Unaudited Preliminary Results, 20 Jul 2021 07:00

20 July 2021, 07:00

Source - LSE Regulatory

RNS Number : 7453F

Supreme PLC

20 July 2021

Supreme plc

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

Unaudited Preliminary Results for the Year Ended 31 March 2021

"Strong revenue and Adjusted EBITDA¹ performance underpins both

organic and acquisitive growth opportunities"

Supreme (AIM:SUP), a leading manufacturer, supplier and brand owner of fast-moving consumer products, announces its unaudited preliminary results for the year ended 31 March 2021 ("FY21").

Financial highlights

	FY21 (£ million)	FY20 (£ million)	% Change
Revenue	122.3	92.3	+33%
Gross Profit	33.0	26.6	+24%
Gross Profit %	27.0%	28.8%	-1.8%
Adjusted EBITDA¹	19.3	16.0	+21%
Adjusted Profit before tax²	16.4	13.6	+21%
Profit before Tax	13.0	13.2	-2%
Net Debt	7.6	21.3	+64%
EPS	8.9p	9.9p	-10%
Adjusted EPS³	12.0p	10.3p	+17%

· Strong organic growth across all key categories coupled with encouraging performances from the recent acquisitions. The strongest sales growth was generated in the two highest margin categories

- Vaping 36% revenue growth

- Sports Nutrition & Wellness 38% revenue growth

· Gross profit grew by 24% driven by increases for manufactured lines that benefitted from economies of scale and efficiency improvements. Gross profit as a percentage of sales was marginally lower (1.8ppt) reflecting the change in the sales mix with the addition of the Branded Household Consumer Goods category

· The Balance Sheet was notably stronger, with net assets of £18.8 million (FY20: £4.1 million) and net debt of only £7.6 million (FY20: £21.3 million) at the end of FY21.

Operational highlights

· Successfully admitted to trading on AIM in February 2021 and achieved an oversubscribed fundraising with a register of high calibre institutional investors

· Strong new business momentum achieved throughout the year

- In June 2020, secured contract with Scottish Prison Service for bespoke vaping products providing further endorsement of vaping from the public sector;

- In March 2021, completed the roll-out of 88Vape products across McColl's estate adding a further 1,180 retail convenience stores nationwide; and

- Continued progress in product and category development by expanding the Sports Nutrition & Wellness category into protein snack bars (via the acquisition of Battle Bites) and meal replacements.

· Rapid response to COVID-19:

- Undisrupted manufacturing and distribution operations throughout the pandemic;

- Early-adoption of full-site weekly testing to ensure the safety of all our staff; and

- Seamless business adaptations to manage the changes to our distribution channels - most notably the rapid growth of our online offerings.

Post period-end highlights and outlook

· The current financial year to 31 March 2022 ("FY22") has started well, including 2 new customers wins - Sainsburys (who will begin to stock 88vape in 400 stores starting in late Summer) and Core Communications who aim to supply 88vape to their network of 25,000 independent retailers. All areas of the business are performing in line with management expectations.

· In June 2021, completed the acquisitions of:

- Vendek Limited, Ireland's leading distributor of batteries and lighting products, creating a hub from which to expand Supreme's European footprint. The acquisition is expected to be immediately earnings enhancing for the Group; and

- the stock and brands of Sci-MX Nutrition Limited, a leading sports nutrition and supplements business.

· Maiden dividend payment expected following publication of FY22 interim results.

· The board and management of Supreme continue to monitor the COVID-19 situation closely but remain confident in the growth prospects for the Group in the medium-term

Sandy Chadha, Chief Executive Officer of Supreme, commented:

"Supreme performed very strongly in the year ended 31 March 2021, as reflected by the 21% increase in Adjusted EBITDA¹ that we achieved, underpinned by solid trading across all of our key categories. I am also extremely proud of the Supreme team and their response throughout the pandemic. Without their hard work and dedication, our trading performance would simply not have been possible.

"The management team has big ambitions to deliver sustained growth and further leverage the platform we have built at Supreme, including its status as a quoted company. There are clear and very exciting opportunities that exist for our business, particularly in categories like Sports Nutrition & Wellness and Vaping, and I look forward to providing further updates in due course as we capitalise on these.

"We have made a good start to the current financial year and look to the future with confidence."

¹Adjusted 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 other non-recurring items (including all IPO-related costs)

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 other non-recurring items (including all IPO-related costs)

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 other non-recurring items (including all IPO-related costs).

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

Sandy Chadha, Chief Executive Officer

Suzanne Smith, Chief Finance Officer

via Vigo Consulting

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett / Samantha Harrison / Harrison Clarke

+44 (0)20 7383 5100

Berenberg (Broker)

Chris Bowman / Mark Whitmore / Jen Clarke

+44 (0)20 3207 7800

Vigo Consulting (Financial Public Relations)

Jeremy Garcia / Antonia Pollock

supreme@vigoconsulting.com

+44 (0)20 7390 0230

About Supreme

Supreme supplies products across five key categories; batteries, lighting, vaping, sports nutrition & wellness, and branded household consumer goods. 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 3,300 active business accounts with retail customers who manage over 10,000 branded retail outlets. Customers include B&M, Home Bargains, Poundland, The Range, Sainsburys, Sports Direct, Londis, SPAR, Costcutter, Asda, Halfords, McColls, Iceland 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 and JCB licenses across 45 countries, Supreme has also developed brands in-house, most notably 88Vape and has a growing footprint in Sports Nutrition & Wellness.

www.investors.supreme.co.uk

Chairman's Statement

It is a pleasure to provide our first set of results for Supreme as a public company. Our February 2021 IPO was a major milestone for the Company, which received positive support from the investor community. We are extremely proud to be publicly quoted and look forward to capitalising on the many benefits that our public quotation brings.

Supreme traded strongly in the year-ended 31 March 2021, achieving a 33% increase in revenues to £122.3 million (2020: £92.3 million) and a 21% increase in Adjusted EBITDA¹ to £19.3 million (2020: £16.0 million), which was ahead of expectations. We maintained our attractive financial profile during the year, with strong EBITDA and cash flow growth, underpinned by our capital light model and strong balance sheet.

Despite the broader impact of COVID-19 on the UK economy, the Company was able to maintain strong business continuity, successfully trading throughout and navigating the challenges presented, by adapting to the ever-evolving situation. Supreme continued to benefit from operating in attractive markets, including the large and fast-growing vaping, lighting and sports nutrition markets as well as being vertically integrated, our manufacturing facilities remaining fully operational throughout the pandemic with the majority of our customers remaining open for business.

Demand for Supreme's everyday items withstood the economic pressures of the pandemic and we were able to leverage our vertically integrated platform and extensive retail network that includes over 3,300 accounts and 70,000 active online accounts.

I firmly believe that our team's hard work and talent was core to our business overcoming the many obstacles presented by COVID-19. To achieve sustained growth and progress in all categories during a year of disruption and uncertainty is testament to the strength of Supreme's team and the Company's underlying business structure.

Ahead of the IPO, we put together a high calibre, well-balanced Board with a strong blend of skills and relevant experience. Sandy Chadha, our CEO, was joined by our CFO, Suzanne Smith, as the Executive Directors. Concurrently, three independent non-executive directors were appointed including Mark Cashmore as Senior Non-Executive Director and Chair of the Remuneration Committee and Simon Lord as Chair of the Audit & Risk Committee. They have each brought diverse and informed perspectives, enabling our committees to be fully functional from an early stage and, I am confident, will also continue to apply independent judgement and diligent oversight to the operation of the Board.

Looking to the future, the Board firmly believes Supreme will continue to deliver strong year-on-year growth following a solid start to the current financial year. We have a highly experienced management team, great value products, an almost unrivalled distribution platform and a proven business model, in addition to a focused growth strategy centred around domestic and overseas expansion.

Finally, I would like to put on-record my gratitude to the whole Supreme team for their dedication and tenacity in the last 18 months in navigating our business through the pandemic. This commitment has been reflected in a strong set of results and we look to the future with confidence.

Paul McDonald

Non-executive Chairman

19 July 2021

Chief Executive Officer's Review

Introduction

I am delighted to announce our first set of results as a quoted company, in what was a fantastic year for our business, with the IPO of the Company a clear highlight. In the year ended 31 March 2021, we achieved significant progress across all of our key categories, in particular, within our two key growth categories of Vaping and Sports Nutrition & Wellness, whilst producing a very strong performance in our Lighting and Batteries categories. This performance further establishes Supreme as one of the leading suppliers and manufacturers of fast-moving consumer goods and a trusted partner to our customers and suppliers.

Supreme delivered a 33% increase in revenues to £122.3 million in the year (2020: £92.3 million) and a 21% increase in Adjusted EBITDA¹ to £19.3 million (2020: £16.0 million), which was ahead of expectations. Central to our strong financial performance is the prominence of our brands and our diverse and extensive retail network, which includes 3,300 active accounts across wholesale, discount, supermarket, high street, international and public sector customers, in addition to 70,000 active online accounts.

Specifically, Supreme delivered a 36% increase in revenues in its Vaping division, with its 88Vape brand continuing to achieve strong customer traction, as demonstrated by the recent agreement with McColl's. Furthermore, the Group's Sports Nutrition & Wellness category delivered 38% revenue growth, which was underpinned by the success of the acquisition of Battle Bites protein snack bars in October 2020, the expansion of the powdered protein range into meal replacements under the Solo brand and the early success of private label vitamins, which will be further complemented by additional product launches later in 2021.

I am also extremely proud of the way the Supreme team has responded throughout the COVID-19 pandemic, which has touched the lives of every individual and had a huge impact on the broader UK economy. Most importantly, we have kept our people safe throughout this period, whilst ensuring strong business continuity. We introduced testing for all our staff well ahead of our peers and have ensured PPE equipment and social distancing guidelines were implemented across the Group.

