Earnings call transcript: Ultimate Products misses Q4 2025 earnings expectations

Ultimate Products (ULTP) reported its fourth-quarter earnings for 2025, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.037, falling short of the anticipated $0.048, a surprise of -22.92%. Revenue reached $70.7 million, below the expected $76 million, marking a -6.97% surprise. Despite these misses, the stock saw a 5% increase in pre-market trading, rising from $60 to $63.

Key Takeaways

• Ultimate Products’ EPS and revenue fell short of expectations.
• The company’s international business, particularly in the EU, showed significant growth.
• Stock price increased by 5% in pre-market trading despite earnings miss.
• The company is focusing on expanding its European market presence.

Company Performance

Ultimate Products experienced a challenging fourth quarter, with total sales decreasing by 3% year-over-year. Gross profit declined by 14%, mainly due to increased freight costs. However, the company’s international business, especially with EU discounters, grew by 42%, offsetting the flat performance in the UK market. The company has also reduced its headcount and is investing in AI and automation to streamline operations.

Financial Highlights

• Revenue: $70.7 million, down from the forecasted $76 million.
• Earnings per share: $0.037, below the forecast of $0.048.
• Gross profit: Declined by 14% year-over-year.
• International business growth: 42% increase in the EU market.

Earnings vs. Forecast

Ultimate Products missed its EPS forecast by 22.92%, with actual EPS at $0.037 against the expected $0.048. Revenue also fell short by 6.97%, coming in at $70.7 million compared to the forecasted $76 million. This marks a significant deviation from expectations, reflecting challenges in the current market environment.

Market Reaction

Despite missing earnings expectations, Ultimate Products’ stock rose by 5% in pre-market trading, moving from $60 to $63. This increase may reflect investor confidence in the company’s long-term strategy and growth potential, particularly in international markets. The stock remains well within its 52-week range of $44.6 to $142.

Outlook & Guidance

Ultimate Products remains committed to its FY ’26 forecasted sales and EBITDA numbers. The company expects changes in its sales function to yield positive results by FY ’27. With 60-70% order book visibility, the focus will continue to be on productivity and cost management.

Executive Commentary

CEO Andrew Gossoj emphasized the company’s mission, stating, "We are the advocates for the squeezed nibble, and we are proudly mass market." CFO Chris Stent highlighted growth potential, saying, "We see that we can grow quite strongly in Europe in the medium term."

Risks and Challenges

• Increased freight costs impacting gross profit.
• Flat performance in the UK market.
• Challenges in the discretionary non-food sector due to the cost of living crisis.
• Potential market saturation in existing channels.
• Dependence on the discount sector, which is shifting towards own-label products.

Q&A

During the earnings call, analysts inquired about the potential for an AIM market listing to better align with market capitalization. The company also discussed its increased use of AI for translations and process automation, and its focus on expanding its presence in the European market.

Full transcript - Ultimate Products PLC (ULTP) Q4 2025:

Rachel, Webinar Moderator: And many thanks for joining us today for Ultimate Products full year twenty five results presentation. Just while we wait for people to join, just a bit of general housekeeping. So this webinar is being recorded and, will be available in due course on the equity development website. You can also access our research on the website.

There will be a q and a session with management at the end of the presentation. So if you do have any questions, please feel free to drop them into the q and a box at the bottom of your screen. I will now hand you over to Andrew Gossoj, the CEO, and Chris Stent, the CFO, to run through the presentation. Over to you guys. Thank you.

Andrew Gossoj, CEO, Ultimate Products: Thanks, Rachel. Well, for the non holders here, thought I’d give the sort of sixty seconds background to business. Obviously, there’s lots of detail in the annual reports on on on our website. But we are a branded consumer goods business. We have two main brands, Salter and Bell Dry.

Together they account for 60% of our overall revenues. Salter is The UK’s oldest housewares brands, dates back to 1760, before before America existed and before the French Revolution. And that is our scales and kitchen brands. We say scales first because that’s always what people remember it for and it’s it’s it’s it’s, main heritage. Albeit the majority of the revenue comes from the kitchen sides.

By kitchen, I mean, largely cookware and kitchen electrical items. Bell’s Ray is a mere nipper that’s a 150 years old, dates back to 1872. And that is our laundry and floor care brands. And again, is where its heritage is. It was the back in the nineteen thirties or nineteen forties, it was the patent holder for the adjustable ironing boards.

And those two, I’d say, account for 60% of our revenue. We then have a supporting cast of other brands that we own, typically, typically, brands, and they account for 20% of our revenue. And we typically use those brands for channel management purposes, where for whatever reason it won’t be appropriate to use salsa or beldrang. We then have a license under Russell Hobbs. We don’t do the electrical.

We but we do license the brands for cookware and that accounts for approximately 10% of our our revenue. And then the balance is is a is a mix of different things like we have a a closeout business still and and and we do we do do some bits of own label. We are we’re headquartered in in Oldham in Greater Manchester. The the bulk of our product is sourced from China where we have an office and showroom in Guangzhou. And we also have a showroom in in in Paris, which we use for our for our European customers.

If we can go to page four, please, Rachel. So this is this is our our highlight slide, which is a misnomer, should we say. It has been a disappointing year, f y twenty five. It’s led to, you know, quite a lot of introspection amongst the amongst the management team. And if we can turn to page five, you can see to some extent the output of that introspection.

We’ve looked back on all the way back to when we IPO ed in in f y seven in 2017, and we’ve looked at, you know, what have we achieved, what have we maybe not achieved. And actually over the course of that period, the business has been transformed and transforms for the goods. Back in back in f y seventeen, less than half of our revenue came from brands that we owned. In FY twenty five that was over over 80%. And the the the brand execution is is is also being transformed.

