Annual Report
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THG PLC
For the year ended: 31 December 2023
Company Number: 06539496
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2023
Contents
Strategic Report
Chair’s introduction
Chief Executive Officer’s review
Our purpose, vision and values
Our strategy
THG Beauty
THG Nutrition
THG Ingenuity
Chief Financial Officer’s review
Section 172 statement stakeholder engagement
Non-financial and sustainability information
Our people
Sustainability
Task Force on Climate-related Financial Disclosures
Risk management and informed decision-making
Directors’ Report
Governance
Corporate Governance Report
Audit Committee Report
Risk Committee Report
Nomination Committee Report
Related Party Committee Report
Sustainability Committee Report
Directors’ Remuneration Report
Financial Statements
Glossary
1
Page 3
Page 5
Page 7
Page 9
Page 19
Page 25
Page 29
Page 35
Page 47
Page 55
Page 57
Page 63
Page 69
Page 87
Page 99
Page 107
Page 123
Page 129
Page 133
Page 139
Page 141
Page 143
Page 167
Page 229
Highlights
Who we are
THG PLC operates three distinct businesses in Beauty,
Nutrition and Ingenuity, each scaled from the UK to hold
global leading positions in their respective sectors.
Strategic progress
•
•
•
•
Strategic Review leading to discontinuation of
loss-making categories, underpinning profitability
improvements
THG Nutrition over-delivered medium-term margin
targets and entered new strategic partnerships
through development of offline strategy
Prioritisation of higher margin sales and territories
reflected in higher quality EBITDA
Appointment of Sue Farr and Helen Jones to the
Board of Directors, increasing independence
Financial performance
• Group adjusted EBITDA £114.1m, +78% YoY
•
•
Free cash flow breakeven achieved
Strong balance sheet, with c.£600m of cash
and available facilities
•
RCF refinanced to May 2026
Revenue
FY23
FY22
FY21
Adjusted EBITDA
FY23
FY22
FY21
Adjusted EBITDA margin
FY23
FY22
FY21
Reported operating loss
FY23
FY22
FY21
£2,045.4m
£2,239.2m
£2,179.9m
£114.1m
£64.1m
£161.3m
5.6%
2.9%
7.4%
£185.4m
£495.6m
£137.5m
Revenue by territory
Revenue by business
ROW 15%
(FY22: 17%)
US 18%
(FY22: 20%)
Europe 21%
(FY22: 20%)
UK 46%
(FY22: 43%)
THG Ingenuity
£673.9m £154.1m external
(FY22: £757.0m £159.5m external)
THG Nutrition
£657.9m
(FY22: £662.7m)
THG Beauty
£1,171.7m
(FY22: £1,226.0m)
2
Annual Report & Accounts 2023
Chair’s
introduction
Charles Allen,
Lord Allen of
Kensington CBE
Independent Chair
Introduction
Welcome to our 2023 Annual Report. We are delighted to report
a strong set of results, in particular achieving our cash generation
guidance alongside improved profitability on an adjusted EBITDA
basis.
When I joined THG, I was given a clear mandate to refresh
the Board and further strengthen governance, independence
and diversity. As documented throughout this Annual Report,
we have made significant progress, both in this regard and in
working closely with Matthew Moulding to develop the Senior
Management team and refine the Group’s strategy.
As Chief Executive Officer, Matthew has set a clear strategy for
the Group, supported by Senior Management, who continue to
bring vast amounts of energy to execute this strategy and take
advantage of opportunities for growth.
At Group level, our financial targets are centred on sustainable
growth, cash generation, strengthening the balance sheet and
improving margins. Having reviewed and developed the strategy,
we are focused on initiatives within each business that ultimately
support our objectives as a Group.
In line with our vision to create and grow category-leading brands
on a global scale, I continue to be impressed by the progress
made by each of our three businesses, and, while external
challenges remain prevalent, particularly inflation and higher
interest rates affecting consumer confidence, we have achieved an
impressive financial performance.
Board composition and management
As I discuss later in the Governance Report, the Company
remains committed to ensuring that a robust governance
framework exists throughout the Group, and that the Board is
appropriately structured to guide THG through the next stage of
its governance plans. With reference to my mandate to broaden
the independence and diversity of the Board, we were delighted
to welcome two further independent NEDs, Sue Farr and Helen
Jones during 2023, building upon the progress made with the
appointments of Gillian Kent and Dean Moore in September 2022.
With the appointment of Sue as SID, it is pleasing that one of our
four senior Board positions is now held by a woman, although we
recognise we need to progress further in this regard.
Indeed, we remain committed to further broadening diversity in
line with the FCA’s D&I targets (which are considered further in
the Nomination Committee Report) and meeting the Group’s own
EDI targets, on which further information can be found within the
Sustainability section of this Annual Report. The search to identify
suitable candidates to enhance the composition of the Board will
remain an ongoing focus throughout 2024, to ensure we have the
appropriate balance of skills, knowledge, experience and diversity
on the Board to oversee the successful execution of the Group’s
strategy, and support THG’s ongoing PLC evolution. In addition,
we note the need to ensure that a robust and diverse succession
pipeline is in place throughout the organisation more generally.
On behalf of the Board, I would also like to thank Iain McDonald
for his significant contribution to the Company over his many years
in office and prior to stepping down from the Board at the end
of March. In particular, we have greatly valued his contribution to
strengthening the Board composition, welcoming new NEDs and
developing THG’s strategy. Notably, when Iain stood down from
the Board, we achieved an equal balance of independent and
non-independent Directors (excluding myself), which rectified the
previous departure from Code Provision 11.
Further information on the Board changes which took place during
2023 can be found within the Corporate Governance Report and
the Nomination Committee Report.
Strategy
Sustainable revenue growth is a common objective across
our businesses, and their detailed strategic plans are reviewed
regularly by the Board. During the year, we reviewed and exited
categories that did not meet our returns criteria, while making
substantial investments in areas where we are well-placed and see
specific opportunities to accelerate growth.
In THG Beauty, we made decisions on the categories and markets
to prioritise, with a product-led focus. This multi-year strategy has
redeveloped our retail business and allowed us to build stronger
relationships with our brand partners, particularly in the UK and
US.
In THG Nutrition, we achieved our medium-term margin targets
alongside evolving our brand model into new markets and
categories through selective partnerships. We have an excellent
platform from which to expand our position in health and wellness,
supported by a refreshed brand and look to broaden appeal.
THG Ingenuity was also recognised in the influential Gartner
Magic Quadrant™ for Digital Commerce, acknowledging its
completeness of vision and ability to execute. We will continue to
progress our technology roadmap and deepen partnerships over
multiple services and territories.
Following completion of our expansionary investment in
our global fulfilment infrastructure, we have transformed our
approach to operations, optimising automation to reduce costs,
create efficiencies and, in turn, support our path to positive cash
generation.
Work has already begun to meet these targets and we have also
replaced our Ethical Code of Conduct with our new THG Supply
Chain Standards, which strengthens our approach with our supply
chain.
As a business, we are committed to encouraging environmental
and societal change both through our own operations and as a
key partner for our stakeholder groups. This is supported by our
2030 Sustainability Strategy, ‘THG x Planet Earth’, which details our
goals and targets as we pledge to use our global scale, world-class
talent, and dedication to innovation to act as a force for good.
People and diversity
Outlook
Despite a challenging year for the UK jobs market, we continued
to attract and retain top talent within THG during 2023. With a
renewed focus on internal mobility, we provided support for 365
people to move into new roles within the Group, which has not
only strengthened our internal talent pipeline, but helped to create
a resilient and agile workforce for the future.
We also invested in our future talent, onboarding 104 graduates,
24 interns and 100 apprentices. THG Accelerator, our in-house
training programme for graduates from a non-computer science
background, continued to provide a pipeline of diverse technology
talent.
ED&I remained high on our agenda, influencing our talent
attraction strategy across all areas of the Group. We continued
to improve our knowledge and understanding of accessibility
and inclusion in the workplace, and entered a two-year strategic
partnership with Tech She Can to bring more women into the
technology industry.
We are proud of the changes which we have made over the
past 12 months, and plan to make further investment in our
people in 2024.
Sustainability
Our sustainability strategy continues to be embedded across our
businesses, led by our Senior Management and our Sustainability
team. Following a full GHG inventory in 2020, THG submitted its
net-zero targets to the SBTi, which were successfully validated as
follows:
•
•
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THG commits that 85% of its suppliers by spend, covering
purchased goods and services and upstream transportation
and distribution, will have science-based targets by 2027.
THG commits to reducing absolute Scope 1 and 2 GHG
emissions by 42% by 2030 from a 2020 base year.
THG commits to reducing absolute Scope 1 and 2 GHG
emissions by 97.7% by 2040 from a 2020 base year. THG
also commits to reduce absolute Scope 3 emissions by 90%
within the same timeframe.
As we turn to the year ahead, we are positive on the outlook for
our markets and anticipate a return to revenue growth during the
year. We will continue to execute our strategy, work deeply with our
partners and be disciplined stewards of the balance sheet.
During 2024 we expect further progress on EBITDA initiatives as
our momentum continues. The new financial year has started well,
especially within THG Beauty, where we recently added Biossance
to our prestige own-brand portfolio. We also expect further good
progress on profit enhancement initiatives which we will balance
with investment in demand generation.
THG is a modern and dynamic company in a traditional
environment. We are building a business fit for the next decade
and beyond, and the Board remains highly supportive of the
strategic direction the CEO and Senior Management team are
pursuing to create value for stakeholders.
Finally, I’d like to thank our 7,000 colleagues around the world for
their commitment and dedication to all of our stakeholders during
this period.
Further information can be found within:
Chief Financial Officer Review (see page 35)
Section 172 Statement Stakeholder Engagement
(see page 47)
Our People (see page 57)
Sustainability (see page 63)
Corporate Governance Report (see page 107)
Nomination Committee Report (see page 133)
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Chief Executive
Officer’s review
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Across both our consumer businesses, our customer health
remains robust with repeat purchase rates of above 80%.
Ingenuity’s pivot to larger, multi-service clients is gaining
momentum, reflected in some key client wins and a strong
pipeline. We were thrilled to be listed in the Gartner’s Magic
Quadrant™ for Digital Commerce, in recognition of our ability
to provide an all-encompassing direct to consumer journey.
In line with our guidance, substantial growth in Group
profitability, along with improved inventory efficiency, led to
the Group delivering £174m of operating cashflow1 in 2023.
This strong operating cash performance allowed the Group
to continue to make £128m of Capex investments in the year,
principally into the UK, while still delivering overall free cash2
flow breakeven for the year.
Following the Group’s solid adjusted EBITDA and operating
cash performance, closing net leverage for FY 2023 was
c.1.9x, compared to 2.8x for FY 2022. Continued positive
momentum into FY 2024 provides confidence of further
degearing.
• With the support of our long-term banking partners, we
extended our revolving credit facility until May 2026. Whilst
we haven’t used this facility since IPO, it affords us continued
significant financial flexibility during uncertain geo-political
times.
Matthew Moulding
Executive Director
and Chief Executive Officer
Chief Executive Officer’s statement
2023 was a year of material operational progress and execution
for THG, as we continued to grow our category-leading, global
brands through digital transformation, innovation and impactful
partnerships. It was certainly not without its headwinds, but the
Group responded proactively, and emerged stronger.
Following the challenging global environment in 2022, we
repositioned our three businesses to focus our resources onto
margin recovery and a return to sustainable revenue growth.
Overall, the performance was highly encouraging, and although
we have more work to do in 2024, I am confident we have the right
people, capabilities and expertise to make further progress.
• We achieved a Group record EBITDA performance after
cash adjusting items and anticipate further progress towards
our medium-term targets during 2024, in line with historical
performance.
•
Our Beauty business displayed incredible resilience, despite
the first half being affected by short-term global de-stocking
affecting manufacturing volumes. Our focus on orders that
delivered immediate profitability over ones with a longer
payback, meant we fulfilled more orders closer to our global
distribution hubs, driving further economies of scale.
As noted in the Chair’s Statement, we were delighted to
welcome two further independent NEDs, Sue Farr and
Helen Jones, as we expanded our independent Board, while
thanking Iain McDonald for the significant contribution he
made to the Company over many years.
• We celebrated our meritocratic culture in our Annual
Awards, awarding £150,000 equity to Newcomer of the
Year, Employee of the Year, and Outstanding Contribution,
in addition to supporting many well-deserved promotions
across the Group.
THG Nutrition achieved an impressive performance, and
with inflationary pressures easing, posted substantially higher
margin growth year on year. The early results from the major
Myprotein rebrand are also encouraging as we’ve taken steps
to further enhance the premium nature of the world’s No.1
online sports nutrition brand.
•
These actions should strengthen partnership opportunities
as we expand our licensing and offline strategy. The new
branding also lays the groundwork for selective category
expansion, supporting our plan of building Myprotein into a
truly global lifestyle brand.
Following the Group’s strong performance, the Executive
Directors would have been eligible for a bonus opportunity
totalling in excess of £1m in 2023. It is likely that a material
proportion of this would have been payable to me, however,
in line with each financial year since IPO, the Executive
Directors unanimously decided to waive their entitlement to a
2023 bonus. In recognition of this, the Group intends to make
a charitable donation of £500,000 targeting homelessness
in Manchester. I also waived my £750k salary in return for
the Group making a charitable donation to The Moulding
Foundation.
1. Defined as cash generated from operations including a cash receipt of £11.2m from HMRC which was remitted to the Group, but physically cleared the bank on the first
working day of 2024.
2. Free cash flow is defined as total cash flow for the group adjusting for debt (repayments) / proceeds and acquisitions cash flows and in respect of FY 2023 the
inclusion of a cash receipt of £11.2m from HMRC which was remitted to the Group in December 2023 but physically cleared the bank on the first working day of 2024.
For presentation purposes, this is considered to be free cash flow as at 31 December 2023 as a result of the remittance advice received.
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Business operational performance
As an authority in Beauty, we continue to attract, retain and
develop our customer relationships, with our proposition refined
and elevated by new technology and a best-in-class delivery
service that enhances the customer experience.
Myprotein has evolved beyond sports and performance to broader
health and wellness categories, expanding its addressable markets
and catering for increased consumption occasions. Pivotal to this
strategy has been creating ranges with prominent partners in
distribution, grocery and chilled goods – expanding the reach of
the brand into offline channels and, in turn, building awareness and
engagement. Commodity challenges abated during the year and
we were able to achieve significant profitability while undergoing
an ambitious brand repositioning.
Our proprietary technology and operations platform, THG
Ingenuity, is a multi-year development story, with our fulfilment
and operational solutions business now winning clients in its own
right, as the business accelerates the returns on investment in
distribution capacity.
Finally we actively managed our portfolio through the exit of small
legacy brands within Beauty and Nutrition, and through the sale of
OnDemand and ProBikeKit delivering a cash return.
Financial performance
Much like the previous year, 2023 presented challenges for all
businesses in the markets we operate in. Nevertheless, we are
very pleased with how the Group has responded, making
substantial progress towards the targets we communicated at
the outset of the year.
We achieved revenue of £2bn, reflecting our efforts in executing
our strategic review, as we repositioned several loss-making
categories across the Group. This created strong momentum
heading into 2024, and we expect to return to progressive revenue
growth throughout the year.
We repositioned Beauty to materially improve profitability, with
the business finishing the year in constant currency growth.
In Nutrition, we set out to recapture the significant investment
we made in margin during 2022, subsequently achieving
an EBITDA margin in excess of our medium-term guidance.
Ingenuity continued to execute its strategic pivot towards higher
value clients, with new client wins and expanded partnerships
accelerating monthly recurring revenue throughout the year.
We made notable margin improvements, in part due to the Group’s
excellent operational performance. Distribution costs were lower
year on year, through an optimised fulfilment network consisting
of increased automation and an improved delivery offering. We will
continue to increase automation in our major hubs to further offset
lingering inflation and move towards our goal of around half of
customer orders being touched by automation.
Operational leverage also supported improvements in profitability,
achieving continuing adjusted EBITDA of £120m – ahead of our
previous guidance.
Our business has nearly doubled in revenue since IPO, with our
growth capex investment phase already paying back. Investment
in future years will remain at comparatively modest levels, though
still extending and enhancing our proposition and competitive
advantage while the market growth opportunity remains
significant.
Following our strong operating cash performance in the second
half of the year and our recently extended Revolving Credit Facility,
we have a healthy liquidity position with c. £600m in cash and
undrawn facilities providing substantial liquidity and flexibility, to
capitalise on growth opportunities.
People and purpose
2023 was a year of transformation for our people as we prioritised
attracting top talent, as well as retaining and nurturing our
existing teams. From introducing wraparound support for working
families, to increasing compassionate leave, we made significant
investment in our people, their wellbeing, and their long-term
development at THG.
We launched our social impact strategy, THG in the Community;
our plan for creating positive social change and making an impact
in our local communities. The strategy is underpinned by three
pillars – championing inclusion, disrupting inequality, and creating
opportunities – and revolves around three key initiatives, all of
which have been introduced to give our people an opportunity to
get involved and give back.
All businesses are accountable for maintaining a focus on closing
the emissions gap. THG is rising to this challenge by committing a
greater number of resources to its sustainability agenda, ensuring
compliance with the ever-increasing legislative demands and
making progress on our 2030 Sustainability Strategy.
Outlook
We expect long-term channel shift across our consumer markets
to continue, supported by a track-record of consistently taking
market share, and a global, expanding, high-repeat customer base.
We remain confident of a return to 9% adjusted EBITDA margins
in the medium-term, and progression into 2024 through:
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a return to revenue growth across the Group;
operating leverage improvements across the fixed
infrastructure, including automation; and
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further free cashflow progress.
With a strong balance sheet and category-leading positions within
substantial end markets that continue to benefit from long-term
structural growth, we have confidence in our ability to deliver long-
term value for Shareholders.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Our purpose
To make an impact through digital
transformation, innovation and expertise.
Our values
We’re incredibly proud to celebrate our diverse
workforce and the unique experiences, skills
and qualities everyone brings to the table. But
there are a few things we all have in common.
Ambition
Decisiveness
We think big. We set ourselves ambitious
goals, seeing opportunities where others
see obstacles. We take pride in our work
and view our setbacks as valuable learning
experiences. Our progressive mindset allows
us to deliver better outcomes for our people,
our brands, our clients, our customers and our
communities.
Collaboration
We work together. We share ideas, insights
and skills to create a meaningful impact and
drive positive results for our business. We
listen to each other, we trust each other and
we strive to create an environment where
everyone feels heard.
Innovation
We do things differently. We celebrate
experimentation and champion
entrepreneurial thinking. We find solutions,
not problems, and use our creativity and
resilience to drive continuous improvement.
We make bold decisions. We use robust
data to make quick, informed and confident
decisions. We take calculated risks and we’re
not afraid to take accountability for our actions.
Leadership
We lead by example. We inspire, motivate
and encourage each other to push the
boundaries of what is possible. We set a
positive example and promote a culture of
meritocracy so that everyone at THG, no
matter their background, age, or experience,
has the opportunity to go further, faster.
Our vision
To create and grow category-leading
global brands on a global scale.
We live and breathe
our values every
single day.
Watch this video to find out
more about our influencer
management platform, THG
Society, that has been designed
and developed in-house by our
tech and marketing teams.
Collaboration
From creative development and
branding, to set build and show
production, our teams at THG
Studios worked together to bring
The Overlap to life.
THG Awards
Tech
Sustainability
Innovation
Innovation is at the heart of everything
we do at THG. From the technology
we build to the products we develop.
“We wanted to showcase THG’s talent
in every inch of the design including
branding, carpentry, lighting design,
build, set design, and set dressing. We
also collaborated with some northern
creatives and artists outside of THG to
create a custom wall mural for the set.
Collaboration was key in the overall
vision and mindset
of the team”
– Mike Scott,
Executive Creative
Director.
Leadership
We’re passionate about creating
leaders at all levels. That’s
why we give our early careers
talent access to career-defining
opportunities.
From creating global campaigns
and organising brand events to
presenting to senior stakeholders
and building their professional
networks, life at THG enables
them to go further, faster.
Prolific North Awards:
Large Tech Company of the Year
Environmental Finance: EMEA Circular
Economy Transition of the Year 2023
Status: Shortlisted
Status: Won
Sustainability
Ingenuity
Creative
Creative
Retail Week Awards –
The Responsible Retailer Award
Gartner Magic Quadrant™
Prolific North Creative Awards:
Inspired Space
The Drum Roses Awards:
The Guru – MyProtein cyber campaign
Status: Shortlisted
Status: N/A
Status: Won
Status: Won
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Our strategy
Strategic priorities
Build category leadership
positions in beauty, health
and wellness
Make Ingenuity the partner
of choice for commerce
transformation and
sustainability solutions
Deliver engaging
content and innovative
products to our global
customer base
Accelerate growth in core
international territories,
leveraging our local
infrastructure
Drive positive change
with our stakeholders,
through an entrepreneurial,
values-led culture
Medium-term financial priorities
Suppliers
and partners
We promote open and
transparent working
practices and collaborate
for mutual commercial
success
Customers
and consumers
We enable brands to have direct
relationships with consumers
by providing a high-quality retail
experience and establishing
a relationship of trust
Shareholders
We create value for
shareholders through
a focus on sustainable
growth, responsible capital
allocation and balance
sheet stewardship
Our
stakeholders
Our people
We aim to ensure THG
is an inclusive and
supportive environment
with career development
opportunities at all levels,
focused on building the
skills of tomorrow
Revenue
growth
Return to historical
adjusted EBITDA
margin of c.9%
Free cash flow
generation
Strong balance
sheet
Market-share
growth in key
territories
THG Ingenuity
clients
We support clients
on their digital
transformation journeys
through the provision of
technology, operational
and marketing services
Society and
communities
We aim to develop digital skills
and tech talent, providing jobs
within local communities to help
promote greater social mobility,
whilst protecting the environments
we operate in and source from
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
The Group operates three distinct businesses:
Beauty, Nutrition and Ingenuity, each holding global
leading positions in their respective sectors.
THG Nutrition
THG Nutrition comprises a family of digital-first health and wellness brands, including the
world’s largest online sports nutrition brand Myprotein.
THG Beauty
THG Beauty is a leading digital strategic player within the prestige beauty industry globally, combining
its portfolio of prestige owned brands across skincare, haircare and cosmetics with the provision of a
critical route to market for over 1,300 third-party beauty brands sold through its online retail sites, including
Lookfantastic, Cult Beauty and Dermstore.
THG Beauty’s stated ambition is to be the global digital partner of choice across the beauty
industry, supporting the channel shift to online. This strategy is based upon four key pillars:
1. maintaining its position as the world’s largest online pure-play prestige beauty retailer;
2. supporting global beauty brands in addressing the channel shift in marketing spend from
offline to online;
3. developing a digitally-focused stable of prestige THG-owned brands, providing margin
enhancement and differentiation;
4. providing innovation and product development services directly to the beauty industry.
THG Nutrition is optimally positioned for continued global growth leveraging:
1.
long-term trend of consumers becoming increasingly health conscious, and consuming
more nutritional products across a broadening range of categories;
2. proven ability to enter new markets and categories, localising the proposition whilst
maintaining quality and operational excellence;
3. a global community of influencers, affiliates and social media followers driving direct
traffic and brand awareness, in addition to its partnerships with major brands;
4. proprietary customer insights from direct to consumer engagement, supporting new product
development and innovation through its vertically integrated manufacturing capabilities.
THG Ingenuity
THG Ingenuity offers a complete digital commerce solution. Through its expertise in building direct to consumer
brands, developing technology and operational solutions and use of deep data insights, it enables brands to sell
online by providing technology, global fulfilment and digital performance marketing services.
Strategic priorities for the business remain focused on:
1.
increasing the value from our existing customer base and investing in long-term new
customer growth across primary verticals of FMCG, beauty and retail;
2. growing its presence within its target markets of UK, Europe and the US;
3. building technology and delivery partnerships that create indirect revenue channels and
extended delivery capacity to help us grow;
4. developing new products and solutions and continuing innovation on the platform.
In 2021 the Board set out the Group’s strategy to provide
each business with its own growth and capital platform,
through individual public market listings or partnerships, with
THG retaining significant majority ownership.
Since setting out this strategy, the Group has completed a
complex and lengthy divisional reorganisation, with each
business now operating stand-alone. A strategic review of loss-
making categories and territories within the THG OnDemand
business was also completed in 2023, leading to its full exit.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Our business
model
THG is a leading vertically integrated, global ecommerce
technology group and brand owner, powered by its proprietary
technology platform, THG Ingenuity, through which it also
provides end-to-end ecommerce solutions powering THG’s
brands offering alongside external, third-party brands to reach
a global ecommerce consumer base.
THG operates three distinct businesses THG Beauty, THG
Nutrition and THG Ingenuity, each operating in resilient,
growing markets. These businesses leverage the Group’s
specialisms: the development of a portfolio of leading
consumer brands; and the acceleration of D2C growth for
brands and retailers.
Our businesses
THG Beauty
Comprising the #1 online pure-play prestige beauty retailer
Lookfantastic, in addition to other popular online prestige
beauty retailers including Cult Beauty and Dermstore. In total,
THG Beauty offer more than 1,300 premium brands across the
skincare, haircare, cosmetics, and fragrance categories globally
with leading positions in the UK, US, and Europe. THG Beauty
represents a critical route-to-market for beauty brands seeking
to grow, innovate and connect with global audiences.
Additionally, THG Beauty owns nine prestige brands retailed
through THG’s online multi-brand sites as well as direct
to consumer websites, subscription boxes, and third-party
channels. These brands are primarily skincare, haircare and
cosmetics.
Finally, THG Beauty manufacturing provides a vertically
integrated model for both our own and external prestige
brands. THG Beauty is informed by market and brand trend
insights from its global consumer base to support brand
partners with their new product development capabilities
while its in-house product development and manufacturing
capabilities enables independent brands to scale.
THG Nutrition
A group of digital-first brands spanning the nutrition and
wellness space, led by the world’s largest online sports
nutrition brand, Myprotein. Its vertically integrated model allows
for the business to expand and operate in complementary
markets to sports nutrition such as vegan products, vitamins,
bars, snacks and sportswear within the online and digital
space in key markets including the UK and Asia.
Supporting the online and digital offering is the strategic
advance into international and retail markets through offline
partnerships and licensing agreements, further scaling and
diversifying the global portfolio.
In addition, THG Nutrition boasts its own vertically integrated
manufacturing capabilities, driving product development and
production, shortening timelines to market and enabling the
business to address consumer and market trends ahead of its
competitors, driving higher levels of cross-category purchasing
and brand awareness globally.
THG Ingenuity
Proprietary end-to-end ecommerce platform that powers
digital experience and retail for CPG, beauty and retail brands
globally, creating a seamless experience for consumers.
Clients can purchase end-to-end or modular services to meet
their needs, drawing on the Group’s digital brand building
capability, extensive proprietary ecommerce technology and
physical infrastructure.
As well as being a third-party ecommerce solution, THG
Ingenuity is the operational infrastructure and digital hub that
supports THG Beauty and THG Nutrition, delivering excellence
throughout the supply chain and customer experience. THG
Ingenuity operates a vertically integrated model, allowing the
Group to control the entire customer journey, from design,
manufacturing, product education and discovery, to purchase
and fulfilment.
Its core competencies sit across:
Technology
Since inception nearly 20 years ago, the Group has continually
invested in building its own ecommerce software specifically
designed for the retail of consumer goods globally. Solutions
include the Group’s highly scalable enterprise platform that
powers ecommerce for brands; hosting infrastructure ranging
from dedicated servers and cloud hosting to managed
services; fulfilment technology including warehouse and
delivery management systems and warehouse automation;
and fraud management and detection software.
Operations
Encompassing global fulfilment from a network of 13
warehouses in strategic locations across the world, courier
management, customer services and sustainability solutions
from carbon offsetting and consultancy to plastic recycling.
Marketing
THG’s integrated marketing ecosystem brings together digital
marketing, media, creative content production, translation and
digital services to create a holistic, data-driven digital marketing
strategy across channels, driving scalable and cost-effective
customer acquisition.
Operating model
THG operates a vertically integrated model to deliver products and
services to customers, giving greater control over revenue growth
and costs to deliver profits and cash in the medium-term.
R E V E N U E
THG Beauty and THG Nutrition sell products direct to consumers across the world. Revenue
is generated on the sale of products and recognised when received by the customer. THG
Ingenuity generates revenue through selling services to THG Beauty and THG Nutrition
alongside third party external customers through a combination of one-off fees for services
such as initial website build, recurring fees for regular services such as marketing, fulfilment or
software licenses, and revenue share on Ingenuity websites.
C O S T S
Input costs relate primarily to raw materials for goods manufactured in-house (e.g. whey
used in the manufacture of whey protein within THG Nutrition business) and finished goods
purchased for resale (e.g. third party beauty products retailed by THG Beauty business).
Distribution costs relate to the fulfilment and shipping of orders to customers. THG has
delivered further efficiencies during the year through an innovative warehouse automation
solution, despite the inflationary cost environment. Administrative costs relate primarily to
marketing and people costs.
A D J U S T E D E B I T D A
THG’s three businesses; THG Beauty, THG Nutrition and THG Ingenuity are profitable
when considering adjusted EBITDA from continuing operations. The Group’s medium-
term adjusted EBITDA target remains c.9%, which is supported by its profit enhancement
programme and in line with historical periods.
C A S H F L O W
The Group is targeting to be free cash flow positive from 2024 onwards, with the strategy to
reinvest for growth.
For further information please see: THG Beauty (see page 19), THG Nutrition (see page 25),
THG Ingenuity (see page 29), Chief Financial Officer Report (see page 35), Section 172 report (see page 47)
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Our marketplace
The substantial and expanding addressable markets in which
we operate in provide clear and compelling opportunities for
growth across our businesses:
THG Beauty
Market description
Key trends
Our position
Outlook
The online global beauty and personal care market continues
to grow, supported by increases in online penetration across
the world and advancements in technology, enabling the in-
store customer experience to be emulated online.
Despite wallet pressures, beauty spending remains robust as
consumers pull back from purchasing in higher-price, prestige
markets such as clothing and accessories. Relief in inflation
rates, sequential increases in promotional activity and strong
employment markets are likely to contribute to increased
beauty spending expectations in the near to medium-term.3
Premium beauty remains a key trend within the global
beauty market, growing 7.7% year on year in 2023, compared
with the overall beauty and personal care market. As
consumers become increasingly focused on product
efficacy and maximising value, prestige beauty is becoming
increasingly attractive. With increased competition in beauty,
premiumisation unlocks value and opportunity within the
market as legacy brands begin to lose market share to prestige,
upcoming brands with loyal followings.
The global total addressable beauty and personal care market
is estimated to grow to £636 billion by 2027, at a CAGR of 5.8%
between 2023 - 2027.4
Online adoption within global beauty is set to follow suit, rising
at a CAGR of 7.7% between 2024 – 20305. This represents the
continued opportunity within the beauty ecommerce space.
Global retail online penetration is set to steadily grow from 26%
in 2023 up to 31% in 2027, with our key markets, the UK and
US having a significant higher ecommerce share at c.30% for
2023.6
Our competitive advantage comes from the synergy of our
entire beauty proposition. Through our retail sites and owned-
beauty brands, we can forge both strong brand partner and
customer relationships, supported by our global network of
capabilities that allow access to multiple markets, new product
development, and product discovery, underpinning our
leading positions in key territories, the UK and US. The insights
gained from our customers help to drive innovation and brand
curation, particularly for emerging niche and independent
brands.
The regime-based nature of our key categories, skincare and
haircare, also offer up a competitive advantage as we are able
to use thought-leadership, education and personalisation to
further engage with our global audiences. Repeat-purchases
and low level of trend influence enable us to dictate new
product development opportunities while capitalising on
unlimited online shelf-space that traditional and outdated
channels such as department stores cannot do.
The global total addressable market for beauty and personal
care was estimated to be £476 billion in 2023, growing 9.5%
year on year. The premium segment, within which we primarily
operate, is set to expand at a CAGR of 6.7% between 2023 –
2027 and anticipated to be valued at £136.6 billion in 2023.1
One of our key markets, the US, is leading the way in terms
of beauty ecommerce penetration with the highest level at
c.30%, in line with its overall online retail penetration rate. UK
online spending has also been steadily growing throughout
2023, with online penetration remaining higher than pre-
pandemic levels, set to accelerate throughout 2024.2
Products
THG Beauty comprises leading multi-retail sites, a portfolio
of prestige owned brands and manufacturing capabilities
across multiple categories within the beauty and personal care
market, with leadership positions in key markets, the UK and
US.
Our multi-retail sites Lookfantastic, Cult Beauty and Dermstore
provide a critical route to market for over 1,300 brands across
haircare, skincare, cosmetics, body care and fragrance.
Our vertically integrated owned brand proposition is supported
by manufacturing capabilities in the UK and US, led by flagship
skincare brands Perricone MD and ESPA. These brands aid in
driving new product development as well as product discovery
through partnership opportunities outside of the traditional
beauty market.
Utilising our expansive proposition, THG Beauty seeks to use
its digital expertise and innovation to deliver best-in-class
curation and maximise the beauty customer experience,
encouraging the channel shift from offline to online.
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1. Source: Euromonitor.
2. Source: Barclays Online Penetration in 2024 Report.
3. Source: Canaccord Genuity US Equity Research, Industry Update, December 2023.
4. Source: Euromonitor.
5. Source: Grand Research View, Beauty and Personal Care Products Market Report 2030.
6. Source: Barclays Online Penetration in 2024 Report.
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THG Nutrition
THG Ingenuity
Market description
Our position
Market description
Our position
THG Nutrition’s total addressable market, including the
sports nutrition, vitamins, weight management products and
sportswear categories, is estimated to amount to around £350
billion globally. THG Nutrition’s main focus is on the sports
nutrition market, which is estimated to amount to £23 billion in
2023. However, the focus has been expanded in recent years
to address wider segments of the global nutrition market.
Products
THG Nutrition’s products span a number of categories
of the global nutrition market, including protein powders,
supplements, vitamins and minerals, bars and snacks, and
drinks. In addition, THG Nutrition offers performance clothing
through its activewear brand MP. THG Nutrition’s products
are primarily distributed direct to consumer through its
own websites, such as Myprotein.com. This allows for close
engagement with the brand’s customers, while also enabling
the brands to offer a wider assortment of products than is
typically available through traditional retail channels, where
the product range is confined by shelf space.
Key trends
The global nutrition market’s growth is supported by the
long-term trend of consumers becoming increasingly health
conscious, and looking to consume more nutritional products.
This is common across a wide range of product categories.
The rate of adoption of healthier products is affected by income
levels, with higher income countries typically consuming
more nutritional products. As lower income countries develop,
we would therefore expect to see higher consumption of
nutritional products, in line with the trends seen in higher
income countries. The adoption of online channels has also
been increasing in the nutrition market, in line with that
seen in many other retail categories. In addition, ecommerce
penetration is expected to grow significantly in a number of
key markets as the online channel in these markets matures.
Consumers are not only turning to online channels for their
purchasing, but also using the internet to inform and educate
themselves of the benefits of nutritional products. Brands that
invest in producing engaging and educational content for their
consumers therefore stand to benefit through offering value to
consumers beyond the purchase of products.
The competitive landscape within sports nutrition, our primary
market, is fragmented globally, comprising a very small number
of international brands of scale including Myprotein, alongside
a number of smaller brands that operate principally in their
local markets. Myprotein is the largest online sports nutrition
brand globally, and the most internationally diverse.
THG Nutrition is therefore uniquely positioned to capitalise
on this long-term shift towards ecommerce. In addition, we
see THG Nutrition’s online direct to consumer model as
a strategic benefit as consumers increasingly turn to the
internet to educate themselves on the benefits of nutritional
products. THG Nutrition’s connection with consumers through
its websites and apps enables direct engagement with
consumers, which traditional retail brands cannot achieve,
positioning THG Nutrition as a valuable source of engaging
and educational content for consumers. THG Nutrition is
positively differentiated from competitors through its digitally-
native direct to consumer model, its global reach, the extent
of its vertically integrated model, and its broader focus,
spanning the sports nutrition, vegan products, vitamins,
bars and snacks and sportswear categories.
THG Nutrition has also expanded into traditional retail
channels in recent years, principally through convenience
products developed in-house, such as bars and snacks, and
through licensing partnerships that expand the brand into new
product formats, such as frozen food ranges developed with
Iceland.
Outlook
The total addressable market is expected to continue to grow,
reaching approximately £35 billion by 20281, representing
a 9% CAGR (2023 to 2028). The online segment of the
sports nutrition market has historically grown faster than the
overall market; the drivers of this structural growth include
the increasing long-term trend towards healthier lifestyles,
an increased awareness of nutrition, and greater online
engagement of consumers, both in purchasing and educating
themselves on the category.
THG Ingenuity has an unrivalled ability to continuously
innovate, optimise and drive efficiencies at pace through
its vertical integration and full ownership of the end-to-end
ecommerce experience. Our investment in GenAI has helped
to overcome structurally higher cost pressures and streamline
operational processes while automation in fulfilment has
increased efficiency, throughput, and accelerated speed
of delivery to the end customer. This is just a small part of
the c.15,000 platform releases deployed annually which are
automatically available to all clients on the platform.
Outlook
Euromonitor expects global ecommerce growth to settle
at a ‘new normal’ growth rate of c.10% per annum from 2024-
2027. In 2023, growth was largely inflation driven through
higher average order values rather than volumes, with analysts
expecting a return to volume-based growth during 2024 across
apparel, footwear, health and beauty and food and beverage.²
THG Ingenuity offers a full service commerce solution for
brands looking to scale their ecommerce operations through
improved online performance and internationalisation.
A shifting labour market, higher-for-longer interest rates,
slower consumer spending and increased costs of advertising
represented ongoing pressures for businesses through 2023.
At the same time, digital innovation continued its far-reaching
impact across new markets, altering existing markets and
challenging the status quo. As brands like Walmart and
Amazon set the standards for customer experience online,
providers that offer cheaper, faster and better will win out.
The most dangerous decision a business can do in this
context, is to take a conservative ‘wait and see’ approach.
THG Ingenuity’s unique advantage in this market context is to
move fast, think bold and be willing to pivot, finding new ways
to interact with end customers, optimise operations and deliver
long-term, sustainable value.
Products
Powering £2 billion online sales for THG’s own brands, serving
over 1,000 Ingenuity customers globally and supported by
c.4,000 employees, Ingenuity’s ecommerce toolkit comprising
technology, operations and marketing solutions propel digital
growth and new market entry:
1.
Technology comprises a core commerce platform
which enables brands to sell their products online across
their owned brand site, social channels and marketplaces
supported by the infrastructure required to run and
maintain the platform
2. Fulfilment includes our global payment solutions,
fulfilment capabilities and courier management services,
regulatory, labelling, sustainability and our customer
contact solution.
3. Marketing comprises services that are designed to build
and grow brands in new markets, on a global and local
scale: trading, marketing and data services, creative
strategy, content production, translation and localisation,
retail media and THG’s content creator platform.
Key trends
In 2023, the global ecommerce market was worth $5.8tn,
spurred by the growth in international shopping where
globally 52% of online consumers ordered from both local
and international websites and social commerce including
live stream shopping on channels such as TikTok.¹ This
was accompanied by a resurgence of enthusiasm about
technology’s potential to solve some of the world’s most
complex challenges with GenAI helping to catalyse
progress in both business and society.
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1. Source: Euromonitor.
1. Source: Forbes, March 2024.
2. Source: Barclays Equity Research, January 2024.
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THG Beauty
THG Beauty is a disruptive, digital-first premium beauty retailer,
brand owner and manufacturer. We are positioned to offer
prestige product and brand curation across categories such as
skincare, haircare, cosmetics, body care and fragrance, driving
innovation and product discovery, maximising the beauty
experience for our customers.
Our multi-retailer sites comprise Lookfantastic, Cult Beauty
and Dermstore, presenting an expansive beauty offering in key
markets such as the UK and US. Our portfolio of nine prestige
owned brands, led by recently acquired Biossance, Perricone
MD and ESPA, are stocked by over 1,000 global partners in
53 countries, including hotels, spas and salons.
Our business proposition is constantly evolving, remaining
adaptive to customer needs and shifting beauty trends to
ensure we maintain digital and category leadership. We are
continuing to support the channel shift from offline to online
to become the global digital partner of choice across the
beauty industry.
Online retail
c.80% of revenue
Manufacturing
THG Beauty
Ecosystem
Prestige
owned brands
c.10% of revenue
c.10% of revenue
Accelerates value creation from data, and generates superior consumer engagement
Makes us a trusted brand partner providing deeper relationships and enhances offering
Supports a highly engaged, digitally native workforce equipped with best-in-class digital tools
Creates a source of global advantage for our retail banners and drives consumer engagement
Revenue
FY23
FY22
FY21
FY20
FY19
Active Customers1
FY23
FY22
FY21
FY20
FY19
Number of orders2
FY23
FY22
FY21
FY20
FY19
Average order value3
FY23
FY22
FY21
FY20
FY19
£1,207.5m
£1,285.9m
£1,227.5m
£751.6m
£478.3m
8.5m
9.2m
9.2m
6.9m
4.1m
16.8m
17.5m
17.1m
13.1m
8.3m
£64
£63
£60
£55
£51
Operational review
During 2023, we consciously prioritised
higher margin sales, and while this decision
led to a decline in headline revenue, we
were encouraged to see resilient and stable
purchase behaviour from our active customer
base.
Reflecting the deprioritisation of certain
geographies, our active customers, and
consequently order numbers, fell year on
year, with the decline slowing throughout
the year. Critically, the behaviour of the active
customer base remained healthy, with average
order value remaining stable and order
frequency improving year on year. This not
only demonstrates the strength of our offering
in key markets but also signifies improving
quality within our existing customer base.
This is supported by our existing customer
repurchase rates, which remain above
80% as we continue to focus on customer
engagement and retention.
Across our global audience, we saw continued
growth in app participation, attracting 3.3
million new users in 2023, +32% year on year,
with notable improvements in app purchases
as a portion of revenue (FY 2023: 14.1%, FY
2022: 10.0%). Notwithstanding the ongoing
macroeconomic uncertainty throughout
the year, the UK, being one of our key and
largest markets, performed strongly, with app
purchases now driving over 20% of sales. This
has underpinned a year on year increase in
active customers in the region, and enabled
growth in our retail fascias ahead of that of the
total UK prestige beauty market.4
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Is the enabler to value-accretive and advantaged beauty brand acquisitions
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1. Active customers is defined as customers who have purchased at least once within the period.
2. Number of orders is defined as orders fulfilled within the period.
3. Average order value is defined as the average order value per customer order on a gross revenue basis, inclusive of any shipping revenue.
4. As per third party data and management estimates.
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In 2023, as part of the Group’s overall strategic review,
THG Beauty decided to discontinue our SkinStore brand
and consolidate all resources behind the strength and value
proposition of our premium, dermaskin-focused US brand,
Dermstore.
Dermstore is the largest community of skin-health experts,
brands and consumers in the US, a key market behind the
UK. With demand continuing to grow for effective skin-health
products, we saw greater value in simplifying the US offering
to one brand.
Since its acquisition (February 2021), THG Beauty has
observed a gradual yet consistent shift in customer purchases
from SkinStore to Dermstore. This is underpinned by
Dermstore’s stronger community engagement, greater basket
sizes and higher customer retention, exemplifying the merit in
operating a single brand proposition in the US.
Our vision is for THG Beauty US to be the leading digital
partner for professional and prestige beauty, and this decision
aligns our aim with our commitment to offering best-in-class
professional expertise, education and products to meet our
customers’ needs.
Strategic highlights
Key performers
The proposition of Cult Beauty as a platform for niche and
emerging beauty brands continues to strengthen, with
significant revenue coming from brands sold exclusively on
Cult Beauty in the UK. This enhances the site’s unique selling
point and enables us to reach a greater audience within the
prestige beauty market, with launches in 2023 including
skincare brand Kinship, supercharged by its proprietary
ingredient Kinbiome, and haircare brand Ceremonia, rooted
in Latin beauty rituals.
In building category leadership positions within the beauty
industry, it is crucial we use customer insights to inform our
decision-making. This will enable us to focus on the right
brand and product curation to serve our customer needs and
enhance our relationships. Understanding our customers at a
deeper level also creates value for the brands we partner with,
unlocking a greater global audience and providing new routes
to market through our multi-retail platforms.
the production of the 2023 Beauty Trend Report, where we
revealed the fastest-growing trends and categories of 2023
and looked forward to what 2024 holds for the industry.
This engagement with customers through traditional media
channels and thought leadership reports not only enhances
brand awareness but also establishes us as an authority on
emerging and current industry trends.
In June 2023, Cult Beauty made a commitment to champion
unedited imagery across its channels as part of its Can’t (Re)
Touch This campaign. Joining forces with Dr Luke Evans,
we have signed the Body Image Pledge to encourage more
transparency and authenticity in the way we portray beauty
to our customers meaning they can be confident the imagery
they see is unaltered. Our Beauty Untouched watermark was
rolled out across our in-house model imagery as part of the
campaign, to make it instantly apparent that the photo had
not been retouched.
Throughout 2023, we used these data-driven
customer and trend insights to position
ourselves as a thought-leader within the
beauty market. One example of this is
Going beyond imagery, we have also revisited our language
guidelines to ensure we are celebrating all bodies instead of
identifying perceived flaws. We are on a mission to broaden
what beauty looks like, creating room for greater representation
and committing to diversity in our casting and content choices.
Loyalty
THG Beauty has seen an increasing impact from the loyalty
programmes across its retail sites, now boasting a over 2
million members, adding 1.3 million members in 2023. We
have seen significant improvement in the quality of customer
health through our loyalty programmes, with overall spend
being at least 31% higher than non-loyalty members. This
increased engagement is underpinned by a double-digit uplift
in average order value and order frequency, helping to drive
incremental sales through greater cross-category and brand
purchase behaviour. For both Lookfantastic and Cult Beauty,
the proportion of our most-engaged customers is progressively
increasing, offering a greater contribution to total loyalty sales.
Our loyalty programmes are proving successful at aiding
customer retention and improving the quality of our customer
base in our key territories through greater personalisation and
product knowledge.
Through our loyalty programmes, the enhanced levels of
data provided have enabled us to continually deepen our
understanding of our customer base, which in turn, leads to
elevated relationships with our brand partners, creating value
through informed decision-making.
C A S E S T U D Y
Category expansion
In 2023, our category dynamics continued to strengthen, most
notably within fragrance, through the addition of new brands to site
and new product development from legacy brands. The category’s
performance on our retail sites has demonstrated an ability to
overcome its predominantly sensory nature, as consumers begin to
embrace the shift towards purchasing fragrance online.
As our fragrance offering continues to grow, and accounts for an
increasing proportion of sales, our position within prestige beauty
continues to strengthen. Fragrance continued to outperform the
overall premium beauty and personal care market in 2023 (8.0% vs.
7.7% respectively), highlighting the value yet to be unlocked, with
fragrance category growth on our sites exceeding that even further
(+22% in 2023). The fragrance market in the UK is valued at c.$2
billion, with an online penetration of 46.1%, providing opportunities
for us to continue to grow market share in key areas of the
fragrance category and build category leadership in one of our key
territories.
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C A S E S T U D Y
Biossance
The most recent addition to
our owned brand portfolio is
US-based, prestige skincare
brand Biossance, acquired in
December 2023. Biossance
is leading the way in science-
backed skincare, born out of
its proprietary fermentation
technology used to bio-design
new and high-performing
ingredients.
Currently stocked in over
1,600 stores globally, the
brand’s curated skincare
range is centred on its
ingredient technology and
commitment to sustainability.
Evidenced through strong
performance on our retail sites
prior to acquisition, we look
to support its growth with
our significant experience in
the prestige skincare market
as an innovator and beauty
brand owner. Building upon
its strong brand presence and
awareness, Biossance is set
to unlock further value and
audience reach in our key
markets, the US and UK.
Foundation Finder
In August 2023, Lookfantastic launched AI and data-driven
ecommerce beauty tool, Foundation Finder, designed to
match customers with their perfect foundation shade. The
Foundation Finder combines cutting-edge technology with
scientific precision to bring the traditionally in-store shade-
matching experience into online beauty.
Customers can access the shade-matching experience
through a simple questionnaire asking about their current
foundation, preferred coverage, type and finish. Using data
from over 3,400 foundation samples, colour matches are
found from multiple brands by determining the closest
match.
The Foundation Finder tool aims to transform the way
consumers shop the category, making online product
discovery and customer experience increasingly more
accurate. Individuality and inclusivity sit at the heart of
the breakthrough innovation, which seeks to empower
customers, not only by taking the guesswork out of
purchasing, which can be a barrier to conversion, but
by catering to a wide range of skin tones and textures.
This ensures that the tool is accessible and useful for
all consumers regardless of beauty preferences and
complexion requirements.
Own brand
The collective strength of our owned brand portfolio has been
leveraged to double-down in key territories such as the UK
and US. With a focus on brand equity and customer affinity,
we can further build on leading positions with key partners
and channels, optimising both product and customer reach.
Expanding on our existing global owned-brand presence
in over 450 spas and 65,000 hotel rooms in 58 countries,
both flagship skincare brands ESPA and Perricone MD have
partnered with leading brands to further enhance their global
footprint.
ESPA built on its leadership position in the wellness and
amenities space by partnering with global designer guest
amenity provider, Vanity Group. Complementing this, ESPA
can now be found on yachts such as the Ritz-Carlton,
Scenic Eclipse and River Fleet, as well as on Etihad Airways
following an exclusive partnership across the airline and
Armani Beauty. Prestige holistic skincare brand Perricone MD
also entered the travel retail market, now being represented
on Virgin Airlines, Aer Lingus and British Airways, further
increasing the global reach of the brand.
Future outlook
Our aim is to become the global digital partner of choice
across the beauty industry, continuing to build upon our
position as the world’s largest online pure-play beauty
retailer. The focus remains on sustainable growth in our
key markets, maximising the value from our retail offerings,
prestige owned brand proposition and manufacturing
capabilities.
We will continue to leverage our category and digital
leadership to support global beauty brands in addressing
the shift from offline to online. Our brand relationships
remain key to ensuring that we can provide first-to-market
products and continually innovate, supported by our
manufacturing capabilities and owned brand offering,
which remain a point of differentiation for THG Beauty.
Our customers are a crucial part of our success.
Engagement and retention strategies remain a focus,
enabling us to continue evolving our targeted proposition,
enhance personalisation and ensure data-driven decision-
making across the business.
Our diverse proposition and global footprint continue
to support our competitive advantage, enabling us to
remain the leading digital destination for beauty consumers,
delivering best-in-class products and category expertise
to our global audience.
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THG Nutrition
THG Nutrition is a collection of sports nutrition and wellness
brands, led by Myprotein, the largest online sports nutrition
brand globally. With a global rebrand launching in the second
half of 2023, Myprotein is now positioned to target an even
broader demographic range of consumers. Our newly defined
mission is to empower everyone to lead a healthier, more
active life – delivered through our wide range of products and
expert guidance. This approach has seen awareness in our key
markets rise significantly, while also seeing considerable uplifts
in our key brand perception metrics.
Our brands are delivered to our global customer base through
localised direct to consumer websites, powered by the THG
Ingenuity platform, enabling consumers from all over the world
to experience the nutritional benefits of our products and join
the Myprotein community. The brand spans sports nutrition,
vegan products, vitamins, bars and snacks and sportswear,
with further categories being launched through our in-house
product development capabilities and through licensing
partnerships. 2023 saw us make significant further strategic
advances across international markets, retail, licensing, and
new product innovation, as we continue to build a globally
scaled, digital-first, leading nutrition, and wellness brand
portfolio.
Operational review
While continuing revenue growth was flat on a constant
currency basis , our focus on enhancing profit margins drove
a record-breaking performance in THG Nutrition’s EBITDA in
2023, and the building blocks are in place to achieve long-term
sales growth across all markets and product categories.
The margin potential of the business was further enhanced
through the development of licensing partnerships with
carefully chosen partners in key territories. Examples of this
were Myprotein licensing deals launched in our two largest
markets: UK (with major grocer, Iceland), and Japan (with
leading distributor, Itochu). Within each partnership, THG
Nutrition remains extensively involved in all aspects of product
development and branding.
Currency represented a notable headwind during 2023, with
the impact of this peaking in the fourth quarter of 2023. This
impact was most acutely felt in the Japanese market, where
the Japanese Yen declined c.13% versus pound sterling.
Performance in the UK, which accounts for over 30% of
THG Nutrition revenue, remained strong in Q4, delivering
c.10% revenue growth. While c.86% of FY 2023 revenue was
generated through direct to consumer channels, an increasing
focus on offline partnerships led to Myprotein also being
recognised as the fastest growing sports nutrition brand in the
UK retail market. Recent launches include Sainsbury’s, Asda
& Iceland, whilst existing partnerships with Boots, Morrisons &
Tesco have been extended.
Revenue
FY23
FY22
FY21
FY20
FY19
Active Customers1
FY23
FY22
FY21
FY20
FY19
Number of orders2
FY23
FY22
FY21
FY20
FY19
Average order value3
FY23
FY22
FY21
FY20
FY19
£664.4m
£675.1m
£659.5m
£562.3m
£412.9m
6.7m
7.0m
7.2m
6.3m
4.3m
12.8m
13.2m
13.9m
12.3m
8.7m
£49
£50
£46
£47
£48
Strategic highlights
2023 was a significant year in the evolution of the Myprotein
brand, with a global rebrand launching in the second half
of the year. The rebrand included a newly designed logo
that will act as a halo logo across all Myprotein brands,
along with redesigned packaging for all stock keeping
units (SKUs), designed to make the brand inclusive to a
broader demographic of consumers. The rebrand is aligned
with our commitment to breaking down the barriers of the
fitness industry, and empowering everyone to live healthier,
more active lives. It represents the latest step we’ve made
in developing the brand and making it accessible to an
increasingly broad audience since we acquired the brand
in 2011.
In 2023, THG announced a landmark multi-year partnership
with Williams Racing. The partnership saw Myprotein become
Williams Racing’s Official Nutrition Partner, where Myprotein
will focus on driving the Williams team and its audiences
towards a healthier, more active lifestyle, which aligns with
THG Nutrition’s strategic objective. Myprotein will support
the Williams team with products, guidance and know-how to
maximise and enhance team performance, while participating
in a number of joint campaigns to promote the benefits of
healthy and active lifestyles.
As part of the multi-year partnership, Myprotein and Ingenuity
branding will be present on the FW45 racing cars and in the
team environment, including drivers’ race suits and Williams
Racing team kit. This global brand exposure, and alignment
with one of the world’s fastest growing sports and most
successful teams, will serve to accelerate the awareness
and positioning of the Myprotein brand globally, further
strengthening its positioning as a globally diverse and leading
nutrition brand.
New product development
THG Nutrition’s direct to consumer model provides THG
Nutrition with millions of daily demand insights from its
customer base, with these insights fed directly into new
product development decisions. As testament to the success
of our new product development, the Myprotein brand was
recognised by several industry bodies in 2023, including
Myvitamins Pre-workout Gummies winning the “Best pre-
workout” award at the Men’s Health and Women’s Health
awards, and the “Myprotein Triple Layered Bar” winning
“Best Protein Bar” at the European Specialist Sports Nutrition
Alliance Awards.
We also pride ourselves on being first to market with a number
of key innovations, with the launch of Whey Forward in the US
and Asia markets as a notable recent example. This animal-
free performance protein caters for a broader range of dietary
requirements, while not compromising taste and performance.
Whilst the rebrand has been focused on broadening our
appeal to the wider wellness consumer, we continue to focus
on addressing the needs of our core customer with the launch
of Origin, a range of traditional sports nutrition products
designed to maintain our leading position within our traditional
customer base.
“Whenever we’re developing a product
the most important thing to remember
is the customer needs and the problem
we’re trying to solve.”
- Brett Hamer, Product Director -
Myprotein
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1. Active customers is defined as customers who have purchased at least once within the period.
2. Number of orders is defined as orders fulfilled within the period.
3. Average order value is defined as the average order value per customer order on a gross revenue basis, inclusive of any shipping revenue.
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THG Nutrition continues to play a leading role in driving
innovation across a number of product categories. Following
the global rebrand, Myprotein is now better positioned to
move into new product categories, expanding the range of
products we can offer to our existing customers, while also
bringing new customers to the brand, while also continuing
to serve our main market of sports nutrition. As the nutrition
market continues to grow and evolve, the rebrand provides
the platform for Myprotein to best address consumers’
changing tastes and preferences. As discussed further in the
licensing section, we are also increasingly leveraging licensing
partners to aid our expansion into new retail channels, product
categories and purchasing occasions.
Our new product development capabilities are complemented
by in-house manufacturing across seven facilities, which
manufacture c.80% of THG Nutrition’s products by revenue.
Through our vertically integrated product development and
production model, we can shorten the typical new product
development (NPD) timelines from c.12 to 15 months to six
to nine months. Consequently, we are first to market with
many industry innovations, and are able to bring highly-
targeted products to consumers at regular intervals, which
serves to enhance customer satisfaction and drive higher
levels of purchasing frequency. Our THG Nutrition production
facilities also service a number of large third party FMCG
businesses and sports nutrition brands, which validates the
breadth and depth of capabilities in product development and
manufacturing.
Territory expansion
Currency proved to be a headwind affecting international
performance during 2023, with this peaking in Q4 2023,
with a 13% decline in the Japanese yen versus pound sterling
impacting revenue in the Japanese market, which is c.15%
of THG Nutrition revenue.
We continue to invest in localising the Myprotein brand in
key international markets, and after a two-year process, local
manufacturing will launch in Japan, India and Australia in 2024,
improving delivery timelines, local product range development
and securing significant cost savings. Local manufacturing in
Japan will also largely eliminate future risk from yen exchange
rate volatility and reverse the estimated impact of prolonged
yen weakness on EBITDA.
We also launched our new Myprotein India direct to consumer
website in late 2023, which represents a key milestone in
developing our India business. The US represents a key
strategic market for future growth, with offline partners such
as Costco being used to build brand awareness and sales to
complement our digital sales channels.
27
4. Source: Nielsen.
Retail
Customers
The licensing partnership with Iceland Foods that launched in
January 2023 has proven to be one of the stand-out successes
for the Myprotein brand in the year, with first year retail sales of
£28 million significantly outpacing our expectations. Myprotein
is now distributed in all of Iceland’s 1,000+ UK stores and
online through the Iceland website, with further new products
to enable further sales growth in 2024. The range provides
healthier and more nutritionally complete versions of many
popular meals, and includes fully prepared meals, pizzas,
wraps, ingredients, desserts and ice creams, and therefore
aligns with our strategic values of empowering our consumers
to live healthier and more nutritious lives. The launch has
added incremental purchasing occasions to our existing
Myprotein customer base, while also bringing new customers
to the brand. The partnership highlights the strength of the
Myprotein brand, the largest online D2C sports nutrition brand
globally, and the scale of opportunity for further licensing deals,
both within the UK and internationally.
Total global Gross Merchandise Value (GMV) of THG Nutrition
brand sales in 2023 increased by +5% year on year in 2023
(including +22% growth in the UK) when licensing sales are
considered. As THG Nutrition further develops its licensing
opportunity, we intend to increase disclosure on total retail
sales to enable investors to form a more complete picture of
total THG Nutrition brand sales, including licensing sales.
Major licensing and partnership developments
Myprotein is currently the fastest growing sports nutrition
brand in the UK retail market4, recently launching in
Sainsbury’s, Asda and Iceland and extending our distribution
with existing partners such as Boots, Morrisons and Tesco. The
expansion of in-store distribution in 2023 demonstrates the
wide appeal of the brand and the leading brand awareness we
hold in the UK market.
It is important to stress that we regard store sales as
complementary to our online sales, as the products sold in
store are convenience products (single unit meals, bars, snacks
and drinks) that are not typically available online. Further,
we see the purchase of single unit products as aiding brand
awareness, growing brand equity and encouraging the repeat
purchase of multi-pack product variants online.
The THG Nutrition customer base remains highly engaged,
with high rates of repeat purchase. We continue to work on
increasing our share of revenue through channels that incur
no or very low marketing costs. A key driver of this was the
launch of our mobile apps in 2021, with mobile apps now
accounting for around 20% of THG Nutrition online revenue.
App customers also exhibit more favourable purchasing
dynamics, generating higher AOVs and purchasing products
more frequently than non-app customers.
We continue to look at new and innovative ways of connecting
with and deepening relationships with our customers. An
example of this was the recent Myprotein-sponsored HYROX
event in Manchester, which involved over 7,500 athletes and
fitness enthusiasts. HYROX combines both running and
functional strength work, and is hosted in indoor sports halls
where spectators can watch the whole of the event. It serves
to enhance awareness of Myprotein’s growing authority in the
endurance market, which is aligned with our strategic objective
of making the brand inclusive to a wider demographic of
consumers. Such partnerships also serve to strengthen and
grow the Myprotein community.
A recent YouGov poll also demonstrates the strength of
Myprotein brand affinity in the UK, with Myprotein leading all
competitor brands on the ‘awareness to consideration’ (the
conversion of consumers aware of the brand to considering
a purchase), ‘consideration to purchase’ (the conversion of
consumers considering a purchase to making a purchase)
and ‘purchase to preference’ (the conversion from a customer
being a purchaser to it becoming their preferred brand)
metrics. Myprotein also had the highest unaided awareness
of any brand in the category, with over one in five UK
consumers spontaneously naming Myprotein when asked
to name a sports nutrition brand. We also have quickly built
strong equity of our new Mycon logo, with over half of those
aware of Myprotein having now seen the new logo now
recognising the Mycon as our logo. In the same survey,
Myprotein also ranked first for customer satisfaction in the
UK and second in Germany.
Future outlook
The significant progress made in 2023 in brand development,
strategic partnerships, new product development and retail
expansion leaves the THG Nutrition business optimally placed
to continue to grow in 2024 and beyond.
The 2023 global rebrand further strengthens our identity as
a brand that resonates with a wider audience, not just the
regular gym goer, and enables us to expand the brand to new
groups of consumers and to new purchasing occasions. The
global rebrand has been complemented by increased retail
distribution, mostly notably through the Iceland licensing
agreement, and new strategic partnerships, such as those
with Williams Racing and HYROX.
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THG Ingenuity
A provider of ecommerce solutions for brands and retailers built
through two decades of investment and expertise gained in
scaling category leading brands. THG Ingenuity exists to navigate
the complexities of acquiring new audiences and driving traffic,
facilitating a frictionless ecommerce experience and distributing
products to consumers all over the world. The critical components
of ecommerce, technology, fulfilment and marketing are
supported by a vertically integrated proprietary platform.
THG Ingenuity offers a full service digital commerce
solution, designed to remove D2C complexity.
Comprising the core components of successful ecommerce, technology, fulfilment and marketing,
we help retailers and brands solve the complexities of acquiring new audiences and selling and
distributing their products to consumers globally.
Technology
• Our packaged solution of commerce technology, omnichannel, marketplace, CRM, app and fraud taken
as self-serve or fully-managed by our team of in-house ecommerce experts.
• Helping brands accelerate growth, cost-effectively enter new markets, develop core capabilities and
strengthen in-house expertise.
• Our platform modularity removes complex and costly integrations by allowing customers to flexibly select
our headless solution and their choice of modular products.
• Helping brands accelerate technology roadmaps and speed of evolution whilst reducing cost to serve.
Fulfilment
• Market-leading, global fulfilment infrastructure and courier management services which continually
improve the speed, quality of delivery and experience to every customer.
• Helping brands become asset light, reduce operating costs and improve their customer experience.
Marketing
• Our unique mix of creative content production, campaign execution, influencer management
and retail media to attract new audiences, cost effectively.
• Helping brands combat rising marketing costs by acquiring new audiences in new channels with
digital campaigns.
Our proposition resonates with our clients because we are a
digital brand builder and global online retailer ourselves. We
understand the pressures that our customers face operating
online and we solve for them, sharing our own learnings and
insights from entering new markets and geographies.
Through 2023:
• We continued our strategic repositioning, focusing on higher
value and higher margin clients to drive quality, recurring
revenue. This included:
High-growth brands require capital infrastructure to accelerate
growth and provide optionality for the future. At the same time,
traditional retailers need to maximise the viability of their legacy
platforms and move their brands into the future operating world,
reducing cost to serve and driving profitability. THG Ingenuity is
relevant to both.
•
•
launching new D2C and omnichannel experiences for
customers in our retail vertical
an agreement to provide D2C operational services to the
UK’s leading health and wellness retailer – our first major
standalone fulfilment partnership
We help brands:
•
•
•
enter new markets through local capabilities, infrastructure
and expertise, by enabling access to a full suite of
ecommerce capabilities while allowing their internal
technology teams to retain control of the front-end
experience
become asset light in their operations through relatively low
capital investment
improve the customer experience to positively impact
sentiment and lifetime value
• we extended our footprint in the US, winning new customer
contracts and building on-the-ground teams
• we secured new alliances with Rithum (formally
Commercehub) and PwC, which will extend THG
Ingenuity’s platform solution into marketplaces, supporting
our scaling ambitions through PwC’s delivery teams
• we deployed c.15,000 platform releases, introducing further
automation and AI into our platform and through our supply
chain, developed entirely by our in-house technology
teams, resulting in an improved customer experience and
guaranteeing greater operational resilience for the future.
THG Ingenuity is one of a few solutions in the market able to cater
to all these needs in global territories.
Monthly recurring revenue increased +14.7% YoY in December
2023 as the strategic repositioning towards multi-service
enterprise clients bedded in.
Our unique advantage is our ability to think big and bold,
challenge, and quickly pivot, find new ways to interact with end
customers, develop sustainable products and solutions and
deliver long-term value. This is achieved through our track record
in supporting the growth and internationalisation of our largest
clients THG Beauty and THG Nutrition.
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Technology
Our technology supported 138 million platform searches and up to 52,000 orders per hour over Cyber Weekend in 2023
(23 – 27 November), whilst our proprietary fraud platform captured £182.6 million of fraudulent attempts in 2023 (an increase
of 24% in fraudulent attempts versus last year).
Clients can integrate elements of their existing technology stack flexibly with our modular platform.
Attractive &
Easy Navigation
Inspiring
Engagement
Frictionless
Checkout
Secure Order
Processing
Fast & Reliable
Delivery
Helpful Customer
Assistance
Data-driven
Insights
Secure
Infrastructure
Commerce Technology
Customer
& Loyalty
Payment,
Tax & Duties
Fulfilment
Customer
Care
Data Analytics
and Reporting
Secure
Cloud
Core
Commerce
Mobile,
Web & App
CRM &
Loyalty
Fraud
Engine
Merchandising
& Inventory
Management
200+ Global
Courier
Services
Multi-channel
incl. WhatsApp
& Social
Real-time
Data
Hosting
Infrastructure
Content
Management
System
AI
Engine
Community
Building
50+ Global
Payment
Solutions
Carrier
Management
Warehouse
Management
System
Ai-Powered
Response
Tools
AI & ML
Capabilities
Global
Coverage
Search
Special Offer
Engine
Customer
Segmentation
Tax & Duty
Calculation
End-to-end
tracking
Returns
Handling
Returns
One Business
Data View
Automation
& Control
DTC
Commerce
Functionality
Order
Management
System
Audience
Management
Multi-
Currencies
Multi-
fulfilment
Options
Cross Border
Shipping
Buyer &
Telephone
Ordering
SKU-level
Analytics
Digital Asset
Management
Product
Information
System
Campaign
Management
Basket
Optimisation
3P Marketplace
Management
Omni-channel
Capabilities
Customer
Feedback
Reporting
& BI
In 2023 we launched our Headless Commerce solution which gives clients even greater flexibility of deployment of relevant
commerce applications whilst allowing brands to retain ownership of their look and feel on the front end. As we continued to
innovate, our use of machine learning models and generative AI technology were infused further into the platform to develop
multiple new use cases, including a features offering, personalised product advice, guidance and customer support.
Our AI Roadmap
Fulfilment
Our fulfilment network spans 13 distribution centres,
shipping to 195 countries, with capacity to dispatch
750,000 orders a day from our UK automated facility.
86% of THG Ingenuity’s technology platform customers
adopt our fulfilment services. Supported by new client
wins including Holland & Barrett and Williams Racing,
we recently launched THG Ingenuity’s unique fulfilment
and courier management offering as a standalone service.
Enabling clients to take advantage of our extensive
fulfilment know-how and distribution infrastructure.
Due to our vertically integrated platform, we have total
control over the delivery experience allowing us to
continually improve the speed and quality of service
to every customer - whether that be via designing and
implementing software to increase throughput via our
fulfilment channel, or by having the ability to segment
and delight the most valuable customers with free, faster
delivery. In 2023, we upgraded over four million UK
customer orders to next day services free of charge.
This initiative was then extended across the East and
West Coast of the US.
1.5 days
Average UK standard click to
delivery timeframe 2023
>450,000
5* Trustpilot reviews 2023
C A S E S T U D Y
Automated Fulfilment
THG Ingenuity houses some of the biggest and most
efficient automated technology in the world, allowing us
to successfully receive and dispatch up to 750,000 units
per day from one of our UK facilities, with the capacity
to achieve even more. Pick robotics is complimented by
automated sortation with capability to sort 14,000 shipments
per hour. The same automated facility at THG’s ICON
campus services external clients alongside THG’s own
brands, dispatching over 38m units in 2023. This is set to
grow to close to 70m in 2024, increasingly expanding its
category breadth from beauty, nutrition, fashion, electronics,
luxury and homeware.
An extension of this automated technology was deployed in
April 2023, in New Jersey, US. This time, THG Ingenuity built
the software capability to drive all automated instruction
itself as an incremental adaptation to its own WMS
(Warehouse Management Software); Voyager. This allowed
THG Ingenuity total control of all data points, increasing
the ability to squeeze efficiencies in real time via machine
learning and AI.
Our investments in automated fulfilment allow us to virtually
eliminate picking errors whilst substantially reducing labour
requirements.
More information provided in Section 172 (pages 47 to 54).
AI Journey Begins
RECs - CEB+ & FBT+
Product Misattribution
Intelligent CS
Review Moderation
Sentiment & Topic Extraction
Language & Profanity Detection
Churn Prediction
Fraud Detection
Colour Matching
Foundation Finder v1
NVIDIA Partnership
Visual
Recommendations
CLV Prediction
Attack Detection
Demand Forecasting
Warehouse & Logistics
Optimisation
Foundation Finder v3
Vector Search
Semantic Search
Generative AI
2018
2019
2020
2021
2022
2023
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Platform Intelligence
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Seamless Commerce
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Marketing
In 2023, we completed over 1,500 creative projects, totalling
125,000 artwork and 14,000 video assets in 70 countries. Our
global influencer network helped THG brands and Ingenuity
customers achieve over 11 million global social media followers
with an ambassador reach of over 100 million.
We design and provide fully integrated creative solutions
that draw new audiences into brands at an emotional level.
We supercharge growth through our unique mix of content,
influencers, performance marketing and media planning.
C A S E S T U D Y
Future of Commerce
C A S E S T U D Y
In 2023, Disney worked with THG Ingenuity
to produce a brand advert to relaunch Shop
Disney as Disney Store. This is an exciting
time for Disney, as fans are keen to see the
return of the Disney Store, where you can
“shop the stories you love”. Part of the brief
was to remind key audiences that Disney
Store has something for everyone, for all
fans and families, including luxury, toys,
clothes, costumes and homeware.
Working with Disney teams in both the
US and UK, THG Ingenuity ran the entire
project, from strategy and creative concepts
to production to video editing. The advert
was broadcast on television across North
America and EMEA and on social channels.
This work forms part of an exciting and
growing partnership where THG Ingenuity
continues to bring the Disney magic to life.
You can view the advert here
Future Outlook
As we continue to execute our strategy through 2024, our focus remains on:
• New customer growth across our core verticals of beauty, FMCG and retail whilst increasing the value
from our existing customer base and investing in continuing long-term new customer relationships
In September, THG Ingenuity held its annual flagship brand event, Future of Commerce, which brought
together our global customers for two days of thought-leadership, product launches and shared lessons
across all areas of ecommerce. This year, the event doubled its capacity. Attendees (both in person and
online) heard from speakers including entrepreneurs, and tech analysts, alongside some of our own
clients, including Kraft-Heinz, Mondelez, Coca-Cola, and Pentland and THG’s own executive leaders.
“It’s safe to say the future of tech is simply more speed. It’s not going to slow down.
Innovation is going to speed up and complexity is going to become way worse than it
is today. The decision to build our own technology to manage these complexities and
accelerate the speed with which we can innovate is in our DNA.”
- Schalk Van Der Merwe, Group CTO
“Data tells us that an emotional reaction is 3,000 times quicker than one of rational thought.
If you take that data point alone and you layer it onto how we spend, where we spend and
how quickly we hit purchase, you can tell the impact that making that emotional connection
will have with your consumer. So if you think of creating a brand ethos that drives those
consumers back, it must be about how they feel when they’re shopping and how they feel
when they’re connecting to your brand.”
- Melissa Labelle, Managing Director, Studios
“Operations is the most valuable part of the entire chain and the part that customers care
about more than the credit it gets. It’s the least sexy, most complicated, can be expensive,
often overlooked, largest lever for cost control and customer trust and because of this, it
is often outsourced. We tackled it because it is hard, but it means we can control every
customer touchpoint, globally.”
•
•
Scaling our presence within our target markets of UK, Europe and US
- Tom Killeen, COO, THG Ingenuity
Building a network of technology and delivery partnerships to create indirect revenue channels and
extend delivery capacity to help THG Ingenuity as we scale
• Developing new products and solutions and continuing innovation on the platform
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Chief Financial
Officer’s review
“We delivered substantial progress in our key
focus areas in 2023 whilst responding well
to challenging conditions across the globe,
notably cash generation, profitability, with
a significant reduction in distribution costs.
In 2023, we delivered free cash flow
breakeven alongside a 78.0% improvement
in Adjusted EBITDA to £114.1m (2022: £64.1m)
as we rebuild margins to their historic
levels. Following completion of the strategic
review, we report a higher quality result,
with significantly lower adjusting items year
on year (£50.6m vs 2022: £345.8m) and an
improvement in statutory operating loss of
+62.6% to £185.4m (2022: £495.6m).”
Damian Sanders
Executive Director and Chief Financial Officer
Consolidated income statement
Alternative performance measures1
The following table provides adjusted measures. The Group
believes that these alternative performance measures, which
are not considered to be a substitute for IFRS measures,
provide stakeholders with additional helpful information on
the performance of the business. These alternative
performance measures are consistent with how the
business performance is monitored and reported
through internal management reporting to the Board.
