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Ultimate Products plc
Annual Report 2023
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Contents
Overview
01 Our purpose, culture and values
02 Highlights
03 Investment case
Strategic Report
05 Chairman’s introduction
07 Chief Executive’s review
10 Business model
11 Strategic goals
13 Strategy in action
17 Key performance indicators
18 Environmental, Social and Governance Report
27 TCFD and environmental reporting
31 Section 172 statement
33 Chief Financial Officer’s review
36 Principal risks and uncertainties
38 Viability statement
Corporate Governance
40 Board of Directors
42 Chairman’s introduction
46 Audit and Risk Committee Report
50 Remuneration Committee Report
72 Directors’ Report and other statutory disclosures
75 Statement of Directors’ responsibilities
Financial Statements
77 Independent Auditor’s Report
82 Consolidated Income Statement
82 Consolidated Statement of
ComprehensiveIncome
83 Consolidated Statement of Financial Position
84 Company Statement of Financial Position
85 Consolidated Statement of Changes in Equity
86 Company Statement of Changes in Equity
87 Consolidated Statement of Cash Flows
88 Reconciliation of cash flow to the Group
netdebtposition
89 Company Statement of Cash Flows
90 Reconciliation of cash flow to the Company
netdebt position
91 Notes to the financial statements
Shareholder Information
112 Shareholder information
Our premier brands
Our purpose, culture and values
Our Culture and Values
We are passionate
about product
We always strive to
do the right thing
We love
ourbrands
We invest in
our people
We care about
our community
We go the extra mile
for our customers
We care about
theenvironment
Our Purpose
We provide beautiful and
more sustainable products
for every home.
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). Our purpose is to provide beautiful and more
sustainablebranded products for every home, across the UK and Europe.
Our focus onsourcing appealing branded products at prices that resonate
with bothcustomers and consumers has helped us growour business
during challenging economictimes.
For more information:
see pages 18-32
01
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Ultimate Products plc Annual Report 2023
Highlights
Operational highlights
⊲ Successful relaunch of Petra, the German kitchen electrical brand,
intothe German market
⊲ Renewal of the Group’s Russell Hobbs licensing agreement on
arollingfour-year basis
⊲ Launch of the Group’s inaugural ESG Strategy
⊲ Continued investment in AI and robotics yielding positive results,
andsupporting operating margin
⊲ Opening of the Group’s new European showroom in Paris
⊲ Renaming of the Company from UP Global Sourcing Holdings plc to
Ultimate Products plc, to reflect the Group’s purpose and core activities
For more information:
see pages 05–09
Financial highlights
Revenue
£166.3m
+8% FY22: £154.2m
Adjusted EBITDA*
£20.2m
+8% FY22: £18.8m
Adjusted EPS*
15.4p
+4% FY22: 14.7p
* Adjusted measures are before share-based payment expense and non-recurring
items and are non-IFRS.
Statutory EPS
14.6p
+2% FY22: 14.3p
Full year dividend per share
7.38p
+4% FY22: 7.12p
Net bank debt/adjusted EBITDA*
0.7x
-43% FY22: 1.3x
02
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Ultimate Products plc Annual Report 2023
Investment case: what sets us apart?
We are passionate about product
Our ambition is to be in every
homeacrossthe UK and Europe
Compelling customer proposition
provides resilience
Because we love our brands, we develop extensive ranges of
original branded products that consumers want to buy. Our focus
on affordability creates the opportunity for retailers to price
our branded products competitively compared to their own-
label equivalents. This, combined with our willingness to go
the extra mile for our customers, makes us a partner of choice
for over 300 retailers across 45 countries. Our branded product
portfolio makes up 89% of our sales and provides a resilient core
to our business model, as our brands provide an opportunity
toleveragecustomerloyalty.
Established international and online
presence provides growth
Whilst proud of our UK heritage, our outlook is international.
Wesee Europe as the key driver for future growth for our
brands. We have seen considerable success in working with
large European retailers, and are ready to expand those, and
new, relationships to fulfil our ambition to be in every home
across Europe. In addition, growth in Europe is supported
by our growing online presence, as we roll-out our tried and
testedonline model to more European countries.
Focus on productivity provides profits
Embedded within our culture is a desire for continuous improvement.
Our position in the supply chain brings a complexity which must be
carefully managed. We see this as an opportunity as it is a barrier
to entry for competition. Our ability to manage this complexity is
based on our investment in people, where, through our graduate
development programme, we employ and develop talent. These
talented individuals enable our successful investment in systems,
where their ideas and way of thinking have helped us to drive
productivity through the use of automation. This productivity
allows us to reinvest in higher salaries to attract more talent, to
competitively price our products for retailers and consumers,
andto increase operating profit margins for shareholders.
03
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Ultimate Products plc Annual Report 2023
Strategic Report
Strategic Report
05 Chairman’s introduction
07 Chief Executive’s review
10 Business model
11 Strategic goals
13 Strategy in action
17 Key performance indicators
18 Environmental, Social and Governance Report
27 TCFD and environmental reporting
31 Section 172 statement
33 Chief Financial Officer’s review
36 Principal risks and uncertainties
38 Viability statement
Going the
Extra
mile
04
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Chairman’s introduction
Making significant progress
Our core purpose is to provide beautiful
and more sustainable products for every
home. This purpose runs deep within our
business and, over the past two years of
surging inflation, has become even more
relevant to our valued retail customers and
consumers. The significance lies in those two
overlooked words at the end of our purpose:
‘everyhome’.
Our ambition is to provide desirable and
affordable products to every household
across the UK and Europe. In the current
economic climate, where consumers are
feeling the impact from cost of living price
increases, we are extremely proud to have
kept our prices flat year-on-year. Although
our products are not as essential as food or
energy, they are the products that consumers
and their families use on a daily basis - the
kettles and toasters that make breakfast
possible; the scales and kitchen accessories
that help bake a cake for the family; the air
fryer used to cook dinner for the kids. Our
products continue to be wanted and needed
by millions of households, and this is why
theyare found in 80% of homes across the UK.
Our focus on providing beautiful and more
sustainable products at a price that is appealing
to both our retail customers and consumers has
helped us maintain our position as a leading
branded homeware supplier during times of
household budgetary constraint. Our retail
partners can earn an equivalent ‘own label’
margin whilst, at the same time, being able to
take advantage of our world-class sourcing
and logistical capabilities. Meanwhile, our
consumers can purchase, at affordable prices,
beautiful products which they are proud both
touseandto have on display in their homes.
Whilst we are proud to keep our prices low, we
retain the ability to increase selling prices. The
mechanism by which this is achieved is through
constant innovation and bringing new products
to market. Each year we aim to introduce around
600 new products, which is approximately 20%
of the total amount of products we sell. These
new products enable a resetting of price, which
allows us to maintain healthy, but fair gross
margin levels.
While our products are already highly prevalent
across UK households, we also have strong
European ambitions. In FY23, we generated
sales of £49.6m in Europe, up 1% from the
previous year. However, as sales in the UK
grewfaster, our overall percentage of sales
fromEurope fell slightly from 32% in FY22 to
30% in FY23. We continue to believe that our
products are as attractive to our retail partners
and consumers in Europe as they are in the UK,
and view the continent as a key growth driver for
the business. We currently sell £1.72 of product
per capita in the UK (population: c.67 million).
If we can repeat just a fraction of that level of
penetration in Europe (population: c.477 million),
the financial effects would be transformational
for our business. To capitalise on this huge
potential, we took the decision during the year
to relocate our European showroom to Paris,
which we expect will open up opportunities with
both French and pan-European retailers.
Our Cologne showroom enabled us to
showcase the quality of our products to
German retailers in their home territory, and
was therefore very important in helping us to
achieve traction and growth in that market.
I am pleased to introduce the Annual Report for FY23,
ayear in which the business demonstrated the appeal
ofour affordable branded products to both our retail
partners andconsumers.
James McCarthy
Chairman
05
Ultimate Products plc Annual Report 2023
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Overview
Chairman’s introduction continued
As such, we have been able to win a number
of large German retailers as customers across
Europe, with German sales of £15.2m making
up 30% of our sales into Europe. We regularly
meet our German retail partners at their
premises and at events, such as Ambiente,
the largest consumer goods fair in Europe,
so there is now less need for them to travel
to our showroom. Therefore, as we look to
increase our penetration with other large
non-German retail customers, we took the
decision to move our European showroom
to a 16,500 sq. ft. space at the Homexpo
Paris showroom complex, where the anchor
tenant is JJA, one of France’s largest home
furnishing suppliers. The site, which is located
near Charles de Gaulle airport, is not only
convenient for hosting French retail partners,
but also existing and potential customers from
across Europe. To facilitate this international
expansion plan, we have been delighted
to welcome our new sales team in Paris,
who complement our other sales teams
inGermany and Poland.
While our outlook is increasingly international,
the heart of Ultimate Products will always be
Oldham, which we have been proud to call
home since our inception. Our commitment
to Oldham, from where we continue to recruit
the majority of our talent, was reaffirmed
during the year with the renewal of our
lease at Heron Mill, our 240,000 sq. ft.
warehousingfacility.
Summary
FY23 has been a challenging year for the
many retailers and consumers that we are
proud to support; nonetheless, the Group
has responded by remaining true to its
core purpose, and this has led to a record
financial performance. While this success
is rooted in the resilient business model
we have developed, it also depends on the
huge dailyefforts of our colleagues. They
have once again met the challenges of the
year with tenacity, creativity, and above all,
passion. Onbehalf of all stakeholders, we
thank them for all of the hard work they
haveundertakenover the past year.
We look to the future with optimism
andexcitement, knowing that we have
a team of colleagues who will truly bring
to life our UK and international strategy
of developing our portfolio of beautiful
andmoresustainablebrands.
James McCarthy
Chairman
30 October 2023
06
Ultimate Products plc Annual Report 2023
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Strategic Report
Overview
Chief Executive’s review
A resilient and scalable business
Our products are in 80% of UK homes and are
used on a daily basis, and we’ve worked extremely
hard to make sure that we’re able to maintain
affordable prices for all consumers.
Our Brands
In line with our desire to be the ‘Home of
Brands’, we have developed our portfolio
of consumer goods brands to become true
leaders in their respective categories. Our
brand journey over the last five years has seen
us pivot from a licence holder to a brand owner,
giving the business a resilient core from which
we can expand and grow. 89% of our revenues
are now derived from brands which we either
own (79%) or have on long-term licence (10%),
which is up from 60% in 2018.
As a key part of this journey, we were delighted
to welcome Tracy Carroll to the newly created
role of Brand Director in December 2022.
Tracy is enabling us to refine and focus the
development of our portfolio of brands. Her
first major project is the ongoing rebrand of
our key Salter brand, which was successfully
previewed at the Exclusively Homeware
event in June 2023. We are delighted by the
performance of Salter in the current year with
its £66.6m of sales, representing a significant
39% step-up in the scale of what is the UK’s
oldest houseware brand.
In addition, we renewed our trademark licence
agreement with Spectrum Brands, which grants
us an exclusive licence to use the “Russell
Hobbs” trademark in the United Kingdom,
Europe, Australia and New Zealand for non-
electrical kitchen and laundry products. The
new agreement is on a rolling four-year basis,
rather than the previous fixed-term arrangement.
This change reduces the licencing risk, as the
licence will always have four years to run. It
also allows us to better focus on the long-term
growth of the Russell Hobbs brand, which will
increase the benefits of the partnership for
both Spectrum Brands and Ultimate Products.
Finally, we have seen the highly successful
relaunch of Petra, the German kitchen electrical
brand, with sales surpassing £3m during the
period. We have a tried and tested approach
to reinvigorating and growing our heritage
brands, of which Petra is just the latest, and
most international, example.
Our Strategic Pillars
As a business, we continue to diversify our
customer base to mitigate risk and increase
the predictability of our revenue. This year
we have seen the benefits of this strategy
in full effect. During a period of significant
uncertainty around consumer sentiment,
Group revenues increased 8% to £166.3m
(FY22: £154.2m), a performance that was
achieved with no overall price inflation, in
order to keep our products at prices which
areaccessible to all consumers.
Online channels, which still represent a
relatively small part of our diverse customer
base, were the main driver of revenue growth,
and more than offset the temporary weakness
we have seen in other areas. In the first half of
the year, retail customers were understandably
cautious in the size of forward orders, given
the macroeconomic environment and high
stock levels carried over from the pandemic.
As a result, sales to retailers fell 11% in H1 FY23
against the corresponding period in FY22. The
second half of FY23 saw an easing in the level
of overstocking and sales returned to growth,
increasing 8% against the corresponding
period in H2 FY22. Although overstocking
and uncertainty regarding the consumer
environment continue to hold back retail
ordering, confidence is steadily returning.
Simon Showman
Chief Executive Officer
07
Ultimate Products plc Annual Report 2023
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Chief Executive’s review continued
Responding to challenges
The exceptional 64% growth in FY23 online
sales reverses the pattern seen in FY22,
when, amidst a period of significant supply
constraints, we made the strategic decision to
prioritise orders made by our retail partners,
meaning that sales through our online channels
were necessarily constrained. Our online sales
are mainly conducted through third-party
websites such as Amazon and eBay, as well as
through our own sites, Salter.com and Beldray.
com. They have primarily been focused in the
UK (FY23: 89% of online sales; FY22: 92%),
where an optimised approach to third-party
platforms helped to grow sales by £13.8m.
Weare now using the experience gained in the
UK to expand our online capabilities in Europe,
where online sales grew 115% to £4.3m, clearly
demonstrating the potential for future growth.
Our Product Categories
Our Small Domestic Appliances (SDA) category
has grown strongly in the year, supported by
buoyant consumer demand for energy efficient
and money saving products. Part of this growth
was in air fryers, where continued strong sales
following the pre-Christmas boom appear
to indicate that this product line has found
a permanent place on kitchen counters. As
always, it is newness in product that maintains
Ultimate Products’ strong market position, and
we have been delighted to take our first orders
for the Salter combined air fryer-microwave,
which will open up the air fryer market to new
consumers. Housewares have been hardest
hit by retailer overstocking, with cookware in
particular having seen a COVID-19 spike in sales,
followed by a subsequent fall.
Our Geographies
As noted, growth in the current year has
primarily been in the UK, where online sales
were up 60%, and sales to retail customers
were flat at £78m. Sales growth in Europe
was subdued, with sales increasing 1% to
£49.6m. Within this we saw healthy growth
in our online sales, which offset weakness
in sales to European retailers who have
not reduced overstocking as quickly as UK
retailers. This performance reverses some of
the strong growth we have seen, especially in
Germany, which remains our largest overseas
market. We continue to see the European
market as akey area for long-term growth,
demonstrated by our investment in a new
European showroom in Paris.
Our showroom in Cologne was very successful
in helping to build strong relationships with
retail buyers at German discounters and
supermarkets. These relationships are now
sustained through attending events such as
Ambiente, Europe’s largest housewares show,
and visiting the premises of our retail partners.
Our relocation to Paris aims to replicate the
success we have had in Germany with both
French retailers and other European retailers for
whom our new showroom, located near Charles
de Gaulle airport, is easier to visit than Cologne.
Revenues in ROW declined from £4.2m in FY22
to £1.1m in FY23, as post-COVID overstocking
impacted a key Australian customer. ROW
remains a nascent part of the business, with
a limited number of customers, which can
inevitably lead to fluctuations in year-on-year
revenue performance.
08
Ultimate Products plc Annual Report 2023
Governance
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Strategic Report
Overview
Sustainable development
Investment in Productivity
Despite seeing a dramatic increase in the
inflationary environment, we are proud that
we kept our products at affordable prices
for every consumer, a decision that helped
support our sales growth of 8%. Although
we kept our prices consistent, as a business
we are not immune to cost inflation. To hire
and retain the best talent we need to ensure
that our wages continue to be competitive
and attractive. Despite these cost pressures
we have been able to maintain our EBITDA
operating margin at 12.2% and increase
EBITDA by 8% to a record £20.2m.
We achieved this through the strength of
our operating model, which is constantly
being fine-tuned to optimise productivity,
and this approach is directly linked to our
ability to consistently provide the best service
to our customers. We have therefore been
relentless in developing the systems that
underpin our business and, in recent years,
have established a company culture that
is intensely focused on driving productivity
through automation. This focus has driven
gross profit per employee from £83k in FY18
to £113k in FY23.
During the year we embarked on the
automation of hundreds of tasks across the
business, which is saving over 1,000 hours of
employee time every week. Our approach to
automation is best characterised as a bottom-up
approach by which our teams will come to us
with problems, which our process development
team will then solve. This demand-driven
approach has allowed us to concentrate
our efforts on the tasks that cause the most
friction within our business. Solving them with
automation increases productivity and improves
accuracy, resulting in enhanced operating
margins, an even better customer experience,
and a more engaged workforce.
ESG Strategy Launch
Doing the right thing has always been at the
core of everything that we do. As we continue
to grow, we are acutely aware that our efforts
and ambitions should be underpinned by a
clear sense of responsibility and purpose. This
ambition is reflected in our comprehensive ESG
strategy which is at the heart of all company
activity and ensures that our efforts and
ambitions have a clear sense of direction to
unite our colleagues and supply partners. We
are cognisant of the impact that our business
has on the world in which we operate, and we
know that, to ensure long-term success, we
must become a more sustainable business.
We also recognise that our retail partners need
our help to achieve their own ESG ambitions,
where actions often involve immense scale
andcomplexity. Tofacilitate this, we are working
to ensure that the necessary infrastructure is
in place to support our retail partners in going
the extra mile, while continuing to provide
them with an outstanding service. Being an
ESG front runner is not only the right thing to
do but will also enhance our competitive and
commercialposition.
Finally, we also recognise that an integral part of
our long-term sustainability is the diversification
of our supply chain. Over the next phase of our
business development, we will look to diversify
our supply lines away from their relatively
narrow geographical concentration in China.
As part of this journey, we have appointed a
member of our Operating Board to head up the
complex task of identifying new factories around
the world which can meet the high standards
of both the Group and its customers, but also
support our key purpose of providing beautiful
and more sustainable products for every home.
Simon Showman
Chief Executive Officer
30 October 2023
Our Brands
FY23
£’000
FY22
£’000 Change %
FY23
%
FY22
%
Salter 66,599 48,080 18,519 38.5% 40.0% 31.2%
Beldray 35,031 39,950 (4,919) -12.3% 21.1% 25.9%
Russell Hobbs (licensed) 16,458 20,165 (3,707) -18.4% 9.9% 13.1%
Progress 7,425 8,287 (862) -10.4% 4.5% 5.4%
Petra 3,194 – 3,194 – 1.9% 0.0%
Kleeneze 3,378 2,835 543 19.2% 2.0% 1.8%
Premier Brands 132,085 119,317 12,768 10.7% 77.5% 77.4%
Other proprietorial brands 16,036 17,032 (996) -5.8% 11.6% 11.0%
Own label and other 18,194 17,842 352 2.0% 10.9% 11.6%
Total 166,315 154,191 12,124 7.9% 100.0% 100.0%
Our Strategic Pillars
FY23
£’000
FY22
£’000 Change %
FY23
%
FY22
%
Supermarkets 49,116 51,523 (2,407) -4.7% 29.5% 33.4%
Discount retailers 44,593 48,126 (3,533) -7.3% 26.8% 31.2%
Online channels 41,449 25,321 16,128 63.7% 24.9% 16.4%
Multiple-store retailers 22,178 17,312 4,866 28.1% 13.3% 11.2%
Other 8,979 11,909 (2,930) -24.6% 5.4% 7.7 %
Total 166,315 154,191 12,124 7.9% 100.0% 100.0%
Our Product Categories
FY23
£’000
FY22
£’000 Change %
FY23
%
FY22
%
Small Domestic Appliances 66,813 57,032 9,781 17.2% 40.2% 37.0%
Housewares 48,008 54,539 (6,531) -12.0% 28.9% 35.4%
Laundry 18,163 14,799 3,364 22.7% 10.9% 9.6%
Audio 15,545 12,907 2,638 20.4% 9.3% 8.4%
Heating & Cooling 6,214 5,870 344 5.9% 3.7% 3.8%
Others 11,572 9,044 2,528 28.0% 7.0% 5.9%
Total 166,315 154,191 12,124 7.9% 100.0% 100.0%
Our Geographies
FY23
£’000
FY22
£’000 Change %
FY23
%
FY22
%
UK 115,580 101,050 14,530 14% 69.5% 65.5%
Europe 49,645 48,931 714 1% 29.8% 31.7%
ROW 1,090 4,210 (3,120) -74% 0.7% 2.7%
Total 166,315 154,191 12,124 7.9% 100.0% 100.0%
Chief Executive’s review continued
09
Ultimate Products plc Annual Report 2023
Governance
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Shareholder Information
Strategic Report
Overview
Business model
A model for growth
We source
beautifulproducts
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
ofqualityassuranceprofessionals.
