Ao World Plc · LSE:AO.
Ao World — Investor Day (February 2017)
35 slides from Ao World's investor day presentation, February 2017
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY February 2017 1
Slide 2: Forward-looking statements
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: Agenda
Agenda 1. Welcome 2. Our mission, the 4C’s and the AO Way 3. Why Germany and the Netherlands? 4. Our challenges 5. What next? Scalability 6. Our journey to 2020 7. Summary and Q&A 3
Slide 4: Welcome
Welcome “AT VY / | HU = | a | = | ie | 3 Ae el Z|
Slide 5: Hosts today
Hosts today Steve Caunce Mark Higgins Kevin Monk Steve Richards Alpay Guener Chief Operating Officer Chief Financial Officer Group International Director Operations Director Retail Director 5
Slide 6: Our mission
: Exceptional in the moments that matter : Because we CARE more
Slide 7: 4C's Model
4C’s Model CULTURE & BRAND Be exceptional in the moments that matter and simply care more 7
Slide 8: The AO Way
The AO Way OUR CUSTOMERS LOVE US Best Electrical Retailer in Europe
Slide 9: Our business model in Europe
Our business model in Europe
Slide 10: Order to deliver
Order to deliver 10
Slide 11: Customer opportunity - Germany
Customer opportunity - Germany Total addressable European market of £94bn1 Why Germany? • Geographically well positioned to execute strategy • Substantial opportunity for growth: • Under-developed online proposition • MDA online penetration rate 18% (UK: 39%)2 • Largest MDA, SDA, AV and Computing ma
Slide 12: Customer opportunity - Netherlands
Customer opportunity - Netherlands Why the Netherlands? • Proximity to AO European central hub • Relatively low start-up costs and ease of execution • High overall online adoption rates 93.1% (UK: 92.0%)1 • High population density2 • Higher MDA APVs than UK3 1 source: Worldbank 2015 2 Compared to UK
Slide 13: Countries
Countries The country bolt-on model • Launched Netherlands March 2016 with learnings applied from Germany • Supplier engagement • Recruitment of key personnel • Customer acquisition • Result • Smooth launch • Improved margins and sales growth • Replication model • Further leverage of supplier relati
Slide 14: Our challenges
Our challenges 14
Slide 15: AO Customers
AO Customers • Customers love the AO Way • NPS: • Germany: 91 • Netherlands: 85 • Average Trusted Shops score in Germany is 4.8 out of 5 Points • Customer base and repeat purchase rates growing • Proposition expanded to include: • AV • Warranty products • Premium installations 15
Slide 16: Our challenges
Our challenges 16
Slide 17: Suppliers
Suppliers • Local strategy continuing to build momentum • Successful supplier day with all major brands in both territories • Relationships continue to improve • Further alignment planned for 2017 to leverage AO content and media assets to unlock additional support Manufacturer testimonial 17
Slide 18: Our challenges
Our challenges 18
Slide 19: Culture – Building the team
Culture – Building the team Replicating the AO Way • Central recruitment process against existing group values • UK senior management initially based in territory • Adapt to be respectful of different customs • Educate through: • Workshops • Engagement events • Executive Team value session • Supplie
Slide 20: Categories
Categories *Categories currently being explored for launch in 2017 20
Slide 21: Categories
Categories The category bolt-on model • AV launched in Germany October 2016 • Learnings applied from UK roll-out • Local to local supplier engagement with AO industry expert • Ability to leverage/utilise UK content at low cost • Draw on UK knowledge and experience • Future development • Grow supplie
Slide 22: Brand
Brand • Renewed focus on brand following period of consolidation through: • Building a solid brand foundation • Translating the AO way in new territories • Ensuring brand consistency throughout the UK and Europe • Increasing spontaneous brand awareness to drive traffic • Using AO branded green fleet
Slide 23: Scalability
Scalability 23
Slide 24: The growth journey
The growth journey
Slide 25: Our objective
Our objective • Profitability by 2020 • Assumes existing territories only • Does not include substantial brand investment to accelerate growth • Leveraging our cost base • Achieve profitable adjusted EBITDA* run-rate by FY21 • Revenue of c.€250m • Target to grow the business at >30% CAGR • Grow sust
Slide 26: P&L dynamics
P&L dynamics Gross margin • Product margin • Logistics • Other margin Selling and general administrative costs • Marketing • Warehousing • Other admin 26
Slide 27: Logistics
Logistics European infrastructure • Regional Distribution Centre and customer service • Current Outbases: • 4 in Germany • 1 in Utrecht plus customer service centre • Future outbases identified in complementary locations Fleet • We’re in c100 delivery vehicles* making c1,000 deliveries per day • Cur
Slide 28: Logistics – Revenue / Vans
Logistics – Revenue / Vans • Significant capacity for growth • c150% growth in revenue requires a c65% increase in vans • Efficiencies build as revenue grows 28
Slide 29: Logistics - Warehousing
@ Logistics - Warehousing Warehousing costs asa % of Total Cost-to-Deliver (€) FY17 - FY21 FY 17 FY18 FY 19 FY 20 == Total CTD (warehousing, trunking & delivery) € —— Warehousing cost % of CTD FY 21 29
Slide 30: Product margin journey
Product margin journey • Continue with current strategy • Build on partnerships with manufacturers • Continue to educate them on the AO Way • Increase marketing campaigns to produce engaging content for their customers • Build marketing support • Leverage group-wide media assets 30
Slide 31: Building the brand and driving traffic
Building the brand and driving traffic • Taken learnings from the UK and adapted our strategy to the market • Continue driving our digital performance channels (e.g. Google and affiliates) • Increase our SEO rankings • Build social media audience • Utilise local marketing channels e.g. direct mail a
Slide 32: P&L dynamics
P&L dynamics Gross margin • Product margin • Logistics • Other margin Selling and general administrative costs • Marketing • Warehousing • Other admin Fixed costs largely built leveraging variable costs with scale 32
Slide 33: Our challenges
Our challenges 33
Slide 34: Summary
Because we CARE more ao Ww CULTURE ouR CUSTOMERS LOVE US & BRAND Be exceptional in the moments that matter and simply care more 34
Slide 35: Q&A
Q&A 35