Operational Review

The Supreme business model is simple. We leverage our vertically integrated platform to introduce new consumer brands and increase the penetration of our existing brands and products across our customer base. These brands may be licensed, own-brand or acquired, as well as white-labeled for certain customers. We typically distribute over 2,000 products daily across our five product categories. Whether it be our brands or distribution agreements with battery brands like Panasonic, Energizer and Duracell, we continue to strive to maximise our routes to market to ultimately generate a greater return on our investment.

In addition, our state-of-the-art manufacturing facilities continue to ensure we yield superior returns for our products, most notably for our 88Vape e-liquids as well as our powders and vitamins within the Sports Nutrition & Wellness division. We also made further progress in developing our online fulfillment ordering and integrated management systems for retailers during the year.

The past financial year has highlighted both the robustness and versatility of our vertically integrated platform. With this strong platform firmly at the heart of our business, management will continue to focus on the following strategic growth drivers, which are to:

· concentrate on high growth and high margin categories such as vaping and sports and nutrition, which have strong market tailwinds;

· expand our international footprint through existing customer relationships and strategic acquisitions;

· broaden our customer base and increase penetration through cross-sell opportunities and increasing the average revenue per customer;

· continue to develop innovative products and enter additional verticals to cater for Supreme's broad customer base, focused on a high quality yet good value consumer proposition;

· increase our manufacturing efficiencies through further economies of scale and bringing the manufacture of certain products in-house;

· evaluate complementary acquisitions to add immediate value, through increased efficiencies and synergies with the Group's existing activities; and

· enhance online distribution and services to further grow our B2B and D2C sales channels.

Batteries

We have over 20 years' experience in the consumer battery market, holding license agreements with household names including Panasonic, Duracell and Energizer since the 1990s, in addition to an exclusive 11-year relationship with JCB, and a 7-year relationship with Philips. We have grown to become one of the UK's largest independent distributors of batteries, delivering over 200 million a year. This division performed well in the year-ended 31 March 2021, with a 10% gross profit margin and a number of successes in capitalising on cross-sell opportunities. The category brings stability due to repeat customers, which results in high revenue visibility. Nonetheless, avenues to further growth exist, including an increase in our B2B sales offering.

Pleasingly, we have seen growth across all of our major brands and retailers during the year, with unprecedented demand experienced during lockdown. This excellent performance against a backdrop of extremely challenging times further highlights our distribution capabilities and the strength of our relationships with global battery brands.

Lighting

From licensed, private, and white-label lighting to LED light fittings, our continued investment in this category has seen us develop into an expert supplier for the world's leading brands. The division reported gross profit of £8.0 million, representing 24% of the Group's total gross profit, driven by sales of licensed brands including Eveready, Energizer and JCB.

Supreme maintained the core revenue base and profitability within the lighting category during the year, despite a wide-spread technology shift from halogen to LED during the year, with LEDs carrying a lower unit selling price. However, our distribution-based business model ensured Supreme was able to maintain a strong gross margin of 31%.

Our international expansion plans for our lighting business have been delayed as a result of the pandemic, but we firmly believe there are some exciting growth prospects across Europe, and we are now actively pursuing a number of opportunities.

Vaping

It was an exceptional year for our industry-leading value vaping brand, 88vape, in which revenues increased by 36% to £39.5 million in the period whilst achieving the milestone of 1 million regular users worldwide. Now perceived as a healthier alternative to smoking, we have witnessed heightened demand for our products, resulting in £6.3 million in direct sales to consumers in the period via our 88vape-branded website. The Group now distributes over 1,800 orders per day and 6 million bottles of e-liquid every month, following our successful move to a dedicated fulfillment centre. We have also seen an expansion of core underlying manufacturing margins delivered through purchasing economies and changes to core operating procedures.

We added the Scottish Prison Service to our list of public sector customers including Her Majesty's Prison & Probation Service ("HMPPS") in the year. We create bespoke products specially designed for use in prisons, including closed-system vaping products. This contract is an excellent example of how vaping and e-cigarettes continue to be supported by the UK Government, NHS England and a large number of public health organisations as a means to lower the number of active smokers in the UK, with the UK government working to make the UK smoke-free by 2030. We continue to see solid growth trends and, whilst e-cigarettes are not risk-free, they are a safer alternative compared to traditional cigarettes.

Finally, we continue to explore ways to bring more of our manufacturing in-house, which ultimately helps gross margin progression. This includes exploring opportunities to manufacture our range of vaping pre-filled cartridges in-house, rather than importing them from China.

Favourable market conditions and consumer habits, including strict regulation and low levels of consumer brand switching, makes 88vape well-positioned to increase its footprint in the vaping market.

Sports Nutrition & Wellness

The Sports Nutrition & Wellness category was one of our leading performers in the year-ended 31 March 2021, growing revenues by 38% during the period. Following the GT Divisions Limited acquisition, we diversified our range, adding Battle Bites protein snacks to our existing own brand powder and beverage products, Protein Dynamix and GoNutrition. This acquisition of a recognised protein snack bar brand delivered an extensive customer base and an established consumer website with 5,000 visitors per week.

We have made significant progress in this division since entering the market just a few years ago, with revenues growing 187% between March 2019 and March 2021. After enjoying some early success following our expansion into the vitamin supplements market, we remain optimistic about further growth opportunities which will be facilitated by our brand-new manufacturing facility dedicated to vitamin and powder production. In addition, we have two vitamin launches scheduled for this year, with the introduction of Sealions, our first digital-only brand, in July 2021, and our retail brand, Millions & Millions, is due for launch in September 2021, with Davina McCall as brand ambassador. We also continue to progress developing our private label vitamins business and have already delivered £0.5 million sales ahead of the official launch.

Branded Household Consumer Goods

We continue to develop our nascent Branded Household Consumer Goods category following the acquisition of Provider Distribution in February 2020. It delivered a strong first year under Supreme's ownership, undoubtedly boosted by the pandemic, and a £1 million pharmaceutical bottling contract, which we believe is unlikely to be repeated in the current financial year.

Regardless, we believe the characteristics of this segment, alongside our other FMCG products, offer potentially significant market opportunity given the breadth of our distribution capabilities.

COVID-19 Response

First and foremost, I would like to thank all our staff for their incredible efforts throughout COVID-19. Health and safety at all factory sites and office buildings has always been Supreme's top priority, and our employees have made a concerted effort to adhere to social distancing guidelines in a difficult period for all.

Despite the inevitable disruption caused by COVID-19, Supreme has performed strongly throughout the pandemic. Supply across all channels to market was uninterrupted throughout the year, with warehousing and manufacturing facilities remaining operational. Even between April and July 2020, the strictest period of lockdown, sales across all categories grew year-on-year, manifesting our resilience and adaptability. I am extremely proud of all our staff for reaching their targets and helping to achieve record growth.

Dividend

As highlighted at the time of our IPO, we intend to pay dividends to shareholders in an aggregate annual amount equivalent to approximately 50% of net profits, retaining the balance of earnings from operations to finance our future expansion. Our dividend payments are expected to be split into a one third interim dividend and a two thirds final dividend and we expect to declare our first interim dividend following the publication of our interim results for the six-month period to 30 September 2021.

Outlook

Having successfully completed our IPO on the London Stock Exchange and delivering a record financial performance in the year ended 31 March 2021, the business is ideally placed for ongoing sustainable growth. We continue to invest in launching new products, as well as expanding both our manufacturing and distribution capabilities whilst maintaining a well-managed cost base

We have made an encouraging start to the current financial year with strong demand across all our divisions. Our Vaping segment continues to be a key profit driver, as we seek to expand our market share through our B2C online offering, and our Sports Nutrition & Wellness category is poised for expansion following the launch of our Sea Lions and Millions & Millions vitamins brands and the acquisition of the brands and stock of Sci-MX Nutrition.

The board and management of Supreme continue to monitor the COVID-19 situation very closely but remain confident in the outlook for the business for the current financial year and beyond.

Sandy Chadha

Chief Executive Officer

19 July 2021

Chief Finance Officer's Review

Introduction

The year ended 31 March 2021 was a year of unprecedented change for Supreme. We successfully integrated both new operations and people following the acquisitions undertaken in FY20; changed the Group's capital structure and Board as a result of the IPO; and implemented a number of operational changes as a result of the pandemic. Pleasingly, the financial performance of the business remained strong, delivering revenue growth of 33% to £122.3 million (FY 20: £92.3 million), an increase in gross profit of 24% to £33.0 million (FY20: £26.6 million) and an increase in Adjusted EBITDA¹ of 21% to £19.3 million (FY20: £16.0 million).

	FY21 (£ million)	FY20 (£ million)	% Change
Revenue	122.3	92.3	+33%
Gross Profit	33.0	26.6	+24%
Gross Profit %	27.0%	28.8%	-1.8%
Adjusted EBITDA¹	19.3	16.0	+21%
Adjusted Items	3.4	0.4
Profit before Tax	13.0	13.2	-2%
Adjusted Profit before tax²	16.4	13.6	+21%
Operating Cash Flow	12.3	17.0	-27%
Adjusted Operating Cash flow⁴	14.7	17.5	-16%
Net Assets	18.8	4.1	+358%
Net Debt	7.6	21.3	+64%
EPS	8.9p	9.9p	-10%
Adjusted EPS³	12.0p	10.3p	+17%

Revenue

Revenue for FY21 was £122.3 million (FY20: £92.3 million), an increase of 33%. Around half of this growth can be attributed to recent acquisitions, and the remainder to strong organic growth across all categories. This organic growth was against the backdrop of national lockdowns that impacted the majority of this reporting period, where we estimate around 10% of our customers were closed and many reported lower footfall through their stores.

Revenue by division

· Revenue for Batteries was £34.4 million (FY20: £30.9 million). This growth of £3.5 million (11%) was entirely organic and reported across all major brands and distribution channels. The extent of the COVID-19 "bounce" in these results will be determined in the coming months.

· Revenue for Lighting was £25.9 million (FY20: £25.3m). Considering the revenue reported in FY20 included a one-off benefit as a result of the technology shift from halogen to LED,, management are pleased with the deemed underlying revenue growth.

