Shares of Supreme plc, the Manchester vaping and fast-moving consumer products firm, rose as much as 10% after it published an “excellent” trading update for the nine months ending December 31, 2023, and announced a share buyback of up to £1 million.

Supreme said it “notes” the UK Government’s proposal to ban disposal vape devices as part of a number of initiatives announced to seek to mitigate underage vaping.

The firm said: “As a business, Supreme welcomes this clarity and as a responsible business remains ahead of the curve, having already implemented a number of proactive measures, including narrowing and re-naming of flavours and tailoring packaging, as part of an ongoing commitment to eradicate underage vaping and continuing to support adult smokers by providing an affordable, sustainable, safer alternative to smoking.

“Supreme remains confident that vaping is, and will continue to be, the most credible and effective alternative to cigarettes.

“Supreme has an established suite of fully compliant rechargeable pod systems, produces over 60 million 10ml bottles of e-liquid annually and has already become a principal supplier to the UK Government’s ‘Swap to Stop’ scheme.

“None of these revenue streams are expected to be adversely affected by the changes proposed by the Government earlier today.”

On trading, the company said: “Supreme has delivered an excellent trading performance across the group during our historically busiest quarter.

“It is now expected that FY 2024 will significantly outperform market expectations, with revenue projected to be at least £225 million and adjusted EBITDA anticipated to reach at least £38 million – a doubling from FY 2023’s adjusted EBITDA.

“This success highlights the group’s continued strategic development and record levels of organic growth across its core business divisions, including Vaping and Sports Nutrition & Wellness.

“The ElfBar distribution opportunity is now expected to significantly exceed previously issued guidance in FY 2024.”

On the proposed share buyback programme, Supreme said: “Building on our operational success and strategic response to regulatory changes and the board’s ongoing confidence in the business, Supreme proposes to launch up to £1 million share buyback programme over the next three months.

“This initiative reflects the board’s confidence in the company’s future value and our dedication to enhancing shareholder returns.”

On its full-year 2025 outlook, the company said: “The company expects that approximately £75 million of its revenue (33%) and £9 million of Adjusted EBITDA (23%) will be derived from disposable vapes in FY 2024.

“Looking to FY 2025, the board believes that the anticipated ban on disposable vapes by the end of 2025 is expected to cause a temporary increase in revenue as retailers roll-out replacement vaping devices such as pod-system vaping devices (Pods) and refillable vape kits (10mls).

“The company expects that more than half of disposable vape activity will permanently transition to alternative forms of vaping such as Pods and 10mls, and Supreme will work closely with its retail partners to manage this seamlessly.

“The board will continue to evaluate the ongoing impact of new regulations within the UK e-cigarette market as more clarity, particularly in respect of timing, is published.”

Supreme CEO Sandy Chadha said: “Supreme is at the forefront of the UK vape market, consistently innovating and expanding our reach.

“The UK Government’s latest proposals, many of which Supreme has already proactively embraced, support our strategic direction and focus.

“As a responsible vaping supplier, we welcome changes that help prevent underage vaping and will work with our various stakeholders to work through the proposed legislation.

“Our early initiatives and strong customer partnerships are testament to our resilience and long-term vision.

“We remain extremely excited by the future and believe we are ideally placed to continue to expand both our operational and financial footprint across our key growth markets.

“The buyback proposed today reinforces the confidence we have in the business across the long term.”