REG - Supreme PLC - Half-year Results
26/11/2024 07:00
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RNS Number : 5920N Supreme PLC 26 November 2024
26 November 2024
Supreme plc
("Supreme," the "Company" or the "Group")
Unaudited Results for the Half Year Ended 30 September 2024
- Revenue up 8% and Adjusted EBITDA(1) up 22%
- New 'soft drinks' product vertical, increasing diversification
- Business remains bank-debt free with the interim dividend up 20%
to 1.8p per share
- Results for FY 2025 expected to be ahead of market expectations
with an Adjusted EBITDA(1) upgrade to at least £40 million(5)
Supreme (AIM:SUP), a leading manufacturer, distributor and brand owner of
fast-moving consumer products, announces its unaudited results for the
six-month period ended 30 September 2024 ("H1 2025" or the "Period").
Financial Highlights
· Revenue growth of 8% to £113.0 million (H1 2024: 105.1 million),
underpinned by growth in the core business and revenue from the acquisition of
Clearly Drinks Limited ("Clearly Drinks")
· Adjusted EBITDA(1) up 22% to £18.5 million (H1 2024: £15.2
million), driven by higher gross margins in all categories and a continued
tight control on overheads.
· Adjusted pre-tax profit up 25% to £14.7 million (H1 2024: £11.8
million).
· Operating cash flow of £11.3 million (H1 2024: £0.4 million).
· Interim dividend of 1.8 pence per share declared (H1 2024: 1.5 pence
per share).
· Earnings-enhancing acquisition of Clearly Drinks for £15.6 million,
financed entirely from the Company's own cash reserves.
· The Company remains bank-debt free and with more than £50 million of
unutilised borrowing facilities at the Period end.
H1 2025 H1 2024 Change
£m £m %
Revenue 113.0 105.1 +8%
Gross profit 34.1 28.5 +20%
Gross profit % 30% 27% +3%
Adjusted EBITDA(1) 18.5 15.2 +22%
Profit before tax 12.9 12.3 +5%
Adjusted items (charges) / credits (1.8) 0.5 -
Adjusted profit before tax(2) 14.7 11.8 +25%
EPS 9.2p 7.9p +16%
Adjusted EPS(3) 11.1p 8.1p +37%
Net debt i.e. including IFRS 16 leases 11.8 19.8 +40%
Adjusted net (cash) / debt i.e. excluding IFRS 16 leases(4) (2.3) 4.8 +148%
Dividend 1.8p 1.5p +20%
The increase in Adjusted items relates entirely to the fair value movements on
financial derivatives from a credit of £1.6 million in H1 2024 to a charge of
£1 million in H1 2025.
Operational Highlights
· Acquired Clearly Drinks, a UK manufacturer and brand owner of
specialised canned and bottled-at-source spring water and soft drinks, for a
total net cash consideration of £15.6 million.
o The acquisition is expected to generate around £3.5 million of annualised
incremental EBITDA and will provide cross-sell opportunities across our
network and innovation opportunities for our Sports Nutrition & Wellness
division.
o As a result, non-vape annualised revenue now exceeds £100 million (around
45% of Group revenue).
· Following the successful relocation of the warehouse operations
to 'Ark' last year, the administrative headquarters were also relocated there
during the Period, the final phase of the relocation plan.
Outlook
· Supreme has developed a stable, highly profitable and growing
core business, is currently pursuing a buoyant and diverse M&A pipeline,
has a healthy balance sheet and has more than £50 million of unutilised
borrowing facilities, providing the Company with a strong base for further
growth in the long term.
· The Company is well positioned to deal with the recently
announced budgetary measures, including the vape tax planned for October 2026
which may generate a consolidation of the UK vaping market in which
well-financed, agile businesses should benefit. In reference to National
Insurance and the National Living Wage, the Company estimates an annualised
increase of around £0.9 million to its people costs.
· The Group has made a strong start to the second half of FY 2025
and expects trading for FY 2025 to be ahead of expectations, with revenue
guidance of around £240 million and Adjusted EBITDA(1) guidance of at least
£40 million(5).
Sandy Chadha, Chief Executive Officer of Supreme, commented:
"I am pleased to report another strong period of trading for Supreme. We have
experienced steady growth across our categories whilst seamlessly diversifying
our portfolio through the acquisition of Clearly Drinks. Adding
well-recognised and trusted brands into Supreme's unrivalled distribution
network across UK retail is central to our long-term growth strategy, and this
acquisition reaffirms our ability to identify and execute quickly on M&A
opportunities.
The strength of our strategy and the proactivity of our teams means we are
well-positioned for upcoming changes in the UK vaping sector. Non-disposable
vapes account for the majority of our vaping revenue, and we continue to
report growth in 10ml e-liquid refills.
Looking forward, we are expecting trading to be ahead of market
expectations(5) for the current financial year and the Board is confident that
Supreme is well positioned to deliver ongoing profit growth and shareholder
value."
Investor Presentation
Management will be hosting a presentation for investors in relation to the
Company's interim results today at 2.00 p.m. GMT.
