Member Info for Okehurst1

Dolly

If MM wanted to he could have done a 1p maiden dividend costing £13M, the FCF was there to do that, as always it’s what MM doesn’t say and his actions to watch out for, he’s got his plan and it doesn’t include us Pi’s, whatever that looks like, as such he has no interest in driving the share price up

Don’t think the market anticipated an improvement over market predictions

No dividend

No share buy back

Keep an eye out for Frasers TR1 the last tick

If we don’t get the above then MM/ MA have carved this up

That’s the RNS we are waiting for

Pm, think most of us are expecting poor results from Nutrition.

Take the view FCF is £44M and Group EBITDA £93M then on a fair split of costs being rent / capex / interest, Nutrition is a negative drag on FCF until Whey drops back

Someone posted it’s potentially £12.50 a package paid to Ingenuity to store / send a bag of Protein or lipstick to a customer

We know we pay £22M rent for the space that holds THG products within Ingenuity and we know it’s THG that funds that stock

So I guess you have to say a chunk of the margin THG loses is the ability to deliver products next day

Could THG find a cheaper solution for £360M a year including rent? We will never know as MM can’t afford that to happen and as such it’s an opaque cost structure.

What would the price per package average on a 10 year contract be with £3.6B on a straight line basis ?

It’s why we won’t get full price carving out Beauty as the buyer will want a discount to fund the Ingenuity contract plus there is still 20 months of the joined up IT system to consider

If Frasers are doing their DD and it’s an IF, they will work out what they need back to compensate the cost of above ?

Beauty generated £85M less 66% cost of capex / finance / £22M rent, ballpark £50M FCF if we are generous that a stronger business can fund debt better ?

What multiple that FCF ? Then put the premium buy out on top and add net debt ?

£1B for Beauty looks doable, reckon Ashley will be arguing £1B EV , may be somewhere in the middle if MM wants Nutrition which may not be the case of course, but this week we will have a better idea.

Good post Ephemeral, suggest even the diehard MM fans have now excepted this is the MM show, he doesn’t care about shareholder and especially us PI’s, it’s how much he can grab, he plays a zero sum game

To make money ourselves we have to look at what MM doesn’t say but what he actually does, it’s been the case the last 3 years

If we get a dividend this week he is going to build the business as a public company, if it’s share buybacks the same, plus he is squeezing MA

We get no capital distribution and no Frasers TR1 we are getting carved up, sit back and wait for the associated RNS.

We also pay £22M rent

It’s all in the demerger Doc

That’s the whole point Stan

We have no idea what we get for £340M and is it value for money? Our EBITDA margin is very poor compared to peers so it’s logical to say we are over paying

It’s a massive number 20% off the top line and it’s why one of the reasons the market won’t rerate THG which is down 50% since the demerger announced

MM negotiates with himself and the GLA plays Bank on the £400,000 and looks away

The above is fact

Stan, look at this way

We know Nutrition is generating £8M ish EBITDA and if Whey drops 25% it will make an extra £40M cash but Whey has gone back up this week

Would a buyer pay £800M debt free today but tied into MM for maybe years handing over 20% of your revenue to him?

MM may pay £500M to £600M on a no cash/effective paper driven tax efficient deal as he pulls in £110M to Ingenuity on top

Stan

OSG and others have explained this a number of times, last try off me

APN generate 29% EBITDA

THG. 6.5% as Moulding top slices 20%

Can you see the difference ?

Stan

Don’t want to shock you but THG are not growing their sales numbers but I take your point

Stan, fully understand this is heavy stuff for your Brain

Best you swipe down when you see £numbers and focus on paste / post stuff off ChatGPT, maybe do a bit of research on the difference between gross profit, EBITDA profit and net profit as starter for ten

Ingenuity take 20% off the top line of THG, regardless of input cost

Without this £340M Ingenuity is insolvent

Put this into prospective, Ingenuity only generates £175M of external revenue

Of course Ingenuity is providing a service but as MM now owns 50% of Ingenuity and is also the CEO of THG he has no incentive to chip at that £340M

It’s massive numbers, take over 10 years it’s £3.4B on a straight line basis, imagine going to tender for that and building in IF Whey goes to €1000T then the percentage is reduced

Could THG get these services for 10%? We don’t know as MM signs both contracts, you couldn’t make this stuff up

