REG - Supreme PLC - Final Results
02/07/2024 07:15
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RNS Number : 7006U Supreme PLC 02 July 2024
2 July 2024
Supreme plc
("Supreme," the "Company" or the "Group")
Audited Final Results for the Year Ended 31 March 2024
- Strong trading across FY24 in all divisions, with almost doubled
profitability overall
- Record levels of cash generated from operations and ended the
year bank debt-free
- The recently-announced acquisition of Clearly Drinks Limited
provides product diversification and incremental earnings immediately for the
Group
- The Group has continued its positive trading momentum into the
first quarter of FY25 and is trading comfortably in line with current
expectations(5)
Supreme (https://www.supreme.co.uk/) (AIM:SUP
(https://www.londonstockexchange.com/stock/SUP/supreme-plc/company-page) ), a
leading manufacturer, supplier and brand owner of fast-moving consumer
products, announces its audited final results for the year ended 31 March 2024
("FY24" or "the Period").
Financial Highlights
FY24 FY23 %
£m
£m
change
Revenue 221.2 155.6 +42%
Gross profit 63.5 40.9 +55%
Gross profit % 29% 26% +12%
Adjusted EBITDA(1) 38.1 19.4 +96%
Adjusted items (0.6) (0.8) +25%
Profit before tax 30.1 14.4 +109%
Adjusted profit before tax(2) 30.7 15.2 +102%
EPS 19.1p 10.3p +85%
Adjusted EPS(3) 20.9p 11.8p +77%
Net cash from operations 27.1 19.3 +40%
Net assets 58.0 40.0 +45%
Net (debt) (3.1) (11.8) +74%
Adjusted net cash(4) 11.6 3.2 +263%
· Revenue growth of 42%, and 96% increase in Adjusted EBITDA(1),
demonstrating an exceptional increase in profitability.
· Revenue growth and gross margin % increases reported across all
divisions.
· Branded Distribution division, formerly known as Other Consumer
Goods, reported revenues of £63.5 million (FY23: £7.8 million), driven by
the ElfBar and Lost Mary master distribution agreement.
· Highly cash generative period, delivering £27.1 million cash
from operations in the Period (FY23: £19.3 million), resulting in an Adjusted
net cash position(4) of £11.6 million by year end (263% growth from FY23)
with no bank borrowings.
· Completed £1.0 million share buy-back programme, supporting the
Board's commitment to delivering shareholder value.
Operational Highlights
· Consolidated warehousing operations at Ark, the Group's new
167,000 sq ft principal warehouse and distribution centre which will
facilitate both organic and acquisitive growth.
· Announced numerous proactive measures to combat underage vaping,
which Supreme strongly believes should be adopted by all industry players.
· Appointed as a master distributor for ElfBar and Lost Mary in the
UK, reported within the Branded Distribution category (formally known as Other
Consumers Goods) and achieving this with very little incremental investment
into our people, professional or establishment resources.
· At the year end, the Group had available borrowing facilities of
£55 million but £nil drawn down; the Group was entirely bank debt free.
Dividends
· A final dividend, subject to shareholder approval at the Annual
General Meeting on 24 September 2024, of 3.2 pence per share.
· The Group paid an interim dividend of 1.5 pence per share, which
together with the final dividend would take total dividends for the year to
4.7 pence per share, an 57% increase on the prior year dividend.
Outlook / Current Trading
· Supreme forecasts FY25 to be another profitable and highly
cash-generative year for the Group. Having made a positive start in Q1, the
Group is trading comfortably in line with current market expectations(5).
· The Company's FY25 trading outlook for the Vaping and Branded
Distribution divisions is expected to be largely unaffected by the
Government's proposed future disposable vape ban.
· Alongside an ongoing focus on accelerating organic growth and
strategic cross-selling, the Company remains committed to exploring
complementary acquisition opportunities to further scale our exceptional
distribution channels. The recently announced acquisition of Clearly Drinks
Limited "Clearly Drinks"), a soft drinks manufacturer and brand owner, on 21
June 2024 for a net consideration of £15 million is directly in line with
this strategy. This acquisition provides product diversification for the Group
as well as incremental earnings.
Sandy Chadha, Chief Executive Officer of Supreme, commented:
"Supreme has delivered an outstanding financial performance across the Period,
with strong revenue growth across all five of our divisions.
Set against a challenging backdrop, we continue to be committed to providing
high-quality, high-value products to both retailers and our customers.
Looking at our vaping business, we are fully committed to doing what we can to
support the eradication of underage vaping so that the industry can get back
to its core objective: helping adult smokers find an affordable, sustainable,
and safer alternative to smoking. I am not concerned that the Government's
vaping proposals will have any long-term impact on Supreme as a responsible
manufacturer and distributor with resources and experience to adapt to
potential new market dynamics. Operationally and financially, we are in an
excellent position to expand organically and, as we've successfully
demonstrated in the past (and post-period end with the Clearly Drinks
acquisition), we continue to evaluate complementary acquisitions.
We've made a very positive start to the current financial year, and I look
forward to updating all our stakeholders later this year on our continued
progress."
Retail Investor Presentation
A presentation for retail investors covering the results for the year ended 31
March 2024 will be held at 3.30 p.m. on Tuesday, 2 July 2024.
The online presentation is open to all existing and potential shareholders and
registration is free. Questions can be submitted during the presentation and
will be addressed at the end.
To register for the event, please go to:
https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-2july2024
(https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-2july2024)
(1)Adjusted EBITDA means operating profit before depreciation, amortisation
and Adjusted items (as defined in Note 7 of the financial statements).
Adjusted items include share-based payments charge, fair value movements on
non-hedge accounted derivatives and non-recurring items
(2)Adjusted profit before tax means profit before tax and Adjusted items (as
defined in Note 7 of the financial statements). Adjusted items include
share-based payments charge, fair value movements on non-hedge accounted
derivatives and non-recurring items
(3)Adjusted EPS means Earning per share, where Earnings are defined as profit
after tax but before amortisation of acquired intangibles and Adjusted items
(as defined in Note 7 of the financial statements). Adjusted items include
share-based payments, fair value movements on non-hedge accounted derivatives
and non-recurring items
(4)Adjusted net cash means net debt/(cash) as defined in Note 21 to these
financial statements excluding the impact of IFRS16
(5)Analyst consensus immediately before this announcement for the year ending
31 March 2025 was revenue of £242 million and Adjusted EBITDA(1) of £36.9
million
Enquiries:
Supreme plc via Vigo Consulting
Sandy Chadha, Chief Executive Officer
Suzanne Smith, Chief Finance Officer
Shore Capital (Nominated Adviser and Joint Broker) +44 (0)20 7408 4090
Mark Percy / David Coaten / Rachel Goldstein - Corporate Advisory
Ben Canning - Corporate Broking
Zeus (Joint Broker) +44 (0)161 831 1512
Jordan Warburton / Alex Campbell-Harris - Investment Banking
Benjamin Robertson - Corporate Broking
Vigo Consulting (Financial Public Relations) +44 (0)20 7390 0230
Jeremy Garcia / Kendall Hill / Anna Stacey
supreme@vigoconsulting.com (mailto:supreme@vigoconsulting.com)
About Supreme
Supreme supplies products across six categories; Batteries, Lighting, Vaping,
Sports Nutrition and Wellness, Branded Distribution and Soft Drinks. The
Company's capabilities span from product development and manufacturing through
to its extensive retail distribution network and direct to consumer
capabilities. This vertically integrated platform provides an excellent route
to market for well-known brands and products.
The Group has over 3,000 active business accounts with retail customers who
manage over 10,000 branded retail outlets. Customers include B&M, Home
Bargains, Poundland, Tesco, Sainsburys, Morrisons, Amazon, The Range,
Costcutter, Asda, Halfords, Iceland, Waitrose, Aldi and HM Prison &
Probation Service.
In addition to distributing globally-recognised brands such as Duracell,
Energizer and Panasonic, and supplying lighting products exclusively under the
Energizer, Eveready, Black+Decker and JCB licences across 45 countries,
Supreme has also developed brands in-house, most notably 88Vape, has a growing
footprint in Sports Nutrition and Wellness via its principal brands Sci-MX and
Battle Bites, and has recently expanded into the soft drinks market with the
acquisition of Clearly Drinks, adding established brands such as Perfectly
Clear and Northumbria Spring to its portfolio.
https://investors.supreme.co.uk/
(https://url.avanan.click/v2/___https:/investors.supreme.co.uk/___.YXAxZTpzaG9yZWNhcDphOm86MGY4MjE2NDg1ZDEzMTkxNDcxYTg0ZDM2YmVjYTllYTc6NjoyNDc2OjI0M2E5MTg0ZDVmZWNiMGJlZmJiMDkwZjE1ZTgzYjg3N2MzZTI4M2I1MjAyM2MzNGIyMTI4Y2QwMjZiYjk5MWI6cDpU)
Chairman's Statement
I am pleased to report that Supreme delivered a record performance in FY24,
driven by organic revenue and profit growth across all our divisions. The
principal driver for revenue growth was the addition of the ElfBar / Lost Mary
disposable vape distribution opportunity whilst our Vaping division also
continued to be a major growth engine. All other divisions also remained
profitable and resilient.
Supreme has delivered a strong financial performance in FY24, having almost
doubled EBITDA year-on-year and generated record levels of cash. Consequently,
we have ended this year bank debt-free, which is particularly pleasing for the
Board in the context of the seven acquisitions completed by the Group since
2021. The Group delivered revenue growth of 42% to £221.2 million (FY23:
£155.6 million), and Adjusted EBITDA(1) of £38.1 million (FY23: £19.4
million), representing an increase of 96% on the prior period.
Supported by our capital-light model and strong cash conversion, the Board
approved a £1.0 million share buyback programme, further reflecting our
confidence in the Group's future value and dedication to enhancing shareholder
returns.
In addition, the Board has recommended a final dividend of 3.2 pence per
share, resulting in 4.7 pence per share in aggregate for the year, a 57%
increase on FY23.
FY24 was another excellent period for Supreme's Vaping division, with revenues
up £6.7 million to £82.8 million, and our own-brand disposable vapes
reported sales of £13.7 million. Our Batteries division experienced revenue
growth of £1.0 million and continues to generate a predictable revenue stream
for the Group despite overall market declines, highlighting the strength of
Supreme's proposition. Our Lighting division has been reassuringly stable,
reporting revenue growth of 7% (£1.1 million) to £16.5 million, and we
remain a longstanding supplier and supportive partner to our biggest lighting
retailers. Revenue for the Sports Nutrition & Wellness category grew by 8%
to £18.0 million, driven by a substantial increase in protein powder revenue.
Following Supreme's appointment as a master distributor for ElfBar and Lost
Mary, we renamed our "Other Consumer Goods" category to "Branded Distribution"
to more accurately describe the nature of the products and the business model
housed in this category. The ElfBar and Lost Mary appointment saw us
distribute disposable vapes to new blue-chip retail customers, including
Tesco, and further enhanced the Group's cross-selling opportunities.
Collectively, the business unit reported revenue of £63.5 million in the
Period.
Macroeconomically, FY24 was a challenging period. Well-publicised inflationary
pressures, alongside the ongoing cost-of-living crisis, inevitably posed
challenges for our suppliers, customers, and staff. Yet, as displayed by the
growth detailed above, we successfully navigated these challenges across all
our divisions, and have continued to provide high-quality, low-price goods to
retailers and therefore consumers.
Regarding our broader exposure to the UK vaping market, Supreme remains
supportive of the Government's plans to curb underage vaping. We have been
consistent in articulating how this can be achieved, and in FY24 announced new
measures for our 88Vape brand, including the introduction of plain packaging,
the discontinuation of brightly coloured disposables, the simplification of
flavour names, and ensuring the Group only trades with retailers which enforce
robust age verification. We believe that vaping should be a smoking cessation
tool, and that adults looking to quit smoking should be supported in a
cost-effective way. We have also considered the environmental impact of vapes
and have rolled out vape disposal units across the entire estate of our
largest customer, B&M Retail, with the goal of encouraging more
responsible disposal of single-use devices.
Supreme has also continued to demonstrate its ability to execute strategic
acquisitions and, more importantly, integrate these businesses into the Group
in a timely manner. An example of this is the seamless integration of Liberty
Flights into the Group's existing business processes. This acquisition has
broadened the Company's vaping proposition, with the consequential significant
product overlap and manufacturing processes across the Group's Vaping division
allowing for enhanced margins across the enlarged business. It has also
generated further cross-selling opportunities across Supreme's existing
customer base.
In January 2024, we acquired the assets of FoodIQ UK Holdings Limited ("Food
IQ"), the protein manufacturer, for consideration of £175,000, which included
a £1.2 million state-of-the-art, accredited, and automated contract
manufacturing facility that opened only 18 months prior. A key component to
the acquisition, this purpose-built facility is expected to increase the
Group's Sports Nutrition & Wellness division's manufacturing capacity and
capability, supporting both medium and long-term growth.
This ability to identify opportunities, act strategically, and integrate
effectively underpins Supreme's success. Our team is talented in recognising
comparable, well-priced, immediately earnings-enhancing brands and merging
them into the Supreme portfolio with a keen focus on our core business
offering. Accordingly, we continue to explore accretive M&A opportunities
to retain a diverse and competitive offering of high-value, low-cost products.
At the year end, the Group had immediate access to bank revolving credit and
invoice discounting borrowing facilities of £55 million which were entirely
undrawn, providing significant liquidity to finance such M&A
opportunities.
The Board continues to be committed to ESG concerns, ensuring that the Company
is proactive, rather than reactive, to ESG responsibilities. Supreme manages
its ESG operations via various sub-committees, which ensure that our focus
remains on "doing the right thing" in how we conduct ourselves and our
business for the good of the environment, our community, our people, and our
stakeholders.
The Board remains pleased with the Group's performance, and on its behalf, I
would like to thank all our employees for their fantastic efforts,
persistence, and diligence during the Period.
Our colleagues are integral to the success of Supreme, and we look forward to
seeing what they will continue to achieve. Our management team has driven
Supreme to produce excellent results, and we are confident that they can lead
the Company to achieve its medium and long-term growth goals.
Paul McDonald
Non-executive Chair
1 July 2024
(1)Adjusted EBITDA means operating profit before depreciation, amortisation
and Adjusted items (as defined in Note 7 of the financial statements).
Adjusted items include share-based payments charge, fair value movements on
non-hedge accounted derivatives and non-recurring items
Chief Executive Officer's Review
Introduction
The year ended 31 March 2024 was an exceptional period of growth for Supreme,
both on an operational and financial level. Not only did we deliver a record
financial performance, underpinned by excellent organic revenue and profit
growth across all divisions, but we also significantly enhanced our
manufacturing and distribution credentials by commencing operations from our
new Ark facility in Manchester.
The Group produced an outstanding financial performance, increasing revenue by
42% to £221.2 million (FY23: £155.6 million), alongside a 55% increase in
gross profit to £63.5 million (FY23: £40.9 million). Adjusted EBITDA(1) also
increased to record levels of £38.1 million (FY23: £19.4 million), which
represented a 96% improvement on the prior year - a quite staggering
performance from the business. The Group generated operating cash of £27.1
million (FY23: £19.3 million), further demonstrating the highly
cash-generative nature of our core operations. Adjusted net cash(4) in the
Period increased by £8.4 million to £11.6 million and the Group proposes to
pay a final dividend of 3.2 pence per share, resulting in 4.7 pence per share
in total for the year (FY23: 3.0 pence per share in total).
The Group has continued to see strong sales traction across our product mix,
with our vaping products, both owned and branded (reported within Vaping and
Branded Distribution), performing particularly well. Elsewhere, our Sports
Nutrition & Wellness, Batteries and Lighting categories all grew both
their revenues and gross profits across the Period.
Although our focus during the Period was primarily on accelerating organic
growth, as a business we have continued to explore acquisition opportunities
which we believe have the potential to enhance the Group's overarching trading
performance. In January 2024, we completed the acquisition of the assets of
protein product manufacturer FoodIQ out of administration, for consideration
of £175,000. This transaction provided Supreme with access to a highly
sophisticated, accredited, and automated contract manufacturing facility near
London that originally cost more than £1.2 million to build and is less than
two years old. The site was purpose-built for the development of sports
nutrition products and management expects the facility will increase the
Group's Sports Nutrition & Wellness manufacturing capacity and capability
to help ensure we meet growing demand.
As part of the Company's commitment to safe and responsible vaping
consumption, we have repeatedly outlined our support of all regulation that
helps prevent underage vaping in the UK, and implemented numerous proactive
measures during the Period to ensure that our own-brand products are not
attractive to underage vapers, including toning down colours in 88Vape
packaging and streamlining the brand's flavour range. Our continued investment
in rechargeable pod system vaping devices, coupled with the Company's
exceptional progress in developing a uniquely diverse vape product mix, has
ensured that the Group is well positioned to adapt to changes in the UK
e-cigarette market.
