Hello, and welcome to the THG plc signed option and collaboration with SB Management acquisitions update agreement and proposed issue for new ordinary shares call. I will shortly be handing you over to Matthew Moulding, CEO, who will introduce the Q&A session. Matthew, please begin. Good morning, everybody, and thank you for taking the time to dial in and receive the update that we'd just like to take you through. The RNS that we've put out covers a few different areas. It's quite a bit of content in there. Just to give you a flavor of the detail in there, and then we'll go to Q&A. Two real aspects, I guess. One relates to SoftBank and the broader collaboration that we have there, and then the other relates to a piece of M&A that we've essentially completed on, albeit there's a delay on due to competition clearance. The SoftBank piece is probably the area of most interest for many people. The collaboration itself is probably, for me personally, by far the most exciting area. SoftBank, as many people will know, is probably one of the world's largest tech investors. In our industry, their reach is pretty much unparalleled. Through this collaboration, what we will be looking to do is to be able to offer our Ingenuity Commerce services and other aspects of Ingenuity services to some of their portfolio companies. We've obviously got some progress in mind in terms of specific areas where we will be deploying any collaboration. That for us is by far the most exciting aspect of what we've announced in the RNS yesterday and again this morning. Other areas of the SoftBank collaboration relate to financial aspects as well. Because of the collaboration and the specific interest that SoftBank have around our Ingenuity platform, we've agreed an option where they are set to acquire 19.9% of our Ingenuity division for $1.6 billion. What that means in terms of pre-money valuations, that $6.3 billion is the pre-money value that's being placed on our Ingenuity technology, which equates to about GBP 4.5 billion sterling value. The reason we've done an option instead of taking that investment immediately is there is some internal restructuring that we need to do to make that a dedicated investable entity, which we anticipate will take us, let's say, somewhere in the region of six months. The option, just to give some flexibility there, is for 15 months. After that, SoftBank would then complete the transaction. There's a final area of collaboration which we've done with SoftBank, which is we announced last evening an ABB. SoftBank obviously have got an interest in owning some shares at the PLC level, not just in the Ingenuity level. We agreed a placing with them for $730 million, was the number, and that's kind of the minimum check size that someone like SoftBank would entertain. Then for the benefit of the wider share register to be able to participate, we upsized that to just over $1 billion to provide others with the opportunity of taking part in that. That was completed at the closing share price with zero discount as of last night. So that's the general update on the SoftBank. I'm sure there'll be plenty of questions around that. Just one final point in the RNS. It's quite easily overlooked given the extent of the relationship and announcement with SoftBank. We did also sign a deal yesterday to acquire Bentley Labs, and that's paying $255 million. Now, just to remind people, we've got four very key trading divisions across THG, the largest of which is in beauty. We're very passionate about building those out to be world-leading dominant positions. As such, we continue to invest in each of those verticals to build them out. The Bentley Labs piece of M&A will be entirely accretive. I think we've given some numbers around for next year, it should deliver GBP 55 million of sales and GBP 11 million of EBITDA. Really importantly, it will not only be manufacturing and developing products for our own beauty brands, we are already the second largest customer to Bentley, but it also does it for some of the better known household names that you might have heard of, the likes of Estée Lauder, so on and so forth. The opportunity for Ingenuity to further progress across the U.S. in some of those clients is something else that really excites us with that piece of M&A. That is, in short, the RNS, or the various pieces within the RNS. Probably now we can switch to Q&A and go into more of a deep dive. Thank you. If you wish to ask a question, please press star two on your telephone keypad, that is star two, on your telephone keypad. If you wish to retract the question please press star three. There will now be a short pause while questions are being registered. Our first question is from the line of Andrew Ross from Barclays. Andrew, your line is now open. Please go ahead. Three questions, please. First one, in the statement you talk about future options for Ingenuity, one of those being an IPO of the business. Wondering if you could give us more color in terms of where you see Ingenuity ending up. Are we thinking that a U.S. IPO is most realistic? That's the first question. The second one is, you also talk about looking at options for Beauty and Nutrition. Wondering if you could give us more color on both the types of things you're looking at and the