To register for the event, please go to:
https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-26november2024
(https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-26november2024)
(1) Adjusted EBITDA means operating profit before depreciation, amortisation
and Adjusted items (as defined in the financial statements).
(2) Adjusted Profit before tax means profit before tax and Adjusted items (as
defined in the financial statements).
(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 the financial statements).
(4) Adjusted net debt (excluding IFRS 16 leases) means net debt as defined in
the year-end financial statements but excluding the impact of IFRS16.
(5) Company-issued guidance immediately before this announcement for the year
ending 31 March 2025 was revenue of £240 million and Adjusted EBITDA(1) of
£37 million.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014 which is part of UK law by virtue of the European Union (withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
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 & 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 20,000 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 & 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)
Chief Executive Officer's Review
Introduction
I am pleased to report that Supreme traded strongly during H1 2025, delivering
solid organic growth supported by continued consumer demand for our own,
private label and licensed brands, as well as our entry into the soft drinks
market following the acquisition of Clearly Drinks.
Pleasingly, we increased Group revenues by 8% to £113.0 million (H1 2024:
£105.1 million), alongside a 22% increase in Adjusted EBIDTA(1) which grew to
£18.5 million (H1 2024: £15.2 million). This growth in the Period reflects
the strength of our strategy, the resilience of our business model, and also
the depth of our retail market knowledge which has helped guide the business
at a time of well-reported headwinds for consumers. To this end, we continue
to provide retailers with high quality everyday items at affordable price
points for customers.
As evidenced by the acquisition and integration of Clearly Drinks during the
Period, we remain focused on investing in all areas of the business and
believe that we can continue to benefit from our strategic and opportunistic
approach to M&A.
Alongside planning for anticipated regulatory changes to the UK vaping market,
we have continued to launch new products and explore new partnership
opportunities, further enhancing our reputation as a leading manufacturer,
brand owner and distributor of fast-moving consumer products across multiple
verticals.
We are confident in our long-term growth prospects and remain committed to
delivering on our key strategic targets as we continue to work proactively
rather than reactively to an evolving retail market.
Operational Review
During the Period, we moved our administrative headquarters to our new Ark
facility, the final phase of our relocation plan following the commencement of
distribution and warehousing operations at the site last year. Our new office
centre includes a state-of-the-art showroom and multiple meeting rooms to
facilitate increased customer engagement. Located in Manchester's Trafford
Park, one of Europe's largest business hubs, Ark epitomises Supreme's growth
as a business, as well as our continued commitment to providing the best
possible working environment for our team. Manufacturing operations will
continue as usual at our nearby Beacon Road site which will continue to play
an important role in supporting Supreme's development.
Our manufacturing capacity has also grown during the Period. As part of our
acquisition of Clearly Drinks, we now have access to a 150,000 sq. ft.,
fully-automated drinks manufacturing facility. While we are continuing to
produce Clearly Drinks' existing product range, this site also provides us
with the opportunity to diversify our product offering and enhance our
manufacturing capabilities across our Sports Nutrition & Wellness
category. We are focused on upgrading this already highly sophisticated
facility and plan to introduce new machinery and processes so that it can
accommodate smaller scale customers and exciting nascent brands that provide
an opportunity for further growth.
We have also continued to develop new products across the wider Supreme
portfolio, bolstering our offering and cementing our status as a go-to
manufacturer, distributor and brand owner of fast-moving consumer goods. From
a product development perspective, we continue to consider environmental
factors in line with our ESG initiatives outlined in our latest Annual Report.
Vaping
Revenue H1 2025 H1 2024 Change
£m £m %
Vaping excl disposables 32.2 32.1 +1%
Disposables 4.4 10.0 -56%
TOTAL 36.6 42.1 -13%
The Vaping division continued to perform robustly in H1 2025, generating
revenues of £36.6 million (H1 2024: £42.1 million), reflecting an
anticipated decline in sales of own brand disposable products as consumers
prepare to switch devices ahead of the forthcoming ban. Excluding disposable
vapes in the Period, the category delivered revenues of £32.2 million (H1
2024 Vaping excluding disposables: £32.1 million), reflecting the resilience
and importance of our non-disposable own brand and white label products.
Ahead of the ban on disposable vapes coming into effect in June 2025, Supreme
has consciously de-emphasised 88Vape disposables during the Period, reducing
our stock holding and tightening our SKU discipline to minimise any inventory
risk, which has led to predictably lower sales. We have also transitioned some
of the volume away from 88Vape and towards the ElfBar brand ahead of the ban.
Sales of own brand disposables for the Period, which account for a small
minority of our Vaping category revenues, were £4.4 million (H1 2024: £10.0
million).
We believe that Supreme is well positioned to smoothly manage the forthcoming
changes to the UK vaping market and have, for over a year now, been adapting
our strategy accordingly to ensure we are fully prepared. As outlined above,
the majority of revenue for the Vaping category comes from non-disposable
vapes and, importantly, revenue of 10ml e-liquids has continued to grow at a
healthy rate. Additionally, we have continued to invest in rechargeable pod
system vaping devices and have diversified into manufacturing nicotine
pouches, launching our 88Nic nicotine pouches.