· Revenue for Vaping was £39.5 million (FY20: £29.0 million). This growth (36%) was a result of the full year impact of the HMPPS contract, increased sales to consumers via the 88vape.com website plus underlying organic growth of e-liquids via our core retail and wholesale channels.

· Revenue for Sports Nutrition & Wellness was £6.9 million (FY20: £5.0 million). Year on year growth of 38% was a result of the incremental revenues from the acquisition of GT Divisions in October 2020 combined with the success of new product launches and growth in the core range.

· Revenue for Branded Household Consumer Goods was £15.5 million (FY20: £2.0 million) - the full year impact of the acquisition of Provider Distribution (acquired in February 2020) accounts for 93% of the growth, with the remainder arising from a pharmaceutical bottling contract that generated £1 million of revenue in FY21 that is not expected to re-occur in FY22.

Gross profit

Gross profit for FY21 was £33.0 million (FY20: £26.6m), representing growth of 24%. Gross profit as a percentage of turnover decreased during the year by 1.8ppt from 28.8% to 27.0%, reflecting the change in sales mix (specifically the addition of the Branded Household Consumer Goods category where reported gross profit percentage is around 10%).

By category, gross profit margins were largely unchanged year-on-year (a positive result for Lighting given the technology changes underpinning FY21 sales and also for Sports Nutrition & Wellness where the addition of Battle Bites (distribution only) diluted the impact of the manufacturing margins within the category. The gross profit gains in Vaping are noteworthy - driven by the gains in manufacturing (both in terms of process and volume).

By the end of FY21, gross profit generated from manufactured categories (Vaping and Sports Nutrition & Wellness) accounted for 58% of the total gross profit of the group (FY20: 52% of total gross profit).

Adjusted EBITDA

Adjusted EBITDA¹ increased by £3.3 million (21%) in the year, driven by growth in revenue and gross profit offset by some modest investment in the overhead base to support growth.

Adjusted Items

Adjusted Items of £3.4 million (FY20: £0.4 million) comprised:

- £2.0 million relating to the Group's admission to AIM in February 2021 (which include £1.7 million of adviser fees and commission, £0.2 million of accelerated debt arrangement fees (associated with the tranche of debt that was settled on admission to AIM) and £0.1 million in relation to Company bonuses that were contingent on the transaction;

- £0.4 million in relation to a group-wide reorganisation that took place during the year following the integration of businesses and assets acquired in FY20; and

- £0.8 million in relation to the fair value movements on non-hedge accounted derivatives.

Finance costs

Finance costs were £0.7 million in the year (FY20: £0.8 million) arising from the interest-bearing Senior Facility held throughout the period (£0.6 million) plus the interest relating to the lease liabilities under IFRS16 (£0.1 million).

Taxation

Total tax charge in the year was £3.1 million (FY20: £2.3 million), giving rise to an effective tax rate of 24% (FY20: 18%). The increase in the rate arose from the disallowed expenses in relation to the IPO. Going forward, we expect the Group's effective tax rate to re-align to the UK corporation tax rate.

Profit After Tax and Earnings per share

Profit after tax was £9.8 million compared to £10.9 million in FY20 and the fully diluted earnings per share were 8.7p (FY20: 9.8p). On an adjusted profit after tax basis, which we consider to be a better measure of performance, adjusted earnings were £13.3 million (FY20: £11.3 million) and Adjusted earnings per share³ was 12.0p (FY20: 10.3p)

Dividends

The Group's dividend policy is to pay an annual amount equivalent to around 50% of net profit. In line with the Group's policy set out at IPO, the Directors do not intend to declare a dividend in respect of FY21. The Directors plan to declare its maiden dividend to shareholders following the FY22 interim results which, in line with policy, is expected to be 1/3 of the full year dividend.

Cash flow

	FY21 (£ million)	FY20 (£ million)	Change (£ million)
Adjusted EBITDA¹	19.3	16.0	3.3
Movement in working capital	(1.6)	3.2	(4.8)
Taxation paid	(3.0)	(1.7)	(1.3)
Adjusted operating cash flow⁴	14.7	17.5	(2.8)
Cash-impacting Adjusted Items:
IPO fees	(2.0)	-	(2.0)
Restructuring	(0.4)	(0.3)	(0.1)
Acquisition costs	-	(0.2)	0.2
Operating cash flow	12.3	17.0	(4.7)
Debt (servicing) / raising	(14.2)	4.4	(18.6)
Capex (incl M&A)	(2.1)	(5.1)	3.0
Dividends	(3.0)	(11.0)	8.0
Proceeds from IPO	7.8	-	7.8
Net cash flow	0.8	5.2	(4.4)

We continued to be cash generative in FY21 with Adjusted operating cash flow⁴ of £14.7 million (FY20: £17.5 million). This result is a combination of the continued growth in the Group's EBITDA offset by the planned investment into working capital to support growth of £1.6 million outflow (FY20: £3.2 million inflow) - last year's closing stock balance was unusually low (due to delayed shipments from China at the onset of the pandemic) and last year's reported trade creditors balance was unusually high, as the Group sought to manage cash cautiously given the initial uncertainty brought about by COVID-19. The working capital position reported in FY21 is more aligned to the "normal" cash flows associated with the Group.

With reference to cash flows associated with the Group's admission to AIM, the IPO raised funds of £7.8 million for the Group (£7.5 million of which was used to repay a tranche of its senior debt facility). There was also a cash outflow of £2.0 million associated with adviser fees, commission and staff bonuses directly attributable to the IPO.

In reference to cash flows from investing, we report a cash outflow of £1 million in respect of the acquisition of GT Divisions and Financing cash outflows represented the servicing of the Senior Debt facility in ordinary course, plus a further £7.5 million on admission to AIM as outlined above.

Net debt

	FY21 (£ million)	FY20 (£ million)	Change (£ million)
Cash	(7.5)	(6.7)	(0.8)
Bank Loan	9	21.6	(12.6)
Amounts owed to related parties	3.4	3.4	-
IFRS 16 lease liability	1.5	1.5	-
Other	1.1	1.4	(0.3)
Total net debt	7.6	21.3	(13.7)

Borrowings significantly reduced in the year as a result of the (normal) debt servicing profile of the senior facility, further enhanced by the £7.5 million repayment following the IPO fundraise. At year end, the Group reported net debt of £7.6 million (FY20: £21.3 million), only 0.4x Adjusted EBITDA¹. Immediately after the period end, the Group also repaid 50% of its related party obligations (amounting to £1.7 million).

Events after the Balance Sheet Date

On 10 June 2021 Supreme acquired the entire share capital of Vendek Limited, a leading Dublin-based distributor of batteries and lighting products, for an initial consideration of €1.07 million. The acquisition is expected to be immediately earnings-enhancing.

On 30^th June 2021, Supreme acquired the brands and stock of Sci-MX Nutrition Limited, a leading sports nutrition and supplements business, for £2.3 million. The Acquisition added a number of well-known brands (including Sci-MX and PRO2GO) to the Group's growing Sports Nutrition & Wellness category.

Brexit

In light of the EU-UK Trade and Cooperation Agreement signed in December 2020, the Board continues to monitor the impact of Brexit. A multi-functional project steering committee manages the impact on the Group's operations prior to and following Brexit.

The Group has experienced an increased administrative burden post Brexit although its exposure to EU-UK trade is relatively low (only 8% of revenue originated in Europe in FY21). The acquisition of Vendek Limited shortly after year end, based in the Republic of Ireland, is expected to mitigate some of the impacts of Brexit by providing a European distribution hub for Supreme within Europe to better serve the existing and target EU customers.

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

Suzanne Smith

Chief Finance Officer

19 July 2021

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 other non-recurring items (including all IPO-related costs)

³Adjusted 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 other non-recurring items (including all IPO-related costs).

⁴Adjusted Operating Cash Flow means net cash from operations before the cash impact of Adjusted items (as defined in Note 7 of the financial statements).

GROUP FINANCIAL STATEMENTS OF SUPREME PLC

Consolidated Statement of Comprehensive Income

		Year Ended 31 March 2021	Year Ended 31 March 2020
	Note	£'000	£'000

Revenue	5	122,253	92,329
Cost of sales	6	(89,211)	(65,717)
Gross Profit		33,042	26,612

Administration expenses	6	(19,416)	(12,619)
Operating profit		13,626	13,993

Adjusted EBITDA¹		19,272	16,001
Depreciation	14 & 22	(1,998)	(1,548)
Amortisation	13	(225)	(25)
Adjusted items	7	(3,423)	(435)

Operating profit		13,626	13,993

Finance income	9	-	3
Finance costs	10	(671)	(783)
Profit before taxation		12,955	13,213

Income tax	11	(3,117)	(2,318)
Profit for the year		9,838	10,895

Other comprehensive income/(loss)
Currency translation differences		-	(9)
Total comprehensive income for the year		9,838	10,886

Earnings per share - basic	12	8.9p	9.9p
Earnings per share - diluted	12	8.7p	9.8p

Note 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

		As at 31 March 2021	As at 31 March 2020
	Note	£'000	£'000
Non-current assets
Assets
Goodwill and other intangibles	13	2,628	1,778
Property, plant and equipment	14	2,787	3,458
Right of use asset	22	1,476	1,495
Investments	15	7	7
Total non-current assets		6,898	6,738

Current assets
Inventories	17	19,865	14,458
Trade and other receivables	18	16,052	16,738
Derivative financial instruments	23.9	-	209
Income tax recoverable		-	9
Cash and cash equivalents	19	7,505	6,718
Total current assets		43,422	38,132
Total assets		50,320	44,870

Liabilities

Current liabilities
Borrowings	21	10,476	10,573
Trade and other payables	20	13,295	10,289
Derivative financial instruments	23.9	559	-
Income tax payable		2,370	2,340
Total current liabilities		26,700	23,202
Net current assets		16,722	14,930

