Ao World Plc · LSE:AO.
Ao World — FY2022 Earnings Presentation
25 slides from Ao World's earnings presentation, Aug 18, 2022
Slide 1: FY22 Results
FY22 Results John Roberts, Founder and Chief Executive Officer Mark Higgins, Group CFO 18th August 2022 © 2021 AO World All Rights Reserved
Slide 2: Forward-looking statements disclaimer
Forward-looking statements disclaimer This presentation contains oral and written statements that are, or may be, “forward-looking statements” with respect to certain of AO World PLC’s (“AO” or "Company") plans and its current goals and expectations relating to its future financial condition, perfor
Slide 3: Welcome
Welcome John Roberts Founder and Chief Executive Officer
Slide 4: Financial Performance
Financial Performance Mark Higgins Group CFO
Slide 5: FY22 Revenue Highlights
FY22 Revenue Highlights £m 1YoY 2YoY FY22 FY21 change change Group 1,557 1,661 (6)% +52% UK 1,368 1,435 (5)% +52% Germany 189 226 (17)% +51% • Resilient UK performance against extraordinary comps • Volatile year following robust growth during Covid • Q1 performance in line with Board’s expectations
Slide 6: UK Gross margin
UK Gross margin • UK margins in FY22 affected UK Gross Margin by inflationary pressures in fuel and driver rates Fy22 FY22 19.3% • Increased costs offset by • Higher product pricing • Improvement in our Mobile business profitability FY21 19.0% relative to prior year FY20 19.6% 0.0% 5.0% 10.0% 15.0%
Slide 7: UK SG&A costs
UK SG&A costs • Warehousing costs increased due to UK SG&A Costs lower sales impacting the recovery of 25.0% full year leasing costs on new properties 20.0% • Advertising and marketing costs 15.0% 10.1% reflect increased costs in digital 9.3% 8.2% advertising and brand awareness 10.0% 1.3% spend 1.0
Slide 8: UK Adjusted EBITDA progression
UK Adjusted EBITDA progression • Cost structure at beginning of year set up for bigger 75.0 (31.7) business • B2B and Recycling 60.0 performed well 45.0 20.4 (3.2) (20.4) • AO Care performance in (19.9) line with expectations post 67.5 year end. 30.0 4.8 5.0 • Increased acquisition and brand spendin
Slide 9: UK Working Capital
UK Working Capital Stock (GBPm) Debtors and Contract Assets Payables (GBPm) 140 (GBPm) FY20 FY21 FY22 300 0 120 (50) 250 (136) 2 44 days (189) 1 (100) 44 100 40 61 days 3 (256) 200 22 (150) 56 days 17 24 (62) 19 80 150 (200) (32) (44) 83 91 (18) 91 (250) (40) 60 100 115 (24) (69) (300) 40 days 82 50
Slide 10: Cash flow & liquidity
Cash flow & liquidity £m FY22 FY21 • Net working capital movement was the key driver of cash flow which is unwinding Adjusted EBITDA 9 64 Exceptional cashflows - (2) • RCF facility renewed for £80m underpins Non-cash movements 6 (5) cash position Net change in working capital (68) 59 Movement in inv
Slide 11: Germany
Germany • Strategic review announced January 2022; decision to close June 2022 • Managing orderly closure of the business • Business ceased trading on 1 July 2022 • Physical operations have mostly ceased on 1 August • Expected cash costs in FY23 to be nil - £5m versus original estimate of £15m * 11
Slide 12: FY23 strategic pivot to cash and profit
FY23 strategic pivot to cash and profit • FY23 actions • Rationalisation of stocks and SKUs • Reduce Capex to £5m • Less than £5m of German closure costs • Headcount savings • Additional actions in progress • Rightsizing warehousing and logistics • Review of offices and facilities • Removal of inter
Slide 13: FY23 financial outlook
FY23 financial outlook • Consumer markets continue to be affected by cost of living challenges and volatility • Sensible strategic pivot to profit and cash generation with growth in medium term • Guidance FY23: • Group Adj. EBITDA £20m – £30m • Revenues £1bn to £1.25bn • Capex of £5m • Medium term o
Slide 14: Strategic Progress
Strategic Progress John Roberts Founder and Chief Executive
Slide 15: Our purpose
Our purpose "To make our customers lives easier by helping them brilliantly"
Slide 16: Ongoing Disruption
Ongoing Disruption • AO model provides some inherent protection: • 4 million customers added last two years • 55% repeat purchase rate • Largely ABC demographic customer base insulated by Covid savings boom • Distress sales are over 70% of our MDA mix • Strong finance offer deployed responsibly to h
Slide 17: Strategic Realignment
Strategic Realignment In progress or completed 1. Cash and profit focus with growth anticipated in the medium term 2. Simplification and focus 3. Operational efficiencies 4. Overhead reduction 5. Removal of international- related overheads Future strategic actions 6. Leverage AO platform 7. Leverage
Slide 18: AO Flywheel
AO Flywheel The destination for electricals Product information Pivot to Choice profitable growth Price Operational gearing Service Amazing service Focus Market leading customer satisfaction NPS scores AO Culture & Values Repeat Invest & innovate Grow profitable sales and "Total Addressable Market"
Slide 19: Total addressable market
Total addressable market Online penetration UK1 Post - Covid online penetration higher than pre-Covid period in all categories • One of the UK MDA market leaders with 18% total market share and 32% online share • Total addressable market three times larger than at IPO • Big growth opportunities and
Slide 20: Vertically integrated platform with scale and quality
Vertically integrated platform with scale and quality Incredible AO infrastructure operating at the highest levels of quality and service 1.4m sq ft UK warehousing capacity, 70,000 deliveries 7 days a week; next day delivery available for over 90% of UK postcodes1 Industry leading electricals recycl
Slide 21: Delighting Customers
Delighting Customers 1A c ust ome r is de fine d a s a n individua l who ha s purc ha se d on a o.c om in t he UK 21 2 A re pe a t c ust ome r is de fine d a s a n individua l c ust ome r who ha s pre viously purc ha se d on a o.c om. 3 Trust pilot we bsit e , June 2022
Slide 22: Doing the right thing
Doing the right thing Ownership of one of Europe’s largest and state of the art recycling plants with over 5m white goods processed since 2017, including over 2m fridges1 Extended producer responsibility for retailers from changes to legislation creates new, attractive opportunities, eg. Homebase In
Slide 23: Outlook
Outlook • Q1 FY23 trading in line with Board expectations • MDA market underpinned by distress purchases • Remain mindful of macroeconomic challenges • Continue to put customers first and focus on our fundamentals • Value of a well invested culture and strong partnerships 1Source: Company strategic
Slide 24: Thank you
Thank you
Slide 25: Questions
Questions