Ao World Plc · LSE:AO.
Ao World — H1 FY2017 Earnings Presentation
37 slides from Ao World's earnings presentation, Nov 22, 2016
Slide 1: AO World Plc Interim Results to 30 September 2016
AO World Plc Interim Results to 30 September 2016 22 November 2016 AO World Plc Interim results November 2016
Slide 2: Agenda
Agenda Overview & Economic landscape John Roberts Operations Steve Caunce Financials Mark Higgins Summary John Roberts Q&A AO World Plc Interim results November 2016 2
Slide 3: Introduction
Introduction John Roberts AO World Plc Interim results November 2016 3
Slide 4: Results Headlines
Results Headlines • Customers love the “AO Way” • Computing category launched in the UK, AV in Germany • New Regional Distribution Centre in Bergheim fully operational • Brand awareness on track • Total revenue for the period increased by 22.9% to £324.7m (2015: £264.3m) • Group Adjusted EBITDA incr
Slide 5: Economic outlook
Economic outlook AO World Plc Interim results November 2016 5
Slide 6: 4Cs model
4Cs model Notes: *A customer is defined as an individual UK customer who has purchased from us. AO World Plc Interim results November 2016 6
Slide 7: Operations update
Operations update Steve Caunce AO World Plc Interim results November 2016 7
Slide 8: What is our difference
What is our difference Notes: *By best-in-class we mean the retailer who can deliver the broadest range of SKUs with the most flexible choice of delivery options AO World Plc Interim results November 2016 8
Slide 9: New category / country model
New category / country model AO World Plc Interim results November 2016 9
Slide 10: UK Operational Highlights
UK Operational Highlights • Product Margin • Recycling • Acquisition cost • AO App • Computing the “AO Way” AO World Plc Interim results November 2016 10
Slide 11: Product Margin
Product Margin • Progressing well • AO’s increasing scale and strength of relationships with manufacturers provides support • Impact of Brexit a fluid situation • The “AO Way” and the customer brand provides strong platform for growth AO World Plc Interim results November 2016 11
Slide 12: Recycling
Recycling Investment in new solution for WEEE recycling • Allows us to meet statutory obligations • Planned to be operational in next 6 months • Vertical integration • Capacity to process all of AO’s WEEE • Provides further opportunities / revenue stream AO World Plc Interim results November 2016 12
Slide 13: Acquisition cost
Acquisition cost Progress driven by: • AO brand resonating; metrics on track • Direct / repeat traffic • Customer recommendations • Improving SEO rankings AO World Plc Interim results November 2016 13
Slide 14: AO App
AO App • “MyAO” • Track your order functionality • Further develop for transactional capability • Link to “MyAccount” facility AO World Plc Interim results November 2016 14
Slide 15: Computing – the AO Way
Computing – the AO Way AO World Plc Interim results November 2016 15
Slide 16: Computing – the best journey
Computing – the best journey AO World Plc Interim results November 2016 16
Slide 17: Computing – innovating the category
Computing – innovating the category AO World Plc Interim results November 2016 17
Slide 18: Computing - summary
Computing - summary • Only the beginning • Transforming the category the AO Way • Provides new disciplines & opportunities • Customers & manufacturers happy! AO World Plc Interim results November 2016 18
Slide 19: Europe – update
Europe – update • Asset we have created / base to build from • Bergheim • Progress with manufacturers • Netherlands AO World Plc Interim results November 2016 19
Slide 20: Europe operations
Europe operations • European Employees >550 • We’re in 100 delivery vehicles and 10 trunks a day • 18 mega trailers and 9 tractors • European NPS around 90 • AV category launched on ao.de AO World Plc Interim results November 2016 20
Slide 21: Bergheim