The revenue for third-party disposable vapes, ElfBar and Lost Mary, is
reported separately in our Branded Distribution category and totalled £30.3
million for the Period (H1 2024: £26.4 million), an increase of 15% as a
result of having this distribution for the entirety of the Period versus only
three months last year.
Supreme is proud to be setting the industry benchmark with our proactive
measures across our 88Vape range to discourage underage vaping, which include:
the introduction of plain packaging, reduced hardware colour, age-appropriate
product names, and recommendations to retailers that vapes are positioned away
from confectionary. Supreme supports the UK Government's ambition to eliminate
underage vaping and we are confident that it will seek to strike a sensible
balance between addressing underage vaping concerns whilst also not slowing
down their efforts to become a smoke-free country by 2030, which was a
cross-party objective of the UK Government announced in 2019.
Supreme's overriding goal is to support the widespread use of vaping as a
smoking cessation device in line with the UK Government's conclusion that
vaping remains the most effective tool to transition smokers away from
cigarettes.
Sports Nutrition & Wellness
The Sports Nutrition & Wellness category delivered a strong performance
with revenues up 7% to £9.5 million (H1 2024: £8.9 million). Our Sci-MX
brand continues to perform well and has benefitted from targeted influencer
and community marketing campaigns, including a partnership with leading
fitness influencer and Sculpt Gym founder, Adam Collard. By leveraging our
newly acquired drinks manufacturing expertise and directing this to the Sports
Nutrition & Wellness market, we now have a buoyant product innovation
pipeline. In addition, we have new talent in the category and, with input
prices stabilising, we are able to have a renewed focus on top line growth. In
2023, we estimate that the UK protein powder market was valued at
approximately $1.1 billion and we believe is projected to reach around $1.9
billion by 2030. We remain committed to occupying a growing share of this
market in the medium and long term.
Post period end, we signed a partnership with Boots which now lists 27 Sci-MX
and Battle Bites products on the Boots UK's website. Boots is a UK household
name trusted for only stocking high-quality health and wellbeing products,
making this another great retail partnership for Supreme.
We are pleased with the consistent growth of this category and, with sticky UK
retail relationships in place, we are well positioned to expand our presence
across the industry, especially in the protein powders market with Sci-MX
already a well-established and highly credible value brand.
Soft Drinks
In June 2024, our acquisition of Clearly Drinks for a total net cash
consideration of £15.6 million (after adjustments for completion mechanics)
marked Supreme's entry into the beverage industry. Clearly Drinks is a brand
owner of Perfectly Clear amongst other well-known brands and is also a
contract manufacturer for a number of the world's largest soft drinks
companies. Following this acquisition, Supreme now has control of a 150,000
sq. ft. site containing three onsite natural spring water boreholes as well as
cutting-edge manufacturing technology such as a new can line that is able to
produce 350 million canned drinks per year.
The launch of our Soft Drinks category is part of Supreme's broader
diversification strategy, bringing non-vape annualised sales to over £100
million. With Clearly Drinks servicing c.70 customers nationwide, including
major UK supermarkets Waitrose, Aldi, and Tesco, we have already started to
capitalise on cross-sell opportunities generated by the transaction and have
several more in the pipeline as we assess which products from our other
categories - in particular Sports Nutrition & Wellness - may be of
interest to retailers across Clearly Drinks' existing footprint. Within weeks
of the acquisition, we converted an existing Supreme customer to the Perfectly
Clear brand, illustrating the value of combining the Supreme distribution
network with great consumer brands.
Six months on from the acquisition of Clearly Drinks, Supreme's Soft Drinks
division is performing well and is projected to deliver £2 million of
Adjusted EBITDA(1) in FY 2025 and around £3.5 million on an annualised basis.
Clearly Drinks' manufacturing processes are best-in-class, highly automated
and accredited to the highest standard. In line with our vision, we are now
working on making the facility more agile - introducing new machinery and
processes to help accommodate smaller scale and more embryonic brands and
customers. This will open an entirely new channel of opportunity for Clearly
Drinks.
We are pleased with how well this business has integrated into the Supreme
group and are excited by the multiple growth opportunities this acquisition
has created.
Branded Distribution
The Branded Distribution category delivered revenues of £34.4 million, up 12%
(H1 2024: £30.6 million), and gross profit for the category experienced
growth of 56%. Our distribution of vape brands ElfBar and Lost Mary
contributed 92% of the division's revenue in H1 2025 (H1 2024: 86%) and we
continued to experience strong sales traction for both brands across our UK
retail footprint.
The distribution of ElfBar and Lost Mary forms part of this division rather
than our Vaping division as the brands are not owned nor manufactured by
Supreme, so have a significantly different financial profile to the Group's
Vaping business. As with our core vaping activities, we are working closely
with our key partners to manage the transition from disposable vaping products
to rechargeable alternatives, in line with the forthcoming legislative
changes.
