Ao World Plc · LSE:AO.
Ao World — H1 FY2021 Earnings Presentation
26 slides from Ao World's earnings presentation, Nov 24, 2020
Slide 1: FY21 Interim Results
FY21 Interim Results 24 November 2020 © 2020 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”) plans and its current goals and expectations relating to its future financial condition, performance and res
Slide 3: Welcome
Welcome Geoff Cooper Chairman
Slide 4: Agenda
Agenda Welcome Geoff Cooper, Chairman Financial Performance Mark Higgins, Chief Financial Officer Strategic Progress John Roberts, Founder and Chief Executive Officer 4
Slide 5: HY21 highlights
HY21 highlights • Exceptional response to unprecedented trading conditions • Laser focus on doing the right thing for customers • Strong performances on all fronts • Capacity and capability built to win 5
Slide 6: Financial Performance
Financial Performance Mark Higgins Chief Financial Officer
Slide 7: HY21 financial highlights
7 HY21 financial • Group revenue up 58%* highlights o UK up 54% o Germany up 82% (on a constant currency basis) • Adjusted EBITDA (post IFRS16) o UK profit increased to £32.6m o Germany losses decreased to €4.2m • Group PBT increased to £18.3m (HY20: £(5.9m)) • Total cash generated of £78.4m *For th
Slide 8: Revenue
Revenue UK Revenue (GBPm) Germany Revenue (EURm) Group Revenue (GBPm)* 700 120 112.1 800 616.4 717.0 600 ↑ 700 ↑ ↑ 100 54% 82% 600 58% 500 400.6 80 500 454.9 400 61.5 60 400 300 300 40 200 200 20 100 100 0 0 0 HY20 HY21 HY20 HY21 HY20 HY21 • UK growth, driven by retail, up 54% • Germany revenue incr
Slide 9: Gross margin
Gross margin UK Gross Margin % • Improved buying prices and less pricing tension in the market 7.3% • Product margin increases in MDA and Non-MDA categories 1H21 19.8% • Increase in sales of AO Care products through improved conversion rates 2.7% 2H20 Germany 20.1% • Significant margin progress -0.3
Slide 10: UK SG&A cost analysis
UK SG&A cost analysis UK 20.0% UK SG&A Expenses as a % of revenue * (£120.0 18.0% (£72.0m) • Total UK SG&A costs fall as a % of revenue against HY20 18.0% 1.1% (£4.5m) 16.1% (£80.8m) 16.1% (£99.5m) (£100.0 16.0% • Advertising & marketing expenses increase against prior year 1.0% (£4.8m) 0.9% (£5.8m)
Slide 11: Germany SG&A cost analysis
Germany SG&A cost analysis Germany 25.0% Germany SG&A Expenses as a % of revenue * (£16.0m • Total SG&A costs reduced significantly as a % of revenue 21.0% (£11.4m) (£14.0m 20.0% • Advertising and marketing expenses increase following 17.7% (£12.6m) (£12.0m increase in customer acquisition expenditu
Slide 12: EBITDA progression
EBITDA progression UK adj. EBITDA (GBPm) Germany adj. EBITDA (EURm) Group adj EBITDA* / PBT (GBPm) 35.0 35.0 32.6 -1.0 30.0 28.8 ↑ 30.0 140% -3.0 25.0 25.0 (4.2) 20.0 18.3 -5.0 ↑ 63% 15.0 20.0 -7.0 10.0 15.0 13.6 -9.0 5.0 3.7 10.0 0.0 -11.0 (11.3) -5.0 5.0 -13.0 (5.9) -10.0 - -15.0 -15.0 HY20 HY21 H
Slide 13: Working capital
Working capital Inventories (GBPm) Creditors (GBPm) Debtors and contract assets (GBPm) 110 300 60 Contract asset - Network 31 days 58 days 61 days 52 days 61 days Contract asset - 90 10 250 Warranty 36 days Other debtors 26 days -40 82 27 days 200 70 53 -90 -257 43 56 -237 -249 -140 150 50 93 -190 -
Slide 14: Cash flow
Cash flow Period ended 30 September HY21 HY20 £m £m • Working capital driven by significant increase Adjusted EBITDA 28.8 0.9 Exceptional cashflows (1.0) (0.9) in volume and improved terms with several Non cash movements 1.0 0.4 suppliers Net change in working capital Inventories (20.3) 8.0 • Capex
Slide 15: 2HY21 financial outlook
15 2HY21 financial • UK outlook o Run rate accelerated in Q3 o Plan to win in Q4 • Germany o Expect growth rates to continue this year • Capex • Overall Group outlook 15
Slide 16: Strategic Progress
Strategic Progress John Roberts Founder and Chief Executive
Slide 17: Introduction
Introduction • A half-year like no other • Thanks to the AO team and our partners • Millions more customers experienced a better way to shop electricals 17
Slide 18: Investing for growth
Investing for growth • Doubled our capacity in HY21 with £2m cash capex o 1.3m sq ft of warehousing space 740k sq ft in March) o Currently 150,000 two-person deliveries per week (60,000 per week in March) • Created 800 new roles since March • Proven scalability of the business with operational geari
Slide 19: Permanent structural shift to online
Permanent structural shift to online • Anticipating a buoyant market for sustained period globally • UK growth rates accelerating as capacity becomes available for customers • Well positioned for market tailwinds • Improved profit performance despite Covid-19 related safety investments • Available c
Slide 20: Game changing progress in Europe
Game changing progress in Europe • Everything we expected to happen has materially come through to reality • P&L dynamics now a lot closer to the UK • Expect German business to be profitable for the full year FY22 • Leveraged knowledge and experience of 20 years to repeat a proven model 20
Slide 21: Customer proposition and brand
Customer proposition and brand Progress • Continued investment in creating a simple, intuitive shopping journey • Improved customer experience: personalisation, chatbots, quicker and simpler payments • Improved delivery capacity and service proposition • New visual identity Opportunities • Further b
Slide 22: Doing the right thing
Doing the right thing • Our difference underpinned by our AO Culture • Unique AO Value Creation Plan for all AOers • Cradle-to-cradle appliances created from our recycling capabilities • Long-term mindset to do what’s right 22
Slide 23: AO Ecosystem
AO Ecosystem • Value of vertical integration – united behind a single strategy • B2B business growth during lockdown reaching new customers • AO is now an approved supplier to most major housebuilders • AO proposition trial in five Tesco stores 23
Slide 24: Financial outputs
Financial • Significant operational gearing outputs • Proven scalable model • Structural advantage and market leading returns • Medium term UK EBITDA margin target of c.8% • Reinvest gains in proposition improvement • Structural gain in cash flow 24
Slide 25: Looking ahead and summary
Looking ahead and summary • Accelerated growth at the start of 2HY21 • Capitalising on investment in logistical scale • Changes in customer behaviour will stick – cement this with amazing service • Enormous international opportunity as the digital first retailer • Thanks to the AO team and our partn
Slide 26: Thank you!
Thank you!