We develop brands
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 invest in people
&productivity
It is our people that drive our business
model, from product development, to
buying, to design, to QA, to shipping.
Weare, therefore, proud of our investment
in our people and our sustainability. In
particular, our graduate development
scheme hasbeen key in building
oursuccess.
We distribute globally
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 protect our brands
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.
We grow profits
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
ourshareholders.
Our priorities when
pursuing our strategy are:
To generate repeat business
and through this deliver
increased revenue and
higheroperatingmargins.
To have a unique product offering
achieved through innovation and
a focus on ourbrands.
To have best-in-class execution
in everything that we do.
To be focused on our four key
growth drivers.
To exercise strong financial
disciplines in management of
operating costs, cash and risk.
What we do...
We sell to retailers
&consumers
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.
10
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Strategic goals
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.
Strategy Goals Progress Focus for next year Performance
Growing our
international
sales reach
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. Currently, Europe is an important
part of Ultimate Products’ strategy,
and the Group has a number of
strong and growing relationships
with leading supermarkets in
theregion.
We currently sell £1.72 of product
per head in the UK, in Europe this is
only £0.10. If we achieved the same
level of penetration with European
consumers as we have with UK
consumers, our total sales could
reach£1bn.
Our medium term goal is to expand
our geographical sales reach so that
international sales make up 50% of
our total revenues.
In the current year we successfully
relaunched the Petra brand, reaching
over £3m of sales.
Our overall level of International
sales fell by 4.5% to £50.7m, meaning
that their share of total sales fell to
31% - a disappointing result. This
was primarily due to a fall in sales
to our Australian distributor. In the
strategically important European
market, sales grew by just 1%, due to
continuing overstocking by European
(particularly German)retailers.
During the year, we took the decision
to relocate our European showroom
from Cologne to Paris, as we look
to grow our traction with large non-
German retailed customers.
Our focus for FY24 is to build relations with French and other
European retailers. The sighting of our new showroom near Charles
de Gaulle airport means that it is convenient for hosting both French
retail partners and also potential customers from across Europe. This
will allow our new French sales team to showcase our affordable
branded product ranges to retail buyers from across Europe and
build long-lasting relationships with them, following the model we
have used with UK discounters and supermarkets.
During the current year, European sales have been held back due
to caution by
retailers, particularly German supermarkets, who have
not reduced overstocking as quickly as UK retailers. We expect this
pattern to start to reverse once overstocks have been reduced.
In addition, we will look to grow brand awareness with local
consumers by offering our products online using platforms such as
Amazon and eBay. This dual approach to growing online helps to
grow awareness of our brands by being present in both trusted retail
outlets, and websites.
Expanding
our online
offering
We have been very successful in
growing our nascent online business
over the past 5 years. Our objective
has been to grow this business to
30% of revenue over the medium
to long-term, based on the fact that
online accounts for over 25% of non-
food retail sales in the UK.
In addition, we believe that
there is further scope for growth
via a roll-out across selected
internationalplatforms.
The online business has seen
exceptional growth in the current
year, growing by 64% to £41.4m, and
now makes up 24.9% of our sales
(FY22: 16.4%), and is well on its way
to achieving our target within the
current year.
Although we do not expect the online business to be able to
continue at its initial rapid rate of growth, there continues to be
scope for growing our online offering in selected overseas markets.
Our online overseas business is currently just 10% of our online
revenues, but grew by 115% in the current year to £4.3m.
In addition, we continue to invest in our own online platforms
(Salter.com, Beldray.com and Homeofbrands.com) and continue to
explore selling our products on other online platforms to provide
resilience against customer concentration on any one platform.
60,000
50,000
20232020 2021 2022
20,000
30,000
40,000
10,000
0
International sales £’m
30,000
25,000
20232020 2021 2022
10,000
15,000
20,000
5,000
0
Online sales £’m
40,000
35,000
45,000
11
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Strategic goals continued
Strategic pillars Goals Progress Focus for next year Performance
Refining
our brand
and product
development
to protect
and grow
thebusiness
Over the past five years we have
pivoted from being a licence holder
to a brand owner, which gives
us the responsibility of curating
heritagebrands.
In addition, one of the benefits of
concentrating growth in international
and online sales is the extension
of product life, as current product
lines can be sold to new consumers
through different channels. This
means that we can tighten our
product development process to
bring a better, refined number of
products to market.
During the current year, we have
brought a similar level of products
to market (967), as many of these
were already in the pipeline when
we took our decision to refine our
productdevelopment.
However, the hiring of our first Brand
Director is allowing us to refine
the development of our portfolio
of brands in a more strategically
focused manner.
Our best known and most valuable brand is Salter. During FY24, we
will be fully refreshing the brand. With over 260 years of heritage,
this refresh of the brand has been based on careful evaluation of
thebrand’s equity, brand’s health, and consumer’s perception.
Our medium-term plan is to develop a reducing number of product
lines each year, with the aim to reduce yearly product cycle from
around a third to around a quarter.
Investment
in our
systems and
processes
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
and increasing profitability.
In the current year, we have
made strong progress in terms of
automating tasks and using the
technology of robotics and AI to
drive productivity. Over the year we
have automated 451 tasks, saving
around 1,021 hours a week, which
inturn creates over £500,000 of
costsavings.
We will continue on our journey on focusing on automating tasks on
the basis of prioritising the tasks which provide the greatest level of
return for the business in terms of people hours saved. Our medium
term goal is to complete the robotisation of 1,000 tasks in the current
calendar year.
1,500
1,250
20232020 2021 2022
500
750
1,000
250
0
New products developed
15
12.5
20232020 2021 2022
5
7.5
10
2.5
0
Operating margin %
12
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Strategy in action: Re-branding of Salter
The NEW Salter is on its weigh
As the newly appointed Brand Director
for Ultimate Products I was delighted and
honoured to have the opportunity to be
working on a variety of well-respected,
qualityhousewares brands with hundreds of
years of heritage – it’s a marketeer’s dream.
I was excited to get started on evaluating
the brands. In an ever-changing world and
fast-paced digital age, brands must be highly
adaptive to the evolving conditions to keep
upwith the competition.
My first priority, the Salter brand, was acquired
in 2021. With over 260 years of heritage, it was
imperative that we evaluated the brand’sequity,
brand’s health, and consumers’ perception.
Thisformed the foundation to build our new
brand strategy.
A brand is not just a logo, that’s just
thetip of the iceberg!
Below the surface: The perceived brand.
Consumers’ perceptions and experiences
heavily influence sales decisions and affect
the success of the brand. There are no
hiding places, the perception of brands is
the emotional experience, strengthened
or weakened through every interaction
ateverytouchpoint.
Our research informed us that our consumers’
perception of Salter is, in the majority,
extremely positive. This research provided
important drivers to help formulate the
direction for our new brand strategy.
Through all Salter touchpoints we are
enhancing the positive sentiments:
1. Reliability and Trust
Top sentiments from our research.
2. Joy and Happiness
Lose the clinical perception which has been
adopted through our iconic scales.
3. Expertise and Knowledge
Trusted brand with over 260 years
ofexperience.
4. Friendly and Down to earth
The best friend you can rely upon when
youneed advice.
On the surface: The Visible brand.
The logo identity and branding system is
crucial for selling, marketing, and promoting a
consistent image. Our research confirmed that
there is an abundance of equity in the Salter
brand. This led to our decision to evolve the
logo rather than do a complete redesign.
Our brand values will be
lived by the whole team
everyday.
Tracy Carroll
Brand Director
13
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Strategy in action: Re-branding of Salter continued
Salter is an Expert in everyday
Our new tagline summarises Salter’s
purposeand values in a creative way.
It cleverly combines reliability and trust
messaging with the suggestion of down-
to-earth and familiarity too.
Consistency is Key
Now we have our new brand strategy in
progress, we need to install consistency.
To build Salter into an even stronger brand,
we must deliver a positive and consistent
emotional experience. The more we do this,
the more people come to rely on us and,
mostimportantly, trust us.
We have turned over every stone to
ensurewe have a creative solution for all
ourtouchpoints, for example packaging,
socialmedia, POS, in-store branding,
marketing materials and online listings.
Living our brands each and every day
It doesn’t stop there, everyone in the business
will contribute to help build Salter. Our brand
values and proposition will be lived by the
whole team, whatever their role, each and
every day.
After the insecurity of the last few years, people
are desperate for authenticity, transparency,
and honesty from the brands they interact with.
Authenticity and Trust are at the heart of what
we do at Salter. Our team’s approach to this
brand quality helps build our brand loyalty.
The rebrand is just the very start of a never-
ending journey for Salter, we need to continue
to be consistent and to protect our precious
brand in order to build and grow Salter in line
with our vision:
To be the world’s brand of
choice for all consumers who
are looking for great quality
home products that they
cantrust.
14
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Strategy in action: Culture of continuous improvement
Our culture of continuous improvement has been
instrumental in delivering record EBITDA of £20.2m, and
helping us increase operating margins from 8.2% in 2018
to 12.2% in the current year.
Andrew Gossage
Managing Director
Over the past six years, our business has
increased revenue by an average of 14% per
annum from £88m to £166m, and at the same
time we have increased our adjusted EBITDA
by 31% per annum from £7m to a record
£20m. We have achieved this through the
strength of our operating model, where we
constantly seek to improve our productivity.
Aculture of continuous improvement.
This is intrinsically linked in our ability to
grow sales by consistently providing the best
service to our customers. We have, therefore,
been relentless in developing our systems
and, in recent years, have established an
intense company focus on driving productivity
through automation. This focus has driven
gross margin per head from £83k/head in
FY18 to £113k/head in FY23.
During the current year, we have embarked
on the automation of hundreds of low skill,
low reward tasks increasing the capacity of
our workforce to focus on more high pay
off activities. This is best characterised as a
bottom-up approach by which our teams will
come to us with problems and suggestions,
which our processdevelopment team will
then solve. This approach works because
of the strength of our work force. We take
pride on being a talent business that offers
continuous improvement to its colleagues
through a multitude of opportunities across
allareas ofthe business.
1,021 hours
saved each
week
451 Robotics
tasks
completed
£587,000
estimated
annual savings
15
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Strategy in action: Culture of continuous improvement continued
During FY23, we have increased hours
spent training our colleagues, with average
training time per person increasing from 10
to 15 hours. We have focused that time on
upskilling each person to add greater value
to the roles which they are undertaking
and ensuring they can effectively continue
their careers whilst meeting the evolving
operational needs of thebusiness.
Our graduate scheme aims to bring the
best and brightest talent into the business,
and train them. This workforce is unafraid
to challenge the status quo, and the way
inwhich things are done.
This mindset is encouraged, as it allows us to
nurture a culture of continuous improvement.
This demand-driven approach has allowed us to
concentrate our efforts on the tasks that cause
the most friction within our business. By solving
the issues raised with automation, we are able
to increase productivity and improve accuracy.
This results in enhanced operating margins,
an even better customer experience, and an
engaged workforce. The enhanced operating
margins enable us to keep our pricing at a level
which is attractive to our retail partners and
consumers, but also allows us to invest in higher
salaries for our people to attract and retain
talent. Finally, the enhanced operating margins
lead to higher profits for our shareholders as
thebusiness grows.
Our graduate scheme aims to bring the best and brightest
talent into the business, and train them. This workforce is
unafraid to challenge the status quo, and the way in which
things are done.
16
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Key performance indicators
180
2020 2021 2022
120
150
30
60
90
0
116
136
154
Revenue £m
Change:
+8%
20
2020 2021 2022
10
15
5
0
10.4
13.3
18.8
Adjusted EBITDA £m
Change:
+8%
500
2020 2021 2022
300
400
200
100
0
368
415
429
Change:
+5%
Sales per Head £’000
2.0
2020 2021 2022
1.0
1.5
0.5
0
0.4
1.4
1.3
Change:
-46%
Gearing ratio
25
2020 2021 2022
15
20
10
5
0
23.0
22.2%
24.9%
Change:
+4%
Gross margin %
100
2020 2021 2022
60
80
40
20
0
99%
99%
97%
Change:
+1%
On Time Delivery %
Description:
The revenue in the period.
Performance:
Revenue is up 8% in the period,
and has been achieved with no
overall price inflation to keep our
products at prices affordable to
all consumers. The growth has
been underpinned by strong
growth online, with revenues
increasing 64% to £41.4m.
Description:
Earnings before interest, tax,
depreciation and amortisation,
excluding charges for share-
based payments and other non-
underlying charges.
Performance:
Adjusted EBITDA has increased
step-in-step with revenue by 8%,
with the inflationary pressures we
have experienced in our costs line
being offset by productivity gains.
Description:
Revenue for the period divided by
the average number of employees
& relevant temporary staff in
theperiod.
Performance:
Sales per head has increased
by 5%, with the increases in
productivity of our people being
a clear mark of our commitment
to continuous improvement, with
the measure having increased
from £368k per head in 2020
to£452k per head this year.
Description:
Net bank debt at the end of the
period divided by underlying
EBITDA for the period.
Performance:
Gearing ratio has decreased
from 1.3* to 0.7* through careful
management of working capital.
This lower gearing ratio will help
to mitigate any negative effects
of the increase in interest rates.
Description:
Gross profit for the period
divided by revenue for
theperiod.
Performance:
GM% has risen to 25.7%, driven
by online growth, where we tend
to earn a slightly higher margin
than with sales to retailers, but
supported by the fall in global
shipping rates.
Description:
Number of orders from retailers
delivered on time in the period
divided by the total number of
orders delivered to retailers in
the period.
Performance:
Our delivery performance to our
retail customers has started to
return to its former high level,
following a fall in the previous
year caused by the global
shipping crisis.
2023
98%
2023
166
2023
452
2023
25.7%
2023
20.2
2023
0.7
17
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Environmental, Social and Governance Report
Making ESG at the heart of everything we do
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.
Last year, we launched our ESG strategy
which aligned the great work our people
do into a coordinated and comprehensive
roadmap to achieve our ambitions around
ourpeople, our community and becoming
amore environmentally sustainable
businessforthe future.
Having communicated this to our wider
stakeholders, this year has been about
embedding a more strategic approach to
our ESG work, aligning it to our business
model (explained in more detail on page 10)
and bringing it into the heart of what we do.
This has included engaging further with our
external partners to set expectations, align
goals with the aim of achieving our long-
term targets to see the real changes we
areaspiring to achieve.
An update on the great work completed on
our journey this year against our non-financial
targets is detailed further in this report.
Our ESG Committee, with oversight from the
Main Board, is responsible for keeping the
Company on course to achieve the strategic
aims and targets set and maintain governance
oversight of material ESG issues, along with
consideration of stakeholder feedback and
external market conditions.
This year, the ESG Committee has completed
a review of the ESG management structure,
the Company’s ESG targets, focus areas and
materiality assessment to determine whether
they remain relevant or if refinement is
required. Overall, the Committee believes the
current focus areas and Non-Financial targets
are relevant and should continue, with the
exception of our commitment to reducing plastic
packaging by 50%. The Company has already
successfully achieved this target two years
before its target date of 2025 and therefore the
Committee is finalising a new stretch target in
this area for our next financial year, which will be
communicated to stakeholders in due course.
An assessment of our ESG structure
was completed and determined fit for
purpose. However, it was identified that
as product packaging is a key aspect of
our environmental focus areas, a senior
representative from our Brand/artwork
department will be required to join the ESG
Committee as an ESG lead in the coming
years as the business continues to grow and
evolve. A suitable candidate will be identified
and implemented within the next financial
year. The Company has now introduced
ESG-related objectives within the annual
bonus arrangements of key members of the
Operating Board and ESG Committee to help
drive positive change. This decision will be
reviewed to determine whether ESG-related
objectives should be included in more wider
bonus scheme initiatives.
Our colleague committees continue to
add value through idea generation and
implementation of key actions within our
day-to-day operations.
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
18
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Reviewing our Materiality and
contribution to UN Sustainability Goals
The Company has assessed which of the United
Nations 17 Sustainable Development goals
(UNSDGs) were relevant to the business and
which our actions could directly and positively
contribute towards. These are detailed below.
A review was completed this year and it
wasdetermined that these top five materiality
concerns are still valid and UNSDGs were still
relevant and remain aligned to our strategy.
It is the intention of the ESG Committee
to complete a review of these two areas
every two years as part of the Committee’s
responsibilities as this is the most relevant
timeframe to the business as we continue
togrow and ESG regulation evolves.
Working on Shared Goals with
OurCustomers
Where possible, our aim is to support our
retail customers by aligning our ESG work
and targets to provide a transparent and
best-in-class service, an ESG front runner,
whilst enhancing our reputation and
competitiveposition.
As such, a representative of our
ESGCommittee now attends key retail
customermeetings to present our ESG
strategy to senior decision makers, share
environmental data, discuss opportunities
for alignment and gain feedback, enhancing
our service and sense of shared partnership.
Recently these meetings have been focused
on our main UK retail customers and will
expand into our European retail base in the
coming years as relationships strengthen.
In 2021 the Company completed a materiality
assessment (using the SASB Materiality Map) which
identified a top ten list of issues within the Company’s
business model perceived as having the largest
negative impact. These issues were overlaid with
what are seen as areas of the biggest opportunity
forpositive change creating a top five:
1. The Energy/CO2 consumption in our
operations and wider supplychain
2. Product packaging
3. Product life cycle and design
4. Product quality
5. Workforce diversity and inclusion
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
Materiality
Environmental, Social and Governance Report continued
19
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
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 - Completed
• 100% of remaining plastic packaging to be recyclable or reusable
by 2025
Paper
• 100% of card and paper product packaging to be FSC-certified
by2027
• 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
liveproducts
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
wasteorscrap
• The above targets apply to all products under the Group’s brands only
Focus Areas KPIs
Aim: To Have Net Zero Carbon Emissions from Manufacturing to Delivery
• Fuel & Energy consumption
inoperations
• Far East Supplier base
• Logistic partners in
supplychain
• 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 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
• Zero H&S Reported Incidents on the Group’s sites
• Zero 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
Environmental, Social and Governance Report continued
20
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Environmental, Social and Governance Report – People
We care about our people
Our progress so far:
Women in Main
Board Roles
Women in
Board Roles
Gender in
Leadership
Roles* (F/M)
Global workforce
by gender (F/M)
Target 40% 40% 50/50 50/50
2023 25% 33.3% 43/57 51/49
2022 25% 33.3% 37/63 51/49
Baseline 25% 15.4% 31/69 49/51
Male Female
Total 196 203
Main Board 6 2
Operating Board 4 3
Board direct reports 56 59
Employees 129 139
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%
2023 1.12% 15.0 96.0% 0 0 84% 18.7%
2022 1.14% 9.7 95.0% 0 1 85% 17.3%
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.
Data for the purpose of making diversity disclosures is collected through new-starter forms filled in by our employees,
and is based on ONS categories.
Investing in our Talented People
This year, under our culture of continuous improvement, we have taken steps to continue to
attract the best local people and retain and enhance the many talented people we have, in order
to enhance productivity, maintain a competitive advantage and ensure we are doing the right
thing for our people. The Company has continued to improve its remuneration offer to remain
competitive for its global workforce through regular salary reviews and providing opportunities
for internal job promotions. As such, in FY23, we have promoted 40 of our colleagues into more
senior positions, increased the salaries of our well-established Graduate Development Scheme
and within our Distribution Centres to offer a commitment of all permanent roles starting at
£11.50 per hour (or above), this currently being over £1 per hour above National Living Wage.
