcing UK Limited (‘Subsidiary Shares’). The right
attaching to the Subsidiary Shares include a put option with a three-year vesting period that can be exercised up to seven years
following the vesting date. Exercise of the put option is subject to the share price of UP Global Sourcing Holdings plc exceeding a
hurdle set at a 30% premium to the IPO price. At the point of exercise, the recipient will receive the value of the Subsidiary Shares
in either cash or shares in UP Global Sourcing Holdings plc (‘Plc Shares’), at the discretion of UP Global Sourcing Holdings plc,
subject to a cap of 6.25% of the issued share capital of UP Global Sourcing Holdings plc as at the date of the IPO. The shares
therefore have an exercise price of £Nil for the recipient. The number and weighted average exercise price of the options in issue
based on the conditions present at each year end were as follows:
112
UP Global Sourcing Holdings plc Annual Report 2022
Management incentive plan (MIP) 2022
Weighted average
exercise price 2021
Weighted average
exercise price
Outstanding & exercisable
at the beginning of the period
2,543,773 – 2,543,773 –
Exercised during the period (149,722) – – –
Unvested during the period (2,394,051) – – –
Outstanding & exercisable at the end of the period – – 2,543,773 –
At 31 July 2021, the average 90 day share price was £2.1197 resulting in 2,543,773 shares being under option. At 31 July 2022 the
share price had not met the hurdle price referred to above and, as a result, no shares were under option.
25. Related party transactions
Remuneration of key management personnel, considered to be the Directors and other senior management of the Group is as
follows:
2022
£’000
2021
£’000
Short-term remuneration 2,170 2,514
Other pension costs 60 36
Share-based payments 195 105
2,425 2,655
No balances were outstanding at the end of either period and the maximum balance outstanding during these periods was
£1,250. Additionally, Directors purchased goods from the Group during the year to 31 July 2022 and the total for all Directors
amounted to £3,105 (2021: £1,445). Consultancy fees paid to Directors were £3,750 (2021: £2,500). During the year a family
member of a Director was employed on a short-term basis and was paid £3,533 (2021: £nil).
2022
£’000
2021
£’000
Transactions with related companies:
Lease payments to Heron Mill Limited 407 285
Lease payments to Berbar Properties Limited 180 135
The above companies are related due to common control and Directors. Barry Franks, Andrew Gossage and Simon Showman
are Directors of Heron Mill Limited. Barry Franks (15 ordinary shares of £1.00 each), Simon Showman (50 ordinary shares of £1.00
each) and A&T Property Investments Limited (20 ordinary shares of £1.00 each) are also shareholders of Heron Mill Limited.
Andrew Gossage is a Director of A&T Property Investments Limited. Barry Franks is a Director and the sole shareholder of Berbar
Properties Limited. There were no outstanding balances with related companies or businesses at 31 July 2022 or 31 July 2021.
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STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
Shareholder information
Five-year summary (unaudited)
The results for the years ended 31 July 2018 to 31 July 2019 have been previously restated to reflect the impact of IFRS 16.
2022
£’000
2021
£’000
2020
£’000
2019
£’000
2018
£’000
Revenue 154.191 136,367 115,684 123,257 87,571
Cost of sales (115,836) (106,136) (89,084) (96,013) (67,979)
Gross profit 38,355 30,231 26,600 27,244 19,592
Administrative expenses (19,605) (20,205) (17,485) (18,304) (13,793)
Profit from operations 16,281 10,026 9,115 8,940 5,799
Finance income – – – 6 53
Finance costs (842) (518) (753) (816) (470)
Profit before taxation 15,439 9,508 8,362 8,130 5,382
Income tax (3,069) (2,195) (1,747) (1,720) (1,133)
Profit for the period 12,370 7,313 6,615 6,410 4,249
Non-GAAP performance measures
2022 2021 2020 2019 2018
Adjusted EBITDA (£’000) 18,750 13,291 10,363 10,720 7,166
Adjusted EBITDA margin (%) 12.2% 9.7% 9.0% 8.7% 8.2%
Adjusted profit before taxation (£’000) 15,842 11,150 8,163 8,387 5,574
Adjusted profit after taxation (£’000) 12,722 8,727 6,504 6,667 4,441
Adjusted earnings per share (p) 14.7p 11.1p 8.3p 8.4p 5.4p
114
UP Global Sourcing Holdings plc Annual Report 2022
Company information
UP Global Sourcing Holdings plc
Manor Mill
Victoria Street
Chadderton
Oldham
OL9 0DD
+44 (0) 161 627 1400
www.upgs.com
Auditors
BDO LLP
3 Hardman Street
Spinningfields
Manchester
M3 3AT
Registrars
Equiniti Ltd
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Registered Number
05432142
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Printed on material from well-managed, FSC™ certified forests and other controlled sources.
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the chemical requirements of the Nordic Ecolabel (Nordic Swan) for printing companies, 95% of
press chemicals are recycled for further use and, on average 99% of any waste associated with
this production will be recycled and the remaining 1% used to generate energy.
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Through protecting standing forests, under threat of clearance, carbon is locked-in, that would
otherwise be released.
115
STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE SHAREHOLDER INFORMATION
UP Global Sourcing Holdings plc Annual Report 2022
UP Global Sourcing Holdings plc
Manor Mill
Victoria Street
Chadderton
Oldham
OL9 0DD
+44 (0) 161 627 1400
www.upgs.com