15 April 2021

 

THG PLC

The Proprietary Digital Consumer Brands Group

 

PRELIMINARY FY20 RESULTS AND FIRST QUARTER TRADING STATEMENT

 

 

Full year 2020 £1.6bn of revenues (+42% YoY), £151m adjusted EBITDA (+35% YoY) after £2.6m of self-funded furlough costs

 

Statutory operating profit before adjusted items of £46m, £(482m) operating loss driven by one-off, non-cash items, principally equity awarded to our people

 

Strong Q1 2021 revenue momentum; +58% growth YoY, encouraging progress on Dermstore integration

 

Ingenuity Commerce continued revenue acceleration with Q1 2021 +188% sales growth

 

Reiterate recently upgraded 2021 revenue growth guidance of +30% to +35%

 

Matthew Moulding, Founder, Executive Chairman and CEO to donate £100m of THG PLC shares to charity

 

 

THG PLC ("THG" or the "Group"), the proprietary technology platform specialising in taking brands direct to consumers ("D2C") globally, announces its preliminary results for the financial year ending 31 December 2020 ("FY 2020"), together with its trading update for the three months ending 31 March 2021 ("Q1 2021").

 

FY 2020 and Q1 2021 Group Trading Performance                                                     

 

 

£m Unaudited	FY 2020	FY 2019	FY Growth		Q1 2021	Q1 2020	Q1 Growth
THG Beauty	751.6	478.3	57.1%		220.8	115.9	+90.4%
THG Nutrition	562.3	412.9	36.2%		146.3	110.8	+32.1%
THG Ingenuity	137.3	127.9	7.3%		40.4	32.0	+26.1%
THG OnDemand	101.3	59.9	69.1%		26.4	12.4	+114.0%
Other	61.1	61.3	(0.3%)		13.4	11.7	+14.9%
Group Revenue	1,613.6	1,140.3	41.5%		447.3	282.7	+58.2%
Gross Margin%(1)	45.2%	44.8%
Adj EBITDA(2)	150.8	111.5	35.2%
Adj EBITDA%	9.3%	9.8%
Net Cash / (Debt)(3)	282.8	(431.1)
Ingenuity Commerce Revenue	19.3	7.4	160.4%		7.9	2.8	+187.9%

 

 

⁽¹⁾Gross Margin% is presented before the impact of depreciation and amortisation

⁽²⁾Adjusted EBITDA is defined as operating profit before depreciation, amortisation and adjusted items, and after £2.6m of self-funded furlough costs

⁽³⁾Net debt pre IFRS16 leases and on a hedged basis

 

Outlook and guidance

·      Following a strong end to FY 2020, sales momentum has continued into FY 2021 across all divisions, revenue growth for the first-quarter of +58.2% is broad based, with stable margins in line with guidance.

·      Ingenuity Commerce has been a highlight with 187.9% growth in the quarter, up from 160.4% in 2020 and 144.0% in the fourth-quarter 2020.

·      The acquisition of Perricone MD in September 2020, further strengthened THG's leadership in specialty beauty retailing. The integration strategy remains on track to achieve double digit EBITDA margins by the end of FY 2021, as the brand pivots to a digital-first strategy.

·      We have been collecting customer behaviour data throughout the pandemic as countries and regions moved in and out of restricted conditions. Accordingly, we have good confidence in the continuation of our customer behaviour metrics in 2021 and beyond. Whilst the pandemic is a one-off crisis, the underlying drivers supporting the continued shift and retention of online consumer retail spend have not changed for the past 15 years. Specifically; broader product ranging and availability given online has no shelf-space limitations; greater product education with thousands of user-generated and professional posts accessible immediately online; and superior convenience and payment options.

·      At this stage of the year the upgraded revenue and margin guidance given on 12 January 2021 remains unchanged at +30% to +35% revenue growth on FY 2020, at stable adjusted EBITDA margins, before taking into consideration the dilutive full year contribution of Dermstore. The Group announced on 29 December 2020 that whilst dilutive to margins in FY 2021, it would be in line with Group by the end of 2022 and our confidence in this remains high.

·      Whilst it is early in the year to amend guidance given the current macro environment, Q1 2021 has been ahead of expectations, therefore our degree of confidence and visibility has increased.

·      Capital expenditure for the Group is expected to be 10.0% - 12.0% of revenue (vs 14.8% in 2020), driven by an acceleration of growth plans to meet the demands of our own brands, Ingenuity clients and elevated sales levels entering 2021. As per the guidance communicated at IPO, capex is expected to fall to 5.5% to 6.5% over the medium term.

·      The Group has been successful in growing through disciplined M&A activity and it will continue to be an important and complementary part of strategy. At the time of the IPO the company guided to spending £50m - £150m p.a. on strategic bolt on acquisitions. Given the number and nature of opportunities being presented by the economic environment, guidance is increased for bolt-on M&A to around £250m p.a. whilst continuing to be highly selective and disciplined.

 

FY 2020 financial highlights

·      Strong revenue growth at +41.5% increasing Group revenues to £1.6bn with 61.4% international revenue participation, broadly spread across all major territories. Following the acquisition of Dermstore, US revenue participation is expected to account for over 20% of Group revenues.

·      Ingenuity Commerce revenues grew +160.4% during the period with 324.0% growth in live sites, comprising fully managed and traded end-to-end online solutions of behalf of clients.

·      THG OnDemand revenue surpassed £100m for the financial year, representing +69.1% growth year-on-year as personalisation and print on demand services were increasingly sought after by consumers and brand owners.

·      Group gross profit margin at 45.2%, +40bps ahead of 2019, with gross profit +42.8% on 2019 driven by strong underlying trading margins in Nutrition, Beauty and Ingenuity Commerce.

·      Adjusted EBITDA of £150.8m, is after £2.6m of self-funded furlough costs, £153.4m before this which equates to a 9.5% margin.

·      THG funded the cost of paying employees in full whilst on furlough.

·      Stable adjusted EBITDA margins for the full year, with a clear improvement on the first-half of 2020 (H1 2020: 9.0%).

·      Robust operating cash generation of £177.0m (117.4% of adjusted EBITDA), with net cash of £282.8m at year end (excluding lease liabilities).