Lighting and Batteries
The Lighting division delivered revenues of £8.1 million, up 8% (H1 2024:
£7.5 million). During the Period, we expanded the range of licensed-brand
products we manufacture and distribute, including LED Energizer
Holdings A-Rated lamps, upholding our commitment to offering our retail
network the best products from the best global brands. We also launched our
brand-new lighting brochure to help facilitate new commercial opportunities,
showcasing 580 lighting and fittings products covering the Energizer, Eveready
and Lumilife brands. Our extensive range and unrivalled service means that
thousands of retail outlets, electricians, wholesalers and independent
retailers continue to rely on Supreme for their lighting product needs.
The Batteries division generated revenues of £17.4 million (H1 2024: £15.9
million), up 9%, a solid increase in revenue growth in comparison to the 1%
revenue growth reported between H1 2023 and H1 2024. This growth is a result
of considerable volume increases and our expanded distribution operations,
with new B&M listings bolstering the division's performance. Batteries
continue to be a dependable, profitable division for Supreme and we are
continually assessing opportunities to further broaden our distribution
footprint and renew licensing agreements with some of the industry's leading
brands.
Lighting and Batteries activities remain robust as we continue to experience
solid demand across both divisions ahead of the key seasonal trading period.
Dividend
The Board proposes an interim dividend of 1.8 pence per share in line with the
Company's stated annual dividend policy of 25% of profit after tax. This
dividend will be payable on 10 January 2025 to shareholders on the register at
6 December 2024. The ex-dividend date is 5 December 2024.
Outlook
Supreme has an increasingly diversified portfolio thanks to new product
launches across categories and the establishment of the Soft Drinks division,
a key pillar of our long-term growth strategy. Alongside a continued focus on
organic growth initiatives, we are continuing to target bolt-on acquisitions
which are compatible with our wider growth ambitions, from opportunities in
markets we're familiar with, to chances to establish a presence in new or
fast-growing verticals.
Whilst vaping continues to be the key source of revenue for the Company, we
are prepared for the upcoming change in legislation banning disposable vapes;
we have invested in new non-disposable vaping technology, and the majority of
revenue for the category comes from non-disposable vapes. We are fully
supportive of any proactive measures that the UK Government is taking to
combat underage vaping, and are also a firm believer in the effectiveness of
vaping as a smoking cessation tool for adults as the UK Government embarks on
its mission to achieve a tobacco-free country. The addition of taxation in
2026 shall continue to move the market in the direction of legitimate,
reputable market players such as Supreme.
Supreme continues to put the end consumer at the forefront of its strategy. We
are committed to manufacturing and distributing high-quality, low-cost
household goods, supporting families across the country as they navigate this
ongoing period of economic uncertainty.
The Group has made a strong start to the second half of FY 2025 and
consequently expects trading for the full year to be ahead of market
expectations, with revenue guidance of around £240 million and Adjusted
EBITDA(1) guidance of at least £40 million, an increase of around £3 million
compared to the previous guidance(5).
The Board continues to be pleased with the Group's continued financial and
operational strategic progress and believes that Supreme is well positioned
for the future. Supreme is an agile, opportunistic, cost-conscious and
consumer-centric business with a very healthy balance sheet and a long track
record of delivering growth and cash. Supreme has consistently demonstrated
that it can adapt its strategy when consumer sentiment or legislation changes.
In the long term, we will continue to deliver a multitude of well-priced,
branded consumer goods to the mass market at scale.
Sandy Chadha
Chief Executive Officer
25 November 2024
Chief Finance Officer's Review
I am delighted to present the financial results for the Period, which reflect
solid trading and continued discipline within our cost base and cashflow.
H1 2025 H1 2024 Change
£m £m %
Revenue 113.0 105.1 +8%
Gross profit 34.1 28.5 +20%
Gross profit % 30% 27% +3%
Adjusted EBITDA(1) 18.5 15.2 +22%
Profit before tax 12.9 12.3 +5%
Adjusted profit before tax(2) 14.7 11.8 +25%
EPS 9.2p 7.9p +16%
Adjusted EPS(3) 11.1p 8.1p +37%
Net debt i.e. including IFRS 16 leases 11.8 19.8 +40%
Adjusted net (cash) / debt i.e. excluding IFRS 16 leases(4) (2.3) 4.8 +148%
Operating cashflow 11.3 0.4 +2,725%
Net assets 65.3 47.8 +37%
Dividend 1.8p 1.5p +20%
Revenue
Revenue grew by £7.9 million (+8%) to £113.0 million (H1 2024: £105.1
million) in the Period. The core business grew by £2.6 million (+4%),
disposables (across Vaping and Branded Distribution) reduced by £1.7 million
(-5%) and the addition of Clearly Drinks, acquired during the Period,
contributed £7.0 million of incremental revenue year-on-year.
Gross profit
Gross profit for the Period was £34.1 million (H1 2024: £28.5 million),
growth of 20%. Gross profit as a percentage of sales was 30%, an increase of 3
percentage points on last year, driven by the increase in margin on Branded
Distribution where margins were initially lower on the opening orders and the
addition of the Soft Drinks category. In fact, we have seen increases in gross
margins across the Group. In Vaping in particular, we have the full year
impact of consolidating three manufacturing sites last year as well as
increased volume and scale. Reduced dependency on disposables has also
benefitted the blended margin % in the category.