We’ve recently rebranded Salts and Belgrade. And I think the way we we now have a marketing team, which we didn’t have as recently as as four years ago. And I think we’re doing fantastic things, particularly with our Salts and Belgrade brands. We’ve addressed channel and customer concentration issues which featured quite heavily in our prospectus. We were over 60%, from the from the from the discount channel.

We now have a broader mix, Supermarkets, for example, which were 8% of revenue back in ’17 are now circa 30%. Online, which was less than 4% of revenue back then, is is typically in a range of 20 to 25%. So we have we’re much more balanced in in terms of channel concentration. And back then we also had over 40% of our revenues with two customers and and and that customer concentration is also being addressed. We have quite a lot of licensing risk, both Russell Hobbs and Salter at time we’re licensed.

We acquired Salter Outrights in 2021. Hence, we we only have 10% of our revenue arising from licenses. And that was another key risk of features in our prospectus. I do think the business has transformed in terms of its operational execution and our use of AI and tools like RPA, robotic process automation, and the recent installation of the PIM, our product information management system. We’ve, you know, we are viewed within the industry as, in terms of execution, as a global best player in the way we go about our business.

We, of course, have absorbed quite a number of external shocks. COVID, of course, but shipping crises, cost of living crises, etcetera. So a a lot of improvements over this period, but it’s probably fair to say in terms of our our numbers, we have stalled over recent years. And it’d be very easy for me to sit here and say, well, you know, FY ’22, the the the high watermark of post the post COVID boom in in general merchandises as as consumers, you know, still largely in lockdown, unable to go out, spend money on physical goods. You know, coming off that peak, I could talk about how tough the market is.

And I think, probably most of you on this call will be conscious of that. It’s an exceptionally tough market for discretionary non foods. Not helped of course by significant cost inflation. Some of it’s market led, some of it’s government led. But to use that old English proverb, fine words, butter, no parsnips.

And we have to look to self help because we can’t influence the the overall market, but we can influence our own actions. If we go over onto page six, our starting points with all of this is our overall culture of continuous improvements. They say this culture is largely anchored on our graduate development scheme where we bring talented, bright young people into the business each year. We we are a business which, we have complexity imposed upon us because retailers make things complicated for their suppliers, so it makes it simple for them. Exactly what I would do if I was in their position.

But that complexity can be difficult to manage and difficult to scale. And and and what we can’t aren’t able to do, like say a retailer can, is we’re not able to take a top down approach in terms of how to how to how to drive improvements in into the business. We we really do need our people from the bottom up to bring those ideas to the table that we can then automate. And what this this is an internal graphic, really, that we use quite regularly in the business. We start to use it externally in investor meetings because if it’s, I think investors do find interesting to see how how how businesses think.

We we create this virtuous circle of, you know, ideas generated by by our teams. Those are, you know, ideas for automation. That automation being delivered, that leads to increased productivity. Much of that has been recycled into higher salaries, but that allows us to find even better quality talent. Around the outside, you see the benefits of this.

Now it does feel at first sight like a like an OpEx play, and certainly it is. And we’ve we’ve delivered at flat operate OpEx over the last three years. How unusual I feel for for a consumer business given the inflationary pressures, which all of UK plc has seen. But actually, that’s not what gets me excited. What gets me excited is is the ability to recycle the benefits of increased productivity into areas like branding and marketing and and better product developments and and improved product quality and and price.

And and and we’ll see I’ll I’ll I’ll I’ll tell you a bit more about that in future slides. Let’s go over to page seven. So, you know, the one of the big areas of self help self help is, as I said before, how we execute our branding, which has been transformed really, particularly since we appointed Tracy Carroll as our brand director at the back end of 2022, although and Tracy has subsequently been promoted to chief marketing officer. We thought we knew a thing or two about brands before then, but I I’ve learned an awful lot in the last two or three years. And I think the way the way we’re executing our brand and the way we’re marketing our brands is is is is is is fantastic.

And our brands have delivered, you know, there’s been significant growth in our brands since we have here as you can see from the graph on this slide. If you go on to the next page, product development has always been a a key strength. But what we’ve seen over the last couple of years is is, I believe, a step change in in in in the quality and execution of our product developments. We have a we one of our key metrics is our our is our product development failure rates. You always wanna have a bit of a failure rate.

If all of your products succeed, then you’re probably not taking enough risk. But you obviously don’t want to have too much of a failure rate because then you’re then then that investment is wasted. Our failure rate has improved from twenty five percent, which I’ll probably happy with to be fair, to fifteen percent. I put that down to the benefits of more focus. We’ve we’ve we’ve we’ve reduced our product developments from a from a an astronomical thousands new products a year to a fairly substantial 600.

So plenty of newness still, but just a bit less than we were doing before, given our team’s greater focus on individual lines to really to to really bring great products to market. The automation is really stuff our talents to focus on products. Bringing products to market is administratively very, very heavy. You have to collect a lot of information and a lot of data about the product you bring to market, which then has to be reported on to many people such as customers and government agencies. So for example, the new packaging task tax and EPR, we have to collect all of the details around the packaging of our products, the weights, the types of packaging, what’s card, what’s plastic, what’s being recycled, what hasn’t been recycled, what is recyclable.

And all of this is immersed to be very heavy. So we the more we use the automation, the more we can release talents, our talents to focus on on on the products. And then finally, we’ve been, much more data led. So I’m a great believer in allowing our buying teams to use their intuition. I’ve I’ve been a team that is very talented and has strong intuition.

But it’s always good if we can use market research and the data to verify their intuition. Now we’ve been doing that much more so over the last couple of years. And that has led to a much better I in my opinion, from a strong from a high base and a more improved policy of execution on NPD. You can see an example on this page here, the Bell Drogue Trios team. The youngsters these days don’t even own an ironing board.

