THG, which has just attracted a preliminary and non-binding indicative takeover proposal from Apollo Global Management Inc, has posted annual revenues (to 31st December 2022) of £2,239.2m which is up from the £2,179.9m achieved for FY 2021. (Shares in THG rose to 95p yesterday from 63p at the prospect of Apollo’s interest in taking the business private). THG floated in 2020 with a share price of 500p which peaked in July 2021 reaching 796.2p.
However, returning to its FY results, THG’s rise in revenues was accompanied by an operating loss of £495.6m which, the business says, was impacted by the non-cash impairment of £275.4m plus other non-recurring costs which the company claims will continue to reduce. This includes the £32.4m of costs relating to its strategic review, stock provision and other associated costs, along with incremental delivery costs of £18.5m, and £14.8m in administrative costs.
CEO Matthew Moulding said in a statement: “We continue to make good progress on executing our strategy of building a digital-first consumer brands group, powered by our own technology and global fulfilment operations. I am hugely proud of the THG team who have delivered another record revenue performance.
“While FY22 adjusted EBITDA was not where we planned at the start of the year, this was largely the result of our strategy to minimise the impact of inflation upon our customer base. This investment in their retention, and longer term growth, was the principal driver behind the reduction in gross margin.
“The challenging macro and inflationary environment required decisive action across the business with around £100 million of efficiency savings delivered. A much improved outlook on many key cost inputs gives us confidence in an improved financial performance as the year progresses.”
Moulding went on to confirm that its THG Ingenuity division was now benefiting from the leadership of an experienced CEO and was focusing on long-term, higher-value enterprise accounts plus a strong 2023 pipeline.
THG founder Matt Moulding has made no secret of his dislike of life as a listed business and the controls it brings. Should Apollo’s approach turn into a firm offer, then it could be a relief not only for him, but also THG’s long-suffering shareholders,” commented Julie Palmer, Partner, at Begbies Traynor.
Apollo is required to either announce a firm intention to make an offer or advise that it does not intend to proceed, by 15th May 2023.