timeframe for those two divisions. The third question is whether you can just give us some more color on the commercial relationship with the SoftBank companies. I don't know if there's anything you can share in how many of those companies might be interested in using Ingenuity or any kind of way of quantifying how big that might be. Any more color on that would be great. Thank you. Thanks, Andrew. Look, the first two questions I can address together. In terms of what this deal demonstrates is full optionality for each of our trading divisions. It is important to note that we are super passionate about driving each of these divisions forward. What this isn't about is some sort of slow exit of all of our various divisions. It is actually quite the opposite. What we're intent on doing here is building each individual division in THG out to be world leaders. The collaboration shows that direction of travel with such a strong partner such as SoftBank. Naturally with beauty and nutrition, there are very strong optionalities there for us, and we could do that in broader partnerships with other players across those industries. We can do that in a financial aspect. What we will continue to do is to invest in each one of those verticals under THG's ownership, majority ownership of these assets, and drive them forwards. Clearly what that could entail, you've got full optionality of maybe one day the right thing to do is to have them as listed entities, one or some of them. Maybe none of them, and we continue to drive them forward in a partnership sense. There is no ongoing process of now pressing a button to do something in that regard. That said, there is an ongoing process of driving each division out through partnerships and the like. We will keep optionality open, including listings and the like. I hope that helps out in answering it, Andrew, but they're the answers. The final point on the SoftBank question, which was who are we speaking to? I can't name anybody in that regard. What I can tell you is, obviously through the diligence process with SoftBank, there was a particular focus on certain aspects of our capabilities of being able to work together in various areas. We've got a clear view of how those opportunities can unfold and the scale of them. Clearly from our side, if any aspect of that comes to fruition, it would be utterly transformational to our Ingenuity commerce division. Hence, that's why we've worked so hard to make this partnership work. I can't name them right now, Andrew. It's safe to say, SoftBank have obviously got some pretty wide-ranging serious investments that people can research. Very helpful. Thank you. Thank you, Andrew. Our next question is from the line of James Grzinic from Jefferies. James, your line is now open. Thank you. Morning, Matt. I just had a quick one. You've been extremely busy on the M&A side of things in the two e-com platforms, and you signal that you continue to be very busy. Can you perhaps give us some context on how some of the earlier acquisitions have been bedded down and just how the strength of the team allows you to continue to have very high levels of activity on the M&A front and then bed down these businesses pretty rapidly? Sure. One of the benefits we have because of Ingenuity and the fact we own all of our tech end to end and the platform, distribution logistics platform as well, is that we can pick and choose the assets to build out our respective divisions. If you take a step back and imagine how most of the major brand CPG type businesses have been created over the years, they've been brought together through mega mergers. The challenge in doing a mega merger is quite often there are various assets that you otherwise wouldn't maybe choose to have together, and so you end up with divestment plans, so on and so forth. The benefit we have is we can do a much lower risk approach of buying smaller, more focused acquisitions and putting them onto our platform and developing them into direct consumer propositions. What it can look like is actually you're quite busy. You're doing a few pieces of M&A in a given division. Does that necessarily cause you a great deal of management bandwidth stretch? It's actually quite the opposite. Instead of doing it buying something with a lot of brands in it, by going in and picking and choosing, put them on our platform, it means that management can be free to continue to drive the rest of the group forward without dealing with legacy issues instead. I believe that would be reflected as well, James, just in the fact of the growth figures we keep posting and the general performance of the group. In terms of answering your question around the performance of the things that we've invested in. Most notably that will be Perricone and Dermstore. They've gone incredibly well, better than we anticipated on both counts and are very well integrated now across the group. That is something you should expect from us anyway because we have all of this technology we've invested in over the years and we have a central infrastructure to handle these things. I don't know if that helps you, but that's the position. That's great. Thank you, Matt. Thank you, James. Our next question is from the line of Rob Joyce from Goldman Sachs. Rob, your line is now