Announcement of Placing Price

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This announcement is an advertisement and not an admission document or a prospectus. Prospective investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of the information in the final admission document ("Admission Document") to be published by the Company, and any supplement thereto, in connection with the placing ("Placing") of its ordinary shares ("Shares") and the proposed admission ("Admission") of the Shares to trading on the AIM market of London Stock Exchange plc ("London Stock Exchange"). A copy of the Admission Document will, following publication, be available for viewing on the Company's website at www.supreme.co.uk.

27 January 2021

Supreme plc

("Supreme," the "Company" or the "Group")

Initial Public Offering

Announcement of Placing Price

Supreme, a leading manufacturer, supplier and brand owner of fast moving consumer products, announces the successful pricing of its initial public offering (the "IPO") and conditional placing of 5,597,015 new and 44,776,120 existing shares of 10 pence each  (the "Placing") at 134 pence per share (the "Placing Price") with institutional investors, to raise gross proceeds of £67.5 million.

It is expected that dealings in the Shares will commence at 8.00 a.m. on 1 February 2021 on AIM under the ticker SUP and the ISIN number GB00BDT89C08 ("Admission"). Immediately following Admission, the Company's market capitalisation, based on the Placing Price, is expected to be approximately £156.1 million with a free float of approximately 43.2%.

The Placing saw strong demand from institutional investors. £7.5 million of the gross proceeds raised will be used to partially repay the Group's existing debt, as well as £60 million to pay the selling shareholders, including Sandy Chadha, the Company's founder and Chief Executive Officer, who will retain a substantial shareholding in the Group, amounting to approximately 56.8% of the Shares in issue on Admission.

The Directors believe that the IPO will enable the Company to execute on its growth strategy, raise its profile and provides the ability to incentivise key employees. Berenberg are acting as Sole Global Coordinator and Broker, Grant Thornton UK LLP as Nominated Adviser, and Beyond Corporate as legal counsel to the Company.

IPO Highlights

·   Supreme has created a vertically integrated platform providing an excellent route to market for well-known brands and products

-      The Company supplies products across five key categories; batteries, lighting, vaping, sports nutrition & wellness, and branded household consumer goods

-      Supreme's capabilities span from product development and manufacturing through to its extensive retail distribution network and direct to consumer capabilities

-      This platform enables the Group to efficiently scale up new products, brands, and categories at low cost, as has been the case for vaping and sports nutrition & wellness

·   Consistent track record of sales and profit growth coupled with strong cash generation

-      In the year ended 31 March 2020, the Company generated revenues of £92.3 million, Gross Profit of £26.8 million and adjusted EBITDA of £16.2 million representing CAGRs of 17%, 34% and 52% respectively between 2015 and 2020

-      For the six months to 30 September 2020, unaudited revenues were £56.3 million with adjusted EBITDA of £8.4 million, an increase over the prior period of 43% and 21% respectively, demonstrating the Company's resilience through COVID-19

-      The Directors intend to pay dividends to shareholders in an aggregate annual amount equivalent to approximately 50 per cent. of net profits, retaining the balance of earnings from operations to finance the future expansion of the Group, with dividends commencing (with an interim dividend) following the notification of the Company's interim results for the six month period to 30 September 2021

·   Operating across both an extensive and diverse customer base

-      Over 3,300 active business accounts with retail customers who manage over 10,000 branded retail outlets

-      Customers include discount retailers such as B&M, Home Bargains, Poundland, The Range, and Sports Direct; Wholesalers, e-tailers and Symbol Group Retailers such as Londis, SPAR and Costcutter; Supermarkets and high street retailers such as Asda, Halfords and Iceland; International retailers; Public Sector customers such as HM Prison & Probation Service; and direct to consumer online

·   Well-established brands

-      In addition to distributing globally-recognised brands such as Duracell, Energizer and Panasonic, and supplying lighting products exclusively under the Energizer, Eveready and JCB licences across 45 countries, Supreme has also developed brands in-house, most notably 88Vape

·   Products exposed to growing underlying markets with high repeat and non-discretionary customers

-      The vaping market is expected to grow at a 13% CAGR from 2019 to 2022 supported by UK public health bodies and shifting consumer preferences

-      The sports nutrition and vitamins markets in the UK are expected to grow at 9% and 7% CAGR from 2019 to 2022 respectively

-      Supreme's batteries, lighting and, for users, vaping and sports nutrition & wellness products are consumer staples and therefore are less sensitive to economic conditions

·   A leading vaping brand protected by significant barriers to entry with ownership of a UK based e-liquid manufacturing facility a key differentiator

-      The Company's 88Vape brand has proven to be the most visible value vaping brand in the UK

-      Owning one of the largest e-liquid manufacturing facilities in the UK provides the Group with security over both its supply and quality of e-liquid

-      Since September 2019, the Group has manufactured over 250,000 bottles of e-liquid per working day

-      In the year ended 31 March 2020, Supreme sold c. 45 million bottles of e-liquid, representing c. 30% of e-liquid bottles sold in the UK, and c. 794,200 vaping hardware kits 

·   A growing footprint in Sports Nutrition and Wellness presents a material growth opportunity

·    The Group entered this segment in February 2018 and has already grown this category to report c. £5.0 million revenues in the year ended 31 March 2020

·    More recently the Group has expanded its product offering to include health supplements and vitamins for which the Group has already received initial orders from large customers. The Directors believe this category represents a significant opportunity for future growth

·   Environmental, social and governance standards are at the forefront of business considerations

-      Vaping is widely accepted as aiding smoking cessation and reducing the significant negative impacts of smoking

-      The Directors believe that the Group's practices align with UN Sustainable Development Goals across all of its divisions

·   A strong management team with extensive operational experience

-      Supreme's senior management team has an aggregate of over 90 years' industry experience and has successfully driven the Company's organic growth

Sandy Chadha, Chief Executive Officer of Supreme, commented:

"I am deeply proud of the business we have developed and believe our flotation on AIM will provide Supreme with the tools with which to capitalise on a number of exciting growth opportunities. We have created a profitable business of significant scale, underpinned by a platform which provides a seamless route to market for a number of leading brands and product categories.

