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For a subsidiary company whose 2023 financial statement shows a property value of £5.8mn and right-of-use assets worth £9mn, a £14.5mn writedown is a lot. And given Moulding got Hale, which posted a profit for 2023, THG shareholders might wonder why it’s their loss to wear.

THG didn’t respond immediately to a comment request.

THG’s full-year results this week were, according to its corporate brokers, a turning point in the story. “With the Ingenuity demerger completed, external headwinds having largely passed, and Nutrition having returned to growth, the attractions of the THG equity story are becoming increasingly apparent”, said Jefferies. But it seems the ghosts of misadventures past won’t be so easy to exorcise

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That’s a bit awkward, but it’s nothing compared with the bath THG takes on hotels, as explained on the same page:

The decision to pause refurbishment work on an asset within THG Experience has led to an impairment charge in the year of £14.9m, this also includes the expected cost of returning the property at the end of the term,

THG investors might have thought hotels were no longer their problem. They would have been mistaken.

Somewhat oddly for a company that primarily deals in powders and serums, pre-float THG acquired several hotels: the King Street Townhouse and Great John Street Hotel in central Manchester, as well as the Hale Country Club and Spa near Manchester airport. Hotels income post the group’s flotation in 2020 was included in the group’s Beauty segment because it was “in support of the Group’s influencer marketing”.

THG hived off its lossmaking Ingenuity logistics arm in December 2024 as part of a fundraising anchored by CEO Matt Moulding. Bundled into the deal were “certain leased assets and operational activities of THG Experience”, though the statement gave no detail.

Today’s annual report reveals that while Hale Country Club Limited and King Street Investments Limited are classed as discontinued operations, Great John Street Hotel Limited is a continuing operation.

That squares Companies House filings, which show Moulding taking ultimate control of the country club and the townhouse while THG shareholders remain on the hook for Great John Street. (Its recently rejigged holding company ownership chain goes Thg Beauty Limited < Thg Operations Holdings Limited < Thg Intermediate Opco Limited < Thg Intermediate Holdings Limited < Thg Plc.)

Great John Street closed for refurbishment in 2022 and appears not to have reopened. The phone number listed on its website has been disconnected and its social media accounts have been dormant for four years.

Great John Street therefore seems likely to be what’s behind THG’s annual report note on page 162:

For those assets included within the disposal group the Directors have concluded that there are no indicators of impairment in respect of 2024 and therefore a further impairment assessment has not been undertaken. For the remaining assets within continuing operations, it was identified that for one asset a decision had been taken in the year to pause refurbishment work, as such, an impairment assessment was undertaken which led to an impairment charge in the year of £14.5m in respect of right of use assets and fixtures and fittings along with the expected cost of returning the property at the end of the term. The impairment charge has been recognised in adjusted items within the consolidated statement of comprehensive income.

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THG, the UK-listed retailer of whey protein and lipstick, made a big noise in October 2023 when it signed “a ground-breaking multi-year partnership” with Formula 1 team Williams Racing:

The multi-dimensional agreement sees THG come onboard with Williams Racing as an Official Partner across Nutrition, Technology & Ecommerce and Sustainability.

The partnership embodies the shared DNA of two dynamic British organisations, each boasting a legacy of building leading global brands in their respective domains and delivering elite performance through data-driven technology and innovation.

THG and Williams Racing aim to go big on increasing performance on and off the track for drivers, team members and fans alike, leveraging the vast and growing global audience of the sport. Throughout the remainder of the 2023 season and in years to come, THG will support Williams Racing through three of its global brands, bringing world-leading sports nutrition, ecommerce solutions and sustainability expertise.

How’s that working out? Today we get a rather quieter update in the notes section on page 156 of THG’s annual report:

The Group entered into a sponsorship agreement in 2023 with Williams racing which has not delivered the expected commercial returns, as such, this has been identified as an onerous contract. Under the terms of the sponsorship agreement, the Group is contractually obligated to incur annual fees and termination costs. Notice of termination has been provided, and the contract will be exited at the earliest available opportunity; 31 December 2025. The total cost recognised within adjusting items includes the costs incurred from 1 January 2024 plus any unavoidable committed costs to 31 December 2025

The Williams sponsorship kill costs are bundled in with “unavoidable costs committed to an aborted implementation of a Human Resources enterprise reporting platform”. Those items add up to a £7mn write-off.

Good points Ryan

Wonder how that gentleman businessman who supports multiple retailers through the kindness of his heart, what’s his name? Oh yeah that’s it ..: Mike Ashley, wonder how feels that the 9% shareholder thinks his equity ranks above Mikes 11%

If there is no carve up between him and Moulding then MM is well taking the Pxxx out of Ashley

Maybe Mike is getting soft in his old age ?

Still no TR1

Polish, that’s the punt :-)

MM takes Nutrition, some will roll with him, guess he would be happy with 50% equity, he can’t risk it going to a 3rd party

It’s cost him £60M to net near £100M back in a tax efficient wrapper, he throws in his 9% of shares on top (£70M at 55p) and he has few quid over from the property sale and he could take 50% at £400M.

It’s doable it’s 85p a share all in at £400M for Nutrition depending on how it’s structured, no tax for MM

Reckon he would get that through?

If we can see it Ashley and MM can see it

Ashley gets Beauty on the cheap, £60M FCF restructuring the costs, mainly cost of finance and I guess him and MM are haggling on the time line of the Ingenuity contract, if it was 3 years it’s costing £300M maybe to Frasers, it’s built into what they pay?