·      The Group has incurred an operating loss in the year of £481.8m, driven by a significant proportion of non-recurring and non-cash events, specifically:

o  £331.6m non-cash share based payments charge (68.8% of the operating loss)

o  £105.1m non-cash impact of the impairment on assets held for sale, and sale and leaseback charges (21.8% of the operating loss)

o  £14.3m cash IPO fees (3.0% of the operating loss)

o  £39.2m cash COVID costs (8.1% of the operating loss)

·      Excluding non-cash and one-off adjustments the Group generated an operating profit in the year of £45.5m (2019: £33.5m).

 

FY 2020 Strategic and operational highlights

·      Significant growth in new customer numbers (+10.7m), beauty box subscribers (+39% year-on-year), and number of orders (+41% for Nutrition and +58% for Beauty) as consumers were increasingly engaged through digital channels enabling discovery of new products and emerging brands via curated content. 

·      Consistently strong repeat rates re-enforced by very encouraging new customer to repeat conversion metrics, supported by an increasing proportion of customers acquired via branded Apps.

·      Through THG Society, influencer partnerships grew to over 19,000 via a dedicated recruitment programme, optimising marketing investment to support growth in active Beauty customers to 6.9m and 6.3m for Nutrition.

·      Investment in people, fulfilment and manufacturing capacity within UK, Europe, US and Asia including the addition of >0.5m sq. ft. across 5 global locations and over 3,000 roles created.

·      Launch of THG (eco), the driving force behind the Group's bold sustainability action plan, building towards a long-term vision for THG to operate in a closed-loop on all waste and environmental streams and footprints.

·      THG Nutrition continued to lead by innovation and purpose through the launch of world's first clear vegan protein, and the certification of Myvegan as the world's first plastic neutral sports nutrition brand.

 

First quarter 2021 highlights

·      The Group will shortly be opening its prestigious ICON studios in close proximity to its Manchester Head Office. Europe's largest content studio will house 2,000 people, offering high quality video production and photography capabilities for THG brands and Ingenuity clients. ICON will enable additional content creation opportunities for THG's influencers, supporting the Group's ambition for its proprietary influencer platform, THG Society, to become a global leader in the influencer marketing space.

·      Commitment to further invest in 3.6 million sq. ft. of fulfilment and personalisation capacity in the medium-term at key locations globally to support THG's own-brands and Ingenuity clients.

·      Significant progress in delivering Ingenuity Commerce ("THG Ingenuity") client wins, including:

o  Pentland Brands Limited ("Pentland") to manage the digital ecommerce experience for its portfolio of sports, outdoor and lifestyle brands. THG Ingenuity will completely re-platform the current ecommerce estate to become Pentland's leading ecommerce partner; in a deal that marks a significant step-change in Pentland's global ecommerce strategy.

o  Expanding the L'Occitane Group relationship following the successful Elemis global roll-out, organic beauty brand Melvita will use THG Ingenuity to expand its D2C reach in international markets. The partnership will initially use THG Ingenuity's full end-to-end capabilities to establish and grow the brand's reach in Hong Kong and Canada. 

o  Further Ingenuity Commerce market penetration into Australia and New Zealand with well-established wellness brands Comvita and Live Verdure. New Zealand-based Comvita has agreed a D2C contract with THG Ingenuity to build its ecommerce presence in the UK and Europe. The brand, which is the global market leader in Manuka honey-based products, aims to expand its presence in Europe, which includes an ecommerce platform, fulfilment and digital brand-building services. Live Verdure, a fast-growing D2C Australian wellness company will launch two hemp-based brands into global markets (including USA, Canada and UK), via the partnership.

o  Dr Brandt and Obagi join a number of other beauty and wellness brands including Spectrum X, Balmonds, Watermans Hair and BABOR as Ingenuity further expands into the category. Dr. BRANDT skincare and THG Ingenuity are joining forces to launch the clinical skincare company's first UK-targeted D2C website. THG Ingenuity will provide world-class ecommerce, fulfilment and digital brand services to elevate Dr. BRANDT's UK consumer experience. The partnership kicks off the brand's long-term strategy of scaling its D2C business into other international markets. Obagi will partner with THG Ingenuity to enter 15 international markets over a ten‐year deal. The global skincare brand will utilise a fully managed service solution, alongside fulfilment, payment and courier capabilities. The long‐term partnership delivers on Obagi's strategy to create an omni‐channel model by leveraging THG Ingenuity's strengths in ecommerce to build awareness, provide scientific education as well as drive professional consultation and trial.

·      Successful re-platform of Homebase.com website during March 2021, with incredibly strong initial results, delivering significantly ahead of expectations across all key operating and financial metrics.

 

THG (eco) update

·      In 2020, the Group launched THG (eco), the driving force behind the Group's bold sustainability action plan, building towards a long-term vision to operate in a closed-loop on all waste and environmental streams and footprints.

·      A significant area of focus continues to be reduction of energy use and related carbon footprint. In 2020, THG and our Ingenuity platform achieved CarbonNeutral® Company and Service certifications respectively. The certification was issued in accordance with The CarbonNeutral protocol, the leading global framework for carbon neutrality.

·      Our own brands continue to focus on sustainability as a priority and have launched several initiatives during 2020 including Myvegan's Sustainable September campaign.

·      THG's recycling scheme for hard-to-recycle beauty packaging, recycle:me is being rolled out across all of THG Beauty after it was launched for ESPA in 2020, to help ensure that end-of-life plastic is processed in an environmentally friendly way.

·      2021 THG (eco) initiatives are broad based including: plastic neutrality led by in-housing recycling technologies and know-how; reforestation carbon capture and offsetting; a solar energy rollout programme; and the launch of carbon-lite delivery options via Ingenuity. Further details will be provided in H2 2021 as the Group will publish its 2030 Sustainability Framework, detailing its key priorities across nature and environment, supply chain and employees.

·      THG (eco) is available to all Ingenuity clients, enabling Ingenuity to deliver digital transformations sustainably.