Following feedback from the 2022 colleague engagement survey, we have also consulted
with our UK workforce on adapting their working pattern with the aim of striking a balance
between maximising working productivity at key operational times in the week whilst offering
our colleagues a suitable work life balance. The consultation process involving our colleague
committee was successful enabling the UK office team to adapt the general work pattern to
include additional time worked at the beginning of the week in order to offer a 3pm finish
each Friday. The adaptation started in May 2023 for an initial six-month trial period with
formalfeedback on its success due in November 2023. However, so far, initial feedback
hasbeen very positive across all UK office teams.
We take pride on being a talent business that offers continuous improvement to its colleagues
through a multitude of opportunities. Our average formal training time per person has increased
from 9.7 hours to 15 this year through investment in best practice training. Significant time has
also been invested in migrating our standard onboarding and job training subjects on to our
digital ‘SendMy’ platform, with over 40 subjects now readily available for our colleagues to
complete the training at a time that best suits them and freeing up supervisors and mentors
tofocus their time on other more important tasks.
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. Progress has been
madeon our gender balance in leadership positions as our female colleagues continue to
bethe greater portion of colleagues achieving promotions within the business, evidenced by
29 of the 40 promotions this year being females. We are confident that this increased pipeline
of female leaders currently in more junior leadership positions will progress up the levels of
managementseniority, leading to a more diverse senior management team of the future.
Much of our success relates to our talented people and providing them with opportunities, an environment that is a great place to work for
all and a culture of continuous improvement through training, development, and the use of technology to support them within their chosen
careers. As such, our targets and focus areas are based around diversity and inclusion, people productivity through training and development,
colleague well-being and fairness for all.
21
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Diversity and Inclusion continued
Although our women in Board roles percentage has not changed this year, we have identified
two females within our Senior Management team who have the potential to reach the operating
Board in the next 2-3 years. As such, both are currently working with personal development
plans and gaining more senior experience by attendance to the Company strategy days and
Board level committees and meetings.
We have also improved our policies and procedures relating to our female colleagues to
encourage and retain women in our workplace and help support them with specific needs they
may require continuing their careers in the Company. We have improved our maternity policy by
offering more support to expectant mothers before, during and after their pregnancy and return
to work. This includes increasing our maternity pay from statutory amounts to a maximum of 16
weeks full pay and introducing better structure around a returning mum’s transition back to work
by using an external partner who specialises in mentoring new mums from birth to return to work
through support and guidance. 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 Company introduced a new policy around
menopause support that also includes access to specialised help, support, and guidance from
aqualified person.
We continue to successfully manage our gender pay median within our target threshold through
fairness in our annual salary reviews, graduate development scheme and distribution centre pay
structure whereby remuneration is based purely on the job role and/or length of service.
Under our recruit local initiative, the Company has refocused its recruitment and engagement
efforts on targeting key areas of our local community in search for talent. This has been achieved
through introducing key partnerships with local schools and educational institutions, along with
increased community engagement through supporting key events linked to Oldham’s ethnic
minority residents (such as Eid in the Park) and holding our own onsite recruitment events,
specifically for the people of Oldham. This increase in awareness within the ethnic minority
community has assisted in filling job vacancies both at head office and in our local DCs.
Giving our People a Voice
The annual engagement survey continues to act as a voice for our growing workforce and a key
method for assessing our colleagues’ needs. Initiatives this year arising from the survey include:
• The change in work pattern noted earlier in this report
• The introduction of a new pension provider that offers increased contributions and wider
benefits to our colleagues
• The modernisation of our China office to improve the general working environment and
replicate aspects that are seen in our revamped head office which was completed in 2021
• An expansion of training and development opportunities within our distribution centre teams
Colleague Well-being
In 2022, the Company launched a Well-being Committee that has a particular focus on ensuring
the well-being of our global workforce is a priority for our business as the teams continue to
expand and new challenges are being faced. The Committee identified two priority areas that
were impacting on our team’s well-being:
To support our colleagues with the cost-of-living crisis, the Company arranged a series of specialist
workshops whereby representatives from HSBC could guide our colleagues on key financial matters,
including effective household budgeting, financial planning, and access to other areas of financial
support. In addition, the Company secured a series of bespoke discounts for our colleagues with
local community businesses to help ease costs on general living expenses. Discounts covered areas
around vehicle repairs and breakdowns, house repairs, building works and food costs. The Company
also operates a staff discount scheme on our own products, enabling the entire workforce to
purchase essential household goods at significantly discounted prices compared to the high street.
To support our colleagues with concerns over fitness, the Well-being Committee arranged
a series of fitness activities throughout the year to encourage all people of all fitness levels
to participate. Examples included planned walks in the countryside, fully expensed circuit
trainingand yoga sessions onsite and the annual participation of the Manchester 10k run.
The Company also continues to have an Employee Assistance Programme (EAP) in place to
ensure our global colleagues have access to confidential support across a multiple of subjects
whenever they require.
Environmental, Social and Governance Report – People continued
It’s crucial we continue to suitably support,
develop and reward our teams to ensure
we retainour people which in turn will help
continueto drive results.
Craig Holden
Operations & HR Director
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Strategic Report
Overview
Environmental, Social and Governance Report – Community
We care about our community
Our community work is integral to our core values and will continue to be
akey focus for us going forward as we always strive to do the right thing.
There are clear needs in our community around employment, providing
opportunities for local youth and supporting vulnerable people; to ensure
wehave the greatest impact, our efforts have been re-focused onthese
areas to be the heart of what we do.
Our progress so far:
Charity Support &
Fundraising
UK Workforce to
Live Locally
Target £150k 60%
2023 £68,000 51.8%
2022 £47,000 47.2%
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
past year, we have supported our local foodbank, Oldham Foodbank, with financial aid, which
has been fundraised by our staff through events such as the Manchester 10k, a sponsored hike,
raffles, bake offs and more. We have also provided the foodbank with food donations through
staff collections based on items that they needed, at a particular time, alongside offering the
foodbank our time in volunteering hours.
This year, we have surpassed last year’s total and have, again, had our most successful year
by raising £21,000 for Oldham Foodbank, all going towards helping to provide food to local
peoplein crisis.
In addition, our colleagues also donated 1660kg of food, feeding hundreds of people in our
local community who were in emergency situations. The Company also authorised over 50
colleagues to spend time (nearly 200 hours) volunteering at the foodbank, either packing
foodparcels or delivering food parcels to families across the borough.
Our Company charity next year will be Keeping Our Girls Safe, a local charity based in Failsworth,
working with children and young people to educate about unhealthy relationships, child sexual
exploitation (CSE), grooming and risks. We have plans to support them through monetary donations,
time through training sessions and mock interviews as well as stock donations.
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Overview
Environmental, Social and Governance Report – Community continued
• Introducing Graduate Apprenticeships as a route to employment with the Company, but
currently offering these on an exclusive basis to those based locally to the Oldham area.
• Prioritising people based within local postcodes for recruitment assessment days and first
interviewing for both our Distribution Centre and Office based roles.
To continue progress, next year we intend to introduce graduate placements and work
experience opportunities exclusively to localised people and introduce an additional school
under the UP-Academy model.
Our Wider Community Work
Positive Steps
This year, we have continued our relationship with Positive Steps, a local charitable organisation that
delivers a range of targeted and integrated services for young people, adults and families across
our local community. This year we have provided over £5k of funding which was granted through
the continuation of ‘Micro grants’ which is a way of providing quick relief funding in order to reduce
barriers to employment and give people equal opportunities when trying to secure work. We have
also funded 105 bus passes to allow young people to travel to an interview as well as funding £2,200
worth of work clothing, such as suits and work boots.
Other Community Work
Over the last 12 months, we have made a conscious effort to reach out to our local community in
order to help make a difference to those in need, even more so during the cost-of-living crisis.
Having studied the community, Oldham’s unemployment rate, alongside the rate of youth/BAME
unemployment, are consistently above the averages of Greater Manchester and England, meaning
there are clear needs around providing opportunities for these groups. In order to help improve
these statistics, we made a conscious effort to focus on reaching out to young people and ethnic
minorities. We have organised donations of household products to local community initiatives
such as Greenhill Community Centre, Northern Lily, FreshBeLeaf, Fatima Women’s and CHAI
Project (Care, Help And Inspire). Products have also been donated to Oldham’s SocialServices
and Family Services.
We have also remained an active sponsor in numerous charitable and fundraising events across
the borough, including Oldham Business Awards, the Mayor’s Ball, Eid in the Park, andChadderton
Juniors FC’s fun day.
In order to reach out to the business community in Oldham, we have welcomed Ambassador for
Business, Frank Rothwell, to our Manor Mill to discuss UP’s future plans and how we can continue
to make positive contributions to our local area. Our Group Operations and HR Director also held
atalk with local businesses about the benefits of being a more environmentally sustainable business,
hoping to inspire other local businesses to aspire to Net Zero along withus.
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 seen an increase in our performance this year
dueto:
• Expanding 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
established this scheme at North Chadderton high school and Blue Coat school.
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Ultimate Products plc Annual Report 2023
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Strategic Report
Overview
Environmental, Social and Governance Report – Environment
Our progress so far:
Product packaging Product quality
Reduce Plastic
Packaging
FSC Certified
Paperor Card
Packaging
Amazon
ratings
Wooden product
FSC Certified
Target 50% 100% 4.2 100%
2023 57.5% 20.0% 4.19 48.2%
2022 53.0% 3.5% 4.21 54.3%
Baseline 0.0% 0.0% 4.11 0.1%
Refining our Environmental Reporting
Having accurate data is critical in assessing our impact on the world to effectively adapt our actions
to see positive change. New environmental regulation is continually being introduced that demands
new data. This year, through continued engagement, our wider supply chain partners are becoming
more accurate and sophisticated in capturing their own data, enabling usto cleanse and combine it
with our own for reporting purposes through our Normative, carbonaccounting platform.
The result of this continued improvement in data accuracy has led to us identifying our top 10
target areas within our Scope 3 (primarily our factory base and key logistic partners) to work
withthem in introducing necessary changes across a shared deadline.
One of the biggest changes in data is that of the reporting on our plastic packaging. Previously,
we made the decision to report only on all our plastic packaging that we imported, excluding
products we sourced but did not import on behalf of customers. However, to sit in line with the
new Extended Producer Responsibility (EPR) legislation, we made the decision to capture all
our branded packaging so that the figures are a true reflection of our total impact. As a result
ofthis decision, it has had an impact on the previous reported figures as the level of data we
arereporting on is much greater.
Plastic Product Packaging
Our teams have continued to remove plastic where possible, and, where plastic is necessary,
have been making the switch to recycled content. The challenge has been for the electrical
products where the recycled content could scratch some high gloss items. However, we
havebeen working with the factories to find alternative, paper-based packaging solutions.
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.
Upon reviewing all the data against the baseline, we have now achieved 57.5% of all of our
packaging content, ensuring less plastic is being used overall. It is our intention to increase
anew stretch target for this area whilst maintaining our current performance.
FSC
During FY23, we have pushed for FSC packaging for all new products brought to market.
Wehave ensured that consideration of this is included at the initial stage of pricing to avoid any
margin erosion. As we have generally been seeing overall cost price reductions due to materials,
exchange rates and freight, we have used this opportunity to switch to FSC packaging without
increasing overall prices to customers or consumers.
Product Life Span – Increasing Spare or Replacement Product Parts
The business has focused on increasing the number of spare parts for products as this can
have a material difference on their life span. We have collaborated to drive this target through
assessing the most relevant products and ensuring spare parts are negotiated at the beginning
of each new order. This has resulted in a 33% increase in this target this financial year.
Our Journey to Net Zero
Our carbon accounting partner has been assisting the Company in refining our carbon data
inorder to understand how our operations and wider supply chain are impacting on the world.
This has enabled us to identify our top 10 ‘hot spot’ suppliers that are causing the most negative
impact on the environment within our Scope 3 area, enabling us to engage with these supply
chain partners and work together to achieve Net Zero in accordance with our target dates.
Onceplans are in place for the top 10, we will then move to the next 10, creating a more
strategicapproach to achieving our Net Zero aspirations under Scope 3.
The Company has also completed the following environmental improvements to our own sites
and operations (Scope 1 and Scope 2) over recent years:
• Our main distribution centre has had LED, sensored lighting installed reducing electricity
usage and all external windows have been replaced with UPVC alternatives, improving
heatretention, and therefore reducing energy consumption overall.
• Our Far East and European offices have had LED, energy saving lighting throughout
reducing electricity usage throughout.
• All sites have effective waste management including the separation of recyclable waste,
WEEE waste and food.
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Environmental, Social and Governance Report – Environment continued
Our Journey to Net Zero continued
Whilst the Company continues to seek new improvements to improve environmental change on
our Net Zero journey, the Company has partnered up with Ecologi, an environmental conservation
organisation who help businesses to plant trees and fund carbon projects to help towards positive
climate action. To date we have funded the planting of 1,688,182 trees across eight projects and have
supported the preventions of 3,814 tCO
2
e from being emitted through 14 verified carbon avoidance
projects. We are now Ecologi’s number one partner in regard to their plant a tree initiative.
Our head office is currently based in an iconic heritage Victorian mill in the heart of the Oldham
community that contains over 250 of our colleagues and acts as a multi-purpose site including
housing our office teams, UK showroom and warehousing storage for our distribution centre
operations. Over the years, the site has seen significant investment as part of commitment to
providing a great place to work, to maximise productivity and operational efficiency and also to
achieve our Net Zero aspirations. Our commitment to Net Zero needs to start with a focus on our
own operations where we have greater control to positively influence change. We believe it is
essential to reach our net zero goal first with our Manor Mill, head office site in the coming years
and let that create the blueprint for our future actions across our wider sites and operations.
Therefore, there has been a greater focus on implementing environmental change at Manor
Millincluding positive improvements such as:
• Installing 1,150 solar panels at a cost of £385k, covering approximately 85% of Manor Mill’s
roof. It is anticipated that the panels will produce the Group 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.
• Switching all lighting to LED, energy saving alternatives throughout the site and introducing
sensored lighting on all warehouse floors and communal areas to reduce electricity consumption.
• Replacing external wooden windows with more heat retaining alternatives in UPVC double-
glazed windows throughout the site, reducing heat loss and energy consumption.
• Installing a more energy-efficient air conditioning and heat pump system to control
the temperature of the 4th floor 1,000 sqm2 office space. This enables us to control
and regulatethe temperature more effectively, whilst offsetting the energy use of this
systemviathe solar panels.
• Introducing a paper reduced working environment and increasing the use of technology to
enable colleagues to cover their original needs of printing via other more environmentally
friendly means.
• Switching our waste management provider to B&M Waste, who have been a carbon neutral
organisation since 2011, actively help their customers with waste segregation initiatives and
help turn waste into new raw materials, products and energy.
• Stopped the use of single use plastics onsite and instead provided our colleagues with
freeaccess to water bottles and filtered water onsite.
• Introduced an incentivised car sharing scheme reducing the number of colleague cars
ontheroad.
• The implementation of instant hot water taps in our canteens, reducing the use of kettles
andother boiling water appliances.
Although we are happy with the progress made onsite, we are fully aware there is more to do
in order to hit our Net Zero target, and we have already identified a series of new actions that
will be implemented over the course of the next few years. However, we have not currently
identified a more environmentally friendly alternative to the gas heaters we currently use to
heat the warehousing floors we have on the site, primarily due to the technology not being
readily available. Therefore, the Company intends to offset this environmental impact through
the Ecologi plant scheme initiative, making the Manor mill site Carbon neutral in the interim,
untilwehave identified all solutions to make the site Net Zero.
Case study
China supply base
As part of our assessment of achieving Net Zero,
our supply chain teams identified an issue with
containers leaving our China supply base part-filled
causing an increase in unnecessary transport use
and cost.
As such, our team identified a solution in using
a service, the Northern China Consolidation
Warehouse (CFS warehouse) in Ningbo, whereby our
orders are transported to this centre and consolidated
into combined shipping containers saving on cost
and the number of shipping containers and vehicles
being used in the supply chain process. Since January
2023, the CFS warehouse has saved over 40MT of
CO
2
and approx. £164k in shippingcosts.
Following the success of the Northern CFS
warehouse, our supply chain team has now secured
a Southern version based in Shenzhen, that went
live in earlySeptember2023.
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TCFD and environmental reporting
TCFD Reporting
Task Force on Climate-related Financial Disclosures (TCFD) is a framework for companies to
report climate-related risks and opportunities. TCFD is structured into 11 supporting disclosure
recommendations which span four key themes: Governance, Strategy, Risk Management and
Metrics & Targets. In this climate-related financial disclosure, we aim to report in line with the
requirements of Listing Rule 9.8.6R and the TCFD supporting recommendations.
With the impacts of climate change being increasingly 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. We are aware that climate change is going to have
an impact on our business, presenting risks and opportunities over the short, medium, and long term.
Our business model relies on supplying products; the production, transport, packaging,
useanddisposal of these products have an inherently negative impact on the environment.
However, our business model is technologically agnostic; our heritage brands have evolved
over many years, with the products which we source and sell changing over time to meet the
demands of both consumers and regulators. This flexibility of our business model will be key
inour ability to mitigate risks and take advantage of opportunities as they arise.
Governance
Our Board of Directors is responsible for oversight of our ESG initiatives and this includes climate-
related risks and opportunities. The Board ensures action plans are embedded into the business
strategy and future financial planning to mitigate climate-related risks and capitalise on
climate-related opportunities. The Board considers the threat of climate change and has
beenactively involved in taking steps to address its potential impact through assigning day-
to-dayresponsibilities to the Executive Directors. They have received a full ESG update twice
during the current year, which included updates on progress made towards climate change
targets during the period.
The Board is supported in this role by the ESG Committee which is chaired by Jill Easterbrook
(NED), and includes Christine Adshead (NED) and Chris Dent (CFO) as members. The ESG
Committee is in turn supported by a Committee for TCFD led by our CFO, Chris Dent, and
an Environmental Committee led by Katie Maxwell, Trading Director, and Tony Pole, Process
Development Director. The Committee for TCFD is responsible for the identification and
assessment of risks, and reports into both the ESG and Audit & Risk Committees which
are responsible for monitoring risks and overseeing progress against goals and targets for
addressing climate-related issues. The Environment Committee is made up of executives
andisresponsible for the day-to-day management of environmental risks.
In addition, the Remuneration Committee has in the current year approved a bonus structure for
senior management which includes targets related to the environmental goals which we have
set ourselves as laid out on page 25.
Strategy
The TCFD framework helps us to understand and manage the climate-related risks and
opportunities we face. During the year, our Committee for TCFD, with support from the
EnvironmentCommittee held our second annual scenario planning day at which we reviewed
a number of different climate risks and opportunities which could impact our business model
and strategy. In our considerations, we reviewed two different types of risk that we will face, and
the potential opportunities that these could bring to our business: Transition risk and Physical
risks. Transition risk as a result of moving to a low-carbon future may impact our business model
throughchanging 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,
orlong-term physical changes which may result in permanent changes intopography.
We used the following scenarios and time horizons to understand our vulnerability to the
impacts of climate change and how they vary over time:
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
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Overview
Risk Type Classification
Time
Horizon Description Financial Impact Potential Mitigations
Transition Policy & Legal S M 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. Each year we currently introduce around 900
new products to market, with an aim to reduce this number to 600.
However,the aim is for these 600 new products to be more sustainable.
It is assumed that some costs could potentially be passed on to
our customers and consumer to encourage purchase of lower
emissionsproducts.
Transition Policy & Legal M Banning 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
interms 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 M Consumer behaviour changes away from
products using plastics, and non-essential
products to concentrate on only essential
andsustainableproducts.
High revenue loss potential, but a significant
opportunity as we change our product mix
overtime.
Over the long-term, our product mix will change; currently we aim
tointroduce 600 new products each year out of the 3,000 we sell.
As consumer habits change, we will change our product mix to
reflecttheirchanged priorities.
Transition Reputation S M 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 banks and investors not choosing to
fundus.
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)
M L Increased likelihood of flooding and drought or
other extreme weather events leading to reduction
of production by supplying factories. Currently, our
supply base has a geographical concentration in China
whichcould have a higher risk of physicalimpact.
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)
L 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
ofproduct suite on more essential sectors and on sustainable products.