Adjusted gross profit
Gross margin % (adjusted)
Adjusted distribution costs
As a % of revenue
Adjusted administrative costs
As a % of revenue
Adjusted EBITDA
Adjusted EBITDA%
EBITDA losses from discontinued categories
Adjusted EBITDA (continuing)
Adjusted EBITDA (continuing) %
Year ended 31 December 2023
Year ended 31 December 2022
Movement
£’000
876,096
42.8%
(270,694)
13.2%
(491,296)
24.0%
114,106
5.6%
6,343
120,449
6.1%
£’000
925,488
41.3%
(353,412)
+150bps
15.8%
+260bps
(507,962)
22.7%
64,114
2.9%
17,061
81,175
4.0%
-130bps
+270bps
+210bps
1.
The table shows financial results for gross profit, distribution costs and administrative costs before the impact of adjusted items, depreciation, amortisation and share-based payments.
The impact is as follows:
- For statutory presentation, gross profit includes charges of £15.3m (2022: £25.5m) for adjusted items and £20.6m (2022: £20.0m) for amortisation and depreciation;
- For statutory presentation, distribution costs include charges of £5.1m (2022: £22.1m) for adjusted items and £23.2m (2022: £27.2m) for amortisation and depreciation;
- For statutory presentation, administrative costs include charges of £30.3m (2022: £298.1m) for adjusted items and £170.7m (2022: £155.9m) for amortisation and depreciation and £16.7m
(2022: £10.7m) for share-based payments.
Statutory results
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative costs
Other operating expense
Year ended 31 December 2023
Year ended 31 December 2022
Before
Adjusted Items
Adjusted
Items
Total
Before
Adjusted Items
Adjusted
Items
Total
£’000
£’000
£’000
£’000
£’000
£’000
2,045,378
-
2,045,378
(1,189,837)
(15,251)
(1,205,088)
855,541
(293,910)
(678,733)
(17,664)
(15,251)
(5,061)
840,290
(298,971)
(30,315)
(709,048)
-
(17,664)
2,239,229
(1,333,737)
905,492
(380,652)
(674,626)
-
-
2,239,229
(25,517)
(25,517)
(22,117)
(298,145)
-
(1,359,254)
879,975
(402,769)
(972,771)
-
Operating loss
(134,766)
(50,627)
(185,393)
(149,786)
(345,779)
(495,565)
Revenue
During 2023, two key factors impacted our headline sales
performance, firstly the decision to exit several categories
as part of the strategic review and secondly, the conscious
prioritisation of higher margin sales.
Following the completion of the strategic review, we
successfully executed our plan to exit several loss-making
categories including the sale of THG OnDemand. With
continuing sales declining by only 3.2% in the current
macroeconomic environment and with margin pivot, this
is particularly pleasing when considered against the backdrop
of the total Group reported revenue which has decreased
by 8.7% to £2,045.4m (2022: £2,239.2m).
Importantly, we continue to benefit from strong underlying
customer metrics and behaviours (active customers, total
orders and average order values), positioning the group well
for the future.
The revenue decrease is driven by:
•
•
•
the Group exiting non-profitable categories. Discontinued
categories has resulted in a reduction in revenue of
£129.3m;
THG Beauty and THG Nutrition have consciously
prioritised higher-margin sales and reduced order
volumes that do not deliver target profitability leading
to a decline in revenues, however we have benefitted
from a stronger margin performance. This has focussed
on reducing sales in territories furthest away from local
distribution hubs, where delivery costs are higher;
a one-time destocking across the beauty sector led
to a decline in revenue of THG Beauty manufacturing
(reported within THG Beauty) within the first half of
the year which has faded in the second half and is not
expected to recur in 2024;
•
THG Ingenuity continues with its pre-announced strategic
re-positioning that commenced in Q3 2022, focusing on
higher value and higher margin clients which provide
improved quality recurring revenue over the mid to long
term. The short-term impact has been a reduction in non-
recurring revenue as the re-positioning is executed; and
•
a continuing uncertainty in the macroeconomic
environment throughout the year.
Whilst the above has impacted revenue, the Group is
pleased to report an improvement in both gross profit margin
and absolute Adjusted EBITDA which, together with cash
generation, have been a key management focus.
Detailed analysis is included within the segmental section later
in this report.
Gross profit
Adjusted gross profit was £876.1m (2022: £925.5m) equating
to an adjusted gross profit margin of 42.8% (2022: 41.3%), an
improvement of 150bps compared to 2022.
Gross profit on a statutory basis totalled £840.3m (2022:
£880.0m) also delivering an increased margin of 41.1% (2022:
39.3%) and 180bps stronger than 2022.
The cost environment in 2023 has continued to be challenging
with high levels of inflation combined with the currency
headwinds, which continued to develop as we progressed
through the year. More specifically the 13% decline in the
Japanese Yen vs GBP impacted revenue and margin in the
Japanese market within THG Nutrition.
Overall, despite the decline in Japanese Yen, the Group saw a
substantially better margin within THG Nutrition, reflecting the
unwind of the price investment made in 2022 for customers
and movements in the whey commodity price, which closed
the year at below normalised levels. These commodity prices
are expected to rise to normalised levels during 2024.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
of labour inflation in the market. This included the launch
of the Group’s second AutoStore facility in North America
during 2023. We continue to review the cost base and plan to
continue with the roll out of further automation (albeit lighter
touch) during 2024.
Administrative costs on a statutory basis totalled £709.0m
(2022: £972.8m), an improvement year on year following the
one-off non-cash impairment charge of £275.4m incurred in
2022.
Adjusted administrative costs as a percentage of revenue
totalled 24.0% of revenue (2022: 22.7%). Within administrative
costs, the main increases have been seen within marketing
due to increased spend in certain areas, primarily brand
investment and general media inflation in paid channels.
Greater app participation has partially mitigated rising
marketing costs, with customers acquired at lower costs
through this channel typically ordering more frequently,
with higher AOV’s due to regular engagement.
Other operating expense of £17.7m (2022: £nil) relates to
the loss on disposal of three non-core freehold assets, as
planned and completed in the first half of the year. These three
disposals of assets, no longer required by the Group, generated
cash proceeds of £55.5m.
Japan is THG Nutrition’s second largest market and the
devaluation in the Yen (from 135 Yen/£ at IPO in September
2020, to c. 180 Yen/£ at the close of 2023) has had a material
impact on margins. Had the exchange rate been comparable
in 2023 to that at IPO, THG would have made c. £20m more
profit in the year. The Group also has continued to progress
plans for in territory manufacturing in Japan to provide
a longer-term hedge.
In THG Beauty, online retail (principally Lookfantastic, Cult
Beauty and Dermstore) saw gross profit margin expansion
as a result of the de-prioritisation of lower margin sales and
subtle changes to promotional and geographic strategy.
Manufacturing sales were also impacted by well documented
de-stocking in the first half of the year, which also adversely
impacted gross profit margins.
Pleasingly, the result of the factors above, alongside proactive
implementation of cost saving initiatives, has led to the Group
delivering a much improved margin year on year whilst exiting
the year in constant currency sales growth.
Operating expenses
Distribution costs on a statutory basis further reduced as a
percentage of sales by 340bps compared to 2022, culminating
in a cost of £299.0m (2022: £402.8m), which is 14.6% (2022:
18.0%) of revenue, with total statutory costs improving by
25.8%. This is testimony to the benefits of the fulfilment
automation deployed and is despite the adverse impact of
national minimum wage increases and labour inflation in
general.
Statutory distribution costs include one off adjusted items
of £5.1m, which has substantially reduced from the £22.1m
reported in 2022. As expected, in line with the reopening of air
channels (specifically in Asia) and the impact of the pandemic
lessening, the costs relating to incremental delivery fees in
respect of Covid-19 have fallen away in 2023, totalling just
£2.5m compared to £18.5m in 2022.
Adjusted distribution costs of £270.7m (2022: £353.4m) were
13.2% (2022: 15.8%) of revenue. This 260bps underlying
improvement was driven by the Group’s continued focus on
network optimisation and the expanded use of warehouse
automation, which has more than compensated for high levels
Adjusted EBITDA and Adjusted EBITDA (continuing)
Reconciliation from Operating loss to Adjusted EBITDA
Year ended 31 December 2023
£’000
Year ended 31 December 2022
£’000
Operating loss
Adjustments for:
Amortisation
Amortisation of acquired intangibles
Depreciation
Adjusted items – cash
Adjusted items – non-cash
Other operating expense – non-cash loss on disposal freehold assets
Share-based payments
Adjusted EBITDA
Adjusted EBITDA %
EBITDA loss from discontinued categories
Adjusted EBITDA (continuing)
Adjusted EBITDA (continuing) %
(185,393)
(495,565)
68,829
50,543
95,113
15,824
34,803
17,664
16,723
114,106
5.6%
6,343
120,449
6.1%
58,581
50,394
94,191
40,090
305,689
-
10,734
64,114
2.9%
17,061
81,175
4.0%
Adjusted EBITDA saw a strong improvement to £114.1m from
£64.1m in 2022. This represents a margin of 5.6% (2022: 2.9%),
an improvement of 270bps year on year, delivered through the
Group’s profit improvement programme and the exit of loss-
making categories and territories.
This is an encouraging result against a tough macroeconomic
backdrop, with the cost base of the business fundamentally
stronger and well positioned for operating leverage.
When stripping out the EBITDA loss from discontinued
categories, Adjusted EBITDA (continuing) totalled £120.4m
(2022: £81.2m) with a margin of 6.1% (2022: 4.0%), an
improvement of 210bps.
Depreciation and amortisation
Total depreciation and amortisation costs were £95.1m and
£119.4m respectively (2022: £94.2m and £109.0m). Included
within amortisation is £50.5m relating to acquired intangibles
(2022: £50.4m). This is non-cash and is principally the
depreciation of historic acquisition consideration through the
Income Statement.
Depreciation remained consistent as a result of the previous
investment made across the network.
Amortisation increased following the continued investment
in our proprietary technology platform during the period,
as expected, with more projects moving from work-in-
progress (WIP) to live in the period generating an increased
amortisation charge. This investment is focused on the
technology to support both internal and external customers
and ensures that we continually enhance the functionality and
capability of the platform.
Operating loss
Operating loss before adjusted items totals £134.8m
(2022: £149.8m). This loss was a result of the challenging
macroeconomic environment combined with the above
mentioned factors. The actions taken to exit loss-making
categories and territories combined with a return to sales
growth are expected to reduce this loss position in the
medium-term.
The Group incurred a much decreased operating loss in the
year of £185.4m (2022: £495.6m). The decrease is largely as a
result of the one-off non-cash impairment charge of £275.4m
in 2022 that has not recurred in 2023.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
The loss in 2023 includes one-off charges incurred during the
year, being the loss on disposal of loss-making discontinued
categories totalling £16.4m (2022: £29.3m) and share-based
payment charges of £16.7m (2022: £10.7m). In addition, the
other operating expense of £17.7m (2022: £nil) relates to the
non-cash loss on disposal following the planned sale of non-
core freehold assets which will not recur in future years, but
which generated c.£55.5m of cash for the Group.
Finance costs net of finance income
Finance costs net of finance income have increased to £66.6m
(2022: £54.2m). This is principally the result of the additional
£156.0m facility obtained in September 2022 with the interest
annualising in 2023.
from the average statutory rate of 23.5%. This is primarily due
to a movement in deferred tax not recognised (-16.2%), and the
impact of expenses not deductible (-5.2%).
At the balance sheet date the total net deferred tax liability is
£55.7m (2022: £76.6m). The deferred tax liability in respect of
intangible assets recognised on consolidation was £135.3m
(2022: £150.8). The deferred tax asset in respect of tax losses
recognised was £29.8m (2022: £54.8m). There were £96.2m of
unrecognised deferred tax assets in respect of tax losses at the
balance sheet date (2022: £57.8m). This non-recognition has
an impact on the income statement tax credit, and this is one
of the primary reasons for the effective tax rate being below the
statutory rate.
Earnings per share
Loss before tax and tax rate
Reported loss before tax was £252.0m (2022: £549.7m). The
effective tax rate is 1.4% (2022: 1.8%), based on a total tax credit
of £3.6m (2022: tax credit £9.8m). The effective tax rate differs
Loss per share was (£0.19) per share (2022: £(0.44) per share).
Note that in the prior year, if the non-cash impairment charge
was removed, the loss per share for 2022 would have been
(£0.21) per share.
Cashflow
Adjusted EBITDA
Working capital movements
Tax paid
Net cash generated in operating activities before adjusted items
Adjusted items
Net cash generated in operating activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of non-core freehold assets
Other (primarily interest and lease repayments)
Acquisition of trade and assets and subsidiaries net of cash acquired
(Repayments)/proceeds of/from bank borrowings
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Free cash flow2
2023
£’000
114,106
48,152
(5,411)
156,847
2022
£’000
64,114
23,528
(4,857)
82,785
(15,040)
(45,071)
141,807
37,714
(46,289)
(94,854)
(79,369)
(81,564)
55,450
-
(83,961)
(74,649)
(20,259)
(5,691)
(25,000)
156,000
(57,621)
(63,044)
473,783
536,827
416,162
473,783
(1,135)
(213,353)
The total cash outflow for the year was £57.6m (2022: £63.0m)
driven by a cash inflow from operating activities of £141.8m
(2022: £37.7m) due to increased Adjusted EBITDA, lower
adjusting items, a well-controlled working capital cycle and
the proceeds from the sale of non-core freehold assets. The
improvements in working capital were seen through general
tighter stock controls, reducing stock holding with no impact
on availability as the stock portfolio normalises following a
period of investment which supported the global warehousing
rollout in previous periods.
Total cash adjusting items before tax have declined significantly
to £15.8m from £40.1m in 2022. The cash reduction has been
driven by lower transportation and delivery cash costs in
relation to Covid-19 from £18.5m to £2.5m with air channels
reopening in Asia. Also, acquisition costs in respect of
restructuring and integration has decreased from £8.0m
to less than £1m.
Through conscious, controlled, capital expenditure, there
has been a reduction in the cash spend on the purchase of
property, plant and equipment in 2023 to £46.3m compared
to £94.9m in 2022. The deployment of our distribution network
is now largely complete and continues to deliver efficiencies
and benefits, reflected in lower distribution costs. Continued
investment within intangible assets, mainly the Ingenuity
platform continues at a similar rate to 2022 totalling £79.4m
(2022: £81.6m). In 2023, £55.5m (2022: £nil) cash was received
in relation to the sale of non-core freehold assets.
The combination of these cashflow improvements, has
culminated in the group’s ability to report free cash flow
breakeven for 2023 (2022: outflow of £213.4m). This
improvement of over £200m has come from strong operating
cashflow improvements, and normalisation of capex
expenditure.
During the year, some small, well considered acquisitions
were undertaken to complement the THG Beauty and
THG Ingenuity strategies. This generated a cash outflow of
£20.3m (£5.7m) in 2023, primarily related to the acquisition of
Biossance in December 2023 and City AM in July 2023.
In respect of loans and borrowings, a scheduled capital
repayment of £25.0m (2022: £nil) was made in relation to
the Group’s bank borrowings. In 2022, cash inflows included
£156.0m in respect of the new senior secured facility that was
drawn in October 2022.
The Group ended the period with cash and cash equivalents
of £416.2m (2022: £473.8m).
Segmental Summary - Overview
2023
£m
THG
Beauty
THG
Nutrition
THG
Ingenuity
Central
Inter-group
elimination
Continuing
Total3
Discontinued
categories
FY 2023
Total
External revenue
Inter-segment
revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA
margin
1,171.7
-
1,171.7
44.2
3.8%
657.9
-
657.9
88.9
13.5%
154.1
519.9
673.9
9.0
1.3%
-
-
-
(21.8)
-
-
1,983.7
(519.9)
-
(519.9)
1,983.7
-
-
120.4
6.1%
61.7
-
61.7
(6.3)
(10.3%)
2022
£m
THG
Beauty
THG
Nutrition
THG
Ingenuity
Central
Inter-group
elimination
Continuing
Total
Discontinued
categories
External revenue
1,226.0
Inter-segment
revenue
Total revenue
Adjusted EBITDA
pre SaaS costs
Adjusted EBITDA
Adjusted EBITDA
margin
-
1,226.0
33.6
33.6
2.7%
662.7
-
662.7
51.6
51.6
7.8%
159.6
597.4
757.0
29.3
19.1
2.5%
-
-
-
(23.2)
(23.2)
-
-
2,048.3
(597.4)
-
(597.4)
2,048.3
-
-
-
91.4
81.2
4.0%
191.0
-
191.0
(17.1)
(17.1)
-8.9%
2,045.4
-
2,045.4
114.1
5.6%
FY 2022
(Restated)
Total
2,239.2
-
2,239.2
74.3
64.1
2.9%
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1.
2. Free cash flow is defined as total cash flow for the group adjusting for debt (repayments) / proceeds and acquisitions cash flows and in respect of FY 2023 the
39
inclusion of a cash receipt of £11.2m from HMRC which was remitted to the Group in December 2023 but physically cleared the bank on the first working day of 2024.
For presentation purposes, this is considered to be free cash flow as at 31 December 2023 as a result of the remittance advice received.
3. During 2022, and 2023 certain loss-making categories and territories within non-core divisions were placed under strategic review and subsequently management has exited
these areas. The exit doesn’t meet the criteria under IFRS 5: Discontinued operations as these categories and territories are not a major component of the Group as defined by
the accounting standard, however, to provide further information on the ongoing revenue and Adjusted EBITDA of the Group the result of these operations has been presented
separately in the above table.
40
Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
THG Beauty4
£m
Revenue
Revenue (continuing)
Adjusted EBITDA (continuing)
Adjusted EBITDA Margin %
2023
1,207.5
1,171.7
44.2
3.8%
2022
(Restated)
1,285.9
1,226.0
33.6
2.7%
Change %
-6.1%
-4.4%
31.7%
+110bps
THG Beauty results mainly reflect the change in strategy to
focus on higher margin sales and reducing order volumes that
do not deliver target profitability. THG Beauty sales declined
6.1% to £1,207.5m, THG Beauty generated an increased
Adjusted EBITDA (continuing) of £44.2m (2022: £33.6m) an
110bps improvement on margin to 3.8% (2022: 2.7%). This
improvement was delivered by better quality sales improving
gross margin, which more than offset the adverse impact
from the one time destocking event seen in THG Beauty
manufacturing in H1 2023. Following the completion of the
strategic review, some small legacy brands within THG Beauty
were discontinued, which will continue to improve the margin
into 2024.
Challenges in THG Beauty manufacturing from industry-wide
de-stocking reported in H1 2023, faded in H2, with a return to
more normalised order levels being experienced into 2024.
Our prestige online retailing and THG owned-brands
continued to perform strongly, despite the challenging
backdrop, benefitting from the growth within the prestige
beauty market alongside the continued trend of digital channel
shift and THG Ingenuity platform services aiding conversion,
with a strong app participation.
AOV’s continue to increase totalling £64 per basket for 2023
(2022: £63), arising from a focus on customer loyalty (with
the launch of LF Beauty+) and continued investment to drive
increased customer engagement in both third party and THG
own brands.
In late December 2023, THG Beauty completed the acquisition
of Biossance. The brand was successfully re-platformed
onto Ingenuity technology in January 2024. This acquisition
provides further opportunity for THG Beauty to embed new
strategic partnerships and benefit from the significant levels of
investment into the brand that were made under the previous
ownership. Since inception in 2015, Biossance has generated
global revenues of c. $300m and is currently stocked in over
1,600 stores globally including Sephora, Harrods, Space NK,
Douglas and Selfridges plus online through www.biossance.
com, Lookfantastic and Cult Beauty.
THG Nutrition
£m
Revenue
Revenue (continuing)
Adjusted EBITDA (continuing)
Adjusted EBITDA Margin %
2023
664.3
657.9
88.9
13.5%
2022
675.1
662.7
51.7
7.8%
Change %
-1.6%
-0.7%
72.2%
+570bps
THG Nutrition sales marginally decreased by 1.6% to £664.3m
(2022: £675.1m) as we managed the business throughout
the year with a focus on profit margins. An Adjusted EBITDA
of £88.9m (2022: £51.7m) was delivered. This 570bps
improvement on margin of 13.5% (2022: 7.8%) is a record THG
Nutrition Adjusted EBITDA performance, reaping the rewards
from the prior year investment in pricing strategy and, the
effect of the decrease in whey commodity pricing.
The whey commodity prices saw substantial decreases in the
year from abnormally high levels in 2022, these commodity
prices are expected to rise initially then normalise during 2024.
scaling rapidly during the year. During 2023, targeted offline
Myprotein licensing deals were launched in our two largest
markets: UK (with major grocer, Iceland), and Japan (with
leading distributor, Itochu). Such arrangements provide future
enhanced margin potential for the business.
After a 2-year process, local manufacturing will launch in
both Japan and India in 2024, improving delivery timelines,
local product range development and securing significant
cost savings. Local manufacturing in Japan will also largely
eliminate future risk from Yen FX volatility and reverse the
estimated impact of prolonged Yen weakness on EBITDA
(estimated c.£20m negative impact in 2023 vs 2020).
Licensing arrangements continue to be a high-growth focus
area of the business during 2023 and beyond, with revenue
from Myprotein products sold under licensing arrangements
2023 was a significant year in the evolution of the Myprotein
brand, with a global rebrand launched in the second half of
the year. The rebrand represents the latest step we’ve made
in developing the brand and making it accessible to an
increasingly broad audience since we acquired the brand in
2011.
AOV’s marginally decreased to £49 (2022: £50).
Adjusted EBITDA margin is marginally above the medium-
term guidance level previously communicated. Reflecting the
recouping of investment consumer price protection in 2022.
THG Ingenuity
£m
External revenue
Internal revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA Margin %
2023
154.1
519.9
673.9
9.0
1.3%
2022
159.6
597.4
757.0
19.1
2.5%
Change %
-3.4%
-13.0%
-11.0%
-52.7%
-120bps
THG Ingenuity revenue from external customers decreased
by 3.4% to £154.1m (2022: £159.6m). Strategic re-positioning
commenced in Q3 2022, focusing on higher value and higher
margin clients which provide improved quality recurring
revenue principally through, Software-as-a-Service licence
fees, monthly brand building fees, infrastructure service fees,
revenue share, translation and creative services.
Following an intentional phase of investment in headcount
and expertise to deliver the re-positioned strategy, new
multi-service enterprise client wins have been secured and
onboarding is progressing. Due to this pivot in strategy, as
expected, THG Ingenuity delivered an Adjusted EBITDA of
£9.0m with a margin of 1.3% (2022: £19.1m with a margin of
2.5%), being a 120bps reduction. There continued to be a
strategic exit of smaller accounts and onboarding of multi-
service enterprise clients throughout 2023. As revenue scales
and the revenue mix evolves towards the technology product
offering we anticipate margins will increase towards the
Group’s five-year aspirational target of 7.5%.
Cost-saving initiatives continue to remain on the agenda with
a continued focus on automation rollout to implement further
savings across the cost base into 2024 without impacting
service delivery.
Internal revenue of £519.9m (2022: £597.4m) relates to services
provided to the wider THG Group including platform fees,
customer services, fraud detection services, THG Studios,
fulfilment, postage and marketing services. This revenue is
eliminated on consolidation. Internal revenue declined due to
the wider Group exiting loss-making categories and territories
along with lower group-wide sales, this in turn generated lower
volumes for THG Ingenuity. As these businesses return to
growth, inter-group revenue will also benefit.
Central costs
£m
EBITDA loss from central costs
2023
(21.8)
2022
(23.2)
Change %
+6.1%
Central costs relate primarily to the PLC Board remuneration,
professional services fees, group finance, M&A, and
governance costs that are not recharged to the businesses
as they principally relate to the operations of the PLC holding
company. The costs reduced in comparison to 2022 as the
Group continued to focus on cost saving initiatives, more than
offsetting increased investment in governance through new
Board appointments and record high levels of macro-inflation
in the economy.
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4. THG Experience and THG Luxury results are reported within the THG Beauty segment following a change in internal reporting. These results were
included within the Other segment in 2022. The 2022 result for THG Beauty has been restated to provide a like-for-like comparison to 2023.
42
Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Discontinued categories
£m
Revenue discontinued
Adjusted EBITDA from discontinued categories
Adjusted EBITDA Margin %
2023
61.7
(6.3)
-10.3%
2022
191.0
(17.1)
-8.9%
Change %
-67.7%
+62.8%
-140bps
On 17 January 2023, the Group confirmed its intention to
simplify and streamline its operations, undertaking a strategic
review of loss-making categories and territories within
THG OnDemand. In July 2023, the trade and assets of THG
OnDemand were sold to a Newco led by the OnDemand
management team. The Newco continues to be a client of
Ingenuity, with the provision of technology, operational and
digital services.
In addition, specialist provider of cycling equipment ‘ProBikeKit’
was sold to Frasers Group PLC in Q2 2023. The combined
consideration receivable through both transactions was c. £4m.
(2022: loss of £17.1m). Included within adjusted items are the
losses on disposal of these categories including any write
down of assets to their disposal value totalling £16.4m (2022:
£29.3m).
We note the exits don’t meet the criteria under IFRS 5: Non-
current assets held for sale and discontinued operations, as
these categories and territories are not a major component of
the Group as defined by the accounting standard. However,
to provide further information on the continuing revenue and
Adjusted EBITDA of the Group these have been presented
separately.
During H2, the Group completed its strategic review of non-
core categories resulting in the discontinuation of small legacy
brands within THG Beauty and THG Nutrition.
The prior year discontinued categories have been restated
to include consistent categories disclosed in 2023 to provide
a like-for-like comparison. (See note 2 within the financial
statements).
The discontinued categories contributed £61.7m (2022:
£191.0m) of revenue and an adjusted EBITDA loss of £6.3m
Adjusted items
In order to understand the underlying performance of the
Group, certain costs included within cost of sales, distribution,
administrative and finance costs have been classified as
adjusted items. All material classes of adjusted items reduced
period-on-period.
The largest costs relate to the non-cash loss on disposal
of discontinued and loss making categories following the
strategic review. Following the sale of the trade and assets of
THG OnDemand in July 2023, along with the completion of the
strategic review leading to the discontinuation of small legacy
brands within THG Beauty and THG Nutrition, all assets have
been written down to their recoverable amount expected on
exit. This has led to inventory provisions (within cost of sales)
and impairment of other assets, primarily property, plant and
equipment (within administrative costs) being recognised.
Within Cost of sales
Non-cash loss on disposal of discontinued and loss making categories
Inventory provision following strategic review
Within Distribution costs
Transportation and delivery costs in relation to Covid-19
Commissioning – new facilities
Within Administrative costs
Non-cash loss on property portfolio restructure
Loss on property portfolio restructure
Non-cash loss on disposal of (or exit from) discontinued and loss making categories
Other costs following the outcome of strategic review
Restructuring costs
Acquisitions – restructuring and integration
Other legal and professional costs
Donations
Non-cash impairment of assets
Non-cash impairment of non-core assets held for sale
Within Finance costs
Non-cash – revaluation of SBM option
Total adjusted items before tax
Tax impact
Total adjusted items
Cash adjusting items before tax5
For full details on each category of adjusted items see note 4 to the financial statements.
2023
£’000
10,465
4,786
15,251
2,456
2,605
5,061
18,369
851
5,969
1,515
2,708
703
200
-
-
-
2022
£’000
25,517
-
25,517
18,504
3,613
22,117
-
-
3,763
6,942
6,803
8,046
570
362
269,828
1,831
30,315
298,145
-
50,627
(2,835)
47,792
15,824
(601)
345,178
(11,634)
333,544
40,090
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5. Cash adjusting items before tax total £15.8m (2022: £40.1m), reflecting the total cash before tax expected to be paid. This differs from the Consolidated
statement of cash flows which also reflects the timing of such payments. Cash paid in 2023 totalled £15.0m.
44
Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Balance Sheet
Cash and cash equivalents and net cash before lease liabilities
Loans and other borrowings
Lease liabilities
Cash and cash equivalents
Sub-total
Adjustments:
2023
£'000
2022
£'000
(650,037)
(679,189)
(344,977)
(334,376)
416,162
473,783
(578,852)
(539,782)
Retranslate debt balance at swap rate where hedged by foreign exchange derivatives
15,653
24,782
Net debt
Net debt before lease liabilities
(563,199)
(515,000)
(218,222)
(180,624)
The Group’s balance sheet remains robust closing the period
with cash balances of £416.2m (2022 at £473.8m). The €600m
Term Loan B matures in December 2026 and the incremental
£156m facility matures in Q4 2025. The Group revolving credit
facility of £170m remains undrawn and has not been drawn
post IPO. Post year end, the Group extended its Revolving
Credit Facility by 17 months to May 2026. There will be no
changes to the financial covenants or interest margin beyond
the existing maturity date. From December 2024, the facility
will be £150 million. The extension affords the Group continued
significant financial flexibility during uncertain geo-political
times.
Net debt before lease liabilities and adjusted for the impact
of hedging was £218.2m (2022: £180.6m) driven by movements
in the loans and other borrowings balance and cash balance.
Net debt was £563.2m (2022: £515.0m). The increase in net
debt year on year includes an increase in lease liabilities,
following the restructure of the property portfolio in the year,
with non-core assets being sold via a sale and leaseback
arrangement and subsequently sublet, generating positive
cash flow for the Group.
Non-current assets
Property, plant and equipment totalled £273.2m (2022:
£360.0m). Intangible assets totalled £1,207.4m (2022: £1,275.8m).
The movement in the period was driven by continued
investment in the THG Ingenuity platform and the Group’s
global warehouse expansion programme which is now nearing
completion. These were offset by the sale of the non-core
freehold assets along with depreciation and amortisation
charges incurred.
Damian Sanders
Chief Financial Officer
9 April 2024
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46
Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Section 172 statement
stakeholder engagement
Section 172 of the Companies Act requires that the Directors
act in a way they consider, in good faith, most likely to promote
the success of the Company for the benefit of its shareholders
as a whole, and considering wider stakeholder needs while
having regard to the matters set out in section 172 (1)(a)-(f) of
the Companies Act.
Active engagement between the Board and the stakeholder
groups below is underpinned by THG’s values and purpose
and is critical in the execution of the Group’s strategic
priorities by ensuring that the business, and its relationships,
is consistent with the matters that the Board must consider as
part of their duties. Understanding and outlining the impact
of the Board’s considerations and decision-making will further
inform how best to continue acting fairly and duly across the
stakeholder groups.
THG is focused on making an impact through digital
transformation, innovation, and expertise to create and grow
category-leading global brands, and we have identified six
stakeholder groups that are vital to fulfilling this.
Stakeholder
How THG Engages
How The Board Engages
Find Out More
Customers and
Consumers
We enable brands to
have direct relationships
with customers
and consumers by
providing a high-quality
retail experience and
establishing a relationship
of trust
• Through its brands via social media
Indirect:
• Creating global digital content including Cult
Beauty’s Cant (Re)touch This campaign,
a branded printed media portfolio, now
including the CityAM offering
• Customer and consumer insights provided to
and analysed by Senior Management
• Continued growth from loyalty programmes
across THG Beauty
• Award-winning customer contact centre and
dedicated advisory teams providing bespoke
pre-sales support to customers
• Monthly updates from business Chief Executive
Officers on strategic priorities, including brand
partnerships and new product development with
a focus on better understanding the benefits for
the consumers and customers
• Monthly review by the Chief Operating Officer of
operational performance to consistently deliver
and improve high-quality customer experience
• Board presentation by the Chief Experience
Officer on customer satisfaction scores and
process improvements
• Roll out of the Myprotein rebrand
on key cyber-security enhancements
• Monthly updates by the Chief Technology Officer
THG Beauty
See page 19
THG Nutrition and
Wellness
See page 25
• Offline retail shopping experiences and
concepts such as the Lookfantastic pop-
up store in London and the opening of
the Myprotein kitchen concept store in
Manchester
Shareholders
• Annual Report and Accounts
Direct:
We seek to create value
for Shareholders and
through our purpose,
vision, values and
strategy, deliver long-term,
sustainable growth
• RNS announcements
• Scheduled investor presentations and
conference calls
• Corporate website
• Site tours
• One-to-one and group investor meetings
on site and through attending investor
conferences
• Annual general meetings
• The CEO and CFO have an ongoing programme
of meeting institutional Shareholders, supported
by Senior Management
• The Chair and SID are available to meet
Shareholders upon request
Indirect:
• The Board reviews and approves material
communication investors, such as trading
updates, results announcements, Annual Report,
and significant business events
Governance Report
See page 107
Stakeholder
How THG Engages
How The Board Engages
Find Out More
THG Ingenuity Clients
•
Inaugural US Future of Commerce event
alongside annual UK event for both current
and prospective clients
Direct:
• Attendance at annual Future of Commerce event
THG Ingenuity
See page 29
We support clients
on their digital
transformation
journeys
Our Suppliers and
Partners
We promote open and
transparent working
practices and collaborate
for mutual, sustainable,
and commercial success
• Publication of industry trend and
guidance reports on FMCG, retail, digital
transformation and beauty
• Engagement with clients
Indirect:
• New developments and partner integration
such as social commerce via TikTok shop
• Continuous platform enhancements through
in-house development of machine-learning
models and AI solutions
• Review of new and incremental business pipeline
• Review of key technology, platform developments
and product launches
• Approval of Ingenuity Customer Advisory Board
• Annual anti-bribery training undertaken by
Indirect:
Procurement team
• Regular review of key raw material prices and
buying strategy
• Premises visits undertaken by Head of Risk
Committee to multiple THG sites
• Members of the Executive team regularly meet
top suppliers
• Review of supplier payments metrics
• Risk assessment for all suppliers and a
process for reviewing and increasing audits
for higher-risk suppliers
• Quarterly business reviews with Ingenuity
partners to assess sales pipeline, conversion
and joint marketing strategies
•
Implementation of THG Supply Chain
Standards to replace previous THG Ethical
Code of Conduct with direct suppliers
required to be signed up to Sedex from an
ethical sourcing perspective
• Strategic partners and suppliers identified
and engaged on carbon reduction matters
Our People
• Launch of TechSheCan
Direct:
We aim to ensure THG
provides a supportive
environment with
career development
opportunities at all levels,
with a particular focus
on building the skills of
tomorrow
• Expansion of upskilling programme including
• End-of-year colleague presentation delivered by
the Data Academy
Executive Directors
• Development of employee networks
including accessibility champions
• Launch of Parent’s Network to support
working families
•
Introduction of Parenthood Programme,
enhancing parenthood pay and offering
wrap-around support
• Annual business strategy updates with Senior
management
Indirect:
• Monthly review of attrition and key recruitment
matters by the Chief People Officer
• The Board supported the decision to bring in
Helen Jones and Sue Farr
• Continuation of partnership with Change 100
• Reviewed and approved updated role profiles of
Board members
• Evolution of Learning and Development
offering including introduction of in-house
management programme
• Launched five days of THG campaign to
re-engage employees with five THG values
Risk Management
See page 87
Sustainability
Strategy
See page 63
THG Ingenuity
See page 29
Our People
See page 57
Diversity and
Inclusion
See page 62
Society & Communities
• Launch of social impact strategy
Indirect:
We aim to build skills and
develop talent to promote
greater social mobility,
while protecting the
environments we operate
in and source from
• Charity partner with The Christie
• Quarterly review of progress against the 2030
Sustainability Strategy
• Launch of strategic partnership with
TechSheCan
• Supported TalentTap, providing work
experience to students from social mobility
cold-spots
• ESG matters discussed in Sustainability
Committee meetings and further communicated
to Board
• Approval of charity partner – The Christie
Sustainability
Strategy
See page 63
Our People
See page 57
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Stakeholder engagement
THG Ingenuity clients
Suppliers and partners
The Board is committed to developing supplier relationships
that not only support the brands that we own and work with,
but also tackle societal and environmental issues, guided and
governed by the THG Group’s Supplier Manual, maintaining
a high standard of business conduct. Engagement with
suppliers to develop productive, fair and long-standing
relationships must take into account the impact on THG
in ensuring and enhancing long-term value creation for
shareholders, and also recognise the suppliers’ own business
needs. To establish and maintain these relationships
effectively, ensuring fairness across both sides, all suppliers
continue to be subject to relevant approval processes.
In February 2023, THG Ingenuity signed a global
distribution agreement with AutoStore to provide the
company’s technology on a pay-per-click model alongside
Ingenuity’s proprietary warehouse management,
courier and optimisation software. This new offering has
enabled a lower entry price-point for retailers, allowing
them to meet the growing need for efficient warehouse
operations and faster customer delivery. The pay-per-pick
model provides further differentiation from the market,
unlocking new demand for order-fulfilment automation as
businesses’ needs change and they require more easily
scalable technology.
The relationship with AutoStore has given THG Ingenuity
the opportunity to demonstrate the benefits of order-
fulfilment automation and make it accessible to the
growing existing customer base and potential new
markets across a range of categories.
AutoStore has 23 partnership agreements worldwide;
THG Ingenuity is the first to be implemented on a pay-
per-pick model. The new service model is available to all
partners and customers.
Key outcomes
Increased transparency in procurement decisions,
including in contractual terms, sustainability claims
and onboarding
THG Procure continued to be rolled out in 2023
and now covers 97% of suppliers
Improved supplier on-time payment performance
Implementation of new THG Supply Chain
Standards, an updated version of THG Ethical Code
of Conduct
Significant cost savings per unit and maintenance
of delivery standards throughout peak trading periods
•
•
•
•
•
49
THG Ingenuity clients are central to the business’s ability to
provide an all-encompassing direct to consumer journey,
enabling us to prove ourselves as a key partner for higher-
margin, complex clients.
FY 2023 saw the business pivot towards larger, more
complex clients, for whom we can showcase our end-to-end
ecommerce solution, encompassing technology, marketing
and operational capabilities and support large-
scale ecommerce transformation.
City AM
In July 2023, THG acquired London-based financial and
business publication CityAM, supporting not only its long-
term aspirations and strong balance sheet for growth, but also
enabling THG to scale its existing media, studios, and digital
content offering, as well as the Beauty and Nutrition mobile
apps.
CityAM joins the THG Media portfolio which boasts an existing
digital magazine with combined circulation of 600,000 through
THG’s The Supplement and The Highlight.
Leveraging THG Ingenuity’s technology, CityAM launched
its mobile app, amplifying reach, driving traffic and further
building digital marketing and advertising revenues. Alongside
launching the app, THG has committed to expanding
City AM’s editorial capabilities and coverage, using our
in-house expertise to develop the premium lifestyle, wellbeing,
technology and sustainability content.
The acquisition of CityAM has provided THG Ingenuity with
the opportunity to make a digital step-change in its adtech
capabilities through its digital brand-building and ecommerce
platforms.
CityAM offers c.2 million monthly unique visitors online, and
a daily print circulation of c. 70,000 across four days a week,
enabling THG to benefit from significant new audience reach,
complemented by its already successful content creation and
digital media expertise. Downloads since the app’s launch in
September have increased 2,800%+ to the end of December
2023.
Key outcomes
•
•
THG Ingenuity named in 2023 Gartner Magic Quadrant™
for Digital Commerce, recognised for its completeness
of vision and ability to execute
Investment in journalism for CityAM including new hires
and the launch of the CityAM app to increase digital reach
• New higher-margin client wins increasing monthly
recurring revenue growth throughout the second half of
the year
• Double-digit revenue growth for external clients towards
the end of the year
Customers and consumers
THG serves its global customer base through its direct
to consumer sites comprising of own-brands and retail
destinations.
Customer needs and behaviours are constantly evolving,
driven by advancements in purchase methods, new product
discovery solutions and ever-changing trends, all driving
innovation for us to hold leading positions in our respective
markets. Considering and improving each step of the THG
customer journey, supported by investment in our technology
and operating infrastructure, enables us to offer innovative
products in key and emerging markets, leveraging localisation
to build category leadership across Beauty and Nutrition and
to continue providing engaging content and relevant products
to our global customer base while boasting a high level of
customer service and satisfaction.
Beauty advisory team
Key outcomes
THG offers bespoke pre-sales support to customers
and in early 2022, we developed our offering by investing
in recruitment and front-end tech, enabling customers
to receive expert advice across our sites.
In 2023, we continued to evolve this offering, and our Beauty
Advisory team worked across Lookfantastic and Dermstore
to provide product advice and consultations to customers
via instant channels, available to customers who are unsure
as to which products best suit their requirements and needs.
This strives to further enhance customer sentiment while also
driving up AOV and conversion:
•
•
Substantial improvement in Trustpilot ratings for both
Beauty and Nutrition, Lookfantastic 4.5 (+0.2) and
Myprotein 4.4 (+0.2)
400,000+ 5-star customer service reviews in the last 12
months across internal and external sources
• Greater accuracy in orders and quicker delivery times in
addition to proactive customer communications, reducing
the requirement for post order support
•
Improved customer confidence has led to a record low
customer contact rate average, down 3.7bps year on year
• Over £1 million in assisted sales revenue in 2023
•
•
89% customer satisfaction, measured internally
using virtual chat satisfaction ratings
5-star Trustpilot reviews referring to the Beauty
Advisory Team specifically
The Beauty Advisory Team is constantly evolving, utilising
greater resources and increasing their brand training even
further. In 2023, the team had 40+ training sessions with
key brands such as L’Oreal, Olaplex, ESPA and Elemis,
all providing on-site training.
• Our internal satisfaction metric, which encompasses
customer feedback points, was up 8.7% year on year
achieving a high of 8.05 in 2023
• Maintained 98% contact centre SLAs throughout
the year through improved operational metrics and
the implementation of automated solutions
•
•
•
•
Significant growth in app participation, +4.1ppts to
14.1% and +32% uplift in new users to apps in 2023
Broadening awareness of the use of recyclable
packaging and materials in our own brands
500+ active customer experience support agents
30+ native languages supported
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Principal decisions
The Board keeps under review its governance and operating
protocols to ensure we maintain long-term value creation. The
application of the Code has reinforced this approach and the
underlying governance controls and processes that embed the
ethos of Section 172 across the Group.
Below are examples of the key discussions and principal
decisions taken by the Board in 2023, alongside the relevant
Group strategic priority and stakeholders considered. The
Board will engage with stakeholders accordingly where risks
are considered impactful.
THG Strategic priorities
Board discussions
and principal decisions
Stakeholders engaged
To build category leadership
positions in beauty, health
and wellness
• Discontinuation of loss-making categories
and territories including THG OnDemand,
ProBikeKit and legacy brands within THG
Beauty and THG Nutrition
• Expansion of the THG Beauty portfolio to
include THG Luxury and THG Experience which
Shareholders
Customers and consumers
Suppliers and partners
provide additional complementary marketing
People
opportunities for the business
• THG Nutrition rebrand
• THG Nutrition partnership with Williams
F1 and Hyrox
To make THG Ingenuity the
• THG trading strategy pivot towards
partner of choice for commerce
multi-service clients
transformation and sustainability
solutions
• CityAM acquisition
Shareholders
THG Ingenuity clients
• Recognition in Gartner Magic Quadrant™
Suppliers and partners
Customers and consumers
People
THG Strategic priorities
Board discussions
and principal decisions
Stakeholders engaged
Deliver engaging content and innovative
• Opening of the Myprotein concept store in
products to our global customer base
Manchester and Lookfantastic pop-up in London
Suppliers and partners
• Deepening social media partnerships including
Lookfantastic TikTok shop
Customers and consumers
• New product development in Beauty
and Nutrition
• Further enhanced app capabilities such as
Foundation Finder
• Launched Can’t (Re)Touch This campaign
Accelerate growth in core international
• Successful completion of the Group’s 3-year
territories, leveraging our local
global infrastructure roll-out
Shareholders
infrastructure
Customers and consumers
Suppliers and partners
THG Ingenuity clients
• Completion of installation of Autostore in the
New Jersey warehouse
• Development of THG Nutrition offline strategy
in the US
• Partnership with leading distributor Itochu
in Japan
• Local manufacturing to launch in both Japan
and India in 2024
• Reviewed and approved the updated UK tax
strategy, Polish tax strategy and Treasury policy
• Hedging international FX and managing
interest rate risk
Drive positive change with our
• THG Eco - Science-based targets assured
stakeholders, through an entrepreneurial,
with external adviser
Shareholders
values-led culture
• Support for the choosing of THG’s charity
partner The Christie
Customers and consumers
THG Ingenuity clients
• Appointment of Sue Farr and Helen Jones
to the Board
Suppliers and partners
• Monitoring of the FCA listing regime review
People
• Internally launched social impact strategy
Society and communities
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Strategic review execution
Business strategic optionality
Augmented trading strategies
Cash prioritisation
Stakeholders engaged:
Stakeholders engaged:
Stakeholders engaged:
Stakeholders engaged:
Shareholders
Customers and consumers
Shareholders
Customers and consumers
Shareholders
Customers and consumers
Shareholders
Customers and consumers
Suppliers and partners
People
THG Ingenuity clients
Suppliers and partners
THG Ingenuity clients
Suppliers and partners
THG Ingenuity clients
Suppliers and partners
People
Principal decision by the Board:
Principal decision by the Board:
Principal decision by the Board:
Principal decision by the Board:
In January 2023, the Group confirmed its intention to
simplify and streamline its operations, undertaking a
strategic review of loss-making categories and territories
including THG OnDemand business. In July 2023, the
trade and assets of THG OnDemand were sold to a
Newco which continues to be a client of THG Ingenuity.
In addition, we sold ProBikeKit to Frasers Group PLC in
Q2 2023. During the second half of the year, the Group
completed its strategic review of loss-making categories
resulting in the further discontinuation of additional small
legacy brands within THG Beauty and THG Nutrition.
Following the completion of the legal and operational
re-organisation of THG in 2022, the Board has
supported the development of value creation strategies
to prepare each business with the right platforms to
provide strategic optionality in the future.
In April 2023, it was announced that THG would take
a focused approach to enhancing profitability, leading
to de-emphasis of certain territories in THG Beauty
and THG Nutrition, and the pivoting of THG Ingenuity
towards higher-value and higher-margin clients with
higher quality recurring revenues.
Following the intention to position each of the three
businesses for further operational and strategic progress,
and notwithstanding the continued macroeconomic
uncertainty experienced in the market, the Board
approved a strategy of cash prioritisation in order to
strengthen liquidity and afford the Group financial
flexibility.
Board considerations and outcomes:
Board considerations and outcomes:
Board considerations and outcomes:
Board considerations and outcomes:
The Board approved the sale of THG OnDemand and
ProBikeKit following the completion of the strategic review
of loss-making categories and territories.
The financial impact of the discontinued categories has
been disclosed within the financial results to show the
impact of their exit on the Group and its outlook.
The categories discontinued in the second phase of the
strategic review contributed only c. £40m to sales in 2023.
As a part of these value creation strategies, THG Nutrition
expanded its customer reach through retail presence,
gyms and experiences, notably through physical retail
partnerships and curated licensing. This acts as an
important lever to growth, evolving the Myprotein brand
beyond sports nutrition and into the wider health and
wellness space, also expanding the active customer
base beyond direct to consumer through increased
retail touchpoints and the activation of new and existing
customers.
The decision to refocus on profitable sales and multi-
service, Ingenuity clients demonstrates significant
progress towards building category leadership, making
Ingenuity the partner of choice and accelerating growth
in core international territories.
The Board recognises the short-term impacts on revenue
and adjusted EBITDA. However, as the businesses return
to growth under the implemented profit improvement
plans throughout 2022 – 2023, internal revenue will
benefit.
The Board also approved plans to deprioritise the areas
of the business that are no longer profitable or where we
could not take advantage of our localised infrastructure.
While this may have resulted in reduced order volumes
that have not delivered targeted profitability, it has
supported revenue growth and margin rebuilds in the
medium-to long-term.
Within THG Nutrition, the margin potential of the business
was further enhanced by expanding the royalty model
with carefully chosen partners in key territories with
targeted offline licensing deals launching in the UK and
Japan.
The successful completion of the Group’s three-year
global infrastructure roll-out, and the strong efficiencies
that investments in capital expenditure are now delivering.
The Group delivered a c.£48m reduction in capital
expenditure in FY 2023 in line with stated strategy.
In support of guidance, we have prioritised capital
expenditure on technology development in line with the
medium-term guidance set out at IPO with cash adjusting
items substantially reduced year on year.
The Board also engaged with its lenders to extend the
Revolving Credit Facility, announced in March 2024.
THG confirmed the extension of this by 17 months to
May 2026 with no changes to the financial covenants or
interest margin beyond the existing maturity date. From
December 2024, the facility will be £150 million.
The Board considered the strong profit and cash
performance alongside improvements in net leverage
and considered that the extension will afford the Group
continued significant financial flexibility during uncertain
geopolitical times.
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Non-financial
and sustainability
information statement
The table below sets out where stakeholders can find information relating to the non-financial matters as required under
the Non-Financial Reporting Directive:
Reporting requirements
Some of the relevant policies
and statements
Where to read more in this report about our
impact, including the principal risks relating
to these matters
Page
Environmental matters
• Environmental Policy
• Sustainability
Page 63
• Task Force on Climate-related Financial Disclosures
Page 69
(TCFD)
• Risk - Climate change, environmental
Page 94
and social responsibility
• Risk - Legal and regulatory compliance
Page 95
• Sustainability Committee Report
Page 141
Employees
• Diversity & Inclusion Policy
• People and diversity - Chair’s introduction
• HR Handbook including all
people-related policies
• Our strategy
• Our people
• Section 172 statement stakeholder engagement
• Diversity - Nomination Committee Report
• Risk - Talent
• Risk - Culture
• Risk - Health & safety
Human rights
• Modern Slavery statement
• Section 172 statement stakeholder engagement
• Health and Safety Policy
• Risk - Climate change, environmental
• Whistleblowing Policy
and social responsibility
• HR Handbook
• Risk - Culture
• Risk - Health & safety
• Risk - Product quality and safety
Social matters
• HR Handbook
• Section 172 statement stakeholder engagement
• Environmental Policy
• Our people
• Empowering people and communities -
Sustainability
Page 4
Page 9
Page 57
Page 47
Page 137
Page 91
Page 92
Page 95
Page 47
Page 94
Page 92
Page 95
Page 95
Page 47
Page 57
Page 81
• Risk - Climate change, environmental
Page 94
and social responsibility
• Diversity - Nomination Committee Report
Page 137
Anti-Bribery and Corruption
• Anti-Bribery Policy
• Risk - Culture
• Gifts and Hospitality Policy
Our business model
Non-financial KPIs
• Our business model
• THG Beauty
• THG Nutrition
• Sustainability
Page 92
Page 13
Page 19
Page 25
Page 63
Principal risks and uncertainties
• Risk management and informed decision-making
Page 87
Policy
Description
Environmental Policy
THG is committed to doing business responsibly and reducing any adverse impacts of our operations on the
environment. Our Environmental Policy was implemented as part of our THG Sustainability Strategy (THG x
Planet Earth) to drive positive change in our business, supply chains, communities and for the planet.
Equity, Diversity
& Inclusion Policy
THG strongly believes that having a diverse workforce and an inclusive workplace creates a more innovative
and successful business. Our EDI Policy has been implemented as part of the EDI strategy and reflects our
ongoing commitment to equal opportunity.
Modern Slavery Policy
THG has a zero-tolerance approach to modern slavery, and we are committed to acting ethically and with
integrity in all our business dealings and working relationships. THG’s Modern Slavery Policy reflects its
commitment to acting ethically and with integrity in all its business relationships and to implementing
and enforcing effective systems and controls to ensure slavery and human trafficking is not taking place
anywhere in its operations and supply chains.
Health and Safety Policy
THG takes a proactive approach to managing Health and Safety and our policy outlines the commitment
of THG and the expectations of managers, the leadership team and all colleagues.
Whistleblowing Policy
Our aim is to operate properly, responsibly and ethically whilst encouraging a free and open culture in
dealings between employees and all people with whom we engage. In order to protect our people, assets
and information, we recognise that effective and honest communication is essential if concerns regarding
breaches or failures are to be effectively dealt with and the company’s success ensured. THG whistleblowing
service is a free and professional service that enables all employees to raise their concerns confidentially.
The service is available to all THG staff, agency workers and contractors. An update on all whistleblowing
cases is provided to the Audit Committee on a quarterly basis. This update provides details on the
investigations undertaken and the outcomes of these investigations.
Anti-Bribery Policy
THG is committed to conducting its business with complete integrity and in a manner which ensures
compliance with all applicable laws and with the highest ethical standards. As a company, we use our best
endeavours to ensure that all those acting on our behalf, whether they are employees, contractors, third-party
intermediaries or agents, are aware of and share our commitment to conducting business ethically.
Our Anti-Bribery Policy summarises the Company’s position in relation to ethical standards, including bribery.
Gifts and Hospitality Policy
THG considers the offering and receipt of corporate hospitality to be a part of establishing and enhancing
good relations with our business partners, including suppliers, customers and other business partners.
However, giving or receiving hospitality or gifts which are excessive or inappropriate does not help to build
good relations and may create the impression of undue pressure or improper influence. This could damage
our reputation. In some cases, gifts or hospitality may be considered bribes under applicable Anti-Bribery
law, with consequent criminal penalties. It is therefore essential that our employees and Directors comply
with this policy whenever giving or receiving gifts or hospitality to or from the Company’s business partners,
or otherwise in the context of the Company’s business.
A review of each of the above policies is considered on an
annual basis. Following our 2023 review, a number of policies
were updated where appropriate.
appropriate audiences. This platform allows subsequent
monitoring of completion rates for the reading and acceptance
of these policies at an individual level, promoting awareness
and conformance to our policies.
An integrated training and policy platform continues to
be maintained, which facilitates the rollout of policies to
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Our people
Evolution of our Employee Value Proposition (EVP)
“2023 was a year of transformation for our people
offering. We took a data-driven approach to evaluating
our end-to-end employee experience and invested in
the areas of life at THG that matter most to our people.
I’m very proud of the progress we’ve made over the past
12 months.”
– Konrad Hill, Chief People Officer
We prioritised developing an EVP that not only attracts top
talent but retains and nurtures our existing teams. From
introducing wrap-around support for working families
to increasing compassionate leave, we made significant
investment in our people, their wellbeing and their long-term
development at THG.
Following extensive market research and a review of the
end-to-end employee experience, we identified several
opportunities to enhance our EVP in 2023.
This included:
11.7%
10
Reducing working hours from
42.5 to 37.5 for office-based
employees in the UK
Introducing 10 days
paid time off for fertility
treatments
25
6
10
Increasing annual leave
entitlement to 25 days per
year (plus birthday leave).
Introducing up to six
months full pay for
parental leave
Increasing
compassionate leave
from 3 days to 10 days
Our EVP is in its formative
stages, and we are focused
on developing it further to
nurture and develop our
colleagues whilst attracting
high-calibre talent.
Operational excellence
In 2023, we improved several people processes whilst laying
the foundations for our People team to become true strategic
partners to the business. This included introducing a fairer,
more transparent pay review and promotions process to
reward employees performing in their role with annual pay
increases, as well as a review of all people policies.
We kickstarted the implementation of our new Human
Resource Information System (HRIS). With better technology,
we will benefit from improved system governance and
compliance, operational efficiencies and accuracy in people
reporting, whilst providing a more seamless employee
experience for our global workforce.
In 2024, we will be introducing job architecture to provide the
baseline for fair and equitable job evaluation as well as a clear,
consistent and transparent framework for career development.
Talent attraction and recruitment
2023 proved to be a challenging year for the UK labour market,
but our commitment to fostering innovation and developing
a competitive EVP enabled us to continue attracting and
retaining top talent.
With a renewed focus on internal mobility, we supported 365
people to move into new roles within the Group, which has
not only strengthened our internal talent pipeline but helped to
create a resilient and agile workforce for the future.
2023 cohort identifying as female.
Click to watch THG Milestones
Equity, Diversity and Inclusion (EDI)
remained high on our agenda, influencing
our talent attraction strategy across all areas
of the Group. We continued to improve our knowledge and
understanding of accessibility and inclusion in the workplace
by working with disability inclusion charity,
Leonard Cheshire, for a second consecutive year.
We invested in our future talent, onboarding 104 graduates, 24
interns and 100 apprentices in 2023. THG Accelerator, our in-
house training programme for graduates from a non-computer
science background, continued to provide a pipeline of diverse
talent for our technology division, with just under half of the
We also worked with Talent Tap, offering work experience
to students living in social mobility cold spots, and entered
a two-year strategic partnership with Tech She Can to
improve the ratio of women in the technology industry.
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C A S E S T U D Y
THG x Tech She Can
Over the past decade, we have seen
and felt the impact of the digital
skills gap in the UK. We’ve launched
specific initiatives to address the
skills shortage, including bespoke
apprenticeship programmes and
THG Accelerator, but we recognise
that we need to do more.
That’s why we’ve partnered with
Tech She Can to inspire the next
generation of innovators and improve
the pipeline of women going into
technology roles.
Through this partnership, our people
will be able to volunteer in schools
across the UK to educate, equip
and inspire young people, especially
young girls, to study technology
subjects and choose a career in tech.
The initiative also supports our
sustainability goals:
•
•
•
To achieve 50% female
representation in our Early
Careers programmes by 2025.
To provide all THG employees
with two days volunteer leave
by 2025.
To provide 10,000 people in our
communities with tech and life
skills by 2030.
“Support from THG and our strategic partners allows us to significantly increase the scale of our work and meet
the massive demand we are seeing. We are creating a more diverse workforce for now and in the longer term,
and have inspired tens of thousands of children, especially girls, about careers in technology through our free
Tech We Can schools’ resources and experiences.”
- Dr Claire Thorne, Co-CEO at Tech She Can
Career development
Since 2004, we have prided ourselves on creating career-
defining opportunities for ambitious talent, no matter their age,
background, or experience. Two decades later, our attitude to
career development has not changed.
Over the past year, we revamped our Learning and
Development (L&D) offering, developing programmes and
creating content to meet the unique needs and ambitions
of our diverse workforce. Since launching in March 2023,
the L&D Hub has been visited just under 19,000 times. With
courses on everything from ‘Mastering Public Speaking’
and ‘Adaptable Leadership’ to ‘The Power of Influence’ and
‘Effective Delegation’, our new L&D offering aims to future-
proof our business whilst giving our employees control over
their careers at THG.
Since launching the THG Leadership and Management
Academy in October 2022, 59 employees across all areas of
the Group have completed Chartered Management Institute
(CMI) accredited qualifications that have been delivered by
industry-leading training provider, Corndel.
Following the success of the Leadership and Management
Academy, we launched the THG Data Academy in October
2023 to improve data literacy skills in our workforce and
future-proof our business. As of December 2023, 36 people are
enrolled in data apprenticeships through the Academy and are
expected to complete them in 2025.
Over the past few years, we have reaped the benefits of
upskilling our employees through apprenticeships and
have seen the positive impact it has on their personal and
professional development. That’s why in 2023 we donated
£327,780 from our apprenticeship levy to Hospice UK to enable
28 learners from the hospice sector, 86% of which identified as
women, to enrol in data apprenticeships.
2023 also saw launch of Beyond, our in-house leadership
development programme designed specifically for mid-level
managers across the Group. Combining leadership theory and
real-life examples of leadership scenarios at THG, our L&D
team have delivered over 200 hours of training for Beyond,
creating a programme that works, demonstrated by an NPS
score of 67 and an average engagement score of 4.8 out of 5.
Over the next 12 months, our L&D team will be launching two
new programmes: Emerge, for new managers who have been
in role for under six months and Inspire, for our future CEOs.
Of the 59 employees who have completed, 81% have achieved
distinction, which is not only a testament to the quality of
the training on offer through our Academy, but to our people
and their eagerness to learn and invest in their professional
development. A further 108 employees are enrolled in
leadership qualifications through the Academy and are
expected to complete in 2024.
Culture and engagement
As we reflect on the past 12 months, it’s clear that our
focus on employee engagement has had a positive impact
on our culture.
We made further investment into our ICON campus, opening
the doors of Good Living, our on-site staff shop designed and
built in-house by THG Studios. As well as being a fantastic
place to showcase our brands, launch new products and
host internal events, Good Living supports our sustainability
strategy as it creates a place for damaged or returned items
to be sold at a heavily discounted rate to employees instead
of going to landfill. Our in-house GP service also received
accreditation by the Care Quality Commission (CQC), making
our ICON campus one of the first offices in the UK to hold this
official registration.
Our community groups continued to enhance life at THG,
creating opportunities for our people to network both inside and
outside the office. To celebrate the launch of Move 30, Myprotein’s
brand campaign designed to get people active, THG Nutrition
introduced Run Club and Hike Club and organised a business-
wide sports day in partnership with Battle Cancer. THG Ingenuity
launched Ingenious, a Dragon’s Den style initiative, to encourage
innovation and collaboration. It also continued to recognise top
talent in its monthly Values Awards. THG Beauty continued to
organise brand visits, giving their teams the opportunity to meet
founders, trial new products and learn more about the beauty
industry, as well as run new starter coffee mornings and Final
Friday, an office event on the last Friday of every month.
In November, we announced ‘5 days of THG’, an
engagement initiative designed to bring our five values to
life and strengthen our employer brand. Over the course
of a week, our Senior Leaders announced five challenges
for our people to get involved in, each aligning to one
of our five values. From working in teams to propose a
new business idea to securing three months of Executive
Mentorship, this initiative successfully engaged our global
workforce and reinforced our ambitious culture.
Finally, we celebrated our meritocratic
culture in our Annual Awards, awarding
£150,000 equity to Newcomer of
the Year, Employee of the Year and
Outstanding Contribution.
Click to watch.
15.3%
Increase in our employee
engagement score
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THG in the community
In September 2023, we launched our social impact strategy,
THG in the Community, our plan for driving positive social
change and making an impact in our local communities.
The strategy is underpinned by three pillars - championing
inclusion, disrupting inequality and creating opportunities
- and revolves around three key initiatives, all of which have
been introduced to give our people an opportunity to get
involved and give back.
Corporate volunteering
From supporting a small charity with their technical expertise
to giving care packages to the homeless, we encourage
volunteering as a fantastic way for our teams to contribute
their time and skills to charitable organisations and
community initiatives.
Charity of the year
To engage our people in our social impact, we invited
them to choose our Charity of the Year and they selected
The Christie, leading experts in cancer care, research
and education. Our aim is to raise £75,000 through employee
fundraising for the charity in 2024, which will be matched
by THG at the end of the year.
THG community fund
To help live our purpose, to make an impact through digital
transformation, innovation and expertise, we have created
the THG Community Fund to help support the charities and
causes that matter most to our people.
As well as launching our social impact strategy, THG in
the Community, we have also supported several charities
throughout 2023.
61
Equity, diversity & inclusion (EDI)
We are proud to have a diverse workforce that is representative
of the society we live in.
Our employee networks continued to provide a safe space for
our people to celebrate and embrace their shared identities,
experiences and interests, and to learn from each other. From
our Black Community Network and our Pride Collective to our
Neurodivergent Forum and Parents Network, we’re committed
to ensuring everyone at THG feels comfortable bringing their
whole self to work.
51%
Identifying
as female
49%
Identifying
as male
28%
Ethnic
minority
We appointed an EDI Lead in January 2024 who will drive
our EDI strategy at Group-level and deliver the EDI targets
outlined in our 2030 sustainability strategy, THG x Planet
Earth. To find out more about our progress to date, please
visit the Sustainability Section.
2023 Gender
2023 Ethnicity
Male
Female
Not Disclosed
Total
BAME
Non BAME
Not Disclosed
Total
Board
Senior
Leadership
7
10
3
4
Other
Total
3,712
3,817
3,729
3,824
0
0
37
37
10
14
7,566
7,590
Board
Senior
Leadership
0
4
10
10
Other
Total
1,095
2,843
1,099
2,863
0
0
3,628
3,628
10
14
7,566
7,590
C A S E S T U D Y
THG Studios x Mustard Tree
Over the past 18 months, THG Studios has been
working with Manchester-based charity, Mustard
Tree, to help them fulfil their mission to combat
poverty and prevent homelessness.
December 2023 marked a key milestone in its
partnership as it announced the opening of the newly
refurbished IT suite at Mustard Tree’s Manchester
Ancoats hub. Using its expertise, THG Studios
redesigned, decorated and fully furnished the IT suite
to create a versatile space that will accommodate
technology training, events and family workshops, as
well as a community library.
The team sourced furniture, including bespoke built
desks and surplus THG office furniture, meeting the
project’s furnishing needs while minimising office
waste. This contributed towards THG’s zero waste to
landfill by 2030 target.
As well as revamping the IT suite, THG Studios has
also donated surplus items, raised more than £11,000
for the cause and donated 49 hampers to aid those in
need during the winter period.
“Giving back to the local community through Mustard Tree is a genuine privilege. We’re so inspired by their
kindness and dedication to ending poverty, that we wanted to make a meaningful difference. What better way
than to use our in-house talent and skills to create a special multi-use community space. Together, we’re not just
transforming spaces; we’re changing lives.”
- Cat Mellor, Director of Creative Operations & Solutions at THG Studios
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Sustainability
The Emissions Gap Report of 2023 (United Nations
Environment Programme, 2023) highlights that we, as a planet,
are on course for a 2.5-2.9oC rise in average temperature,
exceeding the aims of the Paris Agreement. This demonstrates
that more work is needed to close the emissions gap. THG
is rising to this challenge by committing a greater number of
resources to its sustainability agenda, ensuring that we are
equipped to find creative solutions, confirm compliance with
the ever-increasing legislative demands and make progress
with our THG x Planet Earth aspirations.
During 2023, we took an important step in our journey
towards net zero by submitting our science-based targets
to the Science Based Targets initiative (SBTi), and they
were approved in September (see page 64). In line with this
achievement, we are also publishing our Scope 3 emissions
for the first time (see page 65). Making Group wide steps like
these is important, but we must also use the wealth of creative
thinking and excellence of the people within the Group. To
do this we have begun to roll out sustainability training to
all staff (see page 82) and have launched our Sustainability
Ambassador Network (see page 82) to harness the increasing
desire of our staff to take action.
With over 97% of THG’s total carbon footprint attributed
from our Scope 3 emissions, we have also taken steps
with our supply chain to ensure that we have visibility and
influence over its emission intensity. The way we do this is our
Partnership in Action (PACT) initiative which will guide our
strategic engagement with our suppliers (see
page 67). To complement this, we have also
replaced our Ethical Code of Conduct with
our new THG Supply Chain Standards which
strengthen our approach with our supply
chain (see page 78).
Materiality assessment
The field of sustainability is constantly evolving, with new
data and innovations emerging all the time. Given this
rapidly changing environment, it is important to assess and
understand the potential challenges and opportunities, as well
as the topics most important to THG and its stakeholders. The
materiality assessment is key in providing insight into what
issues we should focus on, and where the greatest impacts lie.
This can then inform business strategies such as THG’s
Sustainability Strategy. In defining the topics within the
assessment, we talked both to internal and external
stakeholders, to understand how the most-material issues may
affect our operations in the short and long term. We can then
monitor these issues in our day-to-day operations to manage
risks and access opportunities for the future. This assessment
is scheduled for every two years and, in 2023, we undertook
a ‘light’ materiality assessment ahead of our CSRD-aligned
(Corporate Sustainability Reporting Directive) double-
materiality assessment, which we will complete in 2025.
The results from the assessment led us to strategically review
and update THG’s sustainability goals and targets, ensuring
those set in 2021 remained relevant and accurately reflect
2023’s results. We assessed all 2023 material topics on data
availability, quality and working plan. Where this was not
possible, in future we will set baselines, develop tracking
mechanisms, and create clear plans to set measurable and
operational 2025 targets.
The goal was to obtain a complete picture of the environmental
and social sustainability impacts, resulting in a set of prioritised
material issues.
1. Identify issues - Identifying topics of importance to the
business, stakeholders, and the social and environmental
impact of each topic in the full value chain.
2. Internal stakeholder inputs - Ensuring we capture the
diversity and complexity of our operations, gathering inputs
both from group and divisional business units.
3. External stakeholder inputs - To understand concerns and
expectations.
4. Analysis of material issues - Analysis of stakeholder inputs
and the environment THG operates in to establish and prioritise
THG’s material sustainability issues.
Next steps in 2024:
In anticipation of CSRD, we will develop a plan to conduct
a double-materiality analysis. These assessments cover two
different aspects: financial materiality (impact of sustainability
and climate issues on the development, position, or, financial
performance of a company); and impact materiality (what the
company does that affects people and the planet in the short,
medium and long term).
19
20
21
2023 Materiality
assessment results
l
s
r
e
d
o
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e
k
a
t
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a
n
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10
15
16
17
14
18
11
12
13
4
3
9
7
8
5
6
2
1
Medium
High
Importance to Internal Stakeholders
Highest
1. Water Stewardship
2. Sustainable Product
Innovation & Technology
3. Product Transparency &
Labelling
4. Living Wage
5. Waste
6. Nutritional Value
7. Stakeholder Engagement
8. Community Investment
9. Pollution
10. Health and Safety
11. Governance & Ethics
12. Animal Welfare & Testing
13. Talent Attraction, Retention
& Growth
14. Diversity & Inclusion
15. Sustainable Sourcing
16. Packaging Recyclability
17. Data Privacy
18. Responsible Marketing
& Advertising
19. Climate & Emissions
20. Human Rights
21. Product Safety & Quality
Protecting climate
and nature
Climate change is affecting the entire world,
causing extreme weather events and rapidly
changing climate conditions.
It is our role as a global society to limit global
warming to 1.5°C and achieve net-zero carbon
emissions by 2050. Within our Sustainability
Strategy, THG has committed to reducing
its impact on the planet; making positive
progress in understanding the source of our
carbon emissions, setting reduction targets
and developing our plan to net zero.
Target
Target Year Progress in 2023
THG commits to reduce absolute Scope 1 and 2 GHG
emissions 42% by 2030 from a 2020 base year
2030
Year on year reduction in Scope 1 and 2
Location based emissions
THG commits to reduce absolute Scope 1 and 2 GHG
emissions 97.7% by 2040 from a 2020 base year
2040
As above
THG commits to reduce absolute Scope 3 emissions 90%
by 2040 from a 2020 base year
2040
Launch of THG PACT
THG commits that 85% of its suppliers by spend covering
purchased goods and services and upstream transportation
and distribution will have science-based targets by 2027
2027
New target communicated
as part of THG PACT
Accelerate decarbonisation of supply-chain electricity through
a 100% carbon-free electricity (CFE) by 2030 target
2030
New target communicated
as part of THG PACT
Achieve 6% carbon intensity reduction YoY of supplier’s
full product carbon footprint, beyond just electricity
Powering all our geographical operations with 100%
renewable energy by 2030
2030
2030
New target communicated
as part of THG PACT
Increased to 66% compared
to 63% in 2022
All own brand key commodity1 raw materials
to be deforestation free by 2030
2030
See page 68
Science Based Targets initiative (SBTi)
Following a full greenhouse gas inventory in 2020, THG submitted its net zero targets, to the Science Based
Targets Initiative (SBTi). These targets align with the latest climate science, aimed at limiting global warming
to 1.5°C above pre-industrial levels. SBTi confirmed validation for the above near and long-term targets in
September 2023.
Work has already begun to achieve these targets by developing business roadmaps, internal working groups
and the launch of THG PACT, to work with our suppliers to tackle scope 3 emissions.
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1. Palm, soy, cocoa, and paper.
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THG’s emissions and energy reporting
Within this section, we detail our emissions and energy
calculations, fulfilling our obligations within The Companies
Act 2006 (Strategic Report and the Directors’ Report)
Regulations 2013, and the Streamlined Energy and Carbon
Reporting regulations March 2019. We report GHG
emissions in accordance with the GHG Protocol.
Group-wide Scope 1 and 2 GHG emissions - location based
GHG emissions (tonnes of CO2e)
Scope 1
Scope 2
Total
GHG Intensity per £1m revenue
Scope 3
Total
GHG Intensity per £1m revenue
Group-wide Scope 1 and 2 GHG emissions - market based
GHG emissions (tonnes of CO2e)
Scope 1
Scope 2
Total
GHG Intensity per £1m revenue
In 2023, we first published our Scope 3 emissions, covering our
baseline year of 2020 and our 2022 calculations. During 2024,
we will review our data-collection process to find efficiencies,
which will allow us to report Scope 3 emissions on the same
timeline as Scope 1 and 2 emissions. During 2024, we will also
submit our 2023 and 2021 emissions calculation to third-party
limited assurance, and publish in next year’s report.
2021
2,309
11,605
13,914
6.39
-
-
-
2020
1,946
9,584
11,530
7.14
620,518
632,047
392
2023
5,5201
12,3691
17,889
8.75
-
-
-
2023
5,520
9,0601
14,581
7.13
2022
5,194
13,238
18,432
8.23
780,0271
798,458
357
2022
5,194
9,157
14,351
6.41
Country breakdown Scope 1 and 2 GHG emissions
– location based
Country breakdown Scope 1 and 2 GHG emissions –
market based
GHG emissions (tonnes of CO2e)
2023
GHG emissions (tonnes of CO2e)
UK
Rest of the world
9,2731
UK
8,6161
Rest of the world
2023
4,1141
10,4671
Group-wide energy use
energy use (kWh)
Natural Gas
Electricity
Fleet and On-Site Fuel
Total
2023
2022
2021
2020
20,434,090
23,275,342
12,051,833
9,943,330
38,905,882
39,358,032
28,653,493
19,649,394
7,476,557
3,889,419
590,717
488,578
66,816,5301
66,522,793
41,296,043
30,081,302
GHG Intensity per £1m revenue
32,673
29,707
18,952
18,638
Country breakdown energy use
energy use (kWh)
UK
Rest of the world
Renewable vs non-renewable
% of electricity Supply
Renewable
Non-renewable
2023
2022
2021
2020
45,084,421
42,682,049
23,332,220
16,833,917
21,732,108
23,840,744
17,963,822
13,245,455
2023
66%1
34%
2022
63%
37%
1. Assured by Bureau Veritas – for further details please see our Reporting Basis document.
2. Note: Table subject to rounding
Scope 1 and 2
Scope 3
In 2023, we continued to make progress in switching our UK
and international sites to renewable-electricity contracts, and
while electricity from renewable sources grew to 66% this
year, we agreed contracts throughout the year that will start in
2024. Additionally, we have solar-panel installations at selected
THG manufacturing sites and are currently considering further
projects that will support product development capabilities
across THG Beauty, THG Nutrition, and THG Ingenuity.
We continue to identify and deploy these instruments, both in
the UK and internationally, as part of our target to power
all operations with 100% renewable energy by 2030.
