THG Plc

Good morning everyone and thank you for joining us today for our full year 2025 results presentation. It's a pleasure to be here reporting on what has proved to be a landmark year. Our first as a consumer focus group packed with a large number of important initiatives. We delivered a strong full-year 2025 performance ahead of both our guidance and market consensus, with adjusted EBITDA of £76.6 million, setting a solid base for meaningful progress again in the year ahead. And on the balance sheet, we've deleveraged meaningfully. Our debt facilities are now extended out to the end of 2029, and we ended the year with over $330 million in cash and available facilities, giving us real financial flexibility going forward. At the start of the year, we completed the demerger of THG Ingenuity, and with that, THG became what it is today, a focused consumer-led group built around two leading businesses in their respective markets, THG Beauty and THG Nutrition. For the first time since COVID, both businesses delivered full-year revenue growth in 2025, with Nutrition delivering four consecutive quarters of growth in the year. The group's momentum in the second half was especially encouraging, with Q4 delivering our best performance of the year at 7% revenue growth. In THG Beauty, we had a record year for new brand launches and a standout performance in our home territories, particularly Look Fantastic UK, where we took share in established and high growth segments. In THG nutrition, our multi-model strategy is delivering meaningful market share growth, and MyProtein delivered nearly 10% revenue growth in H2, despite the model changes across Asia and India initially reducing sales in those regions. A combination of new partnerships, growing offline and licensing channels, and category diversification are all contributing to a more balanced and resilient revenue base. We have also seen significant progress regarding our VAT claim, which now totals around £78 million, following the prudent treatment of protein, collagen and supplement products over the years, while some of our competitors zero-rated products. We expect a resolution later this year which, along with the meaningful free cash flow generation, could broadly halve net debt by year-end. So turning to THG Beauty, a business which has seen a significant overhaul to the business model in recent years, which has created a strong and unique platform for our revenue and active customer growth. We had our biggest ever year for new brand launches on the platform. We are firmly the destination of choice for the world's leading beauty brands, and that was very evident in 2025. Our biggest ever new product launch was the Huda Beauty Contour Lip Stain, a fantastic exclusive that drove enormous engagement and traffic. Beyond this, our Advent campaign in peak trading set new records, while THG Beauty had its biggest ever year for exclusive product launches, which is so important for differentiation in a competitive market. THG Beauty also became the biggest UK beauty retailer on TikTok shop, a channel we see as strategically important for reaching the next generation of beauty consumers. And on the own brand side, our biggest launch was the Biosense Eye Serum, which further strengthens our margin accretive brand portfolio, where we have invested during the year to repackage and reformulate to remain relevant and compelling to beauty regimes. Moving to THG nutrition and my proteins specifically. MyProtein is the world's number one sports nutrition brand with an enviable level of engagement in a rapidly growing and evolving health and wellness demographic. This position of market leadership continues to strengthen. Brand awareness hit record levels this year, achieving our highest ever unaided awareness score in the UK, where we are clear market leader. MyProtein's aided awareness also reached a record high, further supporting the success of the major rebrand undertaken in 2025. Over half of our target demographic now recognises the MyProtein logo, which speaks to the scale and effectiveness of our marketing investment and our multi-model approach. MyProtein's progress in offline and licensing expansion has been exceptional, with over 43 million products now licensed and sold into global retail. The launch of our Mars products this week serves to build on the uniqueness and quality of the MyProtein brand, with the world's largest brands keen to work in partnership and gain access to the MyProtein community. This channel is still early in its growth journey, and when combined with the wider B2B retail partnerships, it's clear why we're confident about the medium-term trajectory for this business, despite the well-documented commodity price pressures. Outside of protein powders, active wear is a category to watch. It's a structurally attractive, margin accretive category, and our expectation is this will be delivering a run rate of 100 million in sales within 12 to 18 months, after delivering over 50 million of revenues for the full year of 2025. So turning to the outlook, on the full year expectations, we are guiding towards mid-single-digit group revenue growth with gross profit margin improvements year-on-year despite the current record high commodity pricing. We expect to deliver meaningful EBITDA progression, not only from continued sales growth and improving margins, but also from the benefit of significant OPEX savings as we annualize headcount savings while continuing to deliver new savings in utilizing AI. Looking at each business, THG Beauty enters 2026 with strong underlying growth, particularly in the UK and US, our two largest markets. After a slower start to the prior year, the US is performing really well and our new brand and product pipeline remains very healthy. For nutrition, we are seeing strong progress across channels with clear actions in place to improve mix and profitability, alongside a defined strategy to manage weight price volatility through procurement, diversification and discipline pricing. Once commodity pricing starts to fall from record highs, hopefully before the end of the year, then we expect this to have a marked impact on profitability growth beyond 2026. On cash, we expect to deliver free cash flow of £25 to £50 million, with CapEx running broadly flat year on year, working capital inflows following last year's temporary investment in stock and a reduction in financing costs. Our results demonstrate our continued progress against our strategic vision of becoming the leading destination for prestige beauty and sports nutrition. This alignment between strategy and delivery underpins the strong momentum carried into 2026 in fundamentally strong end markets. So the team are here with me today and will be happy now to take some questions and thank you once again for all your support.

Thank you very much, sir. Ladies and gentlemen, if you'd like to ask an audio question, please press star 1 on your telephone keypad. And also, please make sure that your line is not muted to allow your signal to reach our equipment. That is star 1 for questions. Our very first question this morning is from John Stevenson of Peel Hunt. Please go ahead. Your line is open, John.

Hi. Good morning, everyone. I've got two or three questions, but I'll try. Maybe I'll keep it to two. I think, you know, start with the VAT claim. On the VAT claim, you're still treating sales as being standard rate at the moment and paying that over to HMRC. And then secondly, assuming HMRC confirms that protein powders are going to be zero rated, does this go into cheaper pricing for consumers, do you think? The second question is then on nutrition's marginal recovery prospects this year. There's obviously a lot of moving parts. You know, there's strong growth in apparel. We've got offline licensing and way sales. Can you sort of chat through the drivers and how you see things panning out this year? And then maybe final to throw in the last one, obviously you sold Claremont last year. What are your thoughts on potential of further sales of non-core assets? I guess, what do you consider to be non-core?