They hang their product they hang their their shirts on a on a on a a hanger and they steam. This is a three way item. It’s a it’s a steamer. It’s a travel iron. And if you put it into the plates, you can use it as a conventional iron.

So this would retail about 50 pounds and maybe promote it at 40. We have other products like the slushie maker, the Crisp and Go, the our our our version of the vertical air fryer, the VertiCook. And for those who don’t know us well, our our approach to product development is very simple. We want to be a fast second. So we are there to be to to to make markets where follow the trends.

We look at what premium brands are doing. And then what we look to do is bring products to markets that that the other four quintiles can afford. We are the advocates for the squeezed nibble, and we are proudly mass market. Our products have to pass a very simple test. We call it the countertop test.

If if because, you know, our mission is is beautiful products for every home. What we want is product that the the the the our consumers can be proud of, but is a price point that they can afford. And when they take it home and put it on their countertop and their friends come around for dinner, we want them to keep that product on the countertop and not put it in the cupboards. It’s a beautiful product for every home. There is a case study on the next page there, Rachel, which is our Belljoy all in one floor cleaner.

So this is for hard floors. It is it vacuums, it cleans, and it dries. And there are a number of other brands on the markets, which which have products with similar function. They have brands like, like Dyson and Shark, Karcher, G Tech, Bissell. And when all of these brands were were reviewed by which, our Belgya all in one was viewed as the best best product, best buy, the best products.

Not the not the best value products, but the best. It was also the best value. It was the least expensive of of the cohorts. And this this for me is what’s what we must always aspire to as a business, to to bring the best product to market, but the one but one which is, you know, less than the half price of of of of those premium brands to to really to really be able to to win that that that that mass markets. Keep an eye out for this one.

We are going to be utilizing the the witch branding. We we did a soft launch in in in late summer, which is very successful, led to this review. Gonna be doing a hard launch and a and a big go to market in in spring. Plenty of PR. We’re going we’re we’re paying the money to to which to use their branding.

And and and you’ll see you’ll see lots of marketing activity around that in in in spring twenty twenty six. Let’s go to page 10. So I mentioned before about the things we do in the business using AI, RPA, and and our product information management system. You know, we we we we we’re all of UK plc are seeing these these these headwinds. And and and using the sales per head metric, you can see the benefits that this, this this focus on productivity has given us.

We’ve we’ve reduced headcount from, I think, from a peak of about four ten. I think I think at the moment, it’s in a sort of range of three twenty to three thirty. So, you know, we are we are becoming sort of in in you know, as as I think all all of UK plc needs to be, we we are becoming much much more productive in the biz in the in in the business. Recycling the benefits of that into not just good control of OpEx, but also benefits around branding and products. If we move on to the next page, I mentioned that we we went through internally through service, you know, period of introspection.

And we looked at the business and what could we get better at. And I think we we we sort of set you know, we we’ve looked at our sales function and we realized that we’ve been guilty of under investments in our sales function and and and that’s something for which, you know, I personally need to take significant responsibility. It’s it’s not an excuse, but but but it can feel risky to make changes in sales. Particularly if you’re listed and you’re chasing chasing numbers to some extent. But of course, in the medium term, if you don’t change, that’s the biggest risk.

So we are kind of circling back on our sales function. We are going to be focusing in terms of human capital on on on backing talent, and investing in talents, which which kind of broadly mirrors what the rest of the business does. You know, linked to that, big investments in training and developments where where where perhaps we we it’s we’ve under invested previously. Much better use of technology. The business generally is fantastic.

It’s a use of technology, but but less less so in sales. So we’re going to we’re going to sort of, you know, improve that over the over the coming months. We’ve already rolled out the PIN, which is a which is it’s a cross business tool, but including in sales. And we’ve got a CRM as part of the new ERP system and they’re coming into use, during calendar year 2026. And then some, some differences in some tightening in terms of management process, particularly around, setting, expectations and and measuring performance against those expectations.

We brought Duncan Singleton into the CCO role. So previously, Simon Schulman, the founder was the CCO. And Simon as CCO, looked after both buying and selling, which was a, you know, a very very wide brief. What we’ve done now is we’ve split this with the those two roles. So we we’ve got Katie Maxwell who’s a who, is is our new chief product officer.

And and Katie Katie I bore people with this, but Katie is somebody who’s come all the way through from the graduate development scheme in in back in 2013 when she joins into that role today, which is a a fantastic achievement for Katie. And then Duncan Singleton has moved across from from buying into into the CCO role. And some of you will some of you will be will know Duncan. Some of you, maybe most of you, wouldn’t swing. Duncan is Duncan’s Duncan’s really a heavyweight in in both in the business and in the industry.

Duncan has taken the small domestic appliances business from 5,000,000 of revenue when he took it over in 2011 to nearly 60,000,000 in FY twenty five. He sort of transforms that product area. And he also chairs one of the big industry groups, the beta small domestic appliances trades trade group. So it is it’s it’s it’s a it’s a it’s a big appointment, so it put Duncan said, moving down the cost from buying in in into that into that CCO role overseeing the sales function. Just following on from that on on the next slides, Rachel.

We you many of you have seen the announcements around our promotions to within the operating boards. The the guys you see here are our operating board plus myself and and and and Chris Dent. You know, I think I think maybe there’s there’s I did this for two reasons, really. I mean, first of all, like I’ve just mentioned, I needed to split the the buying and and sales role, hence Duncan and Katie’s appointments into the the CCO and CPO roles, respectively. But I also wanted to maybe change some misconceptions.

I think often, externally, people have perhaps fallen into the trap of thinking that it was about me and Simon. But the business has always had very, strong senior executive team. And it was a it was a great opportunity for me to communicate that more explicitly, to the wider world. I I won’t read out their their thumbnail CVs here. I’ll I’ll leave that to yourselves.