TCFD and environmental reporting continued
Key : S Short-term M Medium-term L Long-term
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Ultimate Products plc Annual Report 2023
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Overview
Risk management
The steps we have taken to identify, assess and manage each climate-related issue have
been based on our existing risk management process to ensure a consistent and efficient
assessment and categorisation.
Step 1 – Identifying the risks: Our Committee for TCFD is responsible for identifying the risks
within the business and is led by Chris Dent, our CFO, and Christine Adshead (NED). During
the year, the Committee held its second scenario planning day with key senior management
representing core functions of our businesses including IT, Buying, Supply chain and HR, at
which we identified a number of different risks and opportunities for the business.
Step 2 – Assessing the business impact: We used climate scenario analysis to assess
the impact of both physical and transition climate-related risks and opportunities on
our operations. These findings were presented to the Audit & Risk Committee during
September2023.
Step 3 – Classifying risks: Each climate-related issue was classified using our rating system to
highlight the implications of a risk occurring. This rating system considers the likelihood of a
risk occurring, the potential impact of the risk, and the existence of any inherent mitigations,
toprovide an overall risk classification.
Step 4 – Addressing the risk: Our analysis shows that the likelihood of climate-related
risks impacting our overall operations in a significant manner during the transition to a low
carbon economy is low due to underlying flexibility of our business model being based on
brands rather than being fixed to any certain products, materials or technology. Despite this
resilience, further mitigating actions are being initiated to develop greater strategic resilience
due to the greater level of risk the business is exposed to in relation to longer-term physical
risks as they begin to impact our supply chains. The potential risk management options were
appraised, and a risk management response was determined for each climate-related issue.
Step 5 – Monitor risk: We have embedded a climate change perspective into the ongoing
assessment of our internal corporate risk register and will continue to review our risk
management process. To ensure we are fully prepared for climate change, we will continue
to embed annual climate scenario analyses into our existing risk management framework
andfinancial planning processes to identify future risks and ensure adequate mitigation.
Metrics and Targets
The greenhouse gas (GHG) statement below provides a summary of Ultimate Products’
greenhouse gas (carbon) emissions each year from 1 August 2022 to 31 July 2023. It gives
asummary of emissions from Scope 1 and 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
beoutside of our operational control.
Years
Baseline 2022 2023
tCO
2
e tCO
2
e/ FTEE tCO
2
e tCO
2
e/ FTEE tCO
2
e tCO
2
e/ FTEE
Scope 1 266.16 288.28 0.97 111.98 0.31 92.69 0.24
% UK 100% 100%
Scope 2 303.55 216.26 0.73 225.56 0.62 163.16 0.43
% UK 75.5% 75.5%
Statutory total
(Scope 1 & 2) 505.54 1.69 337.54 0.92 255.85 0.68
Statutory total in KWh
(Scope 1 & 2) 1,868,434 1,736,686 1,304,443
Full-time equivalent
employee (FTEE) 298 365 379
This year, we have seen a significant drop in our Scope 1 & 2 emissions due to the successful
installation of 1,150 solar panels at Manor Mill at the end of FY22. During their first year of operation,
they have supplied around 40% of Manor Mill’s energy requirements and as a result, the expected
cash payback period for the solar panels is approximately 3-4 years.
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.
Through our normative carbon accounting platform, we are starting to be able to more accurately
measure our Scope 3 CO
2
emissions and will look to include this data in future reports along with
other means to report on our Scope 1 and Scope 2 emissions beyond SECR reporting. We intend
to supply our Scope 3 data going forward, but this can be subject to change as we continue to
refine the reporting of our wider supply chain as more accurate data becomes readily available.
Our initial data estimates total Scope 3 emissions of 110,600 tCO
2
e (FY24: 153,400 tCO
2
e)
representing over 99% of total emissions for the Group.
TCFD and environmental reporting continued
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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.
TCFD Compliance Statement
In accordance with Listing Rule 9.8.6 R, we present our FY23 TCFD consistency index and confirm
that we have, in this report, made climate-related financial disclosures for the year ending 31 July
2023 which are consistent with the TCFD Recommendations and RecommendedDisclosures,
apart from the disclosure under the Metrics and Targets recommendation (b). Duringthe year, we
have begun to more accurately measure our Scope 3emissions. During the course of next year,
we intend to review our Scope 3 model and refinethe data, so that we anticipate being able to
disclose in a manner fully consistent with therelevant TCFD recommendations inFY24.
TCFD and environmental reporting continued
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Section 172 statement
Our Directors are bound by their duties under the Companies Act 2006 (the ‘Act’) 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 01, are key to how we do business and are closely aligned to the matters the Directors
mustconsider 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, shareholders and 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.
Doing the right thing is at our core
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
andrewards.
• Employee Consultation Group
• People engagement survey
• SAYE and PSP schemes
• Ask initiative where different departments present their purpose to the wider Company
• Continuing development of our people through formal and informal training, with the graduate development scheme being at
the heartof our employee strategy
ESG Report
on pages
18to 30
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
• Regular calls and meetings with our lenders
• Use of Equity Development to engage with retail investors who may not be able to access institutional analysis
• Attending of investors conferences such as Mello to meet with current and potential retail investors
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, Paris 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
Suppliers Our suppliers provide us with the highest
possible quality of products and services.
Thisallows us to deliver beautiful products
toour consumers and a first class service to
ourcustomers.
• 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
31
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Section 172 statement continued
Board decision-making
Board Decision Directors’ consideration of factors in accordance with S.172(1)
Opening our
Paris showroom
During the year, the Board took the decision to move our European showroom from Cologne to Paris. Our Cologne showroom was important in helping us to achieve traction with German
retailers, as it allowed us to showcase the quality of our products to them in their home territory. Our German retail partners are now happy to meet us at consumer goods fairs, rather than
travelling to our showroom. Therefore, as we look to grow our traction with other large non-German retail customers, we took the decision to move our European showroom to a 16,500 sqft
space at the Homexpo Paris showroom complex. The sighting near Charles de Gaulle airport means that the showroom is not only convenient for hosting French retail partners, but also
potential customers from across Europe. Our German sales team continue to be employed by the business, and are now joined by colleagues in France to help support them in winning new
European customers. Our decision to relocate the office, rather than establish a second European showroom, minimises the additional costs and risk for our shareholders, with the potential
upside from winning new European retail customers outweighing the marginally additional cost for the larger space in Paris.
Signing 4-year
rolling Russell
Hobbs contract
Over the past five years, the business has pivoted from being a licence holder to an owner of brands. However, during the year we decided to renew our Russell Hobbs trademark licence
agreement with Spectrum Brands for non-electrical kitchen and laundry products. We believe that the Russell Hobbs brand is a very strong UK heritage brand, and is complementary to our
other brands. We have moved away from licensing brands, as there continues to be the risk that at the end of a licence period the business could lose the licence and the goodwill and sales
which have been built up. However, the new agreement is on a rolling four-year basis, rather than the previous fixed-term arrangement. This change significantly reduces the licensing risk, as
the licence will always have four years to run, rather than having a fixed end date. This allows us to better focus on the long-term growth of the Russell Hobbs brand, which will increase the
benefits of the partnership for both Spectrum Brands and Ultimate Products. This allows our sales teams to be able to sell our Russell Hobbs branded product ranges into new European retail
customers, our buyers to continue to work with our suppliers to source non-electric kitchen and laundry products, and our shareholders to accrue the benefits of the further sales from our use
of this strong UK heritage brand.
Employee
payrises
In the current year, we have seen an inflationary macroeconomic environment which has been characterised as a ‘cost-of-living crisis’. As a general retailer we have seen relatively low levels of
inflationary pressure on our cost of sales, and hence on revenues. We took the decision to increase salaries for our people to help mitigate the effects of the cost-of-living crisis. This is consistent
with our intention to always do the right thing and to invest in our people. In addition, this means that our business remains competitive in the ability to both recruit and retain the best talent.
Therefore, it is not only the right thing to do for our people, it is the right thing to do for the business and shareholders in the long term. Our ability to recruit and retain the best people is critical
for our process of continuous improvement which increases productivity.
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Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Chief Financial Officer’s review
A culture of continuous improvement
I am delighted to report a record financial
performance in FY23. This is a fantastic
achievement for our business, particularly
giventhe tough macroeconomic backdrop.
2023
£’000
2022
£’000
Change
£’000
Change
%
Revenue 166,315 154,191 12,124 8%
Cost of sales (123,568) (115,837) (7,731) 7%
Gross profit 42,747 38,354 4,393 11%
Other administrative expenses (22,534) (19,604) (2,930) 15%
Adjusted EBITDA* 20,213 18,750 1,463 8%
Depreciation & amortisation (2,260) (2,066) (194) 9%
Finance expense (1,132) (842) (290) 34%
Adjusted profit before tax* 16,821 15,842 979 6%
Tax expense (3,560) (3,120) (440) 14%
Adjusted profit after tax* 13,261 12,722 539 4%
Share-based payment expense (837) (403) (434) 108%
Tax on adjusting items 162 51 111 218%
Statutory profit after tax 12,586 12,370 216 2%
* Adjusted measures are before share-based payment expense and non-recurring items.
Revenue
Group revenue has increased by 8% to £166.3m in the period (FY22: £154.2m). Due to our ongoing
focus on supplying the best products at the best price for our retail customers and consumers,
prices have followed their long-term trend with no price inflation contributing to our top line growth.
Our online business saw exceptional growth of 64% to sales of £41.4m, as the channel benefited
from the normalisation of global supply chains, which had held back growth during FY22.
By Strategic Pillar:
FY23
£’000
FY22
£’000 Change %
FY23
%
FY22
%
Supermarkets 49,116 51,523 (2,407) -5% 30% 33%
Discount retailers 44,593 48,126 (3,533) -7% 27% 31%
Online channels 41,449 25,321 16,128 64% 25% 16%
Multiple-store retailers 22,178 17,312 4,866 28% 13% 11%
Other 8,979 11,909 (2,930) -25% 5% 8%
Total 166,315 154,191 12,124 8% 100.0% 100.0%
This strength in our online business helped to mitigate the weakness which we saw in the first
half of the year from retailers, when significant levels of overstocking led to a reduction in sales
of11% in H1. It is pleasing that, as the year progressed, the overstocks eased, leading to retail
salesgrowing by 8% year-on-year in H2, resulting in FY23 sales to retailers falling just 3%.
Chris Dent
Chief Financial Officer
33
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Chief Financial Officer’s review continued
Although they eased, overstocks continue to
be a headwind, especially in Europe. This, tied
with macroeconomic uncertainty, has led some
retailers to change their buying patterns away
from large infrequent forward orders to smaller
but more frequent orders from current stock.
During a period of higher inflation, which
has squeezed customer spending power,
it is no surprise that sales growth was
weighted towards energy efficient and
money saving products. Consequently, Salter
products, alongside our overall small domestic
applianceoffering (which includes air fryers),
have proved especially popular in the period.
Operating Margins
Gross margin increased to 25.7% (FY22:
24.9%) as our sales growth was driven by
higher-margin online sales. In the second
halfof the year, we also benefited from the
fall in freight rates, which has helped to
mitigate the weakness that we have seen
inthe value of Sterling. The increase in
grossmargin means that gross profit rose
11%to £42.7m (FY22: £38.4m).
Other administrative expenses rose 15% to
£22.5m(FY22: £19.6m). Although we have
seen relatively low levels of inflationary
pressure on our cost of sales, we have
seenpressure in our operating costs.
Our wage bill, which makes up 77% of our
other administrative expenses, rose by 13%
in the period, as we increased salaries for our
people to ensure that employee remuneration
remains attractive to recruit and retain the talent,
measures that both drive productivity within the
business and mitigate the effects of the cost-of-
living crisis. This is consistent with our intention
to always do the right thing and to invest in
our people. We are proud to continue to invest
in our people, and they in turn have helped
us to increase productivity, with gross profit
per employee increasing from £83k in FY18
to £113k in FY23. It is these productivity gains
thathave allowed us to maintain operating
margins, whilst at the same time appropriately
rewarding ourpeople.
We were able to invest in attendance at
Ambiente, Europe’s largest housewares
show, which we had been unable to take
partin during the COVID-19 pandemic.
Attending Ambiente enabled us to exhibit
our range of quality branded houseware
products to new customers, consumers and
suppliers, as we continue to grow brand
awareness in the strategically important
European market.
The combination of 8% revenue
growth, improved gross margin, and
inflation-impactedoverheads has led
to a stable operating margins at 12.2%,
with adjustedEBITDA increasing 8% to
£20.2m(FY22:£18.8m).
Our performance has been driven by the
strength of our operating model, where we
constantly seek to improve our productivity;
Aculture of continuous improvement.
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Ultimate Products plc Annual Report 2023
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Financial Statements
Shareholder Information
Strategic Report
Overview
Adjusted & statutory profit
Depreciation and amortisation increased 9% to £2.3m (FY22: £2.1m) as a result of the increase in the
depreciation charge following our investment in solar panels at our Manor Mill head office during the
summer of 2022.
The finance charge has increased £0.3m to £1.1m (FY22: £0.8m) due to the higher level of interest rates.
The Group has benefited from the hedging instruments it entered into when interest rates were at
historically low levels. These instruments cover an aggregate principle of £18.0m and are a mix of
swaps and caps. These instruments, as well as careful management of net debt, have successfully
limited the effect of higher interest rates.
The share-based payment expense increased by £0.4m to £0.8m as a result of the modification of
the MIP scheme which was approved at the FY22 AGM and resulted in a one-off charge of £0.5m.
The tax charge for the period at 21.3% (FY22: 20%) was higher than the blended statutory rate of
21% due to the higher statutory rate of tax paid on our European foreign branches in Germany and
Poland, with the overall rate increasing due to the increase in UK corporation tax from 19% to 25%.
As a result, the statutory profit after tax increased by 2% to £12.6m (FY22: £12.4m).
Earnings per share
Although we have not issued any new shares within the year, the number of shares held in our
Employee Benefit Trust has changed over the year, resulting in the weighted average number
ofshares decreasing 0.1% to 86,310,315 (31 July 2022: 86,353,827).
2023
£’000
EPS
p
2022
£’000
EPS
p
Adjusted profit after tax 13,261 15.4 12,721 14.7
Share based payment (837) (1.0) (403) (0.5)
Tax on adjusting items 162 0.2 51 0.1
Statutory profit 12,586 14.6 12,369 14.3
As a result, both adjusted profit and adjusted EPS increase 4% to £13.3m (FY22: £12.7m) and
15.4p (FY22: 14.7p) respectively.
Financing and cash flow
The Group generated cash from operating activities of £24.4m (FY22: £6.9m), being a 121%
operating cash conversion (FY22: 37%). This was significantly stronger than the previous year
when the Group needed to invest in working capital due to the supply chain crisis during CY
2021. This meant that at the period end, the Group had a net bank debt/adjusted EBITDA ratio
of 0.7x (31 July 2022: 1.3x), which represents net bank debt of £14.8m (31 July 2022: £24.3m).
The Group makes use of term loans for longer-term funding, such as acquisitions, whereas
our invoice discounting and import loan facilities are designed to fund our working capital,
andautomatically increase in relation to our levels of trading.
31-Jul-23
£’000
31-Jul-22
£’000
Change
£’000
Change
%
Cash 5,086 6,202 (1,116)
Overdraft (5,004) (6,020) 1,016
Term loan (6,000) (8,000) 2,000
RCF – (2,217) 2,217
Invoicing discounting (8,950) (6,197) (2,753)
Import loans – (8,179) 8,179
Loan fee 73 155 (82)
Net bank debt (14,795) (24,256) 9,461 39%
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 4.95p per share (FY22: 4.82p per share).
This takes the total dividend for the year to 7.38p per share (FY22: 7.12p per share), an increase
of 4%. Subject to shareholder approval at the AGM on 15 December 2023, the final dividend will
be paid on 26 January 2024 to shareholders on the register at the close of business on
29 December 2023 (ex-dividend date 28 December 2023).
Strategic Report
The Strategic Report (which includes all of the content from pages 5 to 38 was approved by the
Board on 30 October 2023 and was signed on its behalf by:
Chris Dent
Chief Financial Officer
30 October 2023
Chief Financial Officer’s review continued
35
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
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
Macroeconomic
factors
Macroeconomic trends affecting consumer confidence and reducing non-food
spending such as inflationary pressures and the effect of higher interest rates, could
affect retail demand. In the current year, the global economy has not fallen into
recession as had been feared, as continued high employment and wage increases
have supported consumer spending. This, however, means that interest rate setting
agencies may need to keep interest rates higher, for longer, to bring inflation back
towards target, which will eventually need to affect aggregate demand. As well as
affected demand for our goods, reduced retail demand can also impact the credit
worthiness of our customers.
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
economic downturn. The business has well established procedures for managing credit
risk with its customers including credit insurance, full details of which can be found on
page 108.
Sourcing A major loss of continuity in the supply of goods for resale could adversely affect
the Group’s revenues. In addition, we have 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. In the
current year, buying teams have begun to have an element of variable remuneration
linked to decreasing geographical supply concentration.
Supply chain
management
As a wholesaler, the Group has a significant working capital requirement. 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. In the current year we have seen a reduction in the risks related to the
shipping crisis which affected global supply chains, particularly in relation to the costs
and availability of shipping capacity.
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.
Margin pressure As a wholesaler, the Group faces consistent price pressures from retail customers,
whilst facing changes to input costs such as freight costs, exchange rate fluctuations,
factory gate price and changes in the costs of raw materials. In the current year, the
fluctuations in relation to the valuation of sterling were significant last Autumn, but have
since steadied, and we have benefited from the fall in shipping costs.
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.
36
Ultimate Products plc Annual Report 2023
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Financial Statements
Shareholder Information
Strategic Report
Overview
Area Risk Mitigation Movement
Protection
ofbrands
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. During the year, 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.
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 and the renewal of our Russell
Hobbs licence on a rolling basis.
During the year, we have appointed our first Brand Director who is helping to further
formalise the way in which we develop and protect our brands.
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. As it
becomes increasingly likely that targets set by intergovernmental bodies will be missed,
the long-term risk for our business continues to increase despite the mitigating actions
we are taking.
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 in 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 27 to 30).
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 an 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
37
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Viability statement
At the year end the Group had a net bank debt /adjusted EBITDA ratio of 0.7x (FY22: 1.3x).
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
2028, 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
asthey fall due over the five-year period to
July 2028.
In making this statement, the Directors
haveconsidered 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 five-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 £6m 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 October 2024) and a
£9.0m import loan facility, which is repayable
on demand and subject to annual renewal.
Although it is expected that the Group will
be able to fully de-leverage over the forecast
period as operating cash flows are used to
pay down debt, the Directors believe that, in
the ordinary course of business, the Group
will continue to wish to use facilities to fund
short-term working capital requirements, and
it is assumed that these facilities will continue
throughout the period to 31 July 2028.
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 interest
rates, higher taxation, and the impact from
recession or reduced consumer spending;
• 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 the effects of
changes in exchange rates and changes in
freight costs.
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 testing 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 dividend, 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
akey 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 27 to 30.
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
scenariosmaterialising.
The Board selected the period of five years to
31 July 2028 as an appropriate period for the
Group’s Viability Statement, as management
currently use five-year forecasts as part of the
business planning process.
38
Ultimate Products plc Annual Report 2023
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Financial Statements
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Strategic Report
Overview
Corporate Governance
Corporate Governance
40 Board of Directors
42 Chairman’s introduction
46 Audit and Risk Committee Report
50 Remuneration Committee Report
72 Directors’ Report and other statutory disclosures
75 Statement of Directors’ responsibilities
Doing the
Right
thing
39
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Board of Directors
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.
James McCarthy
Non-executive Chairman
Simon Showman
Chief Executive Officer
Andrew Gossage
Managing Director
Chris Dent
Chief Financial Officer
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
bySteinhoff International in September 2016.
Prior to joining Poundland, James was Managing
Director of Convenience at J Sainsbury plc
and wasa member of the operating, retail and
investment boards. His experience includes ten
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 1March 2017 when he was appointed Non-
executive Chairman.
Simon began his career working for an auctioneer
before founding Ultimate Products in 1997. Initially
a clearance business buying discontinued and
excess stock, Simon was able to grow the business
into a sourcing and importing operation. This led to
investment by 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 strivingfor progression and innovation.