Borrowings	21	4,658	17,413
Deferred tax liability	16	141	191
Total non-current liabilities		4,799	17,604
Total liabilities		31,499	40,806
Net assets		18,821	4,064

Equity
Share capital	24	11,650	11,001
Share premium		7,195	-
Merger reserve		(22,000)	(22,000)
Share-based payments reserve		75	-
Retained earnings		21,901	15,063
Total equity		18,821	4,064

Consolidated Statement of Changes in Equity

	Share Capital	Share Premium	Merger reserve	Share-based payments reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 April 2019	11,001	-	(22,000)	-	15,177	4,178

Profit for the year	-	-	-	-	10,895	10,895
Other comprehensive loss	-	-	-	-	(9)	(9)
Total comprehensive income for the year	-	-	-	-	10,886	10,886

Transactions with shareholders:
Dividends	-	-	-	-	(11,000)	(11,000)
As at 31 March 2020	11,001	-	(22,000)	-	15,063	4,064

Profit for the year	-	-	-	-	9,838	9,838
Total comprehensive income for the year	-	-	-	-	9,838	9,838

Transactions with shareholders:
Issue of shares - options exercised	89	255	-	-	-	344
Issue of shares - IPO shares	560	6,940	-	-	-	7,500
Employee share schemes - value of employee services	-	-	-	75	-	75
Dividends	-	-	-	-	(3,000)	(3,000)
	649	7,195	-	75	(2,925)	4,919
As at 31 March 2021	11,650	7,195	(22,000)	75	21,901	18,821

Consolidated Statement of Cash Flows

		Year Ended 31 March 2021	Year Ended 31 March 2020
	Note	£'000	£'000
Net cash flow from operating activities
Profit for the year		9,838	10,895
Adjustments for:
Amortisation of intangible assets	13	225	25
Depreciation of tangible assets	14 & 22	1,998	1,548
Fixed asset investment written off	15	-	60
Finance income	9	-	(3)
Finance costs	10	671	783
Amortisation of capitalised finance costs		177	149
Income tax expense	11	3,117	2,318
Movement on forward foreign exchange contracts	23.9	768	-
Share based payments expense	25	75	-
Working capital adjustments
(Increase)/decrease in inventories		(5,286)	2,472
Decrease/(increase) in trade and other receivables		970	(942)
Increase in trade and other payables		2,726	1,442
Taxation paid		(3,003)	(1,716)
Net cash from operations		12,276	17,031
Cash flows used in investing activities
Purchase of intangible fixed assets	13	(125)	(26)
Purchase of property, plant and equipment	14	(1,667)	(1,655)
Purchase of subsidiaries net of cash acquired	26	(1,005)	(3,547)
Proceeds from sale of property, plant and equipment		890	-
Interest received		-	3
Net cash used in investing activities		(1,907)	(5,225)
Cash flows used in financing activities
Drawdown of loans	21	-	6,000
Repayment of loans	21	(13,021)	(4,066)
Drawdown of other loans	21	-	3,735
Proceeds from IPO		7,500	-
Proceeds from issue of options		344	-
Payment of deferred consideration		(195)	-
Dividends paid		(3,000)	(11,000)
Finance costs paid		(591)	(691)
Lease payments	22	(619)	(579)
Net cash used in financing activities		(9,582)	(6,601)

Net increase in cash and cash equivalents		787	5,205
Cash and cash equivalents brought forward		6,718	1,543
Foreign exchange		-	(30)
Cash and cash equivalents carried forward		7,505	6,718

Cash and cash equivalents	19	7,505	6,718
		7,505	6,718

Notes to the Group Financial Statements

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 household consumer goods. The registered office is 4 Beacon Road, Ashburton Park, Trafford Park, Manchester, M17 1AF.

These Group financial statements have been prepared on a going concern basis under the historical cost convention, modified for the revaluation of certain financial instruments; in accordance with both international accounting standards in conformity with the requirements of the Companies Act 2006.

Unaudited preliminary or annual results announcements

The financial information for the year ended 31 March 2021 and the year ended 31 March 2020 does not constitute the company's statutory accounts for those years. Statutory accounts for the year ended 31 March 2020 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The financial information for the year ended 31 March 2021 is unaudited. The statutory accounts for that year will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Group expects to publish full financial statements that comply with IFRSs in August 2021.

Initial public offering ("IPO")

In preparation for the IPO, the Company re-registered as a public limited company on 28 October 2020 and the Company's shares were admitted to trading on the Alternative Investment Market ("AIM"), a market operated by the London Stock Exchange, on 1 February 2021.

The preparation of Group financial statements requires the Directors to exercise their judgement in the process of applying accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group financial statements are disclosed in Note 4.

The Group financial statements are presented in sterling and, unless otherwise stated, amounts are expressed in pounds, to the nearest thousand. The financial information presented in respect of the year ended 31 March 2020 has been prepared on a basis consistent with that presented in the Company's Admission Document.

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. Summary of significant accounting policies

2.2 New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 March 2021 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

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 4.

2.3 Going concern

Supreme PLC provides essential products to well established retailers. The nature and price point of the products offered means that the Group is well positioned to overcome any volatility in the economic climate, which is further supported by a customer base who perform consistently strongly and are household names.

The Covid-19 pandemic has not had a material impact on the Group, with many of Supremes customers being able to remain open throughout. This has allowed the Group to continue its growth, both organically and through acquisition.

The group is funded by external banking facilities provided by HSBC until December 2022, as well as through surplus cash held at bank. The Board and Senior Management regularly reviews revenue, profitability and cash flows across the short, medium and longer term.

Management has assessed the Company's Going Concern status by undertaking a 3 year cash flow forecast where the modest levels of growth to revenue and costs have been applied and held all working capital assumptions in line with existing trends. No new categories or acquisitions have been assumed nor any significant economies of scale or manufacturing efficiencies. In terms of cash projections and overall liquidity, the Group reported cash of £7.5m and unused credit facilities of £11.8m (comprising an invoice discounting facility and an import loan facility). The cash flow forecasts show increasing levels of cash generation in FY22 and later years.

In addition to the 3 year forecast, a more detailed forecast of trading and cash flows has been performed for a the 12 month period following the date of these financial statements, including a downside sensitivity analysis, showing that profit would need to fall by 47% before an unpermitted breach of banking covenants occurs or facilities are exhausted.

Taking account of these facilities and having considered future strong trading and cash flow forecasts, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the Group 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.

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 household consumer goods.

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. 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 Company satisfies performance obligations by transferring the promised goods to its customers, i.e. when control has passed from the Company 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, where the trade and assets have subsequently been hived up into this company immediately post acquisition, and the related investment balance transferred to goodwill. 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%

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:

Plant and machinery - 25%

Fixtures and fittings - 25%

Motor vehicle - 25%

Fashion hire assets - 25%

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).

Fashion Hire assets are presented within property, plant and equipment. Revenue is generated from these assets through hire to third party customers. In the year ended 31 March 2021 these assets were sold to a director of the Company.

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 Income tax

The tax expense or credit represents the sum of the tax currently payable or recoverable and the movement in deferred tax assets and liabilities.

(a) Current income tax

Current tax is based on taxable income for the year and any adjustment to tax from previous years. Taxable income differs from net income in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years or that are never taxable or deductible. The calculation uses the latest tax rates for the year that have been enacted or substantively enacted by the dates of the Statement of Financial Position.

(b) Deferred tax

Deferred tax is calculated at the latest tax rates that have been substantively enacted by the reporting date that are expected to apply when settled. It is charged or credited in the Statement of Comprehensive Income, except when it relates to items credited or charged directly to equity, in which case it is also dealt with in equity.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Group financial statements and the corresponding tax bases used in the computation of taxable income, and is accounted for using the liability method. It is not discounted.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable income will be available against which the asset can be utilised. Such assets are reduced to the extent that it is no longer probable that the asset can be utilised.

Deferred tax assets and liabilities are offset when there is a right to offset current tax assets and liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.11 Leases

The Company applies IFRS 16 in the Group financial statements. At inception of a contract, the Company 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 Company 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 Company's incremental borrowing rate.

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 Company 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.

2.12 Payroll expense and related contributions

The Company provides a range of benefits to employees, including annual bonus arrangements, paid holiday arrangements and defined contribution pension plans.

Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

2.13 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.

2.14 Pension costs

The Company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the Company. The annual contributions payable are charged to the statement of comprehensive income.

2.15 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of operating segments.

The Directors consider that there are five identifiable business segments, being the manufacture (vaping and sports nutrition & wellness only) and distribution of batteries, lighting, vaping, sports nutrition & wellness, and branded household consumer goods.

2.16 Dividends

Dividends are recognised as a liability and deducted from equity at the time they are approved. Otherwise dividends are disclosed if they have been proposed or declared before the relevant financial statements are approved.

2.17 EBITDA and Adjusted EBITDA

Earnings before Interest, Taxation, Depreciation and Amortisation ("EBITDA") and Adjusted EBITDA are non-GAAP measures used by management to assess the operating performance of the Company. EBITDA is defined as profit before finance costs, tax, depreciation and amortisation. Adjusted items are excluded from EBITDA to calculate adjusted EBITDA.

The Directors primarily use the Adjusted EBITDA measure when making decisions about the Company's activities as this provides useful information for shareholders on underlying trends and performance. As these are non-GAAP measures, EBITDA and Adjusted EBITDA measures used by other entities may not be calculated in the same way and hence are not directly comparable.

2.18 Exceptional costs and adjusted items

The Company's income statement separately identifies djusted items. Such items are those that in the Directors' judgement are one-off in nature or non-operating and need to be disclosed separately by virtue of their size or incidence and 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 fashion hire 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.

2.19 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.

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 applied to all accounts over £2,500 with exception of proforma accounts and accounts agreed by the CEO.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Trade and other payables

Trade and other payables are initially measured at their fair value and are subsequently measured at their amortised cost using the effective interest rate method; this method allocates interest expense over the relevant period by applying the "effective interest rate" to the carrying amount of the liability.