But, you know, we have we have really fantastic strength in-depth at the senior executive level. And indeed strength in-depth below depth below that. You know, we do, you know, our our our our our human capital model which which broadly mirrors the professional services industry where we bring lots of people in at graduate level and then we train, train, and train again. And and then we bring people through through the pyramids right the way through to to the top of the the organization means we do have a tremendous strength in-depth, not just with the people you see on the slides here, but further down the organization as well. Okay.

I’m gonna hand over to Chris to go through the financials.

Chris Stent, CFO, Ultimate Products: William, thanks very much, Andy. So obviously, it has been a disappointing year when sales go back backwards. So sales down 3%. But actually, the bigger hits of profit has been in relation to our gross margin, where we were hit last year by extra freight costs due to the closure of the Red Sea. So it’s had the gross profit down by 14%.

Admin expenses have remained flat and they’ve remained flat for three years, where the inflationary pressures that we have seen and quite a lot of those inflationary pressures government mandated have been offset by productivity gains. So on to the next slide, looking a little bit more into the sales breakdown and where that loss of revenue has come from. Now there are many different ways to slice and dice our sales. And I’m sure many of you have sort of looked at the very long revenue note that we have in RNS and the accounts. I quite like this breakdown of sales myself, because what it does is it sort of like shows what’s really going on on an underlying basis.

So now, one of the one of the factors have been air fryers. So we saw the boom in that during FY twenty two, which was fantastic when it happened. But obviously, when a boom like the air fryers occurs, you’re always there going, what’s going to happen next year? What’s going to happen with my with my comparatives? But at the time, you do still take that revenue because, to be honest, air fryers are one of our core lines, and therefore we are going to continue to sell it.

So what we saw is that the air fryer boom ended in Q1 FY24. Since that point, it’s reached about steady state. It’s been steady state for the last seven quarters and continues to be in a steady state of about £10,000,000 a year in the start of FY ’twenty six. So that’s one of the big trading items, so £5,000,000 of the decrease. Then the other has been third party closeout.

Now for those of you who don’t know, third party closeout is almost where the business started when Simon founded the business twenty years ago. So this is buying other people’s excess stock and selling it out into the market. Now obviously, this isn’t a core part of our business because it’s not UP branded sales. But last year, it was very helpful for us because it’s sort of like masked that sort of like or not masked, but softened the blow of the air fryers coming off their boom period. Now those are great for us, but they’re only tactical sales.

They aren’t strategic for us for the long term. Because one of the issues is that it can end up distracting both our sales team and also our customers because it causes confusion about what Ultimate Products is. Ultimate Products is the home of brands. And as much as I love those sort of like third party closeout sales last year because they’re relatively high margin and they were great for sort of like filling gap, I love our brands more. I love Solter and Belgrade more than I love those third party closeout sales with their high margin.

So although they’ve come down this year, they are not strategically important and you will see those going down further in the future because they are not the future of our business and they are not strategically important for us. What’s strategically important is our own brands. And I’m very pleased that they went forward in the year, albeit by a relatively modest 4%. And within that, what we’ve seen is quite a difference between our international business and our UK business. Our international business is growing quite strongly at the moment, mainly off the back of the EU discounters, where you can see that they were up sort of like by an impressive 8,600,000 or 42%, which is great because we know we see that we can grow quite strongly in Europe in the medium term.

However, we’ve stalled in The UK. So in The UK, we are down relatively minorly, pretty much just about flat. However, even though it is a tough market, we can do better here. This is the area where we believe that we can be taking market share in The UK rather than just remaining flat. So if you want to move us forward on to the next slide, I can show what sort of like happened in relation to profit during the year.

So you can see that the revenue at prior year margin is a relatively minor effect. So that brought profit down by about £1,400,000 The bigger changes in relation to our profit year on year is in relation to gross margin. The largest segment of that is in relation to freight. So freight prices rose during the mini crisis we had last year when the Red Sea was closed. Well, the Red Sea is still closed, but we have seen markets normalize and freight has now come back down again.

In fact, overall, for gross margin, we’re in a relatively benign period in relation to the macro effects. So freight has normalized. FX is in a relatively benign period with FX rates sort of like above 1.3 in relation to the dollar. And we aren’t seeing a huge amount of factory gate inflation with our Chinese factories. However, we are at the moment seeing pressures in relation to the micro in relation to gross margin.

And this is in relation to sales mix. So as I mentioned earlier, those third party closeout, which we do not see as strategically important, they are relatively high margin. So what we’ve seen is those go down and our own brands go up. Now, yes, as a CFO, I do like high gross margin sales. However, if they are affecting our underlying business, they aren’t great for us for the long term strategic health of the business.

So we will be concentrating on UP brands going forward, even though on a blended basis, they may have it’s a slightly lower gross margin than those closeout sales. So the other thing we can see here is how we’ve managed our admin expenses. So although we’ve seen 1,500,000 of pay increases, we have counteracted that by headcount reduction, which is all through our productivity gains, which we’ve been making. So moving on to the next slide, looking further down the income statement. So pre sheet and amortization relatively flat, finance expense up slightly in the year because net debt was slightly higher over the period.

The most of my interesting thing sort of like draw out is our ERP expense. So this is the money that we’ve been spending on upgrading our ERP system. Now this is quite a major project which we’re undertaking. And overall, it’s probably going to take about two to three years and will cost around £2,000,000 What we expect is that, that will further enable us to continue with our productivity gains. But in the short term, it is going to be quite a risky and time consuming project.