Polish work on net debt, Frasers will use their balance sheet

Star fighter, suggest MM / GLA are rabbits in the headlights

MA is driving the timeline, it’s in his interest to strike now, if that’s his plan

Ashley won’t be paying £50M plus on the cost of capital on £200M net debt, he won’t be paying 66% of £22M rent

will he have £10M capex ? Maybe?

Could he get the finance cost to £15M ? Suggest so, all in he then enjoys £60M FCF on current numbers plus whatever he saves on delivering a parcel once out of the Ingenuity contract

## typo it would be 66% of the £360M and maybe 50% of this figure of Frasers can get that cost to £6 as a figure

£120M a year saving not £180M

In any other similar financial failure Moulding would resign as CEO of THG but in the World he has built he just cant leave as the pack of cards collapse if a 3rd party runs THG and challenges the £340M he takes and the £22M rent at which point potentially Ingenuity is insolvent.

So we have a CEO/ defacto controller of 4 interconnected companies, one of them Private, the others handing him 20% of their revenue and paying rent.

So if he won’t /can’t walk the plank and the large shareholders are weak and MM can’t sell THG a whole and risk the above then his only route is to break up the business

Frasers are looking at that £362M that MM takes and thinking can we can handle / deliver a parcel of Whey or Lipstick for less than £12.50? It might take a day longer than currently but we can get that price to £6 or even less?

Ashley has MM in a corner, he has ££ to go to 30% then try and take the BoD or MM sells him Beauty at a discounted price in lieu of paying £12.50 a parcel and they agree a timeline on the Ingenuity contract

£750M to £800M plus £200M net debt is my call what Ashley will pay, maybe 55p a share

Plus whatever MM offers for Nutrition using the 180M shares he issued to himself at 32p which he sells for 55p before the ink is dry on the paperwork but wrapped up in a tax efficient structure for himself, he will try an shaft us on price but he has laid the marker of £400M to £600M and will use the debt argument, last weeks RNS was to soften us up.

After yesterday there is no other way out of this mess, the THG business is flawed in its current structure, it’s a proxy for the price of a commodity ( whey) and paying top $$ to deliver a parcel, it shouldn’t be a public company.

An RNS out lining the above before the AGM is a strong possibility, it could be another 3rd party buys Beauty and Ashley makes a turn but I reckon he’s got his eyes on the near £100M a year EBITDA Beauty generates and can he pay £6 a parcel and add another £180M a year to the bottom line in a few years time ?

Stan

Know numbers are not your strong point but come on did you read the KPIs in the accounts and Q1 2025?

Without Whey falling materially Nutrition can’t wash its face to the running costs of THG

Beauty margin was better but revenue fell

Ebitda going forward looks like £123M top end forecast less cost of capital, rent, capex looks about £40M FCF

If Whey drops 25% THG could do £80M maybe £85M FCF but without that drop we are going nowhere

If MM was serious about THG remaining on the market and driving the share price he could have announced a 1p interim dividend with the promise of another 2p final dividend, THG would have been a pro rata 10% yield today, I would argue the share price would be 40p minimum

Or a £40M share buy back … imagine? Don’t forget we have £Millions plus cash on the balance sheet and £40M FCF to boot

This price drop suits him and MA as long as they don’t fall out

Re MM’s options of him and MA are not aligned ?

I guess he limps on, converts his £60M CLN and goes to 25% and he hopes MA doesn’t increase his stake and crosses his fingers Whey drops

But MA has £50M tied up, can’t see him standing still

Hi Mover

Yeah so if MM would have announced a maiden dividend of even 1p (£13M) imagine the market response ?

He could have said, ‘ it’s been tough but we have turned the corner and as per our demerger document here is the first dividend ‘

He could have been ‘ zero to hero ‘ and the share price goes north

Pearls,

I think the RNS is coming before the AGM

Hi Dolly

Not writing off MM, he’s on the ropes but not the canvas as yet

Sell Beauty, this has to go to fund his plan

Take Nutrition private

Secure Ingenuity in the process

It has to happen and quick or he risks getting a KO off MA at an EGM vote

Btw notice the usual linked in / oasis style/ Kong videos have dried up, we may get one of the former later but he’s playing safe, he understands his position

Pearls

That’s the point MA is not building on his 11% he can’t IF him and MM have joined to break this munter up

A TR1 from MA changes everything

Think about it … for £13M MM could have been zero to Hero, he’s working a plan

Dolly, he’s brought this on himself

There was a deal to be had with Apollo but his ego couldn’t cope, plus he plays the zero sum game

On a plus side for him he’s bagged 50% of Ingenuity for £12.5M, if he gets his way he will enjoy 25% of THG buy the Ingenuity Achilles heel could well take him down, he needs a deal and quick

MM has MA living in his head

No T1 and their DD continues

If talks fail and Frasers move to the kill could they get to 30% before MM gets to the AGM ?

No wonder MM looks destroyed, MA could bring the house of cards down starting with Ingenuity if he went for an EGM to remove the useless Allan and MM

Think about it … Ingenuity is toast without the £340M and £22M rent from THG, MA’s lawyers will be all over the inter - company contracts that MM has signed for all parties, you couldn’t actually make that bit up,its nuts.

MA then tries and pick up Ingenuity on the cheap as it would be insolvent without the THG contract or he squeezes MM on price, either way MM would be on the ropes

Decent chance MA would get to 50.1% at an EGM and then stops the MM conversion of 180M shares, it’s game over for MM at that point

My call ? We get an RNS saying in talks with Frasers before the AGM, I am even more convinced today, MM had an open goal to announce a 1p dividend (£13M) and he didn’t plus no TR1 as yet

Let’s see how the above goes

Morning Ste

Dolly

Agree with your point