Monty

Think your on track with that reasoning

Maybe MM thought the share price would rise after the demerger, his lackey Iain Mc was sent forth in advance to set up Selkirk with the prospect of a Bid for Nutrition as they needed to protect the £110M he was taking for Ingenuity ?However the share price dropped 50% and MM weighed up he could take advantage and take what he wants on the cheap

However Ashley joined the fray and built a stake very quickly to 11% and MM was forced to the table and needed to get to 25% and quick / on the cheap so he took £60M of shares at 32p to get there or take the risk Ashley took 30% and went for BoD control and start unravelling the £340M a year MM tops slices for himself, think of it like a 4D game of chess, MA and MM ended up with only their Kings on the Board, they had to work together

MA and MM join creating a concert party and MA stops buying to avoid a mandatory take over Bid

If the new chums fall out on their negotiations we will know as Frasers will issue a TR1, until then the boys are carving this one up

Reckon that’s where we stand today alongside poor numbers next week, share price is going nowhere until the MM plan is disclosed

Suggest we can measure the forecast EBITDA profit for 2025 for each division, if we take the lowest broker number it’s £93M ?

Beauty will do around £1.3B @ 6.5% ? Call it £85M

Nutrition contributes £8M with Sweet Whey above €1000

Whey makes up 67% of MP gross cost

if Whey drops 25% we are told MP generates another £40M of cash

Suggest the numbers for Nutrition next week will be horrible, the market Tbf understand that and that’s why we are priced at 28p

Not saying it’s nailed on but IF MM and MA have ironed out their differences we may get a sniff of talks, there’s a chance.

Without a Bid and until Whey drops there is no way Nutrition turns around

Take the 67% input cost of Whey and top slice 20% to MM the Nutrition nothing of note has changed from H2 2024

Just for Stan at the back of the class who struggles with numbers, EBITDA is not net profit

VC

Iain Mc is the crap warm up act that is rolled out at 3pm in the afternoon when the main act (MM this case) comes on at 9pm gets what he wants

Iain Mc has no credibility other than a MM fan boy

MM has said ‘ capable of paying a dividend’ that’s not him saying they will pay a dividend, am not sure he is on thin ice with that one ?

Where the NED’s need to be careful is have Frasers & THG produced a Draft HOT’s and due to MM’s role of being defacto controller of all 4 companies and Frasers being one of the biggest shareholders of THG are they aware of the terms and if so have they cleared with the Company lawyers in terms of disclosure to the market ?

We have a very unusual situation of MM being the biggest supplier to a quoted plc that he is also the CEO, it’s not small change we are talking about it at £340M a year it’s a big number

The GLA appears to have completely lost the plot on who he works for but the NEDs have a collective responsibility and are not getting £400,000 a year each to stay silent so can ask the questions

If Frasers announce a TR1 tomorrow then all bets are off but as the days pass without one something is going on, ditto not a word off Frasers about THG turning down a £600M offer, that’s not normal behaviour off Ashley, he’s usually got something to say, he’s pumped £50M into THG the last 20 weeks, that’s not loose change either

So MP /MM swop for more THG a shares to give up rights in MP

Then Ashley buys THG whats left being Beauty and gets the tax losses

Hi Yorek

Reckon we have to think like MM

So MM repeats Ingenuity structure with MP but places a £600M valuation which is 40p a share, you roll or he gives you pro rata out of the 32p shares he just bought, he owns a total of near 375M ish of shares

It’s all done back to back so he ends up with 25% of MP and he can fund up to near £300M with his THG shares - now at 65p minimum could be 80p

MM sells Beauty for £1B plus debt , 65p same time

Shareholders bag £1+ but it could be cash / paper

I am assuming it’s Frasers paper for this example and Frasers absorb the debt

The variable on the 65p is the £260M a year Frasers would have to pay Ingenuity, Ashley might argue he wants a discount to the £1B plus debt

As Investing 101 says it could be 85p to £1

The above works, super tax efficient for MM, he ends up with 50% of Ingenuity and 50% plus of MP and no debt, he doesn’t even need a penny to fund it, shareholders bag £1 ,it’s typical MM financial engineering, he just needs a buyer for Beauty, Ashley has stopped buying as the above gist of a deal is agreed in draft HOT’s

Hope that makes sense, tried to condense

Stan

Wait and see

It’s just ingenuity 2.0

Typo

£1/4B he takes out of Beauty