We’ve tried to derisk that as much as possible. For instance, the PIN that we have done this year, that was an initial phase of our ERP. So previously, all the data in the PIN was actually held within our current ERP system. By moving the bulk of that data out, it means that we’re less reliant on the ERP as a core system, which therefore ends up derisking the project overall. So moving on to the next slide to look at the movement in terms of the balance sheet.

Overall, the balance sheet has remained stable. The slightly odd thing that’s happened in the period is in relation to the movements in working capital and net debt. When a business shrinks, you’d be expecting your working capital to shrink as well and be getting money back from that working capital. However, we’ve seen our net working capital and hence our net debt go up by £2,400,000 in the period. If you look at the individual lines, that’s what’s happened.

So stock is down in the period. Debtors has fallen, but creditors has fallen by an even larger amount. What has happened here is in relation to deferral of some orders. Some of you may remember when we downgraded our numbers earlier on in the year, part of the reason for that was the deferral of a couple of million pounds worth of orders by one of our big customers. So those orders were meant to be being delivered in June and July, and they were actually delivered in August and September.

So what that meant to our July period end, we have stock on our balance sheet, which we paid for. Most of our stock is usually funded by our creditors, but because it was being held for longer than we would normally hold it for, we have to pay the factories and therefore that stock was being covered by net debt instead. So hence, that investment in working capital and the net debt being marginally higher than we would be expecting it to be. So we can see that on the next slide in relation to the cash flow in the period. So opening net debt, sort of like 10.4%, closing net debt, 14.1%.

That 14.1 ratio basis is 1.1%, which is ever so slightly higher than our capital allocation. So our capital allocation policy is looking for net debt to be around 1x EBITDA. Now in terms of risk, as a CFO, I don’t necessarily look at that ratio. Our net debt is there to fund our working capital. Therefore, for me, I I more look at what our net debt ratio is to our working capital.

And at the moment, that’s two times covered and therefore leaving me fairly happy in terms of a risk basis. So Andy, over to you to look at the outlook and conclusion.

Andrew Gossoj, CEO, Ultimate Products: Thanks, Chris. Yeah. It’s it’s it used to be it used to be an a good time of year to to do this roadshow because for us as a a business with 60 concentration on discounts, our kind of Christmas order book was already put to bed by now. Because we have a a much larger, a lot much larger online business than back then, which is even more concentrated in November and December. We do still have some decent amounts of trading, ahead of us.

And, I mean I mean, I would say we are as as we say in the out in in the summary and outlook, we we are, you know, it is a difficult market. However, I’m I’m pleased with, how trading is progressing. I’m pleased with how, the order book is progressing at this point. But we’ll you know, we have our February pre close, and we’ll we’ll be able to give you all a bit more color around around it, like the key Christmas trading at that point. But but certainly, so far so good, I would say, at at this point at the the very end of our q one.

Okay. Rachel, that’s all from us. I guess, over to questions.

Rachel, Webinar Moderator: Great. Thanks for that, guys. Very comprehensive overview. We’ve a number of questions that have come in, so I will endeavor to get through those. Let’s have a look.

Okay. What scope is there to expand the product ranges which fall under the Beldray and Salta umbrellas?

Andrew Gossoj, CEO, Ultimate Products: So we’ve actually gone the other way over the last twenty four months. Not not not excessively so, but we have certainly done some some some trimming. So for example, within Salter, we did we did launch a laundry range a few years ago. We we we’ve we’ve unwound that. And we’ve done that for for very clear our our branding has you know, when when people look at the salted brands, for example, they have to be very clear as to what it stands for.

And we’re very clear, it’s scales and kitchen brands. So we need to be clear so our consumer can be clear. And the same with Bell’s right, it’s a laundry and floor care brands. Now with it within that, that’s a lot of product. You know, everything fit, you know, cookware, kitchen electrical, scales, the the full range of laundry type items, vacuum cleaners, you know.

It it it it’s already an extensive range, that we can go out and offer to our retailers and to our consumers. But it is more focused than it was a couple of years ago, and we we intend to retain that focus.

Rachel, Webinar Moderator: Okay. Thank you. Excuse me. And, leading on from that, does the focus on Salter and Beldray preclude significant brand acquisitions for now?

Andrew Gossoj, CEO, Ultimate Products: Well, m m and a has never been and and you can review every annual report with other issues. M and a has never been a a a a part of our strategy. We have along the way picked up some bits and pieces mainly to provide us some optionality in terms of channel management. Obviously, big one was the Solta acquisition we did in ’21, but that was really acquiring to some extent us a piece of ourselves and securing that brands. So now we we we we are we are focused on the brands we’ve got which give us extensive product coverage and and and and therefore, you know, substantial, you know, potential for growth.

Chris Stent, CFO, Ultimate Products: Because we’ve got to remember that with both of these brands, they are still challenger brands. Therefore, we believe that we can grow market share moderately in The UK, but we’ve got huge amounts of room for growth with those two brands in Europe.

Rachel, Webinar Moderator: Okay. Thank you. And leading on from that, what explains the relatively small portion of international business done online?

Andrew Gossoj, CEO, Ultimate Products: Well, it it’s the thing with online is you you you your business has to be where the stock is. So when we’re selling to, say, I don’t know, a European retailer, they they can take that product, you know, you know, typically, we’re selling on forward order basis, either delivered into their DC or often handed over to them in the Far East, via the an FOB routes. You with with with online, you have to have stock in territory. So our our we are seeing rapid growth in in The EU with with with with regard to online, but it it it’s it’s typically via the Amazon vendor channel.

Rachel, Webinar Moderator: Okay. Thank you. And what does the brand split look like internationally relative to The UK?