Invoice discounting facility

The company has entered into an invoice discounting arrangement with the bank, where a proportion of the debts have been legally transferred but the benefits and risks are retained by the Company. Gross receivables are included within debtors and a corresponding liability in respect of the proceeds received from the bank are shown within liabilities. The interest element of the bank's charges are recognised as they accrue and included in the statement of comprehensive income within other interest payable.

Borrowings

Interest-bearing overdrafts are classified as other liabilities. They are initially recorded at fair value, which represents the fair value of the consideration received, net of any direct transaction costs associated with the relevant borrowings. Borrowings are subsequently stated at amortised cost and finance charges are recognised in the Statement of Comprehensive Income over the term of the instrument using an effective rate of interest. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accruals basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. 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.

Derivatives

Derivatives are initially recognised at the fair value on the date the derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in the income statement within cost of sales, on the basis that is where the related expense is recognised, unless they are included in a hedging arrangement. Where the instruments have been traded to take advantage of currency movements and not directly linked to the settlement of purchase requirements the gain or loss is recognised separately in the statement of comprehensive income as other operating income/expense. Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.

3. Financial risk management

3.1 Financial risk factors

The Company's activities expose it to certain financial risks: market risk, credit risk and liquidity risk. The overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance. Risk management is carried out by the Directors, who identify and evaluate financial risks in close co-operation with key staff, for further details see Note 23.

(a) Market risk

Market risk is the risk of loss that may arise from changes in market factors such as competitor pricing, interest rates, foreign exchange rates.

(b) Credit risk

Credit risk is the financial loss to the Company if a customer or counterparty to financial instruments fails to meet its contractual obligation. Credit risk arises from the Company's cash and cash equivalents and receivables balances. Credit Insurance is applied to all accounts over £2,500 with exception of proforma accounts and accounts agreed by the CEO and therefore credit risk is considered low.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. This risk relates to the Company's prudent liquidity risk management and implies maintaining sufficient cash. The Directors monitor rolling forecasts of the Company's liquidity and cash and cash equivalents based on expected cash flow.

3.2 Capital risk management

The Company is funded by equity and loans. The components of shareholders' equity are:

(a) The share capital account arising on the issue of shares.

(b) The retained reserve or deficit reflecting comprehensive income to date.

The Company's objective when managing capital is to maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long term. The capital structure of the Company is managed and adjusted to reflect changes in economic conditions. The Company funds its expenditures on commitments from existing cash and cash equivalent balances, primarily received from issuances of shareholders' equity. There are no externally imposed capital requirements. Financing decisions are made based on forecasts of the expected timing and level of capital and operating expenditure required to meet the Company's commitments and development plans. Quantitative data on what the Company manages as capital is included in the Statement of Changes in Equity and in Note 23 to the Group Financial Statements.

3.3 Fair value estimation

The carrying value less impairment provision of trade receivables and payables are assumed to approximate to their fair values because of the short-term nature of such assets and the effect of discounting liabilities is negligible.

4. 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

4.1 Goodwill impairment

The Company tests goodwill for impairment every year in accordance with the relevant accounting policies. The recoverable amounts of cash-generating units are determined by calculating value in use. These calculations require the use of estimates.

Goodwill relates to various acquisitions and amounts to £1,602,000 at 31 March 2021 (31 March 2020: £1,214,000). Management consider that the estimates used in the impairment calculation are set out in Note 13. There are no reasonably possible scenarios in which the goodwill would be impaired.

4.2 Useful economic lives of property, plant and equipment

Property, plant and equipment is depreciated over the useful lives of the assets. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness. The carrying values are tested for impairment when there is an indication that the value of the assets might be impaired. When carrying out impairment tests these would be based upon future cash flow forecasts and these forecasts would be 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 useful economic lives applied are set out in the accounting policies (Note 2.6) and are reviewed annually.

4.3 Valuation of acquired intangibles

IFRS 3 requires separately identifiable intangible assets to be recognised on acquisitions. The principal estimates used in valuing the acquired intangible assets are the future cash flows estimated to be generated from these assets, expected customer attrition, growth in revenues and the selection of appropriate discount rates to apply to the cash flows. The Directors' assessment of these estimates is based on up-to-date information and evidence available at the time of finalising the valuation.

Accounting judgements

4.4 Inventory obsolescence

Management make use of judgement in determining whether certain inventory items are obsolete. Should these judgements be incorrect there could be a material difference in the recoverable value of inventory.

4.5 Right of use assets - discount rate

Management make use of judgements in determining the discount rate to be applied to the IFRS 16 'Leases' right of use asset and liability. This judgement determines the carrying value of the assets and liabilities, and the resulting depreciation and interest charge that is incurred.

5. Segmental analysis

The Chief Operating Decision Maker ("CODM") has been identified as the Board of Directors. The Board reviews the Company's internal reporting in order to assess performance and allocate resources. No balance sheet analysis is available by segment or reviewed by the CODM. The Board has determined that the operating segments, based on these reports, are the sale of:

· batteries;

· lighting;

· vaping;

· sports nutrition & wellness; and

· branded household consumer goods.

The Gross profit before foreign exchange shows the results using standard foreign exchange rates that are used throughout the year. The foreign exchange adjustment shown before gross profit is to adjust back to the actual rates incurred.

	Batteries	Lighting	Vaping	Sports nutrition & wellness	Branded household consumer goods	Year Ended 31 March 2021
	£'000	£'000	£'000	£'000	£'000	£'000

Revenue	34,434	25,905	39,544	6,856	15,514	122,253
Cost of sales	(31,156)	(17,913)	(23,186)	(4,210)	(13,867)	(90,332)
Gross profit before foreign exchange	3,278	7,992	16,358	2,646	1,647	31,921

Foreign exchange						1,121
Gross Profit						33,052

Administration expenses						(19,416)
Operating profit						13,626

Adjusted earnings before tax, depreciation, amortisation and adjusted items						19,282
Depreciation						(1,998)
Amortisation						(225)
Adjusted items						(3,423)

Operating profit						13,626

Finance income						-
Finance costs						(671)
Profit before taxation						12,955

Income tax						(3,117)
Profit for the year						9,838

	Batteries	Lighting	Vaping	Sports nutrition & wellness	Branded household consumer goods	Year Ended 31 March 2020
	£'000	£'000	£'000	£'000	£'000	£'000

Revenue	30,944	25,347	29,029	4,980	2,029	92,329
Cost of sales	(27,662)	(16,869)	(17,363)	(2,863)	(1,703)	(66,460)
Gross profit before foreign exchange	3,282	8,478	11,666	2,117	326	25,869

Foreign exchange						743
Gross Profit						26,612

Administration expenses						(12,619)
Operating profit						13,993

Adjusted earnings before tax, depreciation, amortisation and adjusted items						16,001
Depreciation						(1,548)
Amortisation						(25)
Adjusted items						(435)

Operating profit						13,993

Finance income						3
Finance costs						(783)
Profit before taxation						13,213

Income tax						(2,318)
Profit for the year						10,895

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 (2020: 2 customers) was £19,406,000 and £17,114,000 (2020: £20,853,000 and £12,462,000). These revenues related to all segments.

Analysis of revenue by geographical destination

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
United Kingdom	111,459	82,482
Ireland	3,035	3,734
Netherlands	1,918	2,488
France	983	1,353
Rest of Europe	2,606	2,208
Rest of the World	1,011	1,305
	122,253	92,329

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.

6. Expenses by nature

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
The profit is stated after charging expenses as follows:
Inventories recognised as an expense	80,070	57,926
Impairment of inventories	406	-
Impairment of trade receivables	20	14
Staff costs - Note 8	7,026	6,561
Adjusted items - Note 7	3,423	435
Establishment and general	1,365	839
Depreciation of property, plant and equipment	1,998	1,548
Amortisation of intangible assets	225	25
Auditor's remuneration	92	73
Furlough grant income	(342)	-
Other operating expenses	14,344	10,915
Total cost of sales and administrative expenses	108,627	78,336

7. Adjusted items

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000

IPO costs	1,953	-
Fair value movements on financial derivatives	768	(208)
Restructuring costs	421	318
Share based payments charge (note 25)	75	-
Acquisition costs	15	176
Refinancing costs	191	149
	3,423	435

IPO costs relate to the Group's admission to AIM in February 2021, which include £1.81m of adviser fees and commission, £0.19m of accelerated debt arrangement fees (associated with the tranche of debt that was settled on admission to AIM) and £0.14m in relation to company bonuses that were contingent on the transaction.

The financial derivatives relate to open foreign exchange forward contracts (the Group typically holds 1 years' worth of USD-denominated purchases on open forward contracts). The charge in both years reflects the movement in the fair value of these open forward contracts at the balance sheet date year-on-year.

Restructuring costs in FY21 and FY20 relate to the integration of businesses and subsequent streamlining of operations following the acquisitions of Provider Distribution, the assets of LED Hut and the wider restructuring that took place as a result of COVID-19.

In FY21 and FY20, acquisition costs relate to the adviser fees relating to the acquisitions that took place during the year.

Refinancing costs represent the amortisation of arrangement fees and associated adviser fees incurred in obtaining the HSBC Senior Debt in F20. In FY21, the amortisation of some of these costs were accelerated and reported as IPO costs as a result (following early repayment of a tranche of the senior facility).

8. Employees and Directors

	Year Ended 31 March 2021	Year Ended 31 March 2020
	No.	No.
Average number of employees (including Directors):
Management and administration	53	49
Warehouse	57	52
Sales	26	31
Development	65	67
	201	199

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Aggregate remuneration of staff (including Directors):
Wages and salaries	6,300	5,747
Social security costs	621	564
Other pension costs	105	250
	7,026	6,561

Directors' remuneration

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Directors' emoluments	314	9
Social security costs	80	-
Company contributions to defined contribution pension schemes	1	-
	395	9

The highest paid director received remuneration of £144,000 (2020: n/a).

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 (2020: n/a).

During the year retirement benefits were accruing to 2 directors (2020: 2) in respect of defined contribution pension schemes.