Compared to our 2020 baseline, absolute Scope 1 and 2
location-based emissions have increased by 55%. However,
our revenue for the same period has also increased by more
than 26%. This has resulted in an intensity increase from 7.14
tonnes of CO2e per £ million of revenue in 2020, to 8.74 in
2023. As mentioned above, THG has been investing heavily in
renewable-energy supply, and when we compare our market-
based energy intensity for 2023 of 7.15, to the 7.14 figure of our
baseline year, we can see we are holding steady for this KPI.
We expect the increased renewable-energy supply mentioned
previously will push our percentage of renewable-electricity
supply for 2024 to approximately 95%, which would result in
our market-based emissions being back on track with our
science-based target pathway.
During 2023, we undertook ESOS audits at the UK THG
sites. We will collate the outputs of these in 2024 and make
a plan for the energy-saving opportunities we identify. As part
of this process, we will also devise energy-efficiency targets
for the UK sites. In 2024, we will also roll out automatic meter
readers (AMRs) across our UK sites. This will enable more-
efficient data collection, reduce our reliance on energy-supplier
estimations, and allow our sites to see their data in real time,
to enable them to track energy use and identify opportunities
for efficiencies.
Scope 3 contributes 97.7% of THG’s total carbon footprint
(based on 2022), with category 1 (purchased goods and
services), and category 4 (upstream transport and distribution)
accounting for 86.7% of the total emissions of Scope 3. As
noted in our Basis of Reporting, categories 9, 10, 13, 14 and
15 have been excluded from our Scope 3 calculations due
to materiality. You can find further details in this document.
Absolute Scope 3 emissions increased by 25.7% from our
2020 baseline, however, due to the increased revenue this
resulted in an emission intensity decrease of 9.4% to 348
MtCO2e/£million revenue. Within THG’s net-zero strategy and
forecast, the projected Scope 3 emissions intensity for 2022
was 337 MtCO2e/£million revenue, positioning THG slightly
behind expectations but continuing in the right direction.
Based on 2022 data (location-based)
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Partnership in action
To support our efforts of decarbonising our Scope 3 supply-
chain emissions, in December 2023, THG proudly launched
THG Partnership in Action or PACT - an initiative focused on
collaborating with suppliers to foster a culture of sustainability,
while mutually decarbonising operations. PACT seeks to
enhance transparency throughout the supply chain, and
highlights the importance of sustainable practices in today’s
business landscape.
As THG’s science-based targets were officially validated
by the SBTi in September 2023, encompassing mandatory
Scope 1, 2 and 3 carbon reductions by 2040, the collaborative
efforts of THG and its suppliers are critical to achieving net
zero by this date, recognising the importance of collective
action for meaningful impact. As part of PACT, THG aims
to provide its comprehensive sustainability strategy with key
stakeholders and suppliers to explain progress and crucially
find opportunities for collaboration.
Responsible sourcing
Nature forms an important part of the Group’s THG x
Planet Earth sustainability strategy. Deforestation and forest
degradation continues to be a central topic in the global
discourse on climate change and biodiversity. We recognise
the importance of addressing this risk and minimising our
nature footprint.
Our new target is to ensure ‘all own brand key commodity1 raw
materials to be deforestation-free by 2030’. Expanding from the
focus on palm oil and palm derivatives from last year, under the
new target, the other key commodities we have identified are
paper, cocoa, and soy.
Palm oil and derivatives
As part of the strategic review and update of our sustainability
goals and targets, following the materiality assessment, we
undertook a thorough reassessment of the key commodities
we use. As part of this review, we refined our scope so our
deforestation target focuses on offering deforestation-free
products in the areas where we can maximise our impact.
Previously, two of THG’s subsidiaries were members
of the Roundtable on Sustainable Oil (RSPO). In 2023,
we have worked to prepare to submit the whole Group
for membership in 2024. This commits the whole of THG
to sustainably sourcing palm oil for all our own brands.
Key objectives of PACT
Next steps in 2024
Streamlined communication
of data requirements:
Setting clear
supplier goals:
By developing an online supplier portal, THG aims to
establish a clear communication channel with suppliers
regarding the information necessary to measure and
monitor sustainability performance. This includes data
related to Scope 1, Scope 2, and Scope 3 emissions.
THG will set ambitious sustainability goals for its
suppliers. These goals align with the Company's
overarching commitment to reduce its environmental
impact, promote responsible business practices
and encourage positive change.
Guidance and support:
Recognising that navigating sustainability requirements
can be challenging for suppliers, THG will provide guidance
and support. The Company will work closely with suppliers
to ensure they understand these expectations and have
the necessary resources to meet sustainability goals.
THG comprehends the scale and complexity
involved in pivoting towards more-sustainable
business operations. Demonstrating our
commitment, THG has pledged to use
our expertise to help customers and
suppliers do this. PACT is uniquely
positioned to offer resources, guidance
and technical assistance to suppliers
and vendors throughout the value chain,
with the support of THG Eco capabilities.
Next steps in 2024
We will continue to work with our suppliers on
expanding PACT and collect their data to increase
the accuracy of future reports. This will allow us
to appropriately baseline our efforts and set
specific future annual Scope 3 reduction targets
across THG. With the data, we will identify
opportunities with suppliers and vendors to
decarbonise, whether it relates to their Scope 2
emissions or logistics. We will also look to launch
our supplier portal to streamline and simplify
data collection from our suppliers.
We will expand and cover further areas that could be associated
with nature risks, to make sure we have a positive impact on
biodiversity and ecosystems across our own brands. We will
measure animal derivatives and dairy data throughout 2024
and establish a baseline to determine the next stage of
our approach to using regenerative agricultural practices
throughout our supply chain.
In addition, we are also scoping the requirements for reporting
within the Taskforce for Nature Related Financial Disclosures
(TNFD) from 2025.
To provide a consistent approach to sourcing across
THG, we have developed a Group-wide Sustainable
Sourcing Framework that we will roll out during 2024.
This will act as internal guidance to ensure the traceability and
accountability for both directly and indirectly sourced key risk
commodities and animal products. The framework will also
include compliance with the 2021 EU Deforestation Regulation,
providing traceability to show that all the relevant commodities
listed in the regulation sold in, or exported from, the EU,
are deforestation-free. Independent third-party assurance
certificates and or audit reports will be required to demonstrate
full compliance.
We will gather and analyse commodity data each year to track
progress on our deforestation target, and will record, track and
monitor the relevant audit or deforestation assurance reports
to ensure compliance with the EU Deforestation Regulation.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Task Force on Climate-related
Financial Disclosures (TCFD)
This section of the report is structured to meet the
recommendations of TCFD and is split into sections for
Governance, Strategy, Risk Management, and Metrics and
Targets. THG continues to make progress on our phased
approach to reaching full alignment with the recommendations
of TCFD (as required by Listing Rules 9.8.6R and 14.3.27R).
This disclosure also meets the requirements of the Companies
Act regulations.
During 2023 the Group continued to evolve and strengthen
our approach to climate related risk, and the following sections
detail the progress we have made, how we continue to record
it, and the plans we have in place for 2024 as we work towards
full disclosure.
Governance
The Board
The Board is responsible for the overall execution of the THG x
Planet Earth strategy, which covers climate-related issues and
includes the progress toward our climate change goals and
targets. The Board also approved our Net Zero Strategy as well
as the disclosures made in the Annual Report.
Environment, social and governance (ESG) matters, including
climate change, arising from the Sustainability Committee
are communicated and updated to the Board by the Chair of
the Sustainability Committee using minutes and summarised
updates from the Sustainability Committee meetings.
The Sustainability Committee, chaired in 2023 by our Non-
Executive Director Iain McDonald, meets at least six times a
year. Sue Farr was appointed Sustainability Committee Chair
on 18 March 2024, following the announcement that Iain
McDonald would step down as a Director on 31 March 2024.
The Sustainability Committee was established to ensure that
the Group has appropriate and effective strategies, policies,
and operational controls in place to conduct its business in a
responsible manner, and to ensure it is properly accountable
for sustainability targets. Key duties include reviewing and
monitoring the Group’s systems, strategies, policies, and
targets in relation to, amongst other things, energy and carbon
management, and climate change. You can find further details
on the Committee within the Sustainability Committee Report
on pages 141 to 142.
The Board has overall responsibility for risk management
(including climate related-risks) and establishing the Group’s
risk appetite. It monitors the risk environment and reviews
the relevance and appropriateness of the principal risks
to the business. The Risk Committee supports the Board in
setting the Group’s risk appetite and ensuring that processes
are in place to identify, manage, and mitigate the Group’s
principal risks. At each meeting, the Committee reviews
the principal risks and their associated appetite targets
and metrics, to assess whether they continue to be relevant,
effective, and aligned to the achievement of our strategic
objectives, and within an acceptable tolerance for the Group.
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The Audit Committee monitors the effectiveness of the control
environment through the review of Internal Audit reports
and other assurance activity from THG Internal Audit and
consideration of relevant reporting from management and
the external auditor.
Management
To enable THG to undertake TCFD-related work, we created
a TCFD working group that consists of representatives from
Sustainability, Finance, and Risk. During this year, this evolved
to become the ESG Working Group. The role of this group is
to manage ESG horizon scanning, working with third parties
to review regulations (such as TCFD and CSRD) to devise
appropriate plans to ensure THG complies with upcoming
legislation.
The ESG working group then reports on our impacts, risks and
opportunities through two channels - the Sustainability Forum
and the Monthly Risk Update. The Sustainability Forum meets
once a month and brings together managers from relevant
business areas to review climate change and sustainability-
related topics and projects. The Forum provides a platform
for the Sustainability Team to ask managers from across the
business to overcome these barriers, and enables managers to
raise any climate change and sustainability-related issues that
may come to light. The Sustainability Forum then feeds into the
Sustainability Committee discussed above.
The Risk Team holds monthly Risk Update meetings with
key business areas to ensure the Risk Register continues to
reflect current risk exposure (you can find more details on Risk
and the Risk Register on pages 87 to 98). Within the monthly
meetings, any material risks identified in the ESG Working
Group are escalated to the Risk Team. The Risk Register is
reviewed and confirmed to be up to date. Similar Risk Updates
are held with other key business areas and escalated to the
Risk Committee as appropriate.
The Board
Sustainability
Committee
Audit
Committee
Risk
Committee
Sustainability
Forum
Risk Monthly
Update
ESG Working
Group
Strategy
Climate change is managed as one of our principal risks and is
a core consideration in business strategy and decision-making.
In 2023 THG partnered with Marsh to develop a climate
change impact modelling methodology to be ran across the
short (up to 2030), medium (2030 to 2040), and long term
(2040 and beyond) . During this process we identified areas
of materiality to THG and scoped out the analysis to be
undertaken. These are: physical risk to raw materials, physical
risk to operations, and transitional risk.
Physical risk - raw materials
One primary climate-related impact material to THG Nutrition
is how a changing climate will affect the availability of raw
materials used in our products. These climate impacts can
present risks to THG if markets we source from are likely to
experience drops in yield. Even where THG’s strategy is well
insulated from negative climate impacts, a wider decrease in
global availability is likely to affect availability and costs in our
sourcing regions. If these risks become real, it could lead to
materials becoming unavailable, or translate to an increase in
the cost of our products. A changing climate can also be a source
of opportunities, as changes in some regions may increase yield
and can present wider availability of raw materials, potentially
reducing the cost of raw materials or making them available
in regions closer to our manufacturing sites.
detailed modelling approach, to incorporate their constituent
characteristics into the climate assessment, and a comparison
to the global reality to support the identification of risks and
opportunities.
We identified six key commodities during the scoping exercise,
comprising five crops (cocoa, soybean, pea, broad bean
and oats) and whey. For the crops, we researched optimal
conditions for temperature and precipitation using relevant
academic literature, which informed the optimal yield curve
for each ingredient. For whey, we produced a bespoke model,
whereby heat stress was tied to the wet-bulb temperature
(a function of temperature and humidity), which influences
the efficiency of sweating from dairy producing livestock.
Therefore, the optimal conditions for whey yield production
were given parameters by wet-bulb temperature rather than
temperature and precipitation.
During the modelling, we used Intergovernmental Panel
on Climate Change (IPCC) Representative Concentration
Pathways (RCP scenarios – See Climate Scenario Table on
page 71), which provided different emission-intensity forecasts,
to gain a range of climate-change eventualities extending from
now to 2050 in 5, 10, 20, and 30-year time-steps. For whey,
due to limitations of the source data, we used only one RCP
scenario (4.5 – ‘Most Probable’ scenario), but applied the same
time horizons.
To gain a deeper understanding of the climate-related impacts
to THG, we devised a bespoke approach to modelling our key
ingredients within the nutrition business. THG's ingredients
are sourced from a wide range of locations, with differing
climates, resulting in different long-term risks for many different
ingredients across different product lines. This required a
The map below details some initial outputs from the modelling
work for RCP 4.5 by 2050. We chose these as the most
appropriate to map as RCP 4.5 was the only scenario we
mapped for all six raw materials. This table denotes only
expected changes in yield, and this is only one factor that
affects the availability of raw materials.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
THG risk and opportunities - yield map
Netherlands
Scenario: RCP 4.5
Year: 2050
GBR
Germany
Physical risk - operational sites
Ingredients
Whey
Cocoa
Broadbean
Oat
Pea
Soybean
Key
10% Increase or more
2% to 10% Increase
-2% to 2% change
-2% to - 10% decrease
-10% decrease or more
Canada
Lithuania
Poland
China
USA
Ivory
Coast
Cameroon
Ghana
Nigeria
As our climate changes and extreme weather events become
more common or more severe, physical assets face greater
risk from acute and chronic weather events. These events
risk disruptions to our supply chain and damage to our
assets, both of which pose financial implications. Currently,
when adopting a new site, we take site surveys, to flag
physical risks the site might be exposed to, such as flooding.
This climate-modelling work will aid us in looking at exposure
across the short, medium and long term. Our sites and assets
have a wide variety of characteristics and features that require
a bespoke approach when it comes to modelling physical risk
in a rigorous manner. Our, and our suppliers’ sites, are located
in a wide range of climates, and therefore face different risks
in the long term. Equally, we operate various types of assets
that require a more detailed modelling approach, to ensure
we can factor their characteristics appropriately into the
climate-modelling assessment.
During 2023, we worked with Marsh to design a climate-
change impact-modelling methodology whereby we
prepared asset data, selected the relevant climate scenarios,
and modelled the physical risks.
THG’s asset set consisted of key sites, both within our own
portfolio and our Tier 1 suppliers. Each asset was assessed to
identify the building type, and modelling ran across two climate
scenarios (RCP 8.5 - worst case scenario - +3.7oC and RCP
2.6 – Paris-aligned scenario - +1.0oC). The model ran across
ten-year time intervals up to 2100 and calculated the financial
cost of damage arising from climate-change-based physical
risk for every site (expressed as an annualised damage that is
a proxy for insurance risk). As opposed to the 2050 timeframe
used in the raw-materials climate modelling, we have modelled
the assets to 2100, due to the longer-term investment physical
assets represent. We ran eight major climate perils within the
model (see below).
•
Map only denotes countries that account for >5% supply for a given crop
Peril
Description
Potential Impacts of Peril
The map demonstrates that the Group’s buying strategy is
insulated from climate-related-risks, with no drops in yield
expected. There are additional factors that can affect the
availability of raw materials, in addition to growth conditions -
geopolitical and economic uncertainty, and infrastructure and
supply chain, are identified Principal Risks (see Risk section
page 87) - managed as part of the risk structure discussed
in the Governance Section above.
During 2024, THG will analyse the wider outputs from the
modelling scenarios and will disclose these in our next TCFD
report. We will also look to assess these by what we see
happening within our markets. We will also look to assess
other indirect climate-related risks, such as legislative changes or
market shifts, which can all play a part in raw-ingredient sourcing.
While the current outlook for THG has limited risk, the
scenario modelling did identify some regions that THG
does not currently source from, that are expected to see
positive yield changes under some scenarios. During 2024,
we will assess these regions to understand whether there
are untapped opportunities we can seize.
Climate
Scenario
Median Temp.
Change by 2100
Description
‘Paris-Aligned’ scenario
RCP2.6
Rapid global action occurs
to reduce emissions
‘Most probable’ scenario*
RCP4.5
Stringent global move
towards decarbonisation
• Paris-Aligned’ scenario that limits temperature rise to below 2°C
• Rapid, global move to decarbonise with aggressive climate action implemented
+1.0°C
• Likely temperature increases ranging from 0.3°C to 1.7°C
• ‘Most probable baseline’ scenario that may limit temperature rise around 2°C
• Global move towards decarbonisation with a less aggressive pace and intensity
+1.8°C
• Likely temperature increases ranging from 1.1 to 2.6°C
• RCP of choice for the bespoke dairy model
‘Moderate mitigation’ scenario
• ‘Moderate mitigation’ scenario as emissions rise but are stabilised by the end
RCP6.0
Moderate global effort to
limit reduce emissions
‘Worst-case’ scenario
RCP8.5
Climate action is not achieved
7171
of the 21st century
+2.2°C
• Moderate global effort to limit climate impacts
• Likely temperature increases ranging from 1.4°C to 3.1 °C
• ‘Worst-case’ scenario as emissions continue to rise throughout
the 21st century
+3.7°C
• Limited climate action taken by both government and businesses globally
• Likely temperature increases ranging from 2.6°C to 4.8°C
Surface Water
Flooding
Increased frequency of extreme rainfall leading to localised
flooding, particularly in more urbanised locations
Flash flooding can damage low-lying
building or infrastructure assets
Riverine
Flooding
Increased frequency and intensity of rainfall changing
the frequency and intensity of river flooding
Riverine flood can damage low-lying
building or infrastructure assets
Coastal
Inundation
Rising sea levels and higher incidence of extreme coastal
flood events
Sea water flooding due to high tides, wind, low air
pressure and waves can damage coastal land and
property
Soil
Movement
Changes in rainfall patterns and drought leading to the
growth/shrinking of land, causing subsidence
Soil contraction due to less rainfall causing
subsidence damage to structures
Extreme
Wind
Changes in wind regimes and sea surface temperatures
that have the potential to enhance wind speeds
Extreme windstorms can damage buildings
and infrastructure
Forest
Fire
Increased incidence of fire inducing weather due to
confluence of days with higher temperatures, wind speeds
and drier conditions
Flames and heat from burning vegetation
can damage buildings and infrastructure
Freeze
Thaw
Changes in the annual freeze and thaw cycles resulting
from winter periods that tend close to freezing point
Saturated building materials freeze, expand
and crack facades and structural elements
Extreme
Heat
New extremes of high temperatures, more frequent
hot days and longer-lasting heatwaves
Loss of use or failure of infrastructure,
as well as human heat stress
The outputs of this climate-modelling work were generated
towards the end of 2023. Due to this, we will publish the outputs
in our 2024 report, once we have had the opportunity to analyse
the data and take the next steps. During 2024, we will undertake a
resilience survey for sites where we have identified a material risk,
and devise plans for any mitigation measures that may be required.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Transitional risk
Transition modelling quantifies the business impacts
associated with the global economy’s transition to a lower-
carbon-intensive world. The transitioning of the global
economy carries with it a number of risks and opportunities
that can affect THG. For instance, should governments
introduce carbon taxes, this can pose a risk of increased
costs if we are slow to reduce our footprint. Equally, it can
be an opportunity if we move to net zero ahead of our
competitors and, as such, have lower operating costs. During
2023, our Net Zero GHG Targets were approved by SBTi,
helping ensure THG is resilient to policies such as carbon taxes.
We modelled using the Resilience model, provided
by the Cambridge Centre for Risk Studies, used by numerous
multinational companies in the past to assist with their TCFD
reporting. We ran modelling from 2024 to 2029 due to the
greater forecasting certainty of the shorter time horizon.
We can use the insights gained to determine and prioritise
appropriate mitigation strategies to reduce the impact of risks,
and capitalise on opportunities presented by the transition.
We separated the modelling methodology into four components:
Digital Twin, Transition Modules, Climate Scenarios, and Analysis.
1. Digital twin
A digital copy of THG is created
based on financials, products
and our carbon footprint.
3. Climate scenarios
We evaluated the impacts of the
transition modules on THG’s digital
twin for five potential climate scenarios
or 'decarbonisation pathways', which
represent potential courses by which
the global economy’s transition may
materialise in the future.
2. Transition modules
We selected modules relevant to THG’s business
model. We mapped each module to the business-
value chain and assessed how it will materialise.
We segmented the modules depending on how
the financial impact will materialise: cost impacts
and revenue impacts.
4. Analysis
Once all data was collected in the required
format, we created the digital twin in the
Resilience tool, replicating THG’s business
model, set up the relevant transition scenarios,
and ran the model to assess the financial
impact over five years and under the five
climate change scenarios.
2.a
Cost impacts
i. Liability - Litigation brought by
plaintiffs against ecommerce or
health and beauty companies for
liabilities in causing harm through
climate change.
ii. Carbon policy - Carbon costs
due to legislation enacted by
national and local governments
to price and penalise GHG emissions
– the Resilience model contains
carbon pricing for various countries,
which will measure our exposure.
iii. Technology - Additional economic
depreciation impacts and resulting
investment requirements on assets
in response to changing energy
needs.
The transition-risk modelling began in 2023
and will continue into 2024, as such no outputs
are currently available to publish in this report.
However, we will include them in future reporting.
Once the outputs are available, THG will devise
and implement any strategies required to mitigate
risks or seize opportunities that may be identified
by this modelling.
2.b
Revenue impacts
i. Market shift - Market disruption, changes in
consumer preference trends and demand projections
caused by shifts towards green products.
ii. Reputation - Market change due to a company’s
perceived action or inaction to limit climate change.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Time horizon risk timetable
Risk type
Climate risk
Potential impacts
Time horizon
Damage to physical assets caused by increased frequency
or severity of climate perils (see climate perils table)
Increased cost of repairs,
damage to stock
Physical risk
Supply chain disruption to raw material availability
Increased cost of supply
or inability to source
Litigation brought by plaintiffs against ecommerce
or health and beauty companies for their liabilities
in causing harm through climate change
Increased cost
Transition risk
Carbon costs due to legislation enacted by national and
local governments to price and penalise GHG emissions
Increased operating cost
M to L
M to L
M
M
Additional economic depreciation impacts and
resulting investment requirements on assets
in response to changing energy needs
Market change due to a company’s perceived
inaction to limit climate change
Increased capital and operating cost
M
Loss of market share and revenue
S
Market disruption, changes in consumer preference trends and
demand projections caused by shifts towards green products
Increase of market share and revenue
S
Opportunities
Market change due to a company’s perceived
action to limit climate change
Increase of market share and revenue
S
Key
S = short-term
M = medium-term
L = long-term
Mitigation and resilience
The risks in the table above represent those which we believe
are material to THG and, as such, are being modelled. We
already have measures in place to mitigate these, such as
our SBTi aligned targets (see page 64) and through our risk-
management process (see next section). Once the outputs
of the modelling have been finalised in 2024, we will begin a
process of reviewing these to understand how they align with
the reality we are seeing in the market and carry out further
assessments where required. We will combine these elements
to generate a complete picture of the potential impact.
We already have measures in place to ensure we are resilient
to the above risks. As examples we have SBTi-aligned science
based targets to ensure we are taking action to limit climate
change and protect us against emissions related carbon taxes.
We also undertake site assessments to understand the assets’
exposure to climate related events, such as flooding. Once our
modelling is complete, we will review our resilience under this
more detailed lens, and make any adjustments if they
are required.
Risk management
Climate-related risk is embedded in climate change,
environmental, and social responsibility risk which is one
of the Group’s principal risks (see further detail on page 90).
The Sustainability team, and others in the business including
Legal and Property, undertake a monthly review to identify
and assess various climate change, environmental, and
social responsibility risks. Also, during the monthly reviews,
we monitor work on mitigation and workstreams for climate
risks, with high-risk items flagged to the Risk Committee.
The impacts (financial and non-financial) and likelihood of
identified risks are scored on our Group risk-scoring matrix,
which incorporates environmental and social impacts. You
can find further information in the Risk Management section
(pages 87 to 98).
Currently, the materiality assessment, which is undertaken
every two years (including identifying and prioritising climate-
change-related risks), considers the likelihood and impact of
such risks. As outputs from the climate-modelling work are
collated, we will begin the process of updating the risk matrix
to reflect the outputs.
As part of monthly risk updates, the outputs feed into the
Group risk monthly update meetings between the Chief Risk
Officer and accountable risk leads from across the business.
High-risk items are escalated to the Risk Committee, which
meets quarterly, for comment and scrutiny. You can find further
detail in the Governance section, page 107.
All our principal risks are assigned to Executive owners.
The Executive is responsible for the overall management of
the risk, ensuring the adequacy of control and the rigour of
action plans to maintain the risk within its appetite. Principal
and emerging risks are supported, as appropriate, by in-depth
reviews. We continue to consider risks both individually and
collectively, to fully understand our risk landscape. By analysing
the correlation between risks, we can identify those that have
the potential to cause, affect, or increase another risk, and that
these are weighted appropriately. Principal risks are managed,
mitigated and monitored by their risk appetite, in line with our
Risk Management Policy, and evaluated throughout the year to
ensure they remain aligned to our strategic objectives. They are
continually reviewed by our Risk Committee, who also consider
the results of in-depth testing of key controls supporting each
principal risk.
Metrics and targets
During 2022, we submitted our science-based targets to the
SBTi, and they were approved in September 2023. You can
find the targets we have set ourselves for GHG emissions on
page 64. This report features our first publication of our Scope
3 emissions (see page 65), and during 2024 we will look at
process improvements that will allow us to report Scope 3
emissions on the same timeline as Scopes 1 and 2.
Climate-related targets are split across the three pillars of our
THG x Planet Earth Strategy: Climate and nature (see page
64), Strengthening our supply chain and circularity (see page
78) and Empowering people and communities (see page 81).
You can find details on these targets and our progress on the
appropriate pages.
THG will come in scope of CSRD and EU Taxonomy
regulations, and is already preparing for these, and we
will begin to report metrics and targets on the material
elements of these as they are developed.
During 2023, we carried out ESOS audits to provide us with an
overview of potential areas that can improve the energy efficiency
of the Group. During 2024, we will review the opportunities
identified in these reports to develop a plan, and energy-
efficiency targets to aid in our transition to net zero.
THG also uses climate-related mitigation goals as part of the
remuneration considerations for the Board, with 2023 having
targets set for our net zero transition.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS TCFD Recommendation
Governance
a) Describe the Board’s oversight of
climate-related risks and opportunities.
b) Describe management’s role in assessing and
managing climate-related risks and opportunities.
Strategy
Disclosure Level
Next Steps
Full
Full
During 2024 we will continue to progress through
the remaining climate-scenario modelling. Once this
is complete, we will communicate the outputs internally
and develop any additional mitigation responses needed.
We will continue to meet our climate-reporting obligations.
We expect to comply fully with TCFD disclosures in
2024’s report.
a) Describe the climate-related risks and opportunities
the organisation has identified over the short, medium,
and long term.
Partial
b) Describe the impact of climate-related risks and opportunities
on the organisation’s businesses, strategy, and financial planning.
Partial
During 2024, the final impact outputs of the climate-scenario
modelling will be translated into financial outputs. They
will then be refined and scored to enable prioritisation
of the identified risks and opportunities in line with how
other impacts are managed within THG. Beyond 2024,
we will continue our work to meet our SBTi-aligned net
zero target as well as our other climate-related KPIs.
c) Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Risk Management
a) Describe the organisation’s processes for identifying
and assessing climate-related risks.
b) Describe the organisation’s processes for
managing climate-related risks.
c) Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management.
Metrics and Targets
a) Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in line
with its strategy and risk management process.
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.
c) Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets.
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Partial
Partial
Partial
Full
Partial
Partial
Partial
In 2024, we will communicate the impacts identified
during the climate modelling and perform in-depth
reviews where material impacts are identified.
Where there are material risks, these will feed into the
current risk-management process, where an Executive
owner will be assigned and a mitigation plan
developed. Where a material opportunity is identified,
an Executive owner will be assigned and we will
develop a strategy for exploring this opportunity.
2023 saw the first publication of our Scope 3 emissions.
We are currently reporting on our Scope 3 one year behind
our Scope 1 and 2, due to the extensive data collection
and calculation process. During 2024, we will build on this
progress by finding ways to streamline our Scope 3 reporting
process, so we can align it with Scope 1 and 2 reporting.
Once we have generated the climate-modelling impacts,
assigned an owner and developed mitigation and
realisation plans, we will also develop and report on
relevant metrics and targets for the material impacts.
Strengthening our
supply chain & circularity
Target
Target Year
Progress in 2023
All suppliers to commit to THG’s Supply Chain Standards.
2025
Achieved – see Supply Chain Standards below
100% of Tier 1 and Tier 2 suppliers complete Sedex audit
2025
Continued engagement
THG will disclose 100% whistleblowing reports YoY
on the number of cases raised and closed within
our agreed service level agreement (SLA).
Year on year
0 reports in 2023
100% of own brand packaging to be recyclable and/or reusable.
2025
91% of our packing is recyclable
100% of THG operations and Tier 1 suppliers to
achieve Zero Waste across its operations.
2030
Aligned with TRUE – see page 79
Social responsibility and Sedex
Supply chain standards
Collaboration with our supply chain goes beyond our
commitments to reducing our carbon emissions together.
In 2023 we continued to build our supply chain outreach
programme, developing our Social Responsibility Strategy,
redefining our supplier tiering approach and updating our
internal guidance to follow a geographical risk-based
approach to categorise our suppliers.
We continue to use the Sedex ethical audit platform to track
suppliers’ compliance with the social responsibility standards
set within our enhanced Supply Chain Standards. We now
require suppliers to complete four pillar Sedex Members
Ethical Trade Audits (SMETA) covering labour standards,
health and safety, environmental impacts, and business ethics.
We have defined clear 'guardrails' for addressing areas that
fall below the required standards in health and safety risks,
workers' rights and environmental risks. Through the Sedex
platform, we can see any non-compliance issues identified
in the supplier audits, and can monitor progress towards
corrective action plans to ensure issues are remediated
and future risks mitigated.
In 2023, there were no zero tolerance violations identified
in the high-risk supplier audits and any significant findings
were addressed as described above.
As part of the roll out of PACT, we undertook a review of our
Ethical Code of Conduct. This review found that while our
Ethical Code of Conduct was a good starting point, its scope
was not wide enough. In response to this, we created a new
set of Supply Chain Standards to reaffirm our stance on issues
such as human rights, and to detail our expectations for our
supply chain on setting science-based
targets and disclosing emissions data. The
Supply Chain Standards is also part of our
contracts and, as such, compliance is a
binding part of doing business with us.
Next steps in 2024
We will work with our suppliers to complete SMETA
audits, in line with our geographical risk-based approach,
and are building the resources needed to make strong
progress in 2024.
We are continuing to build a supplier portal to gather
more information about our suppliers, their sustainability
commitments, and the current performance across
a range of metrics. We will expand supplier engagement
as we evolve our PACT initiative and continue our
collaborative approach to achieving our Sustainability
Strategy.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Zero waste
We are focused on maintaining the momentum we have
established on waste diversion. During 2023, we aligned
our Zero Waste Programme to Total Resource Use and
Efficiency (TRUE) and set a 2030 goal for achieving
certification. Certification will formalise our auditing, record-
keeping, and training processes, ensuring we stay consistent
in reducing, reusing, and recycling waste at all our facilities,
and maintaining our commitment to sharing lessons across
the organisation.
Manufacturing products in house gives us an edge in being
able to respond to ever-changing customer and environmental
demands, by enabling us to innovate and improve products
quickly. However, manufacturing operations produce waste,
and it is important for us to take responsibility for the waste
we produce. We aim to apply the waste hierarchy and circular
economy principles in our day-to-day operations, to reduce
the amount of waste produced across the business, reduce
costs, and ensure any waste does not end up in landfill. With
our commitment for all THG operations to achieve Zero Waste
across their operations by 2030, we are finding innovative
solutions to tackle and meet our circular economy target.
Unused Myprotein
repurposed into fish feed
In 2023, we were awarded Circular Transition of the Year
at the Environmental Finance Sustainable Company Awards,
in recognition of an initiative that was championed by THG’s
facilities, operations and sustainability teams’ partnership
with MYGroup, which was to turn unused Myprotein products
into fish feed. The process includes:
• starting with batches being blended with other upcycled
ingredients, creating a perfectly balanced diet of proteins,
fats, carbohydrates, vitamins and minerals
• using combined Myprotein ingredients and upcycled
materials to produce a sustainable fish-feed pellet
Together, we have successfully prevented 156 tonnes of
our nutrition supplements from going to waste in this way.
We have also reused 31 tonnes of cardboard packaging,
while 28 tonnes of plastic have gone into making children’s
furniture and buckets. Winning the EMEA Circular Transition
of the Year Award also demonstrates how we are working
towards our strategic goal of 'Strengthening its supply
chain and circularity’. We know we need to prevent waste
from being generated, and therefore have plans to reduce
the volumes being generated. We will be working closely
with the business to identify opportunities for further
reduction and mitigating factors.
Circular economy –
wider initiatives
Coffee grounds to activewear
Our exploration for further circular economy solutions has
yielded some exciting and innovative ideas that champion
the power of industrial symbiosis to eliminate what would
otherwise have been sent to landfill or incineration. Through
partnerships in our supply chain, we have been able to take
valuable resources to recycle into products. This includes our
latest circular capsule collection launch, made from recycled
coffee grounds. The post-consumer coffee grounds are
upcycled into S.Café® material using their innovative nano coffee
ground technology. Rich in nitrogen, the natural properties of
coffee grounds are perfect for sportswear and activewear, given
its ability to absorb and neutralise odours.
The odours are then released when the fabric is exposed
to sunlight, or water, helping to reduce the need for
frequent washing.
From grain to protein powder
Our circularity efforts extend to our protein
powders, with the launch of our first upcycled
plant-based protein powder in the UK. Made
from spent brewers' grains, our Myvegan
Plant Protein Superblend is a nutrient-rich
protein drink that includes all nine essential
amino acids. Traditionally spent brewers
grains are made into animal feed or sent
to landfill. However, through this process
we ensure the spent grains, made from
barley and rice, are upcycled, retaining
the greatest resource value through
human consumption.
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WRAP – Plastic Pact
To facilitate our progress towards our packaging goals,
and to hold ourselves accountable publicly, THG remained
a member of the UK Plastics Pact (UKPP) in 2023.
UKPP members account for two thirds of all consumer
packaging used in the UK. UKPP brings together
governments, businesses, NGOs, and citizens to move
away from a linear plastics economy towards a circular
system. In June 2023, THG submitted its first report to the
UKPP, summarising the recyclability of the plastic packaging
we placed on the UK market in 2022, which is included
in UKPP’s 2022 annual progress report. We will continue
to report annually its recyclability and recycled content
progress, and efforts across our packaging, to UKPP.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Empowering people and communities
Target
Target Year
Progress in 2023
Achieve 50% female representation and 20% ethnic
minority representation across the entire workforce
Achieve 50% female representation and 15%
ethnic minority on the Board and senior leaders
2030
2030
Female representation = 51%
Ethnic minority = 28%
Female representation = 29%
Ethnic minority = 17%
Eliminate gender and ethnicity pay gaps across
all THG businesses
2030
Median gender pay gap for 2022 was 5.4%
Pay all employees and agency workers
a Real Living Wage (RLW) by 2030
Ethnicity pay gap reporting will commence
once new HR system is operational
2030
67% of UK* staff being paid RLW or greater
Achieve at least 15% improvement in employee
engagement score
2025
15.3% improvement from 2022 baseline
Two days volunteering per year for every THG employee
2025
Formally launched in 2024
Provide 10,000 people in the community with
technology and life skills training
2030
To design, develop, and maintain a THG Privacy Information
Management System (PIMS) aligned to ISO27701 by end of 2025
2025
*excluding agency staff
Formally launched in 2024 - To find out
more about our social impact strategy and
THG in the Community, please page 61.
On track. Completed mapping the controls and
have started integrating ISO27701 requirements
into ISO27001 documentation. This will be
further aligned as THG transitions to the
new ISO27001/2022 standard in 2025
Entire workforce
Board and senior leaders
During 2023, we have achieved our goal to have 50% female
and 20% ethnic minority representation across the business.
We believe this demonstrates that THG is a workplace where
everyone feels welcome, and continues to be representative
of our diverse society. While we have hit the headline goal,
these numbers are not static, and we must continue to ensure
these are consistent and our culture remains inclusive. Gender
and ethnicity disclosures rightly continue to be a voluntary
disclosure by staff, and our 2023 data demonstrated that our
gender disclosure rate is 99.5% but our ethnicity disclosure
rate was 52.2%. During 2024, we will be moving to a new
People Portal, and we will use this transition as an opportunity
to launch an awareness campaign on how we use this data
and its importance, with the aim of reducing the number
of 'unknown' designations.
During 2023 we saw our ethnic minority representation
across the Board and senior leaders increase to 17%, achieving
our target of at least 15% representation by 2030. This is a great
start and in the future we aim to continue on this pathway and
meet the other half of this goal, which is to achieve 50% female
representation across this group.
Board &
senior leaders
Entire workforce
2023
2022
Female representation
29%
28%
Ethnic minority representation
17%
15%
Female representation
51%
50%
Ethnic minority representation
28%
20%
Median hourly pay gap
THG vs UK Average
20.0%
15.0%
10.0%
5.0%
0.0%
14.9%
7.4%
15.4%
5.4%
April 2020
April 2021
THG
UK Average
In 2023, we built on the initiatives we introduced in 2022, and
expanded the roll out of training modules across the business,
providing training to all employees on key sustainability topics.
In 2023, we implemented five planned modules, with a final
one set for introduction in 2024.
While the training sessions provided a knowledge base,
we also need to provide a mechanism for employees to raise
observations and encourage further engagement in the topic.
To facilitate this, we launched the Sustainability Ambassador
Network in 2023. The network consists of volunteers from
across the business who come together to plan sustainability-
related projects and events. This enables us to identify
opportunities throughout THG to reduce our impact on the
planet. This group will help promote greater engagement in
our sustainability agenda across the business.
Gender and ethnicity pay gap
We report on our gender pay gap via the UK government
gender pay gap service every year. In our last report (2022),
we reported that our pay gap had decreased from 7.4% to
5.4%, contrary to the increase in pay gap seen as an average
across the UK. This has resulted in THG outperforming the
UK average by 10%.
Real Living Wage
During 2023, we saw a decrease in staff receiving a Real
Living Wage, from 70% in 2022 to 66.8% in 2023. This metric
currently covers UK-based staff directly employed by THG.
In 2024 we are exploring options to close this gap.
Employee engagement
In 2023, we ran our latest employee engagement survey.
The response rate increased by 16% from 2022, demonstrating
greater engagement across the business for this agenda.
In 2023, THG achieved a score of 603.1 points, leading to us
being accredited as 'One to Watch' by the Best Companies
accreditation system. This score represents an 80 point
increase from 2022, which is a 15.3% improvement, resulting
in us achieving our employee engagement goal a year ahead
of schedule.
Volunteering
THG has committed to providing two days of volunteering
leave for every THG employee. During 2023, we made
progress in two areas to facilitate and track this ambition.
The first was to devise roadmaps across Ingenuity, Beauty
and Nutrition to lay the foundations for engagement with
our businesses. The second was to assess ways to track our
progress. Our current People Portal lacks the functionality to
allow for comprehensive reporting, and the roll out of our new
system alongside a temporary manual operation will enable
the roll out of volunteering days in 2024.
Sustainability training
Our sustainability targets cannot be achieved by our
sustainability team alone, it requires the entire business
to work together and truly make sustainability a key part
of our culture. To help establish it throughout the business,
we introduced sustainability as part of our induction
session for new starters in 2022. This platform provided
an opportunity to introduce THG x Planet Earth, explain
our goals and encourage engagement.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS THG Eco
THG Eco is defined by the purpose-led proposition of
simplifying sustainability, offering a full suite of services
to power an organisation’s wider ESG targets. Born from
the initial complexity of implementing a sustainability
reporting solution, THG Eco breaks down the task of
facing an opaque and misunderstood market to provide
practical and transparent solutions. These solutions
support our customers, partners and suppliers with
sustainability, while simultaneously supporting THG’s
progress towards wider sustainability targets.
Building on the foundations of previous years, in 2023 THG Eco
continued to support customers within their carbon-reporting
workstreams. Our services cover: life-cycle assessments,
Scope 1, 2, and 3 reporting, setting of science-based targets,
and value chain mitigation solutions, from renewable energy
certificates, avoidance and removal carbon trading, and tree-
planting options. During 2023, we achieved a 100% success
rate in SBTi submissions.
Climate
Sustainable
Logistics
Compliance
Carbon Strategies
& Accounting
Life Cycle Assessments
Science-Based
Targets & SBTi
More Trees
Renewable Energy
Certificates
Carbon Trading
Waste Management
Sustainable Aviation
Fuel (SAF)
Sustainable Maritime
Fuel (SMF)
Packaging Compliance
Waste Electrical &
Electronic Equipment
(WEEE)
Book & Claim Platform
Batteries Compliance
International Compliance
Energy Saving Opportunity
Scheme (ESOS)
Streamlined Energy
& Carbon Reporting
(SECR)
Going into 2024, we’re excited to be exploring and implementing
new sustainability propositions to better serve our customers beyond
carbon reporting, and into the pillars of sustainable logistics and
compliance. These areas are fundamental in the transition to net
zero, a fully sustainable supply chain, and upholding operational
governance, all of which align with the European Green Deal,
cementing these as cornerstones of future ESG strategies.
We’ve also re-developed our More Trees platform, expanding the range
of projects for our corporate and individual users to choose from when
supporting local communities, ecosystems and biodiversity. These
include agroforestry in Rwanda, mangrove planting in Kenya, and
wildfire restoration and kelp farming in Canada, also contributing
to ten UN Sustainability Development Goals. More Trees continues
to support customers with their planting options, using corporate
initiatives such as eco delivery and gift with purchase, alongside
planting trees for social engagement, team interaction and, simply,
just for fun.
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Projects
British Columbia
Kelp
Species: Giant, Bull and Sugar Kelp
0.006t CO2 captured/tree
Wildfire restoration
Tree species: 5+ including
Douglas-Fir and Lodgepole Pine
2.58t CO2 captured/tree
West & Nippes D't of Haiti
Agroforestry trees
Seasons: July-August
1.527t CO2 captured/tree
Mombasa, Kenya
Mangrove trees
Seasons: All year
1.81t CO2 captured/tree
East Rwanda
Agroforestry trees
Tree species: 10+ including
Avocado, Alder, Spanish Cedar
1.6t CO2 captured/tree
Tanzania
Mangrove & agroforestry trees
Tree species: including Mango
Avocado, Fig and Lemon
1.5t CO2 captured/tree
Trainline case study
Our recent work with Trainline represents how
businesses look to THG Eco for support with existing
greenhouse gas reporting, but also at how to tackle
the next areas of focus in their sustainability work.
emissions fall within the footprint of the transportation
companies themselves. And, being a tech-led platform,
its biggest environmental impact stems from digital-
advertising emissions.
Trainline is Europe’s most downloaded rail app,
providing users with tickets from over 270 operators
in 40 different countries. Alongside promoting travel
choices that are better for the environment, Trainline
aspired to become one of the first 100 UK-based
companies with SBTi-approved net-zero targets –
leading them to work with THG Eco.
This partnership involved a comprehensive package,
including a Scope 1, 2, and 3 GHG assessment and
report aligned with ISO 14064-1, a net-zero reduction
strategy, carbon offsetting, SECR and CDP reporting,
and the achievement of validated science-based
emissions-reduction targets.
Interestingly, train emissions don’t form part of Trainline’s
carbon footprint – Trainline facilitates train travel through
its online booking system, meaning its emissions
are linked to its digital operations, whereas the train
To address this, THG Eco pioneered an impressions-led
calculation method that departed from conventional
spend-based data, to provide Trainline with detailed
insights into emissions factors such as device type,
session times, user country and electricity consumption.
With THG Eco’s support, Trainline achieved SBTi
approval of their net-zero targets on the first submission,
with ambitious emissions-reduction goals in line with
the latest climate science. The partnership also opens
the door for a decarbonisation strategy integrated with
marketing goals, with optimised ad-targeting to reduce
digital-advertising emissions while maximising ROI.
The success story continues, with THG Eco working on
innovative projects with Trainline that will streamline future
GHG reporting and help users make environmentally
informed travel choices, showcasing Trainline as a
trailblazer in addressing business emissions, while
providing inspiration for similar tech-based businesses.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Health & safety
THG takes a proactive approach to managing health and
safety, and our policy outlines the commitment of THG and
the expectations of managers, the leadership team and all
colleagues. Our approach is for 'Zero Harm, Zero Compromise',
to achieve a lost-time injury-free state.
In 2023, our Group-wide lost-time accident-frequency rate
rose from 0.121 to 0.33*. This increase was due to the planned
extension both of our accident data-reporting criteria and our
Group-wide standardisation of accident reporting and analysis.
This extension of our accident data-reporting criteria has
led to further improvements in our understanding of human
operational performance and processes-based failures,
allowing us to move from sole reliance on lagging H&S
performance indicators, to the inclusion of leading
indicators for 2024.
Injury Free*
We aspire towards a zero-injury state across the THG portfolio through the use of good
governance and oversight, HSE leadership, leading indicators, education and influence.
Raise levels of HSE
competency and
upskill the workforce.
Ongoing evaluation
and enhancement of
our ways of working -
technical and process.
Develop the process for
identifying opportunities
for joined up govern-
ance and oversight.
Focus on health
and wellbeing.
Continue our
cultural orientation
improvements.
Why?
Why?
Why?
Why?
Why?
To drive and improve standards
of HSE worker competence,
supervision capability and
leadership across projects.
We have the most effective
and efficient risk management
systems to enhance ways of
working and raise levels of
hazard awareness.
Good governance adds value.
It is lean, transparent and
ethical, focused on tackling
operational challenges in
ways that complement the
big picture vision.
Promoting wellbeing at work
can help create a positive
working environment that helps
minimise stress levels, improv-
ing employee satisfaction and
engagement, ultimately helping
our employees thrive at work.
Improve capability to rapidly
engage the workforce who
can have a short exposure
time to our injury free culture
standards & values.
Transformation: All THG suppliers
have a common workplace standard
for ensuring an injury-free environment.
Transformation:
Contractor passports
scheme put into place.
A safe, mentally healthy, and culturally
engaged workforce and supply chain
supported by the best technology and
ways of working to deliver HSE governance
and Leadership that is injury free
Transformation: THG suite of
onboarding tools developed
to introduce suppliers into
our injury-free HSE culture.
Transformation:
All THG projects have
common health and
wellbeing programs.
Transformation: THG has an .MS in
place - supporting HSE leadership,
culture and risk management.
Transformation: Q1 24 to
Q2 25 HSE Compliance
& Licence To Operate
conditions met.
Transformation: Mature
Supervisor HSE competencies
and leadership skills.
Transformation: All THG
businesses have common
work planning and risk
management processes.
Transformation: All THG
businesses have common
HSE leading performance
dashboard metrics to
ensure lean and HOP
HSE management.
HSE Compliance & License To Operate
Increasing operational
efficiency.
Enhancing employee
satisfaction and retention.
Driving business growth
and competitive advantage.
Why?
Boosting company reputation
and trust compliance plays
a crucial role in enhancing
a company’s reputation and
establishing trust among
stakeholders.
Compliance is vital in
mitigating potential legal
and financial risks for
organisations.
Using this newly gathered data in 2023, we have also developed
an updated lost-time injury-free strategy , focusing first on
continuing to strengthen our common ways of working initiative
to five key focus areas of: workforce H&S upskilling, evaluation
and enhancement of our ways of working, opportunities for
improving governance and oversight, focus on occupational
health and wellbeing, and continuing our cultural improvements.
Our successes and highlights in 2023
were in line with our 2022 annual report
stated ambitions in the areas of:
Leadership, recruitment and upskilling
UK occupational health provision
Continued recruitment of Health, Safety and Environment
(HSE) professionals for both the UK and overseas.
The mobilisation of our new
occupational health service provider.
Ongoing training and professional development
of the HSE team.
Transfer of overall leadership of the HSE function
to the Chief Risk Officer.
Alongside implementation of our injury-free strategy, the HSE
team will work with internal stakeholders to design and build
an Integrated Management System (IMS) that combines our
ISO management systems.
Our 2024 HSE targets are set out below:
Health, Safety and Environment 2024 KPI's
Health and Safety
(2024 v 2023)
Leading Indicators
Environmental
(New KPI Measurements 2024 v 2023)
Leading Indicator
No. of Safety Audits, Schedule v Completed
(100% of all sites v 5%*)
No. of sites completed Aspects / Impacts
(100% of all sites v 5%*)
Lagging Indicators
Annual (All Accident) Frequency Rate
(1.69) New baseline metric
No. of Environmental Compliance audits
(100% of all sites v 0%)
Lagging Indicator
Annual Lost Time Accident rate (AFR)
(0.11) New baseline metric
No. of actual Discharges to Surface Water
(0 v 0)
07D RIDDOR Injuries
(11 v 16*)
No. of actual Statutory Nuisance Complaints
(0 v 2)
Immediately reportable RIDDOR Injuries
(11 v 16*)
No of accidental spillages (Discharge to Ground)
(0 v 0)
Health and safety remains a principal risk, and the Board
has overall responsibility for risk management. However, as
reflected in its Terms of Reference, the Risk Committee has
been delegated responsibility for the monitoring and
review of the processes and procedures in place to manage
or mitigate principal risks, including health and safety.
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*using the UK 100,000 multiplier
*In 2024 we will begin reporting our H&S statistics using a 200,000 multiplier and 1 million hours to allow better comparison of our performance
with our global work sector peers.
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Risk management and
informed decision-making
THG’s Enterprise Risk Management (ERM) Framework is
designed to protect the interests of key stakeholders and
enhance the quality of decision-making, enabling the effective
management of our strategic, operational, commercial,
compliance, change and emerging risks. The THG ERM
Framework is integral to our day-to-day activities, helping
us achieve our strategic objectives through risk-informed
decision-making and managing risk effectively.
In 2023, we continued the evolution of our approach
to risk management, reviewing our principal risks,
further establishing our risk-management processes,
and refreshing our risk appetite statement and metrics.
Figure 1 – ERM framework
Assess /
analyse
Monitor /
track
Identify /
understand
Respond /
measure
Report /
communicate
Risk appetite and risk tolerances
How we assess risks
Our risk appetite reflects our ability and desire to accept
a certain level of risk to be able to achieve our strategy.
As eliminating risk is often not feasible or desirable, we use
our Group risk appetite statement, parameters and metrics
to inform decisions on the appropriate level of risk that we
can take or seek to achieve the Group’s strategic objectives.
We measure all identified risks using the pre-determined
matrix set out in our Risk Management Policy. We monitor
principal risks using risk appetite targets and supporting
measures, metrics and tolerances, which we evaluate
throughout the year to ensure they remain aligned with
our strategic objectives, and within an acceptable risk
tolerance for the Group.
How we identify risks
Our risk identification process follows an enterprise wide
“top-down, bottom-up” approach, which seeks to identify:
• principal risks that may affect our ability to achieve our
strategic objectives, or pace by which we achieve them,
with these risks representing the risks that most threaten
achieving our strategy;
• strategic, commercial, operational, compliance and change
risks (‘business risks’) that occur across all our businesses.
These risks are those that pose the greatest threat to the
success of business activities across the Group and may
also feed into our principal risks.
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We assess all identified risks for likelihood and impact using
a range of financial and non-financial criteria aligned to the Group
and its businesses. The assessment considers risk before any
mitigations (inherent risk) and after current mitigations (residual
risk). The key benefit of assessing inherent risk is to highlight
potential risk exposure in the event of control or mitigation failure.
How we manage risks
Eliminating risk is often not feasible or desirable, so we use risk
appetite to make informed decisions on the appropriate level
of risk we can take to support the achievement of our strategic
objectives. Our overall risk appetite is approved and measured
by the Board.
All our principal risks are assigned to Executive owners and
appropriate senior leaders. They are responsible for the overall
management of the risk, ensuring the adequacy of control
and the strength of action plans to maintain the risk within the
agreed appetite. Principal and emerging risks are supported,
as appropriate, by in-depth reviews.
Business risks are identified and recorded functionally and
on an individual business basis, being owned and managed
within their respective management teams and reviewed
regularly.
Risk reporting and monitoring
Executive
We continue to consider risks both individually and collectively
to fully understand our risk landscape. By analysing the
correlation between risks, we can identify those that have
the potential to cause, affect, or increase another risk and that
these are weighted appropriately. This exercise informs our
scenario analysis, particularly in scenarios used in the Viability
Statement, see pages 97 to 98.
Business risks are consolidated and escalated in
accordance with our Risk Management Policy, and via
the ERM Framework, to the Risk Committee. This provides
organisational visibility to emerging, strategic, commercial,
operational, financial and compliance risks. The risks are
considered in the context of our existing principal risks,
driving accountability and action.
Principal risks are managed, mitigated and monitored against
risk appetite, in line with our Risk Management Policy, and
evaluated throughout the year to ensure they remain aligned
to our strategic objectives. They are continually reviewed by
our Risk Committee, who also consider the results of ‘in depth’
testing of key controls supporting each principal risk.
Risk governance
THG operates a formal risk governance structure ensuring
risk management is at the forefront of decision-making and
creating clear points of escalation.
Board
The Board has overall responsibility for risk management
and establishing the Group’s risk appetite. It monitors the
risk environment and reviews the relevance and
appropriateness of the principal risks to the business.
Risk committee
The Risk Committee supports the Board in setting the
Group’s risk appetite and ensuring processes are in place
to identify, manage and mitigate the Group’s principal risks.
At each meeting, the Committee reviews the principal risks,
their associated appetite targets and metrics, and the Group-
wide risk-appetite metrics, to assess whether they continue
to be relevant, effective and aligned to our strategic objectives,
and within an acceptable tolerance for the Group.
The Executive is responsible for the stewardship of the
risk management approach. It develops the strategy and
oversees the related operational plans that help to manage
the associated risks. Each principal risk is also owned by
a member of the Executive.
Chief risk officer
The Chief Risk Officer (CRO) is responsible for the second
and third-line functions, namely THG Risk and THG Internal
Audit. The CRO is responsible for facilitating and implementing
the risk-management approach across THG, including the
provision of appropriate risk reporting for the Risk Committee,
Audit Committee and the Executive. The CRO attends the Audit
and Risk Committee meetings and regularly meets respective
Chairs outside these meetings. The CRO is also responsible for
insurance, business continuity, business integrity, health and
safety, facilities, security and loss prevention.
THG risk
THG Risk supports the effective operation of the ERM
Framework and Governance Structure, including the
management of the principal risks and providing guidance,
support and challenge to the business to manage risk effectively.
THG internal audit
THG Internal Audit is led by the Head of Internal Audit, and its
purpose and activities are set out in the Internal Audit section
of the Audit Committee Report on pages 123 to 128.
Figure 2 - Three lines
governance model
1st Line
All employees – Own & operate
2nd Line
Further information on the Committee’s activity in 2023 is set
out in the Risk Committee Report on pages 129 to 131.
THG risk – Guide, support and challenge
Audit committee
3rd Line
The Audit Committee monitors the effectiveness of the control
environment by reviewing Internal Audit reports and other
assurance activity from THG Internal Audit and considering
relevant reporting from management and the External Auditor.
Further information on the Committee’s activity in 2023 is set
out in the Audit Committee Report on pages 123 to 128.
THG internal audit – Independent assurance
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A changing risk landscape
Principal risks
Our Three Lines Governance Model defines clear roles
and responsibilities for all employees and establishes
accountability for actions and decisions. It also describes
how appropriate oversight, challenge and assurance are
provided over business activities, including the ethical
conduct of our operations.
The first line represents all employees, giving them responsibility
for managing their own risks and the subsequent deployment
of risk strategies, thus supporting risk-based decision-making.
They hold the necessary skills and knowledge to help with
identifying and managing risks within our business.
The second line consists of THG Risk, who are responsible
for setting the framework, policies, tools and techniques to
enable the first line to manage risk effectively. As part of this
role, THG Risk is on hand to provide support and guidance
to ensure we maintain a consistent approach to managing risk.
THG Risk also manages the corporate insurance programme,
ensuring placements are appropriate for the risk exposure and
in line with our risk appetite. The Board recognises that culture
underpins the effectiveness of THG’s risk management and
the operation of an effective control environment.
The current macroeconomic and geopolitical environment has
created a more challenging risk landscape for all organisations.
Our ERM Framework equips us to monitor, understand and
respond to external uncertainties and events. The external
risk landscape is reviewed regularly to ensure we respond
proactively to external events with potentially material impacts.
The continued war in Ukraine has further heightened
uncertainty for our employees, customers and investors.
In response, we have continued to evaluate and monitor the
risks, determined potential impacts to our business and made
changes to our business operations, supporting processes and
resilience. Through our risk-governance channels, we continue
to monitor the possible wider effects of the conflict.
We also consider, evaluate and monitor our wider approach
to resilience and business continuity planning, including the
conflict in Palestine and supply-chain routes globally, and
subsequent impacts on employees, business operations
and customers.
The third line is THG Internal Audit, whose main role is to
assess whether the first two lines are operating effectively.
Emerging risks
Risk management and internal controls
The Board retains overall responsibility for setting Group risk
appetite and for risk management and internal control systems.
In accordance with principles M, N and O of the UK Corporate
Governance Code 2018 (the Code), in addition to Paragraph 58
of the Financial Reporting Council (FRC) guidance (Section 6),
the Board is responsible for reviewing the effectiveness of the risk
management and internal control systems and confirms that:
• there is an ongoing process for identifying, evaluating and
managing the emerging risks faced by the Company
• the systems have developed throughout the year under
review and up to the date of the approval of the Annual
Report and Accounts
• they are regularly reviewed by the Board
• the systems accord with the FRC guidance on risk
management, internal control and related financial
and business reporting.
There were no instances of significant control failing
or weakness during the year.
You can read more about our risk management and internal
control systems in our Strategic Report on pages 87 to 98
and the associated work of the Audit and Risk Committees
on pages 123 to 131.
We define emerging risks as uncertainties arising from trends
that are on our radar, but whose full extent and associated
implications are not yet completely clear, identified through
both the principal and operational risk processes. Additionally,
emerging risks are identified, prioritised and understood via an
‘identify’, ‘filter and prioritise’, and ‘investigate and understand’
approach. This approach utilises internal and external sources,
including business leaders and subject matter experts, across
a selection of categories to identify potential emerging risks
and opportunities.
By the very nature of emerging risks, it is common to identify
false leads, conflicting signals and messages. Therefore, this
approach filters and prioritises them, to support management
in helping to decide which emerging risks should be
investigated further.
To address the false leads and conflicting signals and
messages often identified from emerging risks we filter
and prioritise in order to support management in deciding
what may need investigating further.
Once appropriate emerging risks have been identified, they are
then investigated and understood by an allocated Emerging
Risk Owner, working with THG Risk. The work to understand
emerging risks will vary depending on the risk but ranges from
basic qualitative assessment to modelling and quantitative
assessment.
The Board and the Risk Committee carry out a robust and
ongoing assessment of the principal and emerging risks
facing the Group throughout the year. The assessment
considers those risks that would threaten THG’s business
model, future performance, solvency or liquidity, and ensures
that the risks continue to align with our business strategy.
The effective management of strategic, financial, compliance
and operational risks is critical to the success of THG’s
strategy. THG continually assesses its principal risks
to ensure continued and enhanced alignment.
In reviewing the principal risks, we have evolved ‘Strategic
Optionality’ to reflect the importance of ensuring the strategic
decisions we make to continually transform our portfolio
of businesses are both optimal and sufficiently visible
and understood.
We manage principal risks in line with our risk management
policy and approach. In 2023, we monitored and reported on
15 principal risks. As detailed in the following table, a range
of measures are in place, or are being deployed or developed,
to manage and mitigate our principal risks.
Risk heat map
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1. Cyber security & data privacy
2. Talent
3. Culture
4. Ingenuity ecommerce platform
5. Third-party reliance
6. Innovation
7. Customer needs
8. Infrastructure and supply chain
9. Climate change, environmental
and social responsibility
10. Health and safety
11. Legal and regulatory compliance
12 Product quality and safety
13. Strategic optionality
14. Geopolitical and economic uncertainty
15 Liquidity and funding
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Financial / Non-Financial Impact
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Key
Group strategic priorities
Build category leadership
positions in beauty, health
and wellness
Make Ingenuity the partner
of choice for commerce
transformation and
sustainability solutions
Deliver engaging content
and innovative products to
our global customer base
Accelerate growth
in core international
territories, leveraging
our local infrastructure
Drive positive change
with our stakeholders,
through an entrepreneurial,
values-led culture
Direction of travel
Increasing
Decreasing
Stable
New Risk
Principal Risk
Risk context
Management and mitigation
Cyber security
and data privacy
Failure to responsibly collect,
process and store data, together
with not ensuring an appropriate
standard of cyber security across
the business, will result in us not
meeting our regulatory obligations,
and losing the trust of our
stakeholders.
Link to strategic priorities
Information is the life blood of
a digital company – protecting
the confidentiality, integrity and
accessibility of this data is critical
for a data-driven business. Failure to
do so can have significant financial
and regulatory consequences in the
General Data Protection Regulation
(GDPR) era. In addition, we also
need to use our data efficiently
and effectively to improve business
performance.
Executive Owner(s):
Chief Technology Officer,
General Counsel
Direction of Travel -
Talent
If we fail to attract at pace, and/or
retain employees with the critical
skills, capabilities, motivation and
capacity we need to deliver on our
strategy, we will not be successful.
Link to strategic priorities
Executive Owner(s):
Chief People Officer
Direction of Travel -
As we continue to evolve our
priorities, the capacity, knowledge
and leadership skills we need
will continue to change. THG will
not only need to attract the talent
and experience required to help
navigate this change, we will also
need to provide an environment
where employees can develop
to meet these new expectations;
an environment where everyone
can perform at their very best.
By continuing to empower
employees and leaders to make
decisions, be innovative and be
bold in meeting our commitments,
THG will continue to create an
attractive working environment,
increasing employee engagement
and aligning high-performing
teams.
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The Chief Security Officer oversees information security.
The Global Privacy Officer oversees information protection.
Multi-year cyber security programmes supporting continuous
improvement and reducing cyber risk across technology,
business processes and culture.
Continuously improving data-protection strategy, framework
and methodology, ongoing data mapping and impact-
assessment procedures.
Formally deployed information-security risk-management
methodology to provide objective reviews and monitoring
of our assets and systems.
All employees are required to undertake awareness training
for information management and data protection, with a focus
on the GDPR requirements.
Internal and external validation of compliance through auditing,
including risk-based audits of suppliers and other third parties
(see ‘‘Third-party reliance’’ risk).
Reviews of our remuneration requirements and mechanisms
designed to incentivise and drive the right behaviour, with a
focus on ensuring fair and equitable pay across the business.
Focused development of key staff, through specific learning and
development tools, to ensure they create the environment that
enables colleagues to thrive and perform at their very best.
Refinement of job architectures to create greater visibility
of critical talent and support our succession planning.
Review of the employee benefits landscape to ensure alignment
with our employee demographic.
Benchmarking of existing employee remuneration using
third-party industry data aligned to overall employee value
proposition.
Principal Risk
Risk context
Management and mitigation
Culture
If we do not fully empower
our employees and enable
accountability in line with our
shared values and behaviours,
we will be challenged to create
a culture that meets THG’s
business ambitions.
Link to strategic priorities
Executive Owner(s):
Chief People Officer
Direction of Travel -
Ingenuity ecommerce
platform
Failure to maintain a reliable,
scalable and secure live services
environment will impact our ability
to deliver the consistent and
resilient experience expected
by our customers.
Link to strategic priorities
Executive Owner(s):
Chief Technology Officer,
CEO - Ingenuity
Direction of Travel -
The development of a shared
behavioural competency that
encourages employees to always
do the right thing, put customers
at the heart of the business and
drive innovation, is critical in THG’s
success. Devolution of decision-
making, and the acceptance of
accountability for decisions, is
fundamental to our continued
development and to sustain
our shared values and behaviours.
THG also supports a culture of
empowered leaders that develops
ideas and solutions, and provides
employees with a safe environment,
allowing for honest disclosures
and discussions. Such a trusting
and empowering environment can
help sustain innovation, enhance
customer success and drive the
engagement that results
in increased market share.
As a digital company, we continue
to focus on scaling our current and
future Ingenuity platform services
environment in an agile and speedy
manner, to ensure the delivery
of a consistent and robust cloud
platform and associated digital
network. THG must provide the
right infrastructure and operations
for all our customer products, a
hosting platform, together with
the governance, to ensure optimal
service availability, performance,
security protection and restoration
(if required).
Third-party reliance
Failure to embed our partners as
an integral and aligned part of our
infrastructure, fulfilment and go-to-
market strategy in a timely manner
will result in us failing to deliver the
right capabilities and experiences
to our customers.
Link to strategic priorities
THG places reliance on third-party
providers to support the delivery
of our services to our customers.
Any interruption in these services
or relationships could have
a profound impact on THG’s
reputation in the market and
could result in significant financial
liabilities and losses.
Executive Owner(s):
Chief Procurement Officer
Direction of Travel -
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Integration of values and behaviours into all our core colleague
priorities including objectives, performance management,
appraisals, talent attraction, selection and development,
leadership development and onboarding.
Continued investment in diversity & inclusion including
investment in personnel, development of new initiatives and
integration into all recruitment to further improve the employee
journey and workplace culture, to ensure we are a truly
inclusive workplace.
Training, including anti-bribery and corruption training,
which continues to be delivered across our business units
based on assessed risk.
Whistleblowing and incident-reporting mechanisms in-place
to allow issues to be formally reported, investigated and
monitored.
Investment and implementation of new technology, systems
and processes to improve the overall employee journey,
enhance engagement and the quality of feedback and
subsequent actions.
Refresh of employee handbook and people policy suite,
with employee-wide education on key amendments.
Ongoing investment in our Ingenuity platform services
to ensure the THG estate evolves to support the business
as it scales and changes.
Continuous enhancement of our data-protection strategy,
framework and methodology, ongoing data mapping and
impact-assessment procedures.
Robust change-management processes and incident-
management protocols adhered to for all products and services.
Service-level objectives including uptime, responsiveness,
and mean time to repair objectives.
Comprehensive disaster-recovery and business-continuity
plans in place across the Group.
Other key mitigation factors detailed under “Cyber security
and data privacy” risk.
Dual sourcing for most supply categories and in all business
units, reducing dependencies on sole suppliers.
Ongoing development of global site standards and monitoring
to ensure adequate standards are maintained in the supply
chain as far as possible, applicable both in-house and with
third-party sites.
Assurance on our key third-party suppliers and service
providers through internal and external compliance auditing.
Business continuity strategies include an assessment
of potential third-party impacts.
Aligned to the Climate Change, Environmental and Social
Responsibility Strategy, review of all existing key raw-material
suppliers to assess and mitigate any potential impact of various
global-warming scenarios.
Investment and improvement in technology to support
our identification and management of critical suppliers
and improving the contract management lifecycle.
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Principal Risk
Risk context
Management and mitigation
Principal Risk
Risk context
Management and mitigation
Innovation
If we fail to identify and leverage
emerging technologies, and
invest in modern practices and
supporting tools, methods and
infrastructure in a timely manner,
we will not meet the needs of
our customers or our commercial
goals.
Link to strategic priorities
We must be able to rapidly
deploy new innovations to
our infrastructure, systems
and customers by introducing
technologies, services, or new
ways of working. Innovation
requires us to address how we
transform across our employees,
processes and technology, and
how we differentiate and achieve
excellence and efficiencies.
Executive Owner(s):
Chief Operating Officer
Chief Technology Officer
Direction of Travel -
Customer needs
If we fail to anticipate, understand
and deliver against the capabilities
and experiences our current and
future customers need in a timely
manner, they will find alternative
providers.
Link to strategic priorities
Executive Owner(s):
Chief Marketing Officer,
Chief Experience Officer,
CEO Ingenuity
Direction of Travel -
As THG continues to grow its
business and brand, an
understanding of how to
continually attract new customers
while retaining our existing
customers is essential. This requires
a deep and continuous flow of
insights supported by processes
and systems. By understanding
the needs of our customers, THG
will continue to differentiate itself
from competitors, build compelling
value propositions and offers, use
key drivers to identify opportunities,
decrease churn and generate
revenue more effectively.
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Strategic investments, alliances and partnerships in our
fulfilment infrastructure, driving and delivering strategic
programmes to edge ahead of external fulfilment providers
by digitalising stock-ownership solutions, to become more
streamlined in multi-tenanted facilities, selling the same
products and digitalising supplier non-conformance challenges
with auto-billing functionality, and capturing evidence
automatically.
Adding alternative automated solutions to the network, to stay
ahead of the ever-developing robotic innovations, creating
easier-to-move physical locations and re-engineering designs
as client and operational needs arise.
A fully vertically integrated business model, with full control
over new product development, branding and design capabilities,
which significantly reduces development timelines.
Collaboration with partners to complement and enable
accelerated innovation.
Innovation informed through demand insights, consumer data
and feedback from our global retail customer base.
Use of customer activity and churn data, to understand their
appetite for product offerings.
Continuous Net Promoter Score (NPS) surveying allows THG
to identify customer challenges rapidly, and respond in a timely
manner to emerging trends.
Developments in ecommerce trends are monitored to keep
abreast of the latest developments and innovations.
Use of technology and data to be more targeted and strategic
in how we gain new customers and maximise the loyalty and
life-time value of existing customers.
Managed international customer service - 24/7 customer
service for a global audience across live chat, calls, email
and social.
Highly competent buyers and merchandisers are adept at
interpreting and acquiring desirable brands.
Customer service levels and complaints are monitored, and
internet sites are reviewed for customer opinion.
Investment in logistics, fulfilment, delivery, marketing, brand
and customer experience to keep our customer appeal.
Infrastructure and
supply chain
If we fail to scale our infrastructure,
systems and wider supply chain
at pace, whilst maintaining service
levels, it will impact our ability to
meet demand, attract customers
and support territorial expansion.
Link to strategic priorities
Executive Owner(s):
Chief Operating Officer
Direction of Travel -
World-class infrastructure and
supply chain from source to
customer is fundamental to the
exacting service levels we seek
to provide to businesses and
customers alike. Our infrastructure
must be robust, slick and secure
and ensure the THG service
offering is second to none.
The risk is compounded by
demands for incremental
functionality and the need
to deploy this across a larger
footprint.
We invest in our people, partners,
technology and communities to
give individuals, businesses, and
our planet the opportunity to thrive.
Our vision is to act as a force for
good in leaving the world a better
place than we found it.
If we do not act on climate change,
associated governmental actions
and energy transition could disrupt
our operations and increase our
costs.
Climate change,
environmental and
social responsibility
Failure to achieve our
sustainability-related aims,
objectives and obligations will
impact our ability to deliver
our Sustainability Strategy and
result in us failing to meet our
regulatory obligations and public
commitments, losing the trust of
our stakeholders.
Link to strategic priorities
Executive Owner(s):
Chief Sustainability Officer
Direction of Travel -
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Operational Excellence team delivering strategic programmes
to ensure all aspects of the THG estate achieve operational
excellence, seamless integration, conform to a unified standard
and evolve to support the business as it scales and changes.
Capex Committee oversees THG’s Capital Projects team to
support and monitor transformation programmes, including
management of programme risks and dependencies.
THG Risk is involved in these steering groups to ensure
the cross-functional execution of infrastructure projects is
successful and reduce the risk that projects do not achieve
their desired outcomes on time, or fail to maximise the
expected benefits.
Comprehensive disaster-recovery and business-continuity
plans in place across the Group.
Continuous monitoring of supply-chain activity and news
through advanced web-scraping functionality.
Continuous monitoring and forecasting of demand and
availability to adjust intake accordingly.
Multiple delivery methods, routes, ports and carrier strategies
to minimise the risk of disruptions.
Extensive and up-to-date knowledge of supplier base to ensure
we can scale our supply chain appropriately and quickly.
Sustainability is integral to the group ethos, with a team,
headed at an Executive level, to focus on creating more
sustainable products and supply-chain operations and
reducing environmental impact.
Multiple workstreams designed to respond to specific risks and
opportunities as part of our Sustainability Strategy.
Sustainability data and reporting platform that allows us to
comply with regulations and measure performance towards
targets.
Governance structures, such as the internal ESG Working
Group, ensure there is adequate and regular oversight, with
additional independent oversight from the Sustainability
Committee.
A series of sustainability training modules are being rolled
out to all employees. In addition, all new starters undertake
sustainability inductions as part of their onboarding.
Oversight from our team of sustainability experts.
Climate-impact modelling in line with TCFD recommendations
to identify and manage the climate related risks and
opportunities THG is exposed to.
External third-party assurance of our operational energy and
emissions data.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Principal Risk
Risk context
Management and mitigation
Principal Risk
Risk context
Management and mitigation
Health and safety is of paramount
importance, and THG must
provide a safe environment for all
stakeholders.
Failure to implement and monitor
stringent health and safety
procedures and policies across all
parts of the business could lead to
accidents or site-related incidents,
resulting in loss of life or serious
injury to employees, subcontractors,
visitors, customers or members of
the public.
Our global footprint and evolving
infrastructure further compound
this risk.
We continue to operate in a global
market with numerous legal and
regulatory requirements. Remaining
aware of changing regulation, and
ensuring compliance, is key to
ensuring we protect THG and
our customers and partners.
Health and safety
Failure to implement and
monitor appropriate policies
and procedures and support a
continually improving safety culture
across all parts of the business
could lead to accidents or incidents
resulting in loss of life or serious
injury.
Link to strategic priorities
Executive Owner(s):
Chief Risk Officer
Direction of Travel -
Legal and regulatory
compliance
Failure to anticipate, understand
and implement our legal and
regulatory requirements, will
result in us failing to meet our
obligations, impacting our ability
to deliver our strategy and losing
the trust of our stakeholders.
Link to strategic priorities
Executive Owner(s):
General Counsel
Direction of Travel -
Product safety
and quality
Ensuring the ongoing quality and
safety of our product portfolio is vital
for our brands and our reputation.
The quality and safety of the
products within our portfolio are
at risk of becoming compromised
at any stage in the supply chain if
we fail to adequately monitor the
associated processes.
Failure to manufacture and
provide safe, compliant and
quality products to our consumers,
may prevent them from making
informed purchasing decisions,
compromise their safety and result
in us failing to meet our obligations,
negatively impacting our brand
and reputation.