Andrew Gossoj, CEO, Ultimate Products: Well, our focus in in Europe mean, just just to take a step back there, it’s we can explain what our approach is to to to Europe. We we we are looking to it is two strands to our approach. First of all, we look to market our brands, particularly Sault and Belgrade via the Amazon platform. Utilizing skill sets that we we have because we’re we’re we’re adept at utilizing the marketing tools that are that are in that platform. So we we we we’ve been operating on the Amazon on Amazon for a long time.

And indeed, we’ve been operating on Amazon in Europe for for a a a number of years now. So we look to mark because the the logic is really simple. Amazon is your biggest GM retailer. If you’re well known on Amazon, you’re known. So it’s it’s as simple as that.

In terms of capability, the second strand is to market our capability through what we’re doing via the discount channel at the moment in in in in in the EU. You know, we have, we have we we don’t tend to discuss individual retailers because it’s commercially not the right thing to do. But we are we are sort of marketing our capability via what we’re doing via that channel.

Rachel, Webinar Moderator: Okay. Thank you.

Chris Stent, CFO, Ultimate Products: In terms of, you know, more the numbers in relation to that, you’d be saying that Petra is primarily into Europe at the moment. George Wilkinson as well, which has been, you know, being used with the the EU discounters. And Russell Hobbs, we kind of tend to use as a door opener and awful lot in in Europe. So those three brands tend to be at a higher percentage in Europe than they are in The UK.

Rachel, Webinar Moderator: Great. Thank you. And with regard to the discount sector, The UK discount sector seems to have moved down market in SDAs and homewares with less interest in retailing recognized brands or having beautiful products on every shelf. Do you see this as a function of the cost of living crisis, a temporary buying trend, or something more permanent?

Andrew Gossoj, CEO, Ultimate Products: It’s it’s it’s really to do with one particular retailer. Now I think I think I think I think when when you follow UK, you do have to sort of accept that from one year to the other, there will be some individual ups ups and downs relating to individual resellers. Some some of which is is is sort of diluted amongst other other developments and some of which stands out sometimes depending on on on on the account. In this case, there’s a there’s there’s one particular discount that has has had a sort of an own label focus in recent years and and away from brands, and that’s the reason for that decline. We we we we we do see opportunities, more opportunity with that retailer going forward.

Rachel, Webinar Moderator: Okay. And where do you get your consumer data for new product research from, given the retailer owns the consumer loyalty schemes, etcetera?

Andrew Gossoj, CEO, Ultimate Products: So we we it it was always a huge problem because if you say I mean, the the the traditional place to go for consumer data is all always GFK, but it costs an absolute arm and a leg. And because we are so such a diverse such a diverse product offer, by by the time you buy the data for every single category you sell in, you kinda end up spending all your profits on on buying data. About I think I’d say it was about seven, maybe eight years ago, we we started using a new product called Viper. That’s v v y p r, which is an app. So so it it has a huge panel of consumers and and and basically you can interact with those consumers via the Viper app.

And you can basically ask questions of those consumers. So it’s fantastic for sharing, for for for verifying, you know, everything from, you know, what would be the best choice of color for a particular product, say. Because often when we’re doing MPD, we’ve got color options through to what what pricing what might be the sweet spot on pricing, or, you know, all the way through to, you know, whether it’s whether it’s there’s an interest in the product at all. So we yeah. We found Viper to be a cost effective and and super useful tool to use, you know, throughout the the product development process.

Rachel, Webinar Moderator: Thank you. And a question on the Velcro all in one floor cleaner. Can you outline how this product competes with Dyson, Vax, etcetera, on much lower advertising marketing marketing budgets. Is it based on retailer supported promotions or purely price?

Andrew Gossoj, CEO, Ultimate Products: Well, price price is an absolute be to be gonna be a very large component because it because it unlocks markets that say, you know, I mean, some of these other products you you you they’re just being referred to. The brands you just referred to, you’re probably looking at only the top quintiles quintile in terms of income, maybe maybe top quartile can actually afford. So so price is is a is a key component of of of of moving the item. Will will be a key component of moving the item.

Chris Stent, CFO, Ultimate Products: But we do an awful

Andrew Gossoj, CEO, Ultimate Products: lot more marketing now than we did a few years ago. We we basically didn’t have a marketing department four years ago. And now we do on on the on the Tracy’s managements. But, you know, everything we do has got to be, you know, super low cost, including what we spend them on. We’re never gonna take an adverse in the in in in the break for a in coronation sheets or something like that, you know.

So we do a lot of what I term kind of guerilla marketing. So lots of use of social media advertising, influencers, particularly micro influencers. Yeah. And and actually good old fashioned PR works pretty well. Journalists journalists are proper last minute Charlie’s when it comes to deadlines.

And and the brands that can get the samples to them really, you know, really really quickly, often sort of in general some loyalty. If if you have a look at if you follow our LinkedIn, our ultimate products LinkedIn, you’ll you’ll see and maybe some of the social media channels on on Belgian and and salsa. You’ll see a lot of the activity that we we we get up to. I mean, for example, we we we hosted a baking day down in London with a with about a dozen journalists. So we do we do we do we do lots of things, but it’s always it’s not going to be what Dyson and Sharpe do, which is, you know, we’re not we’re not going to be having David Beckham as a brand ambassador at these at these price points, but we can do an awful lot of marketing that’s that’s great value for money.

Rachel, Webinar Moderator: Great. Thank you. What are the early signs of positive impact from the promotion of the five senior executives into the c suite?

Andrew Gossoj, CEO, Ultimate Products: Well, we it it’s we we we do need to drive change in our sales function. And and and, of course, you know, Duncan’s at the sort of tip of the spear on that. He’s he’s got his sleeves rolled up there and he’s he’s, very busy with that. But he’s he’s doing so with the full support of the rest of the operating boards and all of us, including myself and Chris, are doing our best. So so that that’s that that’s great.

