On 18 November 2019, AO World plc published its interim financial results for HY20.
John Roberts, AO Founder and Chief Executive Officer, said:
“These results were achieved during a period of significant change for the business where we were focused on laying the foundation for disciplined, long-term growth. There are encouraging green shoots of profitable growth across our UK business, including within our core MDA offer and we will continue to invest to drive this further.
“Our relentless focus to accelerate profitability in Europe continues and as part of this, we have today announced the closure of our Netherlands operation. This will enable us to concentrate on the transformation of our German business, where we have increased confidence in, and visibility of, the three core drivers of the business model that will put us on the path to profitability.
“We have also kept a clear focus on cash generation, and we expect to be cash generative at a group level as we enter the new financial year.
“Our ecosystem of complementary products and services continues to strengthen, providing us with the belief that these can be leveraged to underpin future growth and profitability in the UK. Overall, I am pleased with the operational progress that we have made in this period and would like to thank AOers across the business for their continued commitment.”
Financial Highlights
- Continued revenue growth with total revenue for the period increasing by 16.3% to £470.1m (2018: £404.2m) (up 3.2% on a like for like basis excluding revenues from AO Mobile):
- Total UK revenue up 20.3% to £402.7m (2018: £334.8m) (up 4.5% on a like for like basis excluding revenues from our acquired mobile phones business)
- Europe revenue for the period decreased by 3.4% to €75.7m (2018: €78.4m) (in GBP 2019: £67.4m; 2018: £69.4m) as we re-aligned our European operating model with our UK policy
- Pre-IFRS 16 Group Adjusted EBITDA losses increased to £6.2m (2018: £5.4m); profit growth in the UK impacted by European performance
- UK Pre-IFRS16 Adjusted EBITDA of £7.8m (2018: £6.9m)
- Europe Pre-IFRS16 Adjusted EBITDA losses increase to €15.9m (2018: €13.8 m) with the impact of the actions highlighted above implemented towards the end of reporting period (in GBP 2019: £14.0m loss; 2018: £12.2m loss).
- Statutory Group operating losses flat at £10.6m (2018: £10.6m loss)
- As at 30 September 2019:
- Group cash was £23.4m (31 March 2019: £28.9m, 30 September 2018: £36.6m)
- Net debt was £12.0m (31 March 2019: net debt £9.0m; 30 September 2018: net funds £23.9m)
- The Group continues to have significant liquidity headroom of £80.1m at the balance sheet date including available funds and undrawn RCF
- Basic loss per share of 1.01p (2018: 2.31p), which includes foreign exchange gainsfrom inter-group funding. Reversing such foreign exchange gains gives an adjusted loss per share of 1.98p (2018: 2.63p loss).
Strategic and Operational Highlights
UK and German NPS scores maintained at over 80
UK Growth
- UK product revenue grew by 6.8% during HY20
- UK MDA sales up 5.5% against the comparable prior year period in a market that declined at 3.7% over the same period
- Launched AO Finance to offer customers additional purchasing flexibility
- Developed an AO branded mobile proposition ahead of planned timescale, building on the foundations of MobilePhonesDirect.co.uk, and secured a new long-term partnership with Vodafone
- Completed the transition from serviced warranty to a hybrid insurance product; providing customers with a truly digital experience that builds relationships and generates repeat business
- Continued investment in the customer journey such as the development and implementation of market leading personalisation and our chatbot which are expected to go-live during FY21
Europe
- Full review of Europe business model undertaken during HY20
- Deepened relationships with suppliers gaining a renewed commitment to AO as a leading pureplay retailer
- Increased confidence in establishing a growing profitable German business through more efficient customer traffic acquisition and the centralisation into the UK of core disciplines including eCommerce and marketing
- Commitment to focus resources and energy on German business resulting in decision to close operations in the Netherlands during H2; closure expected to cost c£3m and become effective by the end of the current financial year. The Netherlands operation made an adjusted EBITDA loss of £2.8m in the six months to 30 September 2019.
Leverage our eco-system
- Continued development of eco-system to compound the benefits within the AO group. For example, launch of next day and nationwide seven-day delivery proposition for housebuilders has generated commitments for over 3,000 plots
- Leveraging our capabilities externally, added new third-party logistics clients Aldi and Simba
- Development of plastics plant continues to plan; expected to be operational during the second half of FY20
To find out more about our FY20 interim results, click here to watch Declan Curry interviewing our CEO and CFO about the numbers and our strategy.