Bergheim • 35,000m2 Regional Distribution Centre now fully operational • Seamless execution • Combines head office and logistics to serve German and Netherlands markets • Drives efficiencies • Increases previous capacity by a multiple of 5, thereby able to serve launch of neighbouring countries • Pr
Slide 22: Europe – the AO way
Europe – the AO way • Replication model underway – Launch of ao.nl – Addition of AV on ao.de • Partnered with Rhenus, third party logistics firm: – Serves customers in outlying areas – Reduces delivery costs • Exploring premium installations • Develop suitable warranty products AO World Plc Interim
Slide 23: Product margin
Product margin • Improving relations with manufacturers & sentiment • Strengthening our team with industry experts • Confident on terminal product margin being similar or better than UK AO World Plc Interim results November 2016 23
Slide 24: Netherlands
Netherlands • Launched March 2016 • Completed 100,000 deliveries • Doubled routes from day 1 • Product margin strong from beginning • Customers love us AO World Plc Interim results November 2016 24
Slide 25: Europe future
Europe future • On current growth plan we aim to achieve profitability by 2020 • We would expect revenue to be c.€250m • To achieve this we will continue to: – improve our product margin to a mature state – leverage our cost base through growth • This profitable business will then be a platform to l
Slide 26: Financials
Financials Mark Higgins AO World Plc Interim results November 2016 26
Slide 27: Revenue growth
Revenue growth £m Group Revenue £m UK Revenue £m European Revenue 350 324.7 350 35 295.1 29.6 300 300 30 264.3 248.7 250 250 25 217.1 217.1 200 200 20 15.6 150 150 15 100 100 10 50 50 5 0 0 0 HY15 HY16 HY17 HY15 HY16 HY17 HY16 Hy17 For the six months ending 30 September Note: Certain financial data
Slide 28: EBITDA
EBITDA £m Group adj. EBITDA £m UK adj. EBITDA £m European adj. EBITDA 8 7.3 14 13.1 0 HY16 HY17 6 12 -2 4 10 -4 1.5 8 7.3 2 -6 6 5.1 0 -8 HY15 HY16 HY17 4 -2 -10 -9.6 2 -4 -12 -11.6 -4.5 0 -6 HY15 HY16 HY17 -14 For the six months ending 30 September Note: Certain financial data have been rounded. As
Slide 29: SG&A
SG&A Group SG&A Expenses UK SG&A Expenses Europe SG&A Expenses as a % of revenue as a % of revenue as a % of revenue 25.0% 20.0% 60.0% 18.0% 50.0% 20.0% 16.0% 14.0% 10.6% 9.5% 40.0% 15.0% 12.0% 8.9% 24.2% 10.4% 11.5% 10.0% 30.0% 10.0% 8.0% 20.3% 5.8% 3.6% 20.0% 3.7% 6.0% 4.5% 4.7% 3.8% 5.0% 4.0% 6.5
Slide 30: Cashflow
Cashflow H1 (£'m) FY17 Adjusted EBITDA 1.5 European set up costs (0.4) Non cash movements 0.4 1.5 Working capital mvts Movement in trade and other receivables (7.5) and accrued income Movement in inventories (7.4) Movement in trade and other payables and provisions 16.1 Tax received/(paid) 0.7 Cash
Slide 31: Capex
Capex FY17 - preparing a solid platform to drive growth Europe • Bergheim fit-out UK • New outbases (x2) • Trailer Refresh • WEEE Recycling solution AO World Plc Interim results November 2016 31
Slide 32: Summary
Summary John Roberts AO World Plc Interim results November 2016 32
Slide 33: Market map
Market map Sources: MDA, SDA and AV - GfK market size year to September 2016 : All other categories – Euromonitor year to December 2015 Exchange rates are the average for the month to 14 November 2016 AO World Plc Interim results November 2016 33
Slide 34: Summary
Summary • Customers love the AO Way • No silver bullets • Our destination remains unchanged • Great progress – Achieved Group adjusted EBITDA profitability – Investing in our 4Cs for growth – Ended our cash investment phase • Customers love the AO Way AO World Plc Interim results November 2016 34
Slide 35: Q&A
Q&A AO World Plc Interim results November 2016 35
Slide 36: Appendix – Definitions
Appendix Definitions Adjusted EBITDA Profit / (loss) before tax, depreciation, amortisation, net finance income and Adjustment. Set-up costs relating to overseas expansion and share based payment charges or credit Adjustments attributable to exceptional LTIP Awards which the Board considers one-off
Slide 37: 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