open. Please go ahead. Hi. Morning, Matthew Moulding. Thanks for taking the questions. Three from me. Firstly, could you give us a bit of an understanding as to how that EV of Ingenuity was calculated, how you came to that valuation? The second one is, can you just let us know exactly what kind of assets sit in Ingenuity now? For example, would Bentley as a production asset sit in Beauty or in Ingenuity? The third one is, if Ingenuity is split out separately, would Beauty and Nutrition become Ingenuity clients, in that regard with a sort of third-party relationship? Thank you. Thanks, Rob. Yeah, sure. What assets are in Ingenuity? It's what you would see in our reporting, minus the beauty manufacturing. Beauty manufacturing will sit in Beauty and we'll be adjusting that for everybody, so you will see that. Bentley will become THG Labs along with our current manufacturing and product development business. It's everything you see as Ingenuity minus the beauty manufacturing. In terms of would the other divisions become a client? Yes. Over time that's unquestionably going to happen. Clearly at group level that gets consolidated out because we own the vast majority of Ingenuity. As a result, that then becomes by far the biggest clients of Ingenuity, save for potentially the SoftBank collaborations. Hopefully that'll become the biggest client pretty quick. Yes, there would be that client relationship taking place which would be transformative as well to the Ingenuity P&L. Then in terms of how did we arrive at the valuation of it, look, there's a number of ways in which you could do it and you guys are more experts at valuing things than arguably we would be. We took a few different examples. Firstly, you obviously look at things like sales multiples, not just sales multiples of where the business is today, but maybe looking at 2023 and seeing where that would sit. Obviously looking at the scale of the opportunities of working together and what that could bring and recognizing there could be some value between us there. Ultimately, on all of these things, Rob, it's a case of, well, what do we as a board feel is fair value that we would come to shareholders with this proposal? From SoftBank, what do they see as fair value as well? As you can imagine there was a bit of to-ing and fro-ing on that, but we did quite quickly land on it. I think it's a very good deal for SoftBank and a very fair deal for THG shareholders today. It's just worth reminding people that the GBP 4.5 billion pre-money valuation is actually the value the group IPO'd at just seven months ago. The whole group was valued at that point. There was a number of ways of doing it. Sales multiples is typical in this sector. You end up with, depending on what you put into that 2023 sales multiple, it can look very cheap or it can look at a fuller price, but I think all parties feel it's very fair. Thank you very much. Our next question is from the line of Wayne Brown from Liberum. Wayne, your line is now open. Please go ahead. Thanks very much. Morning, Matt, congrats on a terrific deal. Just a few questions from me. Just on the firepower that you now have to do more M&A. Is the amount of funding that you have post the recent fundraise, is that enough for the medium term or just the short term? With regards to the SoftBank partnership, is there any more investment that's required in your infrastructure above what has already been planned to kind of get those partnerships up and running and just the timing of that? Just lastly on Nutrition and Beauty, if we had to make an assumption that you would price those services with Ingenuity at an arm's length transaction, what does the cost structure there kind of look like? What would happen to the margins of those underlying businesses? Thanks. Sure. Wow, Wayne. I reckon you and me could have an hour call on those three questions alone. All right. Sorry. On the cash investment, right? There's $1.6 billion going into Ingenuity when the option gets exercised. What would happen then is obviously the CapEx, which is the majority of when you take distribution planned CapEx that we've put in. The normal CapEx, that's the majority of it, yeah, which is probably about $100 million this year of developer type CapEx as we build the technology out. That sits in Ingenuity. There'll be $1.6 billion that'll be an incredibly well-funded Ingenuity business with optionality on how we deploy that. The group will benefit from not having that CapEx though, because that shifted into Ingenuity. The $1 billion that we've had, we've obviously deployed GBP 255. We also have access to significant funding through our TLB. Look, there is ample capital there to fulfill all of our plans that we have, certainly in the near term as far as we're looking ahead. When you add on that THG Ingenuity's got $1.6 billion going into it too. It's a well-structured, strong balance sheet is what I would say. You can never say never, but it fulfills the plans that we have in place. That was one of the attractions with the SoftBank deal. We don't want to be involved in frequent capital-raising exercises and things like that. This delivers everything in one go. I think that answers, hopefully, the capital points on there, but happy to go further in a second. The really long