I think I think, you know, I mentioned before there’s two aspects to split the to split the CPO and CCO role, but also to, you know, get get the correct recognition and and I suppose status really to to to our senior executives both externally and internally. And I’ve certainly seen seen seen seen the benefits of of of that around the business and also outside the business as well.

Rachel, Webinar Moderator: Great. Thank you. And and, Chris, we’ve got a number of financial questions. I know you touched on it, within the presentation, with regard to freight costs and that that they would they’ve stabilized. You have any view on how those freight costs are looking going into 2026?

Chris Stent, CFO, Ultimate Products: I mean, they’re they’re looking to be in a normalized range at the moment as they were sort of like pre crisis, so about February, that that that sort of like level. What I would say is that we are in a more volatile environment now from a geopolitical basis, which means that if there are any sort of like supply or demand peaks or troughs, we’re seeing the prices too much more volatile. So if the Red Sea reopen tomorrow, we’d probably see a collapse, as a huge amount more supply came on in terms of shipping. So at the moment, it is benign, but, you know, there is volatility there.

Rachel, Webinar Moderator: Okay. Thank you. And you mentioned circa June new product launches this year. What is the r and d budget supporting this? It appears to be well under 1% sales, which is not typical for a business new product development on a sustainable basis.

Andrew Gossoj, CEO, Ultimate Products: Well, we’ve this we’ve we’ve it it’s we’ve sustained that over the last sort of twenty five years. I mean I mean, it’s a fair point. I mean, it it it it’s you know, our investments in MPD is people predominantly. So if if you were to go visit our site at Oldham and go to out go to to to to the Fourth Floor where where all our sort of office team is based, and you were to hit a pause button and go around and ask what people are working on, you’d probably find 60% of them are working on something linked to new product developments. It could be the buying team actually, you know, looking at a sample.

It could be it could be the design team creating the packaging. It could be the online team creating the new listings. It could be the QA team making sure that that product is compliant. That that that that that’s where the investments in our MPD comes from. Yes, people.

Rachel, Webinar Moderator: Thank you. Do you have estimates for the cash implementation cost, time scales, and incremental annual overheads for the replacement ERP system?

Chris Stent, CFO, Ultimate Products: So overall cost is about 2,000,000, so spread over the next three years. So obviously, 600,000 taken. This year, there’ll be a little bit more in FY ’twenty six and then come back down in FY ’twenty seven. Overall costs will probably be a couple of 100 k more than we are spending at the moment. But as we sort of like seen with the PIM and everything else that we are doing, I will be fully be expecting productivity gains to be offsetting those extra costs.

Rachel, Webinar Moderator: Okay. Thank you. And how much weight should investors give to the FY ’26 forecasted sales and EBITDA numbers? What is your order visibility like at this point in the year?

Chris Stent, CFO, Ultimate Products: So we’re standing by the guidance that is currently out there for for for FY ’26. Obviously, you know, they are disappointing numbers, but we expect that the changes that we are making in relation to the sales function will start bearing fruit not this year, but in FY ’twenty seven. In terms of order book at the moment, so at this time of the year, the order book’s probably about 60% or 70% complete. So we do have quite good visibility. But there are still ten months of the year, well, nine months of the year, if we kind of like exclude October still to go, and therefore there’s plenty of in month trading to do.

Ten years ago, this business was almost much simpler because all of its business was forward orders. As we have gained more in respect to the online business, for instance, that is more short term in month. And especially for the online, November, December will be key for seeing how that how that trading goes. So although I’ve got, you know, quite good visibility, next couple of months are very important.

Rachel, Webinar Moderator: Understandable. Thank you. And excuse me, we’ve got a number of questions around buybacks. So first off, is the current cash net debt trajectory likely to trigger buybacks in f y twenty six? And and on the back of that, some shareholders disappointed to see their dividend reduced.

Would you consider reducing the share buybacks and maintaining the dividend instead?

Chris Stent, CFO, Ultimate Products: So we are following our capital allocation policy at the moment. And with anything like this, no capital allocation policy is absolutely perfect at all. However, we do have a state of capital allocation policy. And I think it is best to have that in place and continue to run to it rather than chopping and changing on it. So just to be clear, that is targeting net debt to EBITDA at one times and then paying out a 50% dividend of post tax profits.

And then if we are below one times net debt, then we would be sort of like doing share buybacks. So we are going to continue to work in line with that policy. At the moment, we are above one times, so we have paused on share buyback.

Rachel, Webinar Moderator: Thank you. And Chris, hopefully, you can answer this one quite quickly. Could you run through the EBT accounting and how this works? Is it funded by a loan from the company? Where does it appear on the balance sheet?

And how does this relate to the e d EBT reserve?

Chris Stent, CFO, Ultimate Products: Oh my word. That’s that that is not a quick question. So we make a loan to the the EBT, but it’s not expected that that loan will be paid back. But because it ends up sort of like being intercompany, it won’t show in the consolidated accounts because you end up consolidating your EBT in into your numbers. Therefore, in the PLC accounts, will end up with the balances being showing because they are an individual company.

But when it kind of like comes to the consolidated basis, you do have that really in there. If if if that sort of, like, question holder wants to sort of, like, reach out to me, I can probably go into that into a lot more detail at another point in time.

Rachel, Webinar Moderator: Okay. Well, I’m just conscious of time, and we’ve had a few more product questions come through. So maybe I can move back to you, Andrew, just to finish off with a few questions. How are you using AI? Is it led by management or part of IT mandate?

And can you provide examples of how it has helped so far and what you might expect in the future?