Link to strategic priorities
Executive Owner(s):
Chief Operating Officer
Direction of Travel -
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Refresh and roll-out of our Global HSE Strategy and roadmaps
aligned to risk and risk appetite.
Regular and documented engagement and training across the Group.
Clear, effective and regular communications of all relevant safety
updates.
Ongoing updates to our risk assessments and safe systems of work
by trained and competent staff to raise awareness and knowledge.
Continued investment in the HSE team to ensure appropriate
guidance, challenge and support for the business.
Ongoing monitoring of culture and regular reviews of compliance
with relevant safety regulations, policies and procedures.
Oversight by the Board and regular review of safety reports
and safety performance.
Compliance teams with reporting lines to Chief Risk Officer
and Deputy General Counsel.
Defined risk-appetite metrics and key risk indicators which
are monitored and updated at each Risk Committee.
Emerging risk processes, including horizon-scanning,
to anticipate potential changes in the legal and regulatory
landscape.
Legal and regulatory compliance reviews are an established
part of the annual assurance plans provided by our third line
of defence.
See “Cyber security and data privacy” for related regulatory
compliance mitigations.
Product safety and quality is established in our processes and
controls, from product design to customer.
Rigorous testing and regularly monitoring performance
indicators that support improvement activities.
External certification and auditing of key suppliers and other
third parties consistent with our own standards and risk appetite.
Regular monitoring and quality controls over material received to
ensure that it meets THG product safety and quality standards.
Activation of incident management teams in the event of an
incident relating to the safety of our consumers or the quality
of our products.
Oversight from our extensive team of product quality, regulatory
compliance and technical experts across each of the markets
we operate in.
Strategic optionality
Failure to ensure our strategic
decisions and transformation
of our portfolio of businesses are
optimal and sufficiently visible and
understood, may limit our ability to
maximise returns and value for our
shareholders.
Link to strategic priorities
As part of the continued maturing
of our business and to support
our ongoing growth and strategic
aims, we ensure our corporate
structure continues to evolve to
support strategic decisions in a way
that maximises returns and value
creation for our shareholders. We
must also ensure these decisions
are both optimal for now and the
future and sufficiently visible and
understood.
Executive Owner(s):
Group Commercial Director
Direction of Travel -
Geopolitical and
economic uncertainty
Failure to anticipate, understand
and successfully respond to
changes in geopolitical and
economic uncertainty on a timely
basis may impact our ability to
meet our strategy.
Link to strategic priorities
Adverse changes to economic
conditions could affect one or more
countries and result in reduced
customer spending, higher interest
rates, adverse inflation in our cost
base, adverse FX movements and
limited debt refinancing options.
All the above could negatively affect
our operating cashflow.
Executive Owner(s):
Chief Financial Officer
Direction of Travel -
Liquidity and funding
Failure to adequately manage our
cash, debt and overall liquidity
and funding requirements over
the short, medium and long term,
could negatively impact our ability
to deliver our strategy.
Link to strategic priorities
Executive Owner(s):
Chief Financial Officer
Direction of Travel -
Our ability to generate and manage
our cash, control expenditure
and other expenses underpins
our ability to repay debt and fund
working capital investment.
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Opportunities to optimise and streamline our portfolio
are continuously monitored.
Opportunities to generate and realise value from our assets
are assessed on an ongoing basis.
Acquisition and disposal activity is driven by a portfolio
strategy with a clear, defined evaluation process.
Resources are prioritised towards the areas of our portfolio
and markets that have the greatest potential.
Diverse product portfolio and geographic reach that mitigates
our exposure to any localised risks and uncertainties.
Adaptable portfolio of existing products and an ability to
develop new products that suit consumers’ and customers’
changing needs when economic conditions change.
An ability to respond to the inflationary pressures on both
inputs and product pricing.
Currency and interest rate hedging arrangements in line
with the Group’s Treasury Policy.
Regular reforecasting of business results and cash flows,
and rebalancing of investment priorities where necessary.
Financial resilience and liquidity with significant cash on hand
at year-end and our undrawn revolving credit facilities.
Treasury operations are managed and monitored in line with
a Board-approved Treasury Policy.
Maintenance of cash reserves and equivalents, together with
access to undrawn revolving credit facilities.
Close monitoring and stress-testing of projected cash, debt
capacity and overall liquidity, including sensitivity analysis,
to assess the impact of the changing economic environment.
Through our Profit Improvement and Capex Committees, there
is ongoing scrutiny and challenge of discretionary expenditure
and capital spending.
Broader working capital management to continually improve
cash flow and reduce reliance on bank facilities, while meeting
our risk-appetite metrics.
Frequent engagement and dialogue with the market and rating
agencies.
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96
Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Assessment of the going concern assumption
Viability statement
Stress tests
Assessment of viability
The overall financial performance of the business has
remained robust with a strong liquidity position maintained
throughout the year. As at the balance sheet date, the Group
had a total of £170 million in an undrawn Revolving credit
facility (“RCF”), along with £416 million readily available
cash held on the balance sheet. In March 2024, the Group
successfully completed the extension of the RCF facility which
was due to expire in December 2024. The facility will remain at
the current level of £170m until December 2024. Following this,
an extension of 17 months has been agreed for £150m,
with a new maturity date of May 2026.
The Directors have voluntarily adopted the UK Corporate
Governance Code, in which the Directors are required to
issue a Viability Statement declaring whether they believe
the Group is able to continue to operate and meet its liabilities
for the period to December 2026, taking into account its
current position and principal risks. The Directors assessed
the prospects of the Group by reference to its current financial
position, its recent and historical financial performance, its
forecasts for future performance, its business model (pages
13 to 14), strategy (pages 9 to 12) and its principal risks and
mitigating factors (pages 90 to 96).
Net debt at 31 December 2023 was £563 million (31 December
2022: £515 million), with net debt of £218 million (31 December
2022: £181 million) before the inclusion of IFRS 16 lease
liabilities that mature over a period of up to 25 years.
The Group holds a €600 million seven-year loan facility
agreement due to mature in December 2026, alongside a £156
million banking facility expiring in October 2025, which was
secured in 2022 by the Group’s existing lenders, ranking pari
passu with the existing facility. While there are no financial
covenants attached to the €600 million or £156 million loan
facilities, the covenants attached to the RCF are linked to gross
debt leverage, and become effective when the facility is drawn
upon. This covenant requires the Group to maintain the ratio
of gross debt over adjusted EBITDA to below 7.60, which is
reviewed regularly, although as noted the facility is not drawn
down. This facility is not forecast to be drawn in the future period.
The going concern assessment period is the twelve months
from the date of this report to 30 April 2025. In order to satisfy
the going concern assumption, the Directors of the Group
review its Budget periodically, which is revisited and revised
as appropriate in response to evolving market conditions.
The Directors have considered the Budget and forecast
prepared through to 30 April 2025.
Refer to the Viability statement for further information on the
stress test scenarios that have been applied to the Group’s
forecast.
Going concern statement
As a result of the analysis performed, including potential severe
but plausible scenarios, the Board believes that the Group is
able to adequately manage its financing and principal risks
and that the Group will be able to operate within the level of
its facilities and meet the required covenants for the going
concern assessment period. Based on the above activity, the
Directors are satisfied that it is appropriate to prepare the
financial statements of the Group on a going concern basis.
Viability assessment period
In considering the viability of the Group, the Directors felt
that an appropriate period of time was the three-year period
between 31 December 2023 to December 2026 over which to
assess the Group’s prospects. This is consistent with Group’s
business model and strategic planning period approved by the
Board. A roll forward from the three year assessment period is
performed for the purposes of impairment.
The Group has applied financial modelling to the assessment
of going concern and viability to assess the base case and
apply stress testing.
The base case
The Group’s strategic planning cycle includes an annual
Budget process, which is reviewed by the Board. This planning
process involves modelling under a series of assumptions.
Severe but plausible downside scenarios were also modelled
setting out impacts of a combination of the principal risks, as
well as a reverse stress test to identify what would be required
to either breach covenants or run out of liquidity. This process
is led by the Group CFO and Deputy Group CFO along with
the Board and Chair and CEO providing further direction to
align strategic initiatives. Forecasts have been prepared on a
divisional level. The Directors of the Group review its Budget
periodically, which is revisited and revised as appropriate in
response to evolving market conditions.
In considering the Group’s financial position the Directors
have considered:
• Expected future growth of trading businesses;
• The committed and expected pipeline of its Ingenuity
business;
• Margins expected to be achieved in the future; and
• Wider market and industry specific factors.
There is sufficient liquidity throughout the forecast period in
respect of the base case. This is before any mitigating actions
which could be implemented by management and excludes
any drawdown of the RCF facility.
Several stress test scenarios have been applied to the Group’s
forecast, including but not limited to:
• THG Beauty revenue declines by 10%;
• THG Nutrition gross profit margin declines by 2%; and
• Below budgeted contract wins in Ingenuity Commerce of 10%.
In making the Viability Statement, the Board, supported by the
Audit and Risk Committees, carried out a robust assessment
of the Group’s viability, principal risks and uncertainties facing
THG for the next three years, as described on pages 90 to 96,
which could impact the business model taking into account:
A severe but plausible downside modelled the impact of all
scenarios above occurring simultaneously.
Factor
From this scenario, the Directors have assessed two key
metrics to ensure that the Group has the ability to continue to
trade, alongside complying with its current banking facilities.
• Cash headroom: The Group’s forecast shows material cash
headroom, that management are confident give the Group
the ability to continue to trade and capitalise on market
opportunities as they develop; and
Stress test scenarios involving a depression in margin within
Nutrition and a below revenue performance within Ingenuity
Commerce and Beauty has been run together to show
an unlikely but plausible worst case scenario including an
assessment of the Group’s longer-term prospects. We anticipate
that these scenarios would include any further uncertainties that
may come from the impact of the current macroeconomic with
high inflation and various global recessions.
• Leverage (defined as gross debt / adjusted EBITDA). If the
Link to principal risks
Group was to draw upon its currently undrawn RCF, it would
be required to maintain a leverage ratio of less than 7.60
times. The forecasts reviewed suggest that while the facility
is not required, if it were there would be enough headroom
to satisfy this covenant.
The Director’s note that while the wider global economy
is suffering as a result of high inflation and various global
recessions, the Group has a number of mitigating actions
available to it such as reducing stock levels, new customer
marketing investment and investment in the platform which
are not factored in to the scenario above but would provide
additional cash headroom in the event of a further declining
sales and depressed margins.
Reverse stress test
A reverse stress test was modelled to identify the point at
which liquidity is exhausted. The model would have to see a
significant decline in revenue and margins compared with the
stress test set out above. Such a scenario, and the sequence
of events which could lead to it, is considered to be extremely
remote. Whilst the occurrence of one or more of the principal
risks has the potential to affect future performance, none of
them are considered likely either individually or collectively to
give rise to a trading deterioration of the magnitude indicated
by the reverse stress testing and to threaten the viability of the
Group over the assessment period.
Note associated potential impacts were considered within the
following principal risks review: Cyber security & data privacy;
Third-party reliance; Talent; Infrastructure and supply chain;
Ingenuity ecommerce platform; Customer needs; Innovation;
Legal and regulatory compliance; Liquidity and funding;
Geopolitical and economic uncertainty; Strategic optionality;
Culture; and Climate change, environmental
and social responsibility.
The worst case scenario outlined above did not include any
mitigating actions available. There are a number of actions
that management would take to protect working capital and
strengthen the balance sheet if any of the scenarios outlined
above were encountered. These include deferring non-
essential capex and increased cost control.
Based upon the assessment of the sensitivity built into the
scenarios tested, the Directors confirm that they have a
reasonable expectation that the Group will be able to continue
in operation to meet its liabilities as they fall due over the
period, up until December 2026. This includes the repayment
in full of the Term Loan A banking facility (£131m outstanding
at 31 December 2023) and includes an expectation that the
Term Loan B and revolving credit facilities will be successfully
refinanced.
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98
Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Directors’ Report
Directors’ Report disclosures
The Directors present their report, together with the audited
consolidated financial statements of the Company, for the
financial year ended 31 December 2023. In accordance with
section 414C(11) of the Companies Act, the Company has
chosen to provide disclosures and information in relation to a
number of matters which are covered elsewhere in this Annual
Report. These matters, together with those required under The
Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013, are cross-
referenced in the table which follows and, together, form part
of this Directors’ Report.
The Corporate Governance Report, contained on pages 107
to 122, is incorporated by reference into this Directors’ Report.
Information
Section in the Annual Report
Page(s)
Risk management (including principal and emerging risks)
Strategic Report
Pages 87 to 98
Going concern statement
Post balance sheet events
Strategic Report
Directors’ Report
Future developments of the Company
Strategic Report
Page 97
Page 106
Throughout the
Strategic Report
Pages 3 to 106
Greenhouse gas emissions
Strategic Report
Pages 63 to 66
Directors’ biographies
Corporate Governance Report
Pages 111 to 114
Corporate governance arrangements
Corporate Governance Report
Pages 107 to 122
Directors’ conflicts of interest
Corporate Governance Report
Page 118
Directors
Share capital
Biographies of those Directors who were in office at 31
December 2023, and remain in office as at the date of this
Directors’ Report, are contained in the Corporate Governance
Report on pages 111 to 114. All of these Directors held office
throughout the whole of 2023 with the exception of Sue Farr,
who was appointed on 24 April 2023, and Helen Jones, who
was appointed on 21 June 2023. Further, on 24 January 2023
NED Damian Sanders was appointed to the role of CFO and
John Gallemore, the incumbent CFO, was appointed to the role
of COO. Iain McDonald also served as a NED during 2023 but
stood down from the Board on 31 March 2024.
All Directors in office as at the date of this Directors’ Report will
offer themselves for election or re-election (as appropriate) by
Shareholders at the AGM.
Directors’ interests
Details of Directors’ beneficial and non-beneficial interests in
the Shares are detailed in the Directors’ Remuneration Report
on page 159. No share awards were granted to Executive
Directors under the Company’s share schemes during the
2023 reporting period.
Qualifying third party indemnification
and insurance
Pursuant to the Articles of Association and their service
contracts/letters of appointment (as appropriate), Directors
benefited from qualifying third party indemnity provisions for
the purposes of section 236 of the Companies Act throughout
2023 and up to the date of this Directors’ Report. The Company
also maintained Directors’ and Officers’ Liability Insurance
throughout 2023.
Subject to the Companies Act and the Articles of Association,
but without prejudice to the rights attached to any existing
Share, any Share may be issued with, or have attached to it,
such rights or restrictions as the Company may decide by
ordinary resolution or, if no such resolution is in effect, as the
Board may decide so far as the resolution does not make
specific provision. No such resolution is currently in effect.
Purchase of own Ordinary Shares
At the 2023 AGM the Company was granted authority by its
Shareholders to purchase up to 10% of its ordinary issued
share capital, in accordance with the Articles of Association.
No Shares were bought back under this authority during the
2023 financial year or in the period from 1 January 2024 to the
date of this Directors’ Report. This buyback authority will expire
at the conclusion of the AGM, when the Directors intend to
propose the authority be renewed.
Allotment of Shares
Under the Companies Act, the Directors may only allot Shares
if authorised to do so by Shareholders in a general meeting.
The Directors were granted authority by Shareholders to allot
securities in the Company up to an aggregate nominal amount
of £4,841,671.38 and to allot securities, without the application
of pre-emption rights, up to a nominal amount of £726,250.70
and a further £726,250.70 in connection with an acquisition
or specified capital investment of a kind contemplated by
the Pre-Emption Group’s updated Statement of Principles on
Disapplying Pre-Emption Rights. In connection with both
authorities, the Directors were also granted authority to allot up
to a further nominal amount of £145,250.14 for the purposes of
a follow-on offer (as such term is described in the Pre-Emption
Group’s updated Statement of Principles on Disapplying
Pre-Emption Rights).
Related Party Transactions
Financial Statements
Pages 213 to 215
Appointment and replacement of Directors
Statement of engagement with employees
Strategic Report
Pages 47 to 54
Statement of engagement with suppliers, customers and
others in a business relationship with the Company
Strategic Report
Pages 47 to 54
The rules for appointing and replacing Directors are set out in
the Articles of Association. Directors can be appointed by the
Board or by ordinary resolution of the Company. A Director can
be removed from office by the Company passing an ordinary
resolution or by notice being given by all other Directors.
These authorities apply until the conclusion of the AGM
when the Company will seek Shareholder approval to renew
them, with detailed explanatory notes included within the
Notice of Meeting.
Articles of Association
Annual General Meeting
Powers of the Directors
In accordance with the Companies Act, the Articles of
Association may only be amended by special resolution at a
general meeting of Shareholders. The Articles of Association
are available on the Company’s website at:
https://www.thg.com/investor-relations/key-governance-
documents
The AGM will be held at The Bowdon Rooms, The Firs,
Bowdon, Altrincham WA14 2TQ on 24 June 2024 at 2.00 p.m..
The Notice of Meeting, together with explanatory notes, will
be sent to Shareholders on or around the time of this Annual
Report.
The Directors may exercise all the powers of the Company
subject to the provisions of the relevant legislation, the Articles
of Association and any directions given by the Company in a
general meeting.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Share structure
Rights and obligations attaching to Shares
The Company has a Standard Listing on the London Stock Exchange and is the holding company of the Group. The Company
has nine share classes, as set out in the table below, and as at 31 December 2023 the Shares in issue were as follows:
The rights attaching to the Shares, as detailed within the
Articles of Association, are set out below.
Share class
Number of Shares
Percentage of Company’s fully
diluted issued share capital
Allotted, called up and fully paid Ordinary Shares
1,299,700,302
88.36
Allotted, issued and partly paid D1 Shares
Allotted, called up and fully paid D2 Shares
Allotted, issued and partly paid E Shares
Allotted, issued and partly paid F Shares
Allotted, issued and partly paid G Shares
Allotted, issued and partly paid H Shares
Allotted, issued and fully paid Deferred 1 Shares
Allotted, issued and partly paid Deferred 2 Shares
Total
56,082,651
17,441
48,944,593
27,014,247
17,267,066
0
317,613
21,563,860
1,470,907,773
3.81
n/a
3.33
1.84
1.17
n/a
0.02
1.47
100
The Special Share was transferred by the holder, Matthew Moulding, the Chief Executive Officer, on 21 June 2023 and, as a result,
all rights attached to it ceased in accordance with the provisions of the Articles of Association. The Special Share was thereafter
cancelled by the Company.
As at 31 December 2023 Matthew Moulding was also interested in 198,744,095 Ordinary Shares, representing 15.29% of the total
issued Ordinary Shares; 50,550,450 D1 Shares, representing 90.14% of the total issued D1 Shares; 360 D2 Shares, representing
2.06% of the total issued D2 shares; 43,641,266 E Shares, representing 89.16% of the total issued E Shares; 20,197,808 F Shares,
representing 74.77% of the total issued F Shares; 7,733,792 G Shares, representing 44.79% of the total issued G Shares; and
18,346,774 Deferred 2 Shares, representing 85.08% of the total issued Deferred 2 Shares.
(a)
Ordinary Shares
The Ordinary Shares rank pari passu in all respects and carry
the right to receive all dividends and distributions declared,
made or paid on, or in respect of, the Ordinary Shares.
Subject to disenfranchisement in the event of non-payment
of any call or other amount due and payable in respect of any
Share or non-compliance with any statutory notice requiring
disclosure of the beneficial ownership of any Share, on a show
of hands every Shareholder present in person or by proxy has
one vote and on a poll every Shareholder present in person or
by proxy has one vote for every Ordinary Share that they hold.
Electronic and paper proxy appointments and voting
instructions must be received no later than 48 hours (excluding
any part of a day that is not a working day) before a general
meeting.
Except as set out above and as permitted under applicable
statutes, there are no limitations on the voting rights of holders
of a given percentage, number of votes or deadlines for
exercising voting rights.
(b)
D1 Shares, D2 Shares and E Shares
The D1 Shares, D2 Shares and E Shares are non-voting
ordinary shares and do not carry the right to participate in
dividends of the Company.
The holders of D1 Shares, D2 Shares and E Shares may
convert their D1 Shares, D2 Shares and E Shares into Ordinary
Shares (on the basis of, as applicable, one Ordinary Share per
D1 Share or E Share or 185 Ordinary Shares per D2 Share).
(c)
F Shares, G Shares and H Shares
The F Shares, G Shares and H Shares are non-voting ordinary
shares and do not carry the right to participate in dividends of
the Company.
The holders of F Shares, G Shares and H Shares may exercise
put options to convert their F Shares, G Shares and H Shares
into Ordinary Shares (on the basis of, as applicable, one
Ordinary Share per F Share, G Share or H Share). The put
options may be exercised for a period of 10 years from the end
of the performance period (which ended on 31 December 2022).
(d)
Deferred 1 Shares and Deferred 2 Shares
The Deferred 1 Shares and Deferred 2 Shares are non-voting
ordinary shares and do not carry the right to participate in
dividends of the Company.
The Deferred 1 Shares and Deferred 2 Shares may be
purchased by the Company, provided it is lawful for the
Company to purchase them, for an aggregate sum of £1.00.
Restrictions on transfer or holdings of securities
in the Company
With the exception of the following, there are no restrictions
on the transfer of, or limitations on holding, securities in the
Company:
•
•
•
The Company may, pursuant to the Articles of Association
and the Companies Act, send out statutory notices to
those it knows, or has reasonable cause to believe, have
an interest in its Shares, asking for details of those who
have an interest in a particular holding of Shares and the
extent of their interest. When a person receives a statutory
notice and fails to provide any information required by
the notice in the time specified within it, the Company
can apply to a court for an order directing, amongst other
things, that any transfer of the Shares which are the subject
of the statutory notice is void.
The Directors may, without giving any reason, refuse to
register the transfer of any certificated Ordinary Shares
which are not fully paid.
Transfers of uncertificated Ordinary Shares must be
carried out using CREST, the central securities depository
for markets in the UK and for Irish stocks, and the operator
of the relevant system or the Directors can refuse to
register a transfer of an uncertificated Ordinary Share, in
accordance with the regulations governing the operation
of CREST.
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Dividends
Return of capital
Subject to the Companies Act and the Articles of Association,
the Company may, by ordinary resolution, declare dividends
and the Directors may decide to pay interim dividends. A
dividend must not be declared unless the Directors have made
a recommendation as to its amount. Such a dividend must not
exceed the amount recommended by the Directors and no
dividend may be declared or paid unless it is in accordance
with members’ respective rights.
No dividends were declared, nor will be distributed, for the
financial year ended 31 December 2023 (2022: £nil).
A liquidator may, on obtaining any sanction required by law,
divide amongst the members in kind the whole, or any part,
of the assets of the Company and may, for that purpose, value
any assets and determine how the division is carried out as
between the members or different classes of members.
Shares held on trust
The Company has established an employee benefit trust
(“EBT”) to hold Ordinary Shares to satisfy awards made
under the Employee Incentive Plan. The EBT currently holds
98,385,996 Ordinary Shares at the date of this Directors’
Report.
Substantial shareholdings
Disclosable interests of 3% or more in Ordinary Shares as at 31 December 2023 and 31 March 2024 were as follows:
Shareholder
Matthew Moulding
Sofina Capital S.A.
Balderton Capital (UK) LLP
Qatar Investment Authority
THG PLC EBT
Percentage of Ordinary
Shares as at 31 December
2023
Percentage of Ordinary
Shares as at 31 March
2024
15.29
8.89
7.46
7.32
5.73
14.94
8.69
7.29
7.15
7.40
Significant contractual arrangements
The Company is party to a relationship agreement with
Matthew Moulding which regulates the ongoing relationship
between the two parties (the “Relationship Agreement”). The
principal purpose of the Relationship Agreement is to ensure
that the Company is capable of carrying on its business
independently of Matthew Moulding and that all transactions
and arrangements between the Company and Matthew
Moulding are conducted on normal commercial terms. The
provisions of the Relationship Agreement imposing certain
obligations on Matthew Moulding will remain in full force and
effect, in respect of Matthew Moulding, for so long as: (i) the
rights of the Special Share remain in force; and/or (ii) either
Matthew Moulding beneficially owns, together with any of his
associates, at least (a) 5% of the fully diluted share capital of
the Company or (b) 10% of the Ordinary Shares.
THG Intermediate Opco Limited and THG Operations
Holdings Limited are parties to: (i) a senior facilities agreement
(Term Loan B, December 2019); and (ii) a £156m facilities
agreement (October 2022), both of which are subject to
mandatory prepayment provisions on a change of control
or the sale of all, or substantially all, of the assets of THG
Operations Holdings Limited and its restricted subsidiaries.
Other than as disclosed above, there are no significant
agreements to which the Company is a party that take
effect, alter or terminate upon a change of control following a
takeover bid.
The Company does not have any agreement with any Director or
employee that would provide compensation for loss of office or
employment resulting from a change of control on a takeover,
except that the terms of the Company’s share schemes and
plans may provide for the vesting of employee options and/or
awards in the circumstances of a takeover.
As a Group we continue to monitor the situation in Ukraine
and Russia, with our ongoing key focus being the safeguarding
of our employees; arrangements are in place to support the
immediate relocation of employees, and appropriate financial
support provided, where required. Welfare calls are also
extended to all members of our workforce with ties to the
affected regions and additional targeted monitoring groups
established to actively review intelligence on an ongoing basis
to ensure the Group continues to adapt accordingly.
From an operational perspective, all THG own-brand deliveries
remain suspended across Russia and Russian-occupied
Ukraine territories and the Group has continued to work with
its courier partners. The necessary measures have also been
implemented internally to ensure continued compliance with
all applicable sanctions and related notices and guidance.
Research and development
THG and its third-party commerce clients are all powered by
THG Ingenuity, the Group’s proprietary technology platform.
In addition to providing end-to-end ecommerce functionality,
THG Ingenuity provides the Group with several important
competitive advantages. Specifically, the commercial teams
review real-time transactional and customer insight data
which in turn informs trading decisions that are then executed
within short time frames. In order to remain competitive and
to promote innovation, investment into THG Ingenuity from a
People and capex perspective is a key Group priority.
All notifications made to the Company under the DTRs are released to the market via a Regulatory Information Service and
made available on the Company’s website at: https://www.thg.com/investor-relations/regulatory-news/ .
Donations
Change of control
Other than the terms of the agreement between Matthew
Moulding and the Company, as detailed under the Significant
contractual arrangements disclosure which follows, there are
no agreements between THG and its Directors or employees
providing for compensation for loss of office or employment
(whether through resignation, purported redundancy or
otherwise) by reason of a takeover bid.
Details concerning the impact on annual bonus in the event
of a change of control are set out in the Remuneration Policy.
Generally, any annual bonus awards and unvested LTIP awards
would be pro-rated for time and performance in the event of
a change of control whereas any deferred elements of bonus
would not be. While the Remuneration Committee has the
discretion not to pro-rate for time, its normal policy is to do
so. The Remuneration Committee’s discretion not to pro-rate
would only be used if there was an acknowledged business
case which would be fully explained to Shareholders.
The Company has entered into various agreements with third
parties, as well as contracts with third-party service providers,
which provide such parties with a right to terminate their
agreement in the event of a change of control.
During the 2023 financial year the Group made several
charitable donations totalling £0.3m (2022: £0.4m). THG did
not make any political donations during 2023 (2022: £nil).
Overseas branches
While the Group does not operate any overseas branches,
subsidiaries have been established in the following countries:
Australia, China, France, Germany, Guernsey, India, Japan,
Jersey, the Netherlands, Poland, Portugal, the Republic of
Ireland, Singapore, Spain, Sweden, Ukraine, the United Arab
Emirates and the United States of America.
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Directors’ Statement of Responsibility
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable UK
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Accordingly, the Directors
have elected to prepare the Group financial statements in
accordance with UK-adopted IFRS and the parent company
financial statements in accordance with UK Generally
Accepted Accounting Practice (UK Accounting Standards and
applicable law), including Financial Reporting Standard 101
Reduced Disclosure Framework (“FRS 101”). Under company
law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and the Company and of the
profit or loss of the Group and the Company for the period
in question.
In preparing these financial statements, the Directors are
required to:
•
select suitable accounting policies in accordance with IAS
8 Accounting Policies, Changes in Accounting Estimates
and Errors and then apply them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
•
•
•
•
•
present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
provide additional disclosures when compliance with
the specific requirements in IFRS (and, in respect of
the parent company financial statements, FRS 101) is
insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the
financial position and financial performance of the Group
and/or Company;
in respect of the Group financial statements, state
whether UK-adopted IFRS have been followed, subject
to any material departures disclosed and explained in the
financial statements;
in respect of the parent company financial statements,
state whether applicable UK Accounting Standards,
including FRS 101, have been followed, subject to any
material departures disclosed and explained in the
financial statements; and
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company and/or the Group will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
and the Group’s transactions and disclose, with reasonable
accuracy and at any time, the financial position of the
Company and the Group and enable them to ensure that the
Company and the Group financial statements comply with the
Companies Act.
The Directors are also responsible for safeguarding the assets of
the Group and parent company and thus for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
In accordance with DTR 4.1.12R, each Director whose name and
position appears on pages 111 to 114 of the Corporate Governance
Report confirms that, to the best of their knowledge:
•
•
•
the consolidated financial statements, prepared in
accordance with UK-adopted IFRS, give a true and fair
view of the assets, liabilities, financial position and profit
of the parent company and undertakings included in the
consolidation taken as a whole;
the Annual Report, including the Strategic Report,
includes a fair review of the development and
performance of the business and the position of the
Company and undertakings included in the consolidation
taken as a whole, together with a description of the
principal risks and uncertainties that they face; and
they consider the Annual Report, taken as a whole,
to be fair, balanced and understandable, providing the
information necessary for Shareholders to assess the
Company’s position, performance, business model
and strategy.
Outlook and market demand
Current trading and FY 2024 guidance
•
As we enter FY 2024, overall Group revenue trends
continue to improve, with notable momentum in
Beauty following the strategic changes made during
2023. Whilst the Yen has weakened further in Q1 2024
impacting THG Nutrition, the Group’s start to the year
provides us with confidence in delivering in accordance
with market consensus.
• Operating cashflow is expected to remain strong,
supported by profit growth and lower capex (c.£100m to
£110m), which will drive further free cash flow progress.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act.
EY has indicated its willingness to continue in office as
External Auditor and, upon the recommendation of the Audit
Committee, a resolution to reappoint EY as such will be
proposed at the AGM. Any remuneration received by EY for:
(i) auditing this Annual Report; and (ii) any other (non-audit)
services has been disclosed in note 5 to the Group’s financial
statements.
Approval of Directors’ Report
This Directors’ Report was approved and issued
by the Board and signed on its behalf by
James Pochin
General Counsel and Company Secretary
9 April 2024
Medium-term guidance unchanged
•
The decisive actions taken as a business during 2022
and 2023 have provided a solid foundation supporting
further margin recovery to our medium-term Group
adjusted EBITDA margin target of c.9.0%.
Post balance sheet events
Certain loss-making categories and territories within THG
Beauty and THG Nutrition were under strategic review at the
year end. The Board approved the exit of these categories
and territories post year end. These operations will be fully
exited throughout the course of 2024. The optimal exit route
remains under review. The impact of this decision has resulted
in inventory provisioning and the impairment of assets which
have been recognised within cost of sales and administration
expenses respectively and included within adjusted items
(note 4 to the Group’s financial statements). This has been
concluded as an adjusting post balance sheet event.
The existing RCF of £170m was due to mature in December
2024. On 4 March 2024 an extension of 17 months was agreed
to May 2026. From December 2024 the RCF will reduce to
£150m. Covenants attached to the RCF are unchanged and are
linked to gross debt leverage and become effective when the
facility is drawn upon. The RCF remains undrawn and is not
forecast to be drawn in the future period.
On 7 March 2024 nil-cost options were issued over 3,685,598
Ordinary Shares to certain Directors under the THG PLC 2022
Long-Term Incentive Plan. This is a non-adjusting post balance
sheet event and the associated charge will be recognised from
the grant date in 2024.
No other post balance sheet events have occurred.
Audit and External Auditor
At the date of approval of this Directors’ Report each Director
confirms that:
•
•
to the best of their knowledge, there is no relevant audit
information that has not been brought to the attention of
the External Auditor; and
they have taken all steps required of them to make
themselves aware of any relevant audit information and
to establish that the External Auditor was aware of that
information.
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Corporate
Governance Report
Dear Shareholders,
Welcome to the Company’s Corporate Governance
Report for the 2023 reporting period in which we
detail the progress made in THG’s governance
journey during the year and the enhancements
implemented in the ongoing evolution of the
Group’s governance infrastructure.
Code compliance
The Company recognises the importance of good corporate
governance and the value of a robust governance framework,
both in supporting the long-term growth and development
of the Group and in promoting sustainable value creation for
Shareholders. Accordingly, the Company has elected to report
against the Code despite its application being mandatory for
only those companies with a Premium Listing.
As detailed in the Corporate Governance Statement which
follows, the Company complied in full with the Code during
2023 with the exception of two departures, one of which was
rectified in July 2023 and the other addressed in March 2024
when non-independent NED Iain McDonald stood down
from the Board. Upon this Board change, an equal balance of
independent and non-independent Directors (excluding the
Independent Chair) was achieved and, in turn, alignment with
Code Provision 11. We consider that these Code improvements
not only reinforce the Company’s stated commitment to evolve
its governance framework and practices in adherence to the
Code but also demonstrate the significant progress which has
been made by the Company in this regard in the period since
Admission.
Additionally, the Special Share was transferred by the holder,
Matthew Moulding, the Chief Executive Officer, on 21 June
2023 and, as a result, all rights attached to it ceased in
accordance with the provisions of the Articles of Association.
The Special Share was thereafter cancelled by the Company.
Board and Board Committee composition
As anticipated, the search for suitable independent NEDs
continued throughout 2023 (and up to the date of this
Corporate Governance Report) and, more generally, the
structure, size and composition of the Board remained
subject to ongoing review to ensure membership was fit for
purpose and THG’s leadership needs were satisfied (with
specific reference to its collective balance of skills, knowledge,
experience and diversity). While discussed in further detail
within the Nomination Committee Report, the parameters
of the NED recruitment search took into account overall
Board independence and the balance of Executive Directors/
NEDs (with particular reference to Code Provision 11), and
also acknowledged the importance of promoting diverse and
inclusive Board membership, noting, amongst other matters,
the FCA’s D&I targets.
Indeed, since my appointment a key focus of the Nomination
Committee (and the Board collectively) has been to monitor
and reshape the Company’s leadership to ensure it is properly
constituted to drive Shareholder value creation through
delivery of the Group’s strategy. Accordingly, not only must we
identify potential Board candidates who possess the broader
knowledge and experience expected of PLC directors, but such
candidates must also have the requisite skill sets to oversee
the successful delivery of THG’s strategic aims and objectives
and, more generally, support the Company’s ongoing PLC
evolution. As previously referenced, the promotion of diversity
is also a key consideration in all Board appointments to ensure
the risk of group think is minimised (and this is considered
further within the “Board composition, appointments and
succession” section which follows). We therefore regard the
ongoing enhancement of Board membership as a planned,
ordered and sequential process, to ensure both continuity of
Board effectiveness and the successful recruitment of THG-fit
candidates who satisfy the aforementioned criteria.
Following upon the appointment of independent NEDs Gillian
Kent and Dean Moore in September 2022, we were delighted
In compliance with Code Provision 4, we are required to
provide a final summary within this Annual Report in respect
of the significant number of votes cast against the resolution
which was put to the 2023 AGM relating to the re-election
of former Director Iain McDonald (as announced on 21 June
2023). While the Board was disappointed with the outcome
of this vote, it takes seriously its responsibilities to represent
the interests of Shareholders and to attain and maintain high
standards of corporate governance and, as stated at the time,
it is open to constructive dialogue with Shareholders and
shareholder bodies. As subsequently announced on 2 January
2024, such dialogue took place in the period leading up to the
2023 AGM and the Company announced on the morning
of the 2023 AGM that Iain McDonald would step down from
membership of the Remuneration Committee (of which he
was a non-independent member) to focus on his other THG
commitments (including as Sustainability Committee Chair).
The Board continued to engage with Shareholders on this
matter as considered appropriate.
2024 and beyond
Although we are pleased with the corporate governance
enhancements which were implemented during 2023,
we recognise that we must continue to monitor our
governance infrastructure to ensure its evolution is
appropriate for an organisation of the size, nature and
stage of development of THG. While the appointments
of Sue Farr and Helen Jones are in line with my mandate
to strengthen the Board by improving independence and
diversity, and build upon the progress which has been made
to date in this area, we recognise that further progress is
required to fully comply with the FCA’s D&I targets and also
meet the Group’s own EDI goals. Accordingly, the search to
identify suitable candidates to further enhance the composition
of the Board (and also the Senior Management pool) will
remain an ongoing focus throughout 2024, and with due
regard to the need to ensure a robust and diverse succession
pipeline is in place throughout the organisation.
Charles Allen,
Lord Allen of Kensington CBE
Independent Chair
9 April 2024
to welcome Sue Farr and Helen Jones onto the Board as
independent NEDs in, respectively, April 2023 and June 2023.
With Sue assuming the role of SID upon appointment, it is
particularly pleasing that one of our four senior Board positions
is now held by a woman. Sue and Helen are regarded as
key additions to our leadership team; both bring a wealth of
experience and skill sets, technical and otherwise, to the Board
and have proven track records from an executive and non-
executive perspective. Further, and as disclosed in the 2022
Annual Report, two changes were announced to the Executive
Leadership Team in January 2023 – namely, the appointment
of Damian Sanders, former independent NED, to CFO and the
appointment of John Gallemore, the incumbent CFO, to COO.
At this time Dean Moore was appointed SID on an interim
basis, and I would like to take this opportunity to thank Dean
for so ably discharging this role until Sue’s appointment.
In light of these Board changes, Board Committee composition
was also a key Board and Nomination Committee focus during
2023. Notably, in stepping down as an independent NED
Damian Sanders simultaneously stepped down from certain
Board Committees, including as Audit Committee Chair and
as a member of the Risk Committee. As the Board at that time
comprised only two independent NEDs (i.e. Gillian Kent and
Dean Moore (excluding the Chair)), this resulted in the non-
satisfaction of the membership requirements of these Board
Committees from the date of Damian Sanders’ appointment
as an Executive Director. This position was temporary and
was rectified during 2023 following the aforementioned
independent NED appointments.
Further information on the Board changes which took place
during 2023 can be found within this Corporate Governance
Report and the Nomination Committee Report on pages 133
to 138. The changes to Board Committee membership are
detailed within the respective Board Committee Reports on
pages 123 to 166, together with current Board Committee
composition.
Stakeholder engagement
I, together with my fellow Board members, recognise the
importance of active stakeholder engagement to ensure that
stakeholders’ objectives, interests and views are understood
and appropriately factored into the Board’s consideration of
key financial, operational, strategic and ESG matters. Further
information on our stakeholder engagement framework,
including the six key stakeholder categories which have been
identified as critical to THG’s future success, can be found
within the “Section 172 statement stakeholder engagement”
section of the Strategic Report.
Our maturing Investor Relations’ programme seeks to
continuously improve dialogue with investors and analysts
alike and we maintain an ‘open door’ policy for Shareholders
to allow ongoing and constructive dialogue to take place
throughout each calendar year. The Company’s annual general
meeting affords Shareholders the opportunity to engage in
person with Board members and we once again look forward
to welcoming and meeting with investors at the forthcoming
AGM, details of which are contained in the Notice of Meeting.
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Corporate Governance Statement
Governance framework at a glance
While application of the Code is only mandatory for companies with a Premium Listing, the Company elected to report against it
following Admission to reinforce its commitment to establish a robust governance framework which both supports the successful
delivery of the Group’s strategic aims and objectives and encourages Shareholder confidence.
Board
Chair: Charles Allen
Aside from the following departures, the Company complied in full with the Code during the 2023 reporting period:
Provides effective leadership and promotes the long-term, sustainable success of the Company, whilst setting
and overseeing the successful delivery of strategic aims and objectives
Code Provision 11:
Code Provision 32:
(Departure rectified on 31 March 2024)
(Departure rectified on 21 June 2023)
Excluding the Independent Chair from the calculation (as
required by the Code), four of the nine Directors were deemed
to be independent at the end of the 2023 reporting period, thus
representing a departure from Code Provision 11.
The Nomination Committee, and the Board more generally,
remained mindful of this departure throughout 2023, with
particular regard to the Independent Chair’s mandate to
strengthen the Board by improving independence and
diversity. In line with the equivalent disclosure included within
the 2022 Annual Report, the Company hoped to rectify this
matter during 2023 as a matter of priority; pleasingly, significant
progress was made with the appointment of two independent
NEDs, Sue Farr and Helen Jones, who not only possessed the
desired skill sets and experience for Board membership but
also satisfied the diversity parameters of the recruitment brief.
This Code departure was thereafter rectified when non-
independent NED Iain McDonald stepped down from the
Board in March 2024.
Accordingly, as at the date of this Corporate Governance
Report, and in alignment with Code Provision 11, at least half
the Board, excluding the Independent Chair, are independent
NEDs.
Former Director Iain McDonald was deemed to be non-
independent with reference to the tenure provisions of the
Code. However, despite the Code recommendation that a
company’s remuneration committee should comprise only
independent NEDs, Iain McDonald was a member of the
Remuneration Committee during the 2023 reporting period.
The Board previously gave detailed consideration to Iain
McDonald’s membership of the Remuneration Committee,
including the risks associated with this Code departure.
While it recognised the need for independent membership
to demonstrate objective oversight of, and independent
challenge to, the remuneration of Executive Directors, it was
of the opinion that, in the particular circumstances of THG,
it would not be in the best interests of the Company and
its Shareholders for Iain McDonald to step down from the
Remuneration Committee. While his independence was
deemed to be impaired under the Code, the Board considered
that Iain McDonald was well-equipped to serve on the
Remuneration Committee due to his broad remuneration
experience, financial and sector expertise and investment
acumen.
As disclosed in the 2022 Annual Report, the Board intended
to keep Iain McDonald’s continued membership of the
Remuneration Committee under review having regard to,
for example, the timing and independence of future Board
appointees. Accordingly, in conjunction with announcing the
appointment of independent NED Helen Jones in June 2023,
following the appointment of independent NED Sue Farr in
April 2023, the Company announced that Iain McDonald
would step down from membership of the Remuneration
Committee, at which point the Company’s departure from
Code Provision 32 was rectified.
Nomination Committee
Chair: Charles Allen
Remuneration Committee
Chair: Helen Jones
• Regularly reviews structure, size and composition of the Board
• Sets remuneration policy for all Executive Directors
Committees and the Board, including the Board’s balance of skills,
knowledge, experience and diversity, to ensure membership remains fit for
purpose and the Group’s leadership needs are met
• Ensures remuneration policies and practices support strategy and
promote the Company’s long-term success
• Makes appropriate recommendations with regard to any Board Committee
and Board changes it considers necessary and identifies and nominates
candidates for Board approval
• Approves design of, and determines targets for, any performance-related
pay schemes and determines policy and scope of pension arrangements
for Executive Directors
• Oversees plans for the orderly succession of appointments to Board and
Senior Management positions, ensuring appointments and succession
plans are based on merit and objective criteria and with due regard to
applicable D&I targets
• Reviews, and has regard to, pay and employment conditions across the
Group and considers any major changes in employee benefit structures
Audit Committee
Chair: Dean Moore
Risk Committee
Chair: Gillian Kent
Supports the Board in fulfilling oversight responsibilities by reviewing and
monitoring:
Assists the Board in its oversight of risk, including:
•
•
•
the independence and effectiveness of the internal/external audit functions
the integrity of financial and narrative statements
the internal financial controls and, as appropriate and in conjunction with
the Risk Committee, the risk management framework
•
the monitoring, management and mitigation of principal and emerging
risks, including definition and execution of risk management strategy and
associated risk policies
• advising on overall risk appetite, tolerance and strategy
•
reviewing and monitoring robustness of the Group’s risk management
framework, policies and procedures when tested against risk strategy and
appetite
Sustainability Committee
Chair: Sue Farr
Related Party Committee
Chair: Sue Farr
• Reviews and ensures appropriate and effective strategies, policies and
operational controls are in place to conduct business in a responsible
manner, including assessing and monitoring performance against 2030
Sustainability Strategy and ESG targets
• Oversees compliance with all applicable sustainability-related legal and
regulatory requirements and ensures the Group’s standards of business
reflect best practice
• Supports the Board in delivering strong, sustainable growth across its
businesses and supply chains, in global markets and covering all aspects
of the customer ecosystem
• Oversees and approves the terms of any transaction, arrangement or
agreement between the Propco Group and any Group company, other
than those in the ordinary course of business
• Ensures all such transactions, arrangements or agreements continue to
be in the best interests of the Company and its Shareholders
Executive Leadership Team
• Executes delivery of agreed strategic objectives
• Oversees the day-to-day management of Group operations
• Provides regular Board updates on operational performance
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Board of Directors
Board Committee membership key:
A Audit
N Nomination
RP Related Party
Rem Remuneration
R Risk
S Sustainability
Charles Allen,
Lord Allen of Kensington CBE
Independent Non-Executive Chair
Date of appointment: 22 March 2022
Matthew Moulding
Executive Director & CEO
Date of appointment: 24 June 2008
Matthew has been instrumental in THG’s growth, leading
its evolution from an entertainment reseller to a global
ecommerce technology group. Prior to founding THG,
he served an eight-year term as chief financial officer of
20:20 Mobile (the Distribution Division of the Caudwell
Group) before leading its sale to private equity for £365m.
Matthew studied Industrial Economics at the University
of Nottingham before qualifying as a Chartered Accountant
with Arthur Andersen in 1998. His deep ecommerce
knowledge and insight, combined with his proven
entrepreneurial skills, make him best-placed to most
effectively drive THG’s strategic direction and objectives
while working in alignment with its Shareholder base.
Charles has extensive corporate experience across a
number of sectors, including finance, media, hospitality and
retail. Having played a key role in the creation of ITV, he is
recognised for his significant contribution to the television
industry. Previous positions include chief executive of
Granada Group plc and ITV plc and chair of Granada
Media plc, EMI Music, Endemol and The British Red Cross.
Charles has also served on the boards of Tesco plc, Virgin
Media and GET AS and as Chief Adviser to the Home
Office and a Senior Adviser to Goldman Sachs. Charles is
currently chair of Global Media & Entertainment Limited,
Balfour Beatty plc and the Invictus Games Foundation and
also advisory chair of Moelis & Company.
Charles was Vice Chair of the London 2012 bid company,
non-executive director of the London Organising Committee
of the Olympic and Paralympic Games and chair of the
2002 Manchester Commonwealth Games. In 2002 he was
awarded a CBE for his services to Sport and Community
and in 2012 he was appointed a Knight Bachelor for his
services to the 2012 Olympic and Paralympic Games.
Charles received the Freedom of the City of London in
2006 and in 2013 was awarded a peerage and now sits
on the Labour benches.
Damian Sanders
John Gallemore
Executive Director & CFO
Executive Director & COO
Date of appointment: 24 January 2023
Date of appointment: 24 January 2023
(having previously served as an independent
NED from 17 November 2020)
(having previously served as CFO from
24 June 2008)
Damian is a member of the Institute of Chartered Accountants
in England and Wales and was a Senior Audit Partner at
Deloitte LLP for over 20 years, including several years as
the leader of Deloitte’s Technology Practice in the North
of England. Damian has extensive experience of the retail
and technology sectors and has acted as an adviser
and corporate governance specialist to a number of
international listed companies.
Damian brings a wealth of experience to the Board across
audit, accounting, commercial and risk matters and also
business strategy. His strong financial background, depth
of advisory experience and knowledge of the Group
acquired during his two-year tenure as a NED, including
serving as interim SID and as chair and a member of
various Board Committees, make him well qualified to
serve as CFO.
Prior to co-founding THG in 2004 and serving as its
CFO until January 2023, John was Head of Finance of the
Caudwell Group’s International Trading Division from 2001
until 2004.
John studied Economics at the University of Manchester
before qualifying as a Chartered Accountant with Deloitte
LLP in 1994. His business and accounting background,
strong commercial acumen and tenure in international
trading provided the requisite experience to initially serve
as CFO and now as COO. The role of COO allows John
to drive the Group’s operations and build on the progress
he has overseen to date in the Group’s global fulfilment
footprint.
Key external appointments
Key external appointments
Key external appointments
Key external appointments
Chair of Global Media & Entertainment Limited
None
Chair of Balfour Beatty plc
Chair of the Invictus Games Foundation
Advisory chair of Moelis & Company
Senior independent director of Victorian Plumbing
None
Group plc
Board Committee membership
Board Committee membership
Board Committee membership
Board Committee membership
N
Chair
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n/a
n/a
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Board of Directors
Board Committee membership key:
A Audit
N Nomination
RP Related Party
Rem Remuneration
R Risk
S Sustainability
Sue Farr
SID
Edward Koopman
NED
Gillian Kent
Dean Moore
Helen Jones
Independent NED
Independent NED
Independent NED
Date of appointment: 24 April 2023
Date of appointment: 3 May 2016
Date of appointment: 15 September 2022
Date of appointment: 15 September 2022
Date of appointment: 21 June 2023
Edward is a member of the Executive Committee of
Sofina S.A. and a director of Sofina Capital. He also sits
on the board of Nuxe Group, a French-based international
skincare brand. Edward was a founding partner at Electra
Partners/ Cognetas Private Equity (now known as Motion
Equity Partners LLP) and was also previously a Manager at
Bain & Company, having worked in investment banking at
both Baring Brothers and BNP Paribas.
Edward holds a degree from Ecole de Management de
Lyon (EM Lyon) Business School and brings a wealth of
knowledge to the Board through his international business
experience and well-honed management skills.
Sue brings extensive marketing, branding and corporate
communication knowledge and expertise to the Board,
having enjoyed an executive career which has spanned
a number of senior marketing and communication
positions in both agency and private and public sector
organisations. Previous roles include Marketing Director at
the BBC, Corporate Affairs Director at Thames Television,
Communications Director at Vauxhall Motors and director
of Chime Communications plc.
Having subsequently developed a non-executive portfolio, Sue
served as a non-executive director of Accsys Technologies
PLC, Dairy Crest plc, Lookers plc, Millennium & Copthorne
Hotels plc and New Look and is also a former trustee of
the Historic Royal Palaces and former chair of both The
Marketing Society and the Marketing Group of Great
Britain. Sue is currently senior independent director of
British American Tobacco p.l.c. (where she is a member of
the nominations and remuneration committees), and a non-
executive director of Helical plc and Ebiquity plc (where
she chairs the remuneration committees and is a member
of the audit and risk and nominations committees) and
Unlimited Marketing Group Ltd..
Sue was awarded an Honorary Doctorate by the University
of Bedfordshire in 2010 in recognition of her services to
Marketing and Communications and her strong non-
executive and listed company track record, coupled with
her corporate governance expertise, make Sue a valuable
addition to the Board.
Gillian has had a far-reaching career in
software, internet, digital media and mobile
technology businesses and formerly held
various senior roles at Microsoft, including
Managing Director MSN UK, where she
was responsible for creating one of the UK’s
largest online services businesses. Both
at Microsoft and in other roles, including
as chief executive officer of the real estate
portal Propertyfinder, she established her
expertise in building markets and brands for
products and services.
Gillian is currently a non-executive director
of Ascential plc, Mothercare plc (where
she chairs the remuneration committee
and is a member of the audit & risk and
nomination committees), Marlowe PLC
(where she also chairs the remuneration
committee and is a member of the
audit, nomination and risk committees)
and SIG plc. Former positions include
non-executive director of NAHL Group
PLC, Pendragon PLC and Dignity plc and
director of Portswigger Ltd., a leading
software solution company within the
web security industry. Gillian’s expansive
executive career and broad PLC experience
serve to enhance the overall skill sets of
the Board.
Dean is a Chartered Accountant with over
35 years of public company experience
who brings a depth of City and finance
knowledge to the Board, together with
significant expertise in the financial
services and retail sectors.
Dean was previously chief financial officer
of N Brown Group plc, T&S Stores PLC
and Graham Group plc; interim chief
financial officer of Cineworld Group plc
and Dignity plc; senior independent
director of Cineworld Group plc and Volex
plc; and non-executive chair of Tuxedo
Money Solutions Limited. Dean is currently
interim chief financial officer of De La Rue
plc (having been an independent non-
executive director upon appointment) and
a non-executive director of Griffin Mining
Limited. Dean is a skilled and experienced
financial professional who possesses an
all-round technical, business and people
expertise which is founded upon a strong
commercially-orientated approach.
Helen has enjoyed a long and successful
career building premium food and
beverage brands across FMCG and
multi-site hospitality, both in the UK and
internationally, whilst gaining over 35
years of invaluable marketing, branding
and operational experience in consumer-
focused businesses. Former positions
include Vice Chair of the Ben & Jerry’s
Independent Board of Directors USA, a
role she undertook following an extensive
career leading the expansion of the brand
in Europe.
Having embarked on her portfolio career
in 2014, Helen is currently a non-executive
director of Fuller, Smith & Turner PLC (FST),
Virgin Wines UK plc (Virgin) and Premier
Foods plc (PF). In addition to chairing the
remuneration committees of FST, Virgin
and PF, Helen is a member of the audit
committees of Virgin and FST. Additionally,
Helen serves on the nomination committee
of FST and is the non-executive Workforce
Engagement Director for both PF and
FST. Helen brings a wealth of business
transformation and people/customer-
centric skills to the Board, underpinned
by a results-focused approach.
Key external appointments
Key external appointments
Key external appointments
Key external appointments
Key external appointments
Senior independent director of British American Tobacco p.l.c.
Member of Executive Committee of Sofina S.A.
Non-executive director of Ascential plc
Interim chief financial officer of De La Rue plc
Non-executive director of Fuller, Smith & Turner PLC
Non-executive director of Helical plc
Non-executive director of Ebiquity plc
Non-executive director of Unlimited Marketing Group Ltd.
Director of Sofina Capital
Director of Nuxe Group
Non-executive director of Marlowe PLC
Non-executive director of Griffin Mining Limited
Non-executive director of Premier Foods plc
Non-executive director of Mothercare plc
Non-executive director of SIG plc
Non-executive director of Virgin Wines UK plc
Board Committee membership
Board Committee membership
Board Committee membership
Board Committee membership
Board Committee membership
A
N
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Rem
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n/a
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To ensure the most robust governance structure exists within the
Group to support the Board in the proper and effective discharge
of its duties, a Board-constituted Nomination Committee, Audit
Committee and Remuneration Committee were established at
the time of Admission (in compliance with the Code), together
with the Related Party Committee, the Sustainability Committee
and the Risk Committee (the latter two being established during
2021).
Further information on the composition and activities of these
Board Committees during 2023 can be found within the
respective Board Committee Reports on pages 123 to 166,
together with details of any membership changes which took
place. The Nomination Committee was responsible for making
recommendations to the Board in respect of Board Committee
membership (where appropriate, following consultation with
the relevant Board Committee Chair) and, in doing so, took into
account not only the specific skill sets of individual NEDs but
also the time commitment expected of them and their external
commitments (further details on which follow).
Board role and responsibilities
The primary role of the Board is, as narrated within the Code,
to promote the long-term, sustainable success of the Company,
generating value for Shareholders and contributing to wider
society. This responsibility underpins all Board discussions and
decision-making processes and is one which the Board seeks
to discharge through the successful delivery of the Company’s
strategic priorities which flow from its stated purpose to
‘make an impact through digital transformation, innovation
and expertise’. THG’s purpose, determined with reference to
the diversity of the Company’s stakeholder base, has been
formulated to guide a strategy that aims to deliver long-term,
sustainable growth, while promoting environmental and social
responsibility. The Board oversees the Group’s strategic aims
and objectives and seeks to promote an entrepreneurial and
values-led Group culture which is predicated upon THG’s core
values of ambition, collaboration, innovation, decisiveness and
leadership. Further information on THG’s purpose, together
with its vision and values, can be found within the “Our
purpose, vision and values” section of the Strategic Report.
In accordance with Section 172, Directors give the appropriate
consideration to broader stakeholder issues when discharging
their duty to promote the success of the Company, as
evidenced through, for example, the Board-approved Social
Impact Strategy which was launched during 2023. The Social
Impact Strategy is focused on maximising THG’s impact on,
and driving positive social change within, its local communities;
it comprises three pillars, each with defined areas of focus
i.e. championing inclusion, disrupting inequality and creating
opportunities. Linked to this is the Group’s sustainability
vision to act as a force for good and leave the world a better
place by embedding sustainability into everything the Group
does. Demonstrating both this stated commitment to put
sustainability at the heart of THG’s operations and the Board’s
recognition of its wider stakeholder obligations, Executive
Directors and Senior Management have been set relevant
sustainability-linked objectives since 2022, with an increased
focus in personal reviews on sustainability-related, and not
simply commercial, outcomes. It is considered that the Group’s
Social Impact Strategy and sustainability vision, further
details on which can be found within, respectively, the “Our
people” and “Sustainability” sections of the Strategic Report,
clearly demonstrate THG’s social conscience and its desire to
generate positive change and create a better, more sustainable,
future for all.
A formal Schedule of Matters Reserved to the Board
(“Schedule of Reserved Matters”) has been published on
the Company’s website detailing those items of business,
including certain strategic items and corporate and capital
structure approvals, which are expressly reserved for the
Board’s collective consideration, ratification and/or oversight
(as appropriate). Under the terms of this Schedule of Reserved
Matters, and in accordance with the Code, the Board has
ultimate responsibility for the management of risk within
the Group and must ensure that a sound system of internal
controls and risk management framework are established
which provide for the effective identification, assessment
and management of risk. In discharging its risk management
responsibilities (which include overseeing the Group’s
controls framework, determining organisational risk appetite
and undertaking a robust and ongoing assessment of the
principal and emerging risks facing the Group), the Board
was supported during 2023 by the Audit Committee and the
Risk Committee (the activities of which are contained in the
respective Board Committee Reports on pages 123 to 131).
Full details of the Group’s risk management framework, risk
appetite and risk identification process can be found within
the “Risk management and informed decision making” section
of the Strategic Report. This section includes confirmation
that, during the 2023 reporting period, the Board (assisted, as
appropriate, by the Audit Committee and the Risk Committee)
reviewed the effectiveness of the risk management framework
and internal control systems and identified no instances of
significant control failings or weaknesses.
A summary of the principal responsibilities of Board members and the Company Secretary is as follows:
Independent Chair
Charles Allen
• Provides leadership to the Board
• Facilitates constructive Board relations and the effective contribution of all NEDs
• Chairs Board meetings and promotes a culture of openness and debate
• Ensures effective and ongoing communication with Shareholders and other stakeholders
• Sets the agenda for Board meetings, in conjunction with the Company Secretary,
and ensures Directors receive accurate and timely information
Chief Executive Officer
Matthew Moulding
Chief Financial Officer
Damian Sanders
Chief Operating Officer
John Gallemore
• Provides leadership to the Executive
Leadership Team
• Oversees the day-to-day management
of Company and Group business
• Determines the strategic direction and
business objectives of the Group
• Responsible for the Group’s financial
matters and applicable legislative and
regulatory compliance
• Works with the CEO to develop strategic
objectives
• Monitors the Group’s financial performance
• Oversees the effective implementation
of Group strategy with the support of
Senior Management
• Ensures the Group remains appropriately
funded and capital structure is effectively
managed
• Oversees the day-to-day management
of the Group’s global operations
• Monitors operational performance and
provides the necessary strategic advice
to ensure delivery of operational targets
• Ensures the implementation of business
strategies and operational capabilities to
drive operational efficiencies and alignment
with the Group’s strategic aims and
objectives
• Engages with key Shareholders and
stakeholders
SID
Sue Farr
NEDs
Edward Koopman, Gillian Kent,
Dean Moore and Helen Jones
Company Secretary
James Pochin
• Acts as a sounding board for the Chair
and supports, as required, in the discharge
of their duties and responsibilities
• Provide active and constructive challenge
and contribute to the development of
strategy
• Acts as secretary to the Board and Board
Committees and provides the requisite
support
• Acts as an intermediary for the Directors
as and when necessary
• Available to Shareholders with concerns
which have not been resolved through the
normal communication channels
• At least annually, meets with the NEDs,
in the absence of the Chair, to appraise
the Chair’s performance
• Monitor Executive Director performance
against agreed objectives and ensure
robust risk management
• Ensure the Board and Board Committees
fulfil their responsibilities and are ably
equipped to do so
• Ensure the Board is balanced and appropriate
succession planning is undertaken, allowing
it to provide clear and effective leadership
across the organisation
• Advises the Board on all relevant legislative,
regulatory and governance matters
• Ensures the Board has the appropriate
policies, procedures and resources in place
to function effectively and align with best
practice
• Assists with communication between the
Board and Shareholders and is responsible
for annual general meeting organisation
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Board composition, appointments
and succession
As previously detailed, Board composition remained subject to
ongoing scrutiny throughout 2023 (and up to the date of this
Corporate Governance Report), with a particular focus on both
the Chair’s stated mandate to refresh and strengthen the Board
by improving its independence and diversity (including with
reference to the FCA’s D&I targets) and the need to ensure
the Company’s leadership is, at all times, properly constituted
to drive long-term, sustainable growth and Shareholder value
creation. Significant progress was made in this regard during
the year and, following a twin-track recruitment search, Sue
Farr and Helen Jones were appointed as independent NEDs in,
respectively, April 2023 and June 2023. With both appointees
possessing extensive listed company experience, these
appointments not only enhanced the skill sets and knowledge
on the Board but also improved overall independence and the
balance of Executive Directors/NEDs.
Additionally, it was considered appropriate to appoint Damian
Sanders to the position of CFO at the start of 2023 due to
his deep understanding of the Group’s businesses, people
and culture, acquired during his tenure as an independent
NED. At the same time, John Gallemore, the incumbent
CFO, was appointed to the newly-created, stand-alone role
of COO, a position which is viewed as integral in developing
and driving THG’s global fulfilment footprint and continuing
to reduce distribution costs (a key metric for determining his
remuneration outcome).
The considerations of, and process followed by, the Nomination
Committee in recommending these appointments and Board
changes are detailed within the Nomination Committee
Report on pages 133 to 138. Board composition is monitored
on an ongoing basis by the Nomination Committee to ensure
that the balance of skills, knowledge and experience remains
appropriate for a company of the size, nature and stage of
development of THG and the Directors, collectively, have the
necessary skill sets and expertise to effectively oversee the
delivery of the Group’s strategic aims and objectives. The
Nomination Committee is also cognisant of the need to ensure
that the appropriate succession planning is undertaken from
a Board and Senior Management perspective to satisfy any
potential leadership needs that could arise, whether in the
short or medium to long term.
As disclosed in the Nomination Committee Report, and in line
with Code Principle J, the aforementioned NED appointments
were made on the basis of merit, with potential candidates
assessed against objective criteria and with regard to the need
to promote diversity in the boardroom (including with respect
to gender, as reflected in the recruitment agencies’ search
mandates). Indeed, the Board remains aligned with the FRC’s
position that, by reducing the risk of group think, diversity
can have a positive effect on the quality of board decision-
making; a more diverse boardroom may lead to more robust
debate and challenge (where appropriate) which, in turn, may
foster and enhance board effectiveness (Guidance on Board
Effectiveness (July 2018)).
The following matrix sets out the key competencies of individual
Board members:
Skills
Leadership
Name
UK listed
PLC
Technology/
ecommerce
Marketing/
branding
Retail
industries
M&A
Global
operations
Governance
Finance &
accounting
Risk
management
Strategy &
development
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Charles
Allen
Matthew
Moulding
John
Gallemore
Damian
Sanders
Edward
Koopman
Gillian
Kent
Dean
Moore
Sue
Farr
Helen
Jones
117
Time commitment and conflicts of interest
Board independence
Under the terms of their Letters of Appointment (“Appointment
Letters”), and pursuant to Code Principle H and Provision
15, all NEDs must confirm that they have sufficient time to
undertake the duties incumbent upon them as Directors and
disclose details of all significant business (and other) interests,
together with a broad indication of the time required for such
interests. The Board must thereafter be kept apprised of any
changes to such commitments and at least seven days’ written
notice must be provided to the Chair before a NED accepts an
additional external commitment which may impact the time
they are able to commit to their Board role.
In addition to attending standard Company meetings
(including Board meetings, Board Committee meetings and
the Company’s annual general meeting), NEDs are expected to
devote sufficient time to the appropriate preparation ahead of
such meetings and, generally, to commit additional time to their
Board role as circumstances require (and particularly when the
Group is undergoing a period of increased strategic activity).
The time commitment expected of, and expended by, NEDs is
monitored on an ongoing basis by the Board, in conjunction
with the Nomination Committee, and, as at the date of this
Governance Report, the Board is satisfied that the current
external commitments of its NEDs, as detailed within their
biographies on pages 111 to 114, do not compromise their
effectiveness or performance.
Appointment Letters recognise that NEDs may have business
interests outwith those of the Company but require that NEDs
do not put themselves in a position where their duties to any
other person, firm or company conflict with their duties to the
Company or the wider Group. The Appointment Letters further
require that any actual or potential conflict of interest must be
communicated to the Board as soon as it becomes apparent,
and at least seven days’ written notice must be provided to
the Chair before a NED accepts an appointment as a director,
agent, employee or consultant of any company or firm engaged
in a business competing with, or similar to that of, the Company
or any Group company.
The Group occupies and utilises property assets which are
owned by the Propco Group, which itself is wholly owned by
the CEO (who is also a major Shareholder). As a result of these
arrangements, the Board-constituted Related Party Committee
was established to oversee and approve Related Party
Transactions and provide the requisite governance structure
within which any actual or potential conflicts of interest could
be considered and addressed. Further information on the
responsibilities and activities of the Related Party Committee
can be found in the Related Party Committee Report on pages
139 to 140.
The Board currently comprises three Executive Directors
(i.e. the CEO, the CFO and the COO) and six NEDs, five of
whom (including the Chair) are deemed to be independent
in character and judgement. Following due consideration
of his individual circumstances against Code Provision 10,
NED Edward Koopman is not deemed to be independent.
Edward Koopman was appointed to the Board prior to
Admission to represent Sofina Capital S.A. (“Sofina”), a major
Shareholder. Edward Koopman is both an employee of
Sofina and a member of its Executive Committee, although
it is highlighted that Edward’s continued THG directorship is
not in a Shareholder-representative capacity despite Sofina
continuing to hold Ordinary Shares following Admission.
As the Company has previously disclosed, the holding of
Ordinary Shares by NEDs is not considered to impair their
independence but is viewed as aligning their interests with
those of Shareholders more generally, and thus with the long-
term interests and success of the Company. Consequently,
NEDs may purchase Ordinary Shares at market value via a
broker and facilitated by the Company if required. Directors’
holdings are set out within the Directors’ Remuneration Report.
At the end of the 2023 reporting period the Board comprised
three Executive Directors and seven NEDs, five of whom were
regarded as independent – namely, Charles Allen, Gillian Kent,
Dean Moore, Sue Farr and Helen Jones. On an analysis which
incorporates the strict letter of the Code and excludes the
Independent Chair, the Code Provision 11 requirement that at
least half the Board are independent NEDs was not satisfied at
the 2023 financial year end. However, this Code departure was
rectified when Iain McDonald stepped down from the Board
in March 2024. Accordingly, as at the date of this Corporate
Governance Report, at least half the Board, excluding the
Independent Chair, are independent NEDs.
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proposed reforms to the UK financial services sector, including
the overhaul of the listing and prospectus regimes and the
secondary capital raising process; the FCA’s proposed audit
and governance reforms, including the previously proposed
changes to the Code and new reporting requirements
relating to the introduction of the resilience and material fraud
statements and audit and assurance policy; and the new
climate-related financial disclosures and diversity reporting
requirements.
The introduction of regular deep dives at monthly Board
meetings, via the annual Board planning cycle, ensures that
NEDs are kept fully up to date on key Group and individual
business matters (including operational issues and market
challenges and landscape) and People and Sustainability
items. The incorporation of broker and investor updates
within the cycle further ensures that Directors are suitably
equipped with the requisite market and operational knowledge
to oversee the delivery of the Group’s strategic aims and
objectives. Additionally, the Company continues to arrange
membership of the Non-Executive Directors’ Association for all
Board members, including Executive Directors. Through this
membership Directors have access to a comprehensive suite
of technical knowledge updates and a monthly programme
of seminars and briefings (including networking events), thus
providing Board members with the ongoing opportunity to
refresh and enhance knowledge and skill sets as they consider
necessary. The Company is fully supportive of, and indeed
encourages, Directors’ attendance at such events which may
be of interest and/or which address particular training needs.
Board meetings and activities
Whilst 10 core Board meetings were scheduled to take place
during 2023, additional meetings were arranged on an ad
hoc basis to ensure the effective consideration and oversight
of time sensitive and key strategic and financial performance
items. The Board ultimately convened on 12 occasions,
with Board member attendance set out in the table which
follows. Director attendance at Board Committee meetings
is detailed within the various Board Committee Reports on
pages 123 to 166.
Director
Charles Allen1
Matthew Moulding
John Gallemore
Damian Sanders
Edward Koopman2
Gillian Kent
Dean Moore
Sue Farr3
Helen Jones4
2023 attendance
11/12
12/12
12/12
12/12
11/12
12/12
12/12
8/8
6/6
Former Director
2023 attendance
Iain McDonald5
12/12
1. Charles Allen was unable to attend one of the 12 Board meetings which took place during
2023 due to illness.
2. Edward Koopman was unable to attend one of the 12 Board meetings which took place
during 2023 due to a conflicting commitment.
3. Sue Farr attended the eight Board meetings which took place following her appointment
on 24 April 2023.
4. Helen Jones attended the six Board meetings which took place following her appointment
on 21 June 2023.
Iain McDonald stepped down from the Board on 31 March 2024.
5.
Board, and Board Committee, documentation continues to be
issued via the secure third-party platform which the Company
launched following Admission. This online tool provides
enhanced security from an information distribution perspective
and also serves as a secure centralised facility through which
information can be stored and accessed by Directors on an
ongoing basis. To ensure Directors have sufficient time to
review and consider supporting papers, which include the
meeting agenda (as agreed between the Company Secretary
and the Chair) and the minutes of any previous Board
meeting(s), documentation is generally issued no later than
three working days in advance of a meeting, although there
may be occasions when timing is impacted by, for example,
information source and/or volume considerations.
Following output from the 2022 Board evaluation, the timing,
format and content of monthly Board packs and meetings
remained an ongoing focus area throughout 2023. Notably,
while Board packs continue to incorporate the prior month’s
financial results, on a Group and individual business basis,
further progress has been made in streamlining the layout
and contents of the main Board deck, and thus building
upon previous enhancements. The annual Board planning
cycle, which details key Board activities/agenda items and
incorporates the monthly ‘deep dive’ topics, was further
refined during 2023 and its function has become more
deeply embedded within the Board’s governance processes.
Further, and as disclosed in the 2022 Annual Report, Senior
Management continue to present on a ‘taken as read’ basis
in terms of Board pack material, with a more focused Q&A
element having been introduced into meetings. These items
are considered further within the “Board evaluation” section
of the Nomination Committee Report.
In addition to the items of Board business incorporated within
the reserved parameters of the aforementioned Schedule of
Matters, certain other key topics were considered by the Board
during the 2023 reporting period, including (but not limited to)
the following:
•
Corporate activity: considering a highly preliminary
and non-binding indicative proposal from Apollo Global
Management Inc., on behalf of certain of its affiliated
funds, to acquire the entire issued and to be issued share
capital of THG and subsequently rejecting the proposal
on a basis consistent with all previous offers for the
Company i.e. based upon inadequate valuations and
the nature of the offer structures; and considering and
approving the acquisition of the skincare brand Biossance
from US biotechnology group Amyris Inc. via a voluntary
Chapter 11 auction process.
• Governance: ongoing review of certain corporate
governance arrangements including keeping abreast
of the UK Government’s proposed audit and corporate
governance reforms and overseeing the Group’s
strategy for delivery of the associated control framework
enhancements; a continued focus on preparing to step up
to the Premium Segment of the London Stock Exchange’s
Main Market at the appropriate time (with timing subject
to the final outcome of the FCA’s ongoing review vis-
a-vis reform of the current listing regime); further to the
Nomination Committee’s recommendations, considering
and approving the appointment of Damian Sanders as
CFO, John Gallemore as COO and two independent
NEDs to the Board; and overseeing the transfer and
cancellation of the Special Share in accordance with
the relevant provisions of the Articles of Association.
•
Strategy: ongoing consideration of the Group’s strategic
aims and objectives in light of, amongst other matters,
macro-economic conditions and the Group’s confirmed
intention to simplify and streamline its operations;
and overseeing: (i) the strategic review of loss-making
categories and territories within THG OnDemand and
the subsequent sale of the trade and assets of THG
OnDemand to a Newco led by the THG OnDemand
management team (noting that Newco continues to be
a client of THG Ingenuity); (ii) the sale of ‘ProBikeKit’, a
specialist provider of cycling equipment, to Frasers Group
PLC; and (iii) THG Ingenuity’s strategic re-positioning to
focus on partnering with higher margin Enterprise clients,
a pivot anticipated to provide high-quality, recurring
revenues.
• General: ongoing oversight of: (i) the Group’s market
guidance and consensus; and (ii) the progress made
against the stated strategies of the individual businesses
to return to sales growth and rebuild margins, supported
by a programme of cost savings and strong cash discipline.
Further information on the key discussions and principal
decisions taken by the Board during 2023, including
stakeholder considerations, can be found within the “Section
172 statement stakeholder engagement” section of the
Strategic Report.
Board induction and training
A structured onboarding programme has been developed for all
new Board members to ensure they are fully aware of the duties
and responsibilities incumbent upon them as THG Directors
and Board Committee members. This programme includes the
provision of internal briefing memorandums on key regulatory
and legislative items such as the UK Market Abuse Regulation,
inside information and insider dealing; face-to-face/interactive
training and update sessions with relevant external advisers e.g.
legal and remuneration; and one-to-one sessions with members
of Senior Management to provide a general introduction to core
areas of the business and its operations. More focused sessions
may subsequently be arranged with Executive Directors and/
or Senior Management to support particular interests and/
or where new Board members would like detailed insight into
particular areas of the organisation.