 

Acquisition update

Strategic acquisitions play an important part in THG's overall strategy to build its portfolio of premium own brands, facilitate product and technology vertical integration and add additional capabilities to complement its brand building, digital commerce and ESG activities. THG has a strong and disciplined track record of successfully acquiring and scaling brands, both digitally and internationally. During the first quarter, the Group has continued this strategy with complementary investments in support of the Group's commitment to sustainability and innovation:

 

·    In support of the Group's 2030 Sustainability Strategy, in Q1 21 THG acquired Indigo Environmental Limited ("Indigo"), a specialist recycler of plastics for £4.0m, rising to a maximum of £6.5m based on future performance. The acquisition is an important step towards THG's goal to operate in a closed-loop on all waste / environmental streams and footprints. The Group expects to undertake further investments in plastic recycling in 2021 as it builds in-house expertise across the hardest to recycle plastics commonly used in the Beauty industry. Through 2021 investments, the Group expects to be able to recycle c. 20,000 tonnes of plastic annually, representing over 2x its current plastic use.

·      In addition, the Group acquired the entire share capital of Eco Credits Limited ("ECO Credits"), a web based tree planting and carbon off-set platform. Eco Credits provides B2B and D2C tree planting services, as well as selling carbon off-set certificates for consumers and businesses looking to reduce their environmental footprint. The business has partnerships with global reforestation projects and provides THG with the infrastructure to service its consumers and Ingenuity clients with tree planting and carbon off-set services. Initial consideration is £0.5m, with deferred consideration of up to £4.0m being paid based on future performance. The Group will scale this reforestation supply chain solution through check-out technology developments and other digital enhancements, in order to drive scale into a hugely important sustainability action. 

 

While each of these investments will play an important role in the Group's strategic direction, none are expected to be material to the Group's near-term financial performance.

 

Matthew Moulding, Founder, Executive Chairman and CEO to donate £100m of THG PLC shares to charity

Ahead of THG's IPO in September 2020, Matthew Moulding notified the Board that he would not seek to profit from his employment at THG, and instead made the following charitable commitments:

·      Waiving of salary with the Group making a charitable donation of similar value.

·      Equivalent donation to charity of 100% of the profit Moulding Capital Limited ("PropCo") generates over the next 100 years, arising from its role as landlord of a proportion of THG's facilities.

 

The Board can confirm the following:   

·      Between IPO and the end of 2020, THG donated £300,000 to various charities, instead of paying Matthew Moulding and John Gallemore their base salaries as specified in their service contracts.

·      THG's Remuneration Committee assessed Matthew Moulding's performance against agreed objectives and determined that the maximum bonus of 100% of salary would be payable. Matthew Moulding waived his bonus for the period as a listed business, equating to c. £187,500 for his performance in 2020.

·      Matthew Moulding and his family established The Moulding Foundation ("the Foundation") in 2020, and he has notified THG of his immediate intention to transfer £100m worth of listed ordinary THG shares into the Foundation, with the intention to distribute proceeds to various charities.

·      The Foundation is already active and recently pledged £5m to support the construction of a new campus at The Seashell Trust, a residential school for seriously disabled children based in the North West.

·      The decision to donate £100m worth of listed THG ordinary shares was based on his calculation of today's value of 100 years of future profits from PropCo, addressing Matthew's commitment of profits going to charity.

·      Ahead of the share transfer, Matthew and his wife hold 319.3m shares in THG (25% of the Group) on a fully diluted basis. It is anticipated that they will hold c. 305m shares (c. 24% of the Group) on a fully diluted basis post the transfer.

 

Matthew Moulding commented:

"We approach FY21 with confidence having navigated successfully through a milestone year in the Group's history. I am particularly proud of how our people have responded to the changing environment, displaying determination to make a difference across all aspects of our operations from new product development, to digital marketing, M&A, fulfilment and THG (eco).

 

"Our global D2C brand building capabilities and proprietary Ingenuity technology platform has enabled us to further develop both our external brand relationships, and our expanding portfolio of Beauty and Nutrition own brands. Leveraging the platform to build an impressive client base of blue-chip consumer brands has been a highlight of the year, supported by encouraging momentum in the current year Ingenuity Commerce pipeline.

 

"Management's purpose for the IPO was to step change THG's access to funding in order to capitalise on Covid-19 accelerated market changes. As we progressed through 2020, those changes became more apparent in terms of the volume and scale of opportunities available to the Group, as evidenced by the c. £400m committed to acquisitions since IPO, most notably the acquisition of Dermstore in the US.

 

"After highlighting our commitment to reducing the environmental impact of Group operations with the launch of THG (eco) in 2020, we have announced significant investment to support the Group's strategy to off-set existing usage and footprint. Plastics are a real and immediate problem for THG's operational sites, our consumers, and for Ingenuity partners. We are investing in best-in-class plastic recycling operations that at first help us off-set our plastic footprint, but in time enable us to close the loop and re-use the plastic we process within THG directly.

 

"We have delivered exceptionally well on our commitments at IPO and we move forward with purpose, to advance our strategy with investment in talent, infrastructure, THG (eco) and targeted M&A, and to continue to deliver growth on a global scale."

 

Analyst and investor conference call

 

THG PLC will today host a conference call and webcast for analysts and investors at 9.00am (UK time) via the following links:

 

To register for the webcast, please use the below link:

https://brrmedia.news/w34dy

 

To ask questions, you must dial in via conference line using the below details:

·      Room number: 670095

·      Participant pin: 2230

·      UK dial in: +44 33 0606 1118

·      US dial in: +1 646 813 7960

·      International access numbers

 

For further information please contact: 

 

Investor enquiries - THG PLC
Kate Grimoldby/Clara Melia	Investor.Relations@thg.com
Media enquiries -
Powerscourt - Financial PR adviser	Tel: +44 (0) 20 7250 1446
Victoria Palmer-Moore/Nick Dibden/Lisa Kavanagh/Nick Hayns	thg@powerscourt-group.com
THG PLC Viki Tahmasebi	Viki.tahmasebi@thg.com

ENDS

Notes to editors

THG (www.thg.com) is a vertically integrated, digital-first consumer brands group, retailing its own brands in beauty and nutrition, plus third-party brands, via its proprietary, end-to-end, e-commerce technology, infrastructure and brand-building platform (THG Ingenuity) to an online and global customer base. THG's business is operated through the following businesses:

THG Ingenuity: Ingenuity Commerce provides an end-to-end direct-to-consumer e-commerce solution for consumer brand owners under 'Software as a Service' (SaaS) licences. The wider Ingenuity division provides stand-alone digital services, including hosting, studio content, translation services and beauty product development and manufacturing.