Appointedas ChiefExecutive Officer in 2005,
having been a Director of Ultimate Products
since1997.
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.
Joined the company on 4 April 2022 when
hewasappointed as Chief Financial Officer.
Audit and Risk Committee Remuneration CommitteeNomination Committee ESG Committee
Chair of Committee
Committee Membership
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Audit and Risk Committee Remuneration CommitteeNomination Committee ESG Committee
Chair of Committee
Committee Membership
Alan Rigby
Senior Independent
Non-executive Director
Robbie Bell
Independent
Non-executive Director
Jill Easterbrook
Independent
Non-executive Director
Christine Adshead
Independent
Non-executive Director
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 andrefinancing. Joined the
Company on 1 March 2017 when he was appointed
Senior Non-executive Director.
Robbie is Chief Financial Officer of Highbourne
Group whose brand portfolio includes some of the
biggest names in the sector, including City Plumbing,
The Bathroom Showroom, PTS, DHS, The Underfloor
Heating Store, Plumbworld and PlumbNation. He was
formerly CFO of Holland & Barrett, Europe’s largest
health and wellness retailer and convenience retailer
McColl’s Retail Group, prior to which he was Chief
Executive Officer of motorway services operator
Welcome Break Group. Joined the Company
on1March 2017 when he was appointed
Non-executiveDirector.
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 of
AIM-listed Tracsis plc. Joined the Company on
21September 2020 when she was appointed
Non-executive Director.
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-executive Director.
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.
Board of Directors continued
41
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Shareholder Information
Strategic Report
Overview
Chairman’s introduction
Preserving value for shareholders
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.
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
corporategovernance.
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. Asthe 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 stronggovernance.
James McCarthy
Chairman
30 October 2023
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 2023 with
the provisions of theCode.
The Board
On an ongoing basis, the Board has eight
members, comprising of three Executive
Directors, a Non-executive Chairman and
fourIndependent Non-executive Directors.
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 to
exercise independent judgement.
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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 itswiderstakeholders.
There is a formal schedule of matters
reserved for the Board which have been
reviewed, considered and updated during
theyear, and such matters include:
• the approval of the Group’s annual
business plan;
• the Group’s strategy;
• acquisitions;
• capital expenditure projects above
certainthresholds;
• 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
The Board continued
The Board considers that, at the time of his
appointment, the Chairman was independent
forthe purposes of the Code.
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
wouldbe inappropriate.
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
dayoccurred in May 2023.
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 the current year being one of those
years. The Board appointed New Street
Consulting Group Limited (NSCG) to carry
out a review of the Board and its principal
committees. NSCG is an independent advisor
with no other connection to the Company or
any individual Directors. Whilst the review
found that the Board and its Committees
were functioning well and are cohesive in
their desire for continuous improvement,
the Board has agreed on a set of actions
in order to further improve its performance
andeffectiveness.
Training and development
On appointment to the Board, new Directors
are given a tailored induction to introduce
them to the business, which will include any
training which may be deemed necessary.
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’sbusiness.
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
anydiscussion on the identified matter.
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.
Chairman’s introduction continued
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Chairman’s introduction continued
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.
Currently the Board is not compliant with
the Listing Rules requirements of LR9.8 as
amended in 2022, but recent appointments to
the Board have increased its overall diversity.
The appointments of Jill Easterbrook and
Christine Adshead to the Board increased the
level of women on the Board to 25%, and the
appointment of Chris Dent added a gay man
to the Board. Although neither Christine or Jill
currently hold one of the senior Board positions,
they both Chair main Board Committees. The
Board does not currently contain a Director
froma minority ethnicbackground.
It is expected that over time the composition
of the Board will change, and that when
appointing any new directors due weight
will be given to the overall diversity of the
Board when considering succession and
Boardappointments.
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
46to 49.
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 througha 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
successof the Group.
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.
During the year, the Nomination Committee
updated the plan for emergency cover following
from changes in roles and responsibilities of
both executives and non-executives. In addition,
the Nomination Committee has begun to review
the succession planning for non-executives.
The Nomination Committee is aware that the
Chairman, Senior Independent Director, and
Chair of the Audit Committee will all have
completed their full nine-year terms at the same
point in time in FY26 having all been appointed
at the time of the Companies Listing in 2017.
Therefore, the Committee is currently in the
process of designing a timetable by which the
candidate search and handover each of these
important Non-executive Director roles can be
done to provide suitable continuity and without
the inevitable disruption and potential damage
tothe operation of the Board if succession
inallthese roles occurred simultaneously.
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.
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 Christine Adshead
who replaced Alan Rigby during the year and
its other members are James McCarthy, Robbie
Bell and Jill Easterbrook. The Remuneration
Committee Report is included on pages 50 to 71.
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Overview
Meetings and attendance
Board meetings are scheduled to be held
monthly. As required, additional Board and
committee meetings may be held to progress
the Company’s business. In the year ended 31
July 2023, 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 below:
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.
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.
TheESG Committee Report is included on
pages 18 to 30.
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
30 October 2023
Board
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
ESG
Committee
Number of meetings 12 7 6 2 3
James McCarthy 12 6 2
Simon Showman 11 2* 3
Andrew Gossage 12 1* 2*
Chris Dent 12 7* 2* 3
Alan Rigby 11 7 6 2
Robbie Bell 12 7 6 2
Christine Adshead 12 7 6 2 3
Jill Easterbrook 12 6 2 3
* Denotes Directors who attended Board Committee meetings during the year by invitation.
Chairman’s introduction continued
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Audit and Risk Committee Report
During the year the Committee took the decision
to place the audit out to tender, and following a
competitive process awarded the contract to PKF
Littlejohn LLP to replace BDO LLP.
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.
Committee Membership
Robbie Bell (Chair)
Christine Adshead
Alan Rigby
Number of meetings held
during the year
7
Robbie Bell
Chair of the Audit and Risk Committee
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 Directorspresent.
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
theycontain;
• if requested by the Board, providing
advice on whether the Annual Report
and Accounts are fair, balanced
andunderstandable;
• 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;
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Role and responsibilities continued
• 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
reasonsthereof to the Board;
• 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
RiskCommittee
During the year and the period to the date of
this report, the Committee has:
• reviewed and discussed with the external
auditor (BDO LLP) the key accounting
considerations, estimates and judgements
reflected in the Group’s results for the six-
month period ended 31 January 2023;
• performed a competitive tender process
of the external audit which resulted in a
change of external auditor from BDO LLP
to PKF Littlejohn LLP;
• reviewed and agreed the new external
auditor’s audit strategy memorandum in
advance of its audit for the year ended
31July 2023;
• reviewed the non-audit services
provided to the Group by the external
auditor and assessed its independence
andobjectivity;
• agreed the terms of engagement and fees
to be paid to the external auditor for the
audit of the 2023 Financial Statements;
• reviewed reports from management
regarding their approach to key accounting
considerations, estimates and judgements
in the Financial Statements forthe year
ended 31 July 2023;
• discussed the report received from the
external auditor regarding its audit in
respect of the year ended 31 July 2023;
• 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
2023, taken as a whole, are fair, balanced
and understandable and provide the
information necessary for shareholders to
assess the Group’s position and performance,
businessmodel 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.
Significant issues
The significant matters and key accounting estimates considered by the Committee during
theyear 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
estimationis 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.
Audit and Risk Committee Report continued
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Audit and Risk Committee Report continued
Review of risk management and
internalfinancial controls
The Committee has conducted a robust
assessment of the principal risks faced by
thebusiness 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 36 to 37 and the
impact of these risks has been considered in
the Viability Statement on page 38 and the
Going Concernassessment on page 91.
The Group’s financial reporting process
isunderpinned 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
definedapproval processes to minimise the
riskof 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
internalcontrol 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.
Internal audit
The Committee is responsible for monitoring
and reviewing the effectiveness of the
systemsestablished to identify, assess,
manage and monitor financial risk. The
Groupdoes not have an internal audit function.
During the year and the period to the date
of this report, the Committee reviewed the
resultsof the internal control cycles and
concluded that the controls employed are
appropriate, functioning as intended and
sufficient for the size andnatureof the Group.
Auditors’ remuneration:
2023
£’000
2022
£’000
Fees for audit of the Company 50 40
Fees for the audit of the Company’s subsidiaries 65 42
Total audit Fees 115 82
Other assurance services – 18
Total non-audit Fees – 18
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. During the year the Committee decided
to undertake a formal audit tender process
following the end of the FY22 financial
period, which represented the most recent
yearly set of financial statements audited by
BDO LLP. The appointment of PKF follows a
recommendation to the Board by the Audit
and Risk Committee, following the completion
ofthis formal tender process. BDO LLP
resigned from its role as auditor with effect
from 13 June 2023. As required by Section
519 of the Companies Act 2006, BDO LLP
deposited a statement with the Group that
confirmed there are no circumstances in
connection with its resignation as auditor
that should be brought to the attention of
members or creditors of the Group.
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 2023.
Therewere no contingent fee arrangements.
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External audit continued
Audit fees payable by the Group to PKF
Littlejohn LLP in the year ended 31 July 2023
totalled £115,000 (2022: £nil). PKF Littlejohn
LLP were not paid any fees for non-audit
services. The ratio of audit fees to non-audit
fees, in total, for the year ended 31 July 2023
is 1:0.
Audit fees payable by the Group to BDO LLP
in the year ended 31 July 2023 totalled £nil
(2021: £82,000). The Committee reviewed the
level of non-audit services and fees provided
by BDO LLP. For the year ended 31 July 2023,
these totalled £18,000 (2022: £18,000) which
all related to half-year assurance services.
The Committee is required to consider and
review the effectiveness of the external auditor
on an annual basis and report its findings
and recommendations to 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 the current year this
process reviewed the effectiveness of BDO LLP,
but also began to review the effectiveness of
ournew auditors PKF Littlejohn LLP. In particular,
the Committee reviewed and approved the
external auditor’s plan for undertaking the
year-end audit, including the scope of their
work andtheir proposed approach to key
riskareasidentified.
The Committee also reviewed the detailed
reports prepared by the external auditor
setting out their findings from year end audit.
The results were reported to and discussed
by the Audit and Risk Committee. Following
the completion of the current year audit, it is
the Committee’s intention that this approach
is supplemented by the completion of a
questionnaire by the members of the Audit
andRisk Committee and senior members of the
finance team involved in the audit, to include
consideration of the audit partner and team,
aswell as approachandcommunication.
Considering the ongoing review of the
effectiveness, the independence and
the length of tenure of the auditors, the
Committeerecommends that a resolution
forthe reappointment of PKF Littlejohn LLP
asthe Company’s auditor should be proposed
at the forthcoming AGM.
Robbie Bell
Chair of the Audit and Risk Committee
30 October 2023
Audit and Risk Committee Report continued
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Remuneration Committee Report
The Committee is proposing a refreshed approach
to incentivising Executive Directors and senior
management, in order to ensure that the key drivers
and talent are appropriately motivated and remain
in place to deliver future growth.
Committee Membership
Christine Adshead (Chair)
Alan Rigby
James McCarthy
Robbie Bell
Jill Easterbrook
Number of meetings held
during the year
6
Christine Adshead
Chair of the Remuneration Committee
I am pleased to present the FY23 Directors’
Remuneration Report on behalf of the
Remuneration Committee, and my first reportas
Chair of the Committee. I would like to thank
my colleague Alan Rigby for stewardship of the
Committee since IPO in2017.
The Committee is satisfied that the
Remuneration Policy has operated as
intendedin FY23. This report complies with
therelevant 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
withthe 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, includingtheInvestment Association’s
Principles of Remuneration.
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.
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Remuneration Policy review
The current remuneration policy is due for renewal this year in line with the usual three
year timescales for UK listed companies. During the year, the Committee commissioned a
comprehensive review of the approach to remuneration for senior management and Executive
Directors. Working with its executive remuneration advisors, the Committee has conducted a
detailed review of the overall remuneration structure at UPGS, taking into consideration the
Company’s strategic objectives, developments in market practice over recent years, the views
ofthe management team and the external environment in which the Company operates.
As a result of this review, the Committee is proposing a refreshed approach to incentivising
Executive Directors and senior management, in order to ensure that the key drivers and talent
are appropriately motivated and remain in place to deliver future growth. The Committee is
proposing to simplify the Policy by replacing the existing annual bonus and performance share
plan with one single incentive going forward, the UPGS 2023 Incentive Plan (the 'Incentive Plan'),
save for S Showman and A Gossage.
Annual awards will be no higher than 200% of base salary for the Executive Directors (but the
Committee does not intend to make use of this limit in the first year of operation of the Policy).
The Committee is comfortable that the total 200% maximum opportunity under the Incentive
Plan is in line with the total current opportunity under the legacy bonus plan and PSP given that
the incentive opportunity is set at a modest level relative to other similarly sized peers, based on
the output of a remuneration benchmarking exercise.
In light of their significant shareholdings and their continued participation in the MIP, S Showman
and A Gossage will not be eligible to participate in the Incentive Plan and will continue to participate
in the current annual bonus plan with the same 100% of salary maximum quantum as previously.
Further details regarding the proposed Directors’ Remuneration Policy are set out on pages
52 to 61.
The maximum opportunity for C Dent under the Incentive Plan for FY24 will be up to 140% of
salary, with 60% paid in cash and 80% deferred into shares. The maximum opportunity for S
Showman and A Gossage for FY24 under the Annual Bonus Plan will be 100% of salary, with
up to 70% of salary being paid after the end of the performance year in cash and up to 30%
ofsalary being deferred.
The Committee is confident that the new Policy will stand the Company in a better place to
retain and incentivise our management team to achieve our stretching goals and maintain
thealignment of pay andperformance.
Implementation of remuneration policy during the year
The Committee is satisfied that the Remuneration Policy was operated as intended and in line
with the statement of our intentions set out in last year’s report. However, the one exception
wasin respect of the PSP, as recognising the remuneration policy review that was ongoing
during the year, no PSP awards were granted to Executive Directors and senior management.
The base salaries of the Executive Directors were increased during the year with effect from
1 July 2023 to £386,587, £267,876 and £159,500 for S Showman, A Gossage and C Dent
respectively. These increases represent 5% of salary for S Showman and A Gossage, below
the 10.5% average salary increases awarded to the wider workforce. C Dent was awarded an
increase of 10% of salary in reflection of his increased responsibilities and experience inrole.
Performance and pay outcomes during the year
Annual bonus
Recognising the strong levels of EBITDA performance (£20.2m) and progress made against
individual targets, the Annual Bonus outcome was 60% for S Showman, 80% for A Gossage
and81.25% for C Dent, of each of their respective maximums. This corresponds to payouts
equalto 60%, 80% and 48.75% of salary for S Showman, A Gossage and C Dent respectively.
In reflection of their significant shareholdings, 30% of the award for S Showman and A Gossage
will be deferred into cash for three years, vesting in equal annual tranches. 30% of the award for
C Dent will be deferred into shares for three years, vesting in equal annual tranches.
PSP awards
As set out in the remuneration report for FY22, the Committee considered 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.
Following lengthy deliberations, the Committee determined that there would be no adjustments
to the EPS performance conditions associated with the 2019 PSP award. As a result, the overall
vesting of the 2019 LTIP award was 66%, with 62% being based on the EPS performance over
the period to 31 July 2022, and the remaining 4% being based on personal performance targets.
As a result of EPS, Gross Margin, leverage and other personal performance targets, the vesting
of G Screawn's 2019 LTIP award was 81% of maximum. Further details can be found in the
payments to past Directors section on page 67.
No MIP awards have been exercised by participants during the year.
Conclusion
I hope that you can support the decisions we have made this year in relation to the implementation
ofour remuneration policy for FY23 and how we intend to operate our proposed policy for
FY24. As a Committee we believe the proposed policy changes are simple with a clear line of
sight for participants to deliver on stretching short-term targets all the whilst maintaining long-
term shareholder alignment.
We remain committed to an open and transparent dialogue with our shareholders and welcome
any feedback which shareholders may have in relation to this report. I will also be available at
the AGM to take any questions in relation to this report.
Christine Adshead
Chair of the Remuneration Committee
30 October 2023
Remuneration Committee Report continued
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1 year performance
period
At least 50%
deferred into
shares
Up to 50% pays
out after
end of
performance
period
UPGS Incentive
Plan opportunity
(up to 200% of
salary)
Deferred shares
vest
Four year deferral period
Remuneration Committee Report continued
Remuneration policy
1. Introduction
The Group’s Directors’ 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;
• 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 shareholders.
The Ultimate Products Executive Remuneration Policy (the ‘Policy’) has been prepared 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 (the ‘Code’) and to guidance provided by investors, including the Investment Association’s
Principles of Remuneration. This Policy is subject to approval by Shareholders at the 2023 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 Policy. If the Committee wishes to change the Policy within this period,
or is required to do so, it will submit a revised Policy to shareholders for approval.
The Committee is of view that the proposed Policy is well-aligned with the Code’s six principles:
• Clarity: The Policy supports the financial and strategic objectives of the Group and aligns
EDs’ interests with those of shareholders. There is clear disclosure of metrics, weightings
and assessment of variable remuneration outcomes;
• Risk: The Policy ensures risk is reflected in outcomes through the Committee’s discretion to
adjust formulaic outcomes to properly reflect any risk events, deferral provisions, subject to
malus and clawback which mitigates against future risk and shareholding requirements;
• Simplicity: We intend to operate a simple remuneration framework, comprising fixed pay
elements and a single variable pay plan per individual. This provides clear line of sight for
both EDs and shareholders;
• Proportionality: Incentive elements are closely aligned to our strategic goals and robustly
assessed, with the Committee having full discretion to adjust outcomes to ensure they align
with overall Group performance;
• Predictability: The Policy sets out the possible future value of remuneration which EDs could
receive, including the impact of share price appreciation of 50%; and
• Alignment to culture: As well as aligning with the strategy of the business, the Policy
has been formed to allow strong alignment between Executive Directors and senior
management by operating incentive plans that can easily cascade throughout the business.
2. Changes to Policy
The Directors’ Remuneration Policy in its current form was originally approved by the Company’s
shareholders at the December 2020 AGM by 99.37% of the Company’s shareholders. Over the
period since the 2022 AGM, we have undergone a comprehensive review of the approach to
remuneration for senior management and Executive Directors. The Committee has conducted
a detailed review of the overall remuneration structure at UPGS, taking into consideration the
Company’s strategic objectives, developments in market practice over recent years, the views
ofthe management team and the external environment in which the Company operates.
The Committee is proposing to simplify the Policy by replacing the existing annual bonus
and performance share plan with one single incentive going forward, the Incentive Plan for all
Executive Directors save for Simon Showman and Andy Gossage. The diagram below illustrates
how the Incentive Plan will operate in practice:
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
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2. Changes to Policy continued
Annual awards will be no higher than 200% of base salary for the Executive Directors (but the
Committee does not intend to make use of this limit in the first year of operation of the Policy).
The Committee will set stretching performance targets which will be measured over each
financial year. The majority of the award will be assessed against financial performance metrics,
with the balance assessed against non-financial strategic/personal objectives. This will create a
direct focus on delivery against strategic objectives on an annual basis, which in turn will drive
long-term growth and value creation for shareholders.
Subject to the achievement of these annual targets, up to 50% of any award would be paid at
the end of the performance year in cash, with the remaining proportion (i.e. minimum of 50%)
being deferred into shares for four years.
Vesting of the deferred shares will be subject to continued employment and the satisfaction of
adiscretionary performance underpin.
The rationale for the new Incentive Plan is as follows:
• Increased line of sight - feedback from the business indicated that the existing PSP was not
motivational in a cyclical industry, which has meant that setting meaningful and challenging
long term targets has been challenging for the Company. In contrast, the use of one year
targets improves line of sight for management, and is likely to have a greater motivational
effect on participants to achieve targets over the shorter term.
• Long-term shareholder alignment - while performance measurement under the new incentive
willbe measured on an annual basis, in line with institutional guidelines a material proportionof
total remuneration is delivered over the long-term. The Committee believes that the significant
level of deferral, with vesting subject to continued employment and an ongoing level of
performance, will provide strong long-term alignment with shareholders. To the extent that
the performance that generated the outturn from the Incentive Plan is sustained, this will be
reflected in the growth in value of the deferred element.
