THG to Spin Off Ingenuity and Reclassify to FTSE 250

2 min read | September 17, 2024 03:59 AM EDT | By Team Kalkine Media

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THG to Spin Off Ingenuity and Reclassify to FTSE 250 — Image source: Shutterstock

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THG PLC (LSE:THG), the parent company of the Hut Group and Myprotein, has announced plans to spin off its Ingenuity digital and logistics division through a demerger. Concurrently, the company is applying to change its listing category on the London Stock Exchange to facilitate inclusion in the FTSE indices.

The decision to demerge THG Ingenuity aims to "maximize shareholder value," a move prompted by feedback from major shareholders. Post-demerger, THG PLC will focus on its core beauty and nutrition sectors, which are described as leading global consumer businesses with strong profitability, cash generation capabilities, and dividend potential.

THG is currently working with management and advisers to finalize the demerger structure, having received tax clearance from HMRC. While the timeline for the demerger remains uncertain, shareholder approval will be necessary.

In its financial update, THG reported stable underlying revenue for the first half of the year, with a 1.5% rise in adjusted earnings (EBITDA) to £52.3 million. Excluding discontinued or exited businesses, revenue increased marginally by 0.1% to £911.1 million, or 2.2% on a constant currency basis. Including discontinued operations, total revenue decreased by 3.6% to £934 million, while EBITDA grew by 3.6%.

The THG Beauty division saw a 6.9% increase in sales and a 170% rise in adjusted EBITDA, attributed to strategic changes focusing on more profitable orders and proximity to distribution hubs. Conversely, THG Nutrition experienced a 7.5% decline in sales due to "transitory headwinds" linked to the rebranding of the Myprotein business. The rebrand is nearing completion, with anticipated improvements expected to drive growth in the current quarter.

Regarding the listing change, Chief Executive Matthew Moulding stated that the company is transitioning to the LSE's equity shares (commercial companies) category following a review by the FCA. THG aims to be eligible for inclusion in the FTSE UK index series by March 2025, with its current market capitalization placing it in the mid-range of the FTSE 250.

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