THG (THG) Trading Update summary

Demerger and Equity Raise Update

• Announced updated plans for the Ingenuity demerger, supported by a £95 million equity raise, with £50 million from existing investors and £10 million from the CEO.

• Strategic investment made with Frasers, strengthening ongoing partnership.

• £282 million of property leases will transfer to Ingenuity as part of the demerger.

• Share dilution from the equity raise will be offset as the demerger completes, resulting in a net reduction in shares outstanding.

• Progress made on strategy to demerge THG Ingenuity into a private company, supported by major shareholders.

Financial and Trading Performance

• RemainCo generated £1.9 billion in revenue and £105 million EBITDA in 2023, with £77 million free cash flow after interest and leases.

• Q3 2024 continuing revenue was £433.1m, down 0.6% in constant currency, with year-to-date revenue at £1,333.5m, up 2.7% in constant currency.

• Free cash flow is strong, and the board will decide on future capital allocation, including debt repayment, buybacks, dividends, or M&A.

• Gross leverage reduced by £282 million due to lease transfer; net debt expected to become net cash within three years, targeting 0–1x leverage.

• Adjusted EBITDA guidance for the year is £124.4m to £141.0m.

Segment Highlights and Business Updates

• Beauty segment grew 2.8% in Q3 and 7.3% YTD; Ingenuity (external) up 16% in Q3 and YTD; Nutrition declined 10.5% in Q3 but showed improving trends.

• Beauty division achieved record margins and is expected to be the standout performer in Q4.

• Myprotein’s offline sales are over £40 million this year, with strong retailer feedback and plans for significant growth.

• Ingenuity’s profitability is rising, with consensus EBITDA of £24–25 million this year and a strong cash position post-demerger.

• Ingenuity (external) revenue growth driven by new and existing partnerships, with recurring revenue up 44.9% YoY in September.