"We have established leading positions across the battery, lighting and vaping markets. Coupled with our proven ability to innovate, with recent category entries such as sports and nutrition and branded household consumer goods now contributing substantially to our financial performance, we have a clear path to maintaining sustainable growth.

"We welcome our new shareholders at what is a very exciting inflection point for our business."

Enquiries:

IMPORTANT INFORMATION

This announcement does not constitute, or form part of, any offer or invitation to sell, allot or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment therefor.

Recipients of this announcement who are considering subscribing for or acquiring Shares following publication of the Admission Document are reminded that any such acquisition or subscription must be made only on the basis of the information contained in the final Admission Document, which may be different from the information contained in this announcement. No reliance may be placed, for any purpose whatsoever, on the information or opinions contained in this announcement or on its completeness. To the fullest extent permitted by applicable law or regulation, no undertaking, representation or warranty, express or implied, is given by or on behalf of the Company, Grant Thornton UK LLP ("Grant Thornton"), or Joh. Berenberg Gossler & Co KG, London Branch ("Berenberg"), or their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parent undertakings or any of their respective directors, officers, partners, employees, agents, affiliates, representatives or advisers or any other person as to the accuracy, sufficiency, completeness or fairness of the information, opinions or beliefs contained in this announcement and, save in the case of fraud, no responsibility or liability is accepted by any of them for any errors, omissions or inaccuracies in such information, opinions or beliefs or for any loss, cost or damage suffered or incurred, howsoever arising, from any use, as a result of the reliance on, or otherwise in connection with, this announcement.

Grant Thornton, which is authorised and regulated by the Financial Conduct Authority, and Berenberg, which is authorised by the German Federal Financial Supervisory Authority and subject to limited regulation in the United Kingdom by the Financial Conduct Authority, are acting only for the Company (and in the case of Berenberg, the Selling Shareholders) in connection with the proposed Placing and Admission and are not acting for or advising any other person, or treating any other person as their respective client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Grant Thornton, or Berenberg, or advice to any other person in relation to the matters contained herein. Such persons should seek their own independent legal, investment and tax advice as they see fit. Grant Thornton's responsibilities as the Company's nominated adviser under the AIM Rules for Nominated Advisers and AIM Rules for Companies will be owed solely to the London Stock Exchange and not to the Company, to any of its directors or to any other person in respect of a decision to subscribe for or otherwise acquire Shares in reliance on the Admission Document. Neither Grant Thornton nor Berenberg has authorised or approved the contents of, or any part of, this announcement and no representation or warranty, express or implied, is made by Grant Thornton or Berenberg or their respective affiliates as to any of its contents.

This announcement is only addressed to, and directed at, persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2 (e) of the Prospectus Regulation (EU) 2017/1129 ("Qualified Investors"). In the United Kingdom, this announcement is addressed to and directed only at "qualified investors" within the meaning of Article 2(e) of the Prospectus Regulation as it forms part of English law by virtue of the European Union (Withdrawal) Act 2018 (as amended) and regulations made under that Act, who are (i) persons having professional experience in matters relating to investments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net-worth companies, unincorporated associations and other bodies within the meaning of Article 49 of the FPO; or (iii) persons to whom it is otherwise lawful to communicate it (together, "relevant persons"). Any investment activity in relation to the Placing is available only to and will be engaged in only with relevant persons. It is not intended that this announcement be distributed or passed on, directly or indirectly, to any other class of person and under no circumstances should persons of any other description rely on or act upon the contents of this announcement.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The Shares have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

No securities commission or similar authority in Canada has in any way passed on the merits of the Shares and any representation to the contrary is an offence. No document in relation to the proposed placing of the Shares has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance. Subject to certain exceptions, the Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into or from any jurisdiction in which the same would be unlawful or offered or sold to a person within such a jurisdiction.

Neither this announcement nor any copy of it may be (i) taken or transmitted into or distributed, directly or indirectly, in the United States (within the meaning of regulations made under the US Securities Act of 1933, as amended), (ii) taken or transmitted into, distributed, published, reproduced or otherwise made available or disclosed in Canada, Australia, New Zealand or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, or (iii) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such a solicitation or offer. Any failure to comply with these restrictions may constitute a violation of the securities laws or other laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

The date of Admission may be influenced by factors such as market conditions. There is no guarantee that the Admission Document will be published or that the Placing and Admission will occur, and you should not base your financial decisions on the Company's intentions in relation to the Placing and Admission at this stage. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. The value of shares can decrease as well as increase. This announcement does not constitute a recommendation concerning the Placing. Persons considering an investment in such investments should consult an authorised person specialising in advising on such investments.

This announcement contains certain statements that are, or may be, forward looking statements with respect to the financial condition, results of operations, business achievements and/or investment strategy of the Company. Such forward looking statements are based on the Board's expectations of external conditions and events, current business strategy and plans and the other objectives of management for future operations, and estimates and projections of the Company's financial performance. Though the Board believes these expectations to be reasonable at the date of this announcement, they may prove to be erroneous. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Group, or the industry in which the Group operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements.

Certain figures in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly to the total figure given.