question, I guess, is around what would happen if you put various charging mechanisms into the Beauty and the nutrition divisions. We've run various scenarios on that. You could imagine it would have a very significant impact on Ingenuity's P&L if we do that. Obviously it would be the revenues in Ingenuity, in any tech business like that, would have a very different valuation metric. Very, very different. It would be incredibly accretive to that business. Clearly, there would be some impact to the EBITDA and the cost structure of the other divisions. We're not really in a position to share that detail just yet, save for to say, if we do go down that route, obviously there should be an accretion in value, a significant accretion in value of the group. What we want to do is to make sure it's sensible and it's fair before we start to share that. There has been an awful lot of planning going on in the background. I don't want to be vague on that. I just want to be honest and say. Okay. We're not quite ready to share that with you just yet. Sure. No, that's very clear. Thanks, Matt. Just one follow-up. The $1.6 billion of funds that clearly will go into Ingenuity. What will the main use of that be? Can you use that for CapEx in other areas of the business, or does it have to just purely remain within Ingenuity? That will sit within Ingenuity. It was a pre-money valuation of GBP 4.5 billion. The cash goes in and increases the value. We want to build that technology out, so we're aligned on that. That'll be a very strong self-funded tech platform. It'll be incredibly well-funded. It gives us full optionality of how we'd want to do that. We talked at IPO about expanding certain aspects of the platform, such as across the security aspects, and maybe we'll do some investments in that regard. We also talked around payment gateway-type technology, so on and so forth. It just gives us a huge level of optionality around our technology, and it stops it from being a funding drain on the broader group. That $1.6 billion will sit in Ingenuity. We won't be using that elsewhere. Obviously it consolidates into the PLC accounts because we own over 80% of it. It shows our cash, but the focus of that cash is to build Ingenuity into a world beater. Great. Okay. Thanks a lot, Matt, and congrats again. It's a terrific deal. Thanks. Thank you, Wayne. Our next question is from the line of Charlie Muir-Sands from BNP Paribas. Charlie, your line is now open. Please go ahead. Thanks for taking my questions. Several topics already been covered, but I just wanted to revisit if I can. Actually, the first one relates to the option that you've granted to SoftBank. I just wanted to clarify if that was a free option and there's no break on that? Obviously, you've gone into this with very much the expectation the deal does go through, but I just wanted to understand what. Yeah. The risks are around that. Sure. Yeah. That's my first question. Okay. It's on that option, Charlie. THG is committed. Just to remind people, SoftBank wanted to deploy that capital immediately. They're not the kind of organization that would want to sit around in the wings. We weren't in a position to accept that investment directly into Ingenuity. To put that into plc, it would've been a very big stake, so on and so forth. There were suggestions around convertibles and various things which wouldn't have worked for THG, for us. It was our suggestion and our drive to put it into an option. As a result of that option we are committed. Once we're in a position to do it, SoftBank will be able to exercise that, and that will just happen. Clearly, if there is a legal wrinkle or some sort of financial wrinkle that means we can't go ahead with it, then clearly we don't go ahead with it and we'll be allowed to stand down. Obviously, we've done some diligence on that in advance and don't anticipate that, and we anticipate this going through in six months' time. From SoftBank's side, they could decide, "Look, we don't want to do this anymore," which you'd expect them to have that ability to do that, bearing in mind it's on us to be able to sort the vehicle out and put it in. I strongly believe the chances of that are gonna be tiny, and not least because they've invested billions of dollars elsewhere around one particular area that we're looking at addressing for them, and similarly, they've then invested in the ABB and so on and so forth. We are very committed together on this partnership. I think you should assume that it's going to go ahead, but clearly from our side, we are completely committed and can't walk away from that now. Great. That's very reassuring. The second bit goes back to one of Wayne's questions, which was just to understand what's the thinking around that sort of cross-charge mechanism, the fact that Ingenuity will be providing services to the retailing divisions. Obviously, the valuation has been fixed, just wondered what effectively the earnings agreement is with respect to the services that the division that you won't effectively own 100% of will be providing to the bits that you do still own 100% of. Yeah. Look, and it is worth remembering, we do still own 80.1% of it, and it will consolidate out in our group numbers in any event. We are by far the biggest owner of that. I can't