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?

So, on progress with the back claim more generally then, look, I think We've got a bunch of claims in with the revenue that total about £78 million. And you're absolutely right. The revenue have lost their appeals against the vast majority of the items in there. And so now, but there have been competitors now for a number of years that took that approach anyway. So naturally we took a very prudent approach where we continued to hand over VAT monies to HMRC and then follow the situation closely. Now, in terms of the treatment of VAT, this year clearly we'll be changing that treatment. It's probably an ideal time as well, really, to be changing that treatment because, you know, whey pricing is not only on record highs, it's on explosive highs as there's been a number of market forces that have just caused almost a tulip moment in the commodity. And so, naturally, we're in a really good position to be able to absorb that versus our competition, especially now as we've got the benefits of the zero-rated VAT to be able to apply. In terms of what that means for consumers, I think all the time, naturally, consumers are going to see some benefit. But given that THG has been operating already by subsidizing the products, whilst our competitors have zero rated, or some of them have done, then as a result, we've already taken that competitive position. So we would expect to see significant margin improvements, both from falling way prices and from the VAT treatment. So they are two significant tailwinds that we look forward to unlocking whilst way pricing sits at the levels that it sits at today. We're probably not going to see the true benefits of that for a number of months, but we are looking forward to that feeding through. In terms of your question on margin progression for MyProtein, naturally there are a good number of opportunities ahead that set the scene for a very strong margin recovery, not least weight pricing, but put that one to one side. You've then got VAT, so we can put that one to one side. But as we touched on in the presentation, we've sold 43 million products through licensing and offline into global retail last year, which is bigger than any other nutrition brand's total product sales. globally. So that's just our licensing and offline business model. Now, the licensing side of that is pure profit, so that's great for margins, but the offline retail sales, we've entered that market on a low margin basis, almost running that channel at a break even to slightly negative to slightly positive, depending on the given period. Now, as we've now built a significant install base, we will continue to build that base because we've seen fantastic opportunities But then naturally, there's going to be a really strong period where we can start to make significant improvements in that margin stack as well. And then other points I touched on, I think, just in the opening intro there, you may have heard categories, new categories that we've entered into, such as the active wear is really accretive. I mean, to give you an idea of just the trading margin on that, That trading margin in that category has evolved from 42% trading margin on a much lower sales number just a couple of years ago to where currently we're trading margin around 60% in that category on a much greater scale. So as categories like that, creatine and other collagens and various other products that we've launched expand, and become a greater part of the sales mix, we'll see significant margin progression through the myoprotein division. Factors we can't control, just explosions in wave pricing, will naturally cause some near-term volatility from time to time, but we are very confident that the underlying factors driving that volatility will pass and there will be a much more normalised market at some point in the not-too-distant or 12 months, 18 months at the very latest, because there is so much new supply coming into the market too. And then the final question I think was around other assets that we have. The group is full of really high-quality small businesses that don't get much recognition outside of the group. We have had bids against a number of those businesses, not least one of those divisions or one of those small businesses at the end of last year. We had an approach on it didn't meet our valuation, which would have been a very significant number. But we're not with no interest in letting assets go. You know, high quality assets that are trading incredibly well, whilst they might not necessarily be at the forefront of what the market sees THG as, we see great value in them. So unless we're going to get a proper valuation, we won't let them go. But, you know, again, this year there are other assets, different assets, again, where we've had significant interest posed to us. But each and every time we're very clear. We don't waste any time. We know what assets are worth, like you saw with Claremont. If someone wants to pay a proper price and it's the right thing for the group, then naturally we would do that. Should we do one of those this year? I suspect that would take us to net debt free, you know, given the VAT point and the size of the value that we'd be looking at for one of those small businesses.

Okay, brilliant. Thank you. Thanks, Matt. Cheers.

Thank you for your question, sir. Ladies and gentlemen, once again, if you have any questions or follow-up questions, please press star 1 at this time. We'll pause for just a moment. We have another question that just came in. At this time, the question will be coming from Grace Gilbert calling from Jefferies. Please go ahead, Grace.

Hi, everyone. Thanks for taking my call or my questions. I have a few, if I may. The first one around nutrition. Can you – I mean, you already actually answered a little bit on the previous question, but can you speak a bit more about some of the cross-selling opportunities in that division and how you'd be able to consistently defend that segment or within MyProtein against some of the more specialized segments? players out there. So whether it's around athleisure or other nutrition brands, that'd be really helpful. And then the last two I have are also on beauty. So obviously beauty is another, a larger component of the group and becoming more and more critical to the business. Can we speak a little bit more about the growth targets outside of the UK and how you're consistently defending the beauty proposition there outside the UK? And then my last one is probably a bit more general. But it would be helpful to understand a little bit more of the mixed shift within beauty and how we're thinking about moving between makeup and skin care. Obviously, skin care is such a huge boom in the pandemic. We've seen that come back a little bit. But how do you think about your beauty businesses working between both of those segments? That would be really helpful.