In March 2023, we entered a 15-year lease for Ark, the Group's new 167,000 sq
ft principal warehouse and distribution centre. Following a complex fit out
process, 12,000 pallet spaces have been relocated, with the Group now
operating from the new facilities. This new centre, with the committed 15-year
lease, future proofs our operations in the medium term and has enabled our
teams to both consolidate and streamline storage and distribution, whilst also
creating a working environment of which our people can be proud of.
FY24 has been a hugely successful period of growth for Supreme and I strongly
believe that we remain firmly on track to maintain this impressive growth
momentum in FY25 and beyond.
Operational Review
I am delighted with the strong performance of the Group, which further
demonstrates that our vertically integrated platform provides the best route
to market for both Supreme and our customers. Supreme's successful track
record of developing and distributing our own product, alongside providing a
truly unique distribution platform for third parties, has underpinned our
robust financial growth track record.
Management will therefore continue to focus on the following strategic growth
drivers, namely:
· Continue to explore and execute on complementary earnings
enhancing acquisitions;
· Further leverage cross-selling opportunities to expand our
customer footprint and average revenue per customer;
· Continue to explore and develop new product verticals that
complement Supreme's customer base, focused on a high quality and good value
consumer proposition;
· Leverage our new manufacturing and distribution footprint to
create ongoing economies of scale and explore bringing the manufacture of even
more products in-house; and
· Enhance online distribution and services to further grow our B2B
and D2C sales channels.
Vaping
The Group's Vaping division delivered another solid performance in FY24, with
revenues increasing 9% to £82.8 million (FY23: £76.1 million), driven by a
combination of organic retail sales growth and a positive performance from our
longstanding HM Prison and Probation Service ("HMPPS") contract.
During the Period, Liberty Flights' manufacturing, warehousing, and business
administration functions were successfully integrated into Supreme, generating
volume and purchasing synergies alongside creating further cross-selling
opportunities.
As an industry leader, we have made good progress implementing the proactive
measures we announced in October 2023, which are designed to ensure our range
of 88Vape products do not create any interest from those underage. These
include:
· Reducing the use of colour in 88Vape packaging;
· Discontinuing the use of coloured hardware for all of the brand's
disposables;
· Using only age-appropriate naming conventions to describe 88Vape
flavours;
· Trading only with retailers and e-tailers who commit to having
robust age verification controls in place; and
· Making recommendations to retail customers to locate vapes away
from confectionery.
Thanks to the hard work and expertise of our innovation team, we continued to
roll-out new vaping products and now boast a first-class range of reusable
devices, including an 88Vape-branded rechargeable pod system. Looking ahead,
we expect demand for pod system vaping devices to continue to grow and are
well placed to support retail customers as they begin to increase their stock
of the product.
Supreme has been a longstanding supporter of UK Government initiatives to
promote vaping as a smoking cessation tool, and we continue to collaborate
with HMPPS and participate in the Government's 'Swap to Stop' campaign to
facilitate this objective.
Supreme has become the leading voice in the ever-evolving UK vaping landscape,
and we firmly believe that positive regulatory reform can provide a stable
base from which we can continue to grow our business.
UK Government Vaping Proposals
Supreme remains mindful of the UK Government's highly publicised proposal to
ban disposable vaping devices in a bid to combat underage vaping, as well as
its provisional plan to introduce an excise duty on vaping products, albeit
from October 2026. Total revenue from disposable vapes in aggregate came to
£70.7 million in FY24, representing 32% of Group revenue and was reported
across the Vaping and Branded Distribution category.
We continue to work with our key vaping customers and partners to ensure a
smooth transition as any new measures are absorbed by the market. Supreme has
an established suite of fully compliant rechargeable pod systems, produces
over 60 million 10ml bottles of e-liquid annually and, as highlighted above,
has already become a principal supplier to the UK Government's 'Swap to Stop'
scheme. Vaping remains a credible, sustainable, and highly effective smoking
cessation tool endorsed by global public health officials and is integral to
the UK Government's 'Achieving Smoke-free 2030' initiative.
Branded Distribution (previously Other Consumer Goods)
As previously communicated, management chose not to report the ElfBar and Lost
Mary disposable vape revenue stream within the Vaping division so as not to
dilute or detract from our core Vaping business. ElfBar and Lost Mary are not
brands owned or manufactured by Supreme, so have an entirely different
financial profile to the Group's core Vaping business. They are much more
aligned to the profile of our pre-existing Other Consumer Goods category (now
renamed Branded Distribution).
The division reported revenues of £63.5 million (FY23: £7.8 million), with
the ElfBar and Lost Mary distribution agreement contributing £57.0 million.
Supreme generated the remaining £6.5 million from sales in its core business,
which is the distribution of branded household laundry and cleaning brands.
The blended margin of the category remains relatively low compared to other
product categories within the Group at 14% (FY23: 10%)
The speed with which Supreme was able to establish, onboard, and scale this
opportunity with close-to 100% service levels was testament to the
capabilities of the Group's vertically integrated platform, specifically with
reference to sourcing, warehousing, and distribution. More notably, it was
delivered with minimal additional incremental overheads, which can be credited
to our exceptional employees, who have been at the centre of our success this
year.
Sports Nutrition & Wellness
The Sports Nutrition & Wellness division performed strongly during the
Period, delivering revenues of £18.0 million (FY23: £16.7 million), an
increase of 8%. Sci-MX, our leading protein powder, shakes and bars brand, has
continued to deliver significant sales momentum since the rebrand, supported
by strategic marketing, advertising, and influencer campaigns. With all Sci-MX
products now manufactured in-house, the brand is set to benefit from the
Company's increased manufacturing space and distribution capabilities,
alongside the Group's recent FoodIQ acquisition. Powders now represents a
sizeable component of the division compared to previous periods, resulting in
a positive step change in gross margin of the category overall from 16% to
29%.
We launched new Sealions vitamins pouches, alongside an exciting collection of
protein-focused products under the brand which is already beginning to
generate cross-selling opportunities. Supreme recognises the strong growth
potential of the protein powders market and this decision to further diversify
the Sealions portfolio enables us to leverage another fully established
e-commerce channel to market protein products to an even wider demographic
whilst underlining our commitment to providing consumers with great-value
nutritional supplements.
Pleasingly, inflationary pressures impacting raw materials continue to
subside, including those affecting the price of whey which is the key
ingredient in most of our protein products. This, together with our recent
facility upgrades and FoodIQ acquisition, ensures Supreme is well positioned
to further increase profit margins across the division and explore new retail
opportunities in FY25 and beyond.
Lighting
The Lighting division generated a reassuring recovery across FY24, with
revenue up 7% to £16.5 million (FY23: £15.4 million), whilst we retained our
position as a longstanding supplier and supportive partner to our biggest
retail customers. Recent licence extensions with Energizer and Eveready have
positioned the Group well for future trading, and so has our new exclusive
supply agreement with Black+Decker.
Facilitated by our vertically integrated platform, we were able to respond
rapidly to the recent rise in global torches sales, adding Duracell torches to
our already broad Lighting product portfolio. Another key development during
the Period was the investment into out B2B e-commerce site dedicated to our
Lighting division to help drive sales and expand our wholesale presence across
the UK and Europe.
Batteries
The Group's Batteries division remains profitable, delivering revenue growth
of 3% to £40.5 million (FY23: £39.5 million) which was driven by a mix of
inflationary price increases and volume growth.
We have a proud 36-year history operating in the batteries industry and in
that time have developed trusted relationships with the largest brands in the
market to consolidate our position as the UK's largest distributor. Whilst the
market, overall, has declined, Supreme grew its market share, driven by our
operational scale and the resilience of the discounter retailers.
Supreme supplies domestic household batteries to a broad range of UK
retailers, wholesalers and online outlets including discounters, supermarkets,
hardware stores, toy stores, convenience retail, garages and DIY stores,
whilst the Company also has an exclusive licensing agreement for JCB
batteries. The scope of our Batteries division operations means we have an
important responsibility to ensure that our packaging is as eco-friendly as
possible. Pleasingly, almost all the batteries we sell come in plastic-free
packaging and we are also focused on ensuring the carbon footprint of our
manufacturing and distribution processes are kept to a minimum.
The category continues to generate consistent, predictable, profitable, and
growing revenue for the Group, with minimal costs to serve. With sticky
customer relationships and an extensive UK distribution network, we look
forward to further capitalising on the cross-selling opportunities our
favourable reputation in the batteries space continues to create.
Outlook
Supreme forecasts FY25 to be another profitable and highly cash-generative
year for the Group. Having made a positive start in Q1, the Group is trading
comfortably in line with current market expectations(5).
Alongside an ongoing focus on accelerating organic growth and strategic
cross-selling, the Company remains committed to exploring complementary
acquisitional opportunities to further exploit our world class distribution
channels.
The Board is mindful of potential legislative changes to the UK vaping market,
but is confident in the Group's future growth prospects, and remains
encouraged by both the positive impact of the new warehouse facility and the
easing of raw material inflationary pressures. Supreme is well placed to
further improve profit margins and consolidate its status as a leading UK
provider of high-quality, in-demand, and affordable consumer goods.
Sandy Chadha
Chief Executive Officer
1 July 2024
(1)Adjusted EBITDA means operating profit before depreciation, amortisation
and Adjusted items (as defined in Note 7 of the financial statements).
Adjusted items include share-based payments charge, fair value movements on
non-hedge accounted derivatives and non-recurring items
(4)Adjusted net cash means net debt/(cash) as defined in Note 21 to these
financial statements excluding the impact of IFRS16
(5)Analyst consensus immediately before this announcement for the year ending
31 March 2025 was revenue of £242 million and Adjusted EBITDA(1) of £36.9
million
Chief Finance Officer's Review
I am delighted to present our financial results for FY24. The Group delivered
a very strong financial performance with all financial metrics delivering
positive momentum in the Period. Revenue increased by 42% to £221.2 million
and Adjusted EBITDA(1) almost doubled from £19.4 million in FY23 to £38.1
million in FY24 (+96%). What's more pleasing is that the vast majority of this
growth was achieved organically.
The Group has zero bank borrowings at the year-end, Adjusted net cash(4) of
£11.6 million (FY23: £3.2 million) and the balance sheet was notably
stronger having grown net assets by £18.0 million to £58.0 million (FY23:
£40.0 million). The net cash position is particularly notable in the context
of the seven acquisitions completed by the Group since 2021.
Impressively, revenue grew across all our categories: Batteries, Lighting,
Vaping, Sports Nutrition & Wellness, and Branded Distribution. Gross
profit as a percentage of sales also grew in all categories, highlighting the
strength of the various sourcing and manufacturing models employed across the
Group.
The table below summarises the key financial measures and their comparisons to
the prior year. The commentary in this review references alternative
performance measures which are described as 'Adjusted', meaning that in the
Directors' judgement, they need to be disclosed separately by virtue of
either: their volatility year-on-year; their one-off nature; their size, their
non-operating nature; or because the adjustment of a particular item is widely
accepted and conducted by peers (to ensure comparability with other listed
businesses). In addition, this review also references 'net debt' which is
defined as closing cash, as reported on the balance sheet, net of borrowings,
as defined in Note 21.
FY24 FY23 %
£m
£m
change
Revenue 221.2 155.6 +42%
Gross profit 63.5 40.9 +55%
Gross profit % 29% 26% +12%
Adjusted EBITDA(1) 38.1 19.4 +96%
Adjusted items (0.6) (0.8) +25%
Profit before tax 30.1 14.4 +109%
Adjusted profit before tax(2) 30.7 15.2 +102%
EPS 19.1p 10.3p +85%
Adjusted EPS(3) 20.9p 11.8p +77%
Operating cash flow 27.1 19.3 +40%
Net assets 58.0 40.0 +45%
Net (debt) (3.1) (11.8) +74%
Adjusted net cash(4) 11.6 3.2 +263%
Revenue
Revenue for FY24 was £221.2 million (FY23: £155.6 million), an increase of
42%. Almost all of this growth arose organically (£61.3 million) whilst the
remainder of the growth (£4.3 million) came from the annualization effect of
the businesses acquired in FY23. All divisions across the Group reported
growth and further details, by division, are presented below.
Revenue by division
Revenue for Batteries was £40.5 million in FY24 (FY23: £39.5 million),
growth of 3%, arising from a combination of increased volume and price. There
has been a notable change in mix year-on-year which explains the increase in
gross profit as a percentage of sales. For the first time, Energizer has
overtaken Duracell in Supreme's sales of branded batteries, an indication of
how the wider market dynamics are changing.
Revenue for Lighting was £16.5 million (FY23: £15.4 million), growth of 7%,
confirming the recovery of the category following a retailer overstocking
issue in the prior year. Whilst all listings and customers were retained
during the Period, we did report a slowdown in consumer spending in the second
half of the year which may signal an inevitable longer-term trend as
lightbulbs begin to last longer and replacement cycles slow down. Regardless,
we expect a further recovery in this category across FY25.
Revenue for Vaping was £82.8 million (FY23: £76.1 million), growth of 9%.
The businesses acquired in FY23 represented £4.3 million of the growth whilst
the organic growth of £2.4 million predominantly came from e-liquids and the
HMPPS contract. Disposable vape sales in this division of £13.7 million in
FY24 was broadly in line with the prior year. Despite the changing market
dynamics within the industry, the popularity of Supreme's 'hero' 10ml liquids
was unchallenged and we continue to report volume growth which is a key driver
in the growing levels of gross profit margin for the division. E-liquids
generate the highest levels of return across the Supreme product portfolio
owing to the Company's best-in-class manufacturing and economies of scale.
Revenue for Sports Nutrition & Wellness was £18.0 million (FY23: £16.7
million), growth of 8%. Following a period of substantial whey input price
inflation in our supply chain during FY23, the category reported a partial
reversal of this inflation in FY24 where whey prices returned to a more normal
level. The revenue growth was driven by a substantial increase in powder
revenue (increase in volume offset by a reduction in price, linked to the
deflation) offset by a decline in sales of protein snack bars. This means that
powders now account for more of the category overall than before and this
shift in mix alongside the lower whey input prices has driven the increase in
overall gross margin to 29% for the category (FY23: 16%).
In FY24, we re-named the Other Consumer Goods category to Branded Distribution
following the Company's appointment as a master distributor for ElfBar and
Lost Mary, given this category is exclusively involved in the distribution of
third-party consumer goods. The division reported revenue of £63.5 million
(FY23: £7.8 million) with the incremental revenue arising almost exclusively
from Supreme's appointment as a master distributor of ElfBar and Lost Mary
disposable vape products, two of the UK's most recognised vaping brands. Total
revenue from disposable vapes in aggregate came to £70.7 million in FY24,
representing 32% of Group revenue.
Gross profit
Gross profit for FY24 was £63.5 million (FY23: £40.9 million), growth of
55%. As a percentage of revenue, gross profit was 29% (FY23: 26%) with higher
rates of gross profit arising in all divisions. In Batteries, the increase in
gross profit margin was the result of a change in sales mix. For Lighting, it
was the reduced focus on Free On Board ("FOB") arrangements (i.e. shipments
sent directly from the Far East to customers) combined with a leaner supply
chain and better shipping rates. For Vaping, this was the result of the
consolidation of manufacturing into one single site in Manchester following
the three vaping manufacturing acquisitions undertaken in FY23, combined with
further economies of scale and manufacturing efficiencies. In Sports Nutrition
& Wellness, the increase in gross profit margin arose from a shift in
sales mix towards manufactured products (powders and vitamins) plus the
settling back down of input costs on whey generated higher rates of gross
profit as a percentage of sales. The increase in blended gross profit % for
the Group overall was in spite of the incremental ElfBar / Lost Mary revenue
reported at 15% gross margin.
Adjusted EBITDA(1)
Administrative expenses reported within Adjusted EBITDA(1) (i.e. excluding
depreciation and amortisation and adjusted items) were £25.4 million in FY24
(FY23: £21.5 million), an increase of £3.9 million:
· £2.3 million of this arose within people costs as a result of
the full year impact of the cost-of-living pay rise initiative that took place
in September 2022, the reinstatement of the CEO's salary (which he sacrificed
in FY23 to compensate for this cost-of-living initiative), new hires and
bonuses;
· £1.0 million of the increase arose within establishment costs
and related to an increase in business rates across the property portfolio and
the addition of Ark (the new warehouse and distribution centre);
· £0.2 million was a result of increased utility costs across the
Group in line with national increases; and
· a further £0.3 million related to increased professional
expenses (specifically audit and insurance), owing to the step change in the
size of the Group and industry-accepted increases.