9. Finance income

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Other interest receivable	-	3
	-	3

10. Finance costs

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Bank interest payable	164	55
Other interest payable	430	637
Interest on right-of-use assets	77	91
	671	783

Other interest payable represents interest payable in respect of the invoice discounting and supply chain facilities.

11. Taxation

	Year Ended 31 March 2021	Year Ended 31 March 2020
Current tax	£'000	£'000
Current year - UK corporation tax	3,156	2,459
Adjustments in respect of prior periods	-	(374)
Foreign tax on income	17	13
Total current tax	3,173	2,098

Deferred tax
Origination and reversal of timing differences	(56)	118
Adjustment for prior periods	-	94
Effect of tax rate change	-	8
Total deferred tax	(56)	220

Total tax expense	3,117	2,318

Factors affecting the charge

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Profit before taxation	12,955	13,213

Tax at the UK corporation tax rate of 19% (2021: 19%)	2,461	2,510
Effects of expenses not deductible for tax purposes	128	88
Disallowed IPO fees	385	-
Disallowed foreign exchange	146	(40)
Fixed asset differences	-	36
Adjustments to tax charge due to change in rates	-	8
Adjustments to tax charge in respect of prior periods	-	(280)
Recognition of previously unrecognised losses	(3)	-
Income not taxable for tax purposes	-	(5)
Difference in foreign tax rates	-	1
Total tax expense	3,117	2,318

Factors that may affect future tax charges

In the Spring Budget 2020, the Government announced that the previously enacted decrease in the corporate tax rate from 19% to 17% from 1 April 2020 would no longer happen and that rates would remain at 19% for the foreseeable future. The new law was substantively enacted post year end by a resolution under the Provisional Collection of Taxes Act 1968 on 17 March 2020. As the new law was substantively enacted pre year end, the impact of the change to 19% was reflected in the Group financial statements for the year ended 31 March 2020.

In the Spring Budget 2021, the Government announced an increase in the corporation tax rate from 19% to 25% from 1 April 2023. As the new law had not been substantively enacted by the balance sheet date, its impact has not been reflected in the financial statements. The impact of the increase would be to increase the deferred tax liability by approximately £45,000.

12. 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 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Profit for the year after tax	9,838	10,895

	No.	No.
Weighted average number of shares for the purposes of basic earnings per share	111,087,502	110,005,000
Weighted average dilutive effect of conditional share awards	2,124,446	1,256,158
Weighted average number of shares for the purposes of diluted earnings per share	113,211,948	111,261,158

	Pence	Pence
Basic profit per share	8.9	9.9
Diluted profit per share	8.7	9.8

Adjusted EPS

The calculation of adjusted earnings per share is based on the post-tax profit after adding back certain costs as detailed in the table below, namely the amortisation of acquired intangibles and Adjusted items. Management considers that this measure shows the underlying performance of the Group and enables comparisons to be drawn to other listed business who also use this measure.

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Adjusted earnings (see below)	13,353	11,288

	No.	No.
Weighted average number of shares for the purposes of basic earnings per share	111,087,502	110,005,000
Weighted average dilutive effect of conditional share awards	2,124,446	1,256,158
Weighted average number of shares for the purposes of diluted earnings per share	113,211,948	111,261,158

	Pence	Pence
Adjusted basic profit per share	12.0	10.3
Adjusted diluted profit per share	11.8	10.1

The calculation of basic adjusted earnings per share is based on the following data:

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Profit/(loss) for the year attributable to equity shareholders	9,838	10,895
Add back/(deduct):
Amortisation of acquisition related intangible assets	196	7
Adjusted items	3,423	435
Tax effect of the above	(104)	(49)
Adjusted earnings	13,353	11,288

13. Goodwill and other intangible assets

	Domain name £'000	Trademarks £'000	Customer relationships £'000	Trade name £'000	Goodwill £'000	Total £'000
Cost
At 1 April 2019	124	50	-	-	613	787
Arising on business combinations	-	-	419	-	601	1,020
Additions	-	15	-	-	-	15
At 31 March 2020	124	65	419	-	1,214	1,822

Arising on business combinations	-	-	341	221	388	950
Additions	125	-	-	-	-	125
At 31 March 2021	249	65	760	221	1,602	2,897

Accumulated amortisation
At 1 April 2019	16	3	-	-	-	19
Amortisation charged in the year	12	6	7	-	-	25
At 31 March 2020	28	9	7	-	-	44

Amortisation charged in the year	22	7	152	44	-	225
At 31 March 2021	50	16	159	44	-	269

Carrying amount
At 1 April 2019	108	47	-	-	613	768
At 31 March 2020	96	56	412	-	1,214	1,778
At 31 March 2021	199	49	601	177	1,602	2,628

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. The carrying value of goodwill has arisen following the acquisition of subsidiary entities, where the trade and assets have subsequently been hived up into this company, and the related investment balance transferred to goodwill. The carrying value of goodwill is allocated to the following cash generating units:

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Lighting	159	159
Batteries	492	492
Vaping	121	121
Sports Nutrition & Wellness	400	12
Branded Household Consumer Goods	430	430
	1,602	1,214

The Customer relationships, Trade name, and Goodwill arising in the year ended 31 March 2021 related to the acquisition of GT Divisions Limited, see note 26 for further detail. Goodwill arising in the year ended 31 March 2020 related to the acquisition of Provider Distribution Limited, Holding Esser Affairs B.V. and its subsidiary AGP Trading B.V. and Monocore Limited. Goodwill arising before 1 April 2019 related to the acquisition of Powerquick, Vape Importers and Sub Ohm that was hived up into Supreme Imports Ltd.

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 2021 or 31 March 2020. There were no charges for impairment of goodwill in 2021 (2020: nil). The pre-tax discount rate used in the value in calculations was 13%, the long term growth rate assumed was 2% and the gross profit margins applied were 10% for batteries, 33% for lighting, 47% for vaping, 35% for sports nutrition & wellness and 10% for branded household consumer goods.

14. Property, plant and equipment

	Plant and machinery £'000	Fixtures and fittings £'000	Motor vehicles £'000	Computer equipment £'000	Fashion hire assets £'000	Total £'000
Cost or valuation
At 1 April 2019	2,513	466	32	-	1,306	4,317
Additions	1,342	301	12	-	-	1,655
Acquisition of subsidiary	15	2	7	-	-	24
At 31 March 2020	3,870	769	51	-	1,306	5,996

Additions	1,566	1	-	100	-	1,667
Disposals	(120)	-	-	-	(1,306)	(1,426)
At 31 March 2021	5,316	770	51	100	-	6,237

Depreciation and impairment
At 1 April 2019	797	314	6	-	392	1,509
Depreciation charged in the year	815	135	10	-	69	1,029
At 31 March 2020	1,612	449	16	-	461	2,538

Depreciation charged in the year	1,197	192	11	11	37	1,448
Eliminated on disposal	(38)	-	-	-	(498)	(536)
At 31 March 2021	2,771	641	27	11	-	3,450

Carrying amount
At 1 April 2019	1,716	152	26	-	914	2,808
At 31 March 2020	2,258	320	35	-	845	3,458
At 31 March 2021	2,545	129	24	89	-	2,787

The depreciation charge for the year has been included in Administrative expenses in the Statement of Comprehensive Income.

15. Investments

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
At beginning of year	7	60
Amounts written off	-	(60)
On acquisition of subsidiaries	-	7
At end of year	7	7

The balance of £7,000 arising on acquisition of subsidiaries relates to shares held in public entities, by the acquired subsidiary, who are listed on the stock market.

The Company owns 20% of the share capital of Elena Dolce Limited, with a registered office of 111 Deansgate, Manchester, M3 2BQ. This was written off in the prior year.

At 31 March 2021 the Company directly owned 100% of the following subsidiaries, which are incorporated in England and Wales unless stated:

Subsidiary	Registered address	Principal activity	Class of share	Percentage holding
Supreme Imports Limited	4 Beacon Road, Ashburton Park, Trafford Park, Manchester M17 1AF	Distribution of consumer goods	Ordinary	100%
Provider Distribution Limited	Unit 1 Rosewood Park, St James Road, Blackburn, Lancashire BB1 8ET	Distribution of consumer goods	Ordinary	100%
SI Holdings (Jersey) Limited	11 Bath Street, St Helier, Jersey, JE4 8UT	Holding company	Ordinary	100%

At 31 March 2021 the Company indirectly owned 100% of the following subsidiaries, which are incorporated in England and Wales unless stated:

Subsidiary	Registered address	Principal activity	Class of share	Percentage holding
GT Divisions Limited	4 Beacon Road, Ashburton Park, Trafford Park, Manchester M17 1AF	Distribution of consumer goods	Ordinary	100%
VN Labs Limited		Distribution of consumer goods	Ordinary	100%
Battery Force Limited		Dormant	Ordinary	100%
Saira Shoes Limited		Dormant	Ordinary	100%
Powerquick Limited		Holding company	Ordinary	100%
Sub OHM Juice Limited		Dormant	Ordinary	100%
Supreme 88 Limited		Holding company	Ordinary	100%
Supreme Nominees Limited		Holding of shares as nominee	Ordinary	100%
Holding Esser Affairs B.V.	Vanadiumweg 13, 3812 PX, Armersfoort, Netherlands	Holding company	Ordinary	100%
AGP Trading B.V.	Vanadiumweg 13, 3812 PX, Armersfoort, Netherlands	Distribution of consumer goods	Ordinary	100%
SI Jersey Limited	11 Bath Street, St Helier, Jersey, JE4 8UT	Dormant	Ordinary	100%

The Directors believe that the carrying value of the investments is supported by their underlying net assets.