give the detail on that just yet because, as you can imagine, as we've been through this transaction, it's been a pretty intensive process. There is some finer bits of detail to do. Safe to say that we have been clear at IPO during the various analyst presentations, so on and so forth, that if we did introduce a charging mechanism, the accretion to Ingenuity into the overall group's value would be transformational. It's only transformational if an external party comes in and buys a stake. It also is worth remembering this is a very small stake. It would be a completely different valuation in our opinion if this was a greater than 19.9% stake. It's a small minority stake which has one type of valuation thinking to it. We do aim to be able to share that level of detail with you, but what you should assume is clearly it will be very accretive to the wider group as if we did, as we do end up separating some of the charging systems out, but we're just not quite in a position that we'd want to share that just now. Great, thanks. The final question relates to Bentley. It's a relatively high valuation multiple that you're paying, but the statement references strong historic growth and future opportunity. I just wondered if you could talk about some of the momentum that business has and just elaborate a little bit more on the capacity that it's got to fuel both your own private label and third party brands businesses going forward. I mean, look, the momentum's strong in it. It's probably doubled the revenue line and profit line in the last three years alone. There's an element of prudence in those numbers that we put forward, as you would expect us to do, and as we've done with everything else we've presented. Maybe one of the best things I can do is give you a case study of the beauty development business and manufacturing business in the U.K. We added that within THG's capabilities about three years ago. We paid GBP 60 million for a business turnover, about GBP 40 million of revenue, and making about GBP 5 million of EBITDA back then. Forward wind to where we are today, three years on that's turning over externally about GBP 60 million of revenue, making probably about GBP 10 million or GBP 11 million of EBITDA. Importantly, it's delivering GBP 30 million of sales to THG, which obviously get canceled out, and also delivering, saving us GBP 6 million of EBITDA, which obviously you wouldn't get visibility on group accounts. That business has more than doubled and trebled at the bottom line for us, whilst playing the pivotal, real central role of developing our own beauty brands and overhauling them all and done an outstanding job there. The final point with that U.K. opportunity as is, it's been an unbelievable feeder for Ingenuity. The fastest growing area of Ingenuity for many months has been the beauty aspect, that manufacturing development business has been key. We expect the same here for the U.S. This is a real premium asset in that space within the U.S. The U.S. has been a key focus area for us. I've got no doubt that the accretion that that business is going to bring is something now that we've got a very proven experience of. Fantastic. Thank you very much. Thanks, Charlie. Please can I remind you, if you'd like to ask a question, please press star two on your telephone keypad. Our next question is from the line of Simon Bowler from Numis. Simon, your line is now open. Please go ahead. Hi. Thank you. Just a couple of quick ones. Firstly, there's a bit of chat within the statement around refinancing. Just could you clarify whether you're considering refinancing the TLB at all and if that was what you were referencing there? Secondly, could you. Oh, sorry. Go for it. No, go on, Simon. Sorry, I cut in. I thought that was the question. Sorry. No, that was the first question. The second question was just going to be to just touch again on the use of cash within THG Ingenuity, because I guess you had an option as to whether that SoftBank investment came in primary or secondary. It's all coming in terms of primary. Is there an expectation that THG Ingenuity is going to be quite acquisitive itself as an entity? Roughly $ 100 million of CapEx is going to take a while to burn through the cash that's gone into the business. Sure. On Ingenuity and the cash within there, look, the reason it's got $1.6 billion is partly a product of the 19.9% and the valuation. If you're going to sell someone 19.9%, you end up with the $1.6 billion. 9% wouldn't have worked for SoftBank, a smaller number. Equally, 49% wouldn't have worked for THG because we don't want to give that much up, and it's a lot of cash to deploy. That's in part how the $1.6 billion has come about. You're absolutely right, though. $100 million of CapEx is, you're going to take quite a few years to be able to go through that and build that out. What it will do is, it's incredibly well funded, as you point out. We don't have anything specific that we're spending that money on right now. Clearly there are aspects to the technology stack where we think we could potentially deploy capital to really further improve it for everybody. It might take us a bit of time before we come forward with that, but that's the plan. It will fund the CapEx, but also potential opportunities on top. The