Following the induction process, the continuing professional
development needs of the Board (on a collective and individual
basis) remain subject to ongoing oversight and a number of
measures are now in place to keep Directors suitably apprised
of applicable legislation, guidance and market practice/
developments and any changes to, and/or proposals on, the
corporate governance landscape. In addition to the Company’s
legal advisers attending scheduled Board meetings to run
condensed training sessions, associated briefing papers are
also included within Board packs for Directors’ longer-term
information and reference. Board training undertaken during
2023 covered topics such as the new corporate criminal
offence of failure to prevent fraud and the expansion of
corporate criminal liability, pursuant to the Economic Crime
and Corporate Transparency Act 2023; the Government’s
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Board effectiveness
In accordance with Code Principle L and Provision 21, the
Company has conducted formal Board evaluations on
an annual basis since Admission which have considered,
amongst other matters, the effectiveness of the Board and
the Board Committees.
Reflecting its belief that the evaluation process is a critical
tool within the Group’s corporate governance arrangements,
the Company previously committed to undertaking an
externally facilitated review within three years of Admission
(i.e. by 16 September 2023), despite the fact this Code
provision is only strictly applicable to FTSE 350 companies.
Following consideration of the timing of new independent
NED appointments during 2023, it was considered
appropriate to push the evaluation back into the fourth
quarter of 2023 (the “2023 evaluation”) to ensure new NEDs
had gained some form of Board and Board Committee
exposure prior to the review taking place, and thus generate
more meaningful results. Whilst further information on the
2023 evaluation can be found within the “Board evaluation”
section of the Nomination Committee Report (including with
respect to format, content and outputs), notably the Board
is considered to function in a collaborative and effective
manner, and Directors are regarded as making an effective
contribution on an individual basis.
and more motivated workforce which, in turn, results in an
enhanced workplace and operational culture.
The Board recognises the fundamental importance of
robust and consistent employee engagement in seeking to
foster and support a thriving and empowered workforce;
the appropriate arrangements are therefore in place within
the organisation to ensure Directors are kept fully apprised
of all material workforce, including engagement, matters.
Specifically, the inclusion of Board Committee updates has
now been established as a standing agenda item at Board
meetings which affords the NED Sustainability Committee
Chair the opportunity to update the Board on workforce
engagement items on a monthly basis. Further, a People
section is incorporated within the main deck of all monthly
Board packs and the Chief People Officer, who has ultimate
oversight of the Group’s workforce engagement initiatives,
attends monthly Board meetings to take questions, and
report to the Board, on the wider people piece. On a day-to-
day basis the Group’s EDI Committee Champions play a key
engagement role, driving general workforce EDI engagement
and representation while collaborating with, and reporting
into, Senior Management. This reporting structure ensures
the ‘employee voice’ is heard at an appropriately senior level
within the Group and, as Senior Management also attend the
monthly Board meetings, further facilitates regular and direct
Board updates.
THG remains committed to ensuring that the appropriate
resources are available to the Board and Board Committees
to allow them to function effectively and efficiently and
the Company Secretary plays a key role in this regard,
advising on legal, regulatory and governance matters and
being on hand to support and assist Directors as required.
More generally, Board relations and, in turn, effectiveness
are cultivated through informal debate and discussion
outwith the confines of Board and Board Committee
meetings, including the ad hoc discussions which take
place between the SID and the NEDs throughout the year.
Such unstructured interaction amongst Board members
is considered a key means by which Board relations are
fostered and enhanced and it is further encouraged through,
for example, the biannual full Board and NED-only dinners
(as introduced by the aforementioned Board planning cycle).
The Board considers that, with reference to Code Provision
5, such arrangements are effective from a workforce
engagement perspective providing, as they do, a framework
within which clear, transparent and regular communication
and discussion can take place amongst the workforce, Senior
Management and the Board. While further information on
engagement measures and progress can be found within
the “Section 172 statement stakeholder engagement”,
“Our people” and “Empowering people and communities”
sections of the Strategic Report, a key 2023 initiative was
the annual ‘b-Heard Survey’ (the “Survey”) which was run
by a workforce engagement specialist towards the end of
the year and which provided employees globally with the
opportunity to feed back on all aspects of life at THG, from
personal growth and wellbeing through to leadership and
management items, on an anonymous basis.
Workforce engagement
Falling within the scope of the 2030 Sustainability Strategy,
the subject of employee engagement was a combined focus
of the Sustainability Committee and the People team during
2023 (and remains so in 2024). Indeed, one of the three
key priorities under our 2030 Sustainability Strategy, THG x
Planet Earth, is ‘Empowering people and communities’ which
affirms THG’s people-centric approach at the very outset -
“our people are our greatest asset” – and acknowledges that
a diverse, inclusive and supportive environment brings out
the best in people. Such an environment nurtures a happier
The Survey responses are assessed to identify those areas
where THG excels, while highlighting engagement challenges
and opportunities for improvement, and the results are used
to help shape and inform future workforce engagement
initiatives and strategies across the Group. Pleasingly, Survey
participation increased by 16% versus 2022 and the overall
2023 scoring was either flat or higher when compared
with the baseline 2022 data, with significant improvements
evident in a number of areas, including Leadership (i.e. how
employees feel about the organisation’s leadership and its
values and principles) and My Company (i.e. the level of
engagement which employees feel with their role and the
organisation more generally).
While the Survey results continue to be interrogated to
ensure full use is made of the insights generated, Survey
participation has resulted in THG being accredited as a ‘One
to Watch’ company by the Best Companies accreditation
system, a special status awarded to organisations with
good levels of workplace engagement. The Board, and
the Company generally, look forward to building upon the
significant progress achieved in this area during 2024.
Further information on how engagement strategies positively
impact decision-making throughout the organisation, including
at Board level, can be found in the “Section 172 statement
stakeholder engagement” section of the Strategic Report.
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Audit Committee
Report
“The Committee, together with the Risk Committee, continues to play a
leading role in ensuring the integrity of the Group’s financial reporting,
overseeing External and Internal Audit Functions and monitoring the
Group’s controls framework. In light of proposed corporate governance
reforms, the ongoing evolution of THG’s controls environment and
oversight from the Committee remain key.”
Dean Moore
Chair of the Audit Committee
Members and attendance
Committee member
Dean Moore
Gillian Kent
Sue Farr
Helen Jones
Position
Chair1
Member2
Member3
Member4
Damian Sanders
Former Chair5
Attendance
5/5
5/5
3/3
3/3
n/a
1. Dean Moore was appointed as a member of the Audit Committee upon his appointment to the Board on 15 September 2022 and thereafter assumed the position of interim Audit
Committee Chair on 24 January 2023 when Damian Sanders stepped down, following his appointment as an Executive Director. Dean Moore was appointed Audit Committee Chair
on a permanent basis on 21 July 2023.
2. Gillian Kent was appointed as a member of the Audit Committee upon her appointment to the Board on 15 September 2022.
3. Sue Farr was appointed as a member of the Audit Committee on 21 July 2023.
4. Helen Jones was appointed as a member of the Audit Committee on 21 July 2023.
5. Damian Sanders stepped down as Audit Committee Chair upon his appointment as an Executive Director on 24 January 2023.
As Audit Committee Chair, I would like to welcome you to
the Audit Committee Report for the 2023 reporting period.
I am pleased to confirm that, in addition to discharging its
key reporting and controls oversight responsibilities during
the year, the Committee oversaw the ongoing evolution and
improvement of the Group’s control and risk management
framework. Further, membership of the Committee was subject
to review during the year and, following the appointment of
new independent NEDs to the Board, consequently bolstered
with the appointment of Sue Farr and Helen Jones as members
in July 2023.
Composition and meetings
In accordance with its Terms of Reference, members of
the Audit Committee are appointed by the Board, upon
the recommendation of the Nomination Committee and
in consultation with the Audit Committee Chair, and must
possess the skills and experience appropriate for such
membership. The Terms of Reference further provide that the
Audit Committee must comprise at least three independent
NEDs, one of whom is, where possible, a member of the
Remuneration Committee, possessing recent and relevant
financial expertise and experience in accounting and/or
auditing (as determined by the Board), and one of whom
is a member of the Risk Committee.
Current Audit Committee membership therefore satisfies the
relevant provisions of both the Terms of Reference and the
Code comprising, four independent NEDs (i.e. Dean Moore
(Chair), Gillian Kent, Sue Farr and Helen Jones), all of whom
are members of both the Remuneration Committee and the
Risk Committee (having been deemed to possess the requisite
knowledge and expertise for such membership).
As detailed above, Gillian Kent and Dean Moore became
members of the Audit Committee upon their appointment to
the Board on 15 September 2022, with Dean Moore assuming
the position of Audit Committee Chair on an interim basis on
24 January 2023 when Damian Sanders stepped down from
the role upon his appointment as an Executive Director. Sue
Farr and Helen Jones were subsequently appointed to the
Audit Committee on 21 July 2023, at which time Dean Moore’s
Audit Committee chairship became permanent.
At least four Audit Committee meetings must take place
annually, at appropriate times in the financial reporting and
audit cycle (and as otherwise required). Member attendance
at the five meetings which took place during 2023 is set out
within the preceding table and, while attendance is restricted
to Audit Committee members (and any individual entitled to
be present as an observer), the Terms of Reference provide
that certain individuals (including the CFO, the Head of Internal
Audit and the External Auditor’s Lead Partner) may be invited,
and are expected, to attend meetings on a regular basis. These
individuals may also request a meeting of the Audit Committee
should they consider it necessary or desirable to do so.
In addition to the four scheduled meetings and throughout
the 2023 reporting period (and up to the date of this Report),
the Audit Committee Chair (and other Audit Committee
members where appropriate) maintained an ongoing dialogue
with key individuals involved in the Group’s governance,
including the Chair, the CEO and the Head of Internal Audit.
Further, and in addition to attending all Audit Committee
meetings, the External Auditor continued to meet with Audit
Committee members in the absence of Senior Management
and also privately with the Audit Committee Chair, as and
when considered necessary, to discuss the scope of the audit
plan, the remit of the external audit and to challenge, as they
saw fit, the findings of the audit process, including (but not
limited to) any material issues which had been identified,
areas of significant judgement and the general effectiveness
of the process.
Roles and responsibilities
The Terms of Reference of the Audit Committee provide
that its purpose is to support the Board in fulfilling its
oversight responsibilities by reviewing and monitoring: the
independence and effectiveness of internal and external audit
functions; the integrity of the Group’s financial and narrative
statements; and the Group’s internal financial controls, internal
controls and, as appropriate and in conjunction with the Risk
Committee, risk management framework. The specified duties
and responsibilities of the Audit Committee include, but are
not limited to, the following:
• monitoring the integrity of the Group’s financial
statements, including its half-year financial statements,
Annual Report and Accounts and preliminary
announcements, and reviewing and reporting to the
Board on significant financial reporting issues and
judgements which those statements contain, having
regard to matters communicated to it by the External
Auditor;
• where requested by the Board, reviewing the content
of the Annual Report and Accounts and the interim
financial statements and advising the Board on whether,
when taken as a whole, each are fair, balanced and
understandable and provide the information necessary
for Shareholders to assess the Company’s performance,
business model and strategy;
•
assisting the Board with monitoring and reviewing the
Group’s internal control systems on an ongoing basis,
including monitoring material financial, operational and
compliance controls;
• monitoring and assessing the role and effectiveness of the
Internal Audit function in the overall context of the Group’s
risk management system and the work of the Compliance
and Finance functions and the External Auditor; and
•
reviewing the Group’s procedures for preventing
and detecting fraud, its systems and controls for the
prevention of bribery and the adequacy and effectiveness
of its anti-money laundering systems and controls.
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Activities of the Audit Committee
The key areas of review which the Audit Committee considered during the 2023 reporting are summarised as follows:
Topic
Activity / Review
Financial reporting
• During the year, as part of their annual periodic reviews, the Financial Reporting Council (FRC) reviewed the Group’s 2022
Annual Report and Accounts. The Committee is delighted with the satisfactory outcome of the review as reported on the FRC’s
website at www.frc.org.uk. Management committed to enhancing the 2023 disclosures for THG PLC Company only investments
in subsidiaries and amounts due from Group undertakings. The Committee have reviewed the updated disclosures in the
consolidated financial statements as applicable
The Committee acknowledges the scope and limitation of the FRC review procedures noting that the review was based on the
annual report and accounts and the reviewer(s) have not benefited from detailed knowledge of the business or an understanding
of the underlying transactions entered into. It has, however, been conducted by staff of the FRC who have an understanding of
the relevant legal and accounting framework. Correspondence and findings, provide no assurance that the annual report and
accounts are correct in all material respects; the FRC’s role has not been to verify the information provided to it but to consider
compliance with reporting requirements. Correspondence are written on the basis that the FRC (which includes its officers,
employees and agents) accepts no liability for reliance on them by the company or any third party, including but not limited to
investors and shareholders
• Reviewed the annual report and accounts and the final half-year statement, including key accounting judgements, materiality
and the External Auditor’s report on the interim statements
• Reviewed key judgements and estimates in preparation for year-end reporting
• Reviewed year-end matters including the draft Annual Report (and assessed the processes to ensure it is fair, balanced and
understandable), significant accounting judgements, the draft and final full-year results announcement, the going concern
statement and the viability model
• Considered the impact of climate risks on the financial statements
• Reviewed other reports and papers from Management around key accounting judgements and transactions and updates
relating to the UK Government’s proposed audit and corporate governance reforms
External audit
• Reviewed EY’s plan for the audit of this Annual Report and the progress of the audit to date
• Reviewed EY’s report on the scope of the audit relating to this Annual Report, including key audit risks
• Disclosed relevant audit information to the External Auditors and the required evidence in support of it
• Reviewed the final report from EY following completion of the audit of this Annual Report
Internal control
and assurance
• Reviewed other updates from Internal Audit including the Recommendations Tracker and Whistleblowing Updates
• Reviewed reports from Internal Audit on assurance and audit work
• Re-approved the Internal Audit annual plan on a quarterly basis
• Reviewed the outputs of the fraud risk assessment
Significant financial reporting areas
A key role of the Audit Committee is to assess whether the
judgements and estimates made by Senior Management
are reasonable and appropriate. To assist in this assessment,
the Finance team provide accounting papers to the Audit
Committee detailing the financial aspects surrounding key
accounting judgements and areas of focus for THG, including
all significant issues outlined in the table which follows.
As part of the year-end reporting process, the Audit
Committee considered this Annual Report, the Management
papers on key accounting estimates and judgements, the
going concern and viability review, updates provided by
the External Auditor and accounting and reporting matters
(including management representation letters in respect
thereof). The Audit Committee assessed whether suitable
accounting policies had been adopted and the reasonableness
of the judgements and estimates that had been made by
Senior Management.
Key accounting matters which arose during the 2023 reporting
period relating to the financial statements for the period, and
which received particular focus from the Audit Committee,
are as follows:
Area of focus
Consideration and actions taken by the Audit Committee
Accounting for platform
development costs
THG incurred £61m in respect of additions to the platform in 2023. The carrying value at 31 December 2023
totalled £120m. Management judgement is applied regarding which projects relate to capital spend. This is
reviewed with Management on a monthly basis across the Finance and Technology teams.
The Audit Committee reviewed and acknowledged the controls which have been implemented during the
year including review and challenge as to the scope and extent of time capitalised.
Impairment of goodwill
and intangible assets
The Audit Committee reviewed management’s impairment paper in detail and challenged key judgements,
including terminal growth rate, forecast cash flows and discount rate, and concluded these to be
appropriate for THG Beauty following the impairment charge recognised in the prior year.
The Audit Committee reviewed management’s paper setting out the change in basis of assessing the
impairment risk for THG Ingenuity focusing on critical assumptions which underpin the measurement of
replacement cost in respect of the associated intangible assets.
The Audit Committee have reviewed the financial statement disclosures.
Impact on financial
information and
disclosure
The Intangible assets note
11 is included within the
Consolidated Financial
Statements
The Intangible assets note
11 is included within the
Consolidated Financial
Statements.
Presentation and
disclosure of adjusted
items and APM’s
To allow the Audit Committee to assess the policy, presentation and disclosure applied, Management
presented a detailed category-by-category analysis of adjusted items to the Committee in the year.
The Audit Committee also considered the presentation of APMs, throughout this Annual Report and
whether this enables a clear and fair understanding of performance.
The adjusted items note
4 is included within the
Consolidated Financial
Statements.
This included the separate presentation and APMs of discontinued categories consistent with
management actions announced as part of the strategic review.
The conclusion was that the adjusted items policy was appropriate and being applied consistently.
The Audit Committee concluded that the use of APMs were satisfactory.
Related Party
Transactions
The Group leases a number of properties from a related party. A Related Party Committee is in place to
review and approve any transactions in the year.
The Audit Committee has reviewed the related party disclosure within the financial statements to ensure
this gives a true and fair view. This has included a review of whether there are any additional related parties
outside of those already identified due to Board appointments and shareholdings in the year.
The Audit Committee satisfied itself that there were no additional related parties that had not already been
identified. The Audit Committee also approved the disclosure for inclusion within the financial statements.
More details on related
parties are included
within the Related Party
Committee Report.
The related parties’ details
are included within note
27 within the Consolidated
Financial Statements.
The preceding table is not a complete list of all the Group's accounting issues, judgements, estimates and policies, but highlights the most
significant ones for the period in the opinion of the Audit Committee.
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Fair, balanced and understandable assessment
At the request of the Board and pursuant to its Terms of
Reference, the Audit Committee has considered whether, in its
opinion and when taken as a whole, the Annual Report is fair,
balanced and understandable and provides the information
necessary for Shareholders to assess THG’s position and
performance, business model and strategy. THG has established
internal controls in relation to the process for preparing the
Annual Report including the following:
•
•
•
Senior Management regularly monitors and considers
developments in accounting regulations and financial
reporting and, where appropriate, reflects developments
in the financial statements.
The document is drafted by Senior Management with
overall coordination by a member of the Finance team
and additional support from external advisers to ensure
consistency across the relevant sections and inclusion of
the necessary information for Shareholders to assess the
Group’s position and performance, business model and
strategy.
Comprehensive reviews of drafts of the Annual Report are
undertaken by Executive Directors, Senior Management
and external advisers as part of an internal verification
process which is undertaken to ensure accuracy and to
assess whether the Annual Report is fair, balanced and
understandable.
•
The final draft of the Annual Report is reviewed by the
Audit Committee prior to consideration by the Board.
Following its review, the Audit Committee advised the
Board that the Annual Report was, when taken as a whole,
considered to be fair, balanced and understandable and
provided the information necessary for Shareholders to
assess THG’s position and performance, business model and
strategy. The Audit Committee was also satisfied that suitable
accounting policies have been adopted and appropriate
disclosures made in the financial statements. The Viability
and Going Concern Statements are set out on page 97 of
the Strategic Report.
Risk management and internal controls
Whilst the Board has ultimate responsibility for the Group’s risk
management and internal control systems, responsibility for
the ongoing monitoring and review of these systems, including
financial, operational and compliance controls, is delegated to
the Audit Committee which also assists the Board in its annual
review of the effectiveness of these systems and determining
their adequacy (or otherwise). During 2023 the Audit Committee
considered the UK Government’s audit and corporate
governance reforms and reviewed Management’s strategy for
delivering the necessary control framework enhancements.
The Audit Committee continues to work in support of the
Board’s risk management strategy and in conjunction with the
Risk Committee, as and when it is considered appropriate to do
so. Information on the Group’s risk management framework
can be found on pages 87 to 98 of the Strategic Report,
together with details of the processes and controls which
were in place throughout 2023 to manage and mitigate risk
and provide the Board with the required assurance that
sound systems of risk management and internal controls exist
throughout the Group.
Internal Audit
The Audit Committee is responsible for reviewing and
approving the role and mandate of the Internal Audit
function, while monitoring and assessing the effectiveness
of its work (including in the overall context of the Group’s
risk management systems). To ensure the reporting line of
the Internal Audit function is independent of the Executive
Leadership Team and suitably positioned to exercise
independent judgement, it has access to the Audit Committee,
as and when necessary, and the Head of Internal Audit has
a direct reporting line into the Audit Committee Chair. Where
necessary, the Audit Committee meets with the Head of
Internal Audit, in the absence of Senior Management, to
discuss the effectiveness of the function and to consider
the actions taken by Senior Management to implement its
recommendations and support its workings.
Internal audit plans include a range of financial and non-
financial engagements, delivered in an assurance or advisory
capacity. The internal audit plan is risk based and due
consideration is given to each of the following areas during the
planning process: principal risks; compliance; key departments
and central functions; projects and M&A; technology and
cyber, global site audits; operations and commerce. Audit
engagements were undertaken in each of these areas during
2023. The annual internal audit plan is subject to detailed
review by the Audit Committee to ensure alignment with key
business needs; regular progress updates are provided to the
Committee which oversees and approves the scope of the
internal audit plan on a quarterly basis.
Following due and careful consideration of all relevant factors,
the Audit Committee is satisfied that the Internal Audit function
is equipped to properly and effectively discharge its duties and
responsibilities in accordance with the relevant professional
standards for internal auditors and that the internal audit
plan itself provides appropriate assurances in respect of the
financial and non-financial controls in place to manage and
mitigate the principal and emerging risks facing the business
(further details on which can be found on pages 87 to 98 of the
Strategic Report).
Independence, performance and effectiveness
of the External Auditor
The External Auditor confirmed its independence and
objectivity from THG during the 2023 reporting period and
both the Audit Committee and the Board are satisfied that the
External Auditor has adequate policies and safeguards in place
to ensure its objectivity and independence is maintained. When
assessing the independence of the External Auditor, the Audit
Committee considered, amongst other things, the value of non-
audit fees provided by the External Auditor, the relationship with
the External Auditor as a whole and the annual disclosure from
the External Auditor to discuss the threats to its independence
and the safeguards applied to mitigate those threats.
Fees payable to the External Auditor
In overseeing the External Auditor relationship, the Audit
Committee is responsible for making formal recommendations
to the Board on its appointment, reappointment and removal,
and in this regard seeks views from Senior Management on
the quality and effectiveness of the external audit process.
The effectiveness of the Lead Partner, the audit team, their
approach to audits, including planning and execution,
communication, support and value, were assessed and
discussed, and consideration given to whether the External
Auditor had achieved the agreed audit plan or otherwise
explained the reasons for any departures from it, including
any changes in perceived audit risks and the work undertaken
by the External Auditor to address those risks.
The content of the External Auditor’s Board report was also
reviewed and monitored, together with other communications
with the Audit Committee, in order to assess whether there
was a good understanding of THG’s business and establish
whether recommendations had been acted upon and, if not,
the reasons why. As part of the assessment of the External
Auditor, the Audit Committee considered whether it had
exercised professional scepticism and an appropriate degree
of challenge to Senior Management, particularly on key
accounting and audit judgements. Additional feedback was
sought from various participants in the process, including
the CFO, the Chair and the CEO, but primarily from the
Audit Committee itself.
Overall, the effectiveness of the external audit process was
assessed as performing as expected. The Audit Committee
concluded that it was satisfied with the work undertaken by
the External Auditor, including adequate levels of challenge,
during 2023.
There are independent reporting lines from the External
Auditor to the Audit Committee and the External Auditor
is afforded the opportunity for sessions with the Committee
throughout the financial year.
The Audit Committee has reviewed and approved a policy
regarding non-audit work and fees, in relation to which please
see Note 5 to the Group’s financial statements. In order to
ensure that the provision of non-audit services does not
impair the External Auditor’s independence or objectivity, this
policy requires that the Audit Committee pre-authorises any
non-audit work proposed to be undertaken by the External
Auditor or, if required urgently between meetings, the Audit
Committee Chair is empowered to provide such authorisation.
There are certain services which cannot be provided by the
External Auditor, or members of its network, without the
possibility of its independence being compromised; it is not
therefore permissible for the External Auditor to provide such
services. Non-audit services prohibited under independence
requirements will not be authorised.
The only non-audit services performed in the year related to
the interim review procedures and some other assurance work.
The total fees were £0.5million, being a 1:5 ratio to the audit fee.
It is widely accepted that such procedures will be completed
by a group’s auditor. The Audit Committee therefore concluded
that the objectivity and independence of the External Auditor
would be safeguarded.
Focus for 2024
During the current financial year, the Audit Committee will
continue to:
•
oversee both the internal controls and governance
framework within THG to ensure its continued evolution,
effectiveness and integrity and the ongoing development
of the Internal Audit function as the Group continues to
grow and mature;
• monitor the delivery of the required control framework
enhancements following the UK Government’s audit and
corporate governance reforms;
The Audit Committee is also responsible for considering and
approving the terms of engagement and remuneration of the
External Auditor, for both audit and non-audit services, and
its removal. A resolution to propose the reappointment of
EY was approved by Shareholders at the 2023 AGM. When
considering whether to recommend the reappointment of the
External Auditor, the Committee considers a range of factors,
including the effectiveness of the external audit, the period
since the last audit tender was conducted, and the ongoing
independence and objectivity of the External Auditor.
•
•
oversee the use of technology to enhance the operation of
controls and harness potential opportunities to digitalise and
automate controls as the framework matures further; and
ensure the provision of training, development and support
is relevant to all Directors and the Executive Leadership
Team, particularly with respect to applicable new legislation,
regulation and guidance.
The lead audit partner, Karl Havers, has been in post since the
start of the audit for the 2021 reporting period. While the Audit
Committee is aware that the initial engagement period for a
statutory auditor should not exceed ten years, the Company
tenure is counted from 1 January 2021 (the first accounting
period audited following Admission). The Audit Committee
considers that it would be appropriate to conduct an external
audit tender by no later than 2030. The External Auditor has
been appointed since the 2011 reporting period to the date
of this Annual Report.
Dean Moore
Chair of the Audit Committee
9 April 2024
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Risk Committee
Report
“The Committee, together with the Audit Committee, continues to play
a key role in governing THG’s risk management and internal controls.
This oversight is increasingly important as the Group continues to grow,
keeping pace with changes to the external economic environment, and
responding to applicable elements of the UK Government’s audit and
corporate governance reforms.”
Gillian Kent
Chair of the Risk Committee
Members and attendance
Committee member
Gillian Kent
Dean Moore
Sue Farr
Helen Jones
Position
Chair1
Member2
Member3
Member4
Damian Sanders
Former Member5
Attendance
4/4
4/4
2/2
2/2
n/a
1. Gillian Kent was appointed Risk Committee Chair upon her appointment to the Board on 15 September 2022.
2. Dean Moore was appointed as a member of the Risk Committee on 6 December 2022.
3. Sue Farr was appointed as a member of the Risk Committee on 21 July 2023.
4. Helen Jones was appointed as a member of the Risk Committee on 21 July 2023.
5. Damian Sanders stepped down as a member of the Risk Committee upon his appointment as an Executive Director on 24 January 2023.
I would like to introduce the Risk Committee Report for the
2023 reporting period, having now served as Risk Committee
Chair for in excess of one full financial year. I am pleased to
confirm that the Committee continued to operate effectively
and deliver against its Terms of Reference (further details on
which follow), ensuring a robust and effective risk governance
framework was in operation throughout the Group during 2023
(and to the date of this Report).
Alongside the continued oversight of the risk management
framework and the management, reporting and evolution of
principal and operational risks within the Group, a key focus
of the Committee was the development and application of a
suite of metrics to support the evaluation and monitoring of risk
appetite and supplementing the principal risk ‘deep dives’ with
presentations to the Committee from principal risk owners.
Composition and meetings
Role and responsibilities
The Terms of Reference provide that the Risk Committee must
comprise at least three independent NEDs, one of whom
is a member of the Audit Committee, with members being
appointed by the Board, upon the recommendation of the
Nomination Committee and in consultation with myself, as
Risk Committee Chair. While, collectively, the Risk Committee
must possess the necessary competence (risk, financial and
otherwise) relevant to the sectors in which the Group operates,
individual members are also expected to possess the requisite
skills and experience appropriate for such membership.
At the start of the 2023 financial year, Risk Committee
membership satisfied the relevant provisions of the Terms of
Reference, comprising Gillian Kent, an independent NED, as
Risk Committee Chair, Dean Moore, also an independent NED,
and Damian Sanders, a former independent NED. However,
upon his appointment to the position of CFO on 24 January
2023, Damian Sanders stepped down as a member of the Risk
Committee and from all other Board Committees. As the Board
comprised only two independent NEDs, Gillian Kent and
Dean Moore, at that time (excluding the Chair) this resulted
in the non-satisfaction of the Risk Committee’s membership
requirements. This position was rectified in July 2023 when
two new independent NEDs, Sue Farr and Helen Jones, were
appointed as members of the Risk Committee, with current
membership set out in the foregoing attendance table.
The Terms of Reference require that at least four Risk
Committee meetings are held annually, at appropriate times
in the financial reporting and audit cycle (and as otherwise
required), as was the case during 2023, and any Risk Committee
member, the Chief Risk Officer (CRO) or the Head of Internal
Audit may request a meeting of the Committee if they consider
it necessary or desirable to do so. While only Risk Committee
members (and any individual entitled to be present as an
observer) have the right to attend Committee meetings,
typically the CFO, Deputy CFO, CRO and the Head of Internal
Audit will also be in attendance, together with the External
Auditor, and other non-members may be invited to attend as
and when deemed appropriate.
The Risk Committee’s Terms of Reference detail the specific
duties and responsibilities of the Committee and clarify that
its purpose is to:
•
•
•
review and monitor the principal risks and identify the
emerging risks facing the Group, the likelihood and
impact of such risks materialising and the way in which
such risks are managed and mitigated (including the
definition and execution of a risk management strategy
and associated risk policies);
review and monitor the robustness of the Group’s risk
management framework, policies and procedures and
their fitness for purpose when tested against the Board’s
risk strategy and appetite; and
assist the Board in its oversight of risk throughout the
Group and advise on its overall risk appetite, tolerance
and strategy (including the principal and emerging risks it
may be willing to accept to achieve its long-term strategic
objectives).
In fulfilling its purpose, the Risk Committee may seek such
independent professional advice as it considers necessary
to ensure the proper and effective execution of its duties and
responsibilities, and may also access resources, such as Group
Secretariat, when other specialist support and assistance is
required.
Notably, the Risk Committee’s Terms of Reference provide
that it must work and liaise, as necessary, with the other
Board Committees, including with specific reference to the
joint delegation and division of responsibilities with the Audit
Committee in respect of risk management and internal controls
(further details on which follow).
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Activities of the Risk Committee
As detailed at the outset of this Report, four scheduled Risk
Committee meetings took place during 2023, whilst one-
to-one meetings also continued between the CRO and the
Risk Committee Chair to consider the ongoing development,
refinement and embedding of the Group’s risk management
framework and associated processes. The CRO has open
and direct access to the Risk Committee at all times, an
arrangement which is viewed as key in maintaining the
independence of the CRO and Group Risk reporting line from
that of the Executive Leadership Team.
Additionally, the Risk Committee Chair, together with other
Committee members (to the extent appropriate), remained in
ongoing dialogue with key individuals involved in the oversight
of Group governance, including the Chair and Head of Internal
Audit, to ensure the necessary intra-function transparency and
alignment was in place.
A summary of the key activities undertaken by the Risk
Committee during the 2023 financial year is as follows:
•
oversight of the management, reporting and evolution
of principal and operational risks within the Group and
application of risk appetite, together with the outcome
of principal risk ‘deep dives’;
•
consideration of principal risk owner presentations;
• monitoring the identification and quantification of
emerging risks within the Group;
remaining apprised of the proposed reforms to the
UK’s audit and corporate governance framework and
appropriate consideration being given to identifying and
understanding relevant priorities, as applicable to the
Group’s risk landscape and risk management framework;
linked to the foregoing item, developing a roadmap, with
input from relevant advisers, to ensure compliance with
applicable disclosure requirements at the relevant time;
reviewing the results and remedial actions arising from
the annual Fraud Risk Assessment, together with any
summary reports of escalated incidents and instances
of fraud; and
•
•
•
•
and compliance controls, has been delegated to the Risk
Committee, in conjunction with the Audit Committee.
Included within this delegation of responsibility is the ongoing
monitoring and review of the processes and procedures in
place to manage and mitigate principal risks, identify emerging
risks and review and assess the Group’s risk appetite (including
associated stress testing), together with assisting the Board
in its annual review of the effectiveness of these systems and
determining their adequacy (or otherwise).
Information on the Group’s risk management framework can
be found on pages 87 to 98 of the Strategic Report, together
with details of the processes and controls which were in place
throughout 2023 to manage and mitigate risk and provide the
Board with the required assurance that sound systems of risk
management and internal controls exist throughout the Group.
The Viability Statement is set out on page 97 of the Strategic
Report.
Focus for 2024
During the current financial year it is anticipated that key areas
of focus for the Risk Committee will continue to be as follows:
•
•
oversee the risk management framework, risk appetite
and emerging risk processes within THG to ensure its
continued evolution, effectiveness and integrity and the
ongoing development of the Risk function as the Group
continues to grow and mature; and
remaining updated on the business’s response to
applicable elements of the UK Government’s audit and
corporate governance reforms.
On behalf of the Risk Committee
Gillian Kent
Chair of the Risk Committee
consideration of the role of THG Insurance in supporting
risk mitigation activities.
9 April 2024
Risk management and internal controls
In accordance with the FRC’s Guidance on “Risk Management,
Internal Control and Related Financial and Business Reporting”
(September 2014), ultimate responsibility for the Group’s systems
of internal controls and risk management framework rests with
the Board. However, pursuant to the provisions of the Code
and as reflected in its Terms of Reference, responsibility for the
ongoing monitoring and review of the Group’s risk management
and internal control systems, including its financial, operational
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Nomination
Committee Report
“The Nomination Committee recognises the importance of promoting
a diverse and inclusive corporate culture and, while pleased with the
progress made during 2023 from a Board independence and diversity
perspective, acknowledges that further progress is required to meet our
goals in this area. This will remain an ongoing focus of the Committee
during 2024 and beyond.”
Charles Allen,
Lord Allen of Kensington CBE
Chair of the Nomination Committee
Members and attendance
Committee member
Charles Allen
Gillian Kent
Sue Farr
Position
Chair1
Member2
Member3
Iain McDonald
Former Member4
Attendance
3/3
3/3
1/1
3/3
1. Charles Allen was appointed as Nomination Committee Chair on 10 June 2022.
2. Gillian Kent was appointed as a member of the Nomination Committee upon her appointment to the Board on 15 September 2022.
3. Sue Farr was appointed as a member of the Nomination Committee on 21 July 2023.
4.
Iain McDonald stepped down from the Board and as a member of the Nomination Committee on 31 March 2024.
I have pleasure in introducing the Nomination Committee
Report for the 2023 reporting period and look forward to
updating you on the progress which has been made in certain
areas which were highlighted in last year’s Report.
In line with my mandate to strengthen the Board by
improving its independence and diversity, and noting the
FCA’s D&I targets which apply to the financial year under
review (through enactment of Listing Rule 14.3.33R), Board
composition remained subject to ongoing consideration
throughout 2023 (and to the date of this Nomination
Committee Report). As detailed within the Corporate
Governance Report, a key focus of the Nomination Committee
since my appointment has been to monitor and reshape the
Company’s leadership to ensure it is properly constituted
to drive Shareholder value creation through delivery of the
Group’s strategy. Accordingly, not only must we identify
potential candidates who possess the broader knowledge and
experience expected of PLC directors, but such candidates
must also have the requisite skill sets to oversee the successful
•
•
•
delivery of THG’s strategic aims and objectives and, more
generally, support the Company’s ongoing PLC evolution.
Composition and meetings
I am therefore pleased to report that, in addition to certain
Executive Director changes taking place in January 2023,
a successful recruitment process was undertaken during
the reporting period which resulted in the appointment
of independent NEDs Sue Farr and Helen Jones (further
information on which follows). These appointments build upon
the progress made with the recruitment of independent NEDs
Gillian Kent and Dean Moore in September 2022.
An equal balance of independent and non-independent
Directors (excluding the Independent Chair) was also achieved
in March 2024 when non-independent NED Iain McDonald
stood down from the Board, rectifying the departure from Code
Provision 11. I would like to convey my gratitude to Iain for his
strong contribution during his tenure on the Committee, having
served as a member since Admission.
Role and responsibilities
As detailed within its Terms of Reference, the Nomination
Committee has Board-delegated authority to review and
evaluate the structure, size and composition (including the
skills, knowledge, experience and diversity) of the Board
to ensure that THG’s leadership is, at all times, properly
constituted to oversee the successful delivery of the Group’s
strategic aims and objectives. As in previous years, this was
a key focus of the Committee during 2023 and, to ensure it is
well-placed to exercise this authority, the Terms of Reference
provide that the Committee must remain abreast of all
strategic and commercial issues affecting the Group and
the markets within which it operates. Therefore, in addition
to the annual Board strategy session (which took place in
November 2023), relevant insights were shared with the
Committee, and the wider Board, on an ongoing basis during
2023 through incorporation of strategic and market updates
within Board packs and discussion at scheduled monthly
Board meetings.
Other mandated duties which were considered and
discharged by the Nomination Committee, as appropriate,
throughout the 2023 reporting period included:
identifying and nominating suitable NED candidates for
the approval of the Board (discussed in further detail in
the “Board composition” section which follows);
recommending suitable SID candidates to the Board (also
discussed in further detail in the “Board composition”
section which follows); and
The Nomination Committee’s Terms of Reference provide
that the Nomination Committee Chair must be either the
chair of the Board or an independent NED and, in line with
the relevant Code Provision, a majority of its members must
be NEDs who are independent in character and judgement
and free from any relationships or circumstances which are
likely, or could appear, to affect their judgement. Membership
of the Committee, as set out in the preceding table, therefore
aligns with these requirements; Charles Allen, the Nomination
Committee Chair, and members Gillian Kent and Sue Farr
were all deemed to be independent upon their appointments
to the Board (as detailed within the “Board independence”
section of the Corporate Governance Report). Biographies of
all Nomination Committee members can be found within the
Corporate Governance Report on pages 111 to 114.
While the Terms of Reference provide that at least two
Nomination Committee meetings must be held annually, and
at such other times as required by the Nomination Committee
Chair or as requested by any Committee member should they
consider it necessary, three Nomination Committee meetings
were held during 2023. While only members are entitled to
attend Committee meetings, others may attend by invitation
if considered appropriate and necessary e.g. the CEO and/or
external advisers.
Activities of the Nomination Committee
Board composition and independence
As previously detailed, a key focus of the Nomination
Committee has been to monitor and reshape the Company’s
leadership to ensure it is properly constituted to drive long-
term, sustainable growth and Shareholder value creation. As
a result of this ongoing review, the Committee recommended
that certain changes be made to the Executive Leadership
Team at the start of 2023 – specifically, that independent
NED Damian Sanders assume the role of CFO and John
Gallemore, the incumbent CFO, remain an Executive Director
and be appointed to the newly-created, stand-alone role of
COO. In assuming the CFO position, Damian Sanders would
simultaneously step down as interim SID and as chair and
a member of certain Board Committees. Dean Moore was
considered a suitable candidate to step into the position
of SID and his appointment was recommended by the
Committee, also on an interim basis and until such time as
a suitable long-term candidate was identified (with reference
to future independent NED appointments). The Nomination
Committee’s recommendations were duly considered and
approved by the Board and took effect from 24 January 2023.
reviewing Board and Senior Management succession
plans to ensure that the necessary talent exists within the
Group to effectively manage and exploit challenges and
opportunities which may arise now and in the future.
In addition to considering the Executive Director leadership
position, the Nomination Committee remained mindful of
overall Board independence and the balance of Executive
Directors/NEDs throughout the reporting period, with
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the appropriate balance of strategic (including stakeholders and
governance) versus operational and financial content/discussion
and acknowledgement that further embedding the monthly
‘deep-dive’ topics within meetings will support the necessary
evolution of the agenda and an increased focus on matters
which are of key strategic importance.
The 2023 evaluation outcomes in respect of the Independent
Chair are reflective of feedback generated through previous
evaluations and SID-led discussions amongst the NEDs;
the governance improvements (including with regard to the
balance of skills, knowledge, experience and diversity on the
Board) which the Independent Chair has implemented during
his tenure to date are highlighted, together with his inclusive
leadership style, effective prioritisation and knowledgeable,
facilitative and open manner.
particular reference to Code Provision 11. Indeed, the
Committee undertook to continue to seek alignment with
this Code Provision as a matter of priority during 2023
having regard to, amongst other things, the FCA’s D&I
targets and the need to ensure the appropriate leadership
and succession plans are in place within the Group.
Accordingly, Russell Reynolds Associates, an independent
search consultant, and leading recruitment consultancy
firm Axon Moore, both of whom had previously provided
recruitment services to the Company, were engaged to
assist in the search for suitable independent NEDs during
2023. The executive chair and co-founder of Axon Moore is
David Moore, a founder investor in the Company; aside from
this connection, Axon Moore has no other connections with
the Company or individual Directors.
The parameters of the search reflected previous recruitment
briefs which acknowledged the importance of promoting
diverse and inclusive Board membership but which
also sought to identify suitably skilled and experienced
candidates who could be considered the ‘right THG fit’.
Robust recruitment processes took place which included
preliminary desktop and database reviews to produce
candidate longlists which were thereafter refined to shortlists
following initial interviews. In line with previous recruitment
exercises, the Nomination Committee then undertook face-
to-face interviews with shortlisted candidates who were
also interviewed by other Directors, and members of Senior
Management, to the extent considered appropriate.
Following extensive deliberations, including consideration of
required experience and skill sets, cultural alignment and the
benefits which a diverse Board can bring to an organisation,
the Nomination Committee recommended the appointments
of Sue Farr and Helen Jones. These appointments were
thereafter approved by the Board, on the basis of merit
and as assessed against objective criteria (including the
promotion of gender diversity), and Sue Farr and Helen
Jones were appointed as independent NEDs on 24 April
2023 and 21 June 2023 respectively. Sue Farr was appointed
in the capacity of SID and replaced Dean Moore who, as
previously noted, had been appointed to the position on an
interim basis in January 2023.
As noted in the Corporate Governance Report, these
appointments build upon the corporate governance progress
which continues to be made and are in line with the Chair’s
stated mandate to enhance Board composition by improving
independence and diversity. Both Sue Farr and Helen Jones
possess extensive and varied PLC experience and have
demonstrable track records as non-executive directors
(including as board committee chairs).
Additionally, and as considered further within the Corporate
Governance Report, the Company’s departure from Code
Provision 11 was rectified in March 2024 when non-
independent NED Iain McDonald stepped down from
the Board. Therefore, as at the date of this Nomination
Committee Report, and in alignment with Code Provision
11, at least half the Board, excluding the Independent Chair,
are independent NEDs.
Board Committee composition
At the date of last year’s Nomination Committee Report, the
Board comprised only two independent NEDs, Gillian Kent
and Dean Moore (excluding the Chair), which resulted in the
non-satisfaction of the Audit Committee and Risk Committee
membership requirements from the date of Damian Sanders’
appointment as an Executive Director. This position was
expected to be temporary until the appointment of at least
one new independent NED and was subsequently addressed
during 2023 following the aforementioned appointments of
independent NEDs Sue Farr and Helen Jones.
The Nomination Committee’s Terms of Reference provide that
it is responsible for making recommendations to the Board in
respect of Board Committee membership (in consultation with
the relevant Board Committee Chair) and, at various points
during 2023, this was an area of focus for the Committee. In
recommending changes to Board Committee composition,
the Nomination Committee gave consideration to not only
the skill sets and experience of individual NEDs, and the time
commitment expected of them, but also to the specific Board
Committee membership requirements (as set out within the
Code and the Board Committees’ Terms of Reference).
The Board Committee changes which took place during
2023 are detailed within the respective Board Committee
Reports on pages 123 to 166, together with current Board
Committee composition. Key changes to Board Committee
membership include the appointments of Sue Farr and Helen
Jones to, respectively, Related Party Committee Chair and
Remuneration Committee Chair and Iain McDonald stepping
down from membership of the Remuneration Committee.
Board evaluation
In accordance with the relevant Code Provision, the Company
conducted formal Board (including Board Committee)
evaluations in respect of the 2021 and 2022 financial years via
an online digital platform which was provided by BoardClic, an
independent third-party board evaluation consultant. These
evaluations aligned with best market practice and the content
tailored, as appropriate, to THG’s particular circumstances as
a recently listed public company with a Standard Listing. The
BoardClic governance platform is a data-driven, time-efficient
tool which makes use of comprehensive benchmarking
resources to track compliance, effectiveness and year-on-
year alignment. As this evidence-based framework provides a
means by which to ensure evaluation outcomes and objectives
are appropriately addressed and/or monitored, the decision
was taken to continue to utilise this platform for the 2023 Board
(including Board Committee) evaluation which took place in
the fourth quarter of 2023 (the “2023 evaluation”).
Reflecting its belief that the evaluation process is a critical
tool within the Group’s corporate governance infrastructure,
the Board previously committed to undertaking an externally
facilitated review within three years of Admission (i.e. by 16
September 2023), despite the fact this Code Provision is
only strictly applicable to FTSE 350 companies. Following
consideration of the timing of new independent NED
appointments during 2023, it was considered appropriate to
push back the evaluation into the fourth quarter of 2023 to
ensure new NEDs had gained some form of Board and Board
Committee exposure, and thus produce more meaningful results.
The 2023 evaluation therefore took the form of an externally
facilitated evaluation, the scope of which was agreed between
the Chair, the Company Secretary and BoardClic at the outset
of the process. The exercise incorporated two components,
namely: (i) an online evaluation questionnaire, similar in form
and content to previous years but including extended Board
Committee sections, which built upon the data output from
previous exercises; and (ii) in-depth, one-to-one interviews
between Board members and BoardClic’s lead evaluation
assessors.
While the 2023 evaluation outcomes remain subject to ongoing
consideration at the date of this Nomination Committee Report,
the collation and analysis of data by BoardClic disclosed a
number of actionable insights, in the form of recommendations,
centred around four headline themes; these have been
discussed with the Chair and the Company Secretary and
recently presented to the whole Board. These recommendations
require further Board interrogation and deliberation, following
which the necessary measures will be taken during 2024, and
beyond, to ensure that the results are appropriately acted upon
and addressed.
Notably, certain of the results from the 2023 evaluation follow
on from previous evaluation themes relating to the Company’s
ongoing PLC evolution; pleasingly, the results now acknowledge
the wholesale, transformative changes which have taken place
from a Board perspective and which ensure it is well-placed
to effectively guide the business through the next stage of its
listed company journey. The results further disclose that Board
dynamics are considered to be open and collaborative which,
in turn, fosters a sense of cohesion and alignment amongst
Directors, thus enhancing the Board’s overall ability to support
and provide strategic direction to Senior Management.
The timing, format and content of monthly Board packs and
meetings will remain a key focus throughout 2024; while
progress continued to be made in this regard during 2023 (e.g.
streamlining the layout and contents of the main Board deck
and continuing the shift to a more “taken as read”/Q&A-based
style of meeting), output from the 2023 evaluation indicates that
further enhancements are required to reflect the evolving needs
of the Board and further refine the content and presentation
format of monthly Board materials and meetings. Additionally,
there is recognition within the 2023 evaluation that, as the
Board collectively matures, a consensus must be reached on
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Diversity and inclusion
THG’s stated vision is to create a diverse, inclusive and
supportive work environment, comprising talented and
motivated individuals, which reflects the communities within
which the Group operates. The Group’s EDI Strategy is
considered to provide a strong, directional foundation for
achieving this vision and is premised on four key pillars i.e.
visibility and representation, learning and development,
recruitment and progression and accessibility and inclusion.
The EDI Strategy reflects both the Group’s ongoing
commitment to become an industry pioneer in driving social
change and its desire to establish a thriving and inspired
culture underpinned by diversity and inclusion at every level,
and in every location, across the organisation. The Group’s EDI
Committee remains instrumental in driving positive change
and engagement in this area, with EDI representatives working
closely with the EDI Committee and the leadership teams of
the individual businesses to identify key areas for improvement
and implement Group-wide EDI initiatives (further information
on which can be found within the “Our people” section of the
Strategic Report). The Chief People Officer, who has ultimate
oversight of, amongst other matters, general workforce diversity,
attends scheduled Board meetings to provide regular on-topic
updates to ensure the Nomination Committee (and the Board
collectively) remains suitably appraised of material People
issues (including EDI items) to allow it to effectively discharge
its associated responsibilities.
In line with the Code, the Nomination Committee’s Terms
of Reference make clear its mandate to ensure that Board
appointments and succession plans are based on merit
and considered against objective criteria, with due regard to
diversity (including, but not limited to, diversity of gender and
social and ethnic background). The benefits which diverse
membership may bring to boardroom discussions, including
improved corporate governance generated via a broader
insight and knowledge base and a more inclusive culture,
are acknowledged and it is considered that in seeking to
promote diversity, in its various forms, Board effectiveness may
be maximised through enhanced decision-making which, in
turn, may generate enhanced value creation for stakeholders.
As previously confirmed, the parameters of the recruitment
search for independent NEDs during 2023 took into account
the importance of promoting diverse and inclusive Board
membership, with specific reference to the FCA’s D&I targets,
and culminated in the successful appointment of two female
NEDs, one of whom was appointed SID. Accordingly, the
Nomination Committee confirms that, as at 31 December
2023 and in satisfaction of the requirements of LR 14.4.33R,
a woman held the senior Board position of SID and 30% of
the individuals on the Board were women. The Committee
is pleased with the progress which has been made from a
Board diversity perspective during 2023, particularly in light of
the challenges previously encountered in identifying suitable
independent NED candidates who also satisfied the diversity
criteria (as disclosed in the 2022 Annual Report).
It is nonetheless recognised that further progress is required
to fully comply with the FCA’s D&I targets (with specific
reference to the targets that at least: (i) 40% of the individuals
on the Board are women; and (ii) one Board member is from
a minority ethnic background) and also meet THG’s own EDI
goals, noting its stated vision to increase all forms of diversity
across the organisation. The “Empowering people and
communities” section of the Strategic Report provides further
information on these Group EDI targets, incorporated within
the 2030 Sustainability Strategy, and which, notably, include
achieving 50% female representation and 15% ethnic minority
representation on the Board and in Senior Management by
2030 and 50% female representation and 20% ethnic minority
representation across the entire workforce by 2030.
Board and executive management data as at 31 December
2023, presented in accordance with LR 14.3.33R, is as follows:
Number of
Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number
in executive
management
Percentage
of executive
management
Men
Women
Non-binary
Not specified/
prefer not to say
7
3
-
-
70
30
-
-
3
1
-
-
10
4
-
-
71.4
28.6
-
-
Number of
Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number
in executive
management
Percentage
of executive
management
White British or
other White
(including
minority-white
groups)
Mixed/Multiple
Ethnic Groups
Asian/Asian
British
Black/African/
Caribbean/
Black British
Other ethnic
group, including
Arab
Not specified/
prefer not to say
10
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
2
2
-
-
-
71.4
14.3
14.3
-
-
-
The source data used in the foregoing tables is provided on a self-reporting basis through completion of an electronic survey
which asks participants to confirm their name, the most accurate description of their gender identity and their ethnicity. The “Our
people” section of the Strategic Report contains the diversity disclosures required pursuant to section 414C of the Companies Act.
Focus for 2024
In accordance with its Terms of Reference, the Nomination
Committee considered overall Board composition in advance
of the 2023 AGM and the continuation (or otherwise) in office
of individual Directors, with reference to their performance and
ability to contribute to the Board in light of the knowledge, skills
and experience required. Following the requisite deliberations,
the Committee recommended to the Board that all Directors be
put forward for annual election or re-election (as appropriate)
by Shareholders. The Committee will go through a similar
evaluation process in advance of the upcoming AGM and
thereafter make its recommendations to the Board.
The search to identify suitable candidates to enhance
the composition and diversity of the Board and Senior
Management pool will remain an ongoing focus of the
Committee throughout 2024, with a brief which takes into
account not only the Group’s broader EDI vision and FCA/
Group targets but also the need to ensure a robust and
diverse succession pipeline is in place throughout the
organisation. The Nomination Committee recognises the
importance of promoting a diverse and inclusive corporate
culture within THG and takes seriously its commitment and
responsibilities in this area.
On behalf of the Nomination Committee
Charles Allen, Lord Allen of Kensington CBE
Chair of the Nomination Committee
9 April 2024
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Related Party
Committee Report
“The Related Party Committee ensures that strong governance
is in place and that any transactions classified as a ‘Related Party
Transaction’ are challenged and approved. The key objective is
shareholder value protection.”
Sue Farr
Chair of the Related Party Committee
Members and attendance
Committee member
Sue Farr
Dean Moore
Gillian Kent
Helen Jones
Position
Chair1
Member2
Member3
Member4
Damian Sanders
Former Chair5
Attendance
3/3
4/4
4/4
2/2
n/a
1. Sue Farr was appointed as a member of the Related Party Committee upon her appointment to the Board on 24 April 2023 and, in her capacity as SID, assumed the position of Related Party
Committee Chair with effect from 7 September 2023.
2. Dean Moore was appointed as a member of the Related Party Committee upon his appointment to the Board on 15 September 2022 and, as interim SID, assumed the position of Interim
Chair of the Related Party Committee on 24 January 2023 when Damian Sanders stepped down following his appointment as an Executive Director. Dean Moore thereafter stepped down as
Interim Chair of the Related Party Committee, but remained as a member of the Committee, effective from 7 September 2023.
3. Gillian Kent was appointed a member of the Related Party Committee on 24 January 2023.
4. Helen Jones was appointed a member of the Related Party Committee on 21 July 2023.
5. Damian Sanders stepped down as Related Party Committee Chair upon his appointment as an Executive Director on 24 January 2023.
I am delighted to introduce the Related Party Committee’s
Report for the 2023 financial year. Having been appointed
as Committee Chair in September 2023, I would like to
thank Dean Moore for assuming the role of Chair on an
interim basis, and leading the Committee, in the period
prior to my appointment. I would also like to take this
opportunity to reaffirm that the necessary governance
arrangements are in place which allow for the full and
effective oversight of both existing and potential conflicts
of interest; all Related Party Transactions are subject to
robust evaluation prior to approval (or otherwise) and the
Committee, established post-Admission to oversee and
approve such arrangements, is committed to seeking to
comply with the spirit of the Code and the principles of
good corporate governance.
As disclosed in previous Annual Reports, prior to Admission
to the London Stock Exchange, THG divested the Propco
Group, which owns property assets occupied and utilised
by THG. As the Propco Group is wholly owned by Matthew
Moulding, the CEO and a major shareholder in THG,
the divestment was overseen and approved by the
independent NEDs, holding office at that time, to ensure
both actual and potential conflicts of interest arising from
the Propco Transaction were properly managed and
resolved. The lease arrangements which operated between
the Propco Group and THG prior to the Propco Transaction
were unchanged by the aforementioned divestment and
continue to remain in place. Specific matters reviewed by
the Related Party Committee in 2023, have been explained
in further detail below.
Composition and meetings
Capital expenditure
In recognition of the Related Party Committee’s key
governance function, its Terms of Reference provide that
members must be independent NEDs who are appointed
by the Board upon the recommendation of the Nomination
Committee (and in consultation with myself as Committee
Chair). Current Committee membership aligns with this
requirement and is set out in the preceding attendance table.
As detailed above, I assumed the office of Committee Chair
in September 2023, satisfying the requirement that the SID
holds this position, and at the same time Dean Moore stepped
down as Interim Chair, remaining as a Committee member.
Helen Jones was appointed to the Committee as a member
in July 2023.
The Terms of Reference provide that meetings of the Related
Party Committee are held at such times as the Committee
Chair requires, although any member of the Committee may
request a meeting if they consider it necessary. Four meetings
of the Committee took place during the reporting period. While
only members are entitled to attend meetings of the Related
Party Committee, others, including external advisers, may attend
by invitation when considered necessary and appropriate.
Role and responsibilities
As detailed within its Terms of Reference, the principal function
of the Related Party Committee is to oversee and approve
(where appropriate) the terms of any Related Party Transaction,
having regard to whether any such arrangement is fair,
reasonable and in the best interests of the Group (including
from the perspective of THG and shareholders). The Related
Party Committee remains cognisant of the key role which it
plays within THG’s corporate governance infrastructure and,
in making such an assessment, is required to ensure that any
Related Party Transaction is conducted on standard commercial
terms and on an arm’s length basis.
While the general position is that a Related Party Transaction
may not be authorised or implemented by the Board unless
it has been positively recommended by the Related Party
Committee, the Terms of Reference contain a carveout to
this; specifically, if a transaction is deemed to be in the best
interests of the Company and in respect of certain categories
of Related Party Transactions, the Board may resolve that the
Committee’s views are not binding but are of a recommendary
nature. It is noted that no such action has been taken by the
Board historically or within the current period.
Activities of the Related Party Committee
In addition to the ongoing oversight and approval (where
appropriate) of Related Party Transactions, the Related Party
Committee gave specific consideration to a number of other matters
during the 2023 financial year, including the following items:
Capital expenditure incurred by THG on properties leased
from the Propco Group is reviewed on a regular basis, with
specific reference to the rationale for the spend incurred and
the nature of the works completed, to ensure it is appropriate
for a commercial tenant. The Committee concluded that the
nature of the works and level of spend were appropriate for a
commercial tenant.
Subleases
In line with the property portfolio restructure in the year,
consent was sought from the Propco Group (as landlord) to
sublet three properties that it currently leases from Propco
Group to third parties at market rates and thus generating
cash flow for the benefit of THG. The Related Party Committee
challenged the proposed subleases to i) ensure they were in
THG’s best interests: and ii) confirm whether this proposal
would involve variations to the existing lease agreements
(including in respect of rent payable by the Group). It was
confirmed that no variations would be required and that the
arrangements were in the best interests of the Group and
thereafter the Committee approved the subleases.
Management charge
Under the terms of an updated Master Services Agreement
(“MSA”) dated 14 April 2023, THG charge Propco Group for
the provision of specified services. THG and Propco Group
agreed to update the MSA in 2023 to reflect the evolution of
services being provided by THG to Propco Group. The MSA
was approved by the Related Party Committee in March 2023,
at the same time it approved the charge for FY22.
Other items
The Related Party Committee approved the details of the Group’s
charitable donation to The Moulding Foundation. The charitable
donation is paid by the Group in lieu of Matthew Moulding
waiving as much of his annual salary as is legally permissible.
The related party disclosures for H1 and within the consolidated
financial statements of this Annual Report were reviewed and
approved by the Committee.
On behalf of the Related Party Committee
Sue Farr
Chair of the Related Party Committee
9 April 2024
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Sustainability
Committee Report
“The Sustainability Committee plays a critical role in ensuring THG is
delivering its Sustainability Strategy, THG x Planet Earth, and that it is
appropriately woven into the strategies of the Group and the individual
businesses. The Committee will continue to oversee future progress
towards near and long-term targets to ensure THG creates value and
opportunities for stakeholders across the Group’s value chain”.
Sue Farr
Chair of the Sustainability Committee
Members and attendance
Committee member
Sue Farr
Mark Jones
Steven Whitehead
Philip Pratt
Iain McDonald
Position
Chair1
Member2
Member3
External Sustainability Adviser4
Former Chair5
Attendance
n/a
3/3
5/6
6/6
6/6
1. Sue Farr was appointed Sustainability Committee Chair on 18 March 2024, following the announcement that Iain McDonald would step down as a Director on 31 March 2024.
2. Mark Jones assumed membership of the Sustainability Committee upon his appointment as Group Chief Sustainability Officer on 19 June 2023.
3. Steven Whitehead sits on the Sustainability Committee in his capacity as Group Commercial Director.
4. Prior to his departure from the Company at the beginning of 2023, Philip Pratt sat on the Sustainability Committee in his capacity as Group Chief Sustainability Officer. Since his departure
Philip Pratt has continued to serve as a member of the Committee but in the capacity of external sustainability adviser.
Iain McDonald stepped down as Sustainability Committee Chair on 18 March 2024, following the announcement that he would step down as a Director on 31 March 2024.
5.
Welcome to the Sustainability Committee Report for the
2023 reporting period. As the recently appointed Chair of the
Committee, I am pleased to report that during 2023 significant
progress continued to be made under all three pillars of our
2030 Sustainability Strategy and, notably, the SBTi officially
validated our climate-science aligned net-zero targets,
reaffirming our commitment to achieving net-zero by 2040
and minimising our climate impact. Other notable milestones
achieved during the year include:
•
net-zero roadmaps and strategies developed and aligned
to SBTi for the individual businesses;
• materiality assessment undertaken which led to a data-
driven review with updates across THG x Planet Earth
Goals and Targets;
launch of our Partnership in Action (PACT) programme –
aiming to work collaboratively with suppliers to decarbonise
the supply chain;
•
•
•
approval of HSE roadmap; and
successful launch of the Social Impact Strategy and THG
in the Community programme.
Composition and meetings
The Sustainability Committee’s Terms of Reference provide
that the Committee will comprise a minimum of three
members, at least one of whom will be a NED, with any
two Committee members required for a quorate meeting.
Members of the Committee are appointed by the Board,
upon the recommendation of the Nomination Committee,
and while, collectively, the Committee must possess the
competence relevant to the sectors in which the Company
operates, individual members must also have the skills and
experience relevant to Sustainability Committee membership.
In satisfaction of the relevant provisions of the Terms of
Reference, membership of the Sustainability Committee
currently comprises myself, Sue Farr, SID and Sustainability
Committee Chair, Mark Jones, our Group Chief Sustainability
Officer, Steven Whitehead, Group Commercial Director and
Philip Pratt, former Chief Sustainability Officer and now an
external sustainability adviser to the Committee. As previously
detailed, Iain McDonald stood down from the Committee on 18
March 2024, following the announcement that he would stand
down as a Director on 31 March 2024. Many thanks to Iain who
has led and steered the Sustainability Committee over the years
with great energy, passion, and distinction, and whose insights
and engagement on the topic will be missed.
While the Terms of Reference require that at least three
Sustainability Committee meetings must be held annually,
and at such other times as the Sustainability Committee Chair
may require, six scheduled meetings took place during 2023,
reflecting the Group’s robust commitment to its sustainability-
related initiatives and goals. Member attendance at these
meetings is set out in the foregoing table. Although only
Sustainability Committee members (and those entitled to be
present as observers) have the right to attend meetings, external
advisers may be invited when appropriate together with any
other individuals whom the Committee considers necessary.
Role and responsibilities
The Terms of Reference of the Sustainability Committee
narrate that its key function is to ensure that the Group has
appropriate and effective strategies, policies and operational
controls in place to allow its business to be conducted in a
responsible manner, including monitoring performance against
the 2030 Sustainability Strategy and applicable ESG targets.
In addition to reporting any material sustainability-related risks,
identified and managed through the Group’s risk management
process, to the Risk Committee, other specified duties of the
Sustainability Committee include reviewing and monitoring:
•
•
•
Senior Management’s assessment of the health, safety,
security, environmental and social impacts resulting
from the Group’s operations, with particular regard to
impact on its employees, suppliers, contractors and host
communities;
the Group’s systems for compliance with applicable
sustainability-related legal and regulatory requirements
and its performance against such requirements; and
the Group’s systems, strategies, policies and targets
in relation to, amongst other things, emissions, energy
and carbon management, climate change, waste and
recycling, ensuring that they reflect best practice and
global developments.
In discharging its duties the Sustainability Committee may
seek independent professional advice on any matter it
deems necessary and access other appropriate resources
which it requires to function effectively, including support
and assistance from Group Secretariat.
Activities of the Sustainability Committee
A summary of the key activities undertaken by the Sustainability
Committee during the 2023 financial year is as follows:
•
•
•
•
sustainability-linked remuneration targets for the Executive
Leadership Team remitted to the Remuneration Committee
for approval;
review of the Group’s progress in respect of THG x Planet
Earth Goals and Targets;
sustainability materiality assessment review of process and
results;
principal risks reviewed and recommended to the Risk
Committee for approval;
• modern slavery statement and environmental policy review
•
•
•
•
and approval;
update to Group Sustainability Team restructure including
functions and scope;
packaging roadmap for the individual businesses and
strategy review and approval;
net-zero carbon roadmap for the individual businesses
and strategy review and approval;
review of people and engagement survey, including launch
of social impact initiatives; and
• HSE review and progress update.
Focus for 2024
During the current financial year it is anticipated that key areas of
focus for the Sustainability Committee will continue to be as follows:
•
oversee and make recommendations to the Executive
Leadership Team and Board for appropriate actions to be
taken in respect of the Group’s sustainability, compliance and
human rights’ strategies, policies, programmes, and activities;
• monitor and review progress relating to CSRD (Corporate
Sustainability Reporting Directive), seeking to understand
potential risks and uncertainties based on outcomes of
the double materiality assessment;
undertake the bi-annual review of the 2030 Sustainability
Strategy, goals, and targets;
provide updates on the progress to PACT and wider
efforts of supply chain sustainability;
•
•
• monitor and review progress relating to TNFD (Taskforce
on Nature-related Financial Disclosures), seeking to
understand potential risks and uncertainties based on
outcomes of the scenario analysis; and
oversee and make recommendations for actions to be
taken in respect to the Group’s sustainability strategy.
•
On behalf of the Sustainability Committee
Sue Farr
Chair of the Sustainability Committee
9 April 2024
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Directors’
Remuneration Report
“The Remuneration Committee has been kept closely informed of the
Group’s performance, in line with its commitment to align remuneration
with the creation of Shareholder value, while ensuring our leadership
team is appropriately motivated and incentivised to deliver long-term,
sustainable growth for all stakeholders.”
Helen Jones
Chair of the Remuneration Committee
Members and attendance
Committee member
Helen Jones
Dean Moore
Gillian Kent
Sue Farr
Iain McDonald
Damian Sanders
Position
Chair1
Member2
Member3
Member4
Former Member5
Former Member6
Attendance
1/1
2/2
2/2
1/1
1/1
n/a
1. Helen Jones was appointed as a member of the Remuneration Committee on 21 July 2023 and subsequently as Remuneration Committee Chair on 8 December 2023.
2. Dean Moore was appointed as Remuneration Committee Chair upon his appointment to the Board on 15 September 2022. He stepped down from this position, remaining as a member of
the Committee, upon Helen Jones’ appointment on 8 December 2023.
3. Gillian Kent was appointed to the Remuneration Committee on 24 January 2023 when Damian Sanders stepped down as a member upon his appointment as an Executive Director.
4. Sue Farr was appointed as a member of the Remuneration Committee on 21 July 2023.
5.
6. Damian Sanders stepped down as a member of the Remuneration Committee upon his appointment as an Executive Director on 24 January 2023.
Iain McDonald stepped down as a member of the Remuneration Committee on 21 June 2023, subsequently stepping down from the Board on 31 March 2024.
As the recently appointed Chair of the Remuneration
Committee, I would like to welcome you to the Directors’
Remuneration Report for the 2023 financial year and thank
Dean Moore for leading the Committee so ably in the
period prior to my appointment. Dean remains a valued
member of the Committee, and continues in his role as Audit
Committee Chair.
I am fortunate to have served as remuneration committee
chair at a number of listed companies, and, since the date
of my appointment, have sought to develop a deeper
understanding of the approach to remuneration at THG.
I intend to use my experience to determine how I can best
lead the Committee going forward, with a focus on promoting
good practice approaches to remuneration corporate
governance and market alignment in the context of a
competitive environment where attracting and retaining talent
remains challenging.
THG’s performance during 2023 was resilient in the context
of the headwinds which the Group faced, including the high
inflation global environment. The Remuneration Committee
has been kept closely informed of the Group’s performance,
in line with our commitment to align remuneration with the
creation of Shareholder value and thus ensure our leadership
team is appropriately motivated and incentivised to deliver
long-term, sustainable growth for all Shareholders.
We have also continued to monitor key trends in executive
and wider workforce remuneration throughout 2023 and, in
particular, responses to the cost of living challenges faced by
employees. THG has implemented a number of initiatives in
this regard, including the introduction of certain subsidised
staff services (including subsided bus travel) and free lunches
for certain members of the workforce (including apprentices).
The Remuneration Committee has also noted the industry-
wide discussions which have taken place throughout the
year regarding the international competitiveness of UK pay
structures and the ability to compete in the international talent
market.
This Directors’ Remuneration Report has been prepared in
accordance with The Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 (as
amended), the Listing Rules and the Code and is divided into
three sections:
members in July 2023, with Helen Jones subsequently
being appointed as Remuneration Committee Chair in
December 2023. As at 31 December 2023 and at the date of
this Report, Remuneration Committee membership aligned
with the applicable Code Provision and now comprises four
independent NEDs (as detailed in the foregoing table).
In satisfaction of the Terms of Reference, the Remuneration
Committee met on two occasions during 2023, with member
attendance also set out in the foregoing table. While only
Committee members are entitled to attend Committee
meetings, others, such as Senior Management and external
advisers, may attend by invitation as and when considered
appropriate, as was the case during 2023. No Director is
present during a decision relating to their own remuneration.
this annual statement from me, the Remuneration
Committee Chair;
Role and responsibilities
•
•
•
the Remuneration Policy, further details on which
follow and which will be put to a binding Shareholder
vote at the forthcoming AGM; and
the Annual Report on Remuneration which details
payments made to Directors during 2023 and which
is subject to an advisory Shareholder vote at the
forthcoming AGM.
Composition and meetings
The Terms of Reference provide that the Remuneration
Committee must comprise not less than three NEDs, the
majority of whom must be independent, who are selected
by the Board on the recommendation of the Nomination
Committee and in consultation with the Remuneration
Committee Chair. In satisfaction of these provisions and
as at the date of last year’s Directors’ Remuneration Report,
Remuneration Committee membership comprised Dean
Moore, an independent NED, as Remuneration Committee
Chair, Gillian Kent, also an independent NED, and non-
independent NED Iain McDonald. While recognising the
Code’s position that only independent non-executive directors
should sit on a company’s remuneration committee, the Board
considered that it would not be in the best interests of the
Company and its stakeholders for Iain McDonald to step down
from membership of the Committee in the short term in light
of both his extensive remuneration experience and the fact that
only two independent NEDs, Gillian Kent and Dean Moore,
were appointed to the Board at that time. While Damian
Sanders, a former independent NED, had also been a member
of the Committee, he stepped down from this position (and
from all other Board Committees) upon his appointment as
an Executive Director in January 2023.
However, in last year’s Report we committed to keep the
matter under ongoing review, having regard to, for example,
the timing and independence of future Board appointees.
Consequently, Iain McDonald stepped down from the
Committee in June 2023 and new independent NEDs, Sue Farr
and Helen Jones, were appointed as Remuneration Committee
As detailed within its Terms of Reference, a primary
responsibility of the Remuneration Committee is to determine
the remuneration package of Executive Directors and the
Independent Chair. More generally, it is the responsibility of
the Remuneration Committee to ensure that remuneration
practices and policies support the Group’s strategy and
promote its long-term, sustainable success. Other key duties
of the Committee include:
•
•
•
•
approving the design of, and determining targets for,
any performance-related pay schemes operated by
the Company and the payments made thereunder;
exercising its use of discretion, where appropriate,
to override formulaic remuneration outcomes;
reviewing the ongoing appropriateness and relevance
of the Remuneration Policy (further details on which
follow), together with the approach to implementation,
in the context of pay policies and practices across the
wider workforce and the Group’s culture, while consulting
with, and seeking approval from, Shareholders (and other
stakeholders) as appropriate; and
reviewing and having regard to pay and employment
conditions across the Company and/or Group as a
whole, including those of the Executive Leadership Team.
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Remuneration Policy
Remuneration for 2024
LTIP
To ensure the Remuneration Policy was suitably future-proofed
for the medium term, certain amendments were proposed
at the 2022 AGM, including the incorporation of a market-
standard shareholding requirement for future Executive
Directors and the introduction of a LTIP, to allow awards to
be granted to certain Executive Directors and thus maximise
alignment with long-term Shareholder interests.
The current Remuneration Policy (as originally approved by
Shareholders at the 2021 AGM, with subsequent amendments
approved by Shareholders at the 2022 AGM) has a three-
year term, and the Committee is therefore due to present
a Remuneration Policy for Shareholder approval at the
forthcoming AGM. The Committee has reviewed the current
Remuneration Policy and concluded that it remains
fit for purpose, subject to minor amendments to allow
additional flexibility and ensure market alignment. We are
therefore proposing to roll forward the current Remuneration
Policy for Shareholder approval at the forthcoming AGM.
2023 remuneration outcomes
No salary increases were awarded to the Executive Directors
during the 2023 financial year and, as was the case in 2021
and 2022, Matthew Moulding waived as much as was legally
permissible of his base salary in return for the Group making
a charitable donation of similar value.
The Remuneration Committee operated the Remuneration
Policy broadly as intended during 2023, with the exception
that no performance-related pay awards were made in 2023.
In light of the global macro-economic environment and
the cost of living challenges faced by many employees and
consumers, all Executive Directors opted to waive their
entitlement to participate in the 2023 annual bonus plan.
The introduction of a LTIP for Executive Directors (excluding
Matthew Moulding) was approved by Shareholders at the
2022 AGM, although no awards were made in 2022. Following
ongoing transactions and restructuring, the Committee agreed
during 2023 that it would not grant any awards until it had
greater certainty and clarity surrounding the future shape
of the business which, in turn, would ensure that it was in a
position to set robust and meaningful targets. This process,
alongside my appointment as Remuneration Committee Chair
in December 2023, resulted in the Committee deciding to delay
LTIP grants in respect of the 2023 financial year until March
2024, as considered in further detail within this Report.
No discretion was exercised by the Committee during the
2023 financial year in respect of the above remuneration
outcomes, and no Director was involved in deciding their
own remuneration outcome.
The Remuneration Committee intends to implement the Remuneration
Policy during 2024 as follows:
Base salary
While the Remuneration Committee initially proposed a salary
increase for the Executive Directors in line with the wider
workforce, the Executive Directors informed the Committee
that they would forego any proposed salary increase for 2024
(as was also the case in 2021, 2022 and 2023).
Annual bonus
In line with the Remuneration Policy, annual bonus awards
will be granted with a maximum opportunity of 100% of base
salary for each of the Executive Directors.
The measures and weightings for the 2024 bonus awards
for Matthew Moulding and Damian Sanders will be:
• Group Sales (continuing) (35%);
•
•
Adjusted EBITDA (continuing) (35%); and
Free Cash Flow (30%).
The measures and weightings for John Gallemore’s 2024
bonus award will be:
• Group Sales (continuing) (30%);
•
•
• Operational objectives relating to Adjusted
Adjusted EBITDA (continuing) (30%);
Free Cash Flow (20%); and
Distribution Costs (20%).
John Gallemore was appointed to the newly created,
stand-alone role of COO at the beginning of 2023, a role
which is viewed as integral in developing and driving THG’s
global fulfilment footprint, evolving the Group’s commercial
and operating models and continuing to reduce distribution
costs. Noting the specific nature of this position, it was
therefore considered appropriate to vary the measures
and weightings applicable to John Gallemore’s 2024 bonus
award on the basis detailed above.