• Simpler - the replacement of the annual bonus and performance share plan with one variable
remuneration plan simplifies the structure of remuneration at UPGS, and ensures clear
understanding for all stakeholders including participants and shareholders. The revised
structure is consistent with the simplicity factor as set out in Provision 40 of the 2018
Corporate Governance Code - “remuneration structures should avoid complexity and
theirrationale and operation should be easy to understand”.
• Wider alignment with corporate governance best practice – the updated Policy conforms
withbest practice in relation to corporate governance, specifically:
― Five-year overall term until release of the awards under the Incentive Plan.
― Robust procedures granting the Committee the right to exercise discretion over
remuneration outcomes to ensure they are reflective of the wider Company performance
and shareholder experience.
― Clear and full malus and clawback provisions operating for each award over a five year
period in total.
As set out in the Chair’s statement, S Showman and A Gossage will not be eligible to participate
in this plan and will continue to participate in the existing Annual Bonus Plan. The Committee
has made adjustments to the operation of the Annual Bonus Plan for flexibility, to modernise it to
align with the provisions of the Incentive Plan and in the context of the significant shareholdings
of S Showman and A Gossage as follows:
• Increased flexibility in relation to the delivery mechanism and deferral schedule of awards
sothat the Committee has a choice in how any bonus award will be paid.
• Removal of EBITDA as a fixed metric under the plan (although the Committee currently
intends to continue using EBITDA as a measure).
• Changes in the treatment of leavers so that a) good leavers are more narrowly defined to
bethose who die or other leavers at the discretion of the Committee and b) deferred awards
for leavers other than good leavers lapse rather than the treatment under the legacy Policy
whereby the default treatment was vesting at the normal vesting date for other leavers.
The Committee is comfortable that all other elements of the current Policy remain fit for purpose,
and so no other changes are proposed.
Remuneration Committee Report continued
Remuneration policy continued
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3. 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’sstrategy.
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
(withoutlimitation):
• 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 continued
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
inthe 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
andobtainable 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
skilledindividuals.
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
tothe 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.
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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
ExecutiveDirectors are eligible to participate and may provide contributions to
theExecutive Directors’ personal pension arrangements or a cash allowance in
lieu ofpensioncontributions.
Maximum
opportunity
The Executive Directors currently receive between 3.5% and 7% of basic salary as
a contribution to their pension arrangements (or as an equivalent cash allowance).
For S Showman and A Gossage, the Remuneration Committee are gradually
aligning the pension opportunity with the wider workforce. C Dent's pension is
aligned with the arrangements offered to the wider workforce.
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.
3. Summary of components of Executive Directors’ remuneration: continued
Variable remuneration: Annual Bonus Plan (S Showman and A Gossage only)
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
andrewarding 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
arigorous assessment of performance against the targets.
The threshold payment is between 0% and 25% of the maximum award. Other
levels of payout are set by the Committee from year-to-year depending on the
appropriate level of stretch in the targets to align with the business plans.
Bonuses may be paid in the form of cash or shares, and a proportion may be
deferred for a period of time, as determined by the Committee each year in the
light of the significant shareholdings of S Showman and A Gossage.
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
at100% of base salary in the case of S Showman and A Gossage. For the avoidance
ofdoubt, no other Executive Director can participate in this plan.
Performance
measures
The awards under the annual bonus will be earned based on achievement against
a scorecard of measures set on an annual basis. At least 50% of the awards will be
assessed against financial performance metrics, with the balance assessed against
non-financial strategic/personal objectives.
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.
In exceptional circumstances such that the Committee believes the original measures
and/or targets are no longer appropriate, the Committee has discretion to amend
performance measures and targets during the year.
Remuneration Committee Report continued
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Variable remuneration: Incentive Plan
Element, purpose
and link to strategy
To incentivise Executive Directors to deliver on our financial and strategic goals,
align with longer-term shareholder value over a total term of five years from award,
and reward exceptional performance.
Operation Awards will be subject to performance targets measured over a one-year period.
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
arigorous assessment of performance against the targets.
The threshold payment is between 0% and 25% of the maximum award. Other
levels of payout are set by the Committee from year-to-year depending on the
appropriate level of stretch in the targets to align with the business plans.
Up to 50% of any award is paid in cash following the end of the performance year, with
the remaining proportion (i.e. minimum of 50%) being deferred into shares for four years.
Deferred awards vest subject to continued service and the satisfaction of a
discretionary performance underpin, assessed by the Committee at the end of
the deferral period. The value of any dividends during the deferral period may be
payable to the Executive Directors upon vesting at the choice of the Committee.
In light of the significant shareholdings of S Showman and A Gossage and their
continued participation in the MIP, these Executive Directors will not participate in
the Incentive Plan and will instead remain in the current Annual Bonus Plan.
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
ofthe 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 Group, 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 Group. 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.
Malus provisions apply for the duration of the performance period and to deferral
awards, allowing the Committee to reduce to zero any in-year or deferred awards.
Clawback provisions apply to amounts paid following the performance period for
four years following payment, allowing the Committee to claim back all or part of
any amount paid.
Remuneration Committee Report continued
Remuneration policy continued
3. Summary of components of Executive Directors’ remuneration: continued
Variable remuneration: Incentive Plan continued
Maximum
opportunity
200% of salary, with the majority of the award earned being subject to deferral for
four years.
Performance
measures
• The awards under the Incentive Plan will be earned based on achievement
against a scorecard of measures set on an annual basis. At least 50% of
the awards will be assessed against financial performance metrics, with
thebalanceassessed against non-financial strategic/personal objectives.
• 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
Groupor its shareholders. Actual targets, performance levels achieved, and
theresulting payments made will therefore be disclosed, in most circumstances,
retrospectively at the end of the performance period.
• In exceptional circumstances such that the Committee believes the original
measures and/or targets are no longer appropriate, the Committee has
discretion to amend performance measures and targets during the year.
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.
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3. Summary of components of Executive Directors’ remuneration: continued
Other: Shareholding guidelines
Element, purpose
and link to strategy
To create alignment between the Executive Directors’ interests and those
ofshareholders.
Operation The Remuneration Committee expects all Executive Directors, within a period
offive years from appointment, to build up a meaningful shareholding in
UltimateProducts.
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.
Malus and clawback
Malus and/or clawback provisions under the Incentive Plan may be triggered in the
followingscenarios:
• 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 Remuneration 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
ExecutiveDirector;
• 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 Remuneration Committee been aware (or fully aware) of that breach, and of
which the Remuneration 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
wassatisfied; 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
riskmanagement.
Performance conditions
As detailed in the Policy table above, the Committee determines the performance conditions
to be used under the variable pay plans on an annual basis. The Committee’s intention is that
Adjusted EBITDA will continue to be included as it is a key measure of the Group’s financial
performance. The performance conditions chosen for each year’s incentive awards will be
disclosed in the Directors’ Remuneration Report following the end of the relevant year.
Remuneration Committee Report continued
Remuneration policy continued
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Remuneration Committee Report continued
Remuneration policy continued
3. Summary of components of Executive Directors’ remuneration: continued
Illustrations of application of Policy
The charts below illustrate the potential value of the remuneration packages for the Executive
Directors under the operation of the Policy during FY24 and under the scenarios in the
followingtable.
Performance level Fixed Pay Incentive Plan / Annual bonus plan
Minimum
Fixed elements of remuneration –
base salary, car allowance, benefits
andpension only.
Base salary is as at 31 July 2023 and the
value for benefits has been calculated as
per the single figure table for FY23.
No award
On Target 50% of maximum:
70% of salary for C Dent of which
40% of salary is deferred into shares
50% of salary for S Showman and
AGossage, of which 15% of salary
isdeferred
Maximum 100% of maximum:
140% of salary for C Dent of which
80% of salary is deferred into shares
100% of salary for S Showman and
AGossage, of which 30% of salary
isdeferred
Maximum plus
share price
growth
As for Maximum above, but with the value of 50% share price growth included within
the deferred element of the Incentive Plan for C Dent.
Note that the SAYE plan has not been incorporated into the scenarios above on the basis
ofmateriality.
S Showman
A Gossage
C Dent
Remuneration 000’s
£600
£400
£200
£100
£0
£435
£569
£569
Remuneration 000’s
£900
£800
£700
£600
£500
£400
£300
£200
£100
£0
Minimum On Target
Maximum
Maximum plus 50%
share price appreciation
£428
£621
£815 £815
Remuneration 000’s
£500
£400
£450
£300
£350
£250
£150
£200
£100
£50
£0
100%
61%
17%
44% 38%
21%
22%
24%
32%
41%
£175
£287
£399
£463
Fixed Pay Annual Bonus PSP
100%
69%
£500
£300
53% 53%
31%
47% 47%
£301
100%
69%
53%
53%
31%
47%
47%
Minimum On Target
Maximum
Maximum plus 50%
share price appreciation
Minimum On Target
Maximum
Maximum plus 50%
share price appreciation
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4. Statement of consideration of
employment conditions elsewhere
intheGroup
In designing the 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.
5. 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
executiveremuneration.
In developing the Policy, the Chair 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 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 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
theGroup.
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.
6. 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 buy
out 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 accountanticipated vesting levels. The
Committee wouldnormally 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
withthe 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 Incentive Plan, 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 forfeited awards.
The Committee may approve the meeting
of an Executive Director’s reasonable
and proportionate relocation expenses
where this is considered appropriate in
allthecircumstances.
Where an Executive Director is recruited
partway through a financial year, the individual
may be invited to participate in the Incentive
Plan on a pro-rated basis in that first year.
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
taxequalisationarrangements.
Remuneration Committee Report continued
Remuneration policy continued
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Remuneration Committee Report continued
Remuneration policy continued
7. Service agreements and
terminationpayments
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
or any other reason that the Committee
considers to be appropriate (a ‘Good
Leaver Reason’), the Committee shall
consider making a payment to the
Executive Director under the Annual
Bonus Plan or Incentive Plan. This would
normally be pro-rated for the period
worked during the financial year and
any deferred amounts (whether held in
shares or cash) will normally be released
at their normal vesting date subject to
performance and/or underpins under
theiroriginal terms.
• If the termination is as a result of
anythingother than a Good Leaver
Reason, no payment will be made under
theAnnual Bonus Plan or Incentive
Plan on cessation of employment of
anExecutive Director and any deferred
amounts will normallylapse.
• 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
theindividual 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
theAnnual General Meeting.
8. 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
Group’s incentive plans (i.e. after the end of
any performance periods) shall normally vest
in full.
9. 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
toUltimateProducts.
10. Discretion
The Committee has an element of discretion
in several areas of the Policy and has discretion
in some areas under the rules ofcertain
incentive plans. These discretions include:
• selecting participants for each plan
andarrangement;
• determining the quantum of awards
under each plan or arrangement, subject
to the maximums stated in the policy
tableabove;
• 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
whichawards shall vest;
• setting the targets applicable to the
various performance measures used
intheGroup’s plans and arrangements;
• conducting an annual review of
performance measures and the
relativeweightings thereof;
• determining whether a participant shall
be considered to be a Good Leaver in
exceptional circumstances, outside of
theprescribed 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 opinionof 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.
Specifically, in determining whether the
performance measures have been satisfied
for awards made under the Annual Bonus
Plan, Incentive Plan or PSP, the Committee
is required to take account of the extent
to which the measured outcome reflects
overallcorporate performance and the
experience ofthe shareholders of the
Company in termsof value creation.
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Overview
10. Discretion continued
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,
actingin 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 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.
11. Legacy agreements
In addition to payments provided for under
this Policy, the Committee may authorise
payments to honour commitments made
prior to its adoption to any current or
formerExecutive Directors.
In particular, Awards under the following
plans have not yet vested, and therefore
all the terms of these awards (outlined in
previous Directors’ Remuneration Reports) will
continue to apply under the Policy, including
performance conditions, vesting and holding
schedule and malus and clawback provisions:
• Deferred share awards under the Annual
Bonus plan granted to C Dent, which
vest in equal tranches after one, two
andthreeyears;
• Awards granted to C Dent under
the Performance Share Plan (PSP),
which vest three years from the date
of grant subject to EPS and strategic
performanceconditions; and
• Awards granted under the Management
incentive plan (MIP), which participants
may exercise at any point up to 28
February 2026, whose value is based
on growth in the Company’s share
price above a hurdle (which increases
from 166.4p to 193.02p with effect from
28February 2024).
For the avoidance of doubt, no new awards
will be granted under any of these legacy
plans, except for deferred awards under
the Annual Bonus plan for S Showman
andAGossage.
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.
12. 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, subject
to re-election at each AGM.
The fees paid to Non-executive Directors
are determined by the Board in light
of independentsurveys of fees paid to
Non-executive Directors of comparable
companiesand with regard to the time
commitment and responsibilitiesinvolved.
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 incentive or pension arrangements.
Remuneration Committee Report continued
Remuneration policy continued
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Remuneration Committee Report continued
Remuneration Report
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 2023 and 31 July 2022.
Basic
Salary/Fees
1
2023
£
All Taxable
Benefits
2023
£
Pension
2023
£
Total Fixed
2023
£
Bonus
2023
£
MIP, PSP
and SAYE
2023
£
Total
Variable
2023
£
Total
2023
£
Executive Directors
S Showman 388,000 14,272 4,000 406,272 220,907 – 220,907 627,179
A Gossage 274,399 14,038 – 288,437 204,096 – 204,096 492,533
C Dent 144,125 10,378 8,135 162,638 70,688 – 70,688 233,326
Non-executive Directors – –
J McCarthy 88,367 – – 88,367 – – – 88,367
A Rigby 50,970 – – 50,970 – – – 50,970
R Bell 53,470 – – 53,470 – – – 53,470
C Adshead
2
49,470 – – 49,470 – – – 49,470
J Easterbrook 53,470 – – 53,470 – – – 53,470
1,102,271 38,688 12,135 1,153,094 495,691 – 495,691 1,648,785
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Single total figure of remuneration for each Director (audited) continued
Basic
Salary/Fees
1
2022
£
All Taxable
Benefits
2022
£
Pension
2022
£
Total Fixed
2022
£
Bonus
2022
£
MIP, PSP
and SAYE
2022
£
Total
Variable
2022
£
Total
2022
£
Executive Directors
S Showman 396,868 14,135 3,667 402,170 35,255 – 35,255 437,425
A Gossage 268,880 13,916 – 282,796 36,643 – 36,643 319,439
C Dent
3
47,776 3,465 3,249 54,490 – – – 54,490
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
2
45,863 – – 45,863 – – – 45,863
J Easterbrook 46,779 – – 46,779 – – – 46,779
997,640 31,516 6,916 1,023,572 71,898 – 71,898 1,095,470
1 The salaries noted above include the following amounts of pension contributions from the remuneration package that were paid as salary:
2023
£
2022
£
S Showman 27,822 31,827
A Gossage 19,279 24,595
47,101 56,422
2 The remuneration noted above for C Adshead includes £3,000 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: £3,250).
3 The remuneration noted above for C Dent in 2022 includes only a partial year from his date of employment of 4 April 2022.
Remuneration Committee Report continued
Remuneration Report continued
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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 July 2023, the base salaries of the Executive Directors are as
follows, including comparison to the previously agreed rates:
Base Salary
1 July 2023
£
Base Salary
1 March 2022
£
Movement
%
S Showman 386,587 368,178 5
A Gossage 267,876 255,120 5
C Dent 159,500 145,000 10
Taxable benefits
Each Executive Director is entitled to medical expenses insurance. Car allowances are paid
to the Executive Directors as follows: S Showman £12,500; A Gossage £12,500 and C Dent
£10,000. The car allowances have remained unchanged.
Pension benefits
The Group operates a defined contribution pension scheme, which the Directors are eligible to
participate in. The Executive Directors currently receive between 3.5% and 7.6% of their salary
(excluding any car allowance) as a contribution to their pension arrangements or the equivalent
as a cash allowance. 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 July 2023, the Board increased the base fees
payable to the Non-executive Directors for their services from £43,470 to £45,644 per annum.
The fee in respect of Chairing one of the three main Board Committees (Remuneration, Audit
& Risk, ESG) is £10,000 per annum. The fee in respect of services as Non-executive Chairman
increased on 1 July 2023 from £88,000 to £92,400.
Remuneration Committee Report continued
Remuneration Report continued
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Annual bonus scheme
Awards made in respect of the year to 31 July 2023
In accordance with the Remuneration Policy, the maximum bonus opportunity under the Annual
Bonus Plan for FY23 was set at 100% of base salary for S Showman and A Gossage (FY22:
100%), and 60% of base salary for C Dent (FY22: n/a). 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 C Dent
Adjusted EBITDA Threshold (£19.8m) 0% 0% 0%
Target (£20m) 60% 60% 34%
Stretch 1 (£21.5m) 65% 65% 37%
Stretch 2 (£23m) 70% 70% 39%
Stretch 3 (£24.5m) 75% 75% 42%
Stretch 4 (£26m) 80% 80% 45%
Personal Target 1
(subject to Adjusted EBITDA underpin) Below Threshold 0% 0% 0%
Threshold 5% 5% 2.5%
Target 7.5% 7.5% 5%
Stretch 10% 10% 7.5%
Personal Target 2
(subject to Adjusted EBITDA underpin) Below Threshold 0% 0% 0%
Threshold 5% 5% 2.5%
Target 7.5% 7.5% 5%
Stretch 10% 10% 7.5%
Total opportunity 100% 100% 60%
Total assessed (% of base salary) 60% 80% 49%
Total assessed (% of max. opportunity) 60% 80% 81%
As EBITDA for FY23 was £20.2m, the Target level of performance was delivered resulting in
a bonus of £422,916 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
commercialinformation.
• S Showman: Personal Target 1 related to the growth in international revenue at appropriate
margin levels. Threshold was set at gross international revenue of £62.5m; as international
revenue for FY23 was £50.7m this Threshold target was not satisfied, resulting in an award
of 0% of base salary in respect of this measure. Personal Target 2 related to the recruitment
of additional sales personnel to support and build customer relations across the European
market. Although we have recruited a new sales team for our new Paris showroom, this
occurred in the period post year end, therefore the Threshold target was not hit during the
year end, resulting in an award of 0% of base salary in respect of this measure.
• A Gossage: Personal Target 1 related to the development of online direct-to-consumer
revenues at appropriate margin levels. Stretch was set at gross direct-to-consumer revenue
of £38.25m; as direct-to-consumer revenue for FY23 was £41.45m this Stretch target was
satisfied, resulting in an award of 10% of base salary in respect of this measure. Personal
Target 2 related to the number of working hours saved by our investment in robotics.
TheStretch target was set at 15,000 working hours saved; as estimated hours saved was
53,000 this Stretch target was satisfied, resulting in an award of 10% of base salary in
respectof thismeasure.
• C Dent: Personal Target 1 related to maintaining robust internal risk mitigation procedures.
TheCommittee determined that business risks had been proactively managed and
monitored during FY23 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 7.5% of base salary in respect of this measure. Performance Target 2 related to
management of operating cash flow. The Committee determined that with operating cash
flow of £24.4m this had been managed in excess of expectations, resulting in an assessment
ofthis target to Stretch level and an award of 7.5% of base salary being made in respect of
this measure.
Remuneration Committee Report continued
Remuneration Report continued
65
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Annual bonus scheme continued
The table below sets out the resulting bonuses earned, including the amounts deferred into
shares or cash.
Bonus
maximum
(% of salary)
Bonus earned
(% of maximum)
Bonus
earned
(% of salary)
Bonus
earned (£)
Of which
paid in
upfront
cash (£)
Of which
deferred
into shares
or cash (£)
S Showman 100% 60% 60% 220,907 154,635 66,272
A Gossage 100% 80% 80% 204,096 142,867 61,229
C Dent 60% 81.25% 48.75% 70,688 49,481 21,206
The Committee considered that overall performance had been strong during FY23 and that the
bonus outcomes appropriately reflected individual and business outcomes. No discretion was
used in assessing the outcomes as set out above.
Long-term incentive plans (audited)
PSP
There have been no new share options granted under the PSP scheme in the current year, and
there have been no PSP awards with a performance period ending in the current year for the
current Directors.
SAYE
There have been no new share options granted under the SAYE scheme in the current year.
