Good morning and welcome to the THG PLC Q4 Trading Update Call. Today's call will be hosted by Matthew Moulding, Chief Executive Officer, and the THG executive team, who will be happy to answer your questions, and I will start from the question- and- answer session. If you wish to ask a question, please signal by pressing star one on your telephone keypad, and please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. If you wish to cancel your request, please press star two. Again, it is star one to ask a question. We will pause for just a moment to assemble the queue, and we will now take our first question from John Stevenson from Peel Hunt. Please go ahead. Hi, good morning. I've got two or three questions on nutrition to get us going, please, if we can. Firstly, on the Whey price, how quickly will the manufacturing capacity start to bring it down, and until it does, I guess, to what extent do you intend to mitigate the impact and to what extent do you intend to sort of ride it out and take the margin hit to gain share next year? Second question, can you talk about the performance of your sell-throughs in the retail partners and give an update on how the sort of Müller licensing products are performing as well, and then finally, can you talk about some of the strategic targets for the year ahead, please? Sure. So what I'll do, John, there. I'll answer the, this is Matthew Moulding, by the way. I'll be answering all questions, and otherwise, I'll point out who's going to speak apart from myself. But I'll answer the first one. We might need to come back to the other two. So when does the new capacity come online? I mean, look, it is worth pointing out on Whey pricing that we've been in this market now for 13 years, and it's been a relatively stable market. Like every commodity, you'll get ups and downs and whatever, but we've only ever seen two highly volatile periods like this in the 13 years. One in 2022 following COVID and the war, and then one in the last 12 months as well. So even without the new supply coming online, we would expect the market to normalize in any event. But obviously, these are big investment plants because it's quite an extensive process to create very high-quality protein, and there's 9% additional market supply expected to come online this year. The first of those factories from different manufacturers and different producers, the first of those come online in March. The 9% all comes in America, in the American market. Then as you go into next year, there's an additional facility coming online in Poland as well for the European market, albeit that'll be at a slightly smaller amount. So we're expecting the global capacity of high-quality protein to grow by at least 10% over the next sort of 12 months or so. But there'll be a steady onboarding of new suppliers, and we'll obviously, we source our Whey Protein globally, but it is a global commodity. So wherever it comes online in the world, it will have an impact on supply and demand and the rest of it. So we are expecting that to feed through. And in terms of our numbers, what we're expecting is we've assumed that a relatively high level of Whey Protein pricing in half one, slightly better than the prior year. And then we're expecting half two to be about 25% lower. And then what would happen from there is if the Whey pricing itself has doubled, so more than doubled really over the past 12 months or 13, 14 months. And so a 25% reduction is one thing. If you were then to take another 10% off, that every 10% is worth somewhere in the region of about GBP 10 million of profitability. Depending on where the pricing levels are, you would add a large proportion of that at these levels would come back to the business. But obviously, at some levels, you would put that back into the proposition and drive that forwards. But given the high level of pricing today, as and when that comes down, a good proportion of that is going to come back into the Myprotein business. And it's worth reflecting on that, though. If you were to look at 2023, I think the profitability in nutrition was somewhere close to about GBP 90 million with an EBITDA, and that was in a normalized market. So I think we may have put an estimate in the RNS that said somewhere along the way pricing impact for this year alone is about GBP 40 million. That would be the Japanese yen. So as that starts to normalize, we'd expect that profitability to come back. It wouldn't always be a straight line depending on the competitive landscape and things. We put some back into the consumer as well. But we've put a lot into the consumer over the past 12 months in any event. So payback will be due at some point. I think the second question was about offline retail, was it, in terms of the sell-through? I mean, look, it's going very well, as you can imagine, because that was a non-existent or nascent market to us within two years ago. If you were to walk into a lot of the U.K. high street now, you'll see brand presence, and that brand presence is expanding at a rate of knots. It's not just the U.K. in which we want to do that. Obviously, we want to do that in all territories of the world, and we've got a very strong plan in rolling that out, including in Asia and in the U.S. and markets alike. So the sell-through is strong, but that's really supported by the brand awareness as well. Myprotein, if you get the information, if you put it together from Google and also from U.K. Gov or gov.uk, whichever way it is, the position of Myprotein in the year has got very strong. So I think we've had our increase in brand search is 19% year on year. The market itself grew by 6%. So the position of the Myprotein brand through the year has got stronger and stronger. And that's why the offline demand for our brand is very strong. And when it goes into offline retail as well, it goes incredibly well. So despite some of the challenges that we've faced in the nutrition division that they've had to navigate this year, the fact that the brand demand continues to be so robust has been really encouraging. I think the third point, if I remember it right, was on the strategic stuff. Look, last year was a very busy year for strategic initiatives. We discontinued some businesses. We disbursed some non-core businesses, and then we did a major demerger to finish the year of the