While ESG metrics previously featured within the annual bonus
assessment, the Committee feels that, given the longer-term
ambition of the Group’s ESG goals, this metric would be better
aligned with the LTIP time horizon. Further details are outlined
in the LTIP section which follows.
As previously mentioned, when I joined the Remuneration
Committee it was important for me to ensure that we were
able to set meaningful and robust LTIP targets, and we
therefore postponed granting a 2023 LTIP award until earlier
this year.
On 7 March we granted LTIP awards of 250% of base salary
to each of John Gallemore and Damian Sanders, linked to
relative TSR (80%) and a stretching ESG target (20%). The
details of these awards are set out within the “Implementation
of Remuneration Policy for the 2024 financial year” section
of this Report. Relative TSR was chosen as a key financial
metric due to its inherent alignment with the creation of long-
term Shareholder value. As previously noted, assessment of
progress versus ESG strategic priorities will take place within
the LTIP going forward, where rigorous three-year targets can
be determined.
From 2024 we intend to grant annual awards on a normal
cycle, typically following the Company’s annual general
meeting.
In line with the current Remuneration Policy (proposed to be
rolled forward for Shareholder approval at the forthcoming
AGM), the Remuneration Committee intends to grant awards
of 250% of base salary to each of John Gallemore and Damian
Sanders under the LTIP during 2024. Awards will be subject to
stretching financial and strategic performance targets which
will be disclosed at the time of grant and measured over a
three-year period, with a further two-year post-vesting holding
period applying in line with the relevant Code requirement and
market best practice.
Consideration of stakeholder views
Prior to annually reviewing the remuneration of the Executive
Directors, the Remuneration Committee considers pay,
benefits and share scheme practices for employees across
the Group. While no direct workforce engagement took
place during the 2023 financial year on Executive Director
remuneration specifically, the implementation of a LTIP for
Executive Directors is aligned with the approach across the
wider business which has broad equity-based incentive
plans in place. The Group is committed to promoting and
maintaining good relations with employees and, where
relevant, their representative bodies as part of its broader
workforce engagement strategy and during 2023 sought to
enhance the level of remuneration-specific engagement via the
annual ‘b-Heard Survey’ (the “Survey”). The Survey was run by
a workforce engagement specialist and provided employees
globally with the opportunity to feed back on all aspects of life
at THG, including pay and benefits, on an anonymous basis.
While the Survey results continue to be interrogated to ensure
full use is made of the insights generated, they will be used to
help shape and inform future workforce engagement initiatives
and strategies, including remuneration-related, across the
Group.
AGM
I very much look forward to meeting with Shareholders at the
forthcoming AGM to discuss any queries or comments on the
proposed roll forward of the current Remuneration Policy, this
Directors’ Remuneration Report or on Group remuneration
matters more generally. If Shareholders have any concerns or
questions that they would like to discuss prior to the AGM, I
can be contacted via the Company Secretary.
On behalf of the Remuneration Committee
Helen Jones
Chair of the Remuneration Committee
9 April 2024
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Remuneration Policy
Introduction
As previously detailed, the Remuneration Committee has reviewed the current Remuneration Policy (as originally approved by
Shareholders at the 2021 AGM, with subsequent amendments approved by Shareholders at the 2022 AGM) and concluded that
it remains fit for purpose, subject to minor amendments to allow additional flexibility and ensure market alignment. It is therefore
proposed that the current Remuneration Policy is rolled forward for Shareholder approval at the forthcoming AGM. This section
details the Remuneration Policy which will be put to a binding Shareholder vote at the AGM.
The Remuneration Committee has designed the Remuneration Policy to reflect the following six pillars:
Clarity:
The Remuneration Committee believes that the disclosure of the remuneration arrangements is transparent, with clear rationale
provided on their maintenance and any changes to the Remuneration Policy. The Remuneration Committee remains committed to
consulting with Shareholders on both the Remuneration Policy and its implementation.
Simplicity:
The Remuneration Policy and the Remuneration Committee’s approach to implementation is simple and well understood. The
performance measures used in the incentive plans are well-aligned to the Group’s strategy.
Risk:
The Remuneration Committee has ensured that remuneration arrangements do not encourage and reward excessive risk taking by
setting targets to be stretching and achievable, with discretion to adjust formulaic outcomes under both the annual bonus and new
LTIP.
Predictability and proportionality:
The linkage of the performance measures to strategy and the setting of targets balances predictability and proportionality by
ensuring outcomes do not reward poor performance.
Culture:
The Remuneration Policy is consistent with the Group’s culture as well as strategy, therefore driving behaviours that promote the
long-term success of the Group for the benefit of all stakeholders.
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Remuneration Policy table
The following table sets out each element of remuneration and details how they support the Company’s short and long-term
strategic objectives. For the avoidance of doubt, the overall structure of the Remuneration Policy is unchanged from the current
Remuneration Policy (as originally approved by Shareholders at the 2021 AGM, with subsequent amendments approved by
Shareholders at the 2022 AGM), subject to minor amendments to allow additional flexibility and ensure market alignment
(including clarifying the application of Damian Sanders’ shareholding requirement).
Component
and objective
Base salary
To enable the Group to
attract, motivate and
retain the people it needs
to maximise the value of
the business
Operation
Opportunity
Performance
measures
Generally reviewed each year, with increases effective
1 January.
Salaries in respect of the year under review
(and for the following year) are disclosed in
the Annual Report on Remuneration.
n/a
Salary levels take account of:
•
•
•
•
salaries at FTSE companies of broadly similar
size or sector to THG;
salary increases across the rest of the UK
business;
role, personal performance and experience; and
business performance and the external
environment.
There is no fixed maximum.
Salary increases for Executive Directors
will normally not exceed those of the wider
workforce over the period this Remuneration
Policy applies. Where increases are awarded
in excess of the wider employee population,
the Remuneration Committee will provide the
rationale in the relevant year’s Annual Report
on Remuneration (e.g. if there is a material
change in the responsibility, size or complexity
of a role).
Pension
Executive Directors receive pension contributions
either as a direct payment or a cash allowance.
To provide a level of
retirement benefit that is
competitive in the relevant
market
Base salary is the only element of remuneration that
is pensionable.
Benefits
To provide a level of
benefits that is in line with
relevant market practice
Executive Directors receive benefits set at
an appropriate level taking into account total
remuneration, market practice, the benefits provided
to other employees in the Group and individual
circumstances. This may include, but is not limited
to, medical insurance benefits, permanent health
insurance and life assurance.
The Remuneration Committee reserves the right
to introduce other benefits (e.g. in the case that this
is necessary to attract and/or retain key Executive
Directors).
Other benefits, including all employee share schemes,
may be introduced from time to time to ensure the
benefits package is appropriately competitive and
reflects the needs and circumstances of the Group
and individual Executive Directors.
Annual bonus
To focus Executive
Directors on
achieving demanding
annual targets
relating to Group
performance
Performance targets are set at the start of each
financial year and aligned with the annual budget
agreed by the Board. At the end of the financial year in
question, the Remuneration Committee determines the
extent to which these targets have been achieved.
50% of the total bonus payable is normally paid in cash
with 50% deferred in nil-cost options over Ordinary
Shares. These options are exercisable after three years,
subject to continued employment and malus (in whole
or in part) during the deferral period in the event of a
material misstatement in accounting records, gross
misconduct, calculation error or corporate failure. Cash
bonuses may be subject to clawback over the deferral
period in similar circumstances as identified above.
A payment equivalent to the dividends that would have
accrued on deferred bonus awards that vest may be
made to participants on vesting.
Executive Directors receive a Company
contribution of a maximum in line with the
wider workforce for the relevant country. This
is currently set at 3% of pensionable salary for
UK Executive Directors.
n/a
Pensionable salary is determined in line with
the approach taken for the wider workforce
which is currently in line with auto-enrolment
levels.
Benefits may vary by role and the level is
determined each year to be appropriate for
the role and circumstances of individual
Executive Directors.
n/a
Whilst the Remuneration Committee has
not set an absolute maximum on the level
of benefits Executive Directors may receive,
the value of benefits is set at a level which
the Committee considers to be appropriately
positioned taking into account relevant market
levels based on the nature and location of
the role, the level of benefits provided for
other employees in the Group and individual
circumstances.
The Remuneration Committee retains
the discretion to approve a higher cost in
exceptional circumstances (e.g. relocation
expenses or an expatriation allowance on
recruitment) or in circumstances where
factors outside the Group’s control have
changed materially (e.g. market increases in
insurance costs).
Maximum opportunity: 200% of base salary
(with 50% deferred into Ordinary Shares
vesting after three years).
Target opportunity: 50% of maximum
opportunity.
Threshold opportunity: at most, 25% of
maximum opportunity.
Matthew Moulding and John Gallemore
will have a reduced opportunity of 100%
of salary which will be payable fully in cash.
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The bonus will be based on the achievement
of financial and non-financial performance
targets which may vary year-to-year but at
least 50% of the total opportunity will be
based on financial performance.
Details of the measures and weighting
on which the bonus will be based will be
disclosed in the relevant Annual Report
on Remuneration. If the Remuneration
Committee determines certain targets to be
deemed commercially sensitive, the targets
will be disclosed retrospectively.
The Remuneration Committee has discretion
to adjust the formulaic bonus outcomes
(including down to zero) within the limits
of the scheme if the formulaic outcome
is not reflective of underlying business
performance.
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Performance
measures
The majority of the awards will be based on
financial metrics, with the balance based on
strategic metrics.
The Remuneration Committee retains
discretion, in exceptional circumstances, to
change performance measures and targets
and the weightings attached to performance
measures partway through a performance
period if there is a significant and material
event which causes the Remuneration
Committee to believe the original measures,
weightings and targets are no longer
appropriate.
The Remuneration Committee also has
discretion to adjust the formulaic vesting
outcome (including down to zero) within
the limits of the scheme if the formulaic
outcome is not reflective of underlying
business performance.
n/a
Component
and objective
LTIP
To incentivise Executive
Directors while
providing alignment with
Shareholder interests
Operation
Opportunity
Awards are granted annually in the form of nil-cost
options or conditional awards of Ordinary Shares.
These will vest at the end of a three-year period
subject to continued employment and satisfaction
of the performance conditions.
Normally annual awards of up to 250% of
base salary. In exceptional circumstances,
such as to secure an external appointment
or in specific retention scenarios, an award of
up to 300% of base salary may be made.
A further two-year holding period will apply post
vesting.
Matthew Moulding will not be eligible to
participate in the LTIP.
The Remuneration Committee may award dividend
equivalents on awards to the extent that these vest.
Malus and clawback provisions will apply to enable
the Company to recover sums paid or withhold
the payment of any sum in the event of a material
misstatement resulting in an adjustment to the
audited consolidated accounts of THG or action
or conduct which, in the reasonable opinion of the
Board, amounts to employee misbehaviour, fraud
or gross misconduct.
Shareholding
requirement
To align Executive
Director and
Shareholder interests
and reinforce long-term
decision making,
including for
a period following
cessation of
employment
Matthew Moulding and John Gallemore are required
to retain at least 50% of any incentive awards that vest
(net of tax) until they have built up a personal holding
of Ordinary Shares worth at least 350% of salary.
n/a
All other Executive Directors must build up and
subsequently retain a shareholding of at least 200%
of salary over a five-year period from the date of their
appointment to the Board.
A post-cessation shareholding requirement of 350%
of salary to be held for two years after an Executive
Director’s employment is terminated in the case of
Matthew Moulding and John Gallemore and 200% of
salary for all other Executive Directors (or full actual
holding if lower).
Chair and
NED fees
To attract and retain
NEDs of the highest
calibre with broad
commercial experience
relevant to the Group
NEDs are paid a basic annual fee. Additional fees may
be paid to NEDs who chair a Board Committee and/
or who sit on a Board Committee to reflect additional
responsibilities.
The fees paid to NEDs are determined by the Board
and may be paid in a mix of cash and Ordinary Shares.
Fee levels are reviewed periodically, with any
adjustments effective 1 January. Fees are reviewed
by considering external advice on best practice and
fee levels at other FTSE companies of broadly similar
size and sector to THG. Time commitment and
responsibility are also considered when reviewing fees.
Fee increases will be applied considering the
outcome of the review.
n/a
The fees paid to NEDs in respect of the
year under review (and for the following
year) are disclosed in the Annual Report on
Remuneration.
Recruitment policy
External appointments
In cases of hiring or appointing a new Executive Director from outside the Group, the Remuneration Committee may make use of
all existing components of remuneration as follows:
Component
Policy
Base salary
The base salaries of new appointees will be determined by reference to relevant market data, experience and
skills of the individual, internal relativities and the current salary of the incumbent in the role.
Where a new appointee has an initial base salary set below market, the Remuneration Committee may make phased increases
which are above the average employee rate, subject to the individual’s development and performance in the role.
Benefits
As set out in the Remuneration Policy table, benefits may include (but are not limited to) the provision
of medical insurance benefits, permanent health insurance and life assurance, and any necessary
expatriation allowances or expenses relating to an Executive Director’s relocation.
Pension
New appointees will receive pension contributions in line with the wider workforce at the time.
Annual bonus
The bonus structure described in the Remuneration Policy table will apply to new appointees.
The maximum opportunity will be 200% of salary, pro-rated in the year of joining to reflect the proportion of that year employed.
Performance measures may include financial and non-financial performance targets, tailored to the individual in the
financial year of joining and with at least 50% of the total opportunity being based on financial performance.
At least 50% of any bonus earned will be subject to three-year deferral.
LTIP
The LTIP described in the Remuneration Policy table will apply to new appointees.
The maximum opportunity will normally be 250% of salary but in exceptional circumstances, such as to secure an
external appointment or in specific retention scenarios, an award of up to 300% of base salary may be made.
Performance measures may include financial and strategic objectives, with the majority of the award being based on financial performance.
Awards will vest at the end of a three-year period subject to continued employment and satisfaction of
the performance conditions. A further two-year holding period will apply post vesting.
Maximum
variable
remuneration
“Buyout” of
incentives
forfeited on
cessation of
employment
The maximum variable remuneration which may be granted will be in line with the Remuneration Policy which allows for variable
remuneration of up to 500% of salary i.e. the maximum annual bonus and the exceptional maximum LTIP opportunity.
Where the Remuneration Committee determines that the individual circumstances of recruitment justify
the provision of a buyout, the equivalent value of any incentives that will be forfeited on cessation of an
Executive Director’s previous employment will be calculated considering the following:
– the proportion of incentive awards forfeited upon the Executive Director’s cessation of employment;
– the performance conditions attached to the vesting of these incentives and the likelihood of them being satisfied; and
– any other terms and conditions having a material effect on their value (“lapsed value”).
The Remuneration Committee may then grant up to the same value as the lapsed value, where possible,
under the Group’s incentive plans. To the extent that it is not possible or practical to provide the buyout
within the terms of the Group’s existing incentive plans, a bespoke arrangement will be used.
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In determining the appropriate remuneration structure and level for the appointee, the Remuneration Committee will take into
consideration all relevant factors to ensure that arrangements are in the best interests of Shareholders.
Details of NEDs’ terms and notice periods are as follows:
The Company’s policy when setting fees for the appointment of new NEDs is to apply the Remuneration Policy which applies
to current NEDs. In recruiting a new NED, the Remuneration Committee will use the Remuneration Policy as set out in the
preceding table. A base fee in line with the prevailing fee schedule would be payable for serving as a Director, with additional fees
payable for chairing and/or membership of Board Committees.
Notes to the Remuneration Policy table
Changes from current Remuneration Policy
The Remuneration Committee concluded that the existing Remuneration Policy (as originally approved by Shareholders at the
2021 AGM, with subsequent amendments approved by Shareholders at the 2022 AGM) remains appropriate at the current time.
Therefore, the existing Remuneration Policy is rolled forward for approval with:
• updates to the wording on Benefits for Executive Directors, in order to allow additional flexibility;
• update to allow greater flexibility for all Executive Directors to receive some or all of any bonus payments directly rather than
being waived in lieu of a charitable donation; and
• minor wording clarifications on how Executive Directors, other than Matthew Moulding and John Gallemore, are referred to,
reflecting Damian Sanders’ position as CFO.
NED
Original date of appointment1
Notice period
Charles Allen
22 March 2022
Sue Farr
24 April 2023
Edward Koopman
3 May 2016
Gillian Kent
15 September 2022
Dean Moore
15 September 2022
Helen Jones
21 June 2023
6 months
3 months
1 month
1 month
1 month
1 month
1. Edward Koopman is the only NED who was appointed pre Admission. He was re-appointed under the terms of a new Letter of Appointment commencing on Admission.
Payments from previous awards
Payment for loss of office
For the avoidance of doubt, any remuneration payments and/or payments for loss of office made under legacy arrangements
prior to the approval of the roll forward Remuneration Policy at the forthcoming AGM may be paid out. For these purposes,
“payments” include the satisfaction of an award of variable remuneration where the terms of the award are agreed at the time the
award is granted.
Performance measure selection and approach to target setting
The measures used in the annual bonus and LTIP will be selected by the Remuneration Committee to directly reinforce the
Group’s medium to long-term, growth-orientated strategy (with details of the measures selected for use in the annual bonus
and LTIP for the year in review and for the coming year set out in the Annual Report on Remuneration). Targets applying to
incentives are reviewed annually, based on a number of internal and external reference points. Annual bonus targets are aligned
with the annual budget agreed by the Board. Where annual bonus targets are commercially sensitive, they will be disclosed
retrospectively in the next year’s Annual Report on Remuneration. Targets for LTIP awards (where possible) will be disclosed prior
to the time awards are made in the forward-looking section of the Directors’ Remuneration Report.
Internal promotion to the Board
In cases of appointing a new Executive Director by way of internal promotion, the Remuneration Policy will be consistent with that
for external appointees detailed in the preceding table (excluding the flexibility to make “buyout” or one-off recruitment awards).
Where an individual has contractual commitments made prior to their promotion to the Board and it is agreed that a commitment
is to continue, the Company will continue to honour these arrangements even if there are instances where they would not
otherwise be consistent with the prevailing Remuneration Policy at the time of promotion.
Service contracts
Executive Directors have signed rolling contracts, terminable on 12 months’ written notice by either the Company or the Director.
While NEDs are appointed for an initial three-year fixed term they may be invited by the Company to serve for a further period or
periods, conditional, at all times, upon satisfactory performance and annual re-election by Shareholders. With the exception of the
Independent Chair and the SID, where six and three months’ written notice is, respectively, required, a NED’s appointment may
be terminated at any time by either party giving the other one month’s written notice (or payment of fees in lieu of notice) or in
accordance with the Articles of Association.
The Remuneration Committee’s policy for Directors’ termination payments is to provide only what would normally be due to
Directors had they remained in employment in respect of the relevant notice period, and not go beyond their normal contractual
entitlements. Any incentive arrangements will be dealt with subject to the relevant rules, with any discretion exercised by the
Remuneration Committee on a case-by-case basis considering the circumstances of the termination. Termination payments will
also take into account any statutory entitlement at the appropriate level, to be considered by the Remuneration Committee on the
same basis. The Remuneration Committee will monitor and, where appropriate, enforce the Director’s duty to mitigate loss. When
the Remuneration Committee believes that it is essential to protect the Group’s interests, additional arrangements may be entered
into on appropriate terms e.g. post-termination protections, above and beyond those in the contract of employment.
Executive Directors are permitted to take up non-executive positions on the boards of other companies, subject to the prior
approval of the Board.
Under the service contracts of each Executive Director, the Group has the discretion to terminate the employment lawfully
without any notice by paying to the Director a sum equal to, but no more than, the salary and other contractual benefits of
the Director. The payment would be in respect of that part of the period of notice which the Director has not worked, less any
appropriate tax and other statutory deductions.
The Director would be entitled to any holiday pay which may otherwise have accrued in what would have been the notice
period. The Group may pay any sums due under these pay in lieu of notice provisions as one lump sum or in instalments of what
would have been the notice period. If the Group elects to pay in instalments, the Director is under an express contractual duty to
mitigate their losses and to disclose any third party income they have received or are due to receive. The Group reserves the right
to reduce the amount of the instalments by the amount of such income. The Remuneration Committee would expect to include
similar pay in lieu of notice provisions in any future Executive Director’s service contract.
Further, if the Director’s employment is terminated for whatever reason, they agree, pursuant to the terms of their service contract,
that they are not entitled to any damages or compensation to recompense them for the loss or diminution in value of any actual
or prospective rights, benefits or expectations under, or in relation to, discretionary incentive schemes. This is without prejudice to
any of the rights, benefits or entitlements which may have accrued to the Director under such arrangements at the termination of
employment. When considering compensation for loss of office, the Remuneration Committee will always seek to minimise the
cost to the Group while applying the following philosophy:
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Treatment on cessation of employment
Change of control
Remuneration
element
General
The Remuneration Committee will honour Executive Directors’ contractual entitlements. Service contracts do not contain liquidated damages
clauses. If a contract is to be terminated, the Remuneration Committee will determine such mitigation as it considers fair and reasonable in each
case. There are no contractual arrangements that would guarantee a pension with limited or no abatement on severance or early retirement. There
is no agreement between THG and its Directors or employees providing for compensation for loss of office or employment that occurs because
of a takeover bid. The Remuneration Committee reserves the right to make additional payments where such payments are made in good faith in
discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement or compromise of any
claim arising in connection with the termination of an Executive Director’s office or employment.
Salary, benefits
and pensions
These will be paid over the notice period. The Group has discretion to make a lump sum payment in lieu.
Cash element of
bonus
Good leaver reason
Good leaver reasons will include death, injury, disability, retirement and other reasons at the discretion of the Remuneration Committee.
Performance conditions will be measured at the bonus measurement date. Bonus will normally be pro-rated for the period worked during the
financial year in question.
Other reason
No bonus payable for the financial year of cessation.
The Remuneration Committee has the following elements of discretion:
• To determine that an Executive Director is a good leaver. It is the Remuneration Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained in full to Shareholders.
• To determine whether to pro-rate the bonus to time. The Remuneration Committee’s normal policy is that it will pro-rate bonus for time. It is the
Remuneration Committee’s intention to use discretion to not pro-rate in circumstances where there is an appropriate business case which will be
explained in full to Shareholders.
Deferred element of
bonus
Good leaver reason
Good leaver reasons will include death, injury, disability, retirement and other reasons at the discretion of the Remuneration Committee.
All subsisting deferred Share awards will vest.
Other reason
Lapse of any unvested deferred Share awards.
The Remuneration Committee has the following elements of discretion:
• To determine that an Executive Director is a good leaver. It is the Remuneration Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained in full to Shareholders.
• To vest deferred Shares at the end of the original deferral period or at the date of cessation. The Remuneration Committee will make this
determination depending on the type of good leaver reason resulting in the cessation.
• To determine whether to time pro-rate the maximum number of Shares from the date of grant to the date of cessation. The Remuneration
Committee’s normal policy is that it will not pro-rate awards for time. The Remuneration Committee will determine whether or not to pro-rate based
on the circumstances of the Executive Director’s departure.
Unvested LTIP
awards
Good leaver reason
Good leaver reasons will include death, injury, disability, retirement and other reasons at the discretion of the Remuneration Committee.
Unvested LTIP awards will be pro-rated to time and performance.
Other reason
Lapse of any unvested LTIP awards.
The Remuneration Committee has the following elements of discretion:
• To determine that an Executive Director is a good leaver. It is the Remuneration Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained in full to Shareholders.
• To time pro-rate the maximum number of Shares from the date of grant to the date of cessation. The Remuneration Committee’s policy is
generally to pro-rate to time. It is the Remuneration Committee’s intention to only use this discretion to not pro-rate in circumstances where there
is an appropriate business case which will be explained in full to Shareholders.
• To reduce the level of vesting of an award from the formulaic level of vesting if, in the opinion of the Board, the performance of the Executive
Director or the Company justifies such a reduction.
• The post-vesting holding period for LTIP awards will continue to apply irrespective of employment status unless the Remuneration Committee, in
exceptional circumstances, determines otherwise.
Upon departure, Executive Directors will be required to retain 100% of their shareholding requirement for a period of two-years post-cessation.
Post-cessation
shareholding
requirement
153
The Remuneration Committee’s policy on the vesting of incentives on a change of control is summarised as follows:
Remuneration element
Treatment on change of control
Discretion
Annual bonus
LTIP
Pro-rated to time and performance to the date of
the change of control.
The number of Shares, subject to subsisting LTIP
awards vesting on a change of control, will be
pro-rated to time and performance to the date
of the change of control.
The Remuneration Committee has discretion to
continue the operation of the bonus scheme to the
end of the bonus year.
The Remuneration Committee retains absolute
discretion regarding the proportion vesting, taking into
account time and performance. There is a presumption
that the Remuneration Committee will pro-rate to time.
The Remuneration Committee will only waive prorating
in exceptional circumstances where it views the change
of control as an event which has provided a material
enhanced value to Shareholders and which will be fully
explained to Shareholders. In all cases the relevant
performance conditions must be satisfied.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023
Performance scenario charts
The following charts illustrate the remuneration that would be paid to each of the Executive Directors on a forward-looking basis
pursuant to the Remuneration Policy and under the following performance scenarios: (i) minimum; (ii) on-target; (iii) maximum;
and (iv) maximum with 50% Ordinary Share price appreciation. The elements of remuneration have been categorised into three
components: (i) fixed; (ii) annual bonus; and (iii) LTIP, with the assumptions set out below:
Element
Description
Minimum
On-target
Maximum
Fixed
Salary, benefits and pension
Included in full
Included in full
Included in full
Annual
bonus
Annual bonus awards
No variable pay
Payout of 50% of the
maximum bonus
Full payout of the
maximum bonus
The potential opportunities illustrated are based on the Remuneration Policy applied to the base salary for the 2024 financial
year. For the annual bonus, the amounts illustrated are those potentially receivable in respect of performance for the year to 31
December 2024.
Matthew Moulding will not participate in any future long-term incentive arrangements under the Remuneration Policy.
Differences in Remuneration Policy for other employees
The remuneration policy for other Group employees is based on broadly consistent principles as described above. Annual salary
reviews across the Group take into account Group performance, local pay and market conditions and salary levels for similar roles
in comparable companies.
The Group operates an annual bonus scheme for many of its employees and operates equity-based awards for the Executive
Leadership Team and other key employees. Opportunities and performance measures vary by organisational level, geographical
region and an individual’s role.
LTIP
Awards under the LTIP
No variable pay
Vesting of 50% of the
maximum award
Full vesting of the
maximum award
Consideration of employment conditions elsewhere in the Group
Please note that dividend equivalents have not been added to LTIP awards for the purpose of the following illustration.
CEO - Matthew Moulding
Minimum
On-target
Maximum
Maximum with 50%
SP appreciation
£778,500.00
£1,153,500.00
£1,528,500.00
£1,528,500.00
£0
£1,000,000
£2,000,000
£3,000,000
CFO - Damian Sanders
Minimum
On-target
Maximum
Maximum with 50%
SP appreciation
£522,000.00
£1,522,000.00
£2,272,000.00
£2,897,000.00
£0
£1,000,000
£2,000,000
£3,000,000
COO - John Gallemore
Minimum
On-target
Maximum
Maximum with 50%
SP appreciation
£0
Key
155
£518,000.00
£1,418,000.00
£2,093,000.00
£2,655,500.00
£1,000,000
£2,000,000
£3,000,000
Fixed pay
Bonus
LTIP
LTIP with 50% Ordinary Share price appreciation
Prior to annually reviewing the remuneration of the Executive Directors, the Remuneration Committee considers base pay
and share scheme practices across the Group. THG aims to provide a remuneration package for all employees that is market
competitive and operates pension provisions which are provided on the same basis to Executive Directors and employees alike.
In addition, any salary increases for Executive Directors are expected to be generally in line with those for UK-based employees.
The Group seeks to promote and maintain good relations with employees and, where relevant, their representative bodies as part
of its broader employee engagement strategy and intends to continue to improve remuneration-specific engagement over the
course of 2024.
Consideration of Shareholder views
The Remuneration Committee will consider all Shareholder views received, whether as part of a formal consultation or at the
Company’s annual general meeting, together with guidance from Shareholder representative bodies more broadly. The Remuneration
Committee will consult with Shareholders before making any significant changes to the Remuneration Policy.
Discretion of Remuneration Committee
The Remuneration Committee has discretion in several areas of the Remuneration Policy, as previously detailed. The Remuneration
Committee may also exercise operational and administrative discretions under relevant plan rules approved by Shareholders and
as set out in those rules. In addition, the Remuneration Committee has the discretion to amend the Remuneration Policy with
regard to minor or administrative matters where, in the opinion of the Remuneration Committee, it would be disproportionate to
seek or await Shareholder feedback.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023
Annual Report on Remuneration
This section covers the reporting period from 1 January 2023 to 31 December 2023 and provides details of the implementation
of the Remuneration Policy during the period, as well as the intended implementation during the current 2024 reporting period.
No salary increases were awarded to Executive Directors during the 2023 reporting period. As such, at 31 December 2023 salary
levels were as follows:
Single total figure of remuneration (audited)
The following table provides a single figure for total remuneration of the Directors for the financial year to 31 December 2023,
together with comparative figures for the financial year to 31 December 2022. The values of each element of remuneration
are based on the actual value delivered, where known. The value of the annual bonus includes both the cash element and the
element deferred into Shares.
Executive Directors
Matthew Moulding 2023
John Gallemore
Damian Sanders2
NEDs
Charles Allen3
2022
2023
2022
2023
2022
2023
2022
Edward Koopman 2023
Iain McDonald4
Gillian Kent3
Dean Moore3
Sue Farr5
Helen Jones5
Former NEDs
Damian Sanders2
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Salary
& fees1
(£’000)
Benefits
Pension
(£’000)
(£’000)
Total
fixed pay
(£’000)
Annual bonus1
LTIP
Other
(£’000)
(£’000)
(£’000)
Total
variable pay
(£’000)
Total
(£’000)
23
21
450
235
470
n/a
397
328
34
36
53
58
99
30
102
30
74
n/a
47
n/a
37
157
6
12
5
5
7
0
0
1
1
0
n/a
n/a
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
29
33
456
241
477
n/a
397
328
34
36
53
58
99
30
102
30
74
n/a
47
n/a
37
157
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
n/a
n/a
n/a
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
29
33
456
241
477
n/a
397
328
34
36
53
58
99
30
102
30
74
n/a
47
n/a
37
157
1.
From Admission and subject to minimum statutory limits, Matthew Moulding has elected to waive his salary. John Gallemore elected to waive his salary for the period from Admission to 30
June 2022. The salaries and bonuses detailed in the table above for these individuals are the amounts received in the periods. For the financial year ending 31 December 2022, the salaries
waived by Matthew Moulding and John Gallemore were £729,331 and £214,328 respectively. For the financial year ending 31 December 2023, the salary waived by Matthew Moulding was
£727,480. For the financial year ending 31 December 2023, both Matthew Moulding and John Gallemore waived their entitlement to participate in the annual bonus plan, as they did for the
financial year ending 31 December 2022.
2. Damian Sanders held the position of NED during the 2022 reporting period and until he was appointed as CFO on 24 January 2023. His 2023 remuneration has therefore been split between
the relevant periods of service in each role, with each element pro-rated to reflect his position as NED from 1 January 2023 to 23 January 2023 and subsequent position as CFO from 24
January 2023 to 31 December 2023. For the financial year ending 31 December 2023, Damian Sanders waived his entitlement to participate in the annual bonus plan.
3. The figures for the 2022 reporting period have been pro-rated to reflect Charles Allen’s appointment to the Board from 22 March 2022 and the appointments of Gillian Kent and Dean Moore
from 15 September 2022.
Iain McDonald stepped down from the Board on 31 March 2024.
4.
5. The figures for the 2023 reporting period have been pro-rated to reflect the appointments of Sue Farr and Helen Jones to the Board from, respectively, 24 April 2023 and 21 June 2023.
Base salary (audited)
The base salaries of the Executive Directors are typically reviewed on an annual basis, with any increases effective from 1 January.
As detailed in the Remuneration Policy, when determining any increases the Remuneration Committee compares the Group’s
remuneration packages for its Executive Directors with those of directors in FTSE companies of a similar size and/or sector to
THG and also takes account of salary increases across the rest of the UK business, an individual’s role and personal performance,
business performance and the external environment.
• Matthew Moulding: £750,000;
• Damian Sanders: £500,000; and
John Gallemore: £450,000.
•
As previously stated, Matthew Moulding waived as much as was legally permissible of his base salary during 2023 in return for
the Group making a charitable donation to The Moulding Foundation of a similar value. For the financial year ending 31 December
2023, the salary waived by Matthew Moulding was £727,480.
Pension (audited)
As part of their remuneration arrangements, the Executive Directors are entitled to receive pension contributions from the Company.
Under these arrangements, they can elect for those contributions to be paid in the form of taxable pension allowance or direct
payments into a personal pension plan or the Group’s UK defined contribution scheme.
During the 2023 financial year, £488, £294 and £1,321 were paid into the personal pension plans of Matthew Moulding, Damian
Sanders and John Gallemore respectively. These amounts represent 3% of pensionable salary, in line with the UK wider
workforce. Executive Directors participate in a Qualifying Earnings scheme where employer contributions are capped at a
monthly threshold, such that the effective contribution rate is less than 3% of salary in practice. Damian Sanders subsequently
opted out of the Qualifying Earnings scheme in April 2023. None of the Executive Directors participate in a Group defined benefit
pension scheme.
Benefits (audited)
In line with the current Remuneration Policy, benefits in kind for each of the Executive Directors comprised medical insurance
benefits, permanent health insurance and life assurance.
Bonus awards (audited)
All of the Executive Directors chose to waive their entitlement to participate in the annual bonus plan for the 2023 financial year,
taking into account wider economic conditions and the cost of living challenges faced by many. As such, no discretion was
exercised by the Committee during the 2023 financial year.
Scheme interests awarded (audited)
No such awards were made to Directors during the 2023 financial year.
Payments to past Directors (audited)
No payments were made to past Directors during the 2023 financial year.
Loss of office payments (audited)
No loss of office payments were made during the 2023 financial year.
External appointments
Damian Sanders is a non-executive director of Victorian Plumbing Group plc. Neither Matthew Moulding nor John Gallemore
hold any external non-executive roles.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023
Directors’ shareholdings (audited)
The table below shows the shareholdings of each Director as at 31 December 2023:
Directors’ share ownership guidelines (audited)
As described in the Remuneration Policy, Matthew Moulding and John Gallemore are required to hold Ordinary Shares equal to
at least 350% of their base salary, whilst Damian Sanders is expected to build up a holding in Ordinary Shares of at least 200% of
salary over a five-year period from the date of his appointment to the Board. NEDs are not subject to any shareholding requirements.
Director
Ordinary
Shares
D1 Shares
D2 Shares
Deferred
2 Shares
E Shares
F Shares
G Shares
H Shares
Executive Directors’ share ownership at 31 December 2023 was as follows:
Executive Directors
Matthew Moulding1
198,744,095
50,550,450
John Gallemore
682,9472
3,533,879
360 (equivalent to
66,772 Ordinary
Shares)
3,174 (equivalent to
588,702 Ordinary
Shares)
Damian Sanders
21,926
NEDs
Charles Allen3
2,400,000
Edward Koopman
0
Iain McDonald4
2,505,943
Gillian Kent
Dean Moore
Sue Farr3
Helen Jones
0
0
67,3975
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
18,346,774
43,641,266
20,197,808
7,733,792
813,345
185,476
2,666,963
4,000,537
0
0
0
0
0
0
14,524
185,476
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1.
160,486,876 of the Ordinary Shares, 10,971,090 of the Deferred 2 Shares and all of the F Shares and G Shares owned by Matthew Moulding are held by FIC ShareCo Limited, a corporate
entity wholly owned by Matthew Moulding. Additionally, 9,834,879 of the Ordinary Shares shown in the table above are held by Jodie Moulding, Matthew Moulding’s spouse.
2. 578,710 of these Ordinary Shares are held jointly with Joanne Gallemore, John Gallemore’s spouse.
3. Charles Allen and Sue Farr hold Ordinary Shares and, in consideration of these individual shareholdings and NED independence, the Board has applied its assessment criteria including,
but not limited to, whether a NED has held a material business relationship with the Company in the last three years. Taking into account assessments of materiality and the 3% notification
threshold under the DTRs’ major shareholdings notification regime, the Board acknowledges that the shareholdings of these NEDs sit significantly below the notification threshold and
therefore do not impair their independence.
Iain McDonald stepped down from the Board on 31 March 2024.
4.
5. 26,500 of these Ordinary Shares are held by Anthony Mair, Sue Farr’s spouse.
There have been no changes to Directors’ shareholdings between 31 December 2023 and the date of this Directors’ Remuneration Report.
Director
Shareholding requirement
(%age of salary)
Shareholding as at 31 December
2023 (%age of salary)
Shareholding
requirement met?
Matthew Moulding
John Gallemore
350
Damian Sanders
200
33,6861
2,0642
3
Yes
Yes
No
1. Matthew Moulding’s aggregated shareholding includes all Shares (i.e. Ordinary Shares, D1 Shares, D2 Shares, E Shares, F Shares, G Shares and Deferred 2 Shares) held by Matthew
2.
Moulding, his spouse, Jodie Moulding, and FIC ShareCo Limited, a corporate entity wholly owned by Matthew Moulding.
John Gallemore’s aggregated shareholding includes all Shares (i.e. Ordinary Shares, D1 Shares, D2 Shares, E Shares, F Shares, G Shares and Deferred 2 Shares) held by him and jointly with
his spouse, Joanne Gallemore.
Current shareholdings are based on Shares owned outright and valued using the average Ordinary Share price over the three
months ended 31 December 2023 i.e. £0.745.
Performance graph and table
The following graph shows the TSR (i.e. total shareholder return) performance over the period from Admission to 31 December
2023 relative to the FTSE 250 Index. It illustrates the performance of a £100 investment in the Company in that period compared
with the value of £100 invested in the FTSE 250 Index over the same period.
The FTSE 250 Index continues to be considered a more appropriate comparator for this purpose as it is a broad equity index
into which the Company’s market cap falls.
THG
FTSE 250
)
)
%
%
(
(
e
e
c
c
n
n
a
a
m
m
r
r
o
o
f
f
r
r
e
e
p
p
R
R
S
S
T
T
180
160
140
120
100
80
60
40
20
0
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160
Listing
31/12/2020
31/12/2021
31/12/2022
31/12/2023
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023
Chief Executive Officer’s historical remuneration
Chief Executive Officer’s pay ratio
The following table details the Chief Executive Officer’s remuneration for each of the last four financial years:
Single figure (£’000)
Bonus outcome as a percentage of maximum
Long-term incentive outcome as a percentage of maximum
2020
870,139
100
100
2021
453
n/a1
n/a2
2022
33
n/a1
n/a2
2023
29
n/a1
n/a2
1. Matthew Moulding waived his entitlement to participate in the annual bonus plan for each of the 2021, 2022 and 2023 financial years.
2. No LTIP was eligible to vest in respect of the 2021, 2022 or 2023 financial years and Matthew Moulding does not participate in any ongoing LTIP.
Percentage change in Directors’ remuneration
The Executive Directors are the only employees of the Company and therefore the UK workforce has been selected as the
appropriate comparator group to provide a meaningful comparison since this is the geographical location in which all of the
Executive Directors, and the majority of NEDs, are based. Accordingly, the following table shows the percentage change in
the Directors’ salaries, benefits (excluding pension) and annual bonuses between the 2020 and 2021, 2021 and 2022, and
2022 and 2023 financial years, compared with the percentage change in the average of each of these components of pay for
all UK employees for each of these periods. The comparison uses a per capita figure.
2022 to 2023
2021 to 2022
2020 to 2021
Salary / fees
Benefits
Bonus
Salary / fees
Benefits
Bonus
Salary / fees
Benefits
Bonus
Executive Directors
Matthew Moulding1
John Gallemore2
9.5%
91.5%
Damian Sanders3
236.3%
NEDs
Charles Allen
Edward Koopman
Iain McDonald7
Gillian Kent
Dean Moore
Sue Farr
Helen Jones
Wider workforce
21.2%4
-4.1%
-9.1%
235.8%4
247.9%4
n/a6
n/a6
-46.6%
-5.2%
n/a³
0%
0%
0%
0%
0%
n/a6
n/a6
n/a
n/a
n/a³
n/a5
n/a5
n/a5
n/a5
n/a5
n/a5,6
n/a5,6
5.5%
-97.3%
1,100.7%
18.8%
n/a4
2.1%
-2.8%
n/a4
n/a4
n/a6
n/a6
2.6%
0%
n/a4
0%
0%
n/a4
n/a4
n/a6
n/a6
n/a
n/a
n/a
n/a4,5
n/a5
n/a5
n/a4,5
n/a4,5
n/a5,6
n/a5,6
-95.8%
-91.6%
780%
n/a4
250%
325%
n/a4
n/a4
n/a6
n/a6
17.0%
63.0%
0%
n/a4
0%
0%
n/a4
n/a4
n/a6
n/a6
-100%
-100%
n/a
n/a4,5
n/a5
n/a5
n/a4,5
n/a4,5
n/a5,6
n/a5,6
Average employee8
4.7%
22.5%
12.9%
10.5%
-20.8%
-85.4%
10.1%
217.3%
-37.5%
1.
From Admission and subject to minimum statutory limits, Matthew Moulding has elected to waive his salary and the percentage increase stated above reflects changes in these statutory
limits rather than changes to salary levels. The reduction in the 2021 to 2022 benefits figure relates to Matthew Moulding’s private security cover which was funded by the Company in 2021
and personally funded from 1 January 2022 onwards. As in 2021 and 2022, Matthew Moulding waived his entitlement to participate in the annual bonus plan in 2023.
2. During 2021 John Gallemore elected to waive his salary subject to minimum statutory limits. In 2022 John Gallemore elected to waive his salary for the period 1 January 2022 to 30 June 2022
and since this date has been paid his standard base salary. The percentage increase stated above for 2021 to 2022 reflects John Gallemore electing not to waive his salary for the period 1 July
2022 to 31 December 2022. As in 2021 and 2022, John Gallemore waived his entitlement to participate in the annual bonus plan in 2023.
3. The salary/fees change for Damian Sanders reflects a change in his role during the 2023 financial year. He held the position of NED during the 2020, 2021 and 2022 financial years and from
1 January 2023 to 23 January 2023. He was appointed CFO on 24 January 2023 (and has held this position from this date to the date of this Report). The percentage increase stated above for
2022 to 2023 relates to this change in role. It is not possible to show a percentage change for benefits and bonus as Damian Sanders was not eligible to receive these remuneration elements
prior to his appointment as CFO.
4. Charles Allen, Gillian Kent and Dean Moore were not Directors during the 2020 and 2021 financial years. Charles Allen was appointed to the Board on 22 March 2022 and Gillian Kent and
Dean Moore were both appointed on 15 September 2022. The percentage change figure disclosed for 2022 to 2023 for: (i) Charles Allen therefore reflects his full year’s service in 2023 in
comparison to his part year’s service in 2022 (i.e. the figure reflects 12 months’ service in 2023 versus approximately 9 months’ service in 2022); and (ii) each of Gillian Kent and Dean Moore
therefore reflects their full year’s service in 2023 in comparison to their part year’s service in 2022 (i.e. the figures reflect 12 months’ service in 2023 versus approximately 3.5 months’ service
in 2022).
5. NEDs are not entitled to participate in the annual bonus plan.
6. Sue Farr and Helen Jones were not Directors during the 2020, 2021 and 2022 financial years, being appointed to the Board on 24 April 2023 and 21 June 2023 respectively.
7.
8. THG PLC is the parent company of the Group and, with the exception of the Executive Directors, does not have any employees. The figures detailed here are therefore representative
Iain McDonald stepped down from the Board on 31 March 2024.
of the Group’s UK workforce.
The following table presents the pay ratio between the Chief Executive Officer’s single total figure of remuneration and that
of the Group’s UK workforce. The ratios compare the Chief Executive Officer’s single total figure of remuneration with the total
remuneration of full-time equivalent UK employees at the 25th, median and 75th percentiles.
Year
2023
2022
2021
Method
Option A
Option A
Option A
UK employees (full-time equivalents)
CEO remuneration
(£’000)
25th percentile
pay ratio
Median pay ratio
75th percentile
pay ratio
29
33
453
1.2:1
1.2:1
21:1
1.0:1
1.1:1
18:1
0.7:1
0.8:1
14:1
The total pay and benefits and salary figures used for the pay ratio calculations are set out in the following table:
UK employees (full-time equivalents)
Year
2023
Salary
2023
Total pay and benefits
25th percentile
£24,408
£24,844
Median
£28,340
£28,745
75th percentile
£40,700
£41,830
The 25th percentile, median and 75th percentile figures used to determine the above ratios were selected by reference to the
hourly pay figures for the Group’s UK workforce. Option A, as set out under the Regulations, was used to calculate remuneration
for the 2023 financial year as the Company believes this is the most robust methodology for calculating these figures (and reflects
the approach adopted for the preceding two financial years). The full-time equivalent annualised remuneration (comprising salary,
benefits, pension, annual bonus and long-term incentives) was then calculated for those employees for the 2023 financial year.
The ratio continues to remain around 1:1 on a median basis, primarily as a result of Matthew Moulding waiving as much of his base
salary as is legally permissible in return for the Group making a charitable donation of similar value, as well as waiving his entitlement
to participate in the annual bonus and not participating in any long-term incentive scheme. Executive Director pay is, typically, more
at risk than wider employee pay due to the use of variable pay which is not guaranteed and hence, depending on incentive plan
outcomes, can lead to a total pay ratio that varies significantly from year to year. Furthermore, the Committee believes that THG’s
reward policies are not only aligned with the Group’s shared values and culture but also incentivise and drive the right behaviours
and ensure all employees are rewarded fairly and competitively for their contribution to the Group’s success. For these reasons,
the Committee is satisfied that the median pay ratio is consistent with the Group’s pay, reward and progression policies.
THG PLC is the parent company of the Group and, with the exception of the Executive Directors, does not have any employees.
The pay ratio figures have therefore been calculated with reference to the Group’s UK workforce which, the Company believes,
is the appropriate comparator being reflective of the wider policies in operation on employee pay, reward and progression across
the vast majority of the Group’s overall workforce.
Relative importance of spend on pay
The following table details Shareholder distributions and THG expenditure on total employee pay for the 2023 financial year versus
the prior financial year, together with the percentage change year on year.
2023 (£m)
2022 (£m)
%age change
Profit distributed by way of dividend
0
Total spend on remuneration
316.9
0
336.3
n/a
-5.8
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023
Shareholder dilution
Any share incentive plans (including The THG PLC 2022 Executive Long-Term Incentive Plan) post-IPO will be operated in line
with the Investment Association’s Principles of Remuneration which require that commitments under all share schemes satisfied
by newly issued ordinary shares must not exceed 10% of the issued ordinary share capital in any rolling ten-year period, of which
up to 5% may be used to satisfy options under The THG PLC 2022 Executive Long-Term Incentive Plan.
AGM voting outcomes
The following table sets out the Shareholder voting results in respect of the approval of the 2022 Directors’ Remuneration Report
(which was put to Shareholders at the 2023 AGM) and the changes to the Shareholder-approved Directors’ Remuneration Policy
(which were put to Shareholders at the 2022 AGM).
Resolution
Votes for
%age of
votes cast
Votes
against
%age of
votes cast
Total
votes cast
%age of
ISC voted
Votes
withheld
To approve the 2022 Directors’
Remuneration Report (excluding
the Remuneration Policy)
To approve the changes to the
Directors’ Remuneration Policy
796,923,612
96.46
29,288,261
3.54
826,211,873
63.59
933,261
718,254,407
99.88
827,864
0.12
719,082,271
58.88
14,559,630
Implementation of Remuneration Policy for the 2024 financial year
The Remuneration Committee proposes to implement the Remuneration Policy for the 2024 financial year as follows:
Base salary
Executive Directors have voluntarily waived any salary increase in respect of the 2024 reporting period. Therefore, base salaries
will continue to be as follows for the financial year ending 31 December 2024:
• Matthew Moulding: £750,000;
• Damian Sanders: £500,000; and
• John Gallemore: £450,000.
Pension
There is no change in the contribution percentage for Executive Directors for the financial year ending 31 December 2024 and
it remains at 3% of pensionable salary. Pensionable salary is determined in line with the approach taken for the Group’s wider
workforce, which is currently in line with auto-enrolment levels.
Executive Directors participate in a Qualifying Earnings scheme where employer contributions are capped at a monthly threshold,
such that the effective contribution rate is less than 3% of salary in practice. None of the Executive Directors participate in a
Group defined benefit pension scheme.
Benefits
There are no proposed changes to the benefits provisions for Executive Directors for the financial year ending 31 December 2024.
Annual bonus
In line with the Remuneration Policy, the maximum opportunity for the financial year ending 31 December 2024 will be:
• Matthew Moulding: 100% of base salary;
• Damian Sanders: 100% of base salary; and
• John Gallemore: 100% of base salary.
The measures and weightings for Matthew Moulding and Damian Sanders for the 2024 financial year will be:
• Group Sales (continuing) (35%);
• Adjusted EBITDA (continuing) (35%); and
• Free Cash Flow (30%).
The measures and weightings for John Gallemore for the 2024 financial year will be:
• Group Sales (continuing) (30%);
• Adjusted EBITDA (continuing) (30%);
• Free Cash Flow (20%); and
• Operational objectives relating to Adjusted Distribution Costs (20%).
The specific targets are considered commercially sensitive and will be disclosed in next year’s Annual Report on Remuneration.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023
LTIP
2023 LTIP award
As noted in the Chair’s letter, the Committee decided to delay LTIP grants in respect of the 2023 reporting period until March
2024. On 7 March 2024 an award equal to 250% of base salary was granted to each of Damian Sanders and John Gallemore.
Full details of the number of options granted were disclosed via a RNS (i.e. Regulatory News Service) announcement at the
time of grant. The performance period of these awards is three years from the date of grant, with the following targets:
• 80% based on relative TSR versus FTSE 250 Index comparator group: performance in line with the median of the comparator
group will deliver 25% of maximum vesting, and performance in line with the upper quartile of the comparator group will
deliver 100% of maximum vesting (with straight line vesting in between).
• 20% based on ESG target: by end of 2026, THG operational sites to achieve Zero Waste TRUE Gold Certification. This will be
assessed via a binary approach, with full vesting if achieved, and zero vesting if not achieved.
These awards will vest on the third anniversary of the date of grant and will be subject to a further two-year holding period.
2024 LTIP award
As noted in the Chair’s letter, from 2024 onwards we intend to grant annual awards on a normal cycle, typically following the
Company’s annual general meeting each year. A 2024 LTIP award of 250% of salary is therefore expected to be granted after the
upcoming AGM to each of Damian Sanders and John Gallemore. These awards will vest three years after grant and will be subject
to a further two-year holding period. These awards will be subject to stretching financial and strategic performance conditions which
will be disclosed at the time of grant via a RNS announcement which will also be published on the Company’s website.
NED fees
Following a review of the fees paid to NEDs, an increase of 4% will be applied to core/base NED fees in line with wider workforce
salary increases. This 4% increase does not apply to the additional chairing/membership fees. Accordingly, annual NED fees will
be as follows, noting that, in line with prevailing market practice, a fee was introduced during 2023 in respect of the SID role:
NED fee type
Fee for Independent Chair
Fee for SID
Base fee for independent NEDs
Base fee for non-independent NEDs
Additional fee for chairing each of Audit, Risk, Remuneration and Sustainability Committees
Additional fee for chairing each of Related Party and Nomination Committees
Additional fee for membership of each of Audit, Risk, Related Party, Nomination, Remuneration and
Sustainability Committees
Fee
£416,000
£90,000
£72,800
£36,400
£12,000
£8,000
£5,000
Advisers to the Remuneration Committee
PricewaterhouseCoopers LLP (“PwC”) remain engaged as the Remuneration Committee’s independent remuneration advisers,
having been appointed prior to Admission by the then Remuneration Committee Chair. PwC is a member of the Remuneration
Consultants Group, the professional body for remuneration consultants, and adheres to its Code of Conduct. The Remuneration
Committee is satisfied that the advice provided by PwC during 2023 was objective and independent and, while separate teams
within PwC also advise the Company on matters of tax, corporate governance and operations, the Remuneration Committee is
further satisfied that these activities do not compromise the independence or objectivity of the advice it receives from PwC as
Remuneration Committee advisers.
During 2023 PwC provided general support to the Remuneration Committee and guidance on developments in remuneration
governance and best practice, including associated implications for THG. PwC further advised on:
•
•
•
•
the 2022 Directors’ Remuneration Report;
the remuneration packages for the new CFO and SID;
appropriate performance metrics for 2024 incentive arrangements; and
2023 AGM season remuneration trends.
Fees charged by PwC for advice provided to the Remuneration Committee for the financial year ended 31 December 2023
amounted to £47,050 (excluding VAT).
On behalf of the Remuneration Committee
Helen Jones
Chair of the Remuneration Committee
9 April 2024
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023
Independent Auditor’s Report
to the Members of THG PLC
Opinion
In our opinion:
• THG PLC’s group financial statements and parent
• the parent company financial statements have been
company financial statements (the “financial statements”)
give a true and fair view of the state of the Group’s and
of the parent company’s affairs as at 31 December
2023 and of the Group’s loss for the year then ended;
• the Group financial statements have been
properly prepared in accordance with UK adopted
international accounting standards;
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements of THG PLC (the ‘parent company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2023 which comprise:
Group
Parent company
Consolidated statement of comprehensive income
for the year ended 31 December 2023
Company statement of financial position as at
31 December 2023
Consolidated statement of financial position
as at 31 December 2023
Company statement of changes in equity
for the year ended 31 December 2023
Consolidated statement of changes in equity
for the year ended 31 December 2023
Related notes 1 to 8 to the financial statements
including material accounting policy information
Consolidated statement of cash flows
for the year ended 31 December 2023
Related notes 1 to 29 to the financial statements,
including material accounting policy information
The financial reporting framework that has been applied
in the preparation of the group financial statements is
applicable law and UK adopted international accounting
standards. The financial reporting framework that has
been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are
independent of the group and parent company in accordance
with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to
going concern
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group
and parent company’s ability to continue to adopt the
going concern basis of accounting included:
• We have documented and evaluated the process
followed by management to prepare the base case
and downside scenario forecasts which they have
used in their going concern assessment.
• We audited the forecasts underpinning the going
concern model which are based on the Board-approved
forecasts, including checking the arithmetical accuracy and
appropriateness of management’s base case forecast over
the going concern assessment period to 30 April 2025.
• We challenged the reasonableness of the key
assumptions such as the revenue growth rate and EBITDA
margin achieved by the Group used within the base
case and downside scenarios, and compared them to
external evidence including sector reports, industry trends
and historical data where appropriate.
• We compared management’s scenario analysis to the
principal risks disclosed in the Annual Report and Accounts,
and evaluated whether the downside scenarios were
appropriately severe with reference to historical data on
each input sensitised.
• We read and evaluated the Group’s lending agreements to
ascertain any financial or non-financial covenant restrictions
which are in place.
• We obtained management’s schedule of loan facilities
and covenants thereon for the going concern period.
We confirmed that loan repayments have been
appropriately included within management’s forecasts to
the extent they are due in the period. We assessed the
forecast compliance of each covenant throughout
the going concern period.
• We verified the cash positions as at 31 December 2023 and
31 March 2024 to bank statements.
• We reviewed the accuracy of management’s forecasting
by comparing the forecast results for the year to date
to 29 February 2024 to actual results as reported within
management accounts and flash results to the 31 March
2024.
• We have reviewed the terms of the extension of the facility
arrangement confirmed in March 2024 confirming the value
and the period of the extension.
• We identified additional stress tests that were then run
by management to determine the impact of changing
some of management’s key assumptions on the going
concern assessment. These key assumptions were in
relation to: the revenue growth rate and the EBITDA margin
achieved by the Group, both of which would impact the
liquidity headroom in the going concern period. Covenant
compliance only becomes applicable when the business
draws down on more than 40% of the existing RCF facilities.
Management performed these stress tests by sensitising for
each key assumption individually based on their expectation
of a reasonable downside scenario for that assumption, and
then prepared a reverse stress test by sensitising multiple
assumptions in order to reduce headroom to nil. We then
evaluated the likelihood of the scenario that would reduce
headroom to nil.
• We reviewed the appropriateness of management’s going
concern disclosure in describing the risks associated with
its ability to continue to operate as a going concern until 30
April 2025.
• The audit procedures on going concern were supervised
and directed by the audit engagement partner and senior
members of the team.
Our key observations in relation to the work performed are:
• In management’s base case and plausible downside
scenario the Group retained headroom on forecast cash
and covenant compliance throughout the going concern
assessment period. Neither the base case nor the
sensitised scenario assumes any draw down of the RCF.
The lowest level of cash headroom identified is £168.7m
in management’s downside scenario, this cash headroom
position does not include any drawdown of the RCF
facility of £170m (inclusive of £15m ringfenced for supply
chain financing). The RCF facility decreases from £170m
in December 2024 to £150m until its expiry in May 2026,
following an extension agreed in March 2024.
• Cash balances as at 31 December 2023 total £416m.
The Group is projected to meet all of its covenant tests
(which only apply when the Group draws down on more
than 40% of the RCF facilities) throughout the forecast
period after applying sensitivities and stress testing
modelled by management except for the reverse stress
test which was designed to identify which assumptions
would eliminate headroom in the model.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group and parent company’s ability to continue as a going
concern for the period to 30 April 2025.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report. However, because not all future
events or conditions can be predicted, this statement
is not a guarantee as to the Group’s or parent company’s
ability to continue as a going concern.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of 1 component and
specified audit procedures on a further 2 components.
• The components where we performed full or specified audit procedures accounted for
100% of the loss before tax, 96% of revenue, 89% of total expenses and 89% of total assets.
• We also performed specified procedures on 2 other components which were targeted
to gain assurance over the existence of assets and occurrence of revenue and expenses.
Key audit matters
• Revenue recognition.
• Impairment of intangible assets and tangible assets in the THG Beauty and THG Ingenuity CGUs.
• Accounting for platform development costs.
Materiality
• Overall Group materiality of £10m which represents 0.5% of total revenue.
An overview of the scope of the
parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality
and our allocation of performance materiality determine
our audit scope for each company within the Group.
Taken together, this enables us to form an opinion on the
consolidated financial statements. We take into account
size, risk profile, the organisation of the Group and
effectiveness of Group wide controls (including centralised
IT systems), changes in the business environment and
other factors such as recent internal audit results when
assessing the level of work to be performed at each
component. We assessed the control environment and
concluded that the most effective approach to the audit
was a substantive and data analytics approach rather
than a controls-based approach.
Of the 3 components selected, we performed an audit
of the complete financial information of 1 component (“full
scope component”) which was selected based on its size
and risk characteristics.
For the current year, the full scope component contributed
to 83% of the Group’s revenue, 81% of the Group’s
expenses, and 73% of the Group’s assets.
We performed specified procedures over balances not
in the full scope component, that amounted to a further 13%
of the Group’s revenue, 8% of the Group’s expenses, and
16% of the total assets. The specified procedures were
targeted primarily at obtaining bank confirmations for an
additional £391m of cash balances, performing data analytical
procedures over a further £270m of revenue, and to perform
sample testing over a further £179m of expenses.
Of the balances within the components that are not covered
through our full scope or specified audit procedures,
that together represent 4% of the Group’s revenue, none are
individually greater than 2% of the Group’s revenue.
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For these components, we performed other procedures,
including analytical review procedures, to respond to any
potential risks of material misstatement to the Group financial
statements.
Changes from the prior year
There are no significant changes to our scoping from the
2022 Group audit.
Involvement with component teams
There is no involvement of component teams, all audit work
performed for the purposes of the audit was undertaken
by the Group audit team only.
Climate change
Stakeholders are increasingly interested in how climate
change will impact THG PLC. The Group has determined
that the most significant future impacts from climate change
on its operations will be through transition and physical
risks as described in the TCFD section on pages 69 to 77 and
in the Sustainability report, as well as on page 90 within
the principal risks and uncertainties, which form part of the
“Other information”, rather than the audited financial statements. Our
procedures on these unaudited disclosures therefore consisted
solely of considering whether they are materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit or otherwise appear to be materially misstated,
in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the
potential impacts of climate change on the Group’s
business and any consequential material impact on
its financial statements.
Our audit effort in considering climate change was focused
on ensuring that the effects of climate risks have been
appropriately considered when modelling future cash flows.
We also challenged the Directors’ considerations of
climate change in their assessment of Going concern and
viability and associated disclosures including the Group’s
disclosure of its assessment of climate change within the
critical accounting judgements and estimates section of
the Group’s accounting policies on page 188.
Whilst the Group has stated its commitment to the
aspirations of the Paris Agreement to achieve net zero
emissions by 2040, the Group is currently unable to
determine the full future economic impact on their business
model, operational plans and customers to achieve this and
therefore as set out above the potential impacts are not fully
incorporated in these financial statements.
Based on our work we have not identified the impact of
climate change on the financial statements to be a key
audit matter or to impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period and include the most
significant assessed risks of material misstatement
(whether due to fraud) that we identified. These matters
included those which had the greatest effect on the overall
audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the
financial statements as a whole, and in our opinion thereon,
and we do not provide a separate opinion on these matters.
Risk
Our response to the risk
Revenue recognition
(£2,045m, 2022: £2,239m)
• We assessed the design and implementation of the key controls over
revenue recognition for all significant revenue streams within the Group.
Refer to the Audit Committee Report
(page 123); Accounting policies (page 182);
and Note 2 of the Consolidated Financial
Statements (page 189).
THG PLC has reported revenue of £2,045m
for the year ended 31 December 2023
(2022: £2,239m).
Revenue is a key metric when evaluating
the performance of the Group and receives
significant scrutiny externally and internally.
Product revenue (D2C/B2B revenue) is
primarily comprised of a large volume of
small value transactions. Revenue from
THG Ingenuity is split across both product
revenues and other revenues (services,
hosting). As the Group makes 30% of its
revenue in the final quarter of the year, our
risk response is heightened on this quarter.
Our risk in relation to revenue recognition
incorporates three elements:
All significant revenue streams:
• A risk of bias or fraud through management
manipulation of revenue recognised by non-
routine/manual adjustments, with a particular
focus on postings made in the final quarter
of the year.
• Risk of bias or fraud through management
inappropriately reclassifying revenue
between segments.
THG Ingenuity only
• Risk of inappropriate recognition of revenue
through management manipulating the
performance obligations against which
revenue is recognised.
Non-routine adjustments:
• We adopted a data analytics approach to online websales direct to
consumers to corroborate our expectation of the relationship
between revenue, trade receivables and/or cash receipts. Any
material exceptions, representing journals outside of the standard
process which may have been indicative of management override of
controls were substantively tested. For revenue not tested via data
analytics a substantive sample of invoices, proof of delivery and cash
receipts was tested.
• We identified material topside journal entry/consolidation postings
recorded to any significant revenue stream during the period or with
the purpose of reclassifying revenue between segments. For journals
identified which satisfied these criteria we obtained supporting
evidence from management to corroborate that the journal entry
was valid, appropriate and supported.
• We performed an assessment of cash-in-transit balances and tested
them by agreeing a sample through to cash receipts after the year-end.
Inappropriate classification
• We obtained management’s definition of segmental revenues, as described
within THG’s accounting policy and notes regarding segmental revenues,
and challenged any material changes from prior year to understand the
business purpose and rationale. We reviewed segmental disclosures including
those regarding internal recharges levied by THG Ingenuity to THG Beauty
and THG Nutrition, to ensure that amounts recorded and disclosed were an
accurate reflection of the terms of the Master Services Agreement (“MSA”)
between the parties.
THG Ingenuity
• We selected a sample of material new or amended THG Ingenuity
sales contracts. For each contract we reviewed the contractual terms
and conditions and evaluated management’s assessment of how
IFRS 15 is applied to the contract terms, including the identification
of performance obligations and allocation of consideration to each
performance obligation identified.
Key observations communicated to the Audit Committee
Based on the audit procedures performed, we did not identify evidence of material misstatements in the revenue recognised in the current year.
We are satisfied that the disclosures appropriately describe the classification of revenue and that revenue recognised is in compliance with IFRS 15.
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Risk
Our response to the risk
Risk
Our response to the risk
Impairment of intangible assets in the THG
Beauty CGU
In response to this risk, we have:
Impairment of intangible assets in the
THG Ingenuity CGU
In response to this risk, we have:
(£878.6m, 2022: £954.4m)
Refer to the Audit Committee Report
(page 123); Accounting policies (page 182);
and Note 11 of the Consolidated Financial
Statements (page 199).
There is a risk that the recoverable value of
the assets are below the carrying amount of
the THG Beauty cash generating unit (‘CGU’).
An impairment charge was recorded against
the THG Beauty CGU in 2022, and the model
used was sensitive to changes in growth rates
and discount rates. Given the continuing
challenging macroeconomic environment, we
concluded there is a significant risk in relation
to the impairment assessment for this CGU.
Judgements are applied in determining the
forecast cashflows including short and long-
term growth rates, EBITDA margins, and
the discount rates adopted.
• Performed a walkthrough of management’s annual impairment review
process and assessed the design effectiveness and implementation of key
controls.
• Obtained management’s impairment assessment and evaluated the
methodology adopted to confirm it is consistent with the requirements of IAS
36.
• Assessed the reliability of management’s forecasts by comparing previous
forecasts to actuals. We validated that the source of the forecasts used for the
impairment model is the same underlying cash flows used for other parts of
the audit, including going concern.
• Challenged the reasonableness of the forecasts used in the assessment
including key assumptions (such as growth rates and EBITDA margins) by
reference to third party industry forecasts, competitors and historic actuals.
• We also engaged an EY valuations specialist to calculate an independent
range of the discount rate expected for the THG Beauty CGU and validated
whether management’s discount rate was within this range.
• Assessed the sensitivity of the headroom to changes in key assumptions.
• Tested the mathematical accuracy of the models used.
• Assessed the impairment disclosure presented by management and ensured
this is in accordance with the requirements of ‘IAS 36 Impairment of Assets’
and ‘IFRS 13 Fair Value Measurement’.
(£146.7m, 2022: £124.5m)
Refer to the Audit Committee Report
(page 123); Accounting policies (page 182);
and Note 11 of the Consolidated Financial
Statements (page 199).
There is a risk that the recoverable values
of the assets are below the carrying amount
of THG Ingenuity cash generating unit
(‘CGU’).
An Impairment charge was recorded against
the THG Ingenuity CGU in 2022, and the
model used was sensitive to changes in
growth rates and discount rates. Given the
continuing challenging macroeconomic
environment, we concluded there is a
significant risk in relation to the impairment
assessment for this CGU.
Judgements are applied in relation to
determining the replacement cost of the
Ingenuity platform including the number
of technology developers it would take
to recreate the platform, the time period
development would occur over and the
estimated rate per hour.
• Performed a walkthrough of management’s annual impairment review
process and assessed the design effectiveness and implementation of key
controls.
• Obtained management’s impairment assessment and evaluated the
methodology adopted to confirm it is consistent with the requirements of
IAS 36.
• Engaged an EY internal specialist to assist with independently assessing
the appropriateness of the assumptions adopted in relation to the value of
platform development costs.
• Engaged an EY internal specialist to assist with independently assessing
the appropriateness of the assumptions adopted in relation to the value of
certain leased assets.
• Engaged an EY internal specialist to assist with independently assessing
the appropriateness of the assumptions adopted in relation to the value of
fit out costs and robotic assets within certain warehouses.
• Assessed the sensitivity of the headroom to changes in key assumptions.
• Tested the mathematical accuracy of the models used.
• Assessed the impairment disclosure presented by management and
ensured this is in accordance with the requirements of ‘IAS 36 Impairment
of Assets’ and ‘IFRS 13 Fair Value Measurement’.
Key observations communicated to the Audit Committee
We are satisfied that the carrying value of assets in this CGU is not impaired. We have highlighted to the Audit Committee the sensitivity of the
THG Beauty impairment model to reasonably possible changes in key assumptions in combination such as the revenue growth rate and
the discount rate. We have concluded that THG’s disclosures sufficiently describe this sensitivity, and that the disclosures in the Annual
Report and Accounts regarding the Impairment assessment for this CGU are in line with IAS 36.
Key observations communicated to the Audit Committee
We are satisfied that the carrying value of assets in this CGU is not impaired. We do not consider the model to be sensitive to a reasonably
possible change of assumptions and therefore have concluded that enhanced disclosures in this area are not required.
We have concluded that THG’s disclosures sufficiently describe this sensitivity, and that the disclosures in the Annual Report and Accounts
regarding the impairment assessment for this CGU are in line with IAS 36.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Risk
Our response to the risk
Accounting for platform development costs
In response to this risk, we have:
(£120m, 2022: £100m)
Refer to the Audit Committee Report
(page 123); Accounting policies (page 182);
and Note 11 of the Consolidated Financial
Statements (page 199).
Within capitalised platform development costs
there is a risk that management and other
employee time is capitalised that does not
meet the criteria required for capitalisation.
This assessment includes judgement in
assessing the incremental value/future
economic benefits expected from the project.
• Performed a walkthrough of the process associated with capitalised
platform development costs and assessed the design effectiveness and
implementation of key controls
• Obtained a breakdown by project of all platform development costs
capitalised in the period. From this breakdown, we selected a sample of
projects for further testing and for each project we:
• Obtained an understanding and related support for management’s
evaluation of how the project satisfies the requirements of ‘IAS 38
Intangible Assets’ to be capitalised. This was completed through
questionnaires sent directly to a sample of developers.
• Held interviews with 26 project managers to understand a) the
nature and responsibilities associated with their role and b) the
nature of the main project they had been working on in the period.
We utilised this information to assess the appropriateness of
capitalisation in line with the accounting standard requirements and
management’s accounting treatment. We enquired with the project
managers as to when the projects went live, and compared this to
the actual date at which management began to amortise the projects.
• For the developers captured in our above procedures, we used payroll
data by employee to form an expectation of the amount capitalised
based on that employee’s payroll capitalisation rate, and compared this
to the actual amount capitalised.
• We examined the underlying ledger to identify any descriptions of projects
included that may indicate that the costs capitalised are more akin to
operating costs in nature.
• We performed a trend analysis to assess any unusual fluctuation in the
pattern of time capitalised on a month-on-month basis, in comparison
to payroll costs for the same period.
• We benchmarked management’s standard policy to assign a useful
economic life to most projects with other comparable companies to
identify potential inconsistencies.
Key observations communicated to the Audit Committee
Based on the procedures we have performed we did not identify material misstatements in the capitalised platform development costs carried
in the statement of financial position.
We determined materiality for the Group to be £10.0m
(2022: £9.2m), which is c.0.5% (2022: 0.4%) of Group revenue.
Based on our review of analysts’ commentary, we believe
that revenue is the most important benchmark for users of
the financial statements. The increase in materiality reflects
that the audit team have determined planning materiality
to be 0.5% of Revenue (rather than 0.4% in the prior year).
We determined materiality for the parent company to
be £10.0m (2022: £9.2 m), which is 1% of equity (2022:
1% of equity), capped at Group materiality.
During the course of our audit, we reassessed initial
materiality set at the planning stage of the audit, but did
not need to change the amount nor basis of materiality.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form
of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there
is a material misstatement of the other information, we are
required to report that fact.
Performance materiality
We have nothing to report in this regard.
On the basis of our risk assessments, together with our
assessment of the Group’s overall control environment,
our judgement was that performance materiality was 50%
(2022: 50%) of our planning materiality, namely £5.0m (2022:
£4.6m). We have set performance materiality at this percentage
due to the level of errors identified through the course of the
2022 audit.
Audit work of components for the purpose of obtaining audit
coverage over significant financial statement accounts
is undertaken based on a percentage of total performance
materiality. The performance materiality set for each
component is based on the relative scale and risk of the
component to the Group as a whole and our assessment
of the risk of misstatement at that component. In the current
year, the performance materiality allocated to components
was £2.50m to £4.375m (2022: £0.9m to £4.0m), excluding
performance materiality for the parent company.
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would report
to them all uncorrected audit differences in excess of £0.50m
(2022: £0.50m), which is set at 5% (2022: 5%) of planning
materiality, as well as differences below that threshold that,
in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both
the quantitative measures of materiality discussed above
and in light of other relevant qualitative considerations in
forming our opinion.
Corporate governance statement
As THG PLC have voluntarily complied with the UK Corporate
Governance Code, we are required to review the directors’
statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating
to the Group and company’s compliance with the provisions
of the UK Corporate Governance Code specified for our
review.
Based on the work undertaken as part of our audit,
we have concluded that each of the following elements
of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge
obtained during the audit:
• Directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 97;
• Directors’ explanation as to its assessment of the company’s
prospects, the period this assessment covers and why the
period is appropriate set out on page 97;
• Directors’ statement on fair, balanced and understandable
set out on page 127;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set
out on pages 89 to 96;
• The section of the Annual Report and Accounts that
describes the review of effectiveness of risk management
and internal control systems set out on page 87; and
• The section describing the work of the Audit Committee
and Risk Committee set out on pages 123 to 131.
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Our application of materiality
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
In the prior year, our auditor’s report included a key
audit matter in relation to ‘Significant Disclosures’ which
incorporated our risks on adjusted profit measures,
related party transactions, and narrative related to THG
Ingenuity, and presentation of segmental reporting
(including the impact of IFRS 5 discontinued operations).
However, in the current year, we have seen a reduction
in the level of adjusted items, segmental reporting for the
current year is established, and consistent with the prior
year there were no IFRS 5 discontinued operations,
and for these reasons we have concluded that ‘Significant
Disclosures’ is no longer a key audit matter.
Materiality
Other information
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the
users of the financial statements. Materiality provides
a basis for determining the nature and extent of our
audit procedures.
The other information comprises the information included in
the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the
other information contained within the annual report.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report
to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the strategic report and
the directors’ report for the financial year for which
the financial statements are prepared is consistent
with the financial statements and those reports have
been prepared in accordance with applicable legal
requirements;
• the information about internal control and risk
management systems in relation to financial
reporting processes and about share capital
structures, given in compliance with rules
7.2.5 and 7.2.6 in the Disclosure Rules and
Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules),
is consistent with the financial statements and
has been prepared in accordance with applicable
legal requirements; and
• information about the company’s corporate governance
statement and practices and about its administrative,
management and supervisory bodies and their
committees complies with rules 7.2.2, 7.2.3 and
7.2.7 of the FCA Rules.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of the
group and the parent company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited
by us; or
• the parent company financial statements and the part
of the Directors’ Remuneration Report to be audited
are not in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Responsibilities of directors
• We understood how THG PLC is complying with
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as
a body, for our audit work, for this report, or for the opinions
we have formed.