MIP
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 originally included a put
option with a three-year vesting period that could be exercised up to seven years following the
vesting date. Exercise of the put option was subject to the share price of Ultimate Products plc
exceeding a hurdle set at a premium to the IPO price. Following a shareholder vote at the FY22
AGM the time horizon of the MIP was extended by two years subject to an uplift in the Hurdle
from 166.4p to 193.02p (equating to an 8% increase to the Hurdle for each of the two years by
which the MIP was extended). At the point of exercise, the recipient will receive the value of the
Subsidiary Shares in either cash or shares in Ultimate Products plc (‘Plc Shares’), at the discretion
of Ultimate Products plc, subject to a cap of 6.25% of the issued share capital of Ultimate
Products 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 Ultimate Products plc as at the relevant date had the put options been exercised at such time:
As at 31 July 2023 & 31 July 2022
Subsidiary
Shares Held
Maximum Potential
Plc Shares at
31 July Face Value
Executive Directors
S Showman 48 – –
A Gossage 32 – –
Face value is calculated as the number of Plc Shares that could be acquired upon exercise of
theput 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 Ultimate Products
plc was above the hurdle price and the awards had vested, so the put options were exercisable
at such date. As at both 31 July 2022 and 31 July 2023, the share price of Ultimate Products 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
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 40
and 41 of the Annual Report.
Remuneration Committee Report continued
Remuneration Report continued
66
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Payments for loss of office (audited)
There have been no such payments made in either the year ended 31 July 2023 or the
comparative period.
Payments to former Directors (audited)
G Screawn left office on 28 June 2022. During the year, the Remuneration Committee
determined that 101,185 shares of the 2019 PSP scheme had vested, being 81% of the total
potential award. The award had 4 different conditions: Condition 1 (50% of award) was based
on EPS growth at a Threshold of 19% and Stretch of 25%, and it was determined that 62% had
vested. Condition 2 (15% of awards) was based on a stretch target of Gross Margin of 22.8%, and
on a result of 24.9% it was determined that 100% had vested. Condition 3 (10%) was based on
decreasing leverage to 0.7x. Leverage excluding the debt taken on for the Salter acquisition was
below this level, so it was determined that 100% had vested. Condition 4 (25%) was based on
improvements in broader financial reporting and risk management, and it was determined that
100% had vested. On 19 December 2022, G Screawn exercised 65,999 options at an average
price of 27 pence per shares, with a total net gain of £76,290.
Directors’ shareholdings (audited)
The table below sets out the total number of shares held at 31 July 2023 by each Director of
theCompany.
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 – 73,855 40,000 – –
Non-executive Directors
J McCarthy – 1,000,000 – – –
A Rigby – 25,000 – – –
R Bell – 502,144 – – –
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 Ultimate Products plc, as explained in the “Long-Term Incentive Plan” section above. The share price at 31 July
2023 did not exceed the hurdle price and as such, the potential MIP shares at 31 July 2023 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 C Dent in respect of the year
ended 31 July 2023 will be deferred into shares that will vest in three equal tranches after one, two and three years. The legal
title to these shares will be held under a nominee agreement by JTC Employer Solutions 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. Similarly, 30% of the award payable under the
Annual Bonus Plan to S Showman and A Gossage for the years ended 31 July 2021 and 31 July 2022 were deferred in the
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 2023:
Shares owned
outright at
3 November
2022
Shares owned
outright
31 July 2023
Shares held
under share
options
31 July 2023
Potential MIP
shares
31 July 2023
Deferred bonus
shares
31 July 2023
Shares owned
outright at
31 October
2023
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 73,855 40,000 – – 73,855
J McCarthy 1,000,000 1,000,000 – – – 1,000,000
A Rigby 25,000 25,000 – – – 25,000
R Bell 502,144 502,144 – – – 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 386,587 18,530,600 250% 770,094 2406%
A Gossage 267,876 8,052,400 250% 533,618 1509%
C Dent
3
159,500 73,855 125% 158,865 46%
1 Base salary above excludes any amount in respect of a car allowance.
2 Salary divided by the 31 July 2023 share price of 125.5p, 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. In the prior year the comparative was 30% actual shareholding as % of the requirement.
Remuneration Committee Report continued
Remuneration Report continued
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Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
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 Ultimate Products plc is a constituent of this index. Thisillustrates the
movement in a hypothetical £100 invested in the Company from the date ofthe 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 2023 627 60% Nil
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 3382 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.
2023
£’000
2022
£’000 % Change
Total employee costs (note 7 – Financial Statements) 17,854 15,505 18.2%
Dividends 6,591* 6,359* 3.6%
* Dividends declared and proposed in respect of the year ended 31 July 2022 and 2023, including any such amounts waived.
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 2022 A 17.6: 1 15.3:1 10.8:1
Year ended 31 July 2023 A 25:4:1 22:5:1 15:3:1
£60
£120
£40
£100
£20
£80
£0
£180
£140
£160
TSR – Value of a 100 unit investment made at 28 February 2017
28 February
2017
31 July
2017
31 July
2018
31 July
2019
31 July
2020
30 July
2021
29 July
2022
31 July
2023
UP GLOBAL SOURCING HOLDINGS PLC FTSE ALL SHARE
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Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
CEO pay ratio continued
As permitted by the legislation, we have calculated the ratio using Option A as this is
consideredto 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 2022
and 31 July 2023. 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
2022 and 31 July 2023. The total pay and benefits and the base salary component of total pay
and benefits are set out as follows:
Base Salary
2023
£
Total pay and
benefits
2023
£
Base Salary
2022
£
Total pay and
benefits 2022
£
CEO remuneration 386,587 627,112 352,546 437,425
25th percentile employee 24,000 24,720 21,336 24,802
Median employee 27,000 27,810 27,670 28,500
75th percentile employee 34,000 41,020 37,021 40,601
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.
2 There has been an increase in the ratios for the financial year ending 31 July 2023, which is driven primarily by the higher
bonus outcomes. It is to be expected that the ratio will vary from year-to-year, primarily as the CEO’s package consists
of a much higher level of variable pay that is dependent on performance, whereas the wider workforceremuneration is
predominantly fixed in nature, which is normal practice for these roles. In this context, the Committee is satisfied that the
ratios are appropriate and fair.
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 2023, 31 July 2022 and 31 July 2021 compared to that of the average pay of all
employees of the Group.
Salary/fees Benefits Bonus
2021 2022 2023 2021 2022 2023 2021 2022 2023
Executive
Directors
S Showman +13.9% +4.3% +5.0% -3.9% +1.1% +0.5% +100% -82.6% +526.6%
A Gossage +13.9% +4.2% +5.0% -3.0% +1.2% +0.6% +100% -76.8% +457.0%
C Dent N/A N/A +10.0% N/A NA +4.3% N/A N/A +100%
Non-executive
Directors
J McCarthy +17.2% +3.5% +5.0% 0% 0% 0% – – –
A Rigby +5.2% +3.5% +5.0% 0% 0% 0% – – –
R Bell +5.2% +3.5% +5.0% 0% 0% 0% – – –
C Adshead N/A +3.5% +5.0% N/A 0% 0% N/A – –
J Easterbrook N/A +3.5% +5.0% N/A 0% 0% N/A – –
Average pay of
all employees
2
+4.9% +7.6% +10.5% -2.3% -11.9% +18.8% -104.9% -11.8% -2.0%
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.
Remuneration Committee Report continued
Remuneration Report continued
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Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Statement on implementation of remuneration policy in the following financial year
Base salary
As described in the Chair’s statement, the base salaries for the Executive Directors were
reviewed during the year. The resulting rates of salary are as follows:
Fee from
1 March 2022
£
Fee from
1 July 2023
£
S Showman 368,178 386,587
A Gossage 255,120 267,876
C Dent 145,000 159,500
Benefits and pension
There are no planned changes to the provision of benefits for FY24. S Showman and A Gossage
will receive a pension contribution of 7%. C Dent will receive a pension contribution of 3.5%,
aligned to the wider workforce level.
Incentive awards
As set out in the Directors’ Remuneration Policy in this report, the maximum incentive
opportunity for C Dent will be 140% of salary. Under the awards for FY24, 71% of the maximum
bonus opportunity is again based on the achievement of an Adjusted EBITDA target and 29% on
achievement of personal objectives. In relation to the award, up to 70% will be paid in cash at the
end of the performance period and up to 100% deferred into shares for four years. The awards
will also be subject to malus and clawback provisions.
For S Showman and A Gossage, the maximum incentive opportunity will be 100% of salary.
Under the awards for FY24, 75% of the maximum bonus opportunity is again based on the
achievement of an Adjusted EBITDA target and 25% on achievement of personal objectives.
Upto 70% of salary will be paid following the performance period in cash, and up to 30% of
salary deferred into cash vesting over a period of three years.
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.
Non-executive Director fees
The rate of fees for the Chairman and Non-executive Directors were reviewed during the year.
The resulting fees are as follows:
Fee from
1 March 2022
£
Fee from
1 July 2023
£
Chairman of the Board 88,000 92,400
Non-executive Director base fee 43,470 45,644
Additional fee for chairing Audit Committee 10,000 10,000
Additional fee for chairing Remuneration Committee 10,000 10,000
Additional fee for Chairing ESG Committee 10,000 10,000
Consideration of matters relating to Directors’ remuneration
The following Directors were members of the Committee when matters relating to Directors’
remuneration were considered:
• C Adshead
• A Rigby
• J McCarthy
• R Bell
• J Easterbrook
Remuneration Committee Report continued
Remuneration Report continued
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Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Statement on implementation of remuneration policy in the following
financialyearcontinued
External advisers
The adviser to the Committee during the year was RSM UK Tax & Advisory Services LLP (RSM)
until the appointment of PricewaterhouseCoopers LLP (PwC) in June 2023 following a tender
process carried out during the year.
RSM provided 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
annualRemuneration 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 provided remuneration advice to
the Committee do not have connections with the Company that may impair their independence.
RSM were paid fees of £11,500 for Committee matters in the year to 31 July 2023.
PwC is a member of the Remuneration Consultants Group and a signatory to its Code of
Conduct and the Committee is therefore satisfied that the advice PwC will provide is objective
and independent.
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 2022 AGM), was
asfollows:
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
64,541,581 93.47% 4,508,464 6.53% 1,148
The Remuneration Report was approved by the Board on 30 October 2023.
On behalf of the Board
Christine Adshead
Chair of the Remuneration Committee
30 October 2023
Remuneration Committee Report continued
Remuneration Report continued
71
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
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 2023.
Strategic Report
The Companies Act 2006 requires the
Directors to present a review of the business
during the year to 31 July 2023 and of the
position of the Group at the end of the
financial year, together with a description
ofthe principal risks and uncertainties faced.
TheStrategic Report can be found on pages
5 to 38 and is incorporated by reference
intothis 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 40
to 75 and is incorporated by reference into
thisDirectors’Report.
Results and dividends
The Group’s profit after tax for the financial
year ended 31 July 2023, was £12.6m (2022:
£12.4m). 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 4.95p per share (2022: 4.82p
per share). This takes the total dividend for
the year to 7.38p per share (2022: 7.12p per
share). Subject to shareholder approval at
the AGM on 15 December 2023, the final
dividend will be paid on 26 January 2024 to
shareholders on the register at the close of
business on 29 December 2023.
Future developments
In accordance with s414A of the Companies
Act 2006, the Group has disclosed future
developments within its Strategic Report on
pages 5 to 38.
Directors
Names, biographical details and appointment
dates of the Directors of the Company at the
date of this report are shown on pages 40
and41.
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. The indemnities
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
politicalexpenditure
No company within the Group made any
political donations or incurred any political
expenditure in the year (2022: £Nil).
Post balance sheet events
On 30 October 2023, the Company changed
its name from UP Global Sourcing Holdings
plc to Ultimate Products plc. In addition, the
Directors propose a final dividend, as set
outin note 11 to the Financial Statements.
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, France 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 wellas providing a Far East showroom.
Theregistered branches in Germany and
Poland employ local sales teams to support
the Group’s internationalstrategy.
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
isled 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 to accommodate
theirneeds.
72
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Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
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 15.21 % indirect
Ennismore Fund Management Limited 7,942,431 8.89 % indirect
Slater Investments Limited 3,646,756 4.08 % indirect
UP Global Sourcing Employee Benefit Trust 3,033,595 3.40% indirect
Relationships with
controllingshareholders
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 2023, 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
22 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
theArticles.
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 other than:
• those which may from time-to-time
be applicable under existing laws
and regulations (for example, insider
tradinglaws); 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 Ultimate
Products Employee Benefit Trust (UP 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 UP 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 absolutediscretion.
At 31 July 2023, pursuant to shareholder
resolutions passed on 16 December 2022,
theCompany 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
15 December 2023. It is proposed that such
authorities are renewed at the AGM for 2023,
as detailed in the AGM Notice.
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 of control.
Articles of Association
The Company’s Articles may only be
amended by a special resolution at a general
meeting ofshareholders. No amendments
are proposed to be made to the existing
Articlesat the 2023 AGM.
Carbon emission reporting
Disclosures regarding greenhouse
gasemissions, energy consumption and
energy efficiency action are included in the
Strategic Report on page 29. This information
is incorporated by reference into this
Directors’Report.
Financial risk management
andinternalcontrols
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 in note 21.
Directors’ Report and other statutory disclosures continued
73
Ultimate Products plc Annual Report 2023
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Financial Statements
Shareholder Information
Strategic Report
Overview
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
Ultimate Products 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 27 June
2023 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
thecurrent rent is £387,500 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
page38 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 2023 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 112
(4) Details of long-term incentive schemes Pages 50 to 71
(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 74
(11) Provision of services by a controlling shareholder Remuneration Report
(12) Shareholder waivers of dividends Page 73
(13) Shareholder waivers of future dividends Page 73
(14) Agreements with controlling shareholders Directors Report
Directors’ statement as to disclosure
ofinformation 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
auditinformation.
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 PKF Littlejohn 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
2023AGM.
Annual General Meeting
The Company’s AGM will be held at 14:00
pm on 15 December 2023 at the Company’s
registered office, Manor Mill, Oldham, OL9
0DD. The Notice of the AGM accompanies
this Annual Report and will be available
onthe Group’s website at www.upplc.
com. Two resolutions will be proposed as
specialbusiness. Explanatory notes on
these resolutions are set out in the Notice
ofthemeeting.
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
30 October 2023
Directors’ Report and other statutory disclosures continued
74
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
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. Under that 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
andprudent;
• 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
inbusiness; and
• 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 anytime the financial position
of the Companyand 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 andstrategy.
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
pursuanttoDTR4
The Directors confirm to the best of
theirknowledge:
• 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 30 October 2023 and is
signedon its behalf by
Chris Dent
Company Secretary
30 October 2023
Statement of Directors’ responsibilities
75
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Financial Statements
Shareholder Information
Strategic Report
Overview
Financial Statements
Providing the
Best
service
Financial Statements
77 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 in Equity
86 Company Statement of Changes in Equity
87 Consolidated Statement of Cash Flows
88 Reconciliation of cash flow to the Group
netdebtposition
89 Company Statement of Cash Flows
90 Reconciliation of cash flow to the Company
netdebt position
91 Notes to the financial statements
76
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
76
Independent Auditor’s Report
To the members of Ultimate Products plc
Opinion
We have audited the financial statements of Ultimate Products plc (the ‘parent company’)
and its subsidiaries (the ‘group’) for the year ended 31 July 2023 which comprise of the
Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Financial Position, the Company Statement of Financial Position,
the Consolidated Statement of Changes in Equity, the Company Statement of Changes in
Equity, the Consolidated Statement of Cash Flows, the Company Statement of Cash Flows
and notes to the financial statements, including 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.
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of
theparent company’s affairs as at 31 July 2023 and of the group’s profit for the year
thenended;
• 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.
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 are
independent of the group and 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, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director’s 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’s and parent company’s ability to continue
to adopt the going concern basis of accounting included:
• Reading 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 assessed the adequacy and accuracy of the disclosures made in the
financial statements around going concern;
• evaluating management’s historical forecasting accuracy by comparing performance to
budgets from prior financial periods;
• testing the assessment and underlying forecasts for mathematical accuracy;
• We obtained an understanding of the financing facilities from the finance agreements,
including the nature of the facilities, covenants and attached conditions;
• agreeing the underlying cash flow projections to management-approved forecasts,
recalculating the impact on banking covenants and liquidity headroom for the base
casescenario;
• assessing whether key inputs and assumptions, including sales growth rates, gross profit
margins, overheads and financing cashflows made were reasonable;
• performing independent sensitivity analysis on management’s key assumptions, including
applying incremental adverse cash flow sensitivities. The sensitivity analysis included the
impact of certain severe but plausible scenarios, evaluated as part of management’s work
on the group’s viability, including pandemic disruption, operational disruption, technology
displacement and increase in cost of inflation;
• evaluating the amount and timing of identified mitigating actions available to respond
to a severe downside scenario, such as ability to restrict capital expenditure and cash
payments associated with dividends and whether those actions are feasible and within the
group’s control; and
• considering the appropriateness of management’s downside scenario, to understand
how severe conditions would have to be to breach liquidity and whether the reduction in
Earnings Before Interest Taxes Depreciation and Amortisation (EBITDA) required has no
more than a remote possibility of occurring.
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’s or 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.
77
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Financial Statements
Shareholder Information
Strategic Report
Overview
Independent Auditor’s Report
To the members of Ultimate Products plc continued
In relation to the entities reporting on how they have 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 director’s considered it appropriate
toadopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern
aredescribed in the relevant sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements are free from material
misstatement, we define materiality as the magnitude of misstatement that makes it probable
that the economic decisions of a reasonably knowledgeable person, relying on the financial
statements, would be changed, or influenced. We also determine a level of performance
materiality which we use to assess the extent of testing needed to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.
Materiality for the group financial statements as a whole was set as £825,000. This was
calculated based upon 5% of profit before tax due to the group’s profitability and since it is one
of the group’s key performance indicators. Performance materiality and the triviality threshold
for the consolidated financial statements was set at £495,000 and £41,250 respectively due to
the number of significant risks and this being our first year of engagement.
Materiality for the parent company financial statements as a whole was set as £480,000. This
was calculated based upon 1.5% of gross assets due to significant value of, and focus on, the
investment in and balances due from subsidiaries. Performance materiality and the triviality
threshold for the parent company was set at £288,000 and £24,000 respectively due to the
number of significant risks identified and this being our first year of engagement.
For each component in the scope of our group audit, we allocated a materiality that is less
than our overall group materiality. The range of materiality allocated across components was
between £740,000 and £800,000.
We also agreed to report to the Audit Committee any other audit misstatements below
the triviality thresholds established above which we believe warranted reporting on
qualitativegrounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risk of material
misstatement in the financial statements. In particular, we looked at areas involving significant
accounting estimates and judgement by the directors and considered future events that are
inherently uncertain such as the valuation of non-contractual rebates. We also addressed the
risk of management override of internal controls, including among other matters consideration
of whether there was evidence of bias that represented a risk of material misstatement due
tofraud.
The group has two trading companies within the consolidated financial statements, both of
which are based in the UK. We identified two significant components: the parent company –
Ultimate Products plc; and the subsidiary UP Global Sourcing UK Limited, which were subject
to a full scope audit by a team with relevant sector experience undertaken from our office
based in London. We engaged the assistance of a component auditor to assist with inventory
count procedures, as we were not able to visit an overseas third party warehouse.
The other four entities within the group were assessed as being not material, insignificant
components and therefore only analytical procedures at a group level were performed in
respect of these entities.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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) 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.
78
Ultimate Products plc Annual Report 2023
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Financial Statements
Shareholder Information
Strategic Report
Overview
Key audit matters continued
Key Audit Matter How our scope addressed this matter
Customer rebates (Note 4)
The group has a number
of rebate agreements in
place with its customers.
As described in note 4,
management are required
to exercise estimation and
judgement when estimating
rebate charges in the year
and year-end rebate accruals
(£2,932k). This estimation
and judgement includes
estimating the revenue up to
the end of the rebate periods
and estimating rebates where
a contractual agreement is
notinplace.
Given the degree of estimation
and judgement required to be
exercised by management and
the value of both rebates in
the year and accrued rebates
at the year-end, we consider
the accounting for rebates to
be a key audit matter.