Andrew Gossoj, CEO, Ultimate Products: Well, a bit like the question on the EBT. I could I could spend the rest of the day on that one. You know, it’s we’re using AI in lots and lots of different ways. And and our our process for, originating opportunities for use of what be it AI or RPA or other forms of automation is very much bottom up. And and that is based upon our project development scheme because we we have we have a bunch of people who who are really happy to automate, elements of their job away, confidence that, we we will move them onto higher volume tasks, which is which is which is a culture which is not typical, I think, in in in in businesses generally.

You know, automating away parts of your role can be a source of huge anxiety in in different cultures. So we have we have a lot of enthusiasm, a lot of excitements and a and a lot of identity identification of ideas. These are these these these are formulated into tickets which are submitted to our process development departments, which is led by our process process development director, Tony Poe. And Tony and I joined the business within a few months of each other, back in 2005. The process development department in turn is made up of about, 10 super talented, outrageously young, people who often aren’t from a a computer science background.

In fact, I think, I think only one of the 10 are. We we often find what happens is we bring people into the business more generally into different departments. And if we spot that they’ve got an aptitude for process developments, then we then open maybe sort of a year or eighteen months in, we’ll we’ll move them into the process development team. But it’s not often computer scientists, and it’s often, and we’re agnostic, by the way. I don’t care if you’ve done English.

If if you’re good at process developments, you know, you you’ll be given a crack. But it does it often tends to be people from maybe a science or an engineering, backgrounds. It it it I could spend all day giving you case studies. I’m just going to give you one. Translations.

So translations, you know, this is always going to be where, you know, one of the areas where AI was gonna be very effective. But the problem with AI is it it it can misfire. And so relying relying on it completely, is is it can be dangerous. So I I often refer to AI as an augmentation process, not an automation process. So if we have a user, an AI can, you know, can can can can take 80% of the burden, but you still need that human being for the last twenty percent.

Let’s say with customer services, we can get our AI does does our traffic emails, but a human being has to review them. And and that and and and that that can speed things up considerably because starting with a blank piece of paper can be very difficult. Whereas, you know, editing something that’s that the AI has written is is is is much more effective. The translations, we’re we’re using AI for our our instruction manual translations. But the problem is, it does misfire.

So I said to our our our guys, you know, well, what are we gonna do about that? And they said, we’re going to we’re verify the translations which AI produces. So I said, well, how are you gonna verify them? We’re gonna use AI. And I just and I was gonna isn’t that like marking your own homework?

And and and they explained why it wasn’t, which I have to say I didn’t fully understand. And and I’ve, you know, it it there’s there’s some really incredible stuff going on. And and I I don’t worry about boasting about it because, you know, it’s it’s it’s not a technology play. It’s really the tools that we use are readily available. I mean, ChatGPT is on most people’s iPhones these days.

It’s it’s it’s how you use I’m gonna I’m gonna give you one more example. Sorry. I don’t because I I can’t help myself. We introduced the product information management system recently and we had to you have to get all your digital assets onto that platform in high res format. And I we asked the we asked the provider to specify what people normally do.

So we just normally people start with day zero. So they don’t bother. You know, they just start with their existing range and then from there everyone goes. But I said, that means I’m gonna lose twenty years worth of digital assets. That’s just I I can’t I can’t I can’t I can’t stomach that.

So one of our smart guys in in process developments decided to to because the problem you’ve got is your digital assets are being spread all over your servers, different file names, different places. And so we use the combination of RPA and digital facial recognition technology. Basically facial recognition technology that the police use to crawl our servers, to identify the digital assets that we that we needed and then to and then to upload them into the pin. And 85% of our doing it that way is 85% of our digital assets will automatically upload it into the pin. I mean, I I it it just completely blew my mind.

You know, the kind of the kind of lateral thinking required to deploy police facial recognition technology in conjunction with RPA to solve that problem is is is just fantastic.

Rachel, Webinar Moderator: Great. Well, excuse me. Thank you for those examples. I’m just conscious of timing that you guys have got other calls to jump on to. So maybe

Andrew Gossoj, CEO, Ultimate Products: We do.

Rachel, Webinar Moderator: I’ve I’ve got two more questions, and hopefully, these ones are quick. With all the new product development, is any of it patentable?

Andrew Gossoj, CEO, Ultimate Products: Typically, no. I mentioned we are fast seconds, so most of our products uses open technology. Ironically, the Trio steam is that you saw in one of the slides is is one that we are in the process of patented patenting with in conjunction with our manufacturer. But particularly now, you know, it’s a it’s a rare exception that we have that kind of opportunity.

Rachel, Webinar Moderator: Okay. And I’m gonna move on to the final question, and apologies. There are lots of questions that we haven’t been able to get through in the time. But can you give us some rationale around the potential move to AIM? Do you expect your annual listing cost to decrease?

And if so, by how much?

Chris Stent, CFO, Ultimate Products: So I think it’s the aim is the more natural market for us at the market cap size that we are. So if we were listing today, you certainly wouldn’t be kind of like going to main markets as 50,000,000 market capitalization. Certainly, it’s not really a cost move. So it would be relatively minor. So 20,000 to £30,000 which is not really very much in terms of cost saving.

But at the edges, probably sort of like save in terms of some of the complexity, some of the admin side in relation to some of the corporate governance. So it’s really about simplifying and being on the correct market for the size of business that we are.

Rachel, Webinar Moderator: Right. Well, thank you very much. I’m going to conclude it there. Just want to say thank you for everyone who joined the webinar, and thanks to Chris and Andrew for your time today. We will send around a short feedback document if you could complete that.

I know that management always value your views. And just to say, we look forward to hearing from you again in spring twenty six.

Chris Stent, CFO, Ultimate Products: Great. Thanks, Evelyn. Thank you. Thanks, everyone.

Andrew Gossoj, CEO, Ultimate Products: Bye now.

Rachel, Webinar Moderator: Bye.

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