Karl Havers (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
10th April 2024
As explained more fully in the directors’ responsibilities
statement set out on page 105, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group and parent company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless the directors either intend
to liquidate the Group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention
and detection of fraud rests with both those charged
with governance of the company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined
that the most significant are those that relate to the reporting
framework (UK-adopted IAS, Companies Act 2006, the
UK Corporate Governance Code and the Listing Rules of
the UK Listing Authority) and the relevant tax compliance
regulations in the jurisdictions in which THG PLC operates.
In addition, we concluded that there are certain significant
laws and regulations that may have an effect on the
determination of the amounts and disclosures in the
financial statements and those laws and regulations relating
to health and safety, employee matters, environmental,
and bribery and corruption practices.
those frameworks by making enquiries of management,
internal audit, those responsible for legal and compliance
procedures and the Company Secretary. We corroborated
our enquiries through our review of Board minutes,
internal audit reports and papers provided to the
Audit Committee and Risk Committee.
• We assessed the susceptibility of the group’s financial
statements to material misstatement, including how
fraud might occur by meeting with management and
those charged with governance to understand where
it considered there was a susceptibility to fraud. We also
considered performance targets and the propensity to
influence efforts made by management to manage earnings.
Where the risk was considered to be higher, we performed
audit procedures to address each identified fraud risk.
These procedures included testing higher risk journal entries
and were designed to provide reasonable assurance that
the financial statements were free from fraud and error.
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws
and regulations. Our procedures involved journal entry
testing, with a focus on consolidation journals and journal
entries indicating large or unusual transactions based
on our understanding of the business. We performed
inquiries of internal and external legal counsel, reviewed
material items within the Group’s legal expenses, and
reviewed media coverage of the Group to identify whether
there were relevant matters that had not been brought
to our attention through discussions with management.
In addition, we completed procedures to conclude on the
compliance of the disclosures in the Annual Report and
Accounts with the requirements of the relevant accounting
standards, UK legislation and the UK Corporate Governance
Code 2018. We also engaged EY forensics specialists to
assist with the performance of our risk assessment procedures.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/auditors
responsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit committee,
we were appointed by the company in 2011 to audit the
financial statements for the year ending 31 December 2011
and subsequent financial periods.
• The period of total uninterrupted engagement including
previous renewals and reappointments is 13 years, covering
the years ending 31 December 2011 to 31 December 2023.
• The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or the parent
company and we remain independent of the Group and
the parent company in conducting the audit.
• The audit opinion is consistent with the additional report to
the audit committee.
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Consolidated statement of comprehensive income
for the year ended 31 December 2023
Consolidated statement of financial position
as at 31 December 2023
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative costs
Other operating expense
Operating loss
Finance income
Finance costs
Loss before taxation
Income tax (charge) / credit
Loss for the financial year
Other comprehensive (expense) / income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations, net of tax
Net (loss) / gain in cash flow hedges
Total comprehensive expense for the financial year
Basic and diluted loss per share (£)
26
Adjusted EBITDA
Operating loss
Adjustments for:
Amortisation
Amortisation of acquired intangibles
Depreciation
Adjusted items - cash
Adjusted items – non-cash
Other operating expense – non-cash loss on disposal of freehold assets
Share-based payments
Adjusted EBITDA1
Notes
11
11
12.1,22
4
4
7
2023
Total
£’000
2022
Total
£’000
Note
2
2,045,378
2,239,229
(1,205,088)
(1,359,254)
12.1
3
8
8
9
840,290
(298,971)
(709,048)
(17,664)
(185,393)
13,329
(79,900)
879,975
(402,769)
(972,771)
-
(495,565)
2,359
(56,522)
(251,964)
(549,728)
3,592
9,771
(248,372)
(539,957)
(46,255)
(5,220)
(299,847)
(0.19)
2023
£’000
62,953
9,753
(467,251)
(0.44)
2022
£’000
(185,393)
(495,565)
68,829
50,543
95,113
15,824
34,803
17,664
16,723
114,106
58,581
50,394
94,191
40,090
305,689
-
10,734
64,114
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Other financial assets
Current assets
Assets held for sale
Inventories
Trade and other receivables
Other financial assets
Current tax asset
Cash and cash equivalents
Total assets
Equity
Ordinary shares
Share premium
Merger reserve
Capital redemption reserve
Hedging reserve
Cost of hedging reserve
FX reserve
Retained earnings
Non-current liabilities
Borrowings
Other financial liabilities
Lease liabilities
Provisions
Deferred tax
Current liabilities
Contract liability
Trade and other payables
Borrowings
Current tax liability
Lease liabilities
Provisions
Other financial liabilities
Total liabilities
31 December
2023
31 December
2022
Note
£'000
£'000
11
12.1
22
14
12.2
13
15
14
16
23
18
14
22
19
21
20
17
18
22
19
14
1,207,383
273,171
303,635
1,400
7,999
1,793,588
-
297,143
271,782
1,915
-
416,162
987,002
2,780,590
7,072
2,024,824
615
523
(20,020)
25,283
15,604
(1,032,234)
1,021,667
621,011
-
301,440
22,130
55,698
1,275,762
360,041
294,309
1,400
21,567
1,953,079
21,397
373,271
264,949
301
2,377
473,783
1,136,078
3,089,157
6,903
2,024,452
615
523
(6,221)
16,704
61,859
(803,096)
1,301,739
648,197
4,189
290,381
18,840
76,598
1,000,279
1,038,205
22,864
638,350
29,026
1,266
43,537
3,838
19,763
758,644
1,758,923
34,256
636,440
30,992
-
43,995
3,530
-
749,213
1,787,418
1. Adjusted EBITDA is defined as operating profit before depreciation, amortisation, share-based payments, other operating expense - non-cash loss on disposal of freehold assets
and adjusted items.
Total equity and liabilities
2,780,590
3,089,157
The results for the year are derived from continuing activities.
The comprehensive expense is 100% attributable to the owners of the Parent Company.
The financial statements on pages 177 to 222 were approved by the Board of Directors on 9 April 2024 and were signed on its behalf by:
177
178
Damian Sanders
Chief Financial Officer
Registered number: 06539496
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Consolidated statement of changes in equity for the year ended
31 December 2023
Consolidated statement of cash flows for the year ended
31 December 2023
Ordinary
shares
Share
premium
Merger
reserve
Capital
Redemption
reserve
FX
reserve
Hedging
reserve
Cost of
Hedging
reserve
Retained
earnings
Total equity
Note
£'000
£'000
£'000
£'000
£'000
£'000
£’000
£'000
£'000
Balance at 1 January 2022
6,684
2,022,311
615
523
(1,094)
(12,964)
13,694
(274,015)
1,755,754
Loss for the year
Other comprehensive
expense:
Impact of foreign exchange
Movement on hedging
instruments
Total comprehensive
(expense) / income for
the year
Issue of ordinary share
capital
Share based payments
7
Deferred tax in equity
Balance at 31 December
2022
-
-
-
-
-
-
-
-
219
2,141
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62,953
-
-
-
-
-
6,743
3,010
(539,957)
(539,957)
-
-
62,953
9,753
62,953
6,743
3,010
(539,957)
(467,251)
-
-
-
-
-
-
-
-
-
-
2,360
10,734
10,734
142
142
6,903
2,024,452
615
523
61,859
(6,221)
16,704
(803,096)
1,301,739
Balance at 1 January 2023
6,903
2,024,452
615
523
61,859
(6,221)
16,704
(803,096)
1,301,739
Loss for the year
Other comprehensive
income:
Impact of foreign exchange
Movement on hedging
instruments
Total comprehensive
income / (expense) income
for the year
Issue of ordinary share
capital
Share based payments
Deferred tax in equity
Balance at 31 December
2023
-
-
-
-
-
-
-
-
169
372
7
21
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(46,255)
-
-
-
-
-
(13,799)
8,579
(248,372)
(248,372)
-
-
(46,255)
(5,220)
(46,255)
(13,799)
8,579
(248,372)
(299,847)
-
-
-
-
-
-
-
-
-
-
541
16,723
16,723
2,511
2,511
7,072
2,024,824
615
523
15,604
(20,020)
25,283
(1,032,234)
1,021,667
Cash flows from operating activities before adjusted cash flows
Cash generated from operations
Income tax paid
Net cash generated from operating activities before adjusted cash flows
Cash flows relating to adjusted items
Net cash generated from operating activities
Cash flows from investing activities
Acquisition of subsidiaries net of cash acquired
Proceeds from sale of non-core freehold assets
Purchase of property, plant and equipment
Purchase of intangible assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares net of fees
Interest paid
Repayment of lease liabilities
(Repayment of ) / proceeds from bank borrowings
Net cash flow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
2023
£’000
162,258
(5,411)
156,847
(15,040)
141,807
(20,259)
55,450
(46,289)
(79,369)
13,329
(77,138)
-
(47,803)
(49,487)
(25,000)
(122,290)
(57,621)
473,783
416,162
Notes
25
10
8
22
16
179
2022
£’000
87,642
(4,857)
82,785
(45,071)
37,714
(5,691)
-
(94,854)
(81,564)
2,359
(179,750)
(73)
(27,923)
(49,012)
156,000
78,992
(63,044)
536,827
473,783
180
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Notes to the consolidated financial statements
1. Accounting policies
The Directors have also considered the liquidity of the Group
as well as available facilities and note that as at the balance
sheet date, the Group had a total of £170m in undrawn
facilities, along with £416m readily available cash held on the
balance sheet. Net debt at this date was £563m (note 18)
and net debt of £218m before the inclusion of IFRS 16 lease
liabilities.
In December 2019, the Group entered into a €600m seven
year loan facility agreement due to mature in December 2026
and a £170m Revolving Credit Facility (“RCF”) due to mature
in December 2024. In March 2024, this facility was extended
by 17 months to May 2026. The facility which remains undrawn
will reduce to £150m from December 2024. During FY22 an
incremental £156 million export facility was provided by the
Groups existing lenders ranking pari passu with the existing
facility. This facility expires in October 2025. There are no key
covenants attached to the €600m or £156m facilities which are
drawn down. Covenants attached to the RCF are unchanged
and are linked to gross debt leverage and become effective
when the facility is drawn upon. This facility is not forecast to
be drawn in the future period.
The Directors are of the opinion that the Group’s forecasts and
projections, which they believe are based on an appropriate
assessment of the market and past experience taking account
of reasonably possible changes in trading performance given
the current market and economic conditions, show that the
Group should be able to operate within the current facility
and comply with its banking covenants in the event that the
RCF facilities are drawn upon. The Directors have modelled
a range of scenarios, including a base case which has been
stress tested to consider downside risks and a reverse stress
test, over a three-year period. Further details of the Group’s
considerations are provided in the Viability Statement and
Going Concern Statement on page 97.
As a result of the analysis performed, including potential
severe but plausible scenarios, the Board believes that the
Group is able to adequately manage its financing and principal
risks and that the Group will be able to operate within the level
of its facilities and meet the required covenants for the going
concern assessment period. Based on the above activity, the
Directors are satisfied that it is appropriate to prepare the
financial statements of the Group on a going concern basis.
Basis of preparation
The consolidated financial statements have been prepared
in accordance with UK-adopted international accounting
standards (“IFRS”). The financial statements have been
prepared on the historical cost basis, except for derivatives
which are held at fair value.
The accounting policies adopted by the Group in the current
year are consistent with those adopted during the year ended
31 December 2022.
There have been no new or amended accounting standards
or interpretations adopted during the year that have had a
significant impact on the Group’s financial statements.
There are no standards, interpretations or amendments to
IFRS that have been issued but are not yet effective that are
expected to have a material impact on the Group’s financial
statements.
Going concern
Accounting standards require that Directors satisfy themselves
that it is reasonable for them to conclude on whether or
not it is appropriate to prepare financial statements on the
going concern basis. There has been no material uncertainty
identified that would cast significant doubt upon the Group’s
ability to continue using the going concern basis of accounting
for the 12 months to 30 April 2025.
The Group’s business activities, together with the factors likely
to affect its future development, performance and position, are
set out in the Strategic Report on pages 3 to 106.
The Group’s strategic planning cycle includes an annual
Budget process, which is reviewed by the Board. This planning
process involves modelling under a series of assumptions.
Severe but plausible downside scenarios were also modelled
setting out impacts of a combination of the principal risks, as
well as a reverse stress test to identify what would be required
to either breach covenants or run out of liquidity. This process
is led by the Group CFO and Deputy Group CFO along with
the Board and Executive Chair and CEO providing further
direction to align strategic initiatives. Forecasts have been
prepared on a divisional level. The Directors of the Group
review its Budget periodically, which is revisited and revised as
appropriate in response to evolving market conditions.
In considering the Group’s financial position the Directors
have considered:
Expected future growth of trading businesses;
The committed and expected pipeline of its
Ingenuity business;
Margins expected to be achieved in the future; and
Wider market and industry specific factors.
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The Group’s key accounting policies are set out below. These
policies have been prepared on the basis of the recognition and
measurement requirements of IFRS standards in effect that apply
to accounting periods beginning on or after 1 January 2023 and
have been applied to 2022 comparatives where applicable.
a.
Basis of consolidation
The Group financial statements consolidate those of the
Company and all its subsidiary undertakings drawn up to 31
December 2023. Subsidiaries are all entities over which the
Group has control. When the end of the reporting period of
a subsidiary is not 31 December, the subsidiary prepares, for
consolidation purposes, additional financial information as of the
same date as the financial statements of the Group.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and
losses on transactions between Group companies. Where
unrealised losses on intra-Group asset sales are reversed on
consolidation, the underlying asset is also tested for impairment
from a Group perspective.
Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency
with the accounting policies adopted by the Group. Profit or
loss and other comprehensive income of subsidiaries acquired
or disposed of during the year are recognised from the effective
date of acquisition, or up to the effective date of disposal, as
applicable.
b.
Business combinations
Business combinations are accounted for using the
acquisition method under IFRS 3 ‘Business Combinations’. The
consideration transferred by the Group to obtain control of a
subsidiary is calculated as the sum of the acquisition-date fair
values of assets transferred, liabilities incurred, and the equity
interests issued by the Group, which includes the fair value of
any asset or liability arising from a contingent consideration
arrangement. Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and
liabilities assumed, including contingent liabilities, in a business
combination regardless of whether they have been previously
recognised in the acquiree’s financial statements prior to
the acquisition. Assets acquired and liabilities assumed are
measured at their acquisition-date fair values. These fair values
can be re-assessed for a period of 12 months from the date
of acquisition based on information available at the date of
acquisition. Goodwill is stated after separate recognition of other
identifiable intangible assets. It is calculated as the excess of the
sum of a) fair value of consideration transferred, b) the recognised
amount of any non-controlling interest in the acquiree and c)
acquisition-date fair value of any existing equity interest in the
acquiree, over the acquisition-date fair values of identifiable net
assets. If the fair values of identifiable net assets exceed the
sum calculated above, the excess amount (i.e. gain on a bargain
purchase) is recognised in profit or loss immediately.
In determining whether a transaction is a business combination
or an asset purchase, the Group considers the inputs, processes
and outputs acquired in accordance with IFRS 3.
c.
Revenue
Revenue consists primarily of direct to consumer (D2C) internet
sales along with business to business (B2B) sales.
D2C and B2B sales
Identifying performance obligations: For D2C and B2B
sales the performance obligation is the delivery of the goods
purchased by the customer. Control of goods is transferred upon
delivery of the product to the customer.
Identifying the transaction price: For D2C sales, the customer
pays in full at the point of sale, with the transaction price
allocated to individual goods purchased. A contract liability
is recognised until the related goods have been delivered.
For B2B sales, the customer pays in line with the agreed
credit terms.
Revenue is shown net of returns, with expected sales returns
estimated based on historical return data applied to sales. These
returns are accounted for at the lower of cost or net realisable
value. A right of return asset (and corresponding adjustment
to cost of sales) is also recognised for the right to recover the
goods from the customer.
Allocation of transaction price to performance obligations:
In general, the whole transaction price is allocated to the
performance obligation. Where a customer purchases multiple
goods within one transaction, the transaction price is allocated
to those goods based on relative stand-alone selling prices.
Revenue recognition: Revenue is recognised at the point of
time when the customer receives the goods, shown net of
returns.
Revenue from contracts
Identification of performance obligations: THG Ingenuity
Commerce contracts often have multiple performance
obligations that include but are not limited to: creation of digital
assets, marketing services, stock management, fulfilment,
customer support services and access to THG’s Ingenuity
platform. Each contract is reviewed individually once signed and
is assessed to identify the separate performance obligations.
In a typical Ingenuity Commerce contract, all goods and
services provided are considered to be ‘distinct’ as the client
can derive independent benefit from each service provision and
the promise to transfer services to the customer is separately
identifiable. These contracts contain multiple performance
obligations.
Determining transaction prices: Transaction prices are
agreed in advance of the commencement of the work and are
outlined within the signed contract. The amount agreed per
service is deemed to be the fair value of the service provision.
Consideration receivable is usually at a fixed price, however
there are some elements that are variable and dependent on
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order volume and sales levels, for example operations revenues
made up of fulfilment fees and revenue share income. The
charging structure for such transactions is clearly detailed
within the signed contract.
Allocation of transaction price to performance obligations:
Where contracts cover multiple performance obligations, the
transaction price is allocated on a basis that is consistent with
the sale of each performance obligation in isolation.
Revenue recognition: Within certain Ingenuity contracts, the
amount of revenue recognised depends on whether the Group
are acting as an agent or principal. The Group acts as principal
when it has control of the specified good or service prior to
transfer to the customer. Where the Group acts as principal, the
revenue recorded is the gross amount billed. Where the Group is
an agent, predominantly relating to revenue share arrangements,
revenue from the customer and costs with suppliers are
reported on a net basis representing the net margin earned.
Whether the Group is acting as principal or agent depends on
management’s analysis of both legal form and substance of the
agreement between the Group and its business partners.
The allocated transaction price is recognised from the point at
which the customer starts to benefit from the service and over
the time the service is provided. For marketing services, stock
management, fulfilment, customer support services and access
to THG’s Ingenuity platform these are recognised when the
service is provided.
The creation of digital assets revenue is recognised on a
percentage completion basis as the work is performed because
the work does not create an asset with an alternative use and
the Group has a right to payment for the work performed at
each point in time.
Revenue which is invoiced in advance is recorded as a contract
liability on the balance sheet and released to the statement of
comprehensive income account over the periods in which the
services are provided.
Costs associated with obtaining a contract with a customer
that would not have been incurred if the contract had not been
obtained are recognised as an asset where they are expected
to be recoverable and depreciated over the life of the contract.
Costs to obtain a contract that would have been incurred
regardless of whether the contract was obtained or not are
recognised as an expense when incurred, unless those costs are
explicitly chargeable to the customer regardless of whether the
contract is obtained.
Revenue recognised under IFRS 16
Revenues from internet hosting contracts are recognised
under IFRS 16 as the Group is considered a lessor in these
transactions.
Income from hosting contracts is recognised on a straight-line
basis from the commencement date over the lease term as the
performance obligation is settled over the life of the contract.
Any initial direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same basis as
rental income.
Revenue from memberships
Fees recognised in respect of memberships are recorded on a
straight-line basis over the membership period.
Barter income
For some of its monthly subscription offerings, THG receives
goods for inclusion in its subscription boxes from business
partners in return for the marketing exposure received by those
products being included in the subscription box. The goods
are recognised as stock when received and held at their fair
value. When the box is sold, the revenue for providing those
marketing services is recognised with an equal and offsetting
entry recorded in cost of goods sold.
the end of each reporting period, the Group revises its estimates
of the number of equity instruments that are expected to vest
based on the non-market vesting conditions along with taking
account of any equity instruments that may have been cancelled
or modified in the period. It recognises the impact of the revision
to original estimates, if any, in the statement of comprehensive
income with a corresponding adjustment to equity.
The shares issued under the Group’s share schemes are held by
an Employee Benefit Trust (“EBT”), with the beneficial interest
in the shares being held jointly by the EBT and the individual
participant until the shares vest. The EBT has been consolidated
within the Group’s financial statements.
d.
Adjusted items
f.
Intangible assets
The business is managed and measured on a day-to-day
basis using underlying results (Adjusted EBITDA). This is
an important metric utilised within the business to monitor
performance and guide strategic business decisions. The metric
captures the Group’s view of underlying trading performance
after excluding non-recurring items and initial investment / set-
up costs related to establishing the Group’s warehousing and
logistics facilities. Further details of the categories considered as
adjusting items are detailed in note 4.
Management applies judgement in determining which items
should be excluded from adjusted EBITDA. The considerations
factored into this judgement include but are not limited to:
• Nature of the item
•
Significance of the item on the financial results
• Managements expectation on the recurring or non-
recurring nature of the item
These are items which are material in nature and include, but
are not limited to, costs relating to acquisitions, disposals and
significant events or projects, some of which span multiple
years.
Although categories of adjusted items may appear across
multiple periods, the underlying event driving that cost or
income is often non-recurring.
These items are excluded from adjusted EBITDA as
management believe their inclusion distorts the underlying
trading performance. This is consistent with the way that
financial performance is measured by management and
reported to the Board. For further details, refer to note 4.
e.
Share-based payments
The Group operates share-based compensation plans,
under which the Group receives services from employees as
consideration for equity instruments (options) of the Company.
The fair value of the employee services received in exchange for
the grant of the equity instruments is recognised as an expense
in the statement of comprehensive income. The total expense
is recognised over the vesting period, which is the period over
which all the specified vesting conditions are to be satisfied. At
Goodwill
Goodwill represents the excess of the cost of acquisitions over
the Group’s interest in the fair value of the identifiable assets and
liabilities (including intangible assets) of the acquired entity at
the date of acquisition. Goodwill is recognised as an asset and
assessed for any indications of impairment at least annually.
Any impairment is recognised immediately in the statement of
comprehensive income.
For the purposes of impairment testing, goodwill is reviewed by
assessing the cash-generating unit that has benefited from the
acquisition. If the recoverable amount of the cash-generating
unit is less than its carrying amount, then the impairment loss
is allocated first to reduce the carrying amount of the goodwill
allocated to the unit and then to the other assets of the unit on a
pro rata basis.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the profit and loss on disposal.
Platform Development costs
The costs of acquiring and developing the platform and websites
is capitalised separately as an intangible asset. Capitalised
website costs include direct costs of materials, services,
directly attributable overheads, payroll and payroll-related
costs for employees who are directly associated with website
development projects. Such costs are only capitalised when the
criteria within IAS 38 are met.
Intellectual Property
This includes separately acquired customer lists, domain and
trade names, and other intellectual property, including customer
lists acquired as part of business combinations.
Separately acquired intangible assets are measured at cost on
initial recognition. Following initial recognition, intangible assets
are carried at cost less any accumulated amortisation and
impairment losses.
Brands
Brands arising from business combinations are recognised at
fair value on acquisition date. An assessment is made on the
useful economic life, and the intangible asset is subsequently
amortised over that life. The useful economic life is reviewed on
an annual basis to confirm that the useful life continues to be
supportable.
Other intangible assets
Costs associated with developing new products are capitalised as
an intangible asset, including directly associated costs.
Intangible assets are amortised on a straight-line basis over
their estimated useful economic life. Amortisation is charged to
the statement of comprehensive income, classified in expenses
depending on the nature of the asset. The estimates of useful
economic lives are reviewed on an annual basis and any changes
are treated as changes in accounting estimates.
Where computer software is not an integral part of a related item
of computer hardware, the software is treated as an intangible
asset. Computer software is capitalised on the basis of the
costs incurred to acquire and bring to use the specific software.
Amortisation is provided on the cost of software and is calculated
on a straight-line basis over the useful life of the software.
The following useful economic lives are applied:
Platform development costs
New product development
Brands
Intellectual property (including customer
lists, domain and trade names)
5-10 years
1-5 years
5-20 years
2-20 years
g.
Property, plant and equipment
Property, plant and equipment are stated at historic purchase
cost less accumulated depreciation. Cost includes the original
purchase price of the asset and the costs attributable to
bringing the asset to its working condition for its intended use.
Depreciation is provided at the following annual rates in order
to write off each asset on a systematic basis over its estimated
useful economic life. Depreciation is charged to the statement
of comprehensive income, classified in expenses depending
on the nature of the asset.
At each reporting date, property, plant and equipment is
reviewed for impairment if events or changes in circumstances
indicate that the carrying amount may not be recoverable.
When a review for impairment is conducted, the recoverable
amount is assessed by reference to the net present value
of expected future pre-tax cash flows of the relevant cash-
generating unit or fair value less costs to sell if higher. Any
impairment in value is charged to profit or loss in the period in
which it occurs.
Plant and machinery
Fixtures and fittings
Computer equipment and software
Freehold buildings
Motor vehicles
5-10 years
3-20 years
1-10 years
20-50 years
3-7 years
Leasehold improvements
Lower of lease term or asset life
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Financial liabilities
Group as a lessee
h.
Borrowing costs
Cash and cash equivalents
Borrowing costs incurred in relation to bringing into use both
tangible and intangible assets are capitalised as the expenditure
is incurred on such assets and subsequently depreciated in line
with the useful economic life of the relevant asset.
i.
Inventories
Inventories are valued at the lower of cost and net realisable
value, on a weighted average cost basis. Cost of purchase
comprises the purchase price including import duties and
other taxes, transport and handling costs and any other directly
attributable costs, less trade discounts. A provision is made
to write down any slow-moving or obsolete inventory to net
realisable value.
Cash and cash equivalents comprise cash at bank and in
hand and short-term deposits with an original maturity of three
months or less. Cash and cash equivalents include amounts
receivable from banks and payment providers for credit and
debit card transactions which clear the bank shortly after the
transaction takes place.
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents consist of cash and short-term
deposits, as defined, net of outstanding bank overdrafts.
Financial liabilities within the scope of IFRS 9 are classified
as financial liabilities at amortised cost. The Group measures
contingent consideration liabilities at fair value through profit and loss.
j.
Financial instruments
Trade and other payables
The following are deemed to be financial assets and liabilities
within the scope of IFRS 9.
Derivative financial instruments
The Group uses derivative financial instruments, such as foreign
currency swaps, to hedge its foreign currency risks. Derivative
financial instruments are recognised initially and subsequently
at fair value. The gain or loss on remeasurement to fair value
is recognised immediately in the statement of comprehensive
income. However, where derivatives qualify for hedge
accounting, recognition of any resultant gain or loss depends on
the nature of the item being hedged. The sale and purchase of
derivative financial instruments are non-speculative.
Trade and other payables are non-interest bearing and are
recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method. Within
trade and other payables, returns recognised under IFRS 15
(representing the liability for potential returns from customers)
are captured within accruals.
The Group has a supply chain financing agreement in place
to support the cash flow of its external suppliers. The funding
is provided by two of the Group’s relationship banks and gives
certain suppliers the flexibility to receive early payments on
specific invoices. All early payments are processed by the
funding bank and the Group settles the original invoice amount
with the funders at the original invoice due date. The outstanding
balances due to suppliers are recorded within trade payables.
Cash flow hedges
Where a derivative financial instrument is designated as a hedge
against the variability in cash flows of a recognised asset or
liability, or a highly probable forecast transaction, any gain or
loss on the effective part of the derivative financial instrument is
recognised in other comprehensive income and accumulated
within the hedging reserve. The gain or loss on any ineffective
portion of the hedge is recognised immediately in the statement
of comprehensive income. Hedge accounting is discontinued
when the hedging instrument no longer meets the criteria for
hedge accounting, expires, or is sold, terminated or exercised.
The cumulative gain or loss previously recognised in the hedging
reserve remains there until the forecast transaction occurs. The
cumulative gain or loss in the hedging reserve is transferred to
the statement of comprehensive income in the same period that
the hedged item affects profit or loss.
Gain or loss on a portion of a derivative designated as a hedging
instrument that is excluded from that hedging relationship is
captured in the cost of hedging reserve.
Trade and other receivables
Bank borrowings
Interest-bearing bank loans and overdrafts are initially recorded
at fair value, which equals the proceeds received, net of direct
issue costs. Finance charges, including premiums payable on
settlement or redemption and direct issue costs, are accounted
for using an effective interest rate method and are added to the
carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
k.
Supplier income
Supplier income comprises retrospective rebates and discounts.
They are receivable in respect of goods which have been sold
and are initially recognised as accrued income. The retrospective
rebates are analysed per supplier basis and accrued income is
adjusted accordingly based on quarterly assessment of variables
impacting expected rebates. All retrospective rebates and
discounts received and receivable are deducted from cost of
sales when the sale to the third party has been completed.
Trade and other receivables are non-interest bearing and are
initially recognised at fair value. Subsequently they are measured
at amortised cost using the effective interest rate method less
loss allowance. The Group measures the loss allowance at an
amount equal to lifetime expected credit losses.
l.
Contract liabilities
A contract liability is the obligation to transfer goods or services
to a customer for which the Group has received consideration
(or an amount of consideration is due) from the customer. If a
customer pays consideration before the Group transfers goods
185
or services to the customer, a contract liability is recognised
when the payment is made or the payment is due (whichever is
earlier). Contract liabilities are recognised as revenue when the
Group performs under the contract.
or rate used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying asset.
The Group’s lease liabilities are included in interest-bearing loans
and borrowings.
m.
Leases
Short-term leases and leases of low-value assets
The Group assesses at contract inception whether a contract
is, or contains, a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration.
The Group applies a single recognition and measurement
approach for all leases, except for short-term leases and leases
of low-value assets. The Group recognises lease liabilities to
make lease payments and right-of-use assets representing the
right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at
cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred and lease payments
made at or before the commencement date, less any lease
incentives received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets, as follows:
Plant and machinery
Motor vehicles
Buildings
Lease liabilities
1-6 years
3-6 years
1-28 years
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include
fixed payments (including in-substance fixed payments) less
any lease incentives receivable, variable lease payments that
depend on an index or a rate and amounts expected to be
paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties
for terminating the lease, if the lease term reflects the Group
exercising the option to terminate.
In calculating the present value of lease payments, the Group
uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in the lease payments (e.g.
changes to future payments resulting from a change in an index
The Group applies the short-term lease recognition exemption
to its short-term leases (i.e. those leases that have a lease term
of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases that are considered to be
low value. Lease payments on short-term leases and leases of
low-value assets are recognised as an expense on a straight-line
basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer substantially
all the risks and rewards incidental to ownership of an asset
are classified as operating leases. Rental income arising is
accounted for on a straight-line basis over the lease terms and
is included in revenue in the statement of profit or loss due to its
operating nature. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount
of the leased asset and recognised over the lease term on the
same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
Sale and Leaseback accounting
The Group applies sale and leaseback accounting in accordance
with IFRS 16 ‘Leases’. Specifically, the Group recognises the gain
or loss on the sale and leaseback transaction by recognising the
proportion relating to rights transferred to the buyer directly to
the income statement.
Dilapidations provisions
Dilapidations provisions relate to leased properties. Dilapidations
provisions are made based on the best estimate of the likely
committed cash outflow and discounted to net present value.
The provision, when recognised increases the right-of-use asset.
Dilapidations provisions are expected to be used at or by the end
of the lease term.
n.
Taxation
The tax expense included in the statement of comprehensive
income and statement of changes in equity comprises current
and deferred tax.
Current tax is the expected tax payable based on the taxable
profit for the period and the tax laws that have been enacted
or substantively enacted by the reporting date. Management
periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate, based
on amounts expected to be paid to the tax authorities. Current
and deferred tax is charged or credited in the statement of
comprehensive income, except when it relates to items charged
or credited directly to equity, in which case the current or
deferred tax is also recognised directly in equity.
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Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of
taxable profit and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill
or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction
that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at
each reporting date. The business combinations in previous
years have given rise to deferred tax liabilities, as a result
deferred tax assets are recognised to the extent they offset the
corresponding liability. Deferred tax is calculated at the tax rates
(and laws) that are expected to apply in the period when the
liability is settled, or the asset is realised.
Tax assets and liabilities are offset where there is a legally
enforceable right to offset current tax assets against current tax
liabilities and when the deferred tax assets and liabilities relate
to income taxes levied by the same taxation authority on either
the taxable entity or different taxable entities and where there is
an intention to settle the balances on a net basis.
o.
Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“the
functional currency”). The consolidated financial statements
are presented in Sterling which is also the parent company’s
functional currency.
Transactions and balances
Transactions denominated in foreign currencies are translated
into the functional currency at the exchange rates prevailing on
the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the
exchange date. Exchange differences on monetary items are
taken to the statement of comprehensive income.
p.
Government grants
Government grants are recognised where there is reasonable
assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an
expense item, it is recognised as income on a systematic basis
over the periods that the related costs, for which it is intended to
compensate are expensed. When the grant relates to an asset,
it is recognised as income in equal amounts over the expected
useful life of the related asset.
q.
Earnings per share
Basic earnings per share (EPS) is calculated by dividing the
profit or loss for the year attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares
outstanding during the year.
Diluted EPS is calculated by dividing the profit or loss
attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during
the year plus the weighted average number of ordinary shares
that would be issued on conversion of all the dilutive potential
ordinary shares into ordinary shares, to the extent that the
inclusion of such shares is not anti-dilutive.
r.
Critical accounting judgements
and key sources of estimation
uncertainty
In the application of the Group’s accounting policies,
management is required to make judgements (other than those
involving estimations) that have a significant impact on the
amounts recognised and to make estimates and assumptions
about the carrying amounts of assets and liabilities that are
not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and
other factors that are relevant. Actual results may differ from
these estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both current
and future periods. The most critical accounting judgements or
key sources of estimation uncertainty are detailed as follows:
The useful economic life of the platform is between one and ten
years, dependent on the type of development work capitalised.
The useful economic life has been amended from between
one and five years in the prior year to reflect the longer period
in respect of specific projects commenced during FY23. The
estimate of useful economic life is reviewed on a regular basis to
ensure that this continues to be appropriate.
Adjusted items
The identification of adjusted items depends on management
judgement in identifying and quantifying amounts deemed to be
adjusting or not reflective of the underlying performance of the
Group. The key elements management take into consideration
include, but are not limited to:
•
The underlying nature of the item;
• Whether management believe the item is recurring
in nature, or if it represents a one-off distortion of the
underlying results of the business; and
•
Significance of the item on the financial results.
• Where income streams can be segregated and reliably
measured in respect of adjusted costs, these are disclosed
accordingly.
Refer to note 4 for details of each class of adjusted items.
Key sources of estimation uncertainty
Inventory provisioning
The Group holds levels of stock sufficient to meet the forecasted
demand of its customers. As part of this, a provision is
recognised to ensure that the balance sheet value of stock held
is at the lower of cost and net realisable value in accordance
with IAS 2. As part of the provisioning process, managements
consideration includes, but is not limited to: age of stock, type of
stock, and inventory acquired through business combinations.
All of these positions are variable in nature and management
apply judgement in concluding on the recoverable value and
changes to risk profiles which could have a material impact
on provisioning levels. Refer to note 13 for further details on
inventory. A reduction of 10% in online sales selling prices would
impact the net realisable value by c£1m.
Critical accounting judgements
Impairment reviews – key estimates and judgements
Group companies
Capitalisation and amortisation of platform development costs
On consolidation, the assets and liabilities of foreign operations
are translated into the presentational currency of the Group
at the rate of exchange prevailing at the reporting date and
their statements of comprehensive income are translated at
exchange rates prevailing at the dates of the transactions. The
exchange differences arising on translation for consolidation
are recognised in other comprehensive income.
On disposal of a foreign operation, the component of OCI
relating to that foreign operation is recognised in the statement
of comprehensive income.
Costs capitalised as platform development costs include direct
external costs such as consultancy costs and internal payroll
costs. The capitalisation of internal costs is based on the amount
of time spent by employees on capital projects. Judgement is
applied in determining which costs meet the IAS 38 criteria for
capitalisation as development costs, dependent on the type
of cost and the project, along with the appropriate element
of employee time capitalised. The key judgement relates to
assessing the feasibility and the extent of future economic
benefits that will be derived from each project. Refer to note 11
for details of capitalised platform development costs.
When a review for impairment is conducted, the recoverable
amount of the CGU is determined based on the higher of value-
in-use calculations applying IAS 36 and fair value less costs to
dispose applying IFRS 13. The recoverable amount is calculated
using management’s assumptions and estimates. The key
estimates within the value-in-use calculation are growth rates,
margin forecasts and discount rates applied. The key estimates
within the fair value less costs to dispose, relate to THG Ingenuity
capitalised platform costs and are the period over a replacement
build could occur, headcount and rates per hour. Refer to note 11
for further details of calculations.
Other judgements and other sources of estimation uncertainty
Climate Change
In preparing the consolidated financial statements management
has taken into consideration the impact of climate change.
Considerations include, but are not limited to:
•
•
The identification of costs which have been committed
and which have been included within forecasts where
appropriate including increased plastics and waste taxes
and levies;
The impact of climate change on a number of key
estimates which the Group has included within forecasts
where appropriate such as:
•
•
The cost of sourcing sustainable raw materials
Packaging compliance fees and zero waste
implementation costs
• Membership and consultancy costs in respect of
GHC footprint, energy usage, TCFD compliance and
UK Plastic Pact
• Where measurable, the impact of consumer
behaviours of sustainable brand recognition and
development, for example shifts towards MyVegan
•
Continued investment in sustainable businesses, including
More Trees, Preston Plastics and Indigo Environmental,
as the group continues to work towards and evolve its
sustainability targets.
These considerations have not identified any significant impacts
from our climate commitments and therefore do not have
a material impact on the financial statements or reporting
judgements and estimates.
Revenue recognition – Principal vs Agent
Judgement is required in concluding whether the Group acts
as a principal or agent for certain external Ingenuity contracts,
with the amount of revenue recognised depending on this
conclusion. The Group acts as principal when it has control of
the specified good or service prior to transfer to the customer.
Where the Group acts as principal, the revenue recorded
is the gross amount billed. Where the Group is an agent,
predominantly relating to revenue share arrangements, revenue
from the customer and costs with suppliers are reported on
a net basis representing the net margin earned. Whether the
Group is acting as principal or agent depends on management’s
analysis of both legal form and substance of the agreement
between the Group and its business partners. Each contract is
reviewed and concluded on accordingly.
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2. Segmental reporting and revenue
The Directors have assessed the criteria and considerations under IFRS 8 ‘Operating Segments’ in order to identify operating
segments within the Group. For the year to 31 December 2022, the Group’s activities were divided into the following segments THG
Beauty, THG Nutrition, THG Ingenuity, THG OnDemand (disclosed under the discontinued categories segment), THG Luxury and
THG Experience. The THG Luxury and THG Experience segments were aggregated due to being below the quantitative thresholds
as set out in IFRS 8 and were reported separately under Other Central costs.
During 2023, THG Luxury and THG Experience have been reported to the Chief Operating Decision Maker (CODM) as part of the
THG Beauty segment. On this basis, the Directors have concluded that for 2023, the Group has four operating segments. The prior
year segmental analysis has been represented to provide a like-for-like comparison.
The following table describes the main activities for each reportable operating segment:
Segment
Activities
THG Beauty
A digital-first brand owner, retailer and manufacturer in the prestige beauty market, with a portfolio
of own-brands across skincare, haircare and cosmetics. Through its retail websites, including
Lookfantastic, Dermstore, Cult Beauty and the beauty subscription box brand Glossybox, it is a route to
market globally for over 1,300 third-party premium brands. THG Beauty also operates prestige spa and
experience venues, in addition to luxury clothing and homeware D2C sites.
THG Nutrition
A group of digital-first nutrition brands, which includes the world’s largest online sports nutrition brand
Myprotein and its family of brands (Myvegan, Myvitamins, MP Activewear and MyPRO), with a vertical-
ly integrated business model supported by global THG production facilities.
THG Ingenuity
THG Ingenuity provides a complete digital commerce solution for consumer brand owners across its
three pillars of technology, digital marketing and operations. Being part of the THG group, Ingenuity is
uniquely placed to bring relevant, practical and international expertise in every area of commerce. THG
Ingenuity also includes media related services.
Discontinued
categories
During the year, certain loss-making categories and territories primarily within THG OnDemand along
with some additional small legacy brands within THG Beauty and THG Nutrition have been approved
for disposal, or exited. These exits do not meet the criteria under IFRS 5: Discontinued operations at
the balance sheet date, as these categories and territories are not a major component of the Group
as defined by the accounting standard, however, management began to report the financial results of
these categories separately in their reporting to the CODM, as such the result has also been shown in
the same format within this note.
Central costs relate primarily to the PLC Board remuneration, professional services fees, group finance, M&A, risk (insurance) and
governance costs that are not recharged to the divisions as they principally relate to the operations of the PLC holding company.
The CODM is the executive Board directors, who makes key operating decisions for the business. The CODM receives daily
financial information at the combined Group level, along with monthly information at a business level and uses this information to
allocate resources, make operating decisions and monitor the performance of each of the businesses.
The measure of the Group’s profit or loss used by THG’s management team is Adjusted EBITDA comprising operating loss
less interest, tax, depreciation, amortisation, shared-based payments and adjusted items. This is reconciled to the nearest IFRS
measure (loss before tax) in the below table.
THG
Beauty
£’000
2023
External revenue
1,171,742
Internal revenue
-
THG
Nutrition
THG
Ingenuity
Central
PLC
Inter-group
elimination
£’000
£’000
£’000
657,911
-
£’000
154,052
519,871
Result before
discontinued
categories 1
£’000
Discontinued
categories
£’000
61,673
-
2023
Total
£’000
2,045,378
-
-
1,983,705
(519,871)
-
(519,871)
1,983,705
61,673
2,045,378
-
-
-
-
-
-
-
-
-
-
-
120,449
(6,343)
114,106
6.1%
-10.3%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.6%
(95,113)
(119,372)
(16,723)
(50,627)
(17,664)
(185,393)
13,329
(79,900)
(251,964)
-
-
-
(21,757)
-
-
-
-
-
-
-
-
-
-
Total revenue
1,171,742
657,911
673,923
Adjusted
EBITDA
Margin %
Depreciation
Amortisation
Share-based
payments
Adjusted items
Other operating
expense
Operating loss
Finance income
Finance costs
Loss before
taxation
44,238
88,929
3.8%
13.5%
9,039
1.3%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. During 2022, and 2023 certain loss-making categories and territories within non-core divisions were placed under strategic review and subsequently management has exited these areas.
The exit doesn’t meet the criteria under IFRS 5: Discontinued operations as these categories and territories are not a major component of the Group as defined by the accounting standard,
however, to provide further information on the ongoing revenue and Adjusted EBITDA of the Group the result of these operations has been presented separately in the above table.
An element of THG Ingenuity revenue is contract based and therefore is recognised over time; all other revenue streams are
recognised at a point in time. Of the total revenues recognised for THG Ingenuity, £67.7m (2022: £73.8m) is recognised over time.
Segment assets and liabilities are not disclosed because they are not regularly reported or reviewed by the Board.
(Restated)
THG
Beauty
(Restated)
THG
Nutrition
(Restated)
THG
Ingenuity
Central
PLC
Inter-group
elimination
Result before
discontinued
categories
(Restated)
Discontinued
categories
2022
Total
£’000
£’000
£’000
-
2,048,255
(597,420)
-
£’000
190,974
-
£’000
2,239,229
-
2022
£’000
External revenue
1,225,977
Internal revenue
-
£’000
662,737
-
Total revenue
1,225,977
662,737
£’000
159,541
597,420
756,961
-
-
-
Adjusted EBIT-
DA pre SaaS
costs
Adjusted
EBITDA
Margin %
Depreciation
Amortisation
Share-based
payments
Adjusted items
Operating loss
Finance income
Finance costs
Loss before
taxation
33,585
51,647
29,304
(23,178)
33,585
51,647
2.7%
7.8%
19,121
2.5%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(23,178)
-
-
-
-
-
-
-
-
(597,420)
2,048,255
190,974
2,239,229
-
-
-
-
-
-
-
-
-
-
91,358
(17,061)
74,297
81,175
4.0%
-
-
-
-
-
-
-
(17,061)
64,114
-8.9%
-
-
-
-
-
-
-
2.9%
(94,191)
(108,975)
(10,734)
(345,779)
(495,565)
2,359
(56,522)
(549,728)
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The segmental result for 2022 has been restated within the above table. There is no change to the previously reported Total revenue,
Adjusted EBITDA, Operating loss or Loss before taxation. During FY22, THG Luxury and THG Experience were reported separately
Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
(within ‘Other’). From 1 January 2023, these results have been internally reported as part of THG Beauty. The results for THG Beauty
and THG Nutrition have also been restated for the discontinued categories to show a like-for-like comparison for all categories reported
internally as discontinued in 2023.
4. Adjusted items
The result of both of these adjustments is that for 2022, segmental revenue has been restated as follows; THG Beauty £(9.0)m, THG
Nutrition £(12.4)m, Other £(50.9)m and discontinued categories £72.3m. Segmental Adjusted EBITDA has been restated as follows; THG
Beauty £0.7m, THG Nutrition £(0.1)m, Other £1.9m and discontinued categories £(2.5)m.
These are items which are material in nature and include, but are not limited to, costs relating to acquisitions, disposals and
significant events or programmes, some of which span multiple years. These items are excluded from adjusted EBITDA as
management believe their inclusion distorts the underlying trading performance. This is consistent with the way that financial
performance is measured by management and reported to the Board.
The Group has provided an analysis of external revenue by region (by destination):
UK
USA
Europe
Rest of the world
The Group has provided an analysis of external continued revenue by region (by destination):
UK
USA
Europe
Rest of the world
The Group’s non-current assets by geography are as follows:
UK
Europe
Rest of the world
3. Operating loss
Operating loss has been arrived at after charging / (crediting):
Adjusted items – cash
Adjusted items – non-cash
Other operating expense – non-cash loss on disposal of freehold assets
Employee costs
Share-based payments
Depreciation on fixed assets
Depreciation on right-of-use assets
Amortisation
Amortisation of acquired intangibles
Government grants
Net foreign exchange (loss) / gain
191
Note
4
4
12.1
7
12.1
22
11
11
2023
£’000
937,125
379,977
427,713
300,563
2022
£'000
960,535
446,542
449,783
382,369
2,045,378
2,239,229
2023
£’000
918,351
348,414
421,032
295,908
2022
£'000
899,656
370,330
423,905
354,364
1,983,705
2,048,255
2023
£’000
2022
£'000
1,189,386
1,257,689
120,459
475,744
145,057
550,333
1,785,589
1,953,079
2023
£'000
15,824
34,803
17,664
2022
£'000
40,090
305,689
-
Within Cost of sales
Non-cash loss on disposal of discontinued and the exiting of loss making
categories
Inventory provision following strategic review
Within Distribution costs
Transportation and delivery costs in relation to Covid-19
Commissioning - new facilities
Within Administrative costs
Non-cash loss on property portfolio restructure
Loss on property portfolio restructure
Non-cash loss on disposal of (or exit from) discontinued and loss making categories
Other costs following the outcome of strategic review
Restructuring costs
Acquisitions – restructuring and integration
Other legal and professional costs
Donations
Non-cash impairment of assets
Non-cash impairment of non-core assets held for sale
Total adjusted items before finance costs
Within Finance costs
Non-cash – revaluation of SBM option
Total adjusted items before tax
Tax impact
Total adjusted items
253,446
275,145
Cash adjusting items before tax1
2023
£'000
2022
£'000
10,465
25,517
4,786
15,251
2,456
2,605
5,061
18,369
851
5,969
1,515
2,708
703
200
-
-
-
30,315
50,627
-
25,517
18,504
3,613
22,117
-
-
3,763
6,942
6,803
8,046
570
362
269,828
1,831
298,145
345,779
-
(601)
50,627
(2,835)
47,792
15,824
345,178
(11,634)
333,544
40,090
1. Cash adjusting items before tax total £15.8m (2022: £40.1m) reflecting the total cash before tax expected to be paid. This differs from the Consolidated statement of cash flows which also
reflects the timing of such payments. Cash paid in 2023 totalled £15.0m.
16,723
55,691
39,422
68,829
50,543
(1,598)
(201)
10,734
50,896
43,295
58,581
50,394
(1,752)
1,424
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Non-cash loss on disposal of (or exit from) discontinued and loss making categories
Other costs following the outcome of strategic review
On 17 January 2023 the Group confirmed its intention to simplify and streamline its operations, undertaking a strategic review of
loss-making categories and territories primarily within THG OnDemand. In July 2023, the trade and assets of THG OnDemand
were sold to a Newco led by the existing OnDemand management team. This resulted in adjustments in respect of inventory
provisions recognised within cost of sales and impairment of other assets, primarily property, plant and equipment included
within administrative costs being recognised, and therefore an overall loss on disposal, to reflect the recoverable value of the
associated assets.
During the second half of the year, the Group completed its strategic review of non-core categories. As a result in January 2024,
approval was obtained for further discontinuation of some additional small legacy brands within THG Beauty and THG Nutrition.
This resulted in adjustments in respect of inventory provisions recognised within cost of sales and impairment of other assets,
primarily property, plant and equipment within administrative costs being recognised to reflect the recoverable value of the
associated assets.
The total costs incurred regarding these loss making categories are £16.4m (2022: £29.3m) recognised within cost of sales and
administrative costs respectively at £10.5m (2022: £25.5m) and £5.9m (2022: £3.8m).
These costs are deemed to be one-off, non-cash losses to enable and complete the exit of loss making areas of the business.
Associated income in respect of costs arising for discontinued categories has been set out in note 2.
Inventory provision following strategic review of business operations
Following the strategic review including THG Beauty manufacturing, efficiencies were identified that would support long-term
cost savings. Consistent with this a one-off provision was recognised in respect of inventory that is no longer required to drive
forward the operations. This is a one-off item that will not recur following the completion of this review.
As part of the strategic review the Group has consolidated acquired warehouses into the existing THG network.
The costs that have been incurred as part of this process, include:
•
•
Those incurred to relocate the stock across the fulfilment network.
Restructuring costs associated with the dual running of facilities, severance payments and other third party costs such as
rent and utilities.
All costs recognised within adjusted items are from the point of management’s decision to exit the acquired warehouse. The
costs associated with the decommissioning of these warehouses are considered to be one-off costs and are incremental to the
ongoing trading of the group.
Restructuring costs
Costs within restructuring are those incurred in executing and embedding the Group’s simplification project which was previously
announced as part of the strategic review. Current year costs relate directly to one-off costs arising following the decision to
discontinue certain categories which are not expected to recur.
Acquisitions – restructuring and integration
On 26 July 2023 the Group purchased City AM. The costs incurred during the year relate to the integration of the acquisition
within the wider THG Group and the dual running of warehouse facilities of businesses acquired in recent years. The size and
nature of acquisitions and the complexity of the integration plan has led to costs being incurred over an extended post-acquisition
period. It is expected that the costs will continue to further reduce in 2024.
Transportation and delivery costs in relation to Covid-19
Other legal and professional costs
The Group was severely impacted by high surcharges from suppliers in respect of routes travelling through and into Asia during
the Covid-19 pandemic and extended lockdown periods. However, this impact lessened during 2022, with costs reducing further
throughout 2023 as prices have normalised back to pre-covid levels. This item will not continue into 2024.
The Group incurs legal and professional costs that are non-recurring, one off in nature and not related to trading activities. These costs
are included as adjusted items and can include, but are not limited to, legal costs for one off matters and other fees associated with
investor activities. The legal and professional costs incurred during 2023 relate directly to the purchase of City AM and Biossance.
The impact of rising costs was not fully passed on to customers. On this basis, it is not possible to reliably measure any associated
revenues associated with the operational costs.
Donations
Commissioning – new facilities
Consistent with strategic priorities which include warehouse optimisation, the Group has continued its commissioning of
the campus at Manchester Airport, UK (“Icon”) and New Jersey, US. Both warehouses are now operational, although further
automation continues to be implemented in both sites to further efficiency gains. The majority of the costs incurred during the
period relate to the Autostore automation of the New Jersey warehouse and the transfer of stock to this facility. Associated costs
are expected to have been fully incurred by the end of the first half of 2024.
Loss on property portfolio restructure
During the year, as part of the cost reduction programme, the Group completed a review of the properties held within its portfolio,
streamlining space where possible to gain efficiencies. Following consolidation of warehousing and offices across the Group,
some properties across the portfolio are now vacant and not currently being utilised to generate economic benefits for the group.
Where possible assets held in leased properties have been sold or repurposed. However, residual leasehold improvement assets
in respect of vacated properties have been fully impaired, being a one- off loss arising from the streamlining exercise undertaken.
A provision has also been included for such unavoidable costs that are expected on these vacant leased properties over the
remaining life of the lease.
There has been no donations recognised in adjusted items within 2023.
Whilst there have been donations in 2023 totalling £0.3m, these items have been included within the normal course of trade and
therefore recognised outside of adjusted items. In 2022, in addition to donations made in the normal course of trade, the Group
donated £0.4m related to aid in the form of nutrition and hygiene products to charities assisting with the war in Ukraine which
was deemed to be a one off item and was therefore recorded in adjusted items and have not recurred.
Impairment of assets
In 2022, an impact of the divisional reorganisation was that the assets and cash flows of each division were separately identifiable.
The result being the identification of additional cash-generating-units (‘CGUs’). This more granular review, combined with
significant acquisitions within THG Beauty division generating a substantial amount of intangible assets; the market price
for many technology businesses falling; and the macroeconomic, inflationary and interest rate pressures in the wider market
generated one-off impairment charges of £183m within the THG Beauty CGU and £87m within the THG Ingenuity CGU.
No impairment has occurred in 2023.
Impairment of non-core assets held for sale
No impairment of non-core assets held for sale has occurred in 2023.
In 2022, an impairment charge of £1.8m was recognised against non-core assets that met the criteria to be classified as held for
sale under IFRS 5. The net book value of these assets has been reclassified to current assets and an impairment charge has been
recognised for the difference between the selling price and the carrying value.
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5. Auditors remuneration
7.
Share-based payments
Fees in respect of the audit of the Consolidated and Parent Company Financial Statements
Total audit fees
Other services:
- other assurance services*
Total non-audit services
Total fees
2023
£'000
2,300
2,300
480
480
2,780
2022
£'000
2,300
2,300
100
100
2,400
*Fees in respect of other assurance services relate to interim procedures in accordance with International Standard for Review Engagements (UK and Ireland) 2410 and
other assurance procedures.
6. Employee costs and Directors’ remuneration
Wages and salaries
Social security costs
Pension costs
Share-based payments
Note
7
2023
£’000
2022
£’000
259,955
283,080
29,525
10,728
16,723
32,091
10,407
10,734
316,931
336,312
The aggregate amount of employee costs included above that have been capitalised within platform development costs was
£46.8m (2022: £50.5m).
The costs incurred in respect of the Executive Directors and Non-Executive Directors, who are regarded as the key management
personnel, were as follows:
Wages and salaries
Social security costs
Pension costs
No retirement benefits are accruing to any of the Directors at 31 December 2023 (2022: nil).
The average number of employees (including executive directors) during the year was:
Retail
Administration
Distribution
Information technology
2023
£’000
1,786
267
2
2,055
2022
£’000
1,056
124
1
1,181
2023
2022
Number
Number
2,108
1,483
3,465
908
7,964
3,287
1,051
3,834
869
9,041
The above table reflects the full time equivalent (FTE) number of employees calculated as an average throughout the year.
The total staff numbers on an actual basis at 1 January 2023 were 8,239 and at 31 December 2023 were 7,291.
195
The Group operates a share-based compensation plan, under which the Group receives services from employees as
consideration for equity instruments (options) of the Company. A total of 35,529,895 shares were issued in the 12 months
to 31 December 2023. The shares issued during the year are as follows:
• On 27 January 2023 a total of 34,969,541 options were granted with 234,929 of these shares only vesting if targets linked
to ESG are met. The fair value of the employee services received in exchange for the grant of the equity instruments is
recognised as an expense in the Statement of Comprehensive Income with the corresponding increase to equity.
• 1,410,209 shares vested on 31 December 2023;
• The remaining awards vest in two equal tranches. The second and third tranches for each separate grant will vest
on 31 December in the following two years respectively.
• On 1 December 2023 a further 560,283 options were granted. The awards vest in three equal tranches, with the first being 31
December following the date of grant. The second and third tranches for each separate grant will vest on 31 December in the
following two years respectively.
Expense arising from equity-settled share-based payment transactions
The following table shows the shares granted and outstanding at the beginning and end of the year:
As at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
As at 31 December
Exercisable as at 31 December
2023
Number of
shares
41,796,012
35,529,824
(5,324,678)
(3,283,098)
68,718,060
19,975,803
2023
Weighted average
exercise price
£0.06
£0.01
£0.00
£0.00
£0.03
£0.00
2022
Number of
shares
-
43,352,699
(1,556,687)
-
41,796,012
12,308,805
2023
£’000
16,723
2022
£’000
10,734
2022
Weighted average
exercise price
£0.00
£0.05
£0.02
£0.00
£0.06
£0.10
The key inputs to calculate the charge are the share price at the date of grant and an assumption around those not remaining
in continued employment, spread across the vesting period. Achievement of performance conditions have been considered
where appropriate. The range of exercise prices are £0.00 to £0.10, and the weighted average remaining contractual life is 8.8
years. The weighted average share price at date of exercise of shares exercised during the year was £0.75.
8. Finance income and cost
Finance income
Bank interest receivable
Finance costs
Bank interest payable and charges
Interest on lease liabilities
Revaluation of SBM option
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
2023
£'000
2022
£'000
13,329
2,359
65,140
14,760
-
79,900
42,791
14,332
(601)
56,522
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
9.
Income tax
Current tax
Tax charge for the year
Adjustments in respect of prior year
Deferred tax
Origination and reversal of temporary differences
Adjustments in respect of prior year
Change in tax rates
Total income tax credit
The effective tax rate is 1.4% (2022: 1.8%) and is explained below:
Loss before tax
Tax at statutory rate of 23.5% (2022: 19%)
Tax effects of:
Adjustments in respect of prior year
Expenses not deductible
Effect of higher tax rates in other jurisdictions
Losses not recognised in the year
Effect of change in tax rate
Note
2023
£'000
3,478
5,292
8,770
(9,303)
(4,841)
1,782
21
(12,362)
(3,592)
2022
£'000
2,218
(3,025)
(807)
(6,493)
(764)
(1,707)
(8,964)
(9,771)
2023
£'000
2022
£'000
(251,964)
(549,728)
(59,212)
(104,448)
452
13,161
(682)
40,907
1,782
(3,592)
(3,789)
57,115
350
42,708
(1,707)
(9,771)
The main rate of corporation tax in the UK is 25%. The main rate of corporation tax in UK increased from 19% to 25% with
effect from 1 April 2023. This change was introduced by Finance Act 2021 and substantively enacted on 24 May 2021.
The effective tax rate is 1.4% (2022: 1.8%), based on a total tax credit of £3.6m (2022: £9.8m). The effective tax rate differs from
the average statutory rate of 23.5%. This is primarily due to a movement in deferred tax not recognised (-16.2%), and the impact
of expenses not deductible (-5.2%).
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates.
The legislation will be effective for the Group’s financial year beginning 1 January 2024.
The Group has performed an assessment of the Group’s potential exposure to Pillar Two income taxes. This assessment is based
on the most recent information available regarding the financial performance of the constituent entities in the Group. Based on
the assessment performed, all jurisdictions should meet the Country-by-Country Safe Harbour provisions and management is not
currently aware of any circumstances under which this might change. Therefore, the Group does not expect a potential exposure
to Pillar Two top-up taxes in any jurisdiction reviewed through this assessment.
At the balance sheet date the total net deferred tax liability is £55.7m (2022: £76.6m). The deferred tax liability in respect of
intangible assets recognised on consolidation was £135.3m (2022: £150.8). The deferred tax asset in respect of tax losses
recognised was £29.8m (2022: £54.8m). There were £96.2m of unrecognised deferred tax assets in respect of tax losses at the
balance sheet date (2022: £57.8m). This non-recognition has an impact on the income statement tax credit, and this is one
of the primary reasons for the effective tax rate being below the statutory rate.
10. Business combinations
2023 Business combinations
Business
Country
of incorporation
Nature
of activity
Date
of acquisition
Percentage
ownership
City AM
Biossance
UK
USA
Publishing of newspapers
26 July 2023
Online retailer
28 December 2023
100%
100%
City AM
On 26 July 2023 the Group acquired the trade and assets of London’s City AM newspaper for consideration of £1.5m. All
identifiable assets and liabilities have been recorded at fair value. The fair value assessment has resulted in overall goodwill
of £2.3m being recognised. The acquisition of City AM enhances the Group’s media presence through it’s well established
consumer base which accumulates c.2 million online monthly visitors. City AM, has been integrated into THG Ingenuity,
also providing a platform to increase customer reach of THG’s own beauty and nutrition brands.
Biossance
On 28 December 2023 the Group acquired the intellectual property and assets of US beauty brand, Biossance, a company
of Amyris Inc for consideration of £15.7m ($20m). Biossance is a prestige skincare brand which been integrated into and will
further expand THG Beauty’s presence in this sector, with the brand being globally recognised, particularly within the US market.
The brand was successfully re-platformed onto THG Ingenuity technology on 10 January 2024.
This transaction represented an asset acquisition rather than a business combination under IFRS 3. The fair value of identifiable
assets and liabilities upon acquisition exceeded the purchase consideration with amounts therefore apportioned equally across
the acquired assets.
Acquired assets and liabilities are set out below.
Assets acquired at fair value
Intangible assets
Accounts receivable
Inventories
Liabilities at fair value
Cash consideration
Transaction fees and other costs
£'000
6,145
1,798
9,340
(877)
15,707
699
Information as to the operating results of the business prior to acquisition have not been made available. Financial results for the
post acquisition period are not considered material for disclosure due to the proximity to the year end.
F
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N
A
N
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I
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L
S
T
A
T
E
M
E
N
T
S
197
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11.
Intangible assets
Goodwill
Platform
development costs
Intellectual
property
Brands New product
development
Total
Cost or valuation
At 1 January 2022
Transfers
Additions
Business combinations
Currency translation
Disposals
At 31 December 2022
£’000
755,082
-
-
2,375
33,520
-
790,977
£’000
£’000
£’000
£’000
£’000
218,827
197,590
607,358
2,592
55,513
-
348
(9,031)
268,249
-
20,736
-
6,110
(464)
-
353
-
33,045
-
223,972
640,756
13,213
1,937,167
8,671
-
4,513
-
29
-
1,787,528
2,592
81,115
2,375
73,052
(9,495)
At 1 January 2023
790,977
268,249
223,972
640,756
13,213
1,937,167
Transfers
Additions
-
-
Business combinations (note 10)
2,318
Currency translation
Disposals
At 31 December 2023
Accumulated amortisation
At 1 January 2022
Transfers
Amortisation
Impairment loss
Currency translation
Disposals
(18,901)
(1,175)
773,219
33,629
-
-
271,003
-
-
At 31 December 2022
304,632
At 1 January 2023
304,632
Transfers
Amortisation
Impairment loss
Currency translation
Disposals
At 31 December 2023
NBV
At 1 January 2022
At 31 December 2022
At 31 December 2023
-
-
-
(1,651)
-
302,981
721,453
486,345
470,238
-
60,775
-
(199)
(31,226)
297,599
137,083
-
39,837
-
443
(9,031)
168,332
168,332
97
38,520
240
766
(30,853)
177,102
81,744
99,917
120,497
(1,627)
19,988
1,816
(8,730)
(24,078)
211,341
61,350
-
28,980
2,194
3,263
(464)
95,323
95,323
(130)
26,893
-
(5,418)
(23,468)
93,200
136,240
128,649
118,141
103
83
4,329
(17,606)
(376)
627,289
46,273
-
38,274
20
3,386
-
87,953
87,953
33
52,474
-
(2,437)
(362)
137,661
561,085
552,803
489,628
1,524
798
-
(8)
(310)
-
81,644
8,463
(45,444)
(57,165)
15,217
1,924,665
2,901
-
1,884
373
7
-
281,236
-
108,975
273,590
7,099
(9,495)
5,165
661,405
5,165
-
1,485
-
(2)
(310)
6,338
5,770
8,048
8,879
661,405
-
119,372
240
(8,742)
(54,993)
717,282
1,506,292
1,275,762
1,207,383
Included within intellectual property is £5.4m (2022: £4.4m) of capitalised costs incurred to obtain a contract with a customer. The
costs relate to sales commissions paid to sales personnel upon initial acquisition of a customer contract. Amortisation of £1.0m
(2022: £0.8m) was recognised in the period in relation to these assets.
Consideration of impairment of goodwill and intangible assets
Goodwill and intangible assets that have an indefinite life are subject to annual impairment testing, or more frequently if there
are indications of impairment.
Intangible assets and goodwill are reviewed by assessing the appropriate cash generating units (GGUs) annually, which are
identified based on the smallest identifiable group of assets that generates cash inflows largely independently.
The Directors have concluded that there are five (2022: six) CGUs within THG, being THG Beauty, THG Nutrition, THG Ingenuity,
THG Luxury and THG Experience. This corresponds to the organisational structure and excludes THG OnDemand which has
been exited during 2023.
Goodwill has arisen from previous business combinations across the Group and is allocated to the CGUs that are expected to
benefit from synergies of those acquisitions. The recoverable amounts of these CGUs are the higher of fair value less costs to
dispose (FVLCTD) and value in use (VIU).
Management has reviewed each CGU in turn and has adopted the VIU approach for THG Nutrition and THG Beauty,
with a FVLCTD approach being adopted for THG Ingenuity to establish a recoverable amount under IAS 36.
In accordance with IAS 36, THG Luxury and THG Experience CGUs do not include indefinite life assets. The Directors have
concluded that there are no Indicators of impairment in respect of 2023 and therefore a further impairment assessment has
not been undertaken.
THG Beauty - Goodwill totalling £338.1m (2022: £353.2m)
For THG Beauty, management has estimated a VIU using a discounted cashflow method. In the prior year a FVLCTD basis
was adopted, however the Directors consider VIU to be an appropriate basis given the continued macroeconomic uncertainty
and the impact this could have on forecasting for periods exceeding five years.
The key assumptions made are as follows:
Key Assumption
Discount rate
The post tax discount rate used is 9.5% (pre-tax rate 12.7%).
Forecast cash flows
Forecasts are based on assumptions from the Board approved budget with projections covering a five
year period. The key assumptions within the cashflow forecasts are the future revenue growth and
EBITDA margin. The projections are based on the best estimate of future cash flows, taking in to account
externally available expectations that the beauty and online markets will continue to grow at a medium to
high single digit rate. The directors believe the forecasts are reasonable and consistent with the strategy,
in addition to the medium-term outlook as publicly communicated to the market on a regular basis.
Long-term growth rate
A long-term growth rate of 3.0% was used for cash flows after the five year period which is based on long-term
growth rate across the beauty market.
No impairment has been recognised in respect of THG Beauty.
Management has performed sensitivity analysis on the key assumptions in the impairment model using reasonably possible
changes in these assumptions. The model is not sensitive to reasonably possible changes in these key assumptions in isolation,
however it is recognised that a change in more than one of these assumptions could result in a material change. Management
consider that a combination of reducing revenue by 5.8%, reducing EBITDA margin by 0.2% and increasing the discount rate by
0.5% would eliminate headroom. None of these scenarios reflect potential mitigations, including cost reduction. Cost reductions
that could be implemented by management would be deferring non-essential capex and increased cost control, such as reducing
stock levels and new customer marketing investment.
F
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
THG Nutrition - Goodwill totalling £132.1m (2022: £133.1m)
The key assumption used within the VIU calculation are:
Key Assumption
Discount rate
The post tax discount rate used is 8.1% (pre-tax rate 10.8%).
Forecast cash flows
The VIU calculation uses cash flow projections from financial budgets approved by the Board covering a five
year period. The key assumptions within the forecasts are the future revenue growth and EBITDA margin.
Long-term growth rate
A long-term growth rate of 3.0% was used for cash flows after the five year period which is based on the long-
term growth rate across sports and nutrition retailing.
The method relies on inputs not normally observable by market participants.
No impairment has been recognised for THG Nutrition.
Management has performed sensitivity analysis in the key assumptions in the impairment model using reasonably possible
changes in these key assumptions. There are no reasonably possible changes in key assumptions that would lead to an
impairment.
THG Ingenuity - Goodwill totalling £nil (2022: £nil)
The Directors have reviewed the carrying value of the CGU and have adopted a FVLCTD and a replacement cost basis. This
represents a change from the prior year, with the Directors considering this to be the most appropriate basis of valuation
consistent with the nature and intended use of the assets held.
The key assumptions used within the FVLCTD relate to the capitalised platform development costs and include the period for
replacement, headcount and rates per hour.
The CGU also includes property, plant and equipment and right of use assets with no specific impairment indicators identified.
Management has performed sensitivity analysis over the key assumptions in the impairment model using reasonably possible
changes in these key assumptions. There are no reasonably possible changes in key assumptions that would lead to an
impairment.
12.1. Property, plant and equipment
Motor
vehicles
Plant and
machinery
Fixtures
and fittings
Computer
equipment
and software
Leasehold
improvements
and freehold
buildings
Cost
At 1 January 2022
Additions
Transfers to assets held for sale
Transfers
Currency translation differences
Disposals
At 31 December 2022
At 1 January 2023
Additions
Business combinations
Transfers
Currency translation differences
Disposals
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Depreciation (note 3)
Impairment of assets held for sale
Transfers to assets held
for sale (note 12.2)
Currency translation differences
Disposals
At 31 December 2022
At 1 January 2023
Depreciation (note 3)
Impairment loss
Currency translation differences
Disposals
At 31 December 2023
NBV
At 1 January 2022
At 31 December 2022
At 31 December 2023
£’000
2,332
12
-
-
-
(27)
2,317
2,317
111
-
-
-
(165)
2,263
1,291
323
-
-
-
(27)
1,587
1,587
340
-
-
(170)
1,757
1,041
730
506
£’000
126,448
16,370
-
(2,592)
3,137
(263)
143,100
143,100
11,209
-
5,430
(302)
(6,474)
152,963
26,185
16,238
-
-
840
(160)
43,103
43,103
14,494
1,064
(342)
(1,949)
56,370
£’000
107,450
40,461
(6,831)
-
2,461
(2,148)
141,393
141,393
6,707
8
(37,869)
743
(4,117)
£’000
100,474
21,446
-
-
2,031
(5,232)
118,719
118,719
12,224
11
3,009
(532)
(281)
106,865
133,150
28,339
9,799
1,831
(1,831)
409
(2,148)
36,399
36,399
13,489
987
232
(51)
38,010
21,018
-
-
1,083
(5,230)
54,881
54,881
21,310
115
(581)
(257)
51,056
75,468
100,263
99,997
96,593
79,111
104,994
55,809
62,464
63,838
57,682
Total
£’000
459,707
95,598
(23,902)
(2,592)
8,107
(7,670)
£’000
123,003
17,309
(17,071)
-
478
-
123,719
529,248
123,719
2,829
19
29,430
(515)
(45,875)
109,607
30,262
3,518
-
529,248
33,080
38
-
(606)
(56,912)
504,848
124,087
50,896
1,831
(674)
(2,505)
131
-
33,237
33,237
6,058
10,950
(187)
(3,032)
47,026
92,741
90,482
62,581
2,463
(7,565)
169,207
169,207
55,691
13,116
(878)
(5,459)
231,677
335,620
360,041
273,171
201
202
Disposals to property, plant and equipment include the sale of non-core freehold assets which were not consummate to the Group’s
strategic priorities and resulting in a non-recurring and non-cash loss on disposal of £17.7m. Subsequent to the completion of the
sale of the subsidiary holding one of these disposed of properties, the group leased the property back, with this now sublet to a third
party. Sale and leaseback accounting has therefore not been applied as this was the leaseback of an asset that was held in a single
asset entity previously owned by the Group.
Transfers relate to work in progress assets that have been transferred to the relevant asset class as these became ready for use in
the current year.
The impairment loss relates primarily to assets held in properties which have been vacated during the year which have not been
sold or repurposed within the group.
F
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A
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
12.2 Assets held for sale
During 2022, the Group committed to a plan to sell some non-core freehold buildings that were no longer in use by the Group
and not required to execute its future strategy. In accordance with IFRS 5: Non-current assets held for sale and discontinued
operations, the assets were classified as held for sale on the Groups statement of financial position at 31 December 2022.
During 2023, the assets held for sale were sold generating cash proceeds of £13.5m.
There were no assets held for sale as at 31 December 2023.
Assets classified as held for sale
Transfer from property, plant and equipment (note 12.1)
13.
Inventories
Goods held for resale
Raw materials
Goods in transit
2023
£'000
-
-
2022
£'000
21,397
21,397
2023
£'000
2022
£'000
225,600
296,133
67,427
4,116
72,327
4,811
297,143
373,271
Goods in transit relate to goods whose control is still to be transferred to the customers as of the reporting date. The cost of
inventories recognised as an expense and included in cost of sales amounted to £1,079.9m (2022: £1,272.9m). The value of
inventories written down and recognised as an expense in the statement of comprehensive income in the year was £5.1m (2022:
£8.6m). Within goods held for resale is a £2.4m (2022: £3.0m) right to recover asset which represents the carrying value of
inventory expected to be received back from customers as returns.
14. Financial assets and liabilities
Assets as per balance sheet - financial assets
Trade and other receivables excluding non-financial assets
Cash and cash equivalents
Investments
Assets as per balance sheet - held at fair value through OCI
Derivative financial instruments designated as hedging instruments
Derivative financial instruments held at fair value through profit and loss
Note
15
16
2023
£’000
147,686
416,162
1,400
9,613
301
2022
£’000
162,835
473,783
1,400
21,567
301
575,162
659,886
Liabilities as per balance sheet - other financial liabilities at amortised cost
Bank borrowings
Lease liabilities
Trade and other payables excluding non-financial liabilities
Liabilities as per balance sheet - other financial liabilities at fair value
Derivative financial instruments designated as hedging instruments
Note
2023
£'000
2022
£'000
18
22
17
650,037
679,189
344,977
334,376
553,656
574,994
19,763
4,189
1,568,433
1,592,748
Derivative financial instruments designated as hedging instruments
FX forwards hedging foreign exchange risk on borrowings
(19,763)
(3,377)
Interest rate swaps
FX forwards hedging foreign exchange risk on highly probable future cash flows
7,999
1,615
(10,149)
21,567
(812)
17,378
Financial instruments included within current assets and liabilities, excluding borrowings, are generally short-term in nature and
accordingly their fair values approximate to their book values. Bank borrowings are initially recorded at fair value net of direct issue
costs.