Adjusted EBITDA(1)
( )
Adjusted EBITDA(1) was £18.5 million in the Period (H1 2024: £15.2 million),
an increase of 22%; owing to the increase in blended gross profit % from 27%
to 30% and lower selling costs (specifically with reference to listing fees
which were high last year in relation to ElfBar), offset by an investment in
the overhead base in respect of people costs. Adjusted EBITDA(1) also
benefitted from the addition of Clearly Drinks.
Finance costs
Finance costs were £0.6 million (H1 2024: £0.8 million) with most of the
interest arising from IFRS16 lease liabilities with only £0.2 million
attributed to bank interest.
Dividends
The Board has declared an interim dividend of 1.8 pence per share in line with
the Company's stated dividend policy of 25% of profit after tax. The dividend
will be payable on 10 January 2025 to shareholders on the register at 6
December 2024. The ex-dividend date is 5 December 2024.
Cash flow
H1 2025 H1 2024 FY 2024
£m £m £m
Adjusted EBITDA(1) 18.5 15.2 38.1
Movement in working capital (5.9) (11.8) (5.7)
Tax paid (0.6) (2.5) (5.3)
Cash-impacting Adjusted items (0.7) (0.5) -
Operating cash flow 11.3 0.4 27.1
Debt (servicing) / raising (0.2) 5.2 (5.0)
Lease payments (1.0) (0.5) (1.2)
Capex (0.1) (2.8) (5.3)
M&A (15.6) (2.4) (6.1)
Dividends (3.7) (2.6) (4.3)
Share buyback - - (1.0)
Net cash flow (9.3) (2.7) 4.2
Operating cash flow was £11.3 million for the Period. The movement in working
capital was related to the Company's seasonal trends within inventory
(inventory is always at its peak on 30 September each year as we enter our
busiest trading quarter and by year-end inventory is typically at its lowest
point). Capital expenditure was £1.1 million in the Period but was offset by
£1 million income generated from the sale of a property that was inherited by
the Group as part of the Liberty Flights acquisition. M&A of £15.6
million was entirely related to the acquisition of Clearly Drinks; there are
no further amounts payable in respect of this transaction.
Net debt
H1 2025 H1 2024 FY 2024
£m £m £m
Cash (2.3) (4.9) (11.6)
Borrowings (excl IFRS 16 leases) - 9.7 -
Adjusted net (cash) / debt(4) (2.3) 4.8 (11.6)
IFRS 16 (leases) 14.1 15.0 14.7
Net debt 11.8 19.8 3.1
Despite the £15.6 million acquisition, paid for entirely from the Company's
cash reserves, the Company remained debt-free during the Period. The Company
had unutilised borrowing facilities of more than £50 million at the Period
end. The strength of Supreme's balance sheet of course provides firepower for
acquisitions and organic growth but also provides flexibility to allow the
Company to adapt calmy and strategically to legislative changes in the future.
Suzanne Smith
Chief Finance Officer
25 November 2024
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION OF SUPREME PLC
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended 31 March 2024
30 September 2024 30 September 2023
Note £'000 £'000 £'000
Revenue 3 112,987 105,068 221,249
Cost of sales (78,934) (76,538) (157,716)
Gross profit 34,053 28,530 63,533
Administration expenses (20,554) (15,461) (31,515)
Operating profit 13,499 13,069 32,018
Adjusted EBITDA(1) 18,465 15,185 38,116
Depreciation (2,283) (1,787) (3,772)
Amortisation (866) (842) (1,733)
Adjusted items 5 (1,817) 513 (593)
Operating profit 13,499 13,069 32,018
Finance income 117 4 147
Finance costs (731) (783) (2,045)
Profit before taxation 12,885 12,290 30,120
Income tax 6 (2,205) (3,016) (7,694)
Profit for the period/year 10,680 9,274 22,426
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 13 16 (1)
Total other comprehensive income/(expense) 13 16 (1)
Total comprehensive income for the period/year 10,693 9,290 22,425
Earnings per share - basic 7 9.2p 7.9p 19.1p
Earnings per share - diluted 7 8.9p 7.5p 18.1p
(1)Adjusted EBITDA, which is defined as profit before finance costs, tax,
depreciation, amortisation and adjusted items is a non-GAAP metric used by
management and is not an IFRS disclosure
All results derive from continuing operations.