The remainder of the increase in administrative expenses related to increases
in selling costs, aligned to the increase in top line revenue (distribution,
commission and listing fees). Despite the annualization effect of the FY23
acquisitions, there were no resulting increases in overheads in FY24 owing to
the integration of these businesses into Supreme's core platform.
As a result, Adjusted EBITDA(1) increased by £18.7 million (96%) in the year
to £38.1 million (FY23: £19.4 million).
( )
Adjusted items
( )
Adjusted items were £0.6 million compared to £0.8 million the year before.
These costs related to share-based payment charge of £1.2 million (FY23:
£1.5 million), £0.6 million credit in relation to fair value movements on
financial derivatives (FY23: £1.1 million charge), £0.7 million credit owing
to the release of over-accrued contingent consideration in respect of Liberty
Flights (FY23: £nil), and £0.7 million of integration expenses in relation
to the businesses acquired in FY24 and FY23 (FY23: £1.0 million).
The Board believes that by adjusting these items from profitability, it was
able to understand the underlying performance of the business more clearly and
further information pertaining to these items can be found in Note 7 to these
financial statements.
Finance costs
Finance costs (net of interest income) were £1.9 million in the year (FY23:
£1.0 million), split between interest arising from borrowings (net of
interest on deposits) in the year of £0.7 million, the unwind of discounting
on the deferred consideration of Liberty Flights of £0.2 million, arrangement
fees of £0.2 million and the interest relating to the lease liabilities under
IFRS16 of £0.9 million.
Taxation
Total tax charge in the year was £7.7 million (FY23: £2.5 million), giving
rise to an effective tax rate of 25% (FY23: 17%) primarily as a result of the
increase in UK corporation tax from 19% to 25%.
Profit after tax and earnings per share
Profit after tax was £22.4 million compared to £12.0 million in FY23, growth
of 87%. As a result, earnings per share increased by 85% to 19.1p (FY23:
10.3p) and on a fully diluted basis increased from 9.7p to 18.1p.
On an adjusted profit after tax basis, which we consider to be a better
measure of performance, adjusted earnings (as calculated in note 11) were
£24.5 million (FY23: £13.8 million) and adjusted earnings per share(3) was
20.9p (FY23: 11.8p).
Dividends
The Group's dividend policy is to pay an annual amount equivalent to around
25% of net profit. In January 2024, the Group paid an interim dividend of 1.5p
per share and the Directors will recommend a final dividend of 3.2p per share
at the 2024 Annual General Meeting to be held on 19 September 2024. This will
be paid on 24 September 2024 to shareholders on the register at the close of
business on 23 August 2024. The ex-dividend date will be 22 August 2024.
Cash flow
FY24 FY23
£m £m
Adjusted EBITDA(1) 38.1 19.4
Movement in working capital & other items (5.7) 1.6
Tax paid (5.3) (1.7)
Net cash from operations 27.1 19.3
Debt servicing/raising/repaying (5.0) (2.1)
Lease payments (1.2) (1.0)
Capex (5.4) (1.3)
M&A (6.1) (10.3)
Proceeds from sale of assets 0.1 4.0
Dividends net of share issues (4.3) (5.1)
Share buy back (1.0) -
Net cash flow 4.2 3.5
The Group generated £27.1 million net cash from operations in FY24 (FY23:
£19.3 million). The increase in working capital was the net impact of an
initial investment into working capital specifically in respect of the ElfBar
and Lost Mary distribution opportunity of £14.6 million, and a reduction in
working capital across the remainder of the Group via a number of working
capital initiatives. The tight management of working capital in times of
expansion and growth reflects the tenacity with which the business continues
to be managed.
£5.4 million was reported within capex and was largely in respect of the
fitout of Ark, Supreme's new 167,000 sq ft warehouse and distribution centre.
£6.1 million reported as M&A related to the acquisition of Superdragon
(reported on the last day of FY23 but paid for during the first week of FY24)
of £2.7 million and the payment of deferred and contingent consideration in
respect of Liberty Flights totalling £3.4 million. As expected, the Group
serviced its dividend and taxation obligations which totalled £9.5 million
(FY23: £6.8 million) plus a further £1.0 million outflow in respect of the
share buyback process that concluded immediately before year end resulting in
the acquisition of 828,000 shares at an average price of 121p each which were
immediately cancelled.
In respect of financing, the Group's cashflows were supported by its £35
million revolving credit facility ("RCF") and its £20 million invoice
financing facility during the Period. At its peak in H1 FY24, the Group had
drawn £16.6 million on its facilities but by year-end this was fully repaid.
In fact, the Group was entirely bank debt-free at the balance sheet date in
addition to having £11.6 million of cash resulting in an Adjusted net cash(4)
position of £11.6 million at year end (FY23: Adjusted net cash(4): £3.2
million).
At year end, the Group had immediate access to borrowing facilities of £55
million which were entirely undrawn at year end which will provide significant
liquidity to finance M&A or further organic growth in the form of working
capital.
Net debt
FY24 FY23
£m £m
Cash (11.6) (7.5)
Borrowings - 4.3
Adjusted net (cash)(4) (11.6) (3.2)
IFRS 16 lease liabilities 14.7 15.0
Net debt 3.1 11.8
Use of non-GAAP measures in the Group financial statements
Certain measures have been used to increase understanding of the Group's
Report and Accounts. These measures are not defined under IFRS and therefore
may not be directly comparable with adjusted measures presented by other
companies. The non-GAAP measures are not intended to be a substitute for or
superior to any IFRS measure of performance; however they are considered by
management to be important measures used in the business for assessing
performance. The non-GAAP measures used in this strategic review and more
widely in this Annual Report are defined in the footnotes below and set out in
Note 7 to these financial statements.
Suzanne Smith
Chief Finance Officer
1 July 2024
(1)Adjusted EBITDA means operating profit before depreciation, amortisation
and Adjusted items (as defined in Note 7 of the financial statements).
Adjusted items include share-based payments charge, fair value movements on
non-hedge accounted derivatives and non-recurring items.
(2)Adjusted Profit before tax means profit before tax and Adjusted items (as
defined in Note 7 of the financial statements) Adjusted items include
share-based payments charge, fair value movements on non-hedge accounted
derivatives and non-recurring items.
(3)Adjusted EPS means Earning per share, where Earnings are defined as profit
after tax but before amortisation of acquired intangibles and Adjusted items
(as defined in Note 7 of the financial statements). Adjusted items include
share based payments, fair value movements on non-hedge accounted derivatives
and non-recurring items.
(4)Adjusted net cash means net debt as defined in Note 21 to these financial
statements excluding the impact of IFRS16.
Consolidated Statement of Comprehensive Income
for the Year Ended 31 March 2024
Year Ended Year Ended
31 March 2024 31 March 2023
Note £'000 £'000
Revenue 4 221,249 155,612
Cost of sales 6 (157,716) (114,758)
Gross Profit 63,533 40,854
Profit on disposal of Cuts Ice trademarks 7 - 2,787
Administration expenses 6 (31,515) (28,192)
Operating profit 32,018 15,449
Adjusted EBITDA(1) 38,116 19,392
Depreciation 13 (3,772) (2,200)
Amortisation 12 (1,733) (915)
Adjusted items 7 (593) (828)
Operating profit 32,018 15,449
Finance income 9 147 25
Finance costs 9 (2,045) (1,037)
Profit before taxation 30,120 14,437
Income tax 10 (7,694) (2,469)
Profit for the year 22,426 11,968
Other comprehensive (expense)/income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (1) 101
Total other comprehensive (expense)/income (1) 101
Total comprehensive income 22,425 12,069
Earnings per share - basic 11 19.1p 10.3p
Earnings per share - diluted 11 18.1p 9.7p
Note 1: Adjusted EBITDA, which is defined as operating profit before
depreciation, amortisation and Adjusted items (as defined in Note 7) is a
non-GAAP metric used by management and is not an IFRS performance measure.
All results derive from continuing operations.
Consolidated Statement of Financial Position
as at 31 March 2024
As at As at
31 March 2024 31 March 2023
Note £'000 £'000
Non-current assets
Assets
Goodwill and other intangibles 12 13,663 15,281
Property, plant and equipment 13 21,416 20,815
Investments 14 - 7
Total non-current assets 35,079 36,103
Current assets
Inventories 16 24,434 25,606
Trade and other receivables 17 35,626 20,899
Cash and cash equivalents 18 11,631 7,536
Total current assets 71,691 54,041
Total assets 106,770 90,144
Liabilities
Current liabilities
Borrowings 21 1,268 5,026
Trade and other payables 19 27,303 26,117
Forward contract derivative 24.5 52 652
Income tax payable 5,068 2,536
Provisions 23 349 -
Total current liabilities 34,040 34,331
Net current assets 37,651 19,710
Borrowings 21 13,449 14,293
Deferred tax liability 15 854 789
Provisions 23 452 775
Total non-current liabilities 14,755 15,857
Total liabilities 48,795 50,188
Net assets 57,975 39,956
Equity
Share capital 25 11,652 11,732
Share premium 7,435 7,427
Merger reserve (22,000) (22,000)
Capital redemption reserve 83 -
Share-based payments reserve 3,967 3,043
Retained earnings 56,838 39,754
Total equity 57,975 39,956
The notes are an integral part of these financial statements.
The financial statements were approved by the Board of Directors and
authorised for issue on 1 July 2024, and were signed on its behalf by:
S Smith
Director
Registered number: 05844527
Consolidated Statement of Changes in Equity
for the Year Ended 31 March 2024
Share Capital Share Premium Merger reserve Capital redemption reserve Share-based payments reserve Retained earnings Total
equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2022 11,663 7,231 (22,000) - 2,368 33,050 32,312
Profit for the year - - - - - 11,968 11,968
Other comprehensive income - - - - - 101 101
Total comprehensive income for the year - - - - - 12,069 12,069
Transactions with shareholders:
Issue of shares (note 25) 69 196 - - - - 265
Employee share schemes - value of employee services (note 26) - - - - 1,283 - 1,283
Deferred tax on share-based payment charge (note 15) - - - - (608) - (608)
Dividends (note 25) - - - - - (5,365) (5,365)
69 196 - - 675 (5,365) (4,425)
As at 31 March 2023 11,732 7,427 (22,000) - 3,043 39,754 39,956
Profit for the year - - - - - 22,426 22,426
Other comprehensive expense - - - - - (1) (1)
Total comprehensive income for the year - - - - - 22,425 22,425
Transactions with shareholders:
Issue of shares (note 25) 3 8 - - - - 11
Share buy back (note 25) - - - - - (1,000) (1,000)
Cancellation of shares (note 25) (83) - - 83 - - -
Employee share schemes - value of employee services (note 26) - - - - 1,078 - 1,078
Deferred tax on share-based payment charge (note 15) - - - - (154) - (154)
Dividends (note 25) - - - - - (4,341) (4,341)
(80) 8 - 83 924 (5,341) (4,406)
As at 31 March 2024 11,652 7,435 (22,000) 83 3,967 56,838 57,975
Consolidated Statement of Cash Flows
for the Year Ended 31 March 2024
Year Ended Year Ended
31 March 2024 31 March 2023
Note £'000 £'000
Net cash flow from operating activities
Profit for the year 22,426 11,968
Adjustments for:
Amortisation of intangible assets 12 1,733 915
Depreciation of tangible assets 13 2,087 1,268
Depreciation of right of use assets 13 1,685 932
Finance income 9 (147) (25)
Finance costs 9 1,990 982
Amortisation of capitalised finance costs 9 55 55
Income tax expense 10 7,694 2,469
Gain on disposal of intangible fixed assets 7 - (2,787)
Loss on disposal of tangible fixed assets 169 -
Movement on forward foreign exchange contracts 24.5 (600) 1,119
Share based payments expense 26 1,226 1,460
Working capital adjustments (net of acquired on business combinations)
Impairment of investments 14 7 -
Decrease in inventories 1,172 2,920
Increase in trade and other receivables (14,727) (671)
Increase/(decrease) in trade and other payables 7,725 (27)
Increase in provisions 26 349
Taxation paid (5,306) (1,652)
Invoice discounting fees (147) -
Net cash from operations 27,068 19,275
Cash flows used in investing activities
Purchase of intangible fixed assets 12 (115) (23)
Purchase of property, plant and equipment 13 (5,322) (1,254)
Purchase of business combinations net of cash acquired 19 (2,470) (10,055)
Proceeds from sale of property, plant and equipment 115 1
Proceeds from sale of intangible fixed assets - 4,018
Payment of deferred consideration 20 (2,187) (270)
Payment of contingent consideration 20 (1,451) -
Finance income received 147 25
Net cash used in investing activities (11,283) (7,558)
Cash flows used in financing activities
Repayment of long term loans 21 - (3,984)
Repayment of related party loans 21 - (1,779)
Repayments of RCF facility 21 (9,918) (14,000)
Drawdowns of RCF facility 21 5,500 18,418
Issue of options or share capital 25 11 265
Share buy back 25 (1,000) -
Dividends paid 25 (4,341) (5,365)
Finance costs paid 21 (559) (776)
Facility fees paid 9 (115) -
Interest paid on leases 21 (139) (153)
Lease payments 21 (1,062) (834)
Net cash used in financing activities (11,623) (8,208)
Net increase in cash and cash equivalents 4,162 3,509
Cash and cash equivalents brought forward 7,536 3,926
Effects of exchange rate changes (67) 101
Cash and cash equivalents carried forward 11,631 7,536
Cash and cash equivalents 18 11,631 7,536
11,631 7,536
Notes to the Group Financial Statements
for the Year Ended 31 March 2024
1. Basis of preparation
Supreme PLC ("the Company") is a public company limited by shares, registered
in England and Wales and domiciled in the UK, with company registration number
05844527. The principal activity is the manufacture (vaping and sports
nutrition & wellness only) and wholesale distribution of batteries,
lighting, vaping, sports nutrition & wellness and branded distribution.
The registered office is 4 Beacon Road, Ashburton Park, Trafford Park,
Manchester, M17 1AF.
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined by section 434 of the Companies Act
2006.
These Group financial statements have been prepared on a going concern basis
under the historical cost convention, modified for the revaluation of certain
forward contracts derivatives; in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
The results of the year ended 31 March 2024 have been extracted from the full
accounts of the Group for that year which received an unqualified auditor's
report and which have not yet been delivered to the Registrar of Companies.
The financial information for the year ended 31 March 2023 is derived from the
statutory accounts for that year, which have been delivered to the Registrar
of Companies. The report of the auditor on those filed accounts was
unqualified. The accounts for the year ended 31 March 2024 and 2023 did not
contain a statement under S498 (1) and (4) of the Companies Act 2006. The
statutory accounts for the year ended 31 March will be posted to shareholders
at least 21 days before the Annual General Meeting and made available on our
website www.supreme.co.uk (http://www.supreme.co.uk) and on request by
contacting the Company Secretary at the Company's registered office.
The Directors have prepared this financial information on the fundamental
assumption that the Group is a going concern and will continue to trade for at
least 12 months following the date of approval of the financial information.
2. Summary of material accounting policies
The principal accounting policies adopted are set out below.
2.1 Basis of consolidation
The consolidated financial statements present the results of the Company and
its own subsidiaries as if they form a single entity. Intercompany
transactions and balances between Group companies are therefore eliminated in
full.
The Group financial statements incorporate the results of business
combinations using the acquisition method. In the Consolidated Statement of
Financial Position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are included in the
Consolidated Statement of Comprehensive Income from the date on which control
is obtained. They are deconsolidated from the date control ceases. The merger
reserve arose on a past business combination of entities that were under
common control. The merger reserve is the difference between the cost of
investment and the nominal value of the share capital acquired.
2.2 New standards, amendments and interpretations
New and amended standards and adopted by the Group
The Group acknowledges the following changes that have taken effect during
this financial year. Except for IAS 1, these amendments are either not
applicable or have only an immaterial impact on the Group:
Standards and interpretations Effective from
IAS 1 Presentation of Financial Statements (Amendment to Disclosure of 1 April 2023
Accounting Policies);
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 1 April 2023
(Amendment to the Definition of Accounting Estimates);
IAS 12 Income Taxes (Amendment to Deferred Tax related to Assets and 1 April 2023
Liabilities Arising from a Single Transaction);
IAS 12 Taxes (Amendment to International Tax Reform - Pillar Two Model Rules - 1 April 2023
effective immediately upon the issue of the amendments and retrospectively);
and
IFRS 17 Insurance Contracts. 1 April 2023
New standards and interpretations not yet adopted
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The Group is currently assessing the impact of these new accounting standards
and amendments. The Group does not expect any standards issued by the IASB,
but are yet to be effective, to have a material impact on the Group.
Standards and interpretations Effective from
IFRS 16 Leases (Amendment to Liabilities in a Sale and Leaseback); 1 April 2024
IAS 1 Presentation of Financial Statements (Amendment to Classification of 1 April 2024
Liabilities as Current or Non-current);
IAS 1 Presentation of Financial Statements (Amendment to Non-current 1 April 2024
Liabilities with Covenants); and
IFRS 7 Financial Instruments: Disclosures (Amendment to Supplier Finance 1 April 2024
Arrangements).
IAS 21 Transactions in Foreign Currencies (Amendment to Lack of 1 April 2025
Exchangeability)
IFRS 9 Financial Instruments (Amendments to the Classification and Measurement 1 April 2026
of Financial Instruments
IFRS 18 Presentation and Disclosure in Financial Statements 1 April 2027
IFRS 19 Subsidiaries without Public Accountability: Disclosures 1 April 2027
Judgements made by the Directors in the application of these accounting
policies that have a significant effect on these financial statements together
with estimates with a significant risk of material adjustment in the next year
are discussed in Note 3.
2.3 Going concern
In assessing the appropriateness of adopting the going concern basis in the
preparation of these financial statements, the Directors have prepared cash
flow forecasts and projections for the two-year period to 31 March 2026. These
forecasts and projections, which the Directors consider to be prudent, have
been further sensitised by applying general reductions to revenue and
profitability, to consider downside risk. Under both the base and sensitised
cases the Group is expected to have headroom against covenants, which are
based on interest cover and net leverage, and a sufficient level of financial
resources available through existing facilities when the future funding
requirements of the Group are compared with the level of committed available
facilities. (The applicable covenants relate to the RCF facility held by the
group, and are required to be met, even when this facility is not being
utilised.) In addition to these general sensitivities, the Directors have
specifically also considered the proposed changes to the regulatory landscape
within the vaping industry, the increased cost of borrowing and the ongoing
cost of living crisis taking place in the UK, all of which have been reflected
in this forecast.
· The Directors have performed a specific sensitivity in reference
to the upcoming ban on disposables vapes (currently scheduled for 1 April
2025) in which a scenario where all the revenue currently attributable to
disposable vapes does not transition to an alternative form of vaping has been
assessed. The sensitivity confirmed that without the sale of disposable vapes
or a likely substitute product in its place, the remaining Supreme group would
remain profitable and cash-generative and therefore this does not pose a
problem in respect of going concern.
· In addition to the specific sensitivity on the disposable vape
ban, the Directors have also performed reverse stress-testing on the cash flow
forecasts to see how far revenue would be required to decline before a banking
covenant would breach or the Group would run out of cash. This exercise
highlighted that revenue would need to fall by 47% (with the overhead base
remaining in place entirely) before a banking covenant would breach.
· Whilst the Group's debt facilities are priced at a variable rate
(SONIA + a margin) the Group's current positive leverage ratio (i.e. having no
bank borrowings with at the balance sheet date or since then), means that
Supreme's exposure to any increases in borrowing rates is limited. Should the
Group increase its level of bank borrowings during the forecast period (likely
to be triggered by M&A) then of course this increased cost of borrowing
would impact the Group (albeit expected to be offset by the incremental
earnings generated by any M&A target).
· Historically Supreme has been a net beneficiary in periods of
economic downturn, owing to the fact more than half of its revenue is derived
from the discount retail sector which typically trades buoyantly during these
periods (for prudence this has not been assumed in the forecast). The
inflationary cost increases (specifically over salary costs, energy and
transport) have been specifically factored into the cost base throughout for
the forecast period.
Based on this, the Directors are satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in preparing the
Group and Company financial statements.
2.4 Currencies
Functional and presentational currency
Items included in the Group financial statements are measured using the
currency of the primary economic environment in which the Company operates
("the functional currency") which is UK sterling (£). The Group financial
statements are presented in UK sterling.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using a standard exchange rate for a period if the rates do not fluctuate
significantly. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of comprehensive income. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not
retranslated.
Group companies
The results and financial position of foreign operations (none of which has
the currency of a hyper-inflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
· assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that statement of
financial position;
· income and expenses for each statement of comprehensive income
are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
· all resulting exchange differences are recognised in other
comprehensive income.
2.5 Revenue recognition
Revenue solely relates to the sale of goods and arises from the wholesale
distribution and online sales of batteries, lighting, vaping sports nutrition
& wellness and branded distribution.
To determine whether to recognise revenue, the Company follows the 5-step
process as set out within IFRS 15:
1. Identifying the contract with a customer.
2. Identifying the performance obligations.
3. Determining the transaction price.
4. Allocating the transaction price to the performance obligations.
5. Recognising revenue when/as performance obligation(s) are
satisfied.
Revenue is measured at transaction price, stated net of VAT, and other sales
related taxes. Rebates to customers take the form of volume discounts, which
are a type of variable consideration, and the transaction price is constrained
to reflect the rebate element. The transaction price equates to the invoice
amount less an estimate of any applicable rebates and promotional allowances
that are due to the customer. Rebate accruals are recognised under the terms
of these agreements, to reflect the expected promotional activity and our
historical experience. These accruals are reported within trade and other
payables.
Revenue is recognised at a point in time as the Company satisfies performance
obligations by transferring the promised goods to its customers as described
below. At any point in time where such obligations haven't been met but the
customer has been invoiced, revenue is deferred, as disclosed in note 19.
Variable consideration, in the form of rebates, is also recognised at the
point of transfer, however the estimate of variable consideration is
constrained at this point and released once it is highly probable there will
not be a significant reversal.
Contracts with customers take the form of customer orders. There is one
distinct performance obligation, being the distribution of products to the
customer, for which the transaction price is clearly identified. Revenue is
recognised at a point in time when the Group satisfies performance obligations
by transferring the promised goods to its customers, i.e. when control has
passed from the Group to the customer, which tends to be on receipt by the
customer. In respect of certain direct shipments control passes when an
invoice is raised, payment received, and title formally transferred to the
customer; at which point the customer has the risks and rewards of the goods.
2.6 Goodwill
The carrying value of goodwill has arisen following the acquisition of
subsidiary entities. Such goodwill is subject to an impairment review, both
annually and when there is an indication that the carrying value may be
impaired. Any impairment is recognised immediately in the Statement of
Comprehensive Income and is not reversed.
2.7 Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses.
The amortisation is charged on a straight-line bases as follows:
Domain name - 10%
Trademarks - 10%
Customer relationships - 20%
Trade names - 20%
Know how - 10%
Computer software - 20%
2.8 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any impairment losses. Cost includes the original purchase price of the
asset and the costs attributable to bringing the asset to its working
condition for its intended use. Depreciation is charged so as to write off the
costs of assets over their estimated useful lives, on a straight-line basis
starting from the month they are first used, as follows:
Land - not depreciated
Assets under construction - 0%
Plant and machinery - 25%
Fixtures and fittings - 25%
Motor vehicles - 25%
Computer equipment - 33%
Buildings - 2%
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in the Statement of Comprehensive Income.
At each reporting date, the Company reviews the carrying amounts of its
property, plant and equipment assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
2.9 Inventories
Inventories are valued using a first in, first out method and are stated at
the lower of cost and net realisable value. Cost includes expenditure incurred
in the normal course of business in bringing the products to their present
location and condition.
At the end of each reporting period inventories are assessed for impairment.
If an item of inventory is impaired, the identified inventory is reduced to
its selling price less costs to complete and sell and an impairment charge is
recognised in the income statement. Where a reversal of the impairment is
recognised the impairment charge is reversed, up to the original impairment
loss, and is recognised as a credit in the income statement.
2.10 Leases
The Company applies IFRS 16 in the Group financial statements. At inception of
a contract, the Group assesses whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for
consideration.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to restore the underlying asset, less
any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liabilities.
The lease liability is initially measured at the present value of lease
payments that were not paid at the commencement date, discounted using the
rate implicit in the lease. Where there is no rate implicit in the lease then
the Group's incremental borrowing rate is used.
The lease liability is measured at amortised cost using the effective interest
method. If there is a remeasurement of the lease liability, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is
recorded directly in profit or loss if the carrying amount of the right of use
asset is zero.
Short term leases and low value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term lease of machinery that have a lease term of 12
months or less or leases of low value assets. These lease payments are
expensed on a straight-line basis over the lease term.
2.11 Share based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to profit or loss over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each Statement of Financial Position
date so that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options granted. The
cumulative expense is not adjusted for failure to achieve a market vesting
condition.
The fair value of the award also takes into account non-vesting conditions.
These are either factors beyond the control of either party (such as a target
based on an index) or factors which are within the control of one or other of
the parties (such as the Group keeping the scheme open or the employee
maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the Statement of Comprehensive
Income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the
Statement of Comprehensive Income is charged with fair value of goods and
services received.
2.12 Segmental reporting
The Directors consider there to be one segment for reporting purposes because
although revenue is grouped within five product categories, as the directors
analyse revenue at this gross level, the directors do not analyse, monitor or
review the Groups KPIS (being adjusted EBITDA and profit before tax) by
product category. Due to this, the Group do not believe there are any IFRS 8
considerations around the requirement to report operating segments for
reporting purposes.
2.13 Adjusted items
The Company's income statement separately identifies Adjusted items. Such
items are those that in the Directors' judgement need to be disclosed
separately by virtue of either: their volatility year-on-year; their one-off
nature; their size, their non-operating nature; or because the adjustment of a
particular item is widely accepted and conducted by peers (to ensure
comparability with other listed businesses). These may include, but are not
limited to, professional fees and other costs directly related to refinancing,
acquisitions and capital transactions, fair value movements on open forward
contracts, share based payment charges, material impairments of inventories
and gains/losses on disposal of intangible assets. In determining whether an
item should be disclosed as an Adjusted item, the Directors consider
quantitative and qualitative factors such as the frequency, predictability of
occurrence and significance. This is consistent with the way financial
performance is measured by management and reported to the Board.
2.14 Financial instruments
Financial assets and financial liabilities are recognised in the Group
Statement of Financial Position when the Group becomes party to the
contractual provisions of the instrument. Financial assets are de-recognised
when the contractual rights to the cash flows from the financial asset expire
or when the contractual rights to those assets are transferred. Financial
liabilities are de-recognised when the obligation specified in the contract is
discharged, cancelled or expired.
2.15 Trade and other receivables
Trade and other receivables are initially measured at transaction price less
provisions for expected credit losses. The Group applies the IFRS 9 simplified
approach to measuring expected credit losses which uses a lifetime expected
loss allowance. This lifetime expected credit losses is used in cases where
the credit risk on other receivables has increased significantly since initial
recognition. In cases where the credit risk has not increased significantly,
the Group measures the loss allowance at an amount equal to the 12-month
expected credit loss. This assessment is performed on a collective basis
considering forward-looking information.
IFRS 9's impairment requirements use forward-looking information to recognise
expected credit losses - the 'expected credit loss (ECL) model'.
Recognition of credit losses is determined by considering a broad range of
information when assessing credit risk and measuring expected credit losses,
including past events, current conditions and reasonable and supportable
forecasts that affect the expected collectability of the future cash flows of
the instrument.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial instrument.
Credit Insurance is also in place which also mitigates the credit risk in
relation to the respective customer. This insurance is applied to most
accounts over £5,000 with exception of proforma accounts and accounts agreed
by the CEO, although some accounts are excluded from the credit insurance
having been assessed by the Board on a cost-benefit analysis - these equate
largely to the largest grocery retailers.
3. Critical accounting estimates and judgements
The preparation of the Group financial statements require management to make
judgements and estimates that affect the reported amounts of assets and
liabilities at each Statement of Financial Position date and the reported
amounts of revenue during the reporting periods. Actual results could differ
from these estimates. Information about such judgements and estimations are
contained in individual accounting policies. The key judgements and sources of
estimation uncertainty that could cause an adjustment to be required to the
carrying amount of asset or liabilities within the next accounting period are
outlined below:
Accounting estimates
3.1 Share-based payments
Estimating fair value for share-based payment transactions requires
determination of the most appropriate valuation model, which depends on the
terms and conditions of the grant. This estimate also requires determination
of the most appropriate inputs to the valuation model including the expected
life of the share option or appreciation right, volatility and dividend yield
and making assumptions about them. Options with both market and non-market
conditions are most impacted by these estimates. The share options charge is
subject to an assumption about the number of options that will vest as a
result of the expected achievement of certain non-market conditions.
Accounting judgements
3.2 Inventory obsolescence
Management applies judgement in determining whether certain inventory items
are obsolete, considering factors such as expiry dates and sales forecasts.
Based on these judgements, estimates are made regarding the recoverable value
of inventory, which could materially affect the financial statements if these
estimates are incorrect.
4. Revenue analysis
Batteries Lighting Vaping Sports nutrition & wellness Branded distribution Year Ended
31 March 2024
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 40,527 16,498 82,792 17,955 63,477 221,249
Cost of sales (34,975) (10,010) (46,742) (12,813) (54,288) (158,828)
Gross profit before foreign exchange 5,552 6,488 36,050 5,142 9,189 62,421
Foreign exchange 1,112
Gross Profit 63,533
Batteries Lighting Vaping Sports nutrition & wellness Branded distribution Year Ended
31 March 2023
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 39,533 15,426 76,098 16,748 7,807 155,612
Cost of sales (35,613) (11,301) (48,018) (14,089) (6,992) (116,013)
Gross profit before foreign exchange 3,920 4,125 28,080 2,659 815 39,599
Foreign exchange 1,255
Gross Profit 40,854
Analysis of revenue by geographical destination
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
United Kingdom 206,858 140,713
Ireland 7,354 8,645
Netherlands 3,372 1,766
France 1,007 2,428
Rest of Europe 1,123 942
Rest of the World 1,535 1,118
221,249 155,612
The above revenues are all generated from contracts with customers and are
recognised at a point in time. All assets of the Group reside in the UK except
for total net assets of £3,641,000 (2023: £3,192,000) held in Europe.
5. Operating segments
The Chief Operating Decision Maker ("CODM") has been identified as the Board
of Directors. The Board reviews the Group's Internal reporting in order to
assess the performance and allocate resources. The Board of Directors deem
the Group to be one operating segment because they do not assess performance
or allocate resources at a disaggregated level.
Information about major customers
The Group has generated revenue from individual customers that accounted for
greater than 10% of total revenue. The total revenue from each of these 3
customers (2023: 3 customers) was £33,843,000, £25,027,000 and £21,151,000
(2023: £24,938,000, £19,364,000, and £16,045,000). These revenues related
to all divisions.
6. Expenses by nature
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
The profit is stated after charging/(crediting) expenses as follows:
Cost of sales
Inventories recognised as an expense 142,833 103,129
Impairment of inventories (347) 892
Direct Labour (note 8) 5,103 3,551
Other direct cost of sales 10,127 7,186
157,716 114,758
Administrative expenses
Impairment of trade receivables 181 63
Wages and salaries (note 8) 11,085 8,794
Establishment costs 3,306 2,142
Auditor's remuneration for audit services 220 170
Selling, professional and other expenses 10,625 10,293
Adjusted items (note 7) 593 828
Depreciation of property, plant and equipment 2,087 1,268
Depreciation of right of use assets 1,685 932
Amortisation of intangible assets 1,733 915
31,515 25,405
Total cost of sales and administrative expenses 189,231 140,163
During the year, Auditor's remuneration in respect of non-audit services was
£nil (2023: £nil). During the year Auditor's remuneration in respect of the
parent company audit was £15,000 (2023: £15,000).
The group has revised the presentation of the above disclosure to enhance
clarity, allowing a clearer understanding of the nature of expenses between
cost of sales and overheads. These changes have been applied
retrospectively, and the prior year comparatives have been represented
accordingly. The revision does not affect the overall financial position or
performance of the group.
7. Adjusted items
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Fair value movements on forward contracts (600) 1,119
Share based payments charge (note 26) 1,226 1,460
Acquisition costs 703 1,036
Transaction costs (736) -
Profit on disposal of intangible fixed assets - (2,787)
593 828
Fair value movements on forward contracts
The Group typically holds 1 years' worth of USD-denominated purchases on open
forward contracts. The credit (2023: charge) in the year ended 31 March 2024
reflect the movement in the fair value of these open forward contracts at the
balance sheet date. The movement is reported each year as Adjusted due to its
volatility. The liability at 31 March 2024 is £52,000 and is reported as
'forward contract derivative' in the statement of financial position. This is
a non-cash item and is not taxable for corporation tax purposes. The resulting
tax impact is therefore £nil.
Share based payments charge
The Group operates a number of share incentive arrangements as set out in Note
26. The aggregate expense recognised in the year has been reported as an
Adjusted item in line with its treatment by other comparable businesses. The
charge is a non-cash item and was disallowable for corporation tax purposes.
The resulting tax impact is therefore £nil.
Acquisition costs
Acquisition costs related to the operational integrations that took place in
the year ended 31 March 2024 of the businesses and assets acquired in the year
ended 31 March 2023 (Liberty Flights Limited and Superdragon TCM Limited) and
in the year ended 31 March 2024 (Food IQ Limited). The integration costs
related largely to redundancy costs and fixed asset (machinery) write-off
costs that arose when the businesses' operations were transferred to
Manchester (Supreme's principal operating site).
£83,000 of these costs were reported within Accruals at year end.
Similarly, in 2023, the acquisition costs related to the operational
integration that took place following the acquisition of Cuts Ice Limited and
related largely to redundancy costs that arose when the business' operations
were transferred to Manchester. These costs were paid in the year.
Acquisition costs of this nature were treated as allowable for the purpose of
corporation tax and the corporation tax impact was £176,000 in 2024 (25%) and
£197,000 (19%) in 2023.
Transaction costs
Transaction costs related to the release of the contingent consideration
accrual that arose on the acquisition of Liberty Flights Limited. The original
estimate for contingent consideration was £2.2 million, based on the
performance of the business during the 12 months immediately after the
acquisition. Only £1.4 million was paid and the remainder was released. The
release of this accrual is not taxable for corporation tax purposes. The
resulting tax impact is therefore £nil.
Profit on disposal of intangible fixed assets
In 2023, the profit on disposal of the T-Juice brand represents the difference
between the cost of acquiring the brand (£1,231,000) and the proceeds on
disposal (£4,018,000). The disposal of the brand was deemed to be one-off in
nature and therefore reported as Adjusted.
8. Employees and Directors
Year Ended Year Ended
31 March 2024 31 March 2023
No. No.
Monthly average number of employees (including Directors):
Management and administration 104 116
Warehouse 89 70
Sales 44 46
Manufacturing 178 124
415 356
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Aggregate remuneration of staff (including Directors):
Wages and salaries 15,018 10,670
Social security costs 1,432 1,193
Other pension costs 310 482
16,760 12,345
Amounts classified as Adjusted Items 572 -
Amounts recorded as cost of sales and Admin expenses 16,188 12,345
Directors' remuneration
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Directors' emoluments 1,157 600
Social security costs 172 83
Company contributions to defined contribution pension schemes 4 3
1,333 686
The highest paid director received remuneration of £653,000 (2023:
£232,000).
The value of the Company's contributions paid to a defined contribution
pension scheme in respect of the highest paid director amounted to £1,000
(2023: £1,000).
During the year, retirement benefits were accruing to 3 directors (2023: 2) in
respect of defined contribution pension schemes.
9. Finance (income)/costs
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Finance income
Bank interest receivable (147) (25)
Finance costs
Bank interest payable 602 828
Invoice discounting fees 147 -
Unwind of discounting on deferred consideration 245 -
Facility fees 115 -
Amortisation of capitalised arrangement fees 55 55
Interest on lease liabilities 881 154
2,045 1,037
10. Taxation
Year Ended Year Ended
31 March 2024 31 March 2023
Current tax £'000 £'000
Current year - UK corporation tax 7,560 2,967
Adjustments to tax charge in respect of prior periods 175 -
Foreign tax on income 48 -
Total current tax 7,783 2,967
Deferred tax
Origination and reversal of temporary differences 350 (566)
Adjustments to tax charge in respect of prior periods (439) -
Adjustments to tax charge due to change in rates - 68
Total deferred tax (89) (498)
Total tax expense 7,694 2,469
Equity Items
Current tax - -
Deferred tax (154) (608)
Total deferred tax (154) (608)
Factors affecting the charge
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Profit before taxation 30,120 14,437
Tax at the UK corporation tax rate of 25% (2023: 19%) 7,530 2,743
Effects of expenses not deductible for tax purposes 531 123
Income not taxable for tax purposes (186) -
Adjustments to tax charge due to change in rates - 68
Adjustments to tax charge in respect of prior periods (264) -
Exercise of share options - (123)
Deferred tax on Share Based Payments 83 (118)
Enhanced Relief - (224)
Total tax expense 7,694 2,469
Factors that may affect future tax charges
In the Spring Budget 2021, the Government announced that from 1 April 2024 the
corporation tax rate will increase to 25% rather than remaining at 19% as
previously enacted. This new law was substantively enacted on 24 May 2021 and
the impact of this rate change has been considered when recognising deferred
tax in these financial statements. Where the asset or liability is expected to
unwind after 1 April 2024 the deferred tax has been recognised at 25% in these
financial statements. In the Autumn Statement in November 2022, the government
confirmed the increase in corporation tax rate to 25% from April 2024 will go
ahead.
11. Earnings per share
Basic earnings per share is calculated by dividing the net income for the year
attributable to ordinary equity holders after tax by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated with reference to the weighted
average number of shares adjusted for the impact of dilutive instruments in
issue. For the purposes of this calculation an estimate has been made for the
share price in order to calculate the number of dilutive share options.
The basic and diluted calculations are based on the following:
Statutory EPS
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Profit for the year after tax 22,426 11,968
No. No.
Weighted average number of shares for the purposes of basic earnings per share 117,237,891 116,731,311
Weighted average dilutive effect of conditional share awards 6,455,776 6,720,523
Weighted average number of shares for the purposes of diluted earnings per 123,693,667 123,451,834
share
Pence Pence
Basic earnings per share 19.1 10.3
Diluted earnings per share 18.1 9.7
Adjusted EPS
The calculation of adjusted earnings per share is based on the after tax
adjusted operating profit after adding back certain costs as detailed in the
table below. Adjusted earnings per share figures are given to exclude the
effects of depreciation, amortisation and adjusted items, all net of taxation,
and are considered to show the underlying performance of the Group.
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Adjusted earnings (see below) 24,459 13,790
No. No.
Weighted average number of shares for the purposes of basic earnings per share 117,237,891 116,731,311
Weighted average dilutive effect of conditional share awards 6,455,776 6,720,523
Weighted average number of shares for the purposes of diluted earnings per 123,693,667 123,451,834
share
Pence Pence
Adjusted basic earnings per share 20.9 11.8
Adjusted diluted earnings per share 19.8 11.2
The calculation of basic adjusted earnings per share is based on the following
data:
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Profit for the year attributable to equity shareholders 22,426 11,968
Add back/(deduct):
Amortisation of acquisition related intangible assets 1,616 874
Adjusted items 593 828
Tax effect of the above (176) 120
Adjusted earnings 24,459 13,790
12. Goodwill and other intangible assets
Domain name Trademarks Customer relationships Trade names Know how Computer software Goodwill Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 April 2022 249 1,501 760 221 - 18 1,602 4,351
Additions - - - - - 23 - 23
On acquisition 62 43 3,043 4,384 262 - 5,906 13,700
Disposals - - - (1,231) - - - (1,231)
At 31 March 2023 311 1,544 3,803 3,374 262 41 7,508 16,843
Additions - - - - - 115 - 115
At 31 March 2024 311 1,544 3,803 3,374 262 156 7,508 16,958
Accumulated amortisation
At 1 April 2022 75 166 311 88 - 7 - 647
Amortisation charged in the year 25 150 359 359 6 16 - 915
At 31 March 2023 100 316 670 447 6 23 - 1,562
Amortisation charged in the year 87 154 761 675 26 30 - 1,733
At 31 March 2024 187 470 1,431 1,122 32 53 - 3,295
Carrying amount
At 1 April 2022 174 1,335 449 133 - 11 1,602 3,704
At 31 March 2023 211 1,228 3,133 2,927 256 18 7,508 15,281
At 31 March 2024 124 1,074 2,372 2,252 230 103 7,508 13,663
The amortisation charge for the year has been included in Administrative
expenses in the Statement of Comprehensive Income.
Individually material intangible assets
The individually material intangible assets at the year end are summarised
below:
Intangible asset name Asset category Net book value at year end Remaining amortisation period Description
£'000 Years
Sci-MX trademark Trademarks 1,005 7 The Sci-MX trademark was acquired in FY22 from the administrators of Sci-MX
Nutrition Limited.
Liberty Flights customer relationships Customer relationships 1,420 3 These customer relationships were acquired in FY23 as part of the acquisition
of Liberty Flights.
Liberty Flights trade name Trade names 2,207 3 This trade name was acquired in FY23 as part of the acquisition of Liberty
Flights.
The individually material intangible assets at the prior year end are
summarised below:
Intangible asset name Asset category Net book value at year end Remaining amortisation period Description
£'000 Years
Sci-MX trademark Trademarks 1,149 8 The Sci-MX trademark was acquired in FY22 from the administrators of Sci-MX
Nutrition Limited.
Liberty Flights customer relationships Customer relationships 1,825 4 These customer relationships were acquired in FY23 as part of the acquisition
of Liberty Flights.
Liberty Flights trade name Trade names 2,838 4 This trade name was acquired in FY23 as part of the acquisition of Liberty
Flights.
Superdragon customer relationships Customer relationships 978 4 These customer relationships were acquired in FY23 as part of the acquisition
of Superdragon.
Goodwill arises on acquisitions where the fair value of the consideration
given for the business exceeds the fair value of the assets acquired and
liabilities assumed.
Following acquisition of a business, the directors identify the individual
Cash Generating Units (CGUs) acquired and, where possible, allocate the
underlying assets acquired and liabilities assumed to each of those CGUs.
In the prior year, the Board concluded that its CGUs were Supreme Imports
Limited, Vendek Limited and Liberty Flights Limited as these were the smallest
groups of assets that generated cash inflows that were largely independent of
the cash inflows from other assets. As no goodwill arose as a result of the
acquisition or subsequent performance of Vendek then Vendek was not deemed a
required CGU for the purpose of the annual test for impairment of goodwill.
Therefore, the resulting CGUs in the prior year were Supreme Imports Limited
and Liberty Flights Limited.
In the current year, owing to the hive up of Liberty Flights' operations in
Supreme Imports Limited, the Board no longer deemed that Liberty Flights was a
viable CGU as its cashflows were no longer separately identifiable.
Therefore the only remaining viable CGU for the purpose of the annual test for
impairment of goodwill was Supreme Imports.
As at As at
31 March 2024 31 March 2023
£'000 £'000
Supreme 7,508 3,364
Liberty Flights - 4,144
7,508 7,508
The key assumptions for the value in use calculations are:
· cash flows before income taxes are based on approved budgets and
prior experience and management projections for the next 3 years;
· a long term growth rate of 2.0% (2023: 2.0%) for the period
beyond which detailed budgets and forecasts do not exist; based on external
sources of macroeconomic projections for the geographies in which the entity
operates; and
· a post tax discount rate of 10.6% (2023: 10.4%) based upon risk
free rate for government bonds adjusted for a risk premium to reflect
increased risk of investing in equities and investing in the Group's specific
sector and regions.
· a pre tax discount rate of 13.6% based upon risk free rate for
government bonds adjusted for a risk premium to reflect increased risk of
investing in equities and investing in the Group's specific sector and regions
Impairment testing of goodwill is performed at least annually by reference to
value in use calculations which management consider to be in line with the
requirements of IAS 36. These calculations show no reasonably possible
scenario in which any of the goodwill balances could be impaired as at 31
March 2024 or 31 March 2023. There were no charges for impairment of goodwill
in 2024 (2023: nil).
Sensitivity to goodwill impairment
Management has applied sensitivities to the key assumptions, including
discount rates and growth rates and believes there are no reasonably possible
scenarios which would result in an impairment of goodwill.
Supreme Imports Limited Discount rate Long term growth rate
Change in value in use Change in value in use
£'000 £'000
Used in the value in use model 13.6% 2%
Value in use 246,884 246,884
1% increase 228,603 265,311
1% decrease 268,095 231,382
13. Property, plant and equipment
Buildings Plant and machinery Fixtures and Motor vehicles Computer equipment Leasehold improvements Assets under construction Right of use assets Total
£'000 £'000 fittings £'000 £'000 £'000 £'000 £'000
£'000
Cost or valuation
At 1 April 2022 - 6,139 993 287 336 - - 5,078 12,833
Additions 57 724 66 111 340 - 686 14,393 16,377
On acquisition 1,492 423 33 7 11 - - - 1,966
Disposals - - - (28) - - - - (28)
At 31 March 2023 1,549 7,286 1,092 377 687 - 686 19,471 31,148
Additions - 1,000 59 138 155 3,280 - 25 4,657
Disposals - (1,470) (845) (82) (82) - - - (2,479)
Transfers (57) - - - - 743 (686) - -
At 31 March 2024 1,492 6,816 306 433 760 4,023 - 19,496 33,326
Depreciation and impairment
At 1 April 2022 - 4,182 822 91 103 - - 2,962 8,160
Depreciation charged in the year - 949 63 51 205 - - 932 2,200
Eliminated on disposal - - - (27) - - - - (27)
At 31 March 2023 - 5,131 885 115 308 - - 3,894 10,333
Depreciation charged in the year - 1,036 70 57 269 655 - 1,685 3,772
Eliminated on disposal - (1,244) (819) (56) (76) - - - (2,195)
At 31 March 2024 - 4,923 136 116 501 655 - 5,579 11,910
Carrying amount
At 1 April 2022 - 1,957 171 196 233 - - 2,116 4.673
At 31 March 2023 1,549 2,155 207 262 379 - 686 15,577 20,815
At 31 March 2024 1,492 1,893 170 317 259 3,368 - 13,917 21,416
The depreciation charge for the year has been included in Administrative
expenses in the Statement of Comprehensive Income.
Of the additions in the financial year £5,322,000 (2023: £1,254,000) was
paid during the year including £730,000 of cash paid for additions recognised
in the prior year.
14. Investments
As at As at
31 March 2024 31 March 2023
£'000 £'000
Balance at the beginning of the year 7 7
Amounts written off (7) -
Balance at the end of the year - 7
Investments held within Provider Distribution, a company which was part of the
group until its dissolution were written off during the year as they were no
longer deemed to have a value to the group.
Audit exemption statement
Under section 479A of the Companies Act 2006, the Group is claiming exemption
from audit for the subsidiary companies listed below.
The parent undertaking, Supreme plc, guarantees all outstanding liabilities to
which the subsidiary company is subject at the end of the financial year. The
guarantee is enforceable against the parent undertaking by any person to whom
the subsidiary company is liable in respect of those liabilities.
Company number
Liberty Flights Holdings Limited 07137952
Liberty Flights Limited 07089691
15. Deferred tax
Deferred tax consists of the following temporary differences
As at As at
31 March 2024 31 March 2023
£'000 £'000
Share based payments 778 1,016
Short term temporary differences 390 -
Deferred tax asset 1,168 1,016
Excess of depreciation over taxable allowances (687) (550)
Short term temporary differences - 339
Tax losses carried forward - (104)
Fixed asset timing differences (104) -
Acquired intangible assets (1,231) (1,490)
Deferred tax liability (2,022) (1,805)
Net deferred tax liability (854) (789)
Movement in deferred tax in the year
As at As at
31 March 2024 31 March 2023
£'000 £'000
Balance at the beginning of the year (789) 1,156
Credited to profit or loss 89 498
Debited to reserves (154) (608)
Arising on business combination - (1,849)
Other - 14
Balance at the end of the year (854) (789)
The Directors consider that the deferred tax assets in respect of temporary
differences are recoverable based on the forecast future taxable profits of
the Group. All deferred tax arises within the UK.
16. Inventories
As at As at
31 March 2024 31 March 2023
£'000 £'000
Goods for resale 19,587 21,080
Raw materials 4,847 4,526
24,434 25,606
The Directors believe that the replacement value of inventories would not be
materially different than book value.
Inventories at 31 March 2024 are stated after provisions for impairment of
£1,076,000 (2023: £1,492,000).
17. Trade and other receivables
As at As at
31 March 2024 31 March
2023
£'000 £'000
Trade receivables not past due 19,352 15,748
Trade receivables past due 9,613 3,007
Provision for expected credit losses (262) (189)
Total trade receivables 28,703 18,566
Other receivables 5,377 1,507
Prepayments 1,546 826
35,626 20,899
Currency analysis
As at As at
31 March 2024 31 March
2023
£'000 £'000
Sterling 28,670 19,348
Euro 1,309 292
US Dollar 5,647 1,259
35,626 20,899
The Directors believe that the carrying value of trade and other receivables
represents their fair value. Trade and other receivables are considered past
due once they have passed their contracted due date. Trade and other
receivables are assessed for impairment based upon the expected credit loss
model.
The movement in provisions for impairment are shown below:
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Balance at the beginning of the year 189 32
Charged to the statement of comprehensive income 181 63
Arising on acquisition - 111
Utilisation of provision (108) (17)
Balance at the end of the year 262 189
The Group's customer base is predominantly made up of high-quality
organisations with a high credit rating. In order to manage credit risk, the
Directors set limits for customers based on a combination of payment history
and third-party credit references. Credit limits are reviewed on a regular
basis in conjunction with debt ageing and collection history. The maturity
analysis of trade receivables is analysed below.
Ageing of trade receivables
31 March 2024 Current 31 - 60 days 61 - 90 days 90 days + Total
Expected loss rate 0% 0% 0% 61%
Gross trade receivables 14,238 13,170 1,208 349 28,965
Loss allowance - - - (262) (262)
Net trade receivables 14,238 13,170 1,208 87 28,703
31 March 2023 Current 31 - 60 days 61 - 90 days 90 days + Total
Expected loss rate 0% 0% 8% 100%
Gross trade receivables 11,936 5,253 1,492 74 18,755
Loss allowance - - (115) (74) (189)
Net trade receivables 11,936 5,253 1,377 - 18,566
In determining the recoverability of a trade receivable, the Group considers
any change in the credit quality of the trade receivable from the date credit
was initially granted up to the reporting date, taking into account the extent
of credit insurance held on the receivable. The Group uses IFRS 9's simplified
approach to measure the loss allowance at an amount equal to lifetime expected
credit losses for trade receivables. The concentration of credit risk is
limited due to the customer base being large and unrelated. Accordingly, the
Directors believe that no further credit provision is required in excess of
the provision for impairment of receivables.
Details on the Group's credit risk management policies are shown in Note 24.
The Group does not hold any collateral as security for its trade and other
receivables.
18. Cash and cash equivalents
As at As at
31 March 31 March
2024 2023
£'000 £'000
Cash and cash equivalents 11,631 7,536
Currency analysis
As at As at
31 March 2024 31 March
2023
£'000 £'000
Sterling 10,119 7,025
Euro 1,421 453
US Dollar 91 58
11,631 7,536
19. Trade and other payables
As at As at
31 March 2024 31 March
2023
£'000 £'000
Trade payables 9,676 8,697
Accruals 10,673 5,651
Deferred income - 259
Other creditors 525 3,415
Other tax and social security 6,427 3,951
Deferred consideration (note 20) - 1,942
Contingent consideration (note 20) - 2,200
Directors loan account 2 2
27,303 26,117
Currency analysis
As at As at
31 March 2024 31 March
2023
£'000 £'000
Sterling 25,702 23,953
Euro 1,337 760
US Dollar 264 1,404
27,303 26,117
Trade payables principally consist of amounts outstanding for trade purchases
and ongoing costs. They are non-interest bearing and are normally settled on
30 to 60 day terms.
The Directors consider that the carrying value of trade and other payables
approximates their fair value. Supreme PLC has financial risk management
policies in place to ensure that all payables are paid within the credit
timeframe and no interest has been charged by any suppliers as a result of
late payment of invoices during the period.
At 31 March 2023, £2,470,000 was included within Other creditors in respect
of the Superdragon consideration. This was paid in full in the year.
20. Deferred and contingent consideration
Acquisition of Acquisition of Liberty Flights £'000 Grand
Superdragon Total
£'000 £'000
Balance at 31 March 2023
Deferred consideration 187 1,755 1,942
Contingent consideration - 2,200 2,200
Balance at 31 March 2023 187 3,955 4,142
Movements during the year
Payment of deferred consideration (187) (2,000) (2,187)
Payment of contingent consideration - (1,451) (1,451)
Unwind of discount - 245 245
Credited to the Income Statement - (749) (749)
Balance at 31 March 2024 - - -
21. Borrowings
As at As at
31 March 2024 31 March 2023
£'000 £'000
Current
Bank loans - 4,307
Lease liabilities (note 22) 1,268 719
1,268 5,026
Non-current
Lease liabilities (note 22) 13,449 14,293
13,449 14,293
Total borrowings 14,717 19,319
The earliest that the lenders of the above borrowings require repayment is as
follows:
As at As at
31 March 2024 31 March 2023
£'000 £'000
In less than one year 1,268 5,026
Between two and five years 7,095 6,980
In more than five years 6,354 7,313
14,717 19,319
These amounts when presented gross on an undiscounted basis are as follows:
As at As at
31 March 2024 31 March 2023
£'000 £'000
In less than one year 2,189 5,499
Between two and five years 6,867 7,699
In more than five years 11,725 13,065
20,781 26,263
The Group is funded by revolving credit facility ("RCF") of £25 million
provided by HSBC that is secured by way of a fixed and floating charge over
all assets with a further £10 million (Accordion) facility pre-agreed and
available on request. Interest is charged at a margin of 2.3% over SONIA for
all drawn amounts and 35% of the margin for undrawn amounts. The facility is
for 3 years and expires 31 March 2025 and HSBC have already indicated their
interest and support of Supreme to renew this facility. There are 2 principal
covenants attached to the RCF and these are tested quarterly.
Current bank facilities include an invoice discounting facility of £20
million, which is secured by an assignment of, and fixed charge over the trade
debtors of Supreme Imports Limited. The facility was not drawn down at year
end (2023: undrawn).
Therefore undrawn but committed facilities at 31 March 2024 were £35 million
for the RCF (2023: £20.7 million) and £20 million for the invoice
discounting facility (2023: £8.5 million).
Net cash disclosure
As at As at
31 March 2024 31 March 2023
£'000 £'000
Cash and cash equivalents 11,631 7,536
Total borrowings (14,717) (19,319)
Net Cash position (3,086) (11,783)
21. Borrowings
Net debt analysis
Cash flows Non-cash movements
Net debt as at 1 April 2022 Payments Drawdowns Interest payments Arising on acquisition New leases Foreign exchange adjustments Interest expense Movement on loan costs Non current to current movement Net debt as at 31 March 2023
Long term loan - current (3,984) 3,984 - - - - - - - -
Long term loan - non current - - - - - - - - - - -
RCF - non current - 14,000 (18,418) 776 - - - (883) 218 - (4,307)
Leases - current (902) 834 - 7 - (647) - (7) - (4) (719)
Leases - non current (1,294) - - 146 - (13,003) - (146) - 4 (14,293)
Amount owed to related parties - current (1,779) 1,779 - - - - - - - - -
Sub-total (7,959) 20,597 (18,418) 929 - (13,650) - (1,036) 218 - (19,319)
Cash and cash equivalents 3,926 1,643 - - 1,866 - 101 - - - 7,536
Total (4,033) 22,240 (18,418) 929 1,866 (13,650) 101 (1,036) 218 - (11,783)
Cash flows Non-cash movements
Net debt as at 1 April 2023 Payments Drawdowns Interest payments Arising on acquisition New leases Foreign exchange adjustments Interest expense Movement on loan costs Non current to current movement Net debt as at 31 March 2024
RCF - non current (4,307) 9,918 (5,500) 559 - - - (602) (68) - -
Leases - current (719) 1,062 - 76 - (7) - (76) - (1,604) (1,268)
Leases - non current (14,293) - - 63 - (18) - (805) - 1,604 (13,449)
Sub-total (19,319) 10,980 (5,500) 698 - (25) - (1,483) (68) - (14,717)
Cash and cash equivalents 7,536 4,162 - - - - (67) - - - 11,631
Total (11,783) 15,142 (5,500) 698 - (25) (67) (1,483) (68) - (3,086)
22. Leases
The group leases buildings and cars. Rental contracts are typically made for
fixed periods of 3 to 5 years. There are no judgements over the length of the
lease term for any of the Group's leases. There are no variable lease payments
in any of the Group's leases.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases of the Group, the incremental borrowing rate is used, being the
rate that the Group would have to pay to borrow the funds necessary to obtain
an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
Amounts recognised in the Statement of Financial Position
The balance sheet shows the following amounts relating to leases:
Right-of-use assets £'000
At 1 April 2022 2,116
Additions 12,656
Lease modification 1,737
Depreciation charge for the year (932)
At 31 March 2023 15,577
Additions 25
Depreciation charge for the year (1,685)
At 31 March 2024 13,917
The net book value of the right of use assets is made up as follows:
As at As at
31 March 2024 31 March 2023
£'000 £'000
Buildings 13,899 15,576
Cars 18 1
13,917 15,577
Lease liabilities As at As at
31 March 2024 31 March 2023
£'000 £'000
Maturity analysis - contractual undiscounted cash flows
Less than one year 2,189 1,192
More than one year, less than two years 2,129 2,181
More than two years, less than three years 1,715 2,121
More than three years, less than four years 1,683 1,714
More than four years, less than five years 1,340 1,683
More than five years 11,725 13,065
Total undiscounted lease liabilities at year end 20,781 21,956
Finance costs (6,064) (6,944)
Total discounted lease liabilities at year end 14,717 15,012
Lease liabilities included in the statement of financial position
Current 1,268 719
Non-current 13,449 14,293
14,717 15,012
Amounts recognised in the Consolidated Statement of Comprehensive Income
The Consolidated Statement of Comprehensive Income shows the following amounts
relating to leases:
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Depreciation charge - Buildings 1,677 925
Depreciation charge - Cars 8 7
1,685 932
Interest expense (within finance expense) 881 154
There are no restrictions or covenants imposed by leases and there have been
no sale and leaseback transactions.
Any expense for short-term and low-value leases is not material and has not
been presented.
23. Provisions
As at As at
31 March 2024 31 March 2023
£'000 £'000
Dilapidations provision related to right-of-use assets
At 1 April 775 -
Additions - 774
Unwind of discounting 26 1
At 31 March 801 775
Provisions included in the statement of financial position
Current 349 -
Non-current 452 775
801 775
24. Financial instruments
The Group is exposed to the risks that arise from its financial instruments.
The policies for managing those risks and the methods to measure them are
described in Note 2. Further quantitative information in respect of these
risks is presented below and throughout these Group financial statements.
24.1 Capital risk management
The Group's objectives when managing capital are to:
• safeguard their ability to continue as a going concern, so that
they can continue to provide returns for shareholders and benefits for other
stakeholders; and
• maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Group might adjust
the amount of dividends paid to shareholders, return capital to shareholders
or issue new shares.
The Group does not monitor capital on a formal basis. However, the Group
ensures that it operates within the requirements of its loan covenants, which
are designed to ensure that sufficient capital is maintained. These covenants
are outlined below and the Group consistently meets these requirements.
Regular reviews of financial performance and position are conducted by
management to ensure ongoing compliance with these covenants and to maintain
financial flexibility.
Loan covenants
Under the terms of the revolving credit facility, which was undrawn at the
year end (2023: £4,307,000), the Group is required to comply with the
following financial covenants at the end of each quarter:
• Interest cover - EBITDA to Net Finance Charges will not be less
than 4.0:1.
• Leverage - Total Net Debt (RCF, IF & Trade drawings less cash)
to EBITDA will not exceed 2.5:1.
The Group has complied with these covenants throughout the reporting period.
There are no indications that the entity may have difficulties complying with
the covenants in the next financial year.
24.2 Market risk
Competitive pressures remain a principal risk for the Group. The risk is
managed through focus on quality of product and service levels, coupled with
continuous development of new products to offer uniqueness to the customer.
Furthermore, the Group's focus on offering its customers a branded product
range provides some protection to its competitive position in the market.
Stock obsolescence risk is managed through closely monitoring slow moving
lines and prompt action to manage such lines through the various distribution
channels available to the Group.
In addition, the Group's operations expose it to a variety of financial risks
that include price risk, credit risk, liquidity risk, foreign currency risk
and interest rate cash flow risk. The Group has in place a risk management
programme that seeks to limit the adverse effects on the financial performance
of the Group by regularly monitoring the financial risks referred to above.
Given the size of the Group, the Directors have not delegated the
responsibility of monitoring financial risk management to a sub-committee of
the board. The policies set by the Board are implemented by the Group's
finance department.
24.3 Credit risk
The Group's sales are primarily made with credit terms of between 0 and 30
days, exposing the Group to the risk of non-payment by customers. The Group
has implemented policies that require appropriate credit checks on potential
customers before sales are made. The amount of exposure to any individual
counterparty is subject to a limit, which is reassessed regularly by the
board. In addition, the Group maintains a suitable level of credit insurance
against its debtor book. The maximum exposure to credit risk is £5,000 per
individual customer that is covered by the policy, being the insurance excess.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables.
Expected losses are based on the Group's historical credit losses, adjusted
for current and forward-looking information on macroeconomic factors affecting
the Group's customers. The Group's B2B historic credit losses have been
minimal on the back of strong credit control, in addition to the insurance
cover in place. This results in an immaterial expected credit loss being
provided for.
An analysis of past due but not impaired trade receivables is given in Note
17.
24.4 Liquidity risk management
The Group is funded by external banking facilities provided by HSBC. Within
these facilities, the Group actively maintains a mixture of long-term and
short-term debt finance that is designed to ensure the Group has sufficient
available funds for operations and planned expansions. This is monitored on a
monthly basis, including re-forecasts of the borrowings required.
24.5 Foreign currency risk management
The Group's activities expose it to the financial risks of changes in foreign
currency exchange rates. The Group's exposure to foreign currency risk is
partially hedged by virtue of invoicing a proportion of its turnover in US
Dollars. When necessary, the Group uses foreign exchange forward contracts to
further mitigate this exposure.
The following is a note of the assets and liabilities denominated at each
period end in US dollars:
As at As at
31 March 2024 31 March 2023
£'000 £'000
Trade receivables 498 -
Cash and cash equivalents 91 58
Trade payables (181) 1,154
408 1,212
The effect of a 20 percent strengthening of Pound Sterling at 31 March 2024 on
the foreign denominated financial instruments carried at that date would, all
variables held constant, have resulted in a decrease to total comprehensive
income for the year and a decrease to net assets of £68,000 (2023:
£202,000). A 20 percent weakening of the exchange rate on the same basis,
would have resulted in an increase to total comprehensive income and an
increase to net assets of £102,000 (2023: £303,000).
The following is a note of the assets and liabilities denominated at each
period end in Euros:
As at As at
31 March 2024 31 March 2023
£'000 £'000
Trade receivables 1,215 200
Cash and cash equivalents 1,421 453
Trade payables (771) (364)
1,865 289
The effect of a 20 percent strengthening of Pound Sterling at 31 March 2024 on
the foreign denominated financial instruments carried at that date would, all
variables held constant, have resulted in an increase to total comprehensive
income for the year and a decrease to net assets of £311,000 (2023: decrease
of £48,000). A 20 percent weakening of the exchange rate on the same basis,
would have resulted in a decrease to total comprehensive income and an
increase in net assets of £466,000 (2023: increase of £73,000).
Forward contracts
The Group mitigates the exchange rate risk for certain foreign currency
creditors by entering into forward currency contracts. The Group's forex
policy is to purchase forward contracts to mitigate changes in spot rates,
based on the timing of purchases to be made. Management forecast the timing of
purchases and make assumptions relating to the exchange rate at which the
Group costs its products and take out forward contracts to mitigate
fluctuations to an acceptable level. At 31 March 2024, the outstanding
contracts mature between 1 and 12 months of the year end, (2023: 1 and 10
months). At 31 March 2024 the Group was committed to buy $30,000,000 (2023:
$32,500,000) in the next financial year.
The forward currency contracts are measured at fair value using the relevant
exchange rates for GBP:USD and GBP:EUR. The fair value of the contracts at 31
March 2024 is a liability of £52,000 (2023: liability of £652,000). During
the year ended 31 March 2024, a gain of £600,000 (2023: loss of £1,119,000)
was recognised Adjusted items for changes in the fair value of the forward
foreign currency contracts.
Forward currency contracts are valued using level 2 inputs. The valuations are
calculated using the year end exchange rates for the relevant currencies which
are observable quoted values at the year-end dates. Valuations are determined
using the hypothetical derivative method which values the contracts based on
the changes in the future cashflows based on the change in value of the
underlying derivative.
24.6 Interest rate cash flow risk
The Group's interest-bearing liabilities relate to its variable rate banking
facilities. The Group has a policy of keeping the rates associated with
funding under review in order to react to any adverse changes in the
marketplace that would impact on the interest rates in place. The effect of a
1% increase in interest rates would have resulted in a decrease in net assets
of £61,000 (2023: £141,000).
24.7 Price risk
The Group's profitability is affected by price fluctuations in the sourcing of
its products. The Group continually monitors the price and availability of
materials but the costs of managing the exposure to price risk exceed any
potential benefits given the extensive range of products and suppliers. The
Directors will revisit the appropriateness of this policy should the Group's
operations change in size or nature.
24.8 Maturity of financial assets and liabilities
All of the Group's non-derivative financial liabilities and its financial
assets at the reporting date are either payable or receivable within one year,
except for borrowings as disclosed in Note 21.
24.9 Summary of financial assets and liabilities by category
The carrying amount of financial assets and liabilities recognised may also be
categorised as follows:
As at As at
31 March 2024 31 March 2023
£'000 £'000
Financial assets
Financial assets measured at amortised cost
Trade and other receivables 34,080 20,073
Cash and cash equivalents 11,631 7,536
45,711 27,609
Financial liabilities
Financial liabilities measured at amortised cost
Non-current:
Borrowings (13,449) (14,293)
Current:
Borrowings (1,268) (5,026)
Trade payables (9,676) (8,697)
Directors loan account (2) (2)
Deferred consideration - (1,942)
Contingent consideration - (2,200)
Other creditors (525) (3,415)
Accruals (10,673) (5,651)
(35,593) (41,226)
Financial liabilities measured at fair value through profit and loss
Forward contracts (52) (652)
(52) (652)
Net financial assets / (liabilities) 10,066 (14,269)
25. Share capital and reserves
Share capital and share premium
Equity instruments issued by the Company are recognised at the proceeds
received, net of direct issue costs. The excess of proceeds of a share issue
over the nominal value is presented within share premium.
Number of shares authorised and in issue
Ordinary £0.10
No. £
At 1 April 2022 116,627,074 11,662,707
Issued 688,968 68,897
At 31 March 2023 117,316,042 11,731,604
Issued 27,961 2,796
Cancelled (828,000) (82,800)
At 31 March 2024 116,516,003 11,651,600
Issued shares in the year
Date Number of shares Type of share Subscription price Share capital Share premium Total cost
3 Apr 2023 5,084 Ordinary £0.10 £0.3837 £508 £1,442 £1,950
5 Oct 2023 12,709 Ordinary £0.10 £0.3837 £1,271 £3,606 £4,877
14 Dec 2023 5,084 Ordinary £0.10 £0.3837 £508 £1,442 £1,950
27 Mar 2024 5,084 Ordinary £0.10 £0.3837 £508 £1,442 £1,950
Total 27,961 n/a n/a £2,795 £7,932 £10,727
Cancelled shares in the year
Buy back date Number of shares bought back Type of share Subscription price Total price Cancellation date Number of shares cancelled Share capital value cancelled
13 Feb 2024 75,000 Ordinary £0.10 £1.2165 £91,238 16 Feb 2024 75,000 £7,500
20 Feb 2024 140,000 Ordinary £0.10 £1,2923 £180,922 26 Feb 2024 140,000 £14,000
27 Feb 2024 57,500 Ordinary £0.10 £1.2886 £74,095 29 Feb 2024 57,500 £5,750
5 Mar 2024 250,000 Ordinary £0.10 £1.2311 £307,775 8 Mar 2024 250,000 £25,000
12 Mar 2024 170,000 Ordinary £0.10 £1.0908 £185,436 15 Mar 2024 170,000 £17,000
19 Mar 2024 90,000 Ordinary £0.10 £1.1868 £106,812 26 Mar 2024 90,000 £9,000
22 Mar 2024 45,500 Ordinary £0.10 £1.1803 £53,704 26 Mar 2024 45,500 £4,550
Total 828,000 n/a n/a £999,982 n/a 828,000 £82,800
On 29 January 2024, Supreme PLC announced a Share Buyback programme of up to
£1million. Between 16 February 2024 and 26 March 2024, 828,000 shares were
bought back by Supreme PLC and then subsequently cancelled.
Dividends
Dividends of £4,341,000 (2023: £5,365,000) were declared and paid in the
year; a final dividend in respect of 2023 of £0.022 per share (2023: £0.038
per share) and an interim dividend in respect of 2024 of £0.015 per share
(2023: £0.008 per share).
Merger reserve
The merger reserve arose on a past business combination of entities that were
under common control. The merger reserve is the difference between the cost of
investment and the nominal value of the share capital acquired.
Share-based payments reserve
The share-based payments reserve represents the cumulative impact of the
share-based payments charge.
Retained earnings
Retained earnings includes all current and prior period retained profits and
losses, including foreign currency translation differences arising from the
translation of financial statements of the Company's foreign entities.
All transactions with owners of the parent are recorded separately within
equity.
26. Share based payments
The Group operates a number of share incentive arrangements as set out below.
The Supreme plc Enterprise Management Incentive Scheme ("the EMI Scheme")
On 14 September 2018, the Group implemented an Enterprise Management Incentive
Scheme. This was granted to employees to acquire shares in the Company for a
number of ordinary shares of 10p each at the exercise price at the option of
the employee. The exercise of these options was originally subject to the
occurrence of a relevant event (a disposal or a listing) in accordance with
the EMI Scheme rules, but this condition was satisfied by the 2021 listing of
the Company. These options will expire 10 years from grant date. A second
scheme was implemented alongside the EMI scheme ('2018 unapproved scheme') for
one employee who was eligible for more options that the EMI scheme rules
allowed for. All conditions of this scheme were the same as the EMI Scheme.
These options were fairly valued upon a valuation of the entity that had been
performed by an independent expert.
2018 EMI scheme Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £0.38 622,725 £0.38 1,148,850
Lapsed £0.38 (5,084) £0.38 (30,504)
Granted - - - -
Exercised £0.38 (27,961) £0.38 (495,621)
At the end of the year £0.38 589,680 £0.38 622,725
The profit and loss expense that has been recognised in the current year in
respect of these awards is £nil (2023: £nil).
2018 unapproved scheme Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £0.38 193,347 £0.38 386,694
Lapsed - - - -
Granted - - - -
Exercised - - £0.38 (193,347)
At the end of the year £0.38 193,347 £0.38 193,347
The profit and loss expense that has been recognised in the current year in
respect of these awards is £nil (2023: £94,000).
The Supreme plc Sharesave Scheme 2021 ("the SAYE Scheme")
The Company established the SAYE Scheme on 26 January 2021. The SAYE Scheme is
open to all employees who have achieved the qualifying length of service at
the proposed date of grant (initially set at 3 months). Under the SAYE Scheme,
an individual who wishes to accept an invitation to apply form options to be
granted to him or her must take out a 3 or 5 year savings contract with an
approved savings body selected by the Company. The
individual makes a fixed monthly contribution over the life of the savings
contract and on maturity receives a tax-free bonus. The monthly contribution
can be a minimum of £10 and a maximum of £500.
The price at which options may be exercised will be set by the Directors at
the date of grant and may be at a discount of up to a maximum of 20 per cent.
against the market value at the date of grant of the Shares over which they
are granted. The Option will generally be exercisable by the holder within
six-month period after the bonus becomes payable on his or her relevant
savings contract.
All employees of the Group (including executive directors) at 3 March
2021 were invited to participate in the SAYE Scheme. Employees were invited
to subscribe for options over the Company's ordinary shares of 10p each with
an exercise price of 152p, which represents a 20% discount to the closing
middle market price of 190p per Share ("Options") on 2 March 2021, being the
trading day before the invitation for employees to participate was made. Other
than in the case of a takeover or demerger or similar event, an option will
generally be exercisable by the holder in relation to the SAYE Scheme within
the 6-month period after the bonus becomes payable on his or her relevant
savings contract. Any option not so exercised will lapse. There are no
conditions of exercise in relation to options granted under the SAYE Scheme.
2021 SAYE scheme Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £1.52 195,167 £1.52 354,078
Lapsed £1.52 (47,387) £1.52 (158,911)
Granted - - - -
Exercised - - - -
At the end of the year £1.52 147,780 £1.52 195,167
The profit and loss expense that has been recognised in the current year in
respect of these awards is £34,000 (2023: £43,000)
The Supreme plc Company Share Option Plan 2021 ("the CSOP Scheme")
The Company established the CSOP Scheme on 26 January 2021. Grants under the
CSOP Scheme may be made by the Company as subscription Options or, with the
consent of the Remuneration Committee, by an existing shareholder over shares
already issued.
Under the CSOP Scheme certain eligible employees have been granted options to
subscribe for ordinary shares in the Company of 10p each with an exercise
price of 174 pence per ordinary share equal to the closing middle market
price on 15 February 2021. The options were granted on 16 February 2021 and
may be exercisable by the holder at any time between the third and tenth
anniversaries of the date of the grant. Upon exercise, the relevant Shares
will be allotted. A number of employees have been granted additional options
on the same basis under the Unapproved Scheme detailed below to the extent
that the total number of options granted to them exceeded the maximum number
permitted to be granted under the CSOP Scheme by HMRC rules.
23 employees were granted options under the CSOP over a total of 206,886
shares and 4 employees have been granted options under the Unapproved Scheme
over a total of 94,825 Shares, being in aggregate 301,711 shares. By 31 March
2024, a total of 97,697 options had lapsed and 204,014 remained under option.
Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
2021 CSOP
At the start of the year £1.74 181,026 £1.74 201,140
Lapsed £1.74 (31,608) £1.74 (20,114)
Granted - - - -
Exercised - - - -
At the end of the year £1.74 149,418 £1.74 181,026
2021 unapproved scheme Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £1.74 54,596 £1.74 94,825
Lapsed - - £1.74 (40,229)
Granted - - - -
Exercised - - - -
At the end of the year £1.74 54,596 £1.74 54,596
The profit and loss expense that has been recognised in the current year in
respect of these awards is a credit of £2,600 (2023: £57,000).
The Supreme plc Unapproved Share Option Scheme 2021 ("the Unapproved Scheme")
The Company established the Unapproved Scheme on 26 January 2021. Grants under
the CSOP Scheme may be made by the Company as subscription Options or, with
the consent of the Remuneration Committee, by an existing shareholder over
shares already issued.
As described in the Directors' Remuneration Report, on 9 March 2021 the
Company awarded the following options to the executive directors under the
Unapproved Scheme.
Options to subscribe for a total of 5,825,000 Shares at nominal value were
granted to the CEO in two equal tranches. Each tranche of options will be
subject to a performance condition which must be wholly satisfied for the
relevant option to be exercisable. The performance condition for the first
tranche of options is that total shareholder return per Share ("TSR") from
Admission until the third anniversary of Admission is at least 100 per cent.
of the placing price of 134 pence as at Admission (the "Placing Price"). The
performance condition for the second tranche of options is that the TSR from
Admission until the fifth anniversary of Admission is at least 200 per cent.
of the Placing Price.
Options to subscribe for up to 111,940 Shares at nominal value were granted to
the CFO in the year ended 31 March 2022. The options are subject to a
performance condition requiring an average annual TSR of 7.5 per cent. to
become exercisable in part and an annual average TSR of 10 per cent. to become
fully exercisable, in each case measured over a period of 3 years from
Admission as against the Placing Price.
Options to subscribe for a further 174,650 shares at nominal value were
granted to the CFO during the year ended 31 March 2023. These options are
subject to performance conditions. 50% of the options require an average
annual TSR of 7.5% to become exercisable in part and an annual average of TSR
of 10% to become fully exercisable measured over a 3-year period. The
remaining 50% of options are linked to an EPS performance target where a
threshold of 33.7p by the end of a 3-year period is required in order for the
options to become exercisable and 41.1p in order for the options to be fully
exercisable.
Options to subscribe for a further 157,516 shares at nominal value were
granted to the CFO during the year ended 31 March 2024. These options are
subject to performance conditions. 50% of the options require an average
annual TSR of 7.5% to become exercisable in part and an annual average of TSR
of 10% to become fully exercisable measured over a 3-year period. The
remaining 50% of options are linked to an EPS performance target where a
threshold of 36.0p by the end of a 3-year period is required in order for the
options to become exercisable and 44.0p in order for the options to be fully
exercisable.
2021 3-year CEO award Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £0.00 2,912,500 £0.00 2,912,500
Lapsed £0.00 (2,912,500) - -
Granted - - - -
Exercised - - - -
At the end of the year - - £0.00 2,912,500
2021 5-year CEO award Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £0.00 2,912,500 £0.00 2,912,500
Lapsed - - - -
Granted - - - -
Exercised - - - -
At the end of the year £0.00 2,912,500 £0.00 2,912,500
2021 CFO award Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £0.00 111,940 £0.00 111,940
Lapsed £0.00 (111,940) - -
Granted - - - -
Exercised - - - -
At the end of the year - - £0.00 111,940
2022 Senior management awards (TSR) Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £0.00 87,325 - -
Lapsed - - £0.00 (24,950)
Granted - - £0.00 112,275
Exercised - - - -
At the end of the year £0.00 87,325 £0.00 87,325
2022 Senior management awards (EPS) Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year £0.00 87,325 - -
Lapsed - - £0.00 (24,950)
Granted - - £0.00 112,275
Exercised - - - -
At the end of the year £0.00 87,325 £0.00 87,325
2023 Senior management £nil cost awards (TSR) Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year - - - -
Lapsed - - - -
Granted £0.00 108,011 - -
Exercised - - - -
At the end of the year £0.00 108,011 - -
2023 Senior management £nil cost awards (EPS) Weighted average exercise price 2024 £ 2024 Weighted average exercise price 2023 £ 2023
No.
No.
At the start of the year - - - -
Lapsed - - - -
Granted £0.00 108,011 - -
Exercised - - - -
At the end of the year £0.00 108,011 - -
The profit and loss expense that has been recognised in the current year in
respect of the Unapproved Scheme is £1,046,000 (2023: £1,309,000).
The vesting of most of these awards is subject to the Group achieving certain
performance targets under the Unapproved Scheme, measured over a three or five
year period, as set out in the Remuneration Report. The options will vest
depending on achievement of the Group's absolute total shareholder return
("TSR") as follows:
The awards under the CSOP Scheme and Unapproved Scheme to employees other than
as noted above are not subject to performance conditions and vest subject to
continued employment only.
In respect of the CFO and CFO awards, the fair value at grant date is
independently determined using a Monte Carlo simulation model which calculates
a fair value based on a large number of randomly generated projections of the
Company's future share prices. In respect of the CSOP and Unapproved Schemes,
the fair value at grant date has been determined using a Black-Scholes model
that takes into account the exercise price, the term of the option, the share
price at grant date and expected price volatility of the underlying share, and
the risk-free interest rate for the term of the option as shown overleaf:
26. Share based payments
Grant date Share price at grant date (pence) Exercise price (pence) Expected volatility (%) Projection period (yrs) Expected lift (yrs) Expected dividend yield (%) Risk free interest rate (%) Fair value per award (pence)
2018 unapproved schemes 4 Jan 2021 134p 38.38p 45% 2.65 3 5.94% -0.09% 71p
2021 CSOP 16 Feb 21 176p 174p 45% n/a 3 4.10% 0.34% 50p
2021 unapproved schemes 16 Feb 21 176p 174p 45% n/a 3 4.10% 0.34% 50p
2021 3 year CEO award 9 Mar 21 185p nil 45% 2.89 3 3.90% 0.12% 74p
2021 5 year CEO award 9 Mar 21 185p nil 45% 0.89 5 3.90% 0.31% 59p
2021 CFO 9 Mar 21 185p nil 45% 2.89 3 3.90% 0.12% 109p
2021 SAYE 18 Mar 21 190p 154p 55% 3.16 3 3.79% 0.14% 59p
2022 Senior management £nil cost awards (TSR) 5 Aug 21 101p 10p 55% 2.65 3 5.94% 1.92% 31p
2022 Senior management £nil cost awards (EPS) 5 Aug 21 101p 10p 55% n/a 3 5.94% 1.92% 75p
2023 Senior management £nil cost awards (TSR) 30 Nov 23 124p 10p 53% 2.33 3 2.98% 4.30% 79p
2023 Senior management £nil cost awards (EPS) 30 Nov 23 124p 10p 53% n/a 3 2.98% 4.30% 105p
The expected volatility has been estimated based upon the historical
volatility of the FTSE AIM Retailers and Personal & Household goods sub
sectors.
No awards are exercisable at the end of the year. The charge for share-based
payments in the year was £1,226,000 (2023: £1,460,000) which is included
within Adjusted items. Of this, £148,000 (2023 £177,000) related to
Employers National Insurance Contributions and £1,078,000 (2023: £1,283,000)
related to the share-based payments charge.
27. Ultimate controlling party
The Directors consider the ultimate controlling party to be S Chadha and his
concert party.
28. Other financial commitments
See note 24.5 for details of the financial commitments under US dollar forward
exchange contracts.
29. Related party transactions
29.1 Remuneration of key personnel
Remuneration of key management personnel, considered to be the Directors of
the Company and members of the senior management team is as follows:
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Short-term employee benefits 1,793 1,152
Social security costs 254 159
Employee share schemes 1,184 1,405
Post-employment benefits 9 8
Total compensation 3,240 2,724
29.2 Transactions and balances with key personnel
As at As at
31 March 2024 31 March 2023
£'000 £'000
Loan balances with Directors:
Balance outstanding from director (2) (2)
29.3 Transactions and balances with related companies and businesses
Year Ended Year Ended
31 March 2024 31 March 2023
£'000 £'000
Transactions with related companies:
Rent paid to SC8 Limited 365 -
Rent paid to Chadha Properties Limited - 180
On 30 March 2023 the landlord of Beacon Road, Supreme's principal operating
site, changed from Chadha Properties Limited to SC8 Limited (formerly Supreme
8 Limited), both of which are related parties. SC8 Limited is owned entirely
by Sandy Chadha, a director of Supreme PLC. On 5 May 2023 a new lease was
signed between SC8 Limited and Supreme Imports Ltd for a term of 5 years from
16 March 2023. Rent to be paid to SC8 Limited in respect of Beacon Road will
be £374,000 per annum (plus VAT) and will continue to be disclosed as a
transaction with related parties.
There are no year end balances due to any related company.
The above companies are related due to common control and Directors.
30. Acquisition of assets of Food IQ Limited
No acquisitions took place in the year that met the definition of a business
combination under IFRS 3. The business did however acquire the plant and
machinery of FoodIQ UK Holdings Limited ("Food IQ"), a protein manufacturer,
for consideration of £175,000. Owing to the lack of operational employees,
active customer contracts or intellectual property acquired as part of the
acquisition the assets acquired did not constitute a "business" under IFRS 3
and therefore this was not deemed to be a business combination. The acquired
assets are reported within additions within note 13.
31. Post balance date events
On 21 June 2024, Supreme acquired the entire share capital of Acorn Topco
Limited, the parent company of Clearly Drinks Limited, a long-established and
well-known UK manufacturer and brand owners of specialised canned and
bottled-at-source spring water and soft drinks, for a net consideration of
£15 million. Given the proximity of the acquisition to the signing of these
financial statements, the purchase price allocation exercise had not been
finalised and is therefore not disclosed as part of these financial
statements.
Company Statement of Financial Position
as at 31 March 2024
As at As at
31 March 2024 31 March 2023
Note £'000 £'000
Fixed assets
Investments 6 26,150 26,112
26,150 26,112
Current assets
Debtors 7 10,599 10,962
Cash at bank and in hand 3 4
10,602 10,966
Creditors: amounts falling due within one year 8 (768) (620)
Net current assets 9,834 10,346
Total assets less current liabilities 35,984 36,458
Net assets 35,984 36,458
Capital and reserves
Share capital 9 11,652 11,732
Share premium 9 7,435 7,427
Capital redemption reserve 83
Share-based payments reserve 3,948 2,729
Retained earnings 12,866 14,570
Total Equity 35,984 36,458
The Company has taken advantage of the exemption permitted by Section 408 of
the Companies Act 2006 not to produce its own profit and loss account. The
profit for the year dealt within the financial statements of the Company was
£3,637,000 (2023: £4,195,000).
The notes are an integral part of these Company financial statements.
The Company financial statements were approved by the Board of Directors on 1
July 2024 and were signed on its behalf by:
S Smith
Director
Registered number: 05844527
Company Statement of Changes in Equity
for the Year Ended 31 March 2024
Share Capital Share premium Capital redemption reserve Share-based payments reserve Retained earnings Total
equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2022 11,663 7,231 - 2,066 15,740 36,700
Profit for the year - - - - 4,195 4,195
Total comprehensive income for the year - - - - 4,195 4,195
Transactions with shareholders:
Issue of shares (note 9) 69 196 - - - 265
Employee share schemes - value of employee services (note 11) - - - 1,271 - 1,271
Deferred tax on share-based payment charge (note 5) - - - (608) - (608)
Dividends (note 9) - - - - (5,365) (5,365)
Total transactions with owners, recognised in equity 69 196 - 663 (5,365) (4,437)
As at 31 March 2023 11,732 7,427 - 2,729 14,570 36,458
Profit for the year - - - - 3,637 3,637
Total comprehensive income for the year - - - - 3,637 3,637
Transactions with shareholders:
Issue of shares (note 9) 3 8 - - - 11
Share buy back (note 9) - - - - (1,000) (1,000)
Cancellation of shares (note 9) (83) - 83 - - -
Employee share schemes - value of employee services (note 11) - - - 1,078 - 1,078
Deferred tax on share-based payment charge (note 5) - - - 141 - 141
Dividends (note 9) - - - - (4,341) (4,341)
Total transactions with owners, recognised in equity (80) 8 83 1,219 (5,341) (4,111)
As at 31 March 2024 11,652 7,435 83 3,948 12,866 35,984
The notes form part of these Company financial statements.
1. General Information
Supreme PLC ("the Company") is a public company, limited by shares, registered
in England and Wales and domiciled in the UK, with company registration number
05844527. The principal activity is that of a holding company. The registered
office is 4 Beacon Road, Ashburton Park, Trafford Park, Manchester, M17 1AF.
2. Summary of material accounting policies
2.1 Reporting framework
The separate financial statements of the Company have been prepared in
accordance with Financial Reporting Standard 101, "Reduced Disclosure
Framework" ("FRS 101"), on the going concern basis under the historical cost
convention, and in accordance with the Companies Act 2006 as applicable to
companies reporting under FRS 101.
The financial information is presented in sterling and has been rounded to the
nearest thousand (£'000).
The principal accounting policies, which have been applied consistently to all
the years presented, are set out below.
2.2 Financial Reporting Standard 101 - reduced disclosure exemptions
The following exemptions from the requirements in IFRS have been applied in
the preparation of these financial statements:
· The requirement of IFRS 1, 'First-time adoption of International
Financial Reporting Standards', to present a statement of financial position
at the date of transition.
· IFRS 7, "Financial Instruments: Disclosures".
· Paragraphs 91 to 99 of IFRS 13, "Fair value measurement"
(disclosure of valuation techniques and inputs used for fair value
measurements of assets and liabilities).
· Paragraph 38 of IAS 1, "Presentation of financial statements" -
comparative information requirements in respect of:
i. Paragraph 79(a)(iv) of IAS 1;
ii. Paragraph 73 (e) of IAS 16, "Property, plant and equipment"; and
iii. Paragraph 118 (e) of IAS 38, "Intangible assets" (reconciliations
between the carrying amount at the beginning and end of the period).
· The following paragraphs of IAS 1, "Presentation of financial
statements":
iv. 10(d) (statement of cash flows);
v. 16 (statement of compliance with all IFRS);
vi. 38A (requirement of minimum of two primary statements, including
cash flow statements);
vii. 38B-D (additional comparative information);
viii. 111 (statement of cash flows information); and
ix. 134-136 (capital management disclosures).
· IAS 7, "Statement of cash flows".
· Paragraphs 30 and 31 of IAS 8, "Accounting policies, changes in
accounting estimates and errors" (requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but
is not yet effective).
· Paragraph 17 of IAS 24, "Related party disclosures" (key
management compensation).
· The requirements in IAS 24, "Related party disclosures", to
disclose the related party transactions entered into between two or more
members of a Group.
· Paragraphs 130(f)(ii)(iii), 134(d)-(f) and 135(c)-(e) of IAS 36,
"Impairment of assets".
· Paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and
129 and the second sentence of paragraph 110 of IFRS 15.
This information is included in the consolidated financial statements found
earlier in this report.
2.3 Company profit and loss account
The Company has not presented its own profit and loss account as permitted by
Section 408 of the Companies Act 2006. The Company's profit after taxation for
the period was £3,637,000 (2023: £4,195,000). There are no material
differences between the loss after taxation in the current period and its
historical cost equivalent. Accordingly, no note of historical cost profits
and losses has been presented.
2.4 Going concern
In assessing the appropriateness of adopting the going concern basis in the
preparation of these financial statements, the Directors have prepared cash
flow forecasts and projections for the two-year period to 31 March 2026. These
forecasts and projections, which the Directors consider to be prudent, have
been further sensitised by applying general reductions to revenue and
profitability, to consider downside risk. Under both the base and sensitised
cases the Group is expected to have headroom against covenants, which are
based on interest cover and net leverage, and a sufficient level of financial
resources available through existing facilities when the future funding
requirements of the Group are compared with the level of committed available
facilities. In addition to these general sensitivities, the Directors have
specifically also considered the proposed changes to the regulatory landscape
within the vaping industry, the increased cost of borrowing and the ongoing
cost of living crisis taking place in the UK, all of which have been reflected
in this forecast.
· The Directors have performed a specific sensitivity in reference
to the upcoming ban on disposables vapes (currently scheduled for 1 April
2025) in which a scenario where all the revenue currently attributable to
disposable vapes does not transition to an alternative form of vaping has been
assessed. The sensitivity confirmed that without the sale of disposable vapes
or a likely substitute product in its place, the remaining Supreme group would
remain profitable and cash-generative and therefore this does not pose a
problem in respect of going concern.
· In addition to the specific sensitivity on the disposable vape
ban, the Directors have also performed reverse stress-testing on the cash flow
forecasts to see how far revenue would be required to decline before a banking
covenant would breach or the Group would run out of cash. This exercise
highlighted that revenue would need to fall by 47% (with the overhead base
remaining in place entirely) before a banking covenant would breach.
· Whilst the Group's debt facilities are priced at a variable rate
(SONIA + a margin) the Group's current positive leverage ratio (i.e. having no
bank borrowings with at the balance sheet date or since then), means that
Supreme's exposure to any increases in borrowing rates is limited. Should the
Group increase its level of bank borrowings during the forecast period (likely
to be triggered by M&A) then of course this increased cost of borrowing
would impact the Group (albeit expected to be offset by the incremental
earnings generated by any M&A target).
· Historically Supreme has been a net beneficiary in periods of
economic downturn, owing to the fact more than half of its revenue is derived
from the discount retail sector which typically trades buoyantly during these
periods (for prudence this has not been assumed in the forecast). The
inflationary cost increases (specifically over salary costs, energy and
transport) have been specifically factored into the cost base throughout for
the forecast period.
Based on this, the Directors are satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in preparing the
Group and Company financial statements.
2.5 Financial instruments
Financial assets and financial liabilities are recognised in the Company's
Statement of Financial Position when the Company becomes party to the
contractual provisions of the instrument. Financial assets are de-recognised
when the contractual rights to the cash flows from the financial asset expire
or when the contractual rights to those assets are transferred. Financial
liabilities are de-recognised when the obligation specified in the contract is
discharged, cancelled or expired.
2.6 Share-based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to profit or loss over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each Statement of Financial Position
date so that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options granted. The
cumulative expense is not adjusted for failure to achieve a market vesting
condition.
The fair value of the award also takes into account non-vesting conditions.
These are either factors beyond the control of either party (such as a target
based on an index) or factors which are within the control of one or other of
the parties (such as the Group keeping the scheme open or the employee
maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the Statement of Comprehensive
Income over the remaining vesting period. Where equity instruments are granted
to persons other than employees, the Statement of Comprehensive Income is
charged with fair value of goods and services received. The value of the
awards made to the employees of the Company's subsidiaries are treated as an
increase in the cost of investment in the subsidiary, with the credit taken to
the share-based payments reserve.
3. Critical accounting estimates and judgements
In the preparation of the Company financial statements, the Directors, in
applying the accounting policies of the Company, make some judgements and
estimates that effect the reported amounts in the financial statements. The
following are the areas requiring the use of judgement and estimates that may
significantly impact the financial statements.
Accounting estimates
Information about estimates and assumptions that may have the most significant
effect on recognition and measurement of assets, liabilities, income and
expenses is provided below. Actual results may be substantially different.
3.1 Non-current asset impairment
The carrying value of the Company's investments in subsidiaries was
£26,150,000 at 31 March 2024. The Directors have performed an impairment
review by comparing the carrying value to the higher of the value-in-use and
fair value less costs to sell of the underlying assets. The value-in-use
calculations require the use of estimates in calculating the future cash
forecasts based upon management judgement. Future events could cause the
assumptions to change, therefore this could have an adverse effect on the
future results of the Company. The fair value less costs to sell calculations
include an element of judgement.
The estimates used in the impairment calculation are set out in Note 12 to the
Group financial statements.
Accounting judgements
Judgements in applying accounting policies and key sources of estimation
uncertainty.
The following are the areas requiring the use of judgement that may
significantly impact the Company financial statements:
3.2 Non-current asset impairment
The calculation of fair value less costs to sell is based upon management's
judgement by reference to the Group's market capitalisation. Taking into
account movements in the share price the Directors consider there to be no
reasonably possible scenario in which the asset would be impaired. No
reasonable change in inputs would result in impairment.
4. Remuneration of Directors and auditors
Details of Directors' remuneration are shown in the Directors' Remuneration
Report in note 8 of the Group financial statements. Details of auditors'
remuneration are shown in note 6 of the Group financial statements. The
Company has no employees.
5. Deferred tax
Deferred tax consists of the following temporary differences
As at As at
31 March 2024 31 March 2023
£'000 £'000
Share based payments 607 640
607 640
Movement in deferred tax in the year
As at As at
31 March 2024 31 March 2023
£'000 £'000
Balance at the beginning of the year 640 759
(Debited)/credited to profit or loss (174) 489
Credited/(debited) to reserves 141 (608)
Balance at the end of the year 607 640
6. Investments
As at As at
31 March 2024 31 March 2023
£'000 £'000
Balance at the beginning of the year 26,112 25,979
Capital Contribution 38 133
Balance at the end of the year 26,150 26,112
At 31 March 2024, the Company directly owned 100% of the ordinary share
capital of the following subsidiaries, which are incorporated in England and
Wales unless stated:
Subsidiary Registered address Principal activity
Supreme Imports Limited 4 Beacon Road, Ashburton Park, Trafford Park, Manchester M17 1AF Distribution of consumer goods
Provider Distribution Limited Unit 1 Rosewood Park, St James Road, Blackburn, Lancashire BB1 8ET Distribution of consumer goods
At 31 March 2024, the Company indirectly owned 100% of the ordinary share
capital of the following subsidiaries, which are incorporated in England and
Wales unless stated:
Subsidiary Registered address Principal activity
VN Labs Limited 4 Beacon Road, Ashburton Park, Trafford Park, Manchester M17 1AF Distribution of consumer goods
Battery Force Limited Dormant
Powerquick Limited Holding company
Supreme 88 Limited Holding company
Supreme Nominees Limited Holding of shares as nominee
Holding Esser Affairs B.V. Vanadiumweg 13, 3812 PX, Armersfoort, Netherlands Holding company
AGP Trading B.V. Distribution of consumer goods
Vendek Limited Unit C5, South City Business Park, Whitestown Way, Tallaght, Dublin 24, D24 Distribution of consumer goods
A993
Liberty Flights Holdings Limited 4 Beacon Road, Trafford Park, Manchester, England, M17 1AF Holding company
Liberty Flights Limited Distribution of consumer goods
The Directors believe that the carrying value of the investments is supported
by their underlying net assets.
7. Debtors
Amounts Held in Current Assets As at As at
31 March 2024 31 March 2023
£'000 £'000
Amounts owed by Group undertakings 9,992 10,322
Deferred Tax (note 5) 607 640
10,599 10,962
The Directors believe that the carrying value of trade and other receivables
represents their fair value. In determining the recoverability of trade
receivables, the Company considers any change in the credit quality of the
receivable from the date credit was granted up to the reporting date.
All the amounts owed by Group undertakings shown above are repayable on
demand. Historically, there have not been any incidents of credit losses on
intercompany balances.
The deferred tax asset of £607,000 (2023: £640,000) falls due in more than
one year.
8. Creditors: amounts falling due within one year
As at As at
31 March 2024 31 March 2023
£'000 £'000
Amounts owed to Group undertakings 300 -
Amounts owed to related parties - 300
Other tax and social security 468 320
768 620
Amounts owed to Group undertakings are interest free and repayable on demand.
Amounts owed to related parties accrue interest at 3% and are repayable on
demand.
9. Share capital and reserves
Details of movements in share capital and reserves are set out in Note 25 to
the Group financial statements.
10. Related party transactions
The Company has taken advantage of the exemption included in IAS 24 'Related
Party Disclosures' not to disclose details of transactions with Group
undertakings, on the grounds that it is the parent company of a Group whose
financial statements are publicly available.
Directors' transactions
Details of the Directors' interests in the ordinary share capital of the
Company are provided in the Directors' Remuneration Report.
11. Share based payments
The Company operates a number of share option arrangements for key executives
and employees, further details of which can be found in note 26 to the Group
financial statements. Further details of the arrangements for senior
executives can be found in the Directors' Remuneration Report in the Group
financial statements.
The Company recognised total expenses of £1,184,000 in respect of the
equity-settled share-based payment transactions in the year ended 31 March
2024 (2023: £1,271,000). This included £144,000 of Employers National
Insurance contributions (2023: £157,000). The additional charge to equity of
£38,000 reflects the options granted to employees of Supreme Imports Ltd and
corresponds to the increase in the investment in the subsidiary as shown in
note 6.
12. Post balance date events
On 21 June 2024 Supreme Imports Limited, a 100% owned subsidiary of the
Company acquired the entire share capital of Acorn Topco Limited, the parent
company of Clearly Drinks Limited. Further details of this can be found in
note 31 to the Group financial statements.
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