The derivative financial instruments designated as hedging instruments have been recognised at fair value through Other
Comprehensive Income. Hedging instruments used are measured based on observable inputs and have been classified
at Level 2 hierarchy level in line with IFRS 13 ‘Fair Value Measurement’.
The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange, interest
rate, and cash flow contracts are identical to the hedged risk components. To test the hedge effectiveness, the Group uses the
hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in fair
value of the hedged items attributable to the hedged risks. All the hedging activities and derivatives are established to be effective.
The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives.
2023
Notional
Notional
Impact
on OCI*
Impact on
OCI**
Recycled through
interest payable
in the statement
of comprehensive
income
£'000
£’000
£'000
Derivatives hedging foreign exchange risk on borrowings
€600,000,000
(3,138)
(4,183)
(20,568)
Derivatives hedging interest rate risk on borrowings
€600,000,000
10,176
13,568
Derivatives hedging foreign exchange risk on future cash flows
£69,655,812
(1,820)
(2,426)
(6,993)
(5,130)
*Note impact on OCI is shown net of deferred tax
**Note impact on OCI is shown gross of deferred tax
F
I
N
A
N
C
I
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S
T
A
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E
M
E
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Annual Report & Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Liquidity risk
Interest rate risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group regularly forecasts cash flows and maintains an appropriate balance of cash and debt facilities to ensure that sufficient
funds are available to cover future expenses and capital expenditure.
The Group held €600m notional of forward contracts expiring in December 2024 and €600m notional of interest swaps expiring
in December 2026. Maturity of the Group’s derivative and non-derivative financial liabilities are given below.
Included within trade payables is £43.1m (2022: £53.7m) due to suppliers that participate in the Group’s supply chain financing
agreement. The agreement does not change the suppliers agreed payment terms directly with the Group.
Carrying
amount
Total
Less than
3 months
3 to 12 months
1 to 2 years
2 to 5 years
More than
5 years
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Contractual amount
650,037
344,977
553,656
19,763
679,189
334,376
574,145
4,189
657,934
557,100
-
11,636
553,656
524,387
19,763
691,808
447,847
574,145
4,189
-
-
12,188
568,486
-
29,026
33,128
29,269
19,763
30,991
31,942
5,659
-
109,000
44,764
519,908
134,290
-
333,282
-
-
-
44,289
-
4,189
-
-
660,817
87,148
-
-
-
-
-
272,280
-
-
31 December 2023:
Bank borrowings
Lease liabilities
Trade payables
Derivative financial liabilities
31 December 2022:
Bank borrowings
Lease liabilities
Trade payables
Derivative financial liabilities
Undiscounted bank borrowings disclosed in the table above exclude the impact of interest owed from 2024 onwards which is
variable rated. The respective amounts for less than 3 months is £14.5m (2022: £12.4m), 3 to 12 months is £43.7m (2022: £42.8m),
1 to 2 years is £54.9m (2022: £58.0m), 2 to 5 years is £41.9m (2022: £94.0m) and more than 5 years is nil (2022: nil).
The Group is exposed to EURIBOR and SONIA through its loan facilities and has entered into a series of interest rate swap
agreements to mitigate this risk. As of 31 December 2023, the Group held €600m expiring December 2026. Interest rate sensitivity
is summarised in note 18.
The Group’s financial risks are detailed within pages 87 to 98 of this Annual Report.
Changes in liabilities arising from financing activities
The changes in liabilities arising from financing activities are presented below:
1 January 2023
Cash flows
New leases
& Lease
modifications
Repayment
of bank
borrowings
Foreign exchange
movement
Borrowings
Lease liabilities
Total liabilities from
financing activities
£’000
679,189
334,376
£’000
(47,804)
(49,486)
£’000
-
47,844
£’000
(25,000)
-
£’000
(9,133)
(2,396)
1,013,565
(97,290)
47,844
(25,000)
(11,529)
1 January 2022
Cash flows
New leases
& Lease
modifications
Proceeds
from bank
borrowings
Foreign exchange
movement
Borrowings
Lease liabilities
Total liabilities from
financing activities
£’000
489,865
349,173
£’000
(24,469)
(49,013)
839,038
(73,482)
£’000
-
10,930
10,930
£’000
156,000
-
156,000
£’000
27,326
9,156
36,482
Other
£’000
52,785
14,639
67,424
Other
£’000
30,467
14,130
44,597
31 December
2023
£’000
650,037
344,977
995,014
31 December
2022
£’000
679,189
334,376
1,013,565
The ‘Other’ column includes the effect of accrued interest on interest-bearing loans and borrowings, including lease liabilities and
the effect of prepaid loan fees. The Group classifies interest paid as cash flows from financing activities.
The fair value of bank borrowings at 31 December 2023 was £652.5m (2022: £686.6m). There is no material difference between
the fair value and the carrying value of the bank borrowings.
Credit risk
Foreign currency risk
The Group trades internationally and is exposed to exchange rate risk on purchases (Euro, US dollars, and Polish Zloty) and sales
(primarily in Euro and US dollars). The Group’s results are presented in Sterling and are thus exposed to exchange rate risk on
translation of foreign currency assets and liabilities.
The Group’s approach to managing foreign exchange risk is to designate cash flow hedges across a combination of forwards
and spot transactions, whose fair value is based on the observable market value of the respective instrument, taking into account
foreign exchange rates and market volatility at the balance sheet date.
The Group is also exposed to EUR:GBP exchange rate risk on a €600m loan within the Group and mitigates this risk through the
use of hedging instruments in the form of FX forward contracts.
As at 31 December 2023, the Group held €600m notional of forward contracts expiring in June 2024.
The Group’s foreign exchange exposure is predominantly Euro, US Dollars and Polish Zloty. If the closing exchange rate was 5%
higher/lower, the Group’s statement of Comprehensive Income would be impacted as follows:
Change in foreign
exchange rate
Effect on change
in EUR rate*
Effect on change
in USD rate**
Effect on change
in PLN rate
+5%
-5%
+5%
-5%
£'000
(372)
411
(271)
300
£'000
2,766
(3,057)
3,222
(3,561)
£'000
2,367
(2,617)
2,834
(3,132)
*If the closing exchange rate was 5% higher/lower, the impact on Group Equity would be £4.1m (2022: £10.4m) reflecting the impact of the derivative hedges
associated with the €600m term loan B.
** If the closing exchange rate was 5% higher/lower, the impact on Group Equity would be £61.8m (2022: £33.5m) reflecting the impact of the substantial other
intangible assets denominated in USD.
2023
2023
2022
2022
205
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to
a financial loss. The Group is exposed to credit risk from its operating activities, primarily trade receivables. The Group monitors
and reviews exposure to credit risk on an ongoing basis and makes best efforts to ensure recoverability of amounts owed to the
Group. Information about the credit risk exposure on the Group’s trade receivables is disclosed in note 15.
15. Trade and other receivables
Trade receivables
Less: loss allowance
Net trade receivables
Prepayments
Accrued income
Other taxation and social security
Other receivables
2023
£'000
110,912
(2,056)
108,856
28,483
36,428
59,185
38,830
271,782
2022
£'000
121,122
(1,805)
119,317
28,362
40,004
33,748
43,518
264,949
Trade and other receivables are principally denominated in Sterling.
At 31 December 2023, there were 160,392,591 fully vested, but partly paid and unlisted Shares (31 Dec 2022: 160,809,675). The
average amount of unpaid share capital per fully vested but partly-paid and unlisted Share is £0.17 (2022: £0.17) representing a
receivable to the Group of £26.7m (2022: £26.9m). The amount is included within other receivables. The movement in the year is
all due to certain fully vested but partly paid and unlisted Shares being paid-up and converted to Ordinary Shares.
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At 31 December 2023 the ageing of trade receivables was as follows:
Not due
0 to 3 months overdue
More than 3 months overdue
The movement in the loss allowance of trade receivables was as follows:
At 1 January 2023
Charge for the year
Released
Utilised
Foreign exchange movement
At 31 December 2023
2023
£'000
68,952
25,041
16,919
110,912
2022
£'000
61,178
45,318
14,626
121,122
£'000
1,805
4,091
(3,817)
(16)
(7)
2,056
The Group’s credit risk exposure on trade receivables using a provision matrix is as follows:
Expected credit loss rate
Estimated total gross carrying amount at default
Expected credit loss
At 31 December 2023
Current
0-30
days
31-60
days
1.72%
68,952
(1,183)
67,769
1.83%
21,202
(389)
20,813
1.95%
3,228
(63)
3,165
61-90
days
2.06%
611
(13)
598
90+
days
2.41%
16,919
(408)
Total
110,912
(2,056)
16,511
108,856
The Group has adopted IFRS 9 applying the simplified approach to measure the expected credit losses. This uses a lifetime
expected loss allowance for all trade receivables. No provision is required in respect of accrued income.
The Directors consider the carrying amount of trade and other payables approximates to their fair value when measured by
discounting cash flows at market rates of interest as at the balance sheet date.
Contingent consideration on acquisitions is measured at fair value using unobservable inputs (level 3 of the fair value hierarchy).
The unobservable inputs used in the fair value calculation include internal data such as forecasts, budgets and actual results
to date. The fair values are sensitive to changes in EBITDA or revenue given that these key metrics are what the performance
targets are based on. The reduction year on year is driven by payments made of £3.4m.
Included within trade payables is £43.1m (2022: £53.7m) due to suppliers that participate in the Group’s supply chain financing
agreement. The agreement does not change the suppliers agreed payment terms directly with the Group.
18.
Interest-bearing loans and borrowings
Current
Bank borrowings
Lease liabilities
Non-current
Bank borrowings
Lease liabilities
Note
22
22
2023
£’000
29,026
43,537
72,563
621,011
301,440
922,451
2022
£’000
30,992
43,995
74,987
648,197
290,381
938,578
Bank borrowings relate predominantly to the 7-year Euro term loan B, undrawn 5-year revolving credit facility and an incremental
facility obtained during the prior year. The revolving credit facility is provided by Barclays, HSBC, Santander, Citibank, NatWest
and JPM. The term loan B carried an interest rate of 4.50% plus EURIBOR and the revolving credit facility interest rate is SONIA.
The Group increased its bank borrowings in 2022 with an incremental facility obtained plus Commercial Facility Loan. This loan is
provided by the Groups existing lenders and carries a base rate of Daily RFR (SONIA). The floating element of the term loan B is
hedged by interest rate derivatives. Management note that EURIBOR is being reformed as a benchmark rate and are in dialogue
with its lending and hedging partners to minimise the impact on the Group as transition occurs. If interest rates moved by 100bps,
the Group’s loss before tax would be c.£7.3m higher / lower (2022: c.£3.7m) and the subsequent move on the derivative valuation
would cause equity to be c.£15.5m higher / lower (2022: c.£18.5m) as a result of the same move.
16. Cash and cash equivalents
Cash and cash equivalents
2023
£'000
416,162
2022
£'000
473,783
Net debt consists of loans and lease liabilities, less cash and cash equivalents, defined as referenced in note 22. For the purpose
of the Group’s net debt calculation, loans that are denominated in foreign currency are translated at the effective hedged rate
where applicable. Net (debt)/cash is an alternative performance measure and is not defined under IFRS. A reconciliation to the
most directly comparable IFRS measure is included below:
Cash and cash equivalents includes amounts receivable of £3.5m (2022: £3.1m) from banks and £16.7m (2022: £17.4m)
from payment providers, for credit and debit card transactions. Such amounts clear the bank shortly after the transaction
takes place.
17. Trade and other payables
Trade payables
Accruals
Other taxation and social security
Other payables
Government grants
Contingent consideration on acquisitions
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£'000
368,855
182,922
82,351
-
2,343
1,879
2022
£'000
321,709
244,553
58,811
1,880
2,635
6,852
Loans and other borrowings
Lease liabilities
Cash and cash equivalents
Sub-total
Adjustments:
Retranslate debt balance at swap rate where hedged by foreign exchange derivatives
Net debt
Net debt before lease liabilities
638,350
636,440
The contractual maturity analysis of bank borrowings and lease liabilities are given in note 14.
2023
£'000
(650,037)
(344,977)
416,162
2022
£'000
(679,189)
(334,376)
473,783
(578,852)
(539,782)
15,653
(563,199)
(218,222)
24,782
(515,000)
(180,624)
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19. Provisions
At 1 January 2023
Acquired
Utilised
Created
Released
Interest
FX on retranslation
At 31 December 2023
Current
Non-current
Dilapidations
£’000
20,805
-
(380)
6,001
(3,201)
119
(260)
23,084
2,712
20,372
Other
£’000
1,565
-
(614)
1,933
-
-
-
2,884
1,126
1,758
Total
£'000
22,370
-
(994)
7,934
(3,201)
119
(260)
25,968
3,838
22,130
Dilapidations provisions relate to leased properties. Dilapidations provisions are made based on the best estimate of the
likely committed cash outflow and discounted to net present value. Future costs are expected to be incurred over the term
of the existing lease arrangements at the reporting date, which is a period of up to 25 years.
The following table shows the timeline in which undiscounted costs in relation to the dilapidation provision are expected to
be incurred:
Current
£'000
1-5 years
£’000
6-10 years
£’000
11-15 years
£’000
16-20 years
£’000
21-25 years
£’000
At 31 December 2023
At 31 December 2022
2,544
3,025
5,488
5,490
1,178
2,609
3,145
2,367
456
456
11,019
9,736
Total
£’000
23,830
23,683
Other provisions relate to onerous contracts and unavoidable costs arising where the Group no longer operates from a
leased property. Unless a separate sublease or exit has been agreed with the landlord, the Group has provided for the
costs of meeting the obligations of the contract, being primarily service charges. The cost is recognised for the existing
contractual term.
20. Contract liabilities
Contract liabilities
2023
£’000
22,864
2022
£'000
34,256
Contract liabilities are the consideration received from the customers for sales where the Group still has an obligation to
transfer goods or services, which predominately relate to THG Beauty and THG Nutrition. 100% of the transaction price
of the unsatisfied contracts as at 31 December 2022 were recognised as revenue during 2023. Contract liabilities have
reduced in 2023 as a result of investment in automation and faster delivery times to customers.
21. Deferred tax
The deferred tax balance comprises:
Short term timing differences
Accelerated capital allowances
Business combinations
Tax losses
Loan relationships
Derivatives
Other balance sheet amounts
209
2023
£’000
(6,920)
(5,754)
135,335
(29,821)
(38,577)
2,253
(818)
55,698
2022
£’000
106
3,361
150,827
(54,809)
(25,627)
3,558
(818)
76,598
At the balance sheet date there are unrecognised deferred tax assets in respect of tax losses of £96.2m (2022: £57.8m).
Corporate Interest Restrictions (“CIR”) limits tax relief in respect of net interest costs resulting in a deferred tax asset
for disallowed amounts which can be utilised in future periods. An asset of £38.6m (2022: £25.6m) has therefore been
recognised on interest bearing loan relationships.
The movement on the deferred tax liability during the year is as follows:
Accelerated
capital
allowances
Short term
timing
differences
Tax losses
Loan
relationships
Business
combinations
Other
Total
£’000
3,361
£’000
£’000
£’000
£’000
£’000
£’000
106
(54,810)
(25,627)
150,827
2,741
76,598
(8,534)
(4,370)
24,852
(12,950)
(11,360)
-
-
(2,511)
-
-
-
(580)
(145)
137
-
-
-
-
-
(12,362)
(2,511)
(1,306)
(1,306)
-
-
(4,132)
-
(4,720)
Opening balance 1 January 2023
Charged / (credited) to the statement of
comprehensive income
Credited to equity
Charged to OCI
Other / FX
Closing balance 31 December 2023
(5,753)
(6,920)
(29,821)
(38,577)
135,335
1,435
55,699
22. Leases
Set out below are the carrying amounts of the right-of-use assets recognised and movements during the period:
As at 1 January 2022
Additions
Depreciation (note 3)
Lease modifications
Disposals
Currency translation differences
As at 31 December 2022
As at 1 January 2023
Additions
Depreciation (note 3)
Lease modifications
Disposals
Currency translation differences
As at 31 December 2023
Motor
vehicles
Plant and
machinery
Computer
equipment
and software
£’000
£’000
£’000
378
-
(173)
-
-
5
210
210
1,920
(568)
98
-
(4)
1,656
374
-
(213)
-
-
3
164
164
(3)
(45)
-
-
(3)
113
2
-
(1)
(1)
-
-
-
-
-
-
-
-
-
-
Land and
buildings
£’000
309,528
13,608
Total
£’000
310,282
13,608
(42,908)
(43,295)
17,856
(11,426)
7,277
17,855
(11,426)
7,285
293,935
294,309
293,935
294,309
59,475
(38,809)
(10,377)
-
(2,358)
301,866
61,392
(39,422)
(10,279)
-
(2,365)
303,635
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Set out below are the carrying amounts of lease liabilities (included under note 18 interest-bearing loans and borrowings)
and the movements during the period:
As at 1 January
Additions
Accretion of interest
Payments
Lease modifications
Disposals
Currency translation differences
As at 31 December
Current
Non-current
2023
£'000
334,376
56,708
14,641
(49,487)
(8,864)
-
(2,397)
344,977
43,537
301,440
2022
£'000
349,173
6,620
14,130
(49,012)
17,820
(13,510)
9,155
334,376
43,995
290,381
The maturity analysis of lease liabilities is disclosed in Note 14. The Group had total cash outflows for leases of £49.5m
in 2023 (2022: £49.0m). The following are the amounts recognised in the year in the consolidated statement of
comprehensive income:
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
2023
£'000
39,422
14,641
54,063
2022
£'000
43,295
14,130
57,425
23. Share capital and reserves
THG PLC is a public company limited by shares and incorporated in England and Wales. It has a standard listing on the
London Stock Exchange and is the holding company of the Group. The Company has nine classes of shares; Ordinary
Shares of £0.005 each, all of which are fully paid; D1 Shares of £0.005 each; D2 Shares of £1 each, all of which are fully paid;
E Shares of £0.005 each; F Shares of £0.005 each; G Shares of £0.005 each; H Shares of £0.005 each; Deferred 1 Shares of
£0.005 each; and Deferred 2 Shares of £0.005 each. As at 31 December 2023, the Company’s issued share capital comprised:
Class
Ordinary Shares
D1 Shares
D2 Shares
E Shares
F Shares
G Shares
H Shares
Special Share
Deferred 1 Shares
Deferred 2 Shares
2023 Number
2022 Number
Nominal value £ each
1,299,700,302
56,082,651
17,441
48,944,593
27,014,247
17,267,066
-
-
317,613
21,563,860
1,265,377,243
56,082,651
17,741
48,995,797
27,122,287
17,494,614
-
1
313,257
21,563,860
1,470,907,773
1,436,967,451
0.005
0.005
1
0.005
0.005
0.005
0.005
1
0.005
0.005
The rights attaching to the Shares are set out in the Director’s Report on pages 99 to 106.
211
Capital risk management
The Group’s objectives when managing capital, which comprises equity, are to safeguard the Group’s ability to continue as
a going concern to provide returns for Shareholders and benefits for other stakeholders and to maintain an optimal capital
structure. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid
to Shareholders, return capital to Shareholders, issue new Shares or sell assets to reduce debt.
During the financial year ending 31 December 2023 the following share conversions took place in respect of pre-IPO
employee share schemes:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
(xvii)
(xviii)
(xix)
(xx)
(xxi)
2,500 Ordinary Shares were converted from 2,500 E Shares
9,876 Ordinary Shares were converted from 3,547 F Shares and 6,329 G Shares
13,218 Ordinary Shares were converted from 5,288 F Shares and 7,930 G Shares
45,488 Ordinary Shares were converted from 45,488 G Shares
15,765 Ordinary Shares were converted from 15,765 G Shares
8,532 Ordinary Shares were converted from 8,532 E Shares
11,168 Ordinary Shares were created from 5,193 F Shares and 5,975 G Shares
300 D2 Ordinary Shares were subdivided into 60,000 D2 shares of £0.005 each, 55,644 of which
converted into 55,644 Ordinary Shares and 4,356 were reclassified into Deferred 1 Shares.
14,807 Ordinary Shares were converted from 14,807 E Shares
15,000 Ordinary Shares were converted from 15,000 F Shares
21,144 Ordinary Shares were converted from 21,144 F Shares
5,612 Ordinary Shares were converted from 5,612 E Shares
3,700 Ordinary Shares were converted from 3,700 F Shares
20,337 Ordinary Shares were converted from 10,572 F Shares and 9,765 G Shares
61,393 Ordinary Shares were converted from 24,483 F Shares and 36,910 G Shares
8,717 Ordinary Shares were converted from 3,524 F Shares and 5,193 G Shares
13,168 Ordinary Shares were converted from 5,193 F Shares and 7,975 G Shares
9,747 Ordinary Shares were converted from 2,875 E Shares and 6,872 F Shares
16,878 Ordinary Shares were converted from 16,878 E Shares
8,717 Ordinary Shares were converted from 3,524 F Shares and 5,193 G Shares
81,025 Ordinary Shares were converted from 81,025 G Shares
24. Pension Commitments
During the year, the Group operated an auto-enrolment pension scheme. The scheme is managed by independent fund
managers and the Group contributes in accordance with the statutory requirements. In addition to the auto-enrolment
scheme, a subsidiary company operates a defined contribution pension scheme which is also managed by independent
fund managers and its assets and liabilities are held separately from that of the Group. The pension charge represents
the amount paid by the Group and amounted to £10.7m (2022: £10.4m). £1.2m of contributions due to the fund were
outstanding at year end (2022: £1.1m).
25. Cash flow generated from operations
Loss before taxation
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation
Amortisation of acquired intangibles
Share-based payments
Adjusted items
Other operating expense
Net finance costs
Operating cash flow before adjusting items and before
movements in working capital and provisions
Decrease in inventories
(Increase) / Decrease in trade and other receivables
Increase / (Decrease) in trade and other payables*
Increase/(Decrease) in provisions
Foreign exchange (loss) /gain
Cash generated from operations before adjusting items
Free cash flow
Free cash flow2
Note
12.1
22
11
11
7
4
12.1
8
2023
£'000
2022
£'000
(251,964)
(549,728)
55,691
39,422
68,829
50,543
16,723
50,627
17,664
66,571
114,106
70,678
(10,414)
(11,336)
(575)
(201)
162,258
50,896
43,295
58,581
50,394
10,734
345,178
-
54,764
64,114
79,262
1,027
(56,893)
(1,292)
1,424
87,642
(1,135)
(213,353)
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*Included within trade and other payables is a decrease in contract liabilities of £11.4m (2022: decrease £1.9m).
Refer to the Chief Financial Officer’s Review on page 35 of this report for details regarding undrawn borrowing facilities that may be available in the future for the operating activities and settling capital
commitments.
2. Free cashflow is defined as total cash flow for the group adjusting for debt (repayments) / proceeds and acquisitions cash flows and in respect of FY23 the inclusion of a cash
receipt of £11.2m from HMRC which was remitted to the Group in December 2023 but physically cleared the bank on the first working day of 2024. For presentation purposes,
this is considered to be free cash flow as at 31 December 2023 as a result of the remittance advice received.
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26. Earnings per share
The following table reflects the income and share data used in the basic and diluted EPS calculations:
In addition to the shareholdings noted above, the Directors had the following interests in vested Shares issued under
previous incentive arrangements at the balance sheet date. These shares carry no voting rights.
Loss for the financial year (£'000)
Weighted average number of ordinary shares for basic EPS
Basic and Diluted EPS (£’s)
2023
2022
(248,372)
(539,957)
1,296,925,602
1,239,485,253
(0.19)
(0.44)
In 2022, if the impact of impairment charges in the year was removed, the Basic and Diluted EPS would have been £(0.21).
The basic loss per share has been calculated by dividing the loss attributable to the Group by the weighted average
number of ordinary shares in issue.
The diluted loss per share has been calculated by adjusting the weighted average number of shares for the effects of the D,
E, F, G and H shares, assuming full vesting of all potentially dilutive shares. The number of these shares is disclosed in note
23.
Basic and diluted earnings per share are equal since the effect of all potentially dilutive shares outstanding was
anti-dilutive.
27. Related Party Transactions
The Directors’ interests in the ordinary share capital of the Company at the balance sheet date are detailed below:
£ per share
Ordinary Shares
2023
Ordinary Shares
2022
Number
Number
0.005
249,294,545
249,294,545
1
0.005
1
0.005
0.005
0.005
0.005
360
361
4,216,826
3,638,116
3,174
3,174
2,505,943
2,505,943
21,926
21,926
2,400,000
2,400,000
67,397
n/a
258,510,171
257,864,065
M J Moulding
M J Moulding
J A Gallemore
J A Gallemore
I McDonald
D Sanders
C Allen
S Farr
213
M J Moulding
M J Moulding
M J Moulding
M J Moulding
J A Gallemore
J A Gallemore
J A Gallemore
I McDonald
2023
2022
2023
2022
Date of award
Subscription/
exercise price
£
Subscription/
exercise price
£
Dec-19
Aug-20
Aug-20
Aug-20
Dec-19
Aug-20
Aug-20
Dec-19
0.23
0.33
0.28
0.26
0.23
0.33
0.28
0.23
0.23
0.33
0.28
0.26
0.23
0.33
0.28
0.23
Number
Number
43,641,266
43,641,266
20,197,808
20,197,808
7,733,792
7,733,792
-
-
185,476
185,476
2,666,963
2,666,963
4,000,537
4,000,537
185,476
185,476
78,611,318
78,611,318
Also refer to note 15 and the remuneration report for further information as to shareholdings.
The Group has not provided any interest free loans to the Directors in 2023 (2022: none). In previous years the Group
provided £0.3m of interest free loans to the Directors for them to subscribe for shares as part of the employee benefit
scheme which remain outstanding at the balance sheet date. Full details of the Directors’ shareholdings are detailed
in the Directors’ Remuneration Report on page 159.
The Group has in place an agreement on commercial terms with Moulding Capital Limited to provide property, facilities
and project management services to the entity and its subsidiaries. This agreement generated £307,720 (2022: £269,017)
for the Group recognised within administrative expenses.
Prior to the IPO which took place in September 2020, THG divested the Propco Group, an entity now wholly owned by
the Group’s CEO. The Propco Group owns property assets occupied and utilised by THG and its operating businesses.
The amounts recognised on the Group’s balance sheet in relation to the leases with Propco in the year are as follows:
Right-of-use asset
Lease liability
2023
£'000
154,682
174,457
2022
£'000
159,000
178,694
The amounts recognised on the Group’s statement of comprehensive income in relation to the leases with Propco in the
year are as follows:
Depreciation arising on right-of-use assets
Expense recognised in financing costs
Impairment arising on property plant and equipment
2023
£'000
10,066
7,198
9,663
2022
£'000
11,277
8,812
-
214
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The table below gives further detail around the leases in place:
28.
Subsidiary undertakings
Number of properties
Residual lease term date
divestment
FY23 rent
£’000
9
12
7
28
0-4 years
12-14 years
18-24 years
962
3,285
9,923
14,170
The following table shows the amounts receivable from or payable to Propco which are outstanding at the balance sheet
date. These include balances in relation to lease agreements and where the Group has paid suppliers on behalf of the
Propco Group, or vice versa. Such situations arise due to Propco suppliers using legacy details to submit invoices or where
payments are made on behalf of THG by Propco for property related costs rechargeable to THG as a tenant per lease.
2023
2022
Related party
Amounts owed by
related parties
Amounts owed to
related parties
Amounts owed by
related parties
Amounts owed to
related parties
£’000
£’000
£’000
£’000
Aghoco 1442 Ltd
Allenby Square Ltd
MCL Alpha PropCo Ltd
MCL Icon Unit 3 PropCo S.à r.l.
MCL Gadbrook PropCo Ltd
MCL Icon Unit 4 PropCo Ltd
MCL PV PropCo Ltd
MCL A&A PropCo Ltd
MCL GJS PropCo Ltd
MCL HCC PropCo Ltd
MCL KS PropCo Ltd
Moulding Capital Limited
MCL Wroclaw sp. Z.o.o
MCL ICON S.à r.l
MCL Icon Unit 2 PropCo Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
7
-
74
34
45
-
-
35
75
63
-
1
170
292
825
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
190
161
296
242
217
45
241
195
285
225
10,454
-
1,101
953
14,705
These consolidated financial statements include the results of all subsidiaries owned by THG PLC as listed in the table
below. Some of these subsidiaries, which are listed below, have taken the exemption from an audit for the year ended
31 December 2023 permitted by s479A of Companies Act 2006. In order to allow these subsidiaries to take the audit
exemption, the parent company THG PLC has given a statutory guarantee, in line with s479C of Companies Act 2006.
At the balance sheet date, the following subsidiaries were controlled by the Group (a company incorporated in England
and Wales). All investments are 100% owned by THG PLC either directly or indirectly.
Subsidiary
Registered Office
Country of
incorporation
Nature of business
The Hut.com Limited
The Hut Platform Limited
The Hut Holdings Limited
The Hut.com (Trading) Limited
Cend Limited
Guco Internet Supplies Limited
Iwantoneofthose Limited
Ensco 818 Limited
Mankind Holdings Limited
Mankind Direct Limited
Moo Limited
Lookfantastic Group Limited
Lookfantastic.com Ltd
Lookfantastic Franchising Limited
Lookfantastic London Limited
Lookfantastic Salons Limited
Exante Diet Limited
Bike Kit Limited
CNP Professional Holdings Limited
MyVitamins Limited
HQ Hair Limited
Cend International Limited
THGPP LLC
THG International LLC
Mama Mio Limited
Mama Mio Distribution Limited
1
1
1
2
1
3
3
1
3
1
1
1
1
1
1
1
1
1
3
1
3
1
4
4
1
1
England and Wales
Online retailing
England and Wales
Provision of website development services
England and Wales
Dormant
Jersey
Online retailing
England and Wales
Holding company
Guernsey
Guernsey
Holding company
Holding company
England and Wales
Holding company
Guernsey
Dormant
England and Wales
Procurement company
England and Wales
Online advertising
England and Wales
Holding company
England and Wales
Online retailing
England and Wales
Franchising and consultancy services
England and Wales
Dormant
England and Wales
Hairdressing salon
England and Wales
Dormant
England and Wales
Dormant
Guernsey
Procurement company
England and Wales
Dormant
Guernsey
Holding company
England and Wales
Online retailing
USA
USA
Holding company
Warehouse and distribution
England and Wales
Online retailing
England and Wales
Dormant
Mama Mio US Inc.
29
USA
Online retailing
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England and Wales
Retail and leisure company
EI Spa Holdings (UK) Limited
1
1
1
15
4
30
30
20
20
4
1
1
1
5
9
1
10
20
1
1
16
1
1
22
22
22
22
8
22
32
22
1
22
11
Hale Country Club Limited
Gadbrook Limited
THG International Limited
The Hut Group International
(Shanghai) Co Limited
PC Beauty Inc.
Ideal Shape LLC
Performance Supplements LLC
Salu Australia PTY Limited
Skincarestore Australia PTY Limited
Salu Beauty Inc.
UK-2 Limited
Another.com Limited
Virtual Internet Holdings Limited
Hosting Services Inc.
UK2 Ukraine LLC
Virtual Internet (UK) Limited
The Hut.com (Poland) sp. z.o.o.
RY.com.au Pty Limited
Media Ark Limited
THG Studios Limited (previously
Hangar Seven Limited)
H7P Portugal Unipessoal LDA
Illamasqua (Holdings) Limited
Illamasqua Limited
Beauty Box Beteiligungen GmbH
Beauty Trend Holding GmbH
Beauty Trend GmbH
Jade 1150. GmbH
Beauty Trend S.A.S France
GlossyBox Sweden Holding UG
GlossyBox Sweden AB
GlossyBox United Kingdom Holding GmbH
Beauty Trend UK Limited
VRB GmbH & Co. B-149 KG
Beauty Trend USA Inc.
217
England and Wales
Holding company
England and Wales
Marketing company
China
USA
USA
USA
Australia
Australia
USA
License holding company
Holding company
Marketing company
Marketing company
Holding company
Online retailing
Online retailing
England and Wales
Webhosting
England and Wales
Webhosting
England and Wales
Holding company
USA
Ukraine
Webhosting
Webhosting
England and Wales
Webhosting
Poland
Australia
Warehouse and distribution
Online retailing
England and Wales
Visual content producer
England and Wales
Visual content producer
Portugal
Visual content producer
England and Wales
Holding company
England and Wales
Online retailing
Germany
Germany
Germany
Germany
France
Germany
Sweden
Germany
Holding company
Online retailing
Online retailing
Holding company
Online retailing
Holding company
Online retailing
Holding company
England and Wales
Online retailing
Germany
USA
Holding company
Online retailing
ESPA International (UK) Limited
Primavera Aromatherapy Limited
ESPA International (US) Inc.
ESPA International FZE
Make Money Limited
M Beauty Limited
Language Connect International Ltd
Language Connect, Inc.
1
1
1
6
17
1
1
1
7
England and Wales
Holding company
England and Wales
Online retailing
England and Wales
Manufacturing
USA
UAE
Online retailing
Online retailing
England and Wales
Holding company
England and Wales
Online retailing
England and Wales
Translation and interpretation
USA
Translation and interpretation
THG Ingenuity Singapore Pte. Limited
33
Singapore
Translation and interpretation
Acheson & Acheson Limited
1010 Products Limited
Ameliorate Skincare Limited
Eddie Rockers Limited
Great John Street Hotel Limited
King Street Investments Limited
THG Trustee Limited*
THG Nutrition US Inc. (previously MP, Inc.)
Myprotein Japan K.K.
Colorist Christophe Robin S.A.S.
Colorist Christophe Robin US, Inc
THG General Trading LLC
David Berryman Ltd
David Berryman Holdings Limited
Fair Juice Limited
Claremont Ingredients Ltd
THG 100 KING STREET LIMITED
The Hut Group Limited
THG Hangar Holdco Limited
THG Hangar 2 Limited
Lion/Wrinkle Holdings, Inc
Lion/Wrinkle Parent Corp
Lion/Wrinkle Intermediate LLC
N.V. Perricone LLC
Perricone MD Cosmeceuticals UK Limited
1
1
1
1
1
1
1
1
12
8
11
25
1
1
1
1
1
1
1
1
1
1
1
13
1
England and Wales
Manufacturing
England and Wales
Dormant
England and Wales
Holding company
England and Wales
Holding company
England and Wales
Hotel operator
England and Wales
Hotel operator
England and Wales
Trustee of EBT
USA
Japan
France
USA
UAE
Holding company
Online retailing
Online retailing
Online retailing
Online retailing
England and Wales
Online retailing
England and Wales
Holding company
England and Wales
Dormant
England and Wales
Online retailing
England and Wales
Hotel operator
England and Wales
Dormant
England and Wales
Holding company
England and Wales
Holding company
USA
USA
USA
USA
Holding company
Holding company
Holding company
Online retailing
England and Wales
Online retailing
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The Hut Group, S.L
THG Intermediate OpCo Limited
THG Operations Holdings Limited
THG Intermediate Holdings Limited*
THG Ingenuity Limited
THG Shelfco Limited
THG Beauty USA LLC (previously
Dermstore LLC)
Arrow Film Distributors Limited
The Engine House Media Services Limited
Indigo Environmental Limited
Indigo Environmental Holdings Limited
Indigo Polymers Limited
Three Counties Reclamation Limited
The Protein Lab (UK) Limited
Preston Plastics (Holdings) Limited
Preston Plastics Limited
Eco Credits Limited
Brighter Foods Limited
Bentley Laboratories Blocker Company
Bentley Laboratories LLC
Cult Beauty Limited
THG AUS Fulfilment PTY Limited
THG Eco Ltd
THG EU PP Limited
THG Ingenuity Germany GmbH
THG Beauty Limited
THG Beauty Singapore PTE Limited
THG Beauty PP EU Limited
THG Beauty PP US LLC
THG Experience Limited
14
1
1
1
1
1
11
1
1
1
1
1
1
1
1
1
1
1
11
19
1
20
1
21
22
1
23
21
18
1
Spain
Online retailing
England and Wales
Holding company
England and Wales
Holding company
England and Wales
Holding company
England and Wales
Holding company
England and Wales
Holding company
USA
Online retailing
England and Wales
Motion picture distributor
England and Wales
Film processing
England and Wales
Environmental consulting activities
England and Wales
Holding company
England and Wales
Dormant
England and Wales
Recovery of sorted metals
England and Wales
Manufacturing
England and Wales
Holding company
England and Wales
Recovery of sorted metals
England and Wales
Environmental consulting activities
England and Wales
Manufacturing
USA
USA
Holding company
Online retailing
England and Wales
Online retailing
Australia
Fulfilment
England and Wales
Holding company
Ireland
Germany
Holding company
Online retailing
England and Wales
Online retailing
Singapore
Online retailing
Ireland
USA
Holding company
Holding company
England and Wales
Holding company
THG Luxury Limited
THG Luxury PP EU Limited
THG Nutrition Limited
THG AUS Nutrition PTY Limited
THG Nutrition India Private Limited
THG Nutrition Singapore PTE Limited
THG Nutrition Poland s.p.z.o.o
THG Nutrition PP EU Limited
THG OnDemand Limited
THG Beauty Europe GmbH (previously
THG OnDemand Germany GmbH)
THG OnDemand Netherlands B.V
THG OnDemand PP EU Limited
THG OnDemand US LLC
THG Shared Services Limited
THG Shared Services AUS PTY Limited
THG Shared Services Poland sp.z.o.o
THG Shared Services US LLC
THG Beauty Trading LLC
THG Ingenuity General Trading LLC
THG Insurance Limited*
THG Icon CP PropCo Limited
Dermstore LLC (previously Inteladerm LLC)
City A.M. Limited
*Companies owned directly by THG PLC
1
21
1
20
24
23
10
21
1
22
26
21
18
1
20
10
18
27
28
3
1
31
1
England and Wales
Online retailing
Ireland
Holding company
England and Wales
Online retailing
Australia
India
Online retailing
Online retailing
Singapore
Online retailing
Poland
Ireland
Online retailing
Holding company
England and Wales
Online retailing
Germany
Online retailing
Netherlands
Online retailing
Ireland
USA
Holding company
Online retailing
England and Wales
Shared Service centre
Australia
Poland
USA
UAE
UAE
Shared Service centre
Shared Service centre
Shared Service centre
Online retailing
Holding company
Guernsey
Holding company
England and Wales
Holding company
USA
Holding company
England and Wales
Financial and businesses newspaper
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73 rue Sainte-Anne, Paris, France.
26. Barbara Strozzilaan 2011083 HN Amsterdam, The Netherlands.
Iwantoneofthose.com Limited
52189 Media Ark Limited
6127322 Arrow Film Distributors Limited
2584648
Registered Offices:
Icon 1 7-9 Sunbank Lane, Ringway, Altrincham,
United Kingdom, WA15 0AF.
2nd Floor, Charter Place, 23/27 Seaton Place, St Helier, Jersey, JE1 1JY.
Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 4NA.
18.
300 Creekview Road, Suite 209, Newark, New Castle, 19711.
19.
111 Fieldcrest Avenue, Edison NJ 08837.
20. Azure Group Pty Level 10, 171 Clarence Street, Sydney, NSW 2000.
Corporation Trust Center, 1209 Orange Street,
Wilmington, DE 19801, USA.
517 West 100 North, Providence, UT 84332, USA.
100 SE 2nd Street, Suite 2000, Miami, FL 3313, USA.
Language Connect, Inc. 79 Madison Avenue,
Suite 205, New York, NY 10016, USA.
21. City Trust & Corporate Services Limited 1st Floor Liffey
Trust Centre, 117 -126 Sheriff Street Upper, Dublin 1.
22. Maximilianstrasse 5480538 Munich.
23.
100 Tras Street, #16-01 100AM, 079027, Singapore.
24.
203, 2nd Floor, Time Tower, Gurgaon Haryana, India.
25. Eternity Realty Building-ER 3 Deira Al Marrar Office: 041.
1.
2.
3.
4.
5.
6.
7.
8.
9.
79060, Ukraine, Lviv, Naukova str. 7D, office No. 305.
27. Office no 101-105, Bayan Business Center, Dubai Investment Park -
10.
ul. Magazynowa 1, 55-040 Magnice, Poland.
11.
06-101, WeWork 115 Broadway, New York, NY 10006, USA.
12. DLA Piper Tokyo, 2-1-1 Marunouchi, Chiyoda-ku,
Meiji Seimei Kan 7F, Tokyo, 100-0005, Japan.
13.
600 Montgomery St Ste 2500, San Francisco, CA, 941111-2724, USA.
14. Monte Equinza 30 Bajo Izquierda 2810, Madrid, Spain.
15.
Room 753, Level 7, Building 2, No. 155, Fu Texi 1st
Road, China (Shanghai) Pilot Free Trade Zone.
16.
Lote D, Área Empresarial de Marim, 8700-122 Olhão, Portugal.
17.
Jebel Ali Free Zone, Dubai, UAE.
First, Dubai, United Arab Emirates.
28. Office no 08-106, 8th & 9th Floor, The Office 4, We Work, One
Central, Dubai World Trade Centre, Dubai, United Arab Emirates.
29.
555 California Street Ste 4925, San Francisco, CA 94104.
30.
632 N 2000 W Ste 110, Lindon, UT 84042.
31.
7405 E Monte Cristo Ave, Scottsdale, AZ, 85260.
32. Drottninggatan 108113 60 Stockholm Sweden.
33. Rawlinson & Hunter Singapore - 30 Cecil Street, #18-
02 & 03, Prudential Tower, Singapore 049712.
Subsidiary Audit Exemptions
The below subsidiaries have taken the exemption from an audit for the year ended 31 December 2023 permitted by s479A of
Companies Act 2006. In order to allow these subsidiaries to take the audit exemption, the parent company THG PLC has given a
statutory guarantee, in line with s479C of Companies Act 2006.
Name
Company
number
Name
Company
number
Name
Company
number
Ensco 818 Ltd
7459909 UK-2 Ltd
3550739 David Berryman Holdings Ltd
10392135
Lookfantastic Group Ltd
5381562 Virtual Internet (UK) Ltd
3203095 Claremont Ingredients Ltd
Illamasqua (Holdings) Ltd
6116121 Beauty Trend UK Ltd
7569585 David Berryman Ltd
El Spa Holdings (UK) Ltd
9317257
THG International Ltd
10523712
THG Hangar 2 Ltd
Make Money Ltd
5880897
Illamasqua Ltd
6301971
Perricone MD
Cosmeceuticals UK Ltd
Eddie Rockers Ltd
3009737 Primavera Aromatherapy Ltd
2053064 Guco Internet Supplies Ltd
Eco Credits Ltd
12933421 M Beauty Ltd
5850964
The Hut.com (Trading) Ltd
THG Intermediate Holdings Ltd
12526036
THG 100 King Street Ltd
12938227 HQ Hair Ltd
2817306
2185279
12746651
6471993
49249
87702
52888
Lookfantastic.com Ltd
3519634 Cend International Ltd
8651475
THG Studios Limited (previously
Hangar Seven Limited)
6293681
Mankind Direct Ltd
4112104
ESPA International (UK) Ltd
2742156
Lookfantastic Franchising Ltd
5382066
Cend Ltd
4067712
Language Connect International Ltd
7364250
Lookfantastic Salons Ltd
The Hut Platform Ltd
6473891 Acheson & Acheson Ltd
2764368 Moo Ltd
Another.com Ltd
3661600 King Street Investments Ltd
8242806 Mama Mio Ltd
THG Shared Services Ltd
13515579 Great John Street Hotel Ltd
7973960 Hale Country Club Ltd
6310534
5158225
5251791
6970110
Indigo Environmental Holdings Ltd
11738577 The Engine House Media Services Ltd
10597642
Indigo Environmental Ltd
10695826
The Protein Lab (UK) Ltd
8491800
THG Hangar Holdco Ltd
12698636
Three Counties Reclamation Ltd
3792922
THG Nutrition Ltd
13400484 Preston Plastics (Holdings) Ltd
13265838 Preston Plastics Ltd
THG Ingenuity Ltd
13414244
THG Beauty Ltd
13400467
THG OnDemand Ltd
The Hut.com Limited
5016010
THG Luxury Ltd
13515580 THG Experience Ltd
3377914
13400489
13515614
CNP Professional Holdings Limited
53443 Ameliorate Skincare Limited
3427037 Brighter Foods Limited
Gadbrook Limited
9867117
THG Trustee Limited
10511000 Cult Beauty Limited
Virtual Internet Holdings Limited
5943486
THG Intermediate OpCo Limited
12297092
THG Eco Limited
THG Icon CP PropCo Limited
12940601
THG Shelfco Limited
13120197
THG Insurance Limited
Lookfantastic London Limited
6338404
Exante Diet Limited
7126424 Bike Kit Limited
8815259
6195011
13400476
2770512
8317188
Mama Mio Distribution Limited
7721655 Mankind Holdings Limited
52666
The Hut Holdings Limited
7002848
Fair Juice Limited
6494686
1010 Products Limited
3402920
Indigo Polymers Limited
11526560
Myvitamins Limited
8179216
The Hut Group Limited
12526836 City A.M. Limited
15016484
29. Post balance sheet events
Discontinued categories and operations
At the year end, certain loss making categories and territories within THG Beauty and THG Nutrition, were under strategic
review. Post year end, the Board approved the exit of these categories and territories. These operations will be fully exited
throughout the course of 2024. The optimal exit route remains under review. The impact of this decision has resulted in
inventory provisioning and the impairment of assets which have been recognised within cost of sales and administration
expenses respectively and included within adjusted items (note 4). This has been concluded as an adjusting post balance
sheet event.
Revolving Credit Facility
The existing RCF of £170m was due to mature in December 2024. On 4 March 2024, an extension of 17 months to May
2026 was agreed. From December 2024, the facility will reduce to £150m. Covenants attached to the RCF are unchanged
and are linked to gross debt leverage and become effective when the facility is drawn upon. The facility remains undrawn
and is not forecast to be drawn in the future period.
Long Term Incentive Plan
On 7 March 2024, nil cost options were issued over 3,685,598 shares to certain directors under the THG PLC Long Term
Incentive Plan. This is a non-adjusting post balance sheet event and the associated charge will be recognised from the
grant date in 2024.
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Company statement of financial position as at 31 December 2023
Company statement of changes in equity for the year ended
31 December 2023
Non-current assets
Investments
Current assets
Receivables
Cash
Payables: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium
Merger reserve
Capital redemption reserve
Loss for the year
Retained earnings
Total shareholders' funds
Note
4
5
6
7
2023
£’000
541,303
541,303
1,599,654
52,112
1,651,766
(7,320)
1,644,446
2,185,749
2,185,749
7,072
2,024,824
615
523
(16,288)
169,003
2,185,749
2022
£’000
524,580
524,580
1,612,636
56,267
1,668,903
(8,710)
1,660,193
2,184,773
2,184,773
6,903
2,024,452
615
523
(22,560)
174,840
2,184,773
The financial statements on pages 223 to 228 were approved by the Board of Directors on 9 April 2024 and were signed on
its behalf by:
Ordinary
shares
Share
premium
Merger
reserve
Capital
Redemption
Reserve
Retained
earnings
Total equity
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 January 2022
6,684
2,022,311
615
523
164,106
2,194,239
Loss for the year
Issue of ordinary share capital
Share-based payment
-
219
-
-
2,141
-
-
-
-
-
-
-
(22,560)
(22,560)
-
2,360
10,734
10,734
Balance at 31 December 2022
6,903
2,024,452
615
523
152,280
2,184,773
Balance at 1 January 2023
6,903
2,024,452
615
523
152,280
2,184,773
Loss for the year
Issue of ordinary share capital
Share-based payment
-
169
-
-
372
-
-
-
-
-
-
-
(16,288)
(16,288)
-
541
16,723
16,723
Balance at 31 December 2023
7,072
2,024,824
615
523
152,715
2,185,749
Damian Sanders
Chief Financial Officer
Registered number: 06539496
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Notes to the company financial statements
1. Accounting Policies
d. Financial liabilities and equity
The principal accounting policies have been applied in accordance with ‘Financial Reporting Standard 101 Reduced Disclosure
Framework’ (FRS 101) and are detailed below. The policies have been applied consistently throughout both the current and
preceding year.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered. An
equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities.
a. Basis of preparation
e. Investments in subsidiaries
The Company financial statements have been prepared in accordance with United Kingdom’s Generally Accepted Accounting
Practice, including Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’), and in accordance with the
provisions of the Companies Act 2006. The Company has taken advantage of section 408 of the Companies Act 2006 not to
present the parent company profit and loss account. The loss for the financial year in the financial statements of the Company
is £16.3m (2022: £22.6m). The financial statements have been prepared on the historical cost basis.
In accordance with FRS 101, the Company has taken advantage of the following disclosure exemptions:
•
Company cash flow statement and related notes
• Disclosures required by IFRS 2 Share-based payments
• Disclosures required by IFRS 7 Financial Instrument Disclosures
• Disclosure of related party transactions
There have been no new or amended accounting standards or interpretations adopted during the year that have had a significant
impact on the company’s financial statements.
There are no standards, interpretations or amendments to IFRS that have been issued but are not yet effective that are expected
to have a material impact on the Company’s financial statements.
b. Taxation and deferred taxation
Current tax including UK Corporation Tax is provided at amounts expected to be paid or recovered using the tax rates and laws
that have been enacted or substantively enacted by the balance sheet date.
Deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or
a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law.
Temporary differences arise from the inclusion of items of income and expenditure in taxation computations in periods different
from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is
regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
Investments in subsidiaries are held at cost, less any provision for impairment. Where equity settled share-based payments are
granted to the employees of subsidiary companies, the fair value of the award is treated as a capital contribution by the Company
and the investments in subsidiaries are adjusted to reflect this capital contribution.
f. Share-based payments
The Group operates share-based compensation plans, under which the Group receives services from employees as
consideration for equity instruments (options) of the Company. The fair value of the employee services received in exchange
for the grant of the equity instruments is recognised as an increase to investments in the statement of comprehensive income.
The total charge is recognised over the vesting period, which is the period over which all the specified vesting conditions are
to be satisfied. At the end of each reporting period, the Group revises its estimates of the number of equity instruments that are
expected to vest based on the non-market vesting conditions along with taking account of any equity instruments that may
have been cancelled or modified in the period. It recognises the impact of the revision to original estimates, if any, in the statement
of comprehensive income with a corresponding adjustment to equity. Note 7 in the consolidated financial statements details the
schemes in place.
g. Critical accounting judgements and key sources of estimation uncertainty
Critical accounting judgements
Impairment of investments
The carrying amounts of the Company’s investments are reviewed at each reporting date to determine whether there is any
indication of impairment in accordance with the accounting policy set out in note 1 of the consolidated financial statements.
The Company considers impairment of its investments in subsidiaries by estimating the recoverable amounts of its investments.
In performing this assessment, management have considered the cashflows at a group consolidated level adjusted for applicable
intercompany borrowings and external borrowings held at a subsidiary level, consistent with the impairment review for the
Group’s goodwill. It has been concluded that the forecasts support the carrying value of the company’s investments. Note 11 in
the consolidated financial statements details the assumptions used together with an analysis of the sensitivity to changes in key
assumptions which could impact the group level assessment. There are no critical assumptions in respect of the parent level
adjustments which would reasonably change to the overall assessment performed.
c. Financial instruments
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company becomes a party to
the contractual provisions of the instrument.
Key sources of estimation uncertainty
Recoverability of intercompany debtors
The most significant financial asset relates to an intercompany debtor, representing funding requirements within the Group.
Management have considered all aspects of IFRS 9 with respect to recognising the appropriate value of this financial instrument
at the balance sheet date, including credit risk, and have concluded that this has not adversely changed since initial recognition.
The Company uses estimates to determine the recoverability of amounts due from its subsidiaries. Under IFRS 9, the carrying
amounts of receivables from other Group subsidiaries are required to be assessed for recoverability on a forward-looking basis
through the recognition of an expected credit loss (ECL) provision. This requires the estimation of loss given default (LGD) and
probability of default (PD) to compute the ECL, which is deemed to reflect the risk over recoverability of intercompany debtors.
The Group external credit risk ratings have been used as the primary measure of PD. Management consider this to be a
reasonable metric of the Company as a result of the funding arrangements in place and as these ratings provide an independent
view as to financial health and market sentiment, including the impact of macroeconomic factors. Other sources of internal and
external information are also used in determining the final PD applied, including financial forecasts, financing arrangements and
an assessment as to significant changes in credit risk and default events of each borrower.
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2. Employee costs and numbers
7. Share capital and reserves
2023
£'000
961
137
1
1,099
2022
£'000
270
25
2
297
THG PLC is a public company limited by shares and incorporated in England and Wales. It has a standard listing on the London
Stock Exchange and is the holding company of the Group. The Company has nine classes of shares; Ordinary Shares of £0.005
each, all of which are fully paid; D1 Shares of £0.005 each; D2 Shares of £1 each, all of which are fully paid; E Shares of £0.005
each; F Shares of £0.005 each; G Shares of £0.005 each; H Shares of £0.005 each; the Special Share of £1, which is fully paid up;
Deferred 1 Shares of £0.005 each; and Deferred 2 Shares of £0.005 each. As at 31 December 2023, the Company’s issued share
capital comprised:
Short term employee benefits
Social security costs
Pension costs
The average number of employees during the year was 3 (2022: 2).
3. Auditor remuneration
Amounts paid to the Company’s auditors are disclosed in note 5 of the Group’s consolidated financial statements.
4. Fixed asset investments
Fixed asset investments comprise investments in subsidiary undertakings.
At 1 January
Additions
At 31 December
5. Receivables
Trade and other receivables
Amounts owed from Group undertakings
Unpaid share capital
Corporation tax asset
Other taxation and social security
Prepayments and accrued income
2023
£'000
524,580
16,723
541,303
2022
£'000
508,846
15,734
524,580
2023
£'000
3,004
2022
£'000
2,480
1,564,437
1,575,903
26,685
2,486
1,080
1,962
26,919
4,741
1,229
1,362
1,599,654
1,612,634
Amounts owed by Group undertakings are unsecured, non-interest bearing and repayable on demand. The current amount
includes amounts of £1,564.4m (2022: £1,575.9m) due on demand but expected to be settled after 1 year.
At 31 December 2023, there were 160,392,591 fully vested, but partly paid and unlisted Shares (31 Dec 2022: 160,809,675).
The average amount of unpaid share capital per fully vested but partly-paid and unlisted Share is £0.17 (2022: £0.17) representing
a receivable to the Group of £26.7m (2022: £26.9m). The movement in the year is all due to certain fully vested but partly paid
and unlisted Shares being paid-up and converted to Ordinary Shares.
6. Payables: amounts falling due within one year
Trade creditors
Accruals and deferred income
Other taxation and social security
227
2023
£'000
1,697
5,488
135
7,320
2022
£'000
1,900
6,810
-
8,710
Class
Ordinary Shares
D1 Shares
D2 Shares
E Shares
F Shares
G Shares
H Shares
Special Share
Deferred 1 Shares
Deferred 2 Shares
2023 Number
2022 Number
Nominal value £ each
1,299,700,302
56,082,651
17,441
48,944,593
27,014,247
17,267,066
-
-
317,613
21,563,860
1,470,907,773
1,265,377,243
56,082,651
17,741
48,995,797
27,122,287
17,494,614
-
1
313,257
21,563,860
1,436,967,451
0.005
0.005
1
0.005
0.005
0.005
0.005
1
0.005
0.005
During the financial year ending 31 December 2023 the following share conversions took place in respect of pre-IPO employee
share schemes:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
(xvii)
(xviii)
(xix)
(xx)
(xxi)
2,500 Ordinary Shares were converted from 2,500 E Shares
9,876 Ordinary Shares were converted from 3,547 F Shares and 6,329 G Shares
13,218 Ordinary Shares were converted from 5,288 F Shares and 7,930 G Shares
45,488 Ordinary Shares were converted from 45,488 G Shares
15,765 Ordinary Shares were converted from 15,765 G Shares
8,532 Ordinary Shares were converted from 8,532 E Shares
11,168 Ordinary Shares were created from 5,193 F Shares and 5,975 G Shares
300 D2 Ordinary Shares were subdivided into 60,000 D2 shares of £0.005 each, 55,644 of which converted into 55,644
Ordinary Shares and 4,356 were reclassified into Deferred 1 Shares.
14,807 Ordinary Shares were converted from 14,807 E Shares
15,000 Ordinary Shares were converted from 15,000 F Shares
21,144 Ordinary Shares were converted from 21,144 F Shares
5,612 Ordinary Shares were converted from 5,612 E Shares
3,700 Ordinary Shares were converted from 3,700 F Shares
20,337 Ordinary Shares were converted from 10,572 F Shares and 9,765 G Shares
61,393 Ordinary Shares were converted from 24,483 F Shares and 36,910 G Shares
8,717 Ordinary Shares were converted from 3,524 F Shares and 5,193 G Shares
13,168 Ordinary Shares were converted from 5,193 F Shares and 7,975 G Shares
9,747 Ordinary Shares were converted from 2,875 E Shares and 6,872 F Shares
16,878 Ordinary Shares were converted from 16,878 E Shares
8,717 Ordinary Shares were converted from 3,524 F Shares and 5,193 G Shares
81,025 Ordinary Shares were converted from 81,025 G Shares
8. Related party transactions
The Company has taken exemption under FRS 101 not to disclose transactions with wholly owned subsidiary companies.
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Glossary
Alternative performance measures (“APMs”)
The Group tracks a number of alternative performance measures in managing its business, which are not defined or specified
under the requirements of IFRS because they exclude amounts that are included in, or include amounts that are excluded from,
the most directly comparable measure calculated and presented in accordance with IFRS, or are calculated using financial
measures that are not calculated in accordance with IFRS.
The Group believes that these alternative performance measures, which are not considered to be a substitute for or superior to
IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These alternative
performance measures are consistent with how the business performance is planned and reported within the internal
management reporting to the Board.
These alternative performance measures should be viewed as supplemental to, but not as a substitute for, measures presented
in the consolidated financial information relating to the Group, which are prepared in accordance with IFRS. The Group believes
that these alternative performance measures are useful indicators of its performance. However, they may not be comparable
with similarly-titled measures reported by other companies due to differences in the way they are calculated. Profit-related APMs
frequently exclude significant recurring business transactions (e.g., restructuring charges and acquisition-related costs) that
impact financial performance and cash flows.
The Audit Committee have reviewed the overall presentation of APMs to ensure that these are not given undue prominence,
challenged the nature and amount of adjusting items and evaluated the reconciliations used by management.
In determining whether an item should be presented as an allowable adjustment to IFRS measures, the Group considers items
which are significant either because of their size or their nature, and which are non-recurring. For an item to be considered as
an allowable adjustment to IFRS measures, it must initially meet at least one of the following criteria:
•
•
It is a significant item
It has been directly incurred as a result of acquisition related restructuring and integration costs, transportation, delivery
or fulfilment costs in relation to Covid-19 or as part of the outcome of the strategic review or divisional reorganisation.
•
It is unusual in nature or linked to a one-off agreement signed outside of the normal course of business.
Purpose
The Group uses APMs to improve the comparability of information between reporting periods, either by adjusting for
uncontrollable factors or special items which impact upon IFRS measures.
Their use is driven by characteristics particularly relevant to THG:
•
•
Adjustments to operating profit – the Group has a significant non-current asset base and consequently incurs a high
proportion of depreciation and amortisation. APMs are used to provide adjusted measures for users of the financial
statements to evaluate our operating performance.
Acquisition related activity - the Group is in a growth phase in its lifecycle and has made several acquisitions in the
previous reporting periods. Consequently, a high volume of transaction, restructuring and financing costs are incurred
within the Group which do not reflect its underlying business. APMs are used to provide an adjusted measure for users
of the financial statements to consider performance after such items.
APM
Closest
equivalent
IFRS
measure
Adjustments to reconcile to
primary statements
Purpose
Adjusted
gross profit
Gross profit
• Depreciation
• Amortisation
To show gross profit before depreciation and amortisation
charged due to its nature to aid comparability.
See the Chief Financial Officer
review for a reconciliation.
G O V E R N A N C E R E P O R T
F I N A N C I A L S T A T E M E N T S
APM
Closest
equivalent
IFRS
measure
Adjustments to reconcile to
primary statements
Purpose
Adjusted
distribution costs
Distribution
costs
• Adjusted items
• Depreciation and amortisation
To show distribution costs before adjusted items and depreciation
and amortisation charged due to their nature to aid comparability.
See the Chief Financial Officer review
for a reconciliation.
Adjusted
administrative
expenses
Administrative
expenses
• Adjusted items
• Depreciation and amortisation
• Share-based payments
To show administrative expenses before adjusted items and
depreciation and amortisation charged due to their nature to aid
comparability.
Adjusted
EBITDA
Operating profit
Operating profit
Adjusted
EBITDA from
continuing
operations
Free cash flow
Cash flow
Net (debt)/ cash
before lease
liabilities
Cash
See the Chief Financial Officer review
for a reconciliation.
• Adjusted items
• Depreciation and amortisation
• Share-based payments
• Other operating expense – non-
cash loss on disposal freehold
assets
See the Chief Financial Officer review
for a reconciliation.
• Adjusted items
• Depreciation and amortisation
• Share-based payments
• EBITDA from discontinued
categories
See the Chief Financial Officer review
for a reconciliation.
• Debt (repayments) / proceeds
• Acquisitions cash flows
•
In respect of FY23, a cash receipt
remitted from HMRC to the group
Refer to note 25 for further detail
• Loans and other borrowings
• Foreign exchange (Retranslate
debt balance at swap rate where
hedged by foreign exchange
derivatives)
• Lease liabilities
See the Chief Financial Officer review
for a reconciliation.
EBITDA is a useful measure for investors because it is a measure
closely tracked by management to evaluate THGs operating
performance and to make financial, strategic and operating
decisions and may help investors to understand and evaluate,
in the same manner as management, the underlying trends in
operational performance on a comparable basis year on year.
Share-based payment costs are added back, following the
launch of the share-based payment scheme in the prior year
and management consider these to be outside of the underlying
day-to-day operations. Given the material size of these charges
they are removed from underlying Adjusted EBITDA.
EBITDA is a useful measure for investors because it is a measure
closely tracked by management to evaluate THGs operating
performance and to make financial, strategic and operating
decisions and may help investors to understand and evaluate,
in the same manner as management, the underlying trends in
operational performance on a comparable basis year on year.
Free cash flow is a useful measure that is closely tracked by
management in order to evaluate and assess the profitability of
the business. The free cash flow calculation is routinely reviewed
by management and forms the basis of strategic decisions made
in respect of working capital management.
To show the cash balance after the deduction of the loans
and other borrowings balances but before lease liabilities are
deducted and after retranslation of debt balance at swap rate.
This measure is tracked by management when reviewing liquidity
and the indebtedness of the Group which is then used to drive
any strategic or acquisition related decisions.
Net debt
Cash
• Loans and other borrowings
• Foreign exchange (Retranslate
debt balance at swap rate where
hedged by foreign exchange
derivatives)
To show the cash balance after the deduction of the loans and
other borrowings balances and after retranslation of debt balance
at swap rate. This measure is tracked by management when
reviewing liquidity and the indebtedness of the Group which is
then used to drive any strategic or acquisition related decisions.
See the Chief Financial Officer review
for a reconciliation.
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G O V E R N A N C E R E P O R T
F I N A N C I A L S T A T E M E N T S
The definitions set out below apply throughout this document, unless the context requires otherwise.
Company Secretary
means James Pochin, the Company Secretary of THG PLC
Constant currency
means without taking into account fluctuations in the exchange rate; therefore showing the figures as if the
exchange rate remained constant
2021 AGM
2022 AGM
2023 AGM
means the annual general meeting of the Company held on 24 June 2021
means the annual general meeting of the Company held on 10 June 2022
means the annual general meeting of the Company held on 21 June 2023
2022 Annual Report
means the Annual Report and Accounts of the Company in respect of the financial year ending 31 December 2022
2030 Sustainability
Strategy
means the Group’s Sustainability Strategy, THG x Planet Earth, for a better, sustainable future with targets centred
around three key priorities: (i) protecting climate and nature; (ii) strengthening our supply chain and circularity;
and (iii) empowering people and communities
Active Customers
means customers who have purchased at least once in the financial year ending 31 December 2023
Adjusted EBITDA
Adjusted EBITDA (continuing)
Admission
AGM
Annual Report
means the non-GAAP measure which is defined as Earnings Before Interest, Taxes, Depreciation, Amortisation,
share-based payments, SaaS change in accounting policy and adjusting items as detailed in note 4 of the
financial statements contained within this Annual Report
means the non-GAAP measure which is defined as Earnings Before Interest, Taxes, Depreciation, Amortisation,
share-based payments, SaaS change in accounting policy, adjusting items and removal of the EBITDA from those
operations within the Group that are no longer continuing
means the admission of the Ordinary Shares to both the standard listing segment of the Official List of the FCA
and the London Stock Exchange’s main market for listed securities, which took place on or around 16 September
2020
means the annual general meeting of the Company that will be held on 24 June 2024
means this Annual Report and Accounts of the Company in respect of the financial year ending 31 December
2023
API
means Application Programming Interface
Articles of Association
means the Articles of Association of the Company, as adopted by special resolution on 9 September 2020
Autostore
B2B
Bentley
Board
means AutoStore AS, a warehouse robotics company
means business to business
means Bentley Laboratories LLC, an innovative developer and manufacturer of prestige skincare and haircare
products that was acquired by THG on 15 June 2021
means the board of directors of the Company from time to time
Board Committees
means the Company’s Board-constituted committees comprising the Audit Committee, the Risk Committee, the
Remuneration Committee, the Nomination Committee, the Related Party Committee and the Sustainability Committee
Brexit
Brighter
means the UK’s decision to leave the European Union following the referendum on 23 June 2016
means Brighter Foods Limited, a specialist developer and manufacturer of snack bars that was acquired by THG
on 11 May 2021
Carbon Neutrality
means achieving a net-zero release of greenhouse gas emissions (including carbon dioxide) into the atmosphere
Chair or Independent Chair
means Charles Allen, Lord Allen of Kensington, CBE, independent non-executive chair of the Company, appointed
on 22 March 2022
Chief Executive Officer
or CEO
Chief Financial Officer
or CFO
Chief Operating Officer
or COO
means Matthew Moulding, the Company’s Chief Executive Officer and co-founder
means Damian Sanders, the Company’s Chief Financial Officer
means John Gallemore, the Company’s Chief Operating Officer and co-founder
Code
means The UK Corporate Governance Code (July 2018), published by the FRC
Companies Act
means the Companies Act 2006 (as amended from time to time)
Company
means THG PLC, a public limited company incorporated in England and Wales with registered number 06539496,
whose registered office is at Icon 1, 7-9 Sunbank Lane, Ringway, Altrincham, United Kingdom, WA15 0AF
Covid-19
CRM
Cult Beauty
CX
D&I
D1 Shares
D2 Shares
D2C
Deferred 1 Shares
Deferred 2 Shares
Dermstore
Directors
means the disease caused by Severe Acute Respiratory Syndrome Coronavirus 2, responsible for the global
pandemic that has impacted the Group’s operations
means Customer Relationship Management
means Cult Beauty Limited, the UK-based online beauty retailer of prestige and emerging independent brands
that was acquired by THG on 3 August 2021
means customer experience
means diversity and inclusion
means the D ordinary shares of £0.005 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
means the D ordinary shares of £1.00 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
means direct to customer
means the deferred 1 shares of £0.005 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
means the deferred 2 shares of £0.005 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
means Dermstore LLC, the pure play online prestige skincare business that was acquired by THG on 2 February
2021
means the directors of the Company from time to time and “Director” means any one of them
Disclosure Guidance and
Transparency Rules or DTRs
means the disclosure guidance and transparency rules made by the FCA under Part VI of the Financial Services
and Markets Act 2000 (as amended from time to time)
EBITDA
EBT
eCRM
EDI
means the non-GAAP measure which is defined as Earnings Before Interest, Taxes, Depreciation and
Amortisation
means earnings before tax
means electronic customer relationship management
means Equity, Diversity and Inclusion
Employee Incentive Plan
means the employee incentive plan which was put in place during the 2022 reporting period and under which
Ordinary Share awards will be made to certain key employees below the level of the Executive Leadership Team
ERM
ESG
EU
E Shares
means Enterprise Risk Management
means environmental, social and corporate governance factors which are non-financial and are used in assessing
the sustainability and societal impact of the Group and its value chain
means the European Union
means the E ordinary shares of £0.005 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
Executive Leadership Team
means, collectively, those individuals holding executive management positions within the Company
Executive Directors
means the executive directors of the Company from time to time, being the Chief Executive Officer, the Chief
Financial Officer and the Chief Operating Officer at the date of this Annual Report, and “Executive Director”
means any one of them
EY or External Auditor
means Ernst & Young LLP, the Group’s statutory auditor and adviser in respect of non-audit services
FCA
FDA
FIR/ST
FMCG
FRC
means the Financial Conduct Authority
means the Food and Drug Administration, a US federal agency of the Department of Health and Human Services
means fulfilment, inventory, retrieval and storage technology
means fast moving consumer goods
means the Financial Reporting Council
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F Shares
GAAP
GDPR
means the F ordinary shares of £0.005 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
means Generally Accepted Accounting Principles
means the General Data Protection Regulation (EU) 2016/679
General Counsel
means James Pochin, the General Counsel of the Company
GHG
GMV
means greenhouse gases
means Gross Merchandise Value
Group or THG
means the Company and its subsidiaries and subsidiary undertakings from time to time
G Shares
Headless Commerce
means the G ordinary shares of £0.005 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
Headless Commerce is an ecommerce architecture which decouples the front-end experience from the back-end
applications of the technology stack
H1
H2
H Shares
IAS
means the six-month period from January to June
means the six-month period from July to December
means the H ordinary shares of £0.005 each in the capital of the Company, having the rights and being subject to
the restrictions set out in the Articles of Association
means International Accounting Standards
ICON Technology campus
means the Manchester ICON Technology Campus
IFRS
IPO
KPI
Listing Rules
means International Financial Reporting Standards
means the initial public offering of Ordinary Shares by the Company in September 2020
means key performance indicator
means the Listing Rules made by the FCA under Part VI of the Financial Services and Markets Act 2000 (as
amended from time to time)
London Stock Exchange
means the London Stock Exchange PLC or its successor
LTIP
M&A
NEDs
means any long-term incentive plan operated by the Company from time to time
means mergers and acquisitions
means the Non-Executive Directors of the Company from time to time and “NED” means any one of them
Notice of Meeting
means the notice of AGM circulated to Shareholders on or around the date of posting of this Annual Report
NPD
means new product development
Ordinary Shares
means the voting ordinary shares of £0.005 each in the capital of the Company, having the rights and being
subject to the restrictions set out in the Articles of Association
Perricone
means Perricone MD, the US prestige skincare brand that was acquired by THG on 29 September 2020
Premium Listing
Propco Group
means a listing where the issuer is required to comply with Chapter 6 of the Listing Rules and the other
requirements in the Listing Rules that are expressed to apply to securities with a premium listing
means Moulding Capital Limited (formerly Kingsmead Holdco Limited), a company incorporated in Guernsey
(registered no. 51762), whose registered office is at Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 1GR
(“Propco”), and its subsidiaries from time to time, which together hold certain property assets that are used or
occupied by THG under leases between the relevant Group company and the relevant subsidiaries of Propco
Propco Transaction
means the sale of the Propco Group prior to Admission to Moulding Group Limited (formerly FIC Holdings Ltd),
which is wholly owned by Matthew Moulding, the CEO
RCF
means revolving credit facility
Related Party Transaction
Remuneration Policy
means a transaction, arrangement or relationship to which the Company, or any of its subsidiaries,
will be a participant and where any related party has a direct or indirect interest
means the Shareholder-approved policy which sets out the remuneration arrangements for Directors
(as amended from time to time)
G O V E R N A N C E R E P O R T
F I N A N C I A L S T A T E M E N T S
SaaS
SBTi
Section 172
SEDEX
means software as a service
means the Science Based Targets initiative, the global body enabling businesses to set emissions reduction
targets in line with climate science
means section 172 of the Companies Act which relates to the duty of a company’s directors to promote the
success of the company
means Supplier Ethical Data Exchange
Senior Management
means the direct reports of the Executive Leadership Team
Shareholder
means a holder of Ordinary Shares
Shares
SID
Softbank
Special Share
means together the Ordinary Shares, D1 Shares, D2 Shares, E Shares, F Shares, G Shares, H Shares, Deferred 1
Shares and Deferred 2 Shares or any, or a combination, of them as the context requires
means the Board’s senior independent NED, currently Sue Farr who was appointed on 24 April 2023
means SB Management Limited, a subsidiary of SoftBank Group Corp.
means the “special” share of £1.00 in the capital of the Company, which was transferred and cancelled in
accordance with the relevant provisions of the Articles of Association on 21 June 2023
Standard Listing
means a standard listing under Chapter 14 of the Listing Rules
TCFD
THG Beauty
THG Digital
THG Eco
THG Experience
means the Task Force on Climate-Related Financial Disclosures, a framework to help public companies and other
organisations more effectively disclose climate-related risks and opportunities through their existing reporting
processes
means a key business of the Company relating to beauty products, commerce and distribution
means the Company’s end-to-end digital brand services
means the Company’s sustainability solutions business
means the prestige event and experience venues included within the THG Beauty business in support of the
Group’s influencer marketing
THG Ingenuity
means a platform created and used by the Company to achieve global ecommerce competitive advantage
THG Luxury
THG Media
means the Company’s luxury fashion retail included within the THG Beauty business
means the Company's digital content, licensing, social and retail media proposition
THG Nutrition
means a key business of the Company relating to nutritional products, commerce and distribution
THG OnDemand
THG Procure
THG Studios
means the Company’s business unit offering personalisation and customisation to a range of consumers via
online platforms – this business unit was sold during FY23
means the Company’s internally developed procurement system
means the Company’s business unit which produces digital content and included within the THG Ingenuity
business
THG Technology
means the technology business unit included within the THG Ingenuity business
THG Values
means the Company’s values, namely collaboration, leadership, innovation, decisiveness and ambition
YoY
means year on year
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAnnual Report & Accounts 2023