THG looks to demerge Ingenuity arm

THG has announced that it is “actively undertaking” work that could lead to the demerger of its technology arm, THG Ingenuity. Whilst structuring tax clearances have now been approved by HMRC, the group said there was no certainty of a timescale for the demerger that it could provide at this point.

The proposed demerger would require shareholder approval, with details of the move set to be provided to shareholders in due course. 

Following the demerger, the group would consist of THG Beauty and THG Nutrition.

The news comes as the group also revealed its interim results for the half-year ended 30 June 2024, as adjusted EBITDA rose by 1.6%, though year-on-year sales dipped by 3.6%.

Over the period, sales in its Beauty division rose by 5.7%, and THG Ingenuity sales rose by 12.6%. However, THG Nutrition sales fell by 10.9%. Despite this, the group said it was pleased with underlying trading patterns and notably a recent improvement in Nutrition, and expects to exit Q3 in revenue growth. 

Overall, in the second half of the year it expects revenue growth and seasonal weighting in Beauty and Ingenuity to largely mitigate the Nutrition YoY decline. 

Matthew Moulding, CEO of THG, said: “The group continued to deliver against its strategic priorities through H1, with the performances of both Beauty and Ingenuity particularly strong. Reporting another 6-month period of continuing sales and adjusted EBITDA growth was especially pleasing given the FX headwinds suffered within our Nutrition business, which negatively impacted H1 profitability by a further c.£5m. Local manufacturing and fulfilment is now live in Japan which will steadily scale to reduce exposure.

“Beauty revenue growth of +6% supported a record H1 adjusted EBITDA performance, an improvement of c.170% as the business model changes we made to focus on more profitable orders located closer to our global distribution hubs, come to fruition.”  

He added: “Further contract wins within Ingenuity is underpinning a steady acceleration in external revenue growth following the repositioning of the business to focus on higher value, multi-service clients. H1 adjusted EBITDA was a record performance, up +227% YoY, almost double the previous best performance in H1 2021.  

“Finally, after extensive discussions with shareholders over the past 12 months, THG is progressing options to demerge THG Ingenuity, leaving our highly profitable and cash generative global Beauty and Nutrition businesses within THG PLC. The appropriate tax clearances have been received, while the necessary separation work has previously been undertaken.”