Company Announcements

24 June 2024

Supreme plc

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

Acquisition of Clearly Drinks Limited for £15 million

-      Strategic acquisition of leading canned and bottled soft drinks brand, adding diversity to our earnings

-      Transaction will be immediately earnings enhancing

-      Generates cross and upsell sales opportunities

Supreme (AIM: SUP), a leading manufacturer, supplier, and brand owner of fast-moving consumer goods, announces the acquisition of Acorn Topco Limited, the parent company of Clearly Drinks Limited ("Clearly Drinks" or "Clearly" or the "Business"), a long-established and well-known UK manufacturer of specialised canned and bottled-at-source spring water and soft drinks, for a total net cash consideration of £15 million (the "Acquisition").

Established in 1885, Clearly Drinks is a brand owner and manufacturer of soft drinks and bottled-at-source spring water in cans, glass and polyethylene terephthalate ("PET") (plastic) bottles, and currently services c.70 customers nationwide including major UK retailers Waitrose, Aldi, Tesco, Sainsbury's, and Farm Foods. Alongside manufacturing its own brands and providing private and own label beverages for supermarkets and discounters, Clearly Drinks is a contract manufacturer for a number of the world's largest soft drinks companies.

Clearly Drinks is the owner of Perfectly Clear, Northumbria Spring and Revolution Waves, offering a diverse range of products across its beverage brands portfolio including spring water (still and sparkling), energy drinks, isotonic vitamin drinks, flavoured spring water, juices, coffee-based beverages, and mixers and tonics.

The Business employs around 100 members of staff and operates across a 150,000 sq. ft. freehold site which includes three onsite natural spring water boreholes capable of accessing up to 300 million litres of fresh spring water. The facility is fully automated, having received a multimillion-pound investment, and contains a new fully automated can line with the capacity to produce 350 million canned drinks per year. In addition to cans, Clearly Drinks has the manufacturing capabilities to package products in glass or PET bottles, further accommodating both medium and large-sized retailers.

For the year ended 31 December 2023, Clearly reported (unaudited) revenue of £22.4 million and Adjusted EBITDA of £3.0 million, with further growth anticipated for the year ended 31 December 2024.  

Strategic Rationale

·    The Acquisition broadens Supreme's product range, bringing non-vape annualised sales to over £100 million (£250 million including the Group's Vaping division).

·    Clearly's operational footprint can benefit from Supreme's vertically integrated distribution platform with the potential for the enlarged group to further develop sales, marketing and product innovation opportunities, including:

o  Distribution and sales of branded drinks products across Supreme's established customer footprint of supermarkets, discounters and online retailers.

o  Development of additional own-label products or licences under well-recognised brands, replicating Supreme's long-standing success in the Batteries and Lighting categories.

·    Facilitate further product extension within Supreme's established Sports Nutrition & Wellness category to produce wellness and energy drinks.

·    Replicate Supreme's success in vertical integration at Clearly Drinks to generate manufacturing synergies.

The acquisition will be immediately earnings enhancing for Supreme.  

Transaction structure

Supreme has acquired 100% of the share capital of Acorn Topco Limited and its associated subsidiaries including Clearly Drinks Limited on a cash-free, debt-free basis from NorthEdge Capital LLP for a total net cash consideration of £15 million (as adjusted for completion mechanics), which will be funded from the Company's free cash.

Clearly Drinks is based in Sunderland in the North-East of England, and Supreme intends for it to continue to operate from this site, with access to the onsite boreholes, for the foreseeable future, independent of the other manufacturing operations within the Supreme group.   

Sandy Chadha, Chief Executive Officer of Supreme, commented:

"We are delighted to be acquiring Clearly, a high-quality manufacturer and brand owner of soft drinks, which I believe delivers a significant component of our broader diversification strategy. Our enlarged business is not only gaining a strong additional pillar, which fully aligns with our Vaping, Lighting, Batteries and Sports Nutrition & Wellness categories, but also a significant opportunity to develop and capitalise on further cross and upsell opportunities which our trusted reputation across the UK retail space facilitates.

We look forward to welcoming Clearly into the Supreme family and updating shareholders on our progress over the course of the current financial year."

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:

About Supreme

Supreme supplies products across five categories; Batteries, Lighting, Vaping, Sports Nutrition and Wellness, and Branded Distribution. 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, Tesco, Sainsburys, Morrisons, Amazon, The Range, Costcutter, Asda, Halfords, 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, Black & Decker and JCB licences across 45 countries, Supreme has also developed brands in-house, most notably 88Vape and has a growing footprint in Sports Nutrition and Wellness via its principal brands Sci-MX and Battle Bites.

https://investors.supreme.co.uk/