Ingenuity business. And we're all too aware of the state of the U.K. market right now in terms of the LSE and valuations, etc. And we're aware, obviously, of our market cap doesn't make a lot of sense to a lot of people. I mean, probably the best thing I could say against that would be Ingenuity is now a private company backed by an awful lot of small investors. And if you were to look at that business, it's somewhere in the region in dollars of about an $800 million revenue business this year, delivering $50-$55 million of EBITDA. And as of this morning, it's sat on $130 million of net cash. And yet, that business was valued on the market at less than the value of cash. So if I was to come to the stock market today with that business, with thousands of staff and robots all over the world, then I would imagine a lot of people would be begging us to list it on the stock market, but we're not going to do that at a negative value. And obviously, we've tried that, and it has been listed. So we're aware of the challenges for all the stakeholders of the current position. The focus will be to continue to drive the business forward and trade well. But at the same time, we'll always be looking at strategic initiatives. And I would hope that either the market improves this year or we will deliver on more strategic initiatives this year. Okay. Brilliant. That's very clear. Thank you. And yeah, no, I've asked enough questions. That's great. Thanks, Matt. Thank you. We will now move to our next question from Wayne Brown from Panmure Liberum. Please go ahead. Morning, gents. Thanks for my questions. Also three from me. I'll probably take them one at a time, if you don't mind. On nutrition, you've clearly got a good story to tell on offline. You're seeing a lot more distribution. In Q4, your average order values were + 10%. So if the rebranding, which took place last year, saw your pricing down 10%-15%, does that mean your volumes are greater than 20% down in Q4? And how do you go from that run rate to mid-single digit in 2025? That's my first one, please. I'll add to the 2025 point. I'd have to go back and check the data on specific volumes. But as you talk about there, just on the average unit value has been seriously depressed through last year at a time when Whey Protein pricing was exploding because we've had to shift through the old stock and even old packaging and things like that. So that's been quite an extensive and very complex exercise in which to do. So what we then come into for this year is we will be comping a depressed average value for last year. So clearly, we would expect those values to increase and increase materially through the year as we sort of deliver on the rebrand is now behind us and we don't have that stock to clear through. So we're expecting tailwinds from that angle in particular of the average selling price. Then the other tailwind that we would be expecting for the nutrition division this year is just the sheer affordability of Whey Protein. So if anyone goes and tries to shop online for Whey Protein today, it's still somewhere in the region of 70%-80%, probably more expensive than it was 14-15 months ago to buy that branded product. Now, as you make it more affordable, naturally, the volumes will then increase because it becomes within reach of a much wider global market. There is a third tailwind that we are expecting for nutrition as we progress through the year, which is around FX. FX was one of the big challenges for that division last year. It's a big business in Asia, particularly in Japan. The Japanese yen suffered serious devaluation. We've had moments towards the end of the year where it looked as though it could have ended, but what we have seen now is actually it's pretty much in line, and so as we look through this year and then we can see what happened last year, there has been a softening of the yen since the second half, and as a result of that, we would expect that that then becomes quite a strong proposition for us back in Asia because it's not just the profitability that gets hit as you're trying to sell products into Japan when the FX has gone against you. It's actually the competitive nature of the product, so Whey goes up and your pricing relative to peers goes up because the FX has seriously gone against us on that, so we're expecting that to be a tailwind for this year. All of those factors combined mean that we are naturally expecting it to be a much more progressive year for nutrition and a steady return back to a normalized business model, but with the assistance of a first-class global branded nutrition proposition that we have. In terms of just answering the prior year stuff, I think we probably need to come back to you on that and just go through that and what we disclose and what we don't disclose. But that's the view on the 2025. Sure. No, no, thank you for that. I suppose in the guidance of mid-single digit for nutrition in 2025, are you still assuming negative volumes then? I understand the tailwinds you've just mentioned. Those were very clear. But on a volume perspective, are you still budgeting for negative volumes? It's probably budgeting. I mean, look, we don't disclose that, but it'll be somewhere near flat, I'm guessing. And the other factor is on volumes to take into account. When things get expensive, people buy a lot of the smaller, cheaper things. So the net volumes won't necessarily be down. It's just people will be buying different products. So for example, when Whey pricing is cheap or normal, people will buy a much bigger bag of that product. But when they're struggling on the pricing, they will buy a smaller bag. So what it doesn't mean is that people are buying less of Myprotein products. What it can mean is the size of that product is what's being affected. Now, naturally, that then means that there's less Whey Protein being sold when pricing is very high. They're buying it from our brand, but they're buying it at a smaller level, which would help explain why our search demand is up 19% year on year versus the market only 6%. No, very helpful. Thank you. A similar question on beauty. In Q4, your average order values were + 8%. And having a chat earlier with the team, your ex-manufacturing, the underlying performance was probably + 3.5%. So volumes are also down in beauty. Can you just explain that