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
As at As at As at
30 September 2024 30 September 2023 31 March 2024
£'000 £'000 £'000
Assets
Goodwill and other intangibles 19,303 14,439 13,663
Property, plant and equipment 15,444 7,106 7,499
Right of use asset 12,683 14,702 13,917
Right of use receivable 171 - -
Total non-current assets 47,601 36,247 35,079
Current assets
Inventories 32,323 30,836 24,434
Trade and other receivables 35,144 30,801 35,626
Right of use receivable 330 - -
Derivative financial instruments - 948 -
Cash and cash equivalents 2,278 4,898 11,631
Total current assets 70,075 67,483 71,691
Total assets 117,676 103,730 106,770
Liabilities
Current liabilities
Borrowings 981 10,913 1,268
Trade and other payables 28,376 27,098 27,303
Forward contract derivative 1,008 - 52
Income tax payable 7,500 3,230 5,068
Provisions 349 349 349
Total current liabilities 38,214 41,590 34,040
Net current assets 31,861 25,893 37,651
Borrowings 13,113 13,790 13,449
Deferred tax liability 610 130 854
Provisions 466 426 452
Total non-current liabilities 14,189 14,346 14,755
Total liabilities 52,403 55,936 48,795
Net assets 65,273 47,794 57,975
Equity
Share capital 11,661 11,732 11,652
Share premium 7,486 7,427 7,435
Merger reserve (22,000) (22,000) (22,000)
Capital redemption reserve 83 - 83
Share-based payments reserve 4,244 4,170 3,967
Retained earnings 63,799 46,465 56,838
Total equity 65,273 47,794 57,975
Unaudited Consolidated Statement of Changes in Equity
Share capital Merger reserve Capital redemption reserve Share-based payments reserve Retained earnings Total
equity
Share premium
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 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 3 8 - - - - 11
Share buy back - - - - - (1,000) (1,000)
Cancellation of shares (83) - - 83 - - -
Employee share schemes - value of employee services - - - - 1,078 - 1,078
Deferred tax on share-based payment charge - - - - (154) - (154)
Dividends - - - - - (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
Unaudited Consolidated Statement of Changes in Equity
Share capital Merger reserve Capital redemption reserve Share-based payments reserve Retained earnings Total
equity
Share premium
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2023 11,732 7,427 (22,000) - 3,043 39,754 39,956
Profit for the period - - - - - 9,274 9,274
Other comprehensive income - - - - - 16 16
Total comprehensive income for the period - - - - - 9,290 9,290
Transactions with shareholders:
Employee share schemes - value of employee services - - - - 654 - 654
Deferred tax on share-based payment charge - - - - 473 - 473
Dividends - - - - - (2,579) (2,579)
- - - - 1,127 (2,579) (1,452)
As at 30 September 2023 11,732 7,427 (22,000) - 4,170 46,465 47,794
As at 1 April 2024 11,652 7,435 (22,000) 83 3,967 56,838 57,975
Profit for the period - - - - - 10,680 10,680
Other comprehensive income - - - - - 13 13
Total comprehensive income for the period - - - - - 10,693 10,693
Transactions with shareholders:
Issue of shares 9 51 - - - - 60
Employee share schemes - value of employee services - - - - 219 - 219
Deferred tax on share-based payment charge - - - - 58 - 58
Dividends - - - - - (3,732) (3,732)
9 51 - - 277 (3,732) (3,395)
As at 30 September 2024 11,661 7,486 (22,000) 83 4,244 63,799 65,273
Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended 31 March 2024
30 September 2024 30 September 2023
Net cash flow from operating activities £'000 £'000 £'000
Profit for the period 10,680 9,274 22,426
Adjustments for:
Amortisation of intangible assets 866 842 1,733
Depreciation of tangible assets 1,534 911 2,087
Depreciation of right of use assets 749 876 1,685
Finance income (117) (4) (147)
Finance costs 703 728 1,990
Amortisation of capitalised finance costs 28 55 55
Income tax expense 2,205 3,016 7,694
Loss on disposal of fixed assets 74 - 169
Movement on forward foreign exchange contracts 956 (1,600) (600)
Share based payments expense 249 654 1,226
Working capital adjustments
Investment impairment - 7 7
(Increase)/decrease in inventories (6,830) (5,228) 1,172
(Increase)/decrease in trade and other receivables 3,546 (9,902) (14,727)
Increase/(decrease) in trade and other payables (2,660) 3,285 7,725
Increase in provisions 40 - 26
Taxation paid (638) (2,510) (5,306)
Invoice discounting fees (88) - (147)
Net cash generated from operations 11,297 404 27,068
Cash flows used in investing activities
Purchase of intangible fixed assets (64) - (115)
Purchase of property, plant and equipment (1,074) (2,840) (5,322)
Purchase of business combinations net of cash acquired (15,570) - (2,470)
Proceeds from sale of property, plant, and equipment 924 61 115
Payment of deferred consideration - (2,223) (2,187)
Payment of contingent consideration - - (1,451)
Finance income received 117 - 147
Directors loan account movement - (56) -
Net cash used in investing activities (15,667) (5,058) (11,283)
Cash flows used in financing activities
Repayments of RCF facility - - (9,918)
Drawdowns of RCF facility - 5,500 5,500
Issue of options or share capital 60 - 11
Share buy back - - (1,000)
Dividends paid (3,732) (2,579) (4,341)
Finance costs paid (270) (353) (559)
Facility fees paid - (115) (115)
Interest paid on leases (427) (84) (139)
Lease payments (669) (369) (1,062)
Sub lease income receivable 134 - -
Net cash generated from/(used in) financing activities (4,904) 2,000 (11,623)
Net (decrease)/increase in cash and cash equivalents (9,274) (2,654) 4,162
Cash and cash equivalents brought forward 11,631 7,536 7,536
Foreign exchange (79) 16 (67)
Cash and cash equivalents carried forward 2,278 4,898 11,631
Notes to the condensed consolidated interim financial information
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, sports nutrition
& wellness and soft drinks) and wholesale distribution of batteries,
lighting, vaping, sports nutrition & wellness, branded household consumer
goods and soft drinks. The registered office is 4 Beacon Road, Ashburton Park,
Trafford Park, Manchester, M17 1AF.