THG Beauty: The globally pre-eminent digital-first brand owner and retailer in the prestige beauty market, combining its prestige portfolio of nine owned brands across skincare, haircare and cosmetics, the provision of a global route to market for over 1,000 third-party beauty brands through its portfolio of websites, including Lookfantastic, Dermstore, Skinstore and Mankind and the beauty subscription box brand GLOSSYBOX.

THG Nutrition: A manufacturer and online D2C retailer of nutrition and wellbeing products and owner of the world's largest sports nutrition brand Myprotein, including its family of brands Myvegan, Myvitamins, Command, MP Clothing and Myprotein Pro.

THG OnDemand: Personalisation and customisation is a key offering within THG OnDemand, enabling brands to offer unique products to a vast range of consumers across THG's global territories through websites including Zavvi, IWOOT and Pop in a Box.

Other: Luxury D2C websites including Coggles, AllSole and MyBag, in addition to THG Experience. The latter comprises prestige events locations at Hale Country Club & Spa, King Street Townhouse Hotel and Great John Street Hotel, providing deeply experiential brand building environments, most notably in support of THG Society, the Group's proprietary influencer marketing platform.

 

THG (eco): THG (eco) is the driving force behind the Group's sustainability action plan. THG Eco covers the core pillars of THG's sustainability commitment: the planet, sustainable resources, people and livelihoods.

 

 

Cautionary Statement

Certain statements included within this announcement may constitute "forward-looking statements" in respect of the group's operations, performance, prospects and/or financial condition. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words and words of similar meaning as "anticipates", "aims", "due", "could", "may", "will", "should", "expects", "believes", "intends", "plans", "potential", "targets", "goal" or "estimates". By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast. This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares or other securities in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares or other securities of the Company. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser. Statements in this announcement reflect the knowledge and information available at the time of its preparation.

 

 

 

THG PLC ("the Group")

The Proprietary Digital Consumer Brands Group

 

PRELIMINARY FY20 RESULTS

 

 

Chief Executive Officer Overview

 

It has been a monumental 2020 for THG and we are less than a year into our life as a public listed company on the London Stock Exchange ("LSE"). The Executive Leadership Team have been fortunate to have strong, passionate people around them, who have been able to steer the business successfully through months of disruption caused by the Covid-19 global pandemic.

 

We are enthused by the accelerated shift to digital channels and are passionate about delivering on that opportunity. These are exciting times for THG, and we are making progress towards our strategic objectives. I am grateful to our employees, partners and investors for their support.

 

Our Purpose

THG's purpose is to reinvent how brands digitally connect to consumers globally; and to be best in class at building, growing and accelerating brands in order to deliver long-term sustainable growth for its shareholders. This is achieved through THG Ingenuity, our Beauty and Nutrition brands and our own e-commerce websites, whilst ensuring we use our position to promote responsible and sustainable retailing.

 

Landmark IPO

In September 2020, the Group's Initial Public Offering ("IPO") on the LSE was the largest UK IPO in five years, and we were delighted by the strong reception from investors.

 

Six months on, I am proud to report a record-breaking year for the Group, with growth across all divisions and all major geographies. We have delivered ahead of expectations set at the time of the IPO and remain committed to driving further value for our shareholders by investing for growth.

 

The IPO raised £920m of capital, which has allowed us to improve and grow our company, both through investment in our platform and through strategic acquisitions. It has also given us the ability to reward and motivate our employees, who are the driving force behind THG's success. The money raised in our IPO was crucial in enabling us to respond nimbly and effectively to the accelerated shift in consumer habits prompted by the COVID-19 pandemic.

 

Investment for growth

We have a proven track record of acquiring and scaling brands, both digitally and internationally, while investing in technology and assets to strengthen our vertically integrated model. Since our IPO, we have completed seven acquisitions ranging from Perricone MD and Dermstore, two category leading US based Beauty assets, to Claremont and Berryman's within our Nutrition division, each BRC AA grade accredited and contributing flavour house expertise and ready-to-drink innovation and production capabilities.

 

Through our ESG focused investments since IPO, we have added UK leading in-house expertise across plastic recycling technologies, addressing the most difficult to recycle plastics most typically used by the Beauty industry, plus we have added reforestation supply chain know-how which will feature at check-out. All our ESG innovations and investments will support both our own brands plus our Ingenuity clients, helping THG to deliver digital transformations sustainably.   

 

The investments since IPO each execute on our long-term acquisition strategy as outlined at IPO which remains unchanged. Specifically, THG is the leading digital beauty strategic globally, and we maintain a growing pipeline of attractive acquisition opportunities, targeting brands with compelling potential for rapid expansion through digital penetration and internationalisation. Acquisitions play an important role in our overall strategy, with a focus on beauty brands, vertical integration through best in class production facilities, technology assets encompassing both software and infrastructure, in addition to an expansive commitment on ESG.  

 

Covid-19

In common with the rest of the world, the THG team has been saddened by the human toll taken by the Covid-19 pandemic. We have sought to support the communities we serve, with more than £10m committed to charitable causes during the year (£6.6m delivered in 2020, with the remainder to be delivered in 2021), in addition to opening up our accommodation for use by key workers. 

 

The pandemic continues to impact both the online retail marketplace and the wider global economy. As consumers have stayed at home, a shift onto digital platforms has undoubtedly accelerated THG's revenue growth. Notwithstanding this, the reasons for long-term retail channel shift and repeat purchasing online remain unchanged and include, broader product availability given no shelf-space limitations, greater product education with thousands of user-generated and professional posts available online and greater convenience across delivery and payment options. The pandemic has, of course, posed challenges in ensuring that we can provide manufacturing and fulfilment in a safe and secure environment for our employees. THG has responded decisively, with the safety and wellbeing of colleagues of paramount priority at all times.

 

Reflections on 2020

THG has delivered superb revenue and adjusted EBITDA growth of 42% and 35% respectively, with headline revenue of £1.6bn, and adjusted EBITDA of £151m. Due to the unique circumstances occurring in connection to the IPO and the Covid-19 pandemic, the result includes one-off charges including significant non-cash expenses, resulting in an operating loss of £(482)m (91% non-cash). The biggest non-cash element was a £332m charge associated with equity awarded to staff in the years running up to the IPO, which vested in Q4 2020. While we are confident the Group is well positioned for future growth, we remain alert to emerging risks, and through our proprietary technology platform we are prepared and able to respond swiftly and decisively.  