Sure. So nutrition, how does it defend against specialist players, et cetera? I think one of the key things is we do have a significant community, not only at a consumer level but also at a marketing level. So the strength of the brand, the quality of the product that we put into the marketplace means that as long as we execute well, we can really work well. well with the MyProtein community. The strength of that community is reflected for online retailers. So if you were to ever speak to any of the people that have taken MyProtein into store, you'll see that we have a big impact on traffic going to offline retailers and to certain product categories. So I think we've talked in the past about Iceland, you know, with the MyProtein partnership there and the quite material impact that's had on their footfall and customer demographic. But even if you go to major retailers such as the scale of Tesco's, you'll go into there and we'll be literally the only player in the market that can bring together in retail, in a big retailer like that, one big branded bay, which is pulling together multiple product categories. And it will – then when you look at the green core proposition we've had, the number of people we will – the brand will bring to the lunchtime meal deal aisle in a retailer will dramatically change because there's my protein products that are positioned in there. So what that's telling you is the community that we're operating in is passionate about the brand. There's trust in the brand. And we can, as long as we deliver real quality, we can put new areas into them. And just the likes of the partnership with Mars, et cetera, does show you that the scale of recognition that there is across the wider industry of the power of the brand that we've got. And then, you know, if you looked at the athleisure wear, progress we've got there, just because that's one that you mentioned. You know, we've been able to increase margins by 50% in absolute terms on the product. We've been able to move our price point significantly, but it's all been supported by an incredible level of quality. So if you were to go and try the product, et cetera, you will see that the quality of the design, as well as the marketing that's going behind it, is exceptional. So the influencer community globally can relate to the MyProtein product on so many different levels in their life that they can become true, true brand ambassadors rather than one day pushing a bit of MyProtein and the next competitor two, three, four, and five. They can actually live the brand. I think then we got on to beauty. Did we go straight into beauty then? Yeah, and I've got Lucy here with me. And actually, instead of me answering that, I should let Lucy have a word. It's her specialism.

Thanks. Hi, Grace. So in terms of our focus outside of the UK, you'll remember a number of years ago that we did choose to exit some of our other territories that we operated in. So we fully exited Asia and we significantly pulled back and right-sized the business in Europe. Now, we do still have a small business in Europe, but in terms of where our focus and investments are going at the minute, that is solely on the UK and the US, where we believe there is plenty of headroom for us to make significant gains in each of these markets over the next few years. The US is performing strongly for us. We have quite a nice defensible proposition in the US where the focus is on high-value clinical skincare, which is quite different to what the likes of Ulta and Sephora and Amazon are offering. It's very much regime-based, so we have mixed baskets, and there's a lot of interaction with the consumer to help them figure out what skincare regime is right for them. And then your next question, I think, was around category and what dynamics we're seeing within the category. We're actually fairly broad in terms of our category mix across beauty. The category for us is around the same size in skin, hair and makeup, with fragrance being the smallest for us, on the contrary to what the overall beauty category sees. So we've been able to take advantage of growing our fragrance portfolio ahead of the market over the last couple of years. And that has driven a significant amount of growth. We're actually seeing really healthy growth within cosmetics. And like you said, while skincare growth has tailed off coming out of the pandemic, it's actually still been relatively strong for us. And then in terms of hair care, that's seen a huge boom in the category over the last couple of years. Actually, that's where Look Fantastic came from. So there was a time where Look Fantastic held around 80% market share in professional hair care online. Naturally, as some other players have come online into that category, that has diminished somewhat. So hair care for us is about defending our kind of stewardship and leadership in that category. So we've actually seen fairly broad brush positive growth across all of those categories over the last 12 months or so and into this year. And we don't see skincare dropping off to be a huge problem for us, albeit the trends within skincare are evolving every day.

Perfect. Thanks so much. I appreciate it.

Thank you, Grace. Our next question is a follow-up question from John Stevenson calling from Peel Hunt. Please go ahead.

Great. Thanks again. Just a couple more. You've opened your second Look Fantastic store, I think, down in sort of Bristol way. How has that gone? What's that done for the online halo? And have you got any plans for more this year? And then a second follow-up just on the licensing pipeline within nutrition, both in terms of existing partnerships and potential for new ones, if you could chat a little bit about what's to come this year.

Look, I think I'll answer this one for Lucy because Lucy would love to open 10 or 12 stores and put some capex into doing that. And logic says we get quite a fast payback on some of these stores, right? I think when we open a store, we get a payback depending on... on how much support we get in various areas, but you'd be talking a two-year payback on opening a store. Obviously, offline is a challenge market more generally for the longer term structurally, but beauty is a category that's in material growth. So as a result, we will be opening more stores. there'll be a steady, relatively slow progress of opening stores physically that'll be solo our brand. But that said, there's actually an increasing chance we're going to do partnership with other players where we will take over the running of their stores and rebrand them into ours, which is a lower capex. They've already got the traffic footfall. We bring a lot to the table. So, as a result, that's something that we are actively exploring too. Now, if we did that, that would accelerate the number of stores that we would have out there quite materially. So, I think every store that you open broadly adds a couple of million quid with the revenue. In the grand scheme of our beauty business of, what, 1.2, 1.3 billion of revenue, it's not massive, but what we do see is real brand value, marketing value, et cetera, in having a small estate. But we won't be rushing to open 10 more in the next 12 months, but there will be steady progress. Yeah, sorry, yeah. So, look, Neil... Do you want to touch on a couple of, I mean we can't name them, but just some ideas around the licensing progress?

From a licensing standpoint, you'll see us continue to roll out our Mars partnership. So you'll see, it's been mentioned already, but the Mars product has been launched this week and it's got off to a great start. You'll see more of the Mars partnership come to life throughout the year. and you'll see continue to see more partnerships in the flavor profile space and probably more leaning towards the us market from a licensing out standpoint you'll see the rollout of the green core and further roll out of the in the food to go area and then you'll also see us playing in new spaces like ready to drinks as well okay brilliant

Any other one, John, while we've got you?

Oh, wait a minute.

Just saving you coming back in 10 minutes later.

Yeah, I can come in now. That's good for now. Thanks, Matt.

All right. Cheers, John.

Thanks. As we have no further questions at this time, I'll call back over to Matthew Moulton for any additional or closing remarks.

Okay, well, thanks, everybody. Just a big thank you to all the team in making this happen. It's been a lively year, much appreciated, and I appreciate the support of all the shareholders and stakeholders. All the best.