Ao World Plc · LSE:AO.
Ao World — H1 FY2016 Earnings Presentation
29 slides from Ao World's earnings presentation, Nov 24, 2015
Slide 1: 2016 Interim Results Presentation
2016 Interim Results Presentation 24 November 2015
Slide 2: Disclaimer
Disclaimer This presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “i
Slide 3: Today's Agenda
Today’s Agenda 1 Vision & Strategic Review – John Roberts 2 Operational Review – Steve Caunce 3 Financial Review – Mark Higgins 4 Summary and Q&A 3
Slide 4: Vision & Strategic Review
(1 VISION & STRATEGIC REVIEW
Slide 5: Strategy at IPO
Strategy at IPO 1 Continue to grow UK category – Major Domestic Appliances 2 Develop UK category – Small Domestic Appliances 3 Launch new UK category – Audio Visual 4 Roll UK categories to Germany and surrounding countries 5
Slide 6: Category roll out
Category roll out Internal control – Brand (customer & culture) Traffic / Delivery People / Content Customers Proposition Learn Best electrical New category retailer in Europe Range Margin External negotiation- Brand (revenue & offering) 6
Slide 7: Territory roll out
Territory roll out Internal control – Brand (customer & culture) Traffic / Delivery People / Content Customers Proposition Learn Best electrical New country retailer in Europe Range Margin External negotiation- Brand (revenue & offering) 7
Slide 8: AO is on a mission to become the best electrical retailer in Europe
AO is on a mission to… “become the best electrical retailer in Europe” 8
Slide 9: Europe market – current categories c.£40bn opportunity
Europe market – current categories c.£40bn opportunity UK Germany Poland Austria Population 64.1m Population 81m Population 38.2m Population 8.5m Pop. Density 265 Pop. Density 231 Pop. Density 126 Pop. Density 103 MDA £3.9bn MDA £6.0bn MDA £0.9bn MDA £0.6bn SDA £2.3bn SDA £2.7bn SDA £0.4bn SDA £0.3b
Slide 10: Europe market – further categories c.£50bn opportunity
Europe market – further categories c.£50bn opportunity UK Germany Poland Austria Computing £5.2bn Computing £5.7bn Computing £1.0bn Computing £0.8bn Personal Care £0.5bn Personal Care £0.6bn Personal Care £0.1bn Personal Care £48m In-Car devices £0.3bn In-Car devices £0.3bn In-Car devices £47m In-Ca
Slide 11: Operational Review
2 OPERATIONAL REVIEW
Slide 12: Highlights – Financial
Highlights Financial* 1 Total revenue for the period increased by 21.7% to £264.3m (2014: £217.1m) 2 AO UK Website sales up 23.7% to £214.8m (2014: £173.7m) 3 Europe annualised exit run rate of €61.2m (based on September 2015 sales) 4 UK adjusted EBITDA of £5.1m (2014: £7.3m) 5 Europe adjusted EBITD
Slide 13: Highlights – Operational
Highlights Operational 1 UK NPS remains over 80% with Germany NPS higher still. 2 UK repeat business metrics continued to improve during the period 3 UK unprompted brand recognition continued to grow 4 UK business awarded “Best Online Shop” by Which? 5 UK completed orders up by 23% 6 Progress toward
Slide 14: UK Operations
UK Operations § Revenue continues to grow § Best Online Shop – Which? Customers § Unprompted brand awareness increased during the period § NPS remains at high level of over 80% § Repeat customer metrics continue to improve § Continue to develop our SDA business improving ranges and margins wit
Slide 15: Europe Operations
Europe Operations § Our German customers continue to be delighted by our service with an NPS score higher than the UK Customers § Revenues continue to grow, with an exit run rate in excess of €60m § Encouraging repeat rates § We have continued to refine our MDA category in the period adding some
Slide 16: Revenue
Revenue Group 6 months ended September (£m) 2015 2014 Growth Group revenue increased by 21.7% to £264.3m 1 (2014: £217.1m) AO website sales 230.5 173.7 32.7% § AO website revenue increased by 32.7% to Third-party website sales 26.3 34.1 -22.9% £230.5m (2014: £173.7m) Third-party logistics services
Slide 17: UK Analysis
UK Analysis Gross margin as a percentage of sales increased on UK 1 the prior period: 6 months ended September (£m) 2015 2014 Growth § Small improvements were made in MDA AO website sales 214.8 173.7 23.7% margin and an efficiency in delivery costs was Third-party website sales 26.3 34.1 -22.9% Third
Slide 18: Germany Analysis
Germany Analysis Europe Gross margin in Germany was a loss of 13.9% during 1 the period. This is reflective of: 6 months ended September (£m) 2015 2014 Growth AO website sales 15.6 - - § Product margin where we have not made Third-party website sales - - - progress as quickly as previously anticipa
Slide 19: The Netherlands
The Netherlands Country Statistics UK Population 16.8m 64.1m Pop. density (per sq.km) 498 265 Language Dutch English Currency Euro GBP World Bank ease of doing business* 27 8 Online MDA Penetration 40% 48% (*1 being best out of 189 countries analysed) AO category potential – £2.1bn UK MDA £1.0bn £3.
Slide 20: AO in the Netherlands
AO in the Netherlands 1 One additional outbase in Utrecht Trunking time from German NDC under 3 hours 2 (205km) 3 Local buying team and call centre Leverage overhead from German operations. Initial launch 4 with MDA 5 Next day delivery to majority of population 20
Slide 21: Financial Review
3 FINANCIAL REVIEW
Slide 22: Detailed Income Statement
Detailed Income Statement Group 6 months ended 30 September (£m) 2015 2014 Revenue 264.3 217.1 Cost of sales (218.6) (176.2) Gross profit 45.7 40.9 Administrative expenses (54.6) (40.0) Adjustments include: Operating (loss)/profit (8.9) 0.9 Net finance income/(cost) 0.9 (0.1) § Netherlands set-up c
Slide 23: Operating Cash Flow Statement
Operating Cash Flow Statement Cash generated from operating activities Group 6 months ended 30 September (£m) 2015 2014 Cash consumed by operating activities of the 1 group was £3.8m, with a further £0.9m being consumed by Europe set-up costs Adjusted EBITDA (4.5) 7.3 Europe set-up costs (0.9) (3.3)
Slide 24: Balance Sheet
Balance Sheet Group 6 months ended 30 September (£m) 2015 2014 Non Current Assets Capital expenditure Intangible assets 14.4 13.3 Property, plant and equipment 15.1 12.9 Capital expenditure (net of finance leases) for the period Trade and other receivables 25.1 13.6 1 was £3.9m (2014: £2.7m), of whi
Slide 25: Outlook
Outlook The second half has started well although we still have peak trading ahead of us, including Black 1 Friday later this week. In the UK we are on track with our plans for the year as a whole Our early success in Germany, has given us the confidence to continue to invest heavily in 2 marketing
Slide 26: Summary and Q&A
4 SUMMARY AND Q&A
Slide 27: Summary
Summary 1 Continue to grow UK MDA 2 Developing UK SDA and AV 3 Our MDA business in Germany is growing rapidly 4 Expect to launch Netherlands during spring 2016 Well placed to deliver on our exciting plans ahead 27
Slide 28: CG O.om
Ss ed CG O.om eA
Slide 29: Appendix – Definitions
Appendix – Definitions Adjusted EBITDA Loss/profit before tax, depreciation, amortisation, net finance costs, adjustments and exceptional items Adjusted EBITDA Margin Adjusted EBITDA divided by revenue Set-up costs relating to overseas expansion and share based payment charges attributable to the LT