THG, the Manchester-based e-commerce group behind brands such as Lookfantastic and MyProtein and owner of the City A.M. newspaper, is exploring plans to demerger Ingenuity, its technology services arm.
THG has confirmed it is “undertaking detailed work” to demerge its Ingenuity ecommerce division from the rest of the business.
It would be the latest in a series of plans studied by THG’s board, which is chaired by Lord Allen of Kensington, to shake up share performance after a troublesome journey as a public company that has freuqentlt drawn the ire of CEO and founder Matthew Moulding on social media.
THG’s founder has been a vocal critic of investors and the media, as well as London’s listing rules, which he has argued have stymied technology companies like the one he co-founded two decades ago.
A demerger of Ingenuity, which serves clients such as Frasers Group, would allow THG to retain the material free cashflow generated by its more immediately lucrative other operations.
This could pave the way for it to pay its first dividend to shareholders, as last year’s financial results showed that, excluding Ingenuity, it generated more than £80m of free cashflow.
THG went public in 2020 with a valuation of over £5bn. The prospective demerger of Ingenuity would probably see the, currently less profitable, technology and logistics division which does not expect to break even for three-to-five years, become a privately held, rather than listed, company.
In a separate announcement this morning, the group has announced its interim results for the half-year ended 30 June 2024. Over the period, the Group has continued to deliver against its strategic priorities, with group continuing revenue and adjusted EBITDA growth of +2.2% CCY and +1.6% respectively.
Standout performance was delivered by THG Beauty. Its record H1 adjusted EBITDA of £32.6m, followed the successful execution of the market prioritisation strategy, retail and own-brand revenue growth.