16. Deferred tax

Deferred tax consists of the following timing differences

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Excess of depreciation over taxable allowances	(171)	(221)
Short term timing differences	25	25
Tax losses carried forward	5	5
	(141)	(191)

Movement in deferred tax in the year

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Balance brought forward	(191)	31
Credited/(charged) to profit or loss	56	(220)
Arising on acquisitions	-	(3)
Transfer	(6)	1
Balance carried forward	(141)	(191)

The Directors consider that the deferred tax assets in respect of timing differences and tax losses carried forward are recoverable based on the forecast future taxable profits of the Company.

17. Inventories

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Goods for resale	15,849	12,282
Raw materials	4,016	2,176
	19,865	14,458

The Directors believe that the replacement value of inventories would not be materially different than book value.

Inventories at 31 March 2021 are stated after provisions for impairment of £270,000 (2020: £96,000).

18. Trade and other receivables

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Trade receivables	13,321	13,588
Amounts owed by related parties	1,790	1,790
Other receivables	172	405
Prepayments	769	955
	16,052	16,738

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.

The movement in provisions for impairment are shown below:

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Balance at the beginning of the year	26	52
Charged to the statement of comprehensive income	20	14
Utilisation of provision	(9)	(40)
Balance at the end of the year	37	26

Trade receivables disclosed above include amounts (see below for aged analysis) which are past due at the reporting date but against which the Company has not recognised an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are still considered recoverable.

Ageing of receivables

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Current	10,814	13,892
Less than 30 days	-	-
31 - 60 days	1,969	(285)
61 - 90 days	126	(4)
90 days +	449	11
Less provisions for impairment	(37)	(26)
	13,321	13,588

In determining the recoverability of a trade receivable the Company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Credit insurance is also in place.

Details on the Company's credit risk management policies are shown in Note 23. The Company does not hold any collateral as security for its trade and other receivables.

19. Cash and cash equivalents

As at

31 March 2021

As at

31 March 2020

£'000

Cash at bank

7,505

6,718

20. Trade and other payables

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Trade payables	7,299	6,907
Accruals and deferred income	4,343	1,618
Other tax and social security	1,648	1,541
Other payables	-	27
Directors loan account	5	1
Deferred consideration	-	195
	13,295	10,289

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. Trade and other payables are denominated in Sterling, Euros and US Dollars. 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.

21. Borrowings

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Current
Bank loans	5,304	5,310
Amounts owed to related parties	3,392	3,392
Other loans	1,165	1,378
IFRS 16 lease liability (Note 22)	615	493
	10,476	10,573

Non-current
Bank term loan	3,695	16,317
IFRS 16 lease liability (Note 22)	963	1,096
	4,658	17,413

Total borrowings	15,134	27,986

The earliest that the lenders of the above borrowings require repayment is as follows:

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
In less than one year	10,476	10,573
Between two and five years	4,658	17,413
In more than five years	-	-
	15,134	27,986

The Company is funded by external banking facilities provided by HSBC. Current bank borrowings includes invoice discounting facilities, which are secured by an assignment of, and fixed charge over the trade debtors of Supreme Imports Limited. Furthermore, current bank borrowings include an amount of £1,165,000 at 31 March 2021, (2020: £1,378,000) due under a supply chain facility which is secured by fixed and floating charges over all assets of the company. This facility is denominated in US Dollars.

The total facilities available were a £8.5m invoice discounting facility (repayable on demand) and a £4.5m supply chain facility (renewed each year). Therefore undrawn but committed facilities at 31 March 2021 were £8,500,000 and £3,335,000 respectively (2020: £8,500,000 and £3,122,000).

The supply chain facility is utilised to provide short term cash flow to settle liabilities arising out of purchases made in the normal course of business. The amount advanced takes into consideration the cash requirements of the Company and the working capital cycle.

The bank term loan is made up of £12,500,000 repayable in quarterly instalments of £781,000 over a 5 year term, and £7,500,000 repaid on maturity. In March 2020, the facility was increased by £6,000,000, which is repayable in quarterly instalments of £545,000 per quarter over the 5 year term. Interest is charged at a rate of 5% over LIBOR. The bank loan is secured by way of a fixed and floating charge over all assets. On Admission to AIM on 1 February 2021, £7,5000,000 of the £12,500,000 facility was repaid at the request of the lender.

There are three principal covenants attached to the Senior Facilities. These are tested quarterly and include gross leverage, cash flow and interest cover.

22. Leases

Amounts recognised in the Statement of Financial Position

The balance sheet shows the following amounts relating to leases:

Right-of-use assets	£'000

Balance at 1 April 2019	2,014
Depreciation charge for the year	(519)
Balance at 31 March 2020	1,495
Additions	531
Depreciation charge for the year	(550)
Balance at 31 March 2021	1,476

The net book value of the right of use assets is made up as follows:

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Buildings	1,447	1,414
Cars	29	81
	1,476	1,495

Lease liabilities	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Maturity analysis - contractual undiscounted cash flows
Less than one year	678	559
More than one year, less than two years	654	559
More than two years, less than three years	180	535
More than three years, less than four years	120	60
More than four years, less than five years	60	-
More than five years	-	-
Total undiscounted lease liabilities at year end	1,692	1,713
Finance costs	(114)	(124)
Total discounted lease liabilities at year end	1,578	1,589

Lease liabilities included in the statement of financial position
Current	615	493
Non-current	963	1,096
	1,578	1,589

Amounts recognised in the Consolidated Statement of Comprehensive Income

The Consolidated Statement of Comprehensive Income shows the following amounts relating to leases:

	Year Ended 31 March 2021	Year Ended 31 March 2020
	£'000	£'000
Depreciation charge - Buildings	498	445
Depreciation charge - Cars	52	74
	550	519

Interest expense (within finance expense)	77	91

23. Financial instruments

The Company 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 Notes 2 and 3. Further quantitative information in respect of these risks is presented below and throughout These Group financial statements.

23.1 Capital risk management

Details of the Company's capital are shown in Note 24, as well as in the Statement of Changes in Equity.

23.2. Market risk

Competitive pressures remain a principal risk for the Company. 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 Company'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 Company.

In addition, the Company'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 Company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the Company by regularly monitoring the financial risks referred to above.

Given the size of the Company, 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 Company's finance department.

23.3. Credit risk

The Company's sales are primarily made with credit terms of between 0 and 30 days, exposing the Company to the risk of non-payment by customers. The Company 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 Company maintains a suitable level of credit insurance against its debtor book. The maximum exposure to credit risk is £2,500 per individual customer, being the insurance excess.

An analysis of past due but not impaired trade receivables is given in Note 18.

23.4. Liquidity risk management

The Company is funded by external banking facilities provided by HSBC. Within these facilities, the Company actively maintains a mixture of long-term and short-term debt finance that is designed to ensure the Company has sufficient available funds for operations and planned expansions. This is monitored on a monthly basis, including re-forecasts of the borrowings required.

23.5. Foreign currency risk management

The Company's activities expose it to the financial risks of changes in foreign currency exchange rates. The Company's exposure to foreign currency risk is partially hedged by virtue of invoicing a proportion of its turnover in US Dollars. When necessary, the Company 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 31 March 2021	As at 31 March 2020
	£'000	£'000
Trade receivables	1,481	266
Net cash and overdrafts	58	1,370
Supply chain facility	(1,165)	(1,378)
Trade payables	830	(89)
	1,204	169

The effect of a 20 percent strengthening of Pound Sterling at 31 March 2021 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 £201,000, (2020: £28,000). 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 £301,000 (2020: £42,000).

The following is a note of the assets and liabilities denominated at each period end in Euros:

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Inventory	-	289
Trade receivables	42	483
Net cash and overdrafts	-	322
Trade payables	(269)	(464)
	(227)	630

The effect of a 20 percent strengthening of Pound Sterling at 31 March 2021 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 an increase to net assets of £38,000 (2021: £105,000 decrease). A 20 percent weakening of the exchange rate on the same basis, would have resulted in a decrease to total comprehensive income and a decrease in net assets of £57,000 (2021: £158,000 increase).

Derivative financial instruments - Forward contracts

The Company mitigates the exchange rate risk for certain foreign currency creditors by entering into forward currency contracts. The Company'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 Company costs its products and take out forward contracts to mitigate fluctuations to an acceptable level. At 31 March 2021, the outstanding contracts mature between 1 and 12 months of the year end, (2020: 1 and 12 months). At 31 March 2021 the Company was committed to buy $24,000,000 (2020: $1,726,000) 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 2021 is a liability of £559,000 (2020: asset of £209,000). During the year ended 31 March 2021, a loss of £768,000 (2020: gain of £209,000) 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.

23.6. Interest rate cash flow risk

The Company's interest-bearing liabilities relate to its variable rate banking facilities. The Company 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 £136,000 (2020: £230,000 decrease).

23.7. Price risk

The Company's profitability is affected by price fluctuations in the sourcing of its products. The Company 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 Company's operations change in size or nature.

23.8. Maturity of financial assets and liabilities

All of the Company'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.

23.9 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 31 March 2021	As at 31 March 2020
	£'000	£'000
Financial assets
Financial assets measured at amortised cost
Trade and other receivables	15,283	15,783
Cash and cash equivalents	7,505	6,718
	22,788	22,501
Financial liabilities
Financial liabilities measured at amortised cost
Non-current:
Borrowings	(4,658)	(17,413)
Current:
Borrowings	(10,476)	(10,573)
Trade and other payables	(7,304)	(7,130)
Accruals	(4,343)	(1,618)
	(26,781)	(36,734)

Financial liabilities measured at fair value through profit and loss
Derivative financial instruments	(559)	209
	(559)	209

Net financial assets and liabilities	(4,552)	(14,024)

Non-financial assets and liabilities
Plant, property and equipment	2,787	3,458
Right of use assets	1,476	1,495
Goodwill and other intangible assets	2,628	1,778
Investments	7	7
Inventory	19,865	14,458
Prepayments and accrued income	769	955
Deferred tax liability	(141)	(191)
Other taxation and social security	(1,648)	(1,541)
Income tax recoverable	-	9
Income tax payable	(2,370)	(2,340)
	23,373	18,088

Total equity	18,821	4,064

24. Share capital

Number of shares authorised and in issue

	A Ordinary £0.10	B Ordinary £0.10	Ordinary £0.10	Total	Total
	No.	No.	No.	No.	£
At 31 March 2019 and 2020	82,503,750	27,501,250	-	110,005,000	11,000,500
Re-designated in year	(82,503,750)	(27,501,250)	110,005,000	-	-
Issued to settle EMI awards on IPO	-	-	897,965	897,965	89,796
Issued on IPO	-	-	5,597,015	5,597,015	559,702
At 31 March 2021	-	-	116,499,980	116,499,980	11,649,998

Rights of share capital

The A Ordinary shares had attached to them full voting, dividend and capital distribution rights. They did not confer any rights or redemption. The Ordinary B shares were entitled to an initial dividend of £16,500,000. In all other aspects the A Ordinary and B Ordinary shares shared the same rights.