 

As well as adapting elements of our own business in response to the pandemic, changing consumer needs has accelerated a long-term trend towards e-commerce, creating a challenge for brands that lack a meaningful online presence. The Group's Ingenuity platform powered 89 D2C websites for Ingenuity Commerce clients at the end of 2020 - a more than fourfold increase on the 2019 total - providing frictionless end-to-end solutions for major consumer goods companies, brand owners and retailers. Whilst revenue contribution from Ingenuity Commerce remains below two per cent of the total Group, the growth rate is strong, and we are encouraged by the strength and diversity of pipeline opportunities, the highly accretive earnings margins and strong cash generation.   

 

Our expertise as a digital brand builder is highly valued by our Ingenuity clients, underpinned by the continued successful growth of our own portfolio of 15 brands. Through considered M&A and a well-executed integration strategy, the Group has an established record of digitalising brands from largely offline channels. The addition of Perricone MD to the portfolio in September 2020 enhanced our prestige own brand offering, with the transition to the Ingenuity platform completed within a matter of weeks. We are very pleased with the progress of the acquisition as the brand pivots to a D2C, digital first model. Transforming brands in our own portfolio is testament to our ability and expertise to support third party brands with the same strategy.      

       

In addition to our own brands, the Group's Beauty business has delivered phenomenal sales growth through Lookfantastic, our global reseller flagship brand and over 1,000 brands now partner with us. The breadth of range, convenience and educational content are key factors in high rates of repeat purchase and rising average order values. Beauty brand owners are increasingly analysing their own marketing spend, directing investment towards digital sampling and consumer engagement. Our subscription box model has seen significant growth in subscriber numbers as customers seek to stay at the forefront of emerging brands and trends across skincare, haircare and cosmetics. 

  

As consumers seek healthier lifestyles, THG Nutrition's brand family is innovating to meet growing demand, through the launch of over two hundred new products with a focus on convenience, sustainability and education. Myprotein is a global aspirational health and wellness brand, with a strong sense of community and engagement, serving a broadening demographic as the family of brands evolves to serve large addressable markets aligned to its leading position within the D2C sports nutrition market.

 

Whilst our Beauty and Nutrition divisions have delivered exceptional growth during the year, we are equally proud to achieve the £100m revenue milestone within the OnDemand division. Personalisation is prized by many consumers, and we have pivoted the heritage brands within this division including Zavvi and IWOOT to meet this demand, often under exclusive product license (over 1,000 in the Group) or by customised 'print-on-demand' products.

 

Operational excellence

Global lockdown conditions provided a unique opportunity to acquire new customers efficiently, whilst continuing to serve existing customers from our global network of fulfilment centres. The launch of branded mobile apps at the end of 2019 has supported repeat purchase rates, with over 2.6 million users globally at the end of 2020, less than 18 months after launch.

 

The cost to serve customers globally as a result of Covid-19 related restrictions resulted in higher than anticipated adjusted item costs in FY20. In particular, commercial airlines have been unavailable to carry cargo, leading to an increase in freight costs. Strategically we made the decision to further progress investment in global warehousing and fulfilment infrastructure in anticipation of the continuing trend towards online channels which was evident prior to this financial year. 

 

The Group's robust infrastructure and technology is able to manage in excess of 11 million daily website visitors and fulfilling over 50,000 orders per hour in peak trading periods. The Group's multi-continent operational footprint of data centres, warehouses and fulfilment sites continues to grow, enhancing our customer journey and realising operating cost efficiencies, whilst minimising the impact of Brexit.   

 

Corporate governance

The Board recognises that good corporate governance underpins the long-term prospects of the Group. Since the IPO we have appointed two Independent Non-Executive Directors and four Special Advisors, exceeding the commitments we made at IPO. The Board has extended a warm welcome to Tiffany Hall and Damian Sanders, who both bring a wealth of plc and industry experience to THG. The Special Advisors are leading on specific projects with colleagues within the business across risk, sustainability and data protection. 

 

Sustainability

We were particularly pleased to launch THG (eco) in 2020. At THG, we build, grow and accelerate world-class brands using innovative technology and solutions and our vertically integrated business, means that we are uniquely placed to embed sustainability best practice at the heart of product design, manufacture, delivery and the entire customer journey. We are committed to the development and expansion of sustainability across all our products and services to create enduring and permanent positive changes for our customers and THG Ingenuity partners. THG (eco) embodies our commitment to sustainability and innovation, and is dedicated to driving forward positive change. 

 

Powered by THG Ingenuity, we continue to provide a world leading proposition as a sustainable, digital first consumer brands group.  

 

Our culture

Our corporate culture fosters innovation, teamwork, entrepreneurship and technologically advanced and well-crafted software. We believe this culture is an important contributor to our success.

 

Intrinsic to this is a commitment to diversity and inclusion, which was a focus throughout the last 12 months' and will continue to be over the year ahead. We have established a D&I Committee to identify areas for improvement and drive positive cultural change.

 

Given the importance we place on our employees and the nature of our consumer-led business, diversity and inclusion is critical to THG. The Board recognises that failure to identify and respond to diversity issues could cause significant reputational damage to THG, our brands and compromise our partnerships. The Board and I acknowledge these challenges because it is the right thing to do and it is essential for our employees, stakeholders, consumers and partner brands.

 

Our people

I would personally like to welcome new colleagues to the Group and to thank everyone for their contribution to a successful year in a challenging working environment. The performance during 2020 continues to demonstrate the strength of our talent and business model and our collective ability to meet the demands of our consumers and partners, as they adapt their own businesses and undergo major transformations.  

 

Our colleagues have demonstrated outstanding efforts and commitment. I look forward to their continued contribution in achieving the ambitions of the Group.

 

The year ahead

Fantastic opportunities lie ahead, and the Group has the capability to maintain and grow leading positions in its core markets of Technology, Beauty and Nutrition.  

  

The first quarter of the new financial year has begun very positively, and we were pleased to complete the acquisition of Dermstore on 2 February 2021. The integration strategy is progressing in line with plan, providing further scale to our Group US operations, which as a market will now represent over 20% of Group revenue.  