and then how we see that playing out as we move into 2025, please? Sure. So 3.3%, I believe it was excluding manufacturing because you will get volatility in manufacturing. And I think it's well documented that there's a lot of beauty brands out there seeing some volatility in their sales at the moment. Now, we obviously work with them in doing that. And whilst we might have purchase orders and have produced product, we're not going to ever force that on to any brands because it's not good for the business, and it's certainly not good for them, and it ends up glassing you anyway. So we will always support brands where sensible in that. And that's why the manufacturing business occasionally can be a little bit lumpy and impact the numbers. But it was 3.3% growth in Q4 for beauty, excluding the manufacturing. That compares to 2.5% in Q3. So we have seen an acceleration in beauty in that period. Now, again, what I would do is we would need to really break it down to the products that are being bought in that because people naturally will move their spending patterns around. This time last year, there might have been more devices. There were LED masks that have been a massive popular thing that could have taken a greater share last year. Whereas this year, it could be more fragrance or it could be cheaper products that go into there. So mix could well play a part of that. But to be very clear, the beauty business is in rude health and delivered an acceleration on the retail side from 2.5%-3.3% in Q4, driven by the focus of Lookfantastic and Cult Beauty, both doing well, but Cult Beauty doing especially well. And then the one final point to add as well is just to remind people that in 2022 and 2023, we put the beauty division through a massive overhaul. And as part of that, we pulled back from chasing customer orders that were the least profitable, furthest away from where our global distribution centers are. What that naturally does is it does impact on various stats and numbers. So the U.K. performance would have been outstanding. There's no doubt in that because we fulfill everywhere in the U.K. U.S., likewise, we do it at a really good performance in the U.S. Parts of Europe, which are furthest away from our Poland distribution center, where historically may not have been. It might have taken two, three, four purchases to get profitability from a customer. We will have pulled back from that and raised our pricing, reduced our marketing, which will have hurt some of the volumes in that territory. And it is worth taking that into account as well. So it's a complex answer. That's not just easy to say, oh, yeah, the volumes might be down because the AOV is up. No, no, absolutely. That's very helpful, and neatly brings me onto my last question, if you don't mind. I totally get the point about moving to higher quality customers, and that's also part of your shift from bottom of the funnel marketing to top of the funnel, which is brand marketing. And that's clearly played a part in the strategy over the last 12 months, so I'm just trying to get a feel for how that overall marketing spend is going to change in 2025 and how we should think about that impacting the top line. As you clearly shift to more higher quality customers, I absolutely get that, but that could potentially come at more of a cost of top line growth and how we should think about that and then the margin impact, please. Yeah, sure. Look, on top line growth, I mean, we've obviously had a great year in beauty, probably close to a record year when you consider the 2020 peak, probably year that you've had through COVID. So the progress that we've managed to do through beauty, navigating the sort of return to the high street and the rest of it, super pleased with. That momentum as we come into this year, we naturally have to adapt to the world. So we are spending our marketing dollars slightly different, and we continue to plan to do so. We've even opened up a first Lookfantastic store as part of that. We'll open a second one in due course, which will be announced shortly. And we know we probably have four or five or six or somewhere across the U.K. in due course to ensure we've got the absolute best brand supply available for online at the same time. And then how we're spending our marketing dollars between some of the social channels and some of the other areas, we're managing it very carefully and measuring it at the same time to ensure that where we spend the money, we feel we're getting the return. So I don't believe at all it's going to be impacting profitability of the business. So we're not going to be saying, oh, we're going to spend GBP 10 million in above the line, and we'll see a payback in three years from it When we spend above the line in these slightly different ways, we're doing it because the data that we're monitoring is showing that there's a return to it. It might just take a few months rather than a few years for us to see the benefit. And so there's a lot of measurement going on internally at the moment that says, well, instead of just spending loads of money with Google or with Facebook or whatever, doing things slightly differently and what that might yield. And there's just a big project ongoing with that. If we see that change in any way, we change back. But it doesn't mean we're going to be spending dramatically less with the existing people per se. We're just doing a lot of different things. I don't think any of this is particularly an impact on the trajectory of where the beauty business's top line growth will be or bottom line growth will continue to be running to the best of what we can deliver. Okay. Thank you. Thank you. As a reminder, to ask a question, please signal by pressing star one. And our next question is from Andrew Wade from Jefferies. Please go ahead. Morning, Hope you're w ell, three questions from me. First one on the nutrition side of things. You talked to the offline story now, but you also mentioned the statement about a much improved run rate at the start of the new year. Any color you could give us on that would be very helpful. That's the first one. The second one on beauty, it sounds like a pretty strong margin performance through there. So could you talk to us a bit about what the exit rate is and also if that's putting any upward pressure on your sort of