On 2 September 2020, the two share classes were designated as "Ordinary shares" of £0.10.

The Company invited each holder of outstanding options under the EMI scheme (see note 25) to exercise up to 35% of the options held conditional upon Admission and as a result, 897,965 new Ordinary £0.10 shares were issued to satisfy the options at a subscription price of £0.38, generating a premium of £254,753.

On Admission 5,597,015 new Ordinary £0.10 shares were issued at a subscription price of £1.34, generating share premium of £6,940,299.

Dividends

Dividends of £3,000,000 (2020: £11,000,000) were declared in the year. This amounted to £0.027 per share (2020: £0.10).

25. Share based payments

The Company operates a number of share incentive arrangements as set out below.

The Supreme plc Enterprise Management Incentive Scheme ("the EMI Scheme")

On the 14 September 2018, the Company 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. These options may not be granted unless a relevant event attached to the option has occurred. These options vested immediately and will expire after 10 years from grant date.

These option were fairly valued upon a valuation of the entity that had been performed by an independent expert.

On 4 January 2021 the Company granted options to one employee over 594,914 shares at the same exercise price under an individual unapproved option arrangement pursuant to a longstanding commitment.

	Weighted average exercise price 2021	2021	Weighted average exercise price 2020	2020
	£	No.	£	No.
Outstanding at the beginning of the year	0.38	2,174,120	0.38	2,174,120
Lapsed	-	(187,704)	-	-
Granted during the year	-	594,914	-	-
Exercised on IPO	-	(897,965)	-	-
Outstanding at the end of the year	0.38	1,683,365	0.38	2,174,120

The profit and loss expense that has been recognised in the current year is £nil (2020: £nil) and included within administrative expenses.

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 3months). Under the SAYE Scheme, an individual who wishes to accept an invitation to apply form options to be granted to him or her much 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.

A total of 100 Eligible Employees elected to participate in the SAYE Scheme, including and pursuant to these elections, options over a total of 438,620 Shares have been granted. No charge in respect of these awards has been recorded given the immateriality of the amounts in the 1-month period to year-end.

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 have been 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.

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. 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.

Under the CSOP and Unapproved Schemes, the Group has made awards over 6,238,651 conditional shares to certain Directors and employees.

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:

	Measurement period	Absolute TSR p.a	% of element vesting
CFO awards	1 February 2021- 1 February 2024	=>10%	100%
	1 February 2021- 1 February 2024	7.5%	0%
	1 February 2021- 1 February 2024	=<7.5%	0%
CEO awards	1 February 2021- 1 February 2024	=>100%	100%
	1 February 2021- 1 February 2024	<100%	0%
CEO awards	1 February 2021- 1 February 2026	=>200%	100%
	1 February 2021- 1 February 2026	<200%	0%

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 below:

	CSOP/ unapproved scheme	CFO awards	CEO awards - 3 year performance period	CEO awards - 5 year performance period
Grant date	16 February 2021	9 March 2021
Share price at grant date	176p	185p
Exercise price	174p	Nil
Expected volatility	45%
Projection period (years)	N/A	2.89		4.89
Expected life (years)	6.5	3		5
Expected dividend yield	4.10%	3.90%
Risk-free interest rate	0.34%	0.12%		0.31%
Fair value per award	50p	109p	74p	59p

The expected volatility has been estimated based upon the historical volatility of the FTSE AIM Retailers and Personal & Household goods sub sectors.

A summary of the awards made during the year is set out below:

	CSOP/ unapproved scheme	CFO awards	CEO awards - 3 year performance period	CEO awards - 5 year performance period
At the start of the year	-	-	-	-
Awards granted in year	301,711	111,940	2,912,500	2,912,500
At the end of the year	301,711	111,940	2,912,500	2,912,500

No awards are exercisable at the end of the year. The charge for share-based payments in the year was £75,000 which is included within Adjusted items.

26. Business combinations

Acquisition of GT Divisions Limited

On 30 October 2020, the Company purchased 100% share capital of GT Divisions Limited for consideration of £1,072,000 excluding costs of acquisition of £15,000.

Recognised amounts of identifiable assets acquired and liabilities assumed

	Book value	Fair value adjustment	Fair value
	£'000	£'000	£'000
Fixed assets
Customer relationships	-	341	341
Trade name	-	221	221
	-	562	562
Current assets
Inventory	121	-	121
Debtors due within one year	284	-	284
Cash at bank and in hand	67	-	67
	472	-	472
Total assets	472	562	1,034

Creditors
Due within one year	(350)	-	(350)
	(350)	-	(350)
Total identifiable net assets			684
Goodwill			388
Total purchase consideration			1,072

Consideration
Cash			1,000
Deferred consideration			72
Total purchase consideration			1,072

Cash outflow on acquisition
Purchase consideration settled in cash, as above			1,072
Less: cash and cash equivalents acquired			(67)
Net cash outflow on acquisition			1,005

Following an extensive purchase price allocation exercise the company considers customer relationships to be the primary asset acquired. The multi-period excess earnings method was used in order to value the customer relationships. The multi-period excess earnings method considers the present value of net cash flows expected to be generated by the customer relationships, by excluding any cash flows related to contributory assets. In addition, the company considers the trade name to be a secondary asset acquired, which was valued using the relief from royalty method. There were no further intangible assets identified and as such the remaining consideration is represented as goodwill, which stems from expected synergies from combining the operations of Supreme Imports Limited and GT Divisions Limited

The deferred consideration was due for payment on finalisation of the completion accounts, which occurred shortly after the acquisition.

The revenue from GT Divisions Limited included in the Statement of Comprehensive Income for 2021 was £478,000. GT Divisions Limited also incurred a profit of £72,000 over the same period.

If the acquisition had occurred on 1 April 2020, and we had not hived up trade and assets of the business into Supreme Imports, consolidated pro-forma revenue and profit for the year ended 31 March 2021 would have increased by £2,000,000 and £200,000 respectively.

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 23.5 or 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 31 March 2021	Year Ended 31 March 2020
	£'000	£'000

Short-term employee benefits	806	560
Post-employment benefits	6	6
Total compensation	812	566

29.2. Transactions and balances with key personnel

	As at 31 March 2021	As at 31 March 2020
	£'000	£'000
Loan balances with Directors:
Balance outstanding from director	(5)	(1)

During the year S Chadha purchased certain fashion hire assets, with a net book value of £583,000, for £552,000, which was deemed to be market value.

29.3. Transactions and balances with related companies and businesses

	Year Ended / As at 31 March 2021	Year Ended / As at 31 March 2020
	£'000	£'000
Transactions with related companies:
Rent paid to Chadha Properties Limited	180	180
Loans provided to Nash Peters Limited	-	174

Balances with related companies:
Amounts owed by Nash Peters Limited	1,790	1,790
Amounts owed to Supreme 8 Limited	(3,392)	(3,392)

The above companies are related due to common control and Directors.

Amounts owed by Nash Peters, related due to common directorships, are due for repayment on demand and interest is charged on the outstanding balance at a rate of 5%. This balance was repaid in full shortly after year end.

Amounts owed to Supreme 8 Limited, a minority shareholder, are for a loan due for repayment on demand and interest is charged on the outstanding balance at a rate of 3%. £1,790,000 of this balance was settled shortly after year end.

30. Analysis and reconciliation of net debt

	1 April 2019	Acquisitions	Other non-cash changes	Cashflow	31 March 2020
	£'000	£'000	£'000	£'000	£'000
Cash at bank and in hand	1,694	-	(30)	5,054	6,718
Current borrowings	(4,799)	-	(835)	(1,547)	(7,181)
Non-current borrowings	(18,082)	-	669	(3,392)	(20,805)
Net debt	(21,187)	-	(196)	115	(21,268)

	1 April 2020	Acquisitions	Other non-cash changes	Cashflow	31 March 2021
	£'000	£'000	£'000	£'000	£'000
Cash at bank and in hand	6,718	67	-	720	7,505
Current borrowings	(7,181)	-	(741)	838	(7,084)
Non-current borrowings	(20,805)	-	(47)	12,802	(8,050)
Net debt	(21,268)	67	(788)	14,360	(7,629)

31. Post balance date events

On 8 June 2021, a total of 127,094 share options were exercised by a former employee under the Company's EMI Scheme as an acknowledgement of his contribution and long service to the Company.

Pursuant to the exercise of the above share options, 127,094 new ordinary shares were admitted to trading on AIM on 10 June 2021.

At the date of signing these financial statements the total number of Ordinary Shares in issue is 116,627,074 and the total number of voting rights is 116,627,074.

On 10 June 2021 Supreme Imports Limited acquired the entire share capital of Vendek Limited, a leading Dublin-based distributor of batteries and lighting products, for initial consideration of €1.32m. The completion mechanism has not been finalised at the date of signing these financial statements and this, together with a full purchase price allocation exercise, will be finalised and reported in the interim accounts for the period to 30 September 2021.

On 30 June 2021, Supreme Imports Limited acquired the brands and stock of Sci-MX Nutrition Limited, a leading sports nutrition and supplements business for a consideration of £2.3m, the accounting for which (given the proximity to the date of signing these financial statements) had not been finalised.

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