Our procedures included but were not limited to
• Obtaining a listing of both contractual and non-contractual rebates
as at the year-end and agreeing the amounts per listing to the
financial statements;
• For a sample of contractual and non-contractual rebates recorded
in the year, agreeing to supporting documentation and ascertaining
and challenging the key assumptions, estimates and judgements
made by management;
• For a sample of contractual and non-contractual rebates accrued
for, these were agreed to supporting agreements, sales data
andinvoices;
• Reviewing a sample of rebates accrued as at 31 July 2022
and ascertaining the movement in the year through discussion
withmanagement;
• Reviewing rebates settled post year-end and considering whether
there are any indications that rebates accrued as at 31 July 2023
were not complete; and
• Ascertaining the value of rebates and sales recognised in the
current year and prior year in respect of an appropriate sample of
customers and discussing the reason for significant movements
with management to assess whether there are any indications that
rebates accrued as at 31 July 2023 are not complete.
Based on the procedures performed, we are satisfied that the
estimates made by management in calculating, both, the rebate
charges for the year and the year end accrued rebates, to
bereasonable.
Key Audit Matter How our scope addressed this matter
Revenue recognition (Note 5)
The group has a number of
material revenue streams.
These revenue streams have
their own distinct revenue
recognition policies according
to the point in time at which
each performance obligation
issatisfied.
Given the material value
of sales and the number of
different revenue streams,
there is a risk that the various
streams of revenue are not
accounted for in the correct
period in accordance with the
underlying contractual terms of
sale and IFRS 15 Revenue from
Contracts with Customers.
Our procedures included but were not limited to:
• Obtaining and documenting an understanding of the information
systems and related controls relevant to each material revenue
stream during the year ended 31 July 2023;
• Evaluating the appropriateness of the information systems and
the effectiveness of the design and implementation of the related
controls over the various revenue streams;
• Performing a review in accordance with IFRS 15 for all material
revenue streams and comparing with the entity’s accounting
policy to ensure compliance with the relevant financial
reportingframework;
• Obtaining records of all sales invoices, sales orders and good
despatch notes raised in the year and comparing and reconciling
revenue to these three categories of documents. We also reviewed
and tested an appropriate sample of reconciling items.;
• Reconciling revenue per the sales invoice listing to revenue
recognised within the nominal ledger for the year;
• Selecting a sample of credit notes raised during the year to
ensure they have been appropriately raised and authorised. Also
selecting a sample of credit notes raise post year-end to ensure
they have been recognised in the correct period and assessing
whether there is an indication that revenue recognised in FY2023
is overstated;and
• Considering the valuation and completeness of deferred revenue
by assessing, for those streams where the risks and rewards of
ownership transfer on delivery, the value of goods dispatched
butnot delivered at the year-end.
Based on conducting the aforementioned procedures, we found
that the revenue recognition policies for each revenue stream were
consistently applied and reasonable.
Independent Auditor’s Report
To the members of Ultimate Products plc continued
79
Ultimate Products plc Annual Report 2023
Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
Other information
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion on the group and parent
company 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company
and their environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
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.
Corporate governance statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating to the group’s and parent
company’s compliance with the provisions of the UK Corporate Governance Code specified
for our review by the Listing Rules.
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:
• Directors’ statement with regards the appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified set out on page 75;
• Directors’ explanation as to their assessment of the group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 38;
• Directors’ statement on whether they have a reasonable expectation that the group will be
able to continue in operation and meet its liabilities set out on page 38;
• Directors’ statement that they consider the annual report and the financial statements,
taken as a whole, to be fair, balanced and understandable set out on page 75;
• Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 48;
• The section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 48; and
• The section describing the work of the audit committee set out on page 46.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are
responsible for the preparation of the group and parent company 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 group and parent company 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.
Independent Auditor’s Report
To the members of Ultimate Products plc continued
80
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Governance
Financial Statements
Shareholder Information
Strategic Report
Overview
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.
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
proceduresare capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which
they operate to identify laws and regulations that could reasonably be expected to have
a direct effect on the financial statements. We obtained our understanding in this regard
through discussions with management, application of cumulative audit knowledge and
experience of the sector.
• We determined the principal laws and regulations relevant to the group and parent
company in this regard to be those arising from Listing Rules, UK Companies Act 2006,
Disclosure and Transparency Rules, UK Corporate Governance Code, The Consumer
Protection Act 1987, and The Money Laundering and Terrorist Financing (Amendment)
Regulations 2019.
• We designed our audit procedures to ensure the audit team considered whether there
were any indications of non-compliance by the group and parent company with those
lawsand regulations. These procedures included, but were not limited to:
― enquiries of management, review of board minutes, review of the Company’s and
subsidiaries’ legal expenses and a review of Regulatory News Service announcements.
• We also identified the risks of material misstatement of the financial statements due to
fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud
arising from management override of controls, that there was potential for management
biasinrelation to the estimates and judgements made in accounting for customer
rebates and we addressed this by challenging the assumptions and judgments made
bymanagement and conducting procedures to gain assurance over the completeness
andaccuracy of accrued rebates.
• As in all of our audits, we addressed the risk of fraud arising from management override
of controls by performing audit procedures which included, but were not limited to: the
testing of journals; reviewing accounting estimates for evidence of bias; and evaluating
thebusiness rationale of any significant transactions that are unusual or outside the
normalcourse of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all
irregularities, including those leading to a material misstatement in the financial statements
or non-compliance with regulation. This risk increases the more that compliance with a law or
regulation is removed from the events and transactions reflected in the financial statements, as
we will be less likely to become aware of instances of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error, as fraud involves intentional
concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located
on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
Thisdescription forms part of our auditor’s report.
Other matters which we are required to address
We were appointed by the Audit Committee on 30 June 2023 to audit the financial statements
for the period ending 31 July 2023 and subsequent financial periods. Our total uninterrupted
period of engagement is 1 year, covering only the period ending 31 July 2023.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the
group or the parent company and we remain independent of the group and the parent
company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the 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 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 company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
30 October 2023
Independent Auditor’s Report
To the members of Ultimate Products plc continued
81
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Overview
Note
2023
£’000
2022
£’000
Revenue 5 166,315 154, 191
Cost of sales (123,568 ) (115,837 )
Gross profit 42, 747 38,354
Adjusted earnings before interest,
tax, depreciation, amortisation, share-
based payments & non-recurring items
(‘AdjustedEBITDA’) 20,213 18, 750
Depreciation and loss on disposal of
fixedassets 6 (2,238 ) (2,044 )
Amortisation of intangibles 6 (22 ) (22 )
Share-based payment expense 23 (837 ) (403 )
Non-recurring items 6 – –
Total administrative expenses (25,631 ) (22,073 )
Operating profit 6 17 , 116 16,281
Finance expense 8 (1, 132 ) (842 )
Profit before tax 15,984 15,439
Tax expense 9 (3,398 ) (3,069 )
Profit for the year attributable to equity
holders of the Company 12,586 12,370
All amounts relate to continuing operations
Earnings per share
Basic 10 14.6 14.3
Diluted 10 14.3 13.9
Consolidated Income Statement
For the year ended 31 July 2023
Consolidated Statement of
Comprehensive Income
For the year ended 31 July 2023
2023
£’000s
2022
£’000s
Profit for the year 12,586 12,370
Items that may subsequently be reclassified to the
income statement
Fair value movements on cash flow hedging instruments (1,329 ) 3,239
Hedging instruments recycled through the income
statement at the end of hedging relationships (3,445 ) 162
Deferred tax relating to cashflow hedges 875 –
Items that will not subsequently be reclassified to the
income statement
Foreign currency translation (2 ) 11
Other comprehensive (loss)/income (3,901 ) 3,412
Total comprehensive income for the year attributable
to the equity holders of the Company 8,685 15, 782
82
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Note
2023
£’000
2022
£’000
Assets
Intangible assets 13 37 ,003 37 ,025
Property, plant and equipment 14 8,443 6,369
Total non-current assets 45,446 43,394
Inventories 16 28,071 29 , 162
Trade and other receivables 17 29 ,890 32, 194
Derivative financial instruments 21 1,233 4, 142
Cash and cash equivalents 5,086 6,202
Total current assets 64,280 71, 700
Total assets 109, 726 115,094
Liabilities
Trade and other payables 18 (30 ,005 ) (29 ,644 )
Derivative financial instruments 21 (1,806 ) –
Current tax – (170 )
Borrowings 19 (15,891 ) (22,314 )
Lease liabilities 20 (836 ) (817 )
Deferred consideration – (987 )
Total current liabilities (48,538 ) (53,932 )
Net current assets 15, 742 17 , 768
Consolidated Statement of Financial Position
At 31 July 2023
Note
2023
£’000
2022
£’000
Borrowings 19 (3,990 ) (8, 144 )
Deferred tax 15 (6, 797 ) (7 ,585 )
Lease liabilities 20 (4,262 ) (1,940 )
Total non-current liabilities (15,049 ) (17 ,669 )
Total liabilities (63,587 ) (71,601 )
Net assets 46, 139 43,493
Equity
Share capital 22 223 223
Share premium 22 14,334 14,334
Employee Benefit Trust reserve 22 (1,989 ) (1,571 )
Share-based payment reserve 22 1,817 1, 166
Hedging reserve 22 (660 ) 3,239
Retained earnings 32,414 26, 102
Equity attributable to owners of the Group 46, 139 43,493
These Financial Statements were approved by the Board of Directors and authorised for issue
on 30 October 2023 and signed on its behalf by:
Simon Showman Chris Dent
Chief Executive Officer Chief Financial Officer
Company registered number: 5432142
83
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Note
2023
£’000
2022
£’000
Assets
Investments 12 20,810 19,974
Trade and other receivables 17 – 33,151
Total non-current assets 20,810 53,125
Trade and other receivables 17 9,040 431
Derivative financial instruments 587 106
Cash 49 –
Total current assets 9,676 537
Total assets 30,486 53,662
Liabilities
Trade and other payables 18 (264) (11,204)
Borrowings 19 (1,937) (1,937)
Deferred consideration – (987)
Total current liabilities (2,201) (14,128)
Net current assets/(liabilities) 7,475 (13,591)
Borrowings 19 (3,990) (8,434)
Total non-current liabilities (3,990) (8,434)
Total liabilities (6,191) (22,562)
Net assets 24,295 31,100
Company Statement of Financial Position
At 31 July 2023
Note
2023
£’000
2022
£’000
Equity
Share capital 22 223 223
Share premium 22 14,334 14,334
Share-based payment reserve 22 1,817 1,166
Hedging reserve 22 385 268
Retained earnings 7,536 15,109
Total equity 24,295 31,100
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 £1,595,000 (2022: loss of £338,000) and the total comprehensive income for
the year was a loss of £1,478,000 (2022: loss of £97,000).
These Financial Statements were approved by the Board of Directors and authorised for issue
on 30 October 2023 and signed on its behalf by:
Simon Showman Chris Dent
Chief Executive Officer Chief Financial Officer
Company registered number: 5432142
84
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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 31 August 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 23 – – – 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
Profit for the year – – – – – 12,586 12,586
Foreign currency retranslation – – – – – (2 ) (2 )
Cash flow hedging movement – – – – (4, 774 ) – (4, 774 )
Deferred tax movement 15 – – – – 875 – 875
Total comprehensive income for the year – – – – (3,899 ) 12,584 8,685
Transactions with shareholders:
Dividends payable 11 – – – – – (6,255 ) (6,255 )
Share-based payments charge 23 – – – 837 – – 837
Deferred tax on share-based payments 15 – – – – – (88 ) (88 )
Transfer of reserve on exercise/ cancellation of share award – – – (186 ) – 186 –
Transfer of shares by the EBT to employees on exercise of share award – – 297 – – (115 ) 182
Purchase of own shares by the EBT – – (715 ) – – – (715 )
As at 31 July 2023 223 14,334 (1,989 ) 1,817 (660 ) 32,414 46, 139
Consolidated Statement of Changes in Equity
For the year ended 31 July
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Note
Share
capital
£’000
Share
premium
£’000
Share-based
paymentreserve
£’000
Hedging
reserve
£’000
Retained
earnings
£’000
Total
Equity
£’000
As at 1 August 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 23 – – 142 – 261 403
As at 31 July 2022 223 14,334 1,166 268 15,109 31,100
Profit for the year – – – – (1,595) (1,595)
Cash flow hedging movement – – – 246 – 246
Deferred tax movement 15 – – – (129) – (129)
Total comprehensive income for the year – – – 117 (1,595) (1,478)
Transactions with shareholders:
Dividends payable 11 – – – – (6,255) (6,255)
Share-based payments charge 23 – – 837 – – 837
Transfer of reserve on exercise/ cancellation of share award – – (186) – 186 0
Transfer of shares by the EBT to employees on exercise of share award – – – – 91 91
As at 31 July 2023 223 14,334 1,817 385 7,536 24,295
Company Statement of Changes in Equity
For the year ended 31 July
86
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Note
2023
£’000
2022
£’000
Net cash flow from operating activities
Profit for the year 12,586
Adjustments for:
Finance costs 8 1, 132
Income tax expense 9 3,399
Depreciation 14 2,218
Amortisation 13 22
Loss / (Gain) on disposal of non-current assets 20
Derivative financial instruments (199 )
Share-based payments 23 837
Working capital adjustments
Decrease/(Increase) in inventories 16 1,090
(7 , 721 )
Decrease/(Increase) in trade and other
receivables 17 2,691
(5,649 )
Increase in trade and other payables 18 559
Net cash from operations 24,355
Income taxes paid (3,957 )
(2,345 )
Cash generated from operations 20,398
Cash flows used in investing activities
Acquisition of subsidiary- deferred consideration (987 )
(1,960 )
Purchase of property, plant and equipment (999 )
(1,843 )
Net cash used in investing activities (1,986 )
(3,803 )
Consolidated Statement of Cash Flows
For the year ended 31 July
Note
2023
£’000
2022
£’000
Cash flows used in financing activities
Sale of own shares (532 )
Proceeds from borrowings 2, 753
Repayment of borrowings (13,412 )
(2, 766 )
Principal paid on lease obligations (840 )
(936 )
Debt issue costs paid (94 )
Dividends paid 11 (6,255 )
(4,830 )
Interest paid (1, 147 )
(850 )
Net cash (used in)/generated by finance
activities (19,527 )
Net (decrease)/increase in cash and cash
equivalents (1, 115 )
Exchange gains/(losses) on cash and cash
equivalents (1 )
Cash and cash equivalents brought forward 6,202
Cash and cash equivalents carried forward 5,086
87
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Group
Overdraft
£’000
Term Loan
£’000
RCF
£’000
Invoice discounting
£’000s
Import loans
£’000s
Loan Fees
£’000
Leases
£’000
Total liabilities from
financing activities
£’000
Cash
£’000
Net
debt
£’000
At 1 August 2021 – (10,000) (2,983) (3,290) (2,759) 234
(2,801)
(21,599) 133 (21,466)
Financing cash flows (6,020) 2,000 766 (2,907) (5,420) –
936
(10,645) 6,020 (4,625)
Other cash flows – – – – – –
–
– 45 45
Other changes – – – – – (79)
(892)
(971) 4 (967)
At 31 July 2022 (6,020) (8,000) (2,217) (6,197) (8,179) 155
(2,757)
(33,215) 6,202 (27,013)
Financing cash flows 1,016 2,000 2,217 (2,753) 8,179 94
840
11,593 – 11,593
Other cash flows – – – – – –
–
– (1,115) (1,115)
Other changes – – – – – (176)
(3,181)
(3,357) (1) (3,358)
At 31 July 2023 (5,004) (6,000) – (8,950) – 73
(5,098)
(24,979) 5,086 (19,893)
Reconciliation of cash flow to the Group net debt position
88
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Note
2023
£’000
2022
£’000
Net cash flow from operating activities
Profit/(loss) for the year (1,595) (338)
Adjustments for:
Finance and dividend income – (81)
Finance costs 392 349
Impairment of loans from Group undertakings 2,406 –
Income tax charge/(credit) 159 (73)
Working capital adjustments
(Increase)/Decrease in trade and other receivables (36) 53
(Decrease)/Increase in trade and other payables (4) (1,251)
Net cash generated from/(used in) operations 1,322 (1,341)
Cash flows from investing activities
Movement in loans from Group undertakings 10,784 9,539
Acquisition of subsidiary- deferred consideration (987) (851)
Dividends received – 81
Net cash generated from investing activities 9,797 8,770
Cash flows used in financing activities
Repayment of borrowings (4,507) (2,178)
Proceeds from sale of shares 92 –
Debt issue costs paid (94) –
Dividends paid 11 (6,255) (4,830)
Interest paid (306) (421)
Net cash used in by finance activities (11,070) (7,429)
Net increase in cash and cash equivalents 49 –
Cash and cash equivalents brought forward – –
Cash and cash equivalents carried forward 49 –
Company Statement of Cash Flows
For the year ended 31 July 2023
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Company
Term Loan
£’000
RCF
£’000
Loan fees
£’000
Total liabilities from
financing activities
£’000
Cash
£’000
Net
debt
£’000
At 1 August 2021 (10,000) (2,684) 198 (12,486) – (12,486)
Financing cash flows 2,000 177 – 2,177 – 2,177
Other changes – – (62) (62) – (62)
At 31 July 2022 (8,000) (2,507) 136 (10,371) – (10,371)
Financing cash flows 2,000 2,507 94 4,601 – 4,601
Other cash flows – – – – 49 49
Other changes – – (157) (157) – (157)
At 31 July 2023 (6,000) – 73 (5,927) 49 (5,878)
Reconciliation of cash flow to the Company net debt position
90
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91
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3. Accounting policies continued
Notes to the financial statements continued
92
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3. Accounting policies continued
Notes to the financial statements continued
93
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3. Accounting policies continued
Notes to the financial statements continued
94
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3. Accounting policies continued
Leases continued
Notes to the financial statements continued
95
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Notes to the financial statements continued
96
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5. Revenue continued
Notes to the financial statements continued
97
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Notes to the financial statements continued
98
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9. Taxation continued
Notes to the financial statements continued
99
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Notes to the financial statements continued
100
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13. Intangible assets continued
Notes to the financial statements continued
101
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14. Property, plant and equipment continued
Notes to the financial statements continued
102
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Notes to the financial statements continued
103
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17. Trade and other receivables continued
Notes to the financial statements continued
104
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19. Bank borrowings continued
Notes to the financial statements continued
105
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20. Lease liabilities continued
Notes to the financial statements continued
106
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21. Financial instruments continued
Notes to the financial statements continued
107
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21. Financial instruments continued
Notes to the financial statements continued
108
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21. Financial instruments continued
Foreign currency risk management continued
Notes to the financial statements continued
109
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Notes to the financial statements continued
110
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23. Share-based payments continued
Notes to the financial statements continued
111
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Five-year summary (unaudited)
The result for the year ended 31 July 2019 has been previously restated to reflect the impact of
IFRS 16.
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Revenue 166,315 154,191 136,367 115,684 123,257
Cost of sales (123,568) (115,836) (106,136) (89,084) (96,013)
Gross profit 42,747 38,355 30,231 26,600 27, 244
Administrative expenses (25,631) (22,073) (20,205) (17,485) (18,304)
Profit from operations 17,116 16,281 10,026 9,115 8,940
Finance income – – – – 6
Finance costs (1,132) (842) (518) (753) (816)
Profit before taxation 15,984 15,439 9,508 8,362 8,130
Income tax (3,398) (3,069) (2,195) (1,747) (1,720)
Profit for the period 12,586 12,370 7,313 6,615 6,410
Non-GAAP performance measures
2023 2022 2021 2020 2019
Adjusted EBITDA (£’000) 20,214 18,750 13,291 10,363 10,720
Adjusted EBITDA margin (%) 12.2% 12.2% 9.7% 9.0% 8.7%
Adjusted profit before taxation (£’000) 16,821 15,842 11,150 8,163 8,387
Adjusted profit after taxation (£’000) 13,261 12,722 8,727 6,504 6,667
Adjusted earnings per share (p) 15.4p 14.7p 11.1p 8.3p 8.4p
Shareholder information
112
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Ultimate Products plc
Manor Mill
Victoria Street
Chadderton
Oldham
OL9 0DD
+44 (0) 161 627 1400
www.upplc.com