  

2020 has been a superb year for THG and I would like to take this opportunity to thank all THG employees for their outstanding dedication and diligence in these most testing times. The talent, passion and enthusiasm of the whole team at THG has enabled our strong performance. Delivery against the strategic plan remains robust and the Board are confident and excited by the long-term prospects for the Group. 

 

 

 

 

THG PLC ("the Group")

The Proprietary Digital Consumer Brands Group

 

PRELIMINARY RESULTS FOR THE YEAR TO 31 DECEMBER 2020

 

 

Chief Financial Officer Review

 

It has been a momentous year for THG, with a major transaction in the form of the IPO, alongside dealing with the challenges presented by the Covid-19 pandemic and completing three strategic acquisitions.

 

			2020				2019
			Before Adjusted Items	Adjusted Items	Total		Before Adjusted Items
			£'000	£'000	£'000		£'000
Revenue			1,613,625	-	1,613,625		1,140,260
Cost of sales			(884,035)	-	(884,035)		(629,397)
Gross profit			729,590	-	729,590		510,863
Distribution costs			(284,741)	(55,240)	(339,981)		(195,047)
Administrative costs			(294,049)	(472,098)	(766,147)		(204,358)
EBITDA			150,800	(527,338)	(376,538)		111,458
Depreciation			(48,055)	-	(48,055)		(39,624)
Amortisation			(57,239)	-	(57,239)		(38,320)
Operating loss			45,506	(527,338)	(481,832)		33,514

  

Note the table above shows financial results before the impact of depreciation and amortisation, which are shown as separate lines below EBITDA. For statutory presentation, cost of sales includes charges of £16.4m (2019 £14.1m), whilst distribution and administrative costs include £10.3m (2019 £6.6m) and £78.6m (2019 £57.3m) of depreciation charges respectively.

 

Revenue

Group revenues increased 42% from £1,140m to £1,614m, as the wider consumer shift to digital channels continued apace. International sales accounted for 61% of total Group revenue. The Group has continued to deliver organic growth, complemented by strategic acquisitions in the second half of the year, along with the IPO readying the business for continued future success. 

 

Gross profit

The Group achieved gross profit of £730m at a gross profit margin of 45%, consistent with the previous year. Stock provisions increased over the course of 2020 from less than £7m to over £24m by the end of the financial year, reflecting the need to protect against stock risk given Brexit, Covid-19 and the impact of acquisitions. The Group continues to vertically integrate, manage its global supply chain and promote its THG Ingenuity product offering.

 

Operating expenses

Distribution costs, excluding adjusted items remain well controlled at 18% (2019: 17%) of sales. THG's strong international mix, illustrates the benefit of having an end-to-end fulfilment model utilising an extensive local courier network spanning over 195 services, all of which are fully integrated into our proprietary technology platform. The Group has built significant surplus capacity in its global network to fuel future growth with our courier integrations providing optionality for the end customer and enhancing the customer experience through customised communications.

Administrative expenses excluding adjusted items are maintained at 18% of sales at £294m, arising from strong operational efficiency balanced with a continued investment in people and additional regulatory and compliance costs, resulting from being a publicly listed company.

 

Within the underlying result are costs incurred from repaying furlough costs to the UK Government (c. £2.6m in 2020, 2019: nil). 

 

Adjusted EBITDA

Adjusted EBITDA rose to £151m from £111m, representing an increase of 35% on 2019 and maintaining a c.9% EBITDA margin. Adjusted EBITDA is an alternative performance measure, the below table reconciles back to the nearest appropriate GAAP measure, operating loss:

 

£'m			2020	2019
Operating Loss			(481,832)	(11,790)
Adjustments for:
Adjusted item - share-based payments			331,624	27,251
Adjusted item - impairment of assets held for sale and, sale and leaseback			105,138	-
Adjusted items - other			90,576	18,053
Depreciation			48,055	39,624
Amortisation			57,239	38,320
Adjusted EBITDA*			150,800	111,458

 

Depreciation and amortisation

Total depreciation and amortisation costs were £48m and £57m respectively (2019: £39m and £38m).

The Group continued to invest in its market leading end-to-end proprietary technology platform during the year to scale up globally and to address the ever-changing social trends of our customers across the world. £40m was invested in the Ingenuity platform, with the development of THG Detect further adding capability and features to our platform. The Group has continued to acquire brands and intellectual property to expand its international offering as part of the Group's long-term strategy.

 

 

Adjusted items

In order to understand the underlying performance of the Group, certain costs included within distribution, administrative and finance costs have been classified as adjusting items. These items principally relate to share-based payment charges, impairments, restructuring costs, dual running costs and acquisition related costs. In 2020, further costs were incurred due to the ongoing Covid-19 pandemic, which are set out below:

 

 

 

		2020				2019
		£'000				£'000
Within Distribution costs
Transportation, delivery and fulfilment costs in relation to Covid-19				39,175			-
Commissioning - new facilities		15,907				7,495
Decommissioning - legacy facilities		158				2,061
		55,240				9,556
Within Administrative costs
Share-based payments (non-cash)		331,624				27,251
Restructuring and IPO fees		14,308				863
Impairment on assets held for sale, and sale and leaseback (non-cash)					105,138	-
Donations and other Covid-19 costs		11,108				-
Acquisitions - restructuring and integration		5,736				5,511
Acquisitions - legal and professional costs		2,529				1,075
Other legal and professional costs		1,655				1,048
		472,098				35,748
Within Finance costs
Refinancing		-				7,951
Total adjusted items before tax		527,338				53,255

                  For full details on each category of adjusted item see note 4 to the financial statements.

 

Operating loss

The Group has incurred an operating loss in the year of £482m (2019: £12m), driven by significant events that have resulted in cash outflows and non-cash charges, the largest of which related to the vesting of share option schemes subsequent to the strong share price growth experienced post Admission. 

 

Finance costs

Finance costs rose to £53m (2019: £26m), as the Group incurred a full year of interest on the Group's debt facilities, which were put in place in December 2019.

 

Loss before tax

Reported loss before tax was £535m (2019: £45m).

 

Earnings per share

Earnings per share was £(0.66) per share (2019: £(0.06) per share). 

 

Cash flow

The Group continued to generate strong operating cash flows of £75m (2019: £54m), closing the year with cash generated from operations excluding adjusted items of £177m (2019: £71m). Working capital movements generated £26m of cash, as increasing inventory levels were offset by increasing trade and other payables.

