London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
He set up the scheme pre ipo with the blessing of investors. The scheme triggered due to external factors
Like I said I can pick my lottery numbers I can’t make them come up
He put in place the scheme. He didn’t buy shares to make the price go up to £8!
MM setup the 800m bonus in his dual role as both chairman of the board representing shareholders and CEO. Of course he had something to do with it!
Do you have a particular price target as things currently stand Danl?
The £800m bonus was paid based on the share price going from 500p to 800p so a 60% increase and the creation of billions of value to shareholders
The price went to 800p due to external third parties buying shares. MM had nothing to do with it. Apparently he had three years to hit that target. That it happened in months is just people getting excited
I can’t help it if my lottery numbers come in one the first week vs someone playing years
Does MM still have his golden share, i though i heard he gave that up ?
Very Interesting - Thank you. But I don't think giving away salary to charity can compare to 800m taken as a bonus and whatever other targets are hit for a few days as a bonus going forwards. As an possible investor - thats a worry.
Agreed there is now liquidity on the balancesheet to absorb losses for a while. Out of interest came across this youtube video these investors (professional accountant?) run through the accounts and say a SP of £1.84p is too expensive.
Analysis of THG Accounts 2020
https://www.youtube.com/watch?v=y41wAiZjQb4
Will have another look if this goes down a lot further. Thanks for information all.
Proper value add Dan190 thanks - what these chat rooms should be used for - to help each other
Happy to answer these but start with there’s a repositioning in the thought process
Ingenuity is something developed to run Beauty and Nutrition. Even if we didn’t sell ingenuity it would exist to pretty much the same extent to fuel those two businesses
What commercialising ingenuity has done has turned a very very large fixed cost into a future profit centre. It’s cash hungry atm as there is now additional ramp up above the needs of nutrition and beauty but if you were a regular protein business you have to hope that protein alone pays for this. THG have the added benefit that others pay it’s fixed costs
On the 15,000 influencers. These aren’t on the payroll. It’s just a data base that means add campaigns can be targeted and influencers selected quickly
A) well capex is the main cost. So at Q3 update we are told that at £400m ARR of ingenuity commerce revenue this will fully fund capex. But don’t forget capex is entirely related to ingenuity (beauty labs will belong to beauty after spin off but both labs are top top so no need here), and if SoftBank come in that capex has $1.6bln of funding so no need to worry
On B) Matt and John both donate their salaries to charity. This is the same as the profit from the properties. Any profit for the next 100 years goes to charity. Just the newspapers don’t report this as doesn’t fit their narrative
Also worth clarifying that we own the hotel, the spa gym etc. it was the buildings that were spun out. But if you book to stay at King st town house and have a £25 ****tail that money is on THG Plc P&L
Hasn't ingenuity got EPITDA of 60% on 110M and showing 100% YOY growth?
Couple this with automated efficiancy improvements on beauty and neutrition and this will generate enough future profit to fuel M&A
Thank you for your line of enquiry Musclehead : got me thinking. I feel a heavyweight chair would instinctively be wary of possible MM pitfalls (which would help MM grow) and need to communicate better with markets. Much here - I think - is (a) comms and (b) sentiment that’ll clear. Heavyweight Chair : quickly would be great, perhaps an ex ARM Holdings chair or similar who understands need to comm value to market.
Interesting points but again you make a lot of assumptions, not build on solid facts.
Such as hotels being profitable- the property portfolio were transferred with high debt for instance.
But increased governance is needed, and a heavy weight chairman will be welcomed when announced. Plus a move to the main market forces buying from index’s - in my view this is when shorts go long.
Also on costs for ingenuity, as shared in the SoftBank investment scenario, 4% GMV of beauty and nutrition will go into ingenuity when split, helping to absorb these costs
Suggest we ideally require the following info;
investment required per new Ingenuity client
Timeline to recoup the above
Estimated lifetime return per client ( 10 years )
Appreciate it’s a grey science but THG will know the above based on current trends but they may wish to retain for management eyes only / plus investment house insiders/ shareholders
Beauty / Nutrition is market sentiment driven but the above has serious potential value but the market needs to understand the above to place a value on Ingenuity- which is currently zero
Thanks danl. Good answers
Your right ste2000 - they don't give out figures. My fault for assuming losses - on now about 200m of sales, Ingenuity must surely be profitable, once reviewing its likely costs in the accounts. Who knows though? The costs of 19,000 influencers and 700 IT workers adding 15,000 code pieces in 2020, plus translators, 26 datacentres etc.. as of 2020 are going to be big, but there is probably a substantial margin there - why don't they tell interested investors what it is? It appears to be scaling very strongly albeit corporate budgets are flush with cash to spend at the moment. A huge point of (possible?) optimism even though under 10% of group sales.
As a potential investor, -not a trader trying to trade a bounce - I simply need some light shed on very basic questions -
(a) it's not so much where is the profit - where or when is the free cashflow happening? When does the companies demand for hundreds of millions in capital end and cashflow from operations takeover ?
(b) What of the future likely executive compensation? which has been utterly, utterly eyewatering so far. 'Rational Ponsi' no profit businesses like Amazon had a winning competition destroying disruptive formula - but soon generated increasing FCF by market dominance (by 2004) which was always reinvested. But Jeff Bezos was on under 100k as a salary during this time of losses with a 17% holding.
All any potential investor -not trader- sees now is a business which needs huge sums of cash injected *which have to come from somewhere* and that means a further possible ride down in price with a CEO/Chair who seems to have no shame in transferring the companies profitable assets like Hotels, once the investment has been de-risked, and is not shy to transfer immense sums of shareholders wealth to himself as a bonus which he sets in the role of Chair (looking out for shareholders) - not just CEO and major shareholder. At some point MM can simply take his 800m 'bonus' for his wonderful services to shareholders, and stage a buyout - after the SP has dropped much further.
£350m of capex includes £110m of M&A spend
Capex this year will be around the £200m mark so plenty in current cash
Also as ingenuity grows it will be self-sustainable
Really worth listening to the SoftBank deal investor call. When asked what they will do with the $1.6bln Matt is saying there’s not much tbh. The money value wasn’t as a value for capex need but just the mechanism of the value
Also as thg don’t split out divisional profit, your comment on ingenuity being ‘grossly loss making’ is not built on fact , but your emotion/ view
From q4 update - Thg has cash of 530m and finance of 170m. Same cash position as q3
Hope that answers your points
Ingenity is <10% group revenue on the latest RNS and is grossly loss making although growing. Looking at the 2020 accounts CashFlow Statement - The net cash into the company from all it's overall operations is tiny - 31 Dec 2020 - 75m non adjusted, 54m in 2019. Financing from operations - 900m into the company - comes from selling shares to year end 31 Dec 2020 - this was the period where the SP went from its 5 quid IPO to 6 quid for a few days - when MM's 800m bonus was triggered, to 2 quid. Bottom line - to keep this growth in revenue up THG seems to need simply huge amounts of cash injected as its not generating much. It needed 351m in 31-dec-2020 to spend on capex etc... from the cashflow statement. Where is this cash to come from in future? More share sales? Just honest questions I am not insulting anyone.