first point I think was around refinancing. Do we intend to do that? Look, it's just optionality. We only did the TLB, I don't know, just before IPO, maybe in December 2019, I think it was. We IPO'd September 2020. I think it's a five-year TLB, something like that. We've got loads and loads of time on that. Clearly, we'll just see. We'll always have that optionality that we could refinance it. Being completely frank and open, it's not on my list of things to do at all. If it's not on mine, I very much doubt it's on the CFO's either. There's no plan there currently. Okay, great. Sorry, just one final one. Is Ingenuity currently working with any of the current SoftBank affiliates? It's the other way around, actually. They do have an investment in a business called AutoStore. With AutoStore, in the U.K., there's a 500,000 sq ft new facility that will open in probably September when first shipments come out of it. AutoStore, we've just literally given them access now to put their robotic kits in there. Obviously, SoftBank have got a sizable hold in there, probably going to be a majority holding over time from what I understand. That's one way where we're working together on something. That's them kitting out one of our warehouses. Okay. Sorry, that's the warehouse that you are using or are due to use yourselves. Yeah, it's our facility where we've engaged with a SoftBank entity. We're working together on that. I wouldn't rule out there's the potential to do much more together in that regard. Let's see. SoftBank has some serious investment out there, and there's plenty of opportunity across all of them. That's the one that, prior to this, we were working with. Okay. Thank you. Thank you. Our next question is from the line of Roland French from Davy Research. Roland, your line is now open. Please go ahead. Hi, morning and thanks, and congrats on the deal, guys. A couple questions from me. Just firstly on, I guess, the SoftBank client canvas, maybe some color. I know you can't get into the specifics, and you've given us the example of AutoStore, but can you maybe give some color around geography, around end-use market? I guess heretofore, we've seen that Ingenuity order book being scaled through kind of CPG wellness and retail. I guess my question is, does it broaden that list, or does it deepen that list? Secondly, how do you think about those potential clients in context of the services you're providing? Should we think about it more around supply chain fulfillment, or is there equal opportunity to get into GMV share arrangements? Finally, just kind of pivoting a little bit just to Bentley. I know you've spoken before about leveraging some existing U.S. assets for the protein division, I guess in fulfillment. Is there an ability there, I guess, at New Jersey? Is there capacity at that site for the Myprotein business to benefit? I'll leave it at that. Thanks. Sure. I'll answer the last one on Bentley. It's very specific around beauty. We wouldn't be putting nutrition in there. You're absolutely right. We are passionate across the U.S. in extending our capabilities for nutrition, for beauty, for Ingenuity, but also here with product development. That site will really be a beauty site. The work there will be expanded, it will be entirely around beauty. In terms then of some of the other questions around client base and how that canvas of SoftBank clients works, look, I would say the opportunity is across the whole area of Ingenuity. We've got a whole host of services that sit in there, commerce being one. Obviously, there's hosting, content creation, there's the warehouse management software solution Fulfillment, so on and so forth. In terms of territories, any specific territories, Asia, they're from Japan as a head office, so I would've thought the strength of their business across Asia and their contact base and so on and so forth, that would be a natural place for us to be able to do things at scale pretty fast. We've got a particular strength in Asia. It's a really key market for us, and so I can see us doing things there. Ultimately, it's SoftBank. They're pretty huge. The potential is pretty broad-ranging, and we'll be there to service them with whatever aspect of our Ingenuity stack applies to any given opportunity. Got it. Thanks, Matthew. Thank you. Our last question is from the line of Wayne Brown from Liberum. Wayne, please go ahead. Thanks. Matt, just two follow-up questions. Around management bandwidth, with so much happening in the group, just if that's a bit of a stretch or not. Lastly, you said that there's optionality in nutrition and beauty- I'm not sure if that's finished now. I think we seem to have lost BRR, who are the media people who do all the questions. I don't know if they're coming back on or We just have a follow-up question here from Wayne Brown. Can you hear me, Matt? It sounds like we've lost our media people, but we're probably coming to the close in any event. With that, I think just to wrap up, I really appreciate the support that everyone's given us, and hopefully you'll agree it's quite an exciting opportunity. We look forward to being able to update on any progress we make now with SoftBank, but also in the other areas of THG. Thanks once again, and look forward to speaking soon. Cheers.