The Group further invested c.£102m of cash in acquisitions to further its strategic objectives through key vertical integration and expansionary acquisitions, as well as repaying £168m of outstanding debt. The IPO bolstered the available cash pool of the Group, leaving the Group with a net increase in cash of £461m (2019: £77m), closing the year with £774m of cash on balance sheet, positioning the Group well to deliver long term value.

 

Net Cash / (Debt)

The Group's balance sheet continued to strengthen through the year, bolstered by the primary fund raise from the IPO along with positive cash generation from strong top line trading results, offset by an increase in lease liabilities recognised under IFRS 16. The Group closed 2020 with positive net cash levels of £47m (net cash before leases of £283m).

 

	2020	2019 (restated)
	£'000	£'000
Loans and other borrowings	(526,159)	(750,099)
Lease liabilities	(236,185)	(38,465)
Cash and cash equivalents	773,581	312,233
Sub-total	11,237	(476,331)
Adjustments:
Retranslate debt balance at swap rate where hedged by foreign exchange derivatives	35,403	6,738
Net cash / (debt)	46,640	(469,593)
Net cash / (debt) before leases liabilities	282,825	(431,128)

 

 

 

Unaudited consolidated statement of comprehensive income

				2020			2019 Restated
		Before Adjusted Items	Adjusted Items (note 4)	Total	Before Adjusted Items	Adjusted Items (note 4)	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	2, 4	1,613,625	-	1,613,625	1,140,260	-	1,140,260
Cost of sales		(900,472)	-	(900,472)	(643,450)	-	(643,450)
Gross profit		713,153	-	713,153	496,810	-	496,810
Distribution costs		(295,020)	(55,240)	(350,260)	(201,621)	(9,556)	(211,177)
Administrative costs		(372,627)	(472,098)	(844,725)	(261,675)	(35,748)	(297,423)
Operating profit/(loss)	3	45,506	(527,338)	(481,832)	33,514	(45,304)	(11,790)
Finance income	6	205	-	205	133	-	133
Finance costs	6	(53,012)	-	(53,012)	(25,550)	(7,951)	(33,501)
(Loss)/profit before taxation		(7,301)	(527,338)	(534,639)	8,097	(53,255)	(45,158)
Income tax credit / (charge)		5,794	(3,784)	2,010	(4,200)	5,172	972
(Loss)/profit for the financial year		(1,507)	(531,122)	(532,629)	3,897	(48,083)	(44,186)
Other comprehensive (expense) / income:
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations, net of tax		(582)	-	(582)	(2,393)	-	(2,393)
Net (loss) / gain on cash flow hedges		(4,991)	-	(4,991)	(5,670)	-	(5,670)
Total comprehensive (expense) / income for the financial year		(7,080)	(532,122)	(538,202)	(4,166)	(48,083)	(56,249)
(Loss) / earnings per share (£'s)
Basic				(0.66)			(0.06)
Diluted				(0.66)			(0.06)
Earnings before interest, taxation, depreciation, amortisation, impairment and adjusted items (Adjusted EBITDA)
				2020			2019 (restated)
	Notes			£'000			£'000
Operating loss				(481,832)			(11,790)
Adjustments for:
Adjusted items - SBP	4			331,624			27,251
Adjusted items - other	4			195,714			18,053
Depreciation	9,15			48,055			39,624
Amortisation	8			57,239			38,320
Adjusted EBITDA*				150,800			111,458
Furlough costs				2,595			-
Adjusted EBITDA excluding the impact of furlough costs				153,395			111,458

^(*)Adjusted EBITDA is defined as operating profit before depreciation, amortisation and adjusted items. The results for the year are derived from continuing activities.

The comprehensive income/(expense) is 100% attributable to the owners of the Parent Company.
 

 

Unaudited consolidated statement of financial position

 

		2020	2019 Restated
	Note	£'000	£'000
Non-current assets
Intangible assets	8	674,293	576,800
Property, plant and equipment	9	240,221	355,699
Right-of-use assets	15	193,887	37,973
		1,108,401	970,472
Current assets
Inventories	10	302,678	204,073
Trade and other receivables	11	246,546	131,184
Current tax asset		1,797	4,251
Other financial assets		15,849	2,214
Cash and cash equivalents	12	773,581	312,233
		1,340,451	653,955
Total assets		2,448,852	1,624,427
Equity
Ordinary shares		6,061	4,381
Share premium		1,287,171	230,718
Employee benefit scheme reserve		-	175
Merger reserve		615	615
Capital redemption reserve		523	523
Hedging reserve		(18,003)	(6,134)
Cost of hedging reserve		7,342	464
FX Reserve		(822)	(240)
Retained earnings		(138,361)	237,183
		1,144,526	467,685
Non-current liabilities
Borrowings	14	524,288	602,567
Derivative financial liabilities		2,563	2,940
Lease liabilities	15	207,274	28,678
Deferred tax		5,944	8,039
		740,069	642,224
Current liabilities
Contract liability		32,912	23,739
Trade and other payables	13	499,698	331,599
Borrowings	14	1,871	147,532
Lease liabilities	15	28,911	9,787
Provisions		865	1,861
		564,257	514,518
Total liabilities		1,304,326	1,156,742
Total equity and liabilities		2,448,852	1,624,427

 

 

 

Unaudited consolidated statement of changes in equity

 

