Ao World Plc · LSE:AO.
Ao World — FY2018 Earnings Presentation
27 slides from Ao World's earnings presentation, Jun 5, 2018
Slide 1: AO World PLC Final Results FY18
AO WORLD PLC Final Results FY18 5 June 2018 © 2018 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: Agenda
Agenda Welcome Geoff Cooper, Chairman Financial Performance Mark Higgins, CFO Strategic Progress Steve Caunce, CEO Q&A 3
Slide 4: FY18 highlights
FY18 highlights • Growing revenue and steady financial progress • Significant achievements in building the strength of the business • Fundamental work in articulation of strategy 4
Slide 5: Financial Performance
Financial Performance Mark Higgins Chief Financial Officer 5
Slide 6: FY18 financial highlights
FY18 financial highlights • UK AO website sales up 8.7% (total UK revenue up 8.1%) • Europe revenue up 54.8% • Group revenue up 13.6% • Adjusted EBITDA: − UK profit reduced to £22.6m − Europe losses reduced to €29.6m − Group losses increased to £3.4m 6
Slide 7: Continued revenue growth
Continued revenue growth UK Revenue (GBPm) Europe Revenue (EURm) Group Revenue (GBPm) 800 140 131 900 681 797 700 630 120 800 701 600 558 700 ↑ 100 599 ↑ ↑ 85 600 14% 500 8% ↑ 13% 80 ↑ 500 400 55% 17% 56 400 60 300 ↑ 300 200 40 52% 200 100 20 100 0 0 0 FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18 •
Slide 8: Gross margin remains on plan
Gross margin remains on plan UK Gross Margin % • Efficiency gains in delivery & trunking costs and (1.0) improvements in warranty contribution offset by: H2 18 20.4 – Competitive pricing environment in mature categories (4.2) H1 18 – Dilutive margin impact of newer categories as we 22.2 build scale
Slide 9: UK SG&A cost analysis
UK SG&A cost analysis UK 25% UK SG&A Expenses as a % of revenue* • Warehousing costs reflecting revenue leverage in the investments in recycling and outbases evident in first half 20.8% 20% 18.9% • Marketing costs showing a significant reduction from 5.5% H1 to 17.3% 3.0 % in H2 16.9% 15% 10.8% − Fi
Slide 10: Europe SG&A cost analysis
Europe SG&A cost analysis Europe 40% Europe SG&A Expenses as a % of revenue* • Continue to demonstrate leverage across all cost bases with revenue growth 35% 33.6% 31.6% • Marketing costs reflective of minimal branded advertising and 30% mostly traffic acquisition 25% 24.5% • We expect to continue t
Slide 11: EBITDA progression
EBITDA progression UK adj. EBITDA (GBPm) Europe adj. EBITDA (EURm) Group adj. EBITDA (GBPm) 18.0 0.0 4.0 2.9 16.0 15.3 (2.0) 2.0 1.4 14.0 13.0 (4.0) 12.0 11.3 (6.0) 0.0 (8.0) 10.0 7.4 (10.0) (2.0) 8.0 (12.0) 6.0 (4.0) (14.0) (3.5) 4.0 (16.0) (14.2) (14.0) (15.6) (6.0) 2.0 (18.0) (17.2) (6.3) 0.0 (20
Slide 12: Operating cash flow
Operating cash flow As at 31 March (£m) FY18 FY17 • Working capital outflow as inventory and accrued income increased faster than Adjusted EBITDA (3.4) (2.1) creditors Europe set-up costs (0.3) (0.7) • Replacement Capex of £5.5m during period Non-cash movements 0.8 1.2 (FY17: £16.9m) Net change work
Slide 13: FY19 Financial outlook
FY19 Financial outlook Trading UK • Market conditions expected to remain tough but we have achieved double-digit sales growth in first two months of FY19 underpinning market expectations for the full year • Will return to investing in brand advertising in the UK following conclusion of review Europe
Slide 14: Strategic Progress
Strategic Progress Steve Caunce Chief Executive Officer 14
Slide 15: Ensuring we are aligned for growth
Ensuring we are aligned for growth CEO FY18 focus: • Our Strategy • Our Purpose • Our Brand 15
Slide 16: Our strategy positions us for growth
Our strategy positions us for growth 16
Slide 17: Our Purpose
Our Purpose • AO is an evolving business • Been living and breathing our culture for years but to protect it we have: – worked to identify what drives and connects our business; and – articulated our Purpose in such a way so that it applies to all our competencies • Allows us to: – sharpen the lens
Slide 18: Using our Purpose to build our brand
Using our Purpose to build our brand • Our Purpose is the cornerstone of new brand campaign • 12 month process undertaken involving extensive consumer research • Creation of a new brand platform • Go-live date H1/FY19 18
Slide 19: UK brand progress
UK brand progress • Modest increases in spontaneous and prompted UK Spontaneous Brand Awareness brand awareness over the reporting period UK Prompted Brand Awareness • Actions required: 70% – Build trust and awareness 60% – Encourage trial – when customers try AO they 50% love us 40% 30% 20% 10% 0%
Slide 20: Strategic progress
Strategic progress • Customers • Competencies • Countries 20
Slide 21: Strategic Objectives: Customers
Strategic Objectives: Customers OBJECTIVE: CONSOLIDATE LEADING POSITION IN CORE MARKETS IN THE UK Delivering our customer objective • Transactional Mobile App successfully launched across all territories • Addition of complementary categories and ranges: Mobile Phones, Gaming Consoles, Smart Home an
Slide 22: Strategic Objectives: Customers
Strategic Objectives: Customers OBJECTIVE: CONSOLIDATE LEADING POSITION IN CORE MARKETS IN THE UK Strong UK customer metrics UK Customers (000's)* • Approaching 5 million customers who have bought from AO 5,000 • Net Promoter Score remains consistently high at >80 4,500 4,000 • Reached over 100,000
Slide 23: Strategic Objectives: Customers – new vs repeat
200000 300000 500000 100000 0 600000 400000