These condensed consolidated interim financial statements of the Group are for
the period ended 30 September 2024. They have been prepared on the basis of
the policies set out in the 2024 annual financial statements and in accordance
with UK adopted IAS 34.
The condensed consolidated interim financial statements have not been reviewed
or audited, nor do they comprise statutory accounts for the purpose of Section
434 of the Companies Act 2006, and do not include all of the information or
disclosures required in the annual financial statements and should therefore
be read in conjunction with the Group's 2024 annual financial statements,
which were prepared in accordance with UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006.
Financial information for the year ended 31 March 2024 included herein is
derived from the statutory accounts for that year, which have been filed with
the Registrar of Companies. The auditors' report on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did not
contain a statement under Section 498 of the Companies Act 2006.
The interim condensed consolidated financial statements are presented in the
Group's functional currency of pounds Sterling and all values are rounded to
the nearest thousand (£'000) except when otherwise indicated.
2. Summary of significant accounting policies
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual financial statements for the year ended 31
March 2024 as described in the Group's Annual Report and full financial
statements for that year and as available on the Company's website
(www.supreme.co.uk (http://www.supreme.co.uk) ).
2.1 Taxation
Taxes on income in the interim periods are accrued using management's best
estimate of the weighted average annual tax rate that would be applicable to
expected total annual earnings.
2.2 Forward looking statements
Certain statement in these condensed consolidated interim financial statements
are forward looking with respect to the operations, strategy, performance,
financial condition and growth opportunities of the Group. The terms "expect",
"anticipate", "should be", "will be", "is likely to" and similar expressions
identify forward-looking statements. Although the Board believes that the
expectations reflected in these forward-looking statements are reasonable, by
their nature these statements are based on assumptions and are subject to a
number of risks and uncertainties. Actual events could differ materially from
those expressed or implied by these forward-looking statements. Factors which
may cause future outcomes to differ from those foreseen in forward-looking
statements include, without limitation: general economic conditions and
business conditions in the Group's markets; customers' expectations and
behaviours; supply chain developments; technology changes; the actions of
competitors; exchange rate fluctuations; and legislative, fiscal and
regulatory developments. Information contained in these condensed consolidated
interim financial statements relating to the Group should not be relied upon
as a guide to future performance.
2.3 Key risks and uncertainties
The Group has in place a structured risk management process which identifies
key risks and uncertainties along with their associated mitigants. The key
risks and uncertainties that could affect the Group's medium-term performance,
and the factors that mitigate those risks have not substantially changed from
those set out in the Group's Annual Report which can be found on the Group's
website (www.supreme.co.uk).
2.4 Going concern
Supreme PLC provides essential products to well-established retailers, who
perform well and are household names. The nature and price point of the
products offered means that the Group is well positioned to navigate the
current uncertainty in the economic climate.
The Group is funded by external facilities; firstly a £25 million revolving
credit facility ("RCF") until March 2025 and a £20 million invoice financing
facility, both of which are provided by HSBC. As at the date of this statement
the group is well underway with the facility renewal process and management
have no concerns over their ability to maintain these funding levels.
The Group also utilises credit insurance to mitigate any credit risk, and
foreign exchange forward contracts to mitigate foreign currency risk. The
Board and senior management regularly review revenue, profitability and cash
flows across the short, medium and longer term.
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 18- month period to 31 March 2026. The
forecasts and projections, which the Directors consider to be prudent, have
been further sensitised by applying reductions to revenue and profitability,
to consider downside risk. Under both the base and sensitised case 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.
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.
3. Revenue analysis
Batteries Lighting Vaping Sports nutrition & wellness Branded household consumer goods Soft drinks Unaudited
6 months ended
30 September 2024
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 17,353 8,134 36,608 9,507 34,390 6,994 112,987
Cost of sales (15,005) (4,679) (19,905) (6,625) (29,105) (4,196) (79,515)
Gross profit before foreign exchange 2,348 3,455 16,704 2,882 5,285 2,798 33,472
Foreign exchange 581
Gross profit 34,053
Batteries Lighting Vaping Sports nutrition & wellness Branded household consumer goods Soft drinks Unaudited
6 months ended
30 September 2023
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 15,883 7,507 42,115 8,947 30,616 - 105,068
Cost of sales (13,837) (4,661) (24,934) (6,524) (27,171) - (77,127)
Gross profit before foreign exchange 2,046 2,846 17,181 2,423 3,445 - 27,941
Foreign exchange 589
Gross profit 28,530
Analysis of revenue by geographical destination
Unaudited Unaudited
6 months ended 6 months ended
30 September 2024 30 September 2023
£'000 £'000
United Kingdom 107,199 97,509
Rest of Europe 5,482 6,511
Rest of the World 306 1,048
112,987 105,068
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 £3,628,000 (H1 2024: £3,344,000) held in Europe.