		Ordinary shares		Share premium	Employee Benefit Scheme reserve	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		£'000
Balance at 1 January 2019		4,020		110,446	175	615		523		2,153	-		-		266,418		384,350
Adjustment on correction of error (net of tax)		-		-	-	-		-		-	-		-		(4,832)		(4,832)
Balance at 1 January 2019 (restated)		4,020		110,446	175	615		523		2,153	-		-		261,586		379,518
Loss for the year (restated)		-		-	-	-		-		-	-		-		(44,186)		(44,186)
Other comprehensive expense:
Impact of foreign exchange		-		-	-	-		-		(2,393)	-		-		-		(2,393)
Movement on hedging instruments (restated)		-		-	-	-		-		-	(6,134)		464		-		(5,670)
Total comprehensive expense for the period (restated)		-		-	-	-		-		(2,393)	(6,134)		464		(44,186)		(52,249)
Issue of ordinary share capital		361		120,272	-	-		-		-	-		-		-		120,633
Share buy-backs		-		-	-	-		-		-	-		-		(8,200)		(8,200)
Share-based payments	5	-		-	-	-		-		-	-		-		27,251		27,251
Deferred tax effect of share-based payments		-		-	-	-		-		-	-		-		732		732
Balance at 31 December 2019 (restated)		4,381		230,718	175	615		523		(240)	(6,134)		464		237,183		467,685
Balance at 1 January 2020		4,381		230,718	175	615		523		(240)	(6,134)		464		237,183		467,685
Loss for the year		-		-	-	-		-		-	-		-		(532,629)		(532,629)
Other comprehensive expense:
Impact of foreign exchange		-		-	-	-		-		(582)	-		-		-		(582)
Movement on hedging instruments		-		-	-	-		-		-	(11,869)		6,878		-		(4,991)
Total comprehensive expense for the period		-		-	-	-		-		(582)	(11,869)		6,878		(532,629)		(538,202)
Issue of ordinary share capital		2,079		1,056,453	-	-		-		-	-		-		(100,087)		958,445
Share buy-backs		(399)		-	-	-		-		-	-		-		(1,506)		(1,905)
Share-based payments	5	-		-	-	-		-		-	-		-		331,624		331,624
Deferred tax effect of share-based payments		-		-	-	-		-		-	-		-		2,966		2,966
Impact of restructuring	17	-		-	(175)	-		-		-	-		-		(75,912)		(76,087)
Balance at 31 December 2020		6,061		1,287,171	-	615		523		(822)	(18,003)		7,342		(138,361)		1,144,526

 

 

Unaudited consolidated statement of cash flows

 

		2020	2019 Restated
	Note	£'000	£'000
(Loss) / profit before taxation		(534,639)	(45,158)
Adjustments for:
Depreciation	9/15	48,055	39,624
Amortisation	8	57,239	38,320
Share-based payments	5	331,624	27,251
Adjusted items	4	195,714	26,004
Net finance costs	6	52,807	25,417
Increase in inventories		(83,404)	(47,078)
Increase in trade and other receivables		(66,824)	(22,272)
Increase in trade and other payables		176,799	29,068
(Decrease) / increase in provisions		(996)	(411)
Foreign exchange gain		574	269
Cash generated from operations before exceptional cash flows		176,949	71,034
Income tax received / (paid)		(3,104)	105
Net cash generated from operating activities before adjusted cash flows		173,845	71,139
Cash flows relating to adjusted items		(98,277)	(16,992)
Net cash generated from operating activities		75,568	54,147
Cash flows from investing activities
Acquisition of subsidiaries net of cash acquired	7	(101,949)	(83,738)
Demerger of subsidiaries		(10,003)	-
Purchase of property, plant and equipment		(174,886)	(124,280)
Purchase of intangible assets		(64,486)	(55,995)
Interest received	6	205	133
Net cash used in investing activities		(351,119)	(263,880)
Cash flows from financing activities
Proceeds from issuance of ordinary shares net of fees		905,823	115,755
Share buy-backs	5	(1,905)	(8,200)
Interest paid		(35,383)	(47,109)
Repayment of bank borrowings		(168,221)	(1,245,187)
Proceeds from bank borrowings		53,791	1,481,390
Repayment of lease liabilities		(17,206)	(9,502)
Net cash flow from financing activities		736,899	287,147
Net increase in cash and cash equivalents		461,348	77,414
Cash and cash equivalents at the beginning of the year		312,233	234,819
Cash and cash equivalents at the end of the year	12	773,581	312,233

 

 

 

Notes to the Unaudited Consolidated Financial Statements

 

1.    Basis of preparation

a.     General information

THG PLC (company number 06539496) 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 address of its registered office is 5th Floor, Voyager House, Chicago Avenue, Manchester Airport, Manchester, England M90 3DQ. The Company is the parent and the ultimate parent of the Group, the financial statements comprises the results of the Company and its subsidiaries ("the Group"). The financial period presented here is for the 12 months ending 31 December 2020, and a prior period comparative of the 12 months ending 31 December 2019.

 

b.    Basis of preparation

 

The consolidated financial statements of THG PLC ("the Company") and its subsidiaries (together "the Group" or "THG") have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards ("IFRS") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (EU). The financial statements have been prepared on the historical cost basis, except for derivatives which are held at fair value.

 

The financial information included in this preliminary statement of results does not constitute statutory accounts within the meaning of section 435 of the Companies Act (the "Act"). These unaudited Condensed Consolidated Financial Statements of THG PLC and its subsidiaries apply the same accounting policies, presentation and methods of calculation as those followed in the preparation of the Group's consolidated financial statements for the year ended 31 December 2020, which were prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board and were also prepared in accordance with IFRS adopted by the European Union ('EU'), the Companies Act 2006 and Article 4 of the EU IAS Regulations. Statutory accounts for the 12 months ending 31 December 2020 will be delivered to the Registrar of Companies in advance of the Group's Annual general meeting.

 

The statutory accounts for the 12 months ending 31 December 2019 have been delivered to the registrar of Companies, and the Auditors of the Group made a report thereon under Chapter 3 or part 16 of the Act. This report was unqualified and does not contain a statement under sections 498 (2) or (3) of the Act.  As part of the IPO process, previous errors were identified and corrected, balances which have been adjusted are detonated as restated in the following statements. The financial statements are presented in pounds sterling, rounded to the nearest hundred thousand unless otherwise stated.

 

The Directors consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements of the Group.

 

The accounting policies adopted by the Group in the current year are consistent with those adopted during the year ended 31 December 2019, except for the adoption of new accounting standards and amendments to existing standards in 2020 as set out below:

 

 

•      Amendments to IFRS 3: Definition of a Business

•      Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform

•      Amendments to IAS 1 and IAS 8 Definition of Material

•      Amendments to IFRS 16 Covid-19 Related Rent Concessions

•      Conceptual Framework for Financial Reporting issued on 29 March 2018

 

The amendments noted above do not have a significant impact on the Group's financial statements.

 

The Group has not early adopted any other standard, interpretation or amendment that has been issued but not yet effective as they are not considered to have a material impact on the Group's financial statements.