THG PLC on Wednesday backed annual guidance, with progress on all fronts, while Chief Executive Matthew Moulding surrendered his golden share.
Shares in THG were up 2.8% at 74.96 pence in London on Wednesday morning.
The Manchester-based e-commerce firm predicts that it will achieve adjusted earnings before interest, tax, depreciation, and amortisation between £44 million and £47 million for the first half of 2023. At best a 46% increase from £32.3 million a year prior.
THG said it expects a continuing adjusted Ebitda in the range of £47 million and £50 million. The continuing adjusted Ebitda figure excludes the OnDemand and ProBikeKit businesses.
ProBikeKit is an online seller of bike components, accessories, and clothing. It was acquired by THG in 2013. ProBikeKit is part of THG OnDemand, the lifestyle division that THG said in April it is planning to exit from by the end of the third-quarter of 2023. Sky News in May reported Frasers Group PLC was in talks to acquire the stock and intellectual property of ProBikeKit.
THG’s free cash flow for the 12 months leading to June 30, was ahead of expectations, and expected to be an estimated £40 million outflow.
The company expects to deliver free cash flow neutrality for 2023, after a £63 million outflow in 2022.
THG said its nutrition business, focused on digital-first nutrition brands, had a particularly strong start to the year, with commodity prices easing and further margin benefits expected.
In THG Beauty, the company is eyeing ‘further sales momentum in the second half of the year’.
In THG Ingenuity, it has made ‘good progress on building its client base’. It has added £1 billion worth of incremental gross merchandise value in 2023.
‘In addition to partnerships with BigCommerce, AutoStore, PwC and Elastic Path announced to date, Ingenuity has recently partnered with Commercehub, one of the world’s largest commerce networks, to extend Ingenuity’s marketplace solution and create a complementary, managed marketplace offering,’ THG added.
THG also announced that it was notified by Founder and Chief Executive Officer Moulding that he has transferred the special share he held. The special share will be cancelled by THG. It had been a sticking point to some investors, as the share had special voting rights attached.
The company looking to move to a premium listing of the London Main Market, from a standard listing. Founder and CEO Moulding’s golden share prevented a premium listing at the time of the initial public offering in 2020. This means that THG is currently excluded from FTSE UK indices.
‘The group’s intention in relation to moving to a premium listing remains as stated in its FY 2022 results in April, with timing subject to the final outcome of the FCA’s review for reform of the listing regime,’ THG added.
The news of the cancellation of the special share followed the failed takeover bid by Apollo Global Management in May.
‘There is no longer any merit in continuing to engage with Apollo’, THG said in May.
THG also announced today that Helen Jones, former vice chair of Ben & Jerry’s board of directors USA, has been appointed as an independent non-executive director of THG with immediate effect.
Kelso Group Holdings PLC noted THG’s announcement said it was ‘very encouraging’ to see the firm’s profit outlook.
‘We also note Matthew Moulding relinquishing the golden share; a clear sign of his confidence in the business and shareholder register, alongside improving governance. Kelso reiterates its belief that the current stock market value does not reflect the underlying value of the sum of each of the main THG divisions,’ Kelso said.
THG was Kelso’s initial investment. It holds around 8.0 million shares. Kelso shares surged 7.6% to 2.42 pence each in London on Wednesday morning.
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