longer-term aspirations for the beauty division? And then the last one on potential interest costs. Obviously, the group's going to look pretty different from a cash-consumptive versus cash-generative perspective. Probably won't need to hold as much cash on the balance sheet. Just wondering what your view is on where financing costs, that is bank financing costs, not the IFRS 16 element, where bank financing costs could come down to? Thank you very much. Sure. So run rate, how are we looking as we start the year for nutrition and offline progress? I mean, look, we're expecting really good solid progress in offline this year. These things take time to deliver. So you don't just decide you're going to go into offline and then suddenly you get those sales within six weeks. So a lot of work has been ongoing now over the past couple of years to get to this point, but the listings are growing, and so we'd expect that to really be a positive for us through this year. In terms of then the online sales, yes, we have seen an improvement in that. It's worth just reminding everyone, when you bring an end to having to sell old stock on the Myprotein website, then that's a win-win because you depress the whole sort of image and look and value proposition by having to discount that stock and sell it through, which we opted to do that as opposed to putting it through discount channels. Because if we'd have jobbed the stock out through discount channels, then we would have really hurt our prospects for the offline market because that would have very much upset the retailers, and they wouldn't have wanted to list us until a significant period of time had passed since that jobbed-out stock had gone into the market, so generally speaking, much better run rate. We'd be expecting the division to be returning to growth in the very near future, and that's not just excluding Asia. That's as for the full division, and January has seen that momentum bear good fruit, let's say, so yeah, so feeling good about that. The second question you had on beauty margins and whether that's got upward pressure on that. Look, we set a medium-term target for the beauty margins, and we've hit that, so we've hit that early. I mean, look, we've got to be careful about setting big expectations on beauty from now on that. I think having delivered that is a really good solid position. Let's just keep driving that forward and make sure we keep that top-line progression at the same time. There's no point in having a super profitable beauty division that's struggling for growth or in decline, making more and more money by doing that because that's a zero-sum game. So I think we're in a really solid position. We'll continue to build on that. The margins that we've delivered is perfectly acceptable for the medium term and would deliver everything that we needed to deliver if we do that. The focus really for us is maintain that, and then let's get the nutrition margin back to the normalized position. We really have got fantastic group progress. That's where the primary focus will be. The third point on interest stuff, I mean, look, just to reiterate, as you say, Ingenuity has gone out. All of that CapEx has come out. Much, much reduced CapEx. We've got GBP 400 million of cash on the balance sheet, another 150 million of RCF, which we've never used since IPO. You're right. There's a lot of gross sort of leverage in there. We'll look to reduce that through this year. And then as part of that, naturally, we should be able to reduce our interest costs over time as well as part of that, reduce the gross leverage. Let's look to the cash generation of the business. The lease costs have come down dramatically because half of those lease costs, more have gone into Ingenuity, and a lot more of the lease debt has gone into Ingenuity as well. So I think we're well positioned for that. But the primary focus now is just getting nutrition recovering back to its normalized levels. And that will naturally then impact cash as well at the same time because it's real cash when you do that. I lost you, Andrew. Yeah, that's great. Thanks. No problem. Thank you. We have a follow-up question from Wayne Brown from Panmure Liberum. Please go ahead. J ust on that exit rate in offline, clearly good story coming through there. How are you seeing or thinking about if people are just picking up the marginal purchase in a shop now as opposed to DTC? How should we be thinking about that? If there's a cannibalization story, or is it simply you think you're just targeting a new customer in the main? Sure. Look, we spent a lot of time looking at this. And our first entry point into the market was completely new products, so bars and snacks and things like that. Then we went to licensing the brand into other areas. So you'll see the big Müller deal coming to the U.K. market for now that hopefully goes international. So all of these things are touch points where we make good money out of them, and there's really strong brand awareness. Actually, then as you go into a store for some of the other products, it's a really tight range in every store. So if you compare the website, the website will have thousands of product lines, but in the stores, there'll just be a very limited range because stores can only hold so much product. So we don't see cannibalization in that regard at all. And there'll be some sort of very minor cannibalization, which naturally happens with everything, but nothing at all that we would worry about. The idea that someone walks into a Sainsbury's or any grocer across the world and picks up a single unit of Myprotein bar or something else is a real win for us. And so we see it as a positive. But we will keep an eye on the cannibalization as we roll it out and make sure that it's worth it if there is any that ever creeps up. Okay. Thank you. Thank you. With this, I would like to hand the call over to Matthew Moulding, Chief Executive and THG Executive Team for closing remarks. Thank you. Thank you very much, everybody. Thanks for the support through last year. Most importantly, thanks to everybody at THG and Ingenuity. It was a very, very busy finish to the year and much appreciated for the sacrifices people made. Thank you. Look forward to speaking to you in April, probably next. Thank you. Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.