4. 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 two (H1 2024: one) operating segments following the acquisition of
Acorn Topco Limited, the parent company of Clearly Drinks Limited, as the
performance of the soft drinks division can be measured 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 2
customers (H1 2024: 2 customers) was £16,847,000 and £14,454,000 (H1 2024:
£16,804,000 and £11,925,000). These revenues related to all divisions.
5. Adjusted items
Unaudited Unaudited
6 months ended 6 months ended
30 September 2024 30 September 2023
£'000 £'000
Share based payments charge 249 654
Fair value movements on financial derivatives 956 (1,600)
Acquisition costs 705 433
Gain on assignment of lease (93) -
1,817 (513)
Share Based Payments Charges
The Group operates a number of share incentive arrangements. 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. The charge for share-based payments is made up of
£30,000 related to Employers National Insurance Contributions and £219,000
related to the share-based payments charge.
Fair value movements on financial derivatives
The Group typically holds 1 years' worth of USD-denominated purchases on open
forward contracts. The charge (H1 2024: credit) in the period ended 30
September 2024 reflects 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 30 September 2024 is
£1,008,000 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.
Acquisition Costs
Acquisition costs related to the operational integrations of the businesses
and net assets acquired that took place in the period. For the period ended 30
September 2024 these costs included costs associated with the acquisition of
the group headed by Acorn Topco Limited, as well as costs associated with the
closure of the Food IQ site. The transactions in the period to 30 September
2023 relate to the hive up of the trade and assets in Liberty Flights Holdings
Limited and Liberty Flights Limited into Supreme Imports Ltd on 1 November
2023 including the transfer of warehousing and manufacturing operations to
Supreme's principal sites in Manchester.
Acquisition costs of this nature were treated as allowable for the purpose of
corporation tax and the corporation tax impact was £176,000 in H1 2025 (25%)
and £108,000 (25%) in H1 2024.
Gain on assignment of lease
On 16 July 2024, Supreme Imports Limited entered into an agreement to sublease
a property which it had a qualifying lease under IFRS 16 in. As a result of
this transaction, the group has recognised the disposal of a Right of use
asset and the creation of a right of use receivable. The gain arising from
this transaction has been treated as adjusting as it is outside of the group's
normal trading activity. The gain is considered to be non-cash in nature and
has been treated as disallowable for tax purposes.
6. Taxation
The income tax expense for the half year ended 30 September 2024 is based upon
management's best estimate of the weighted average annual tax rate expected
for the full year ending 31 March 2025. The income tax expense is slightly
higher than standard rate of 25%, primarily due to the disallowable nature of
the exceptional items and provisions.
7. 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 period.
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:
Unaudited Unaudited
6 months ended 6 months ended
30 September 2024 30 September 2023
£'000 £'000
Profit for the period after tax 10,680 9,274
No. No.
Weighted average number of shares for the purposes of basic earnings per share 116,564,333 117,321,074
Weighted average dilutive effect of conditional share awards 3,870,298 6,720,523
Weighted average number of shares for the purposes of diluted earnings per 120,434,631 124,041,597
share
Pence Pence
Basic profit per share 9.2 7.9
Diluted profit per share 8.9 7.5
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.
Unaudited Unaudited
6 months ended 6 months ended
30 September 2024 30 September 2023
£'000 £'000
Adjusted earnings (see below) 12,974 9,494
No. No.
Weighted average number of shares for the purposes of basic earnings per share 116,564,333 117,321,074
Weighted average dilutive effect of conditional share awards 3,870,298 6,720,523
Weighted average number of shares for the purposes of diluted earnings per 120,434,631 124,041,597
share
Pence Pence
Adjusted basic profit per share 11.1 8.1
Adjusted diluted profit per share 10.8 7.7
The calculation of basic adjusted earnings per share is based on the following
data:
Unaudited Unaudited
6 months ended 6 months ended
30 September 2024 30 September 2023
£'000 £'000
Profit for the period attributable to equity shareholders 10,680 9,274
Add back/(deduct):
Amortisation of acquisition related intangible assets 653 807
Adjusted items 1,817 (513)
Tax effect of the above (176) (74)
Adjusted earnings 12,974 9,494
8. Financial instruments
The fair values of all financial instruments included in the statement of
financial position are a reasonable approximation of their carrying values.
9. Business combinations
On 21 June 2024, Supreme Imports Limited acquired the trade and assets of
Acorn Topco Limited, the parent company of Clearly Drinks Limited, a
long-established and well-known UK manufacturer and brand owner of specialised
canned and bottled-at-source soft drinks for a net consideration of
£15,570,000.
Management are currently in the process of performing the purchase price
allocation exercise for this acquisition and as such the consideration paid
over the fair value of the net assets acquired has initially been recorded as
goodwill. It is currently estimated the that the amount to the allocated
between goodwill and other identified intangible assets is £6,423,000.
Management will finalise this exercise in time for the financial statements
for the year ended 31 March 2025.
10. Dividends
Dividends of £3,732,000 were declared in the 6 months ended 30 September 2024
(H1 2024: £2,579,000). This amounted to £0.032 per share (H1 2024: £0.022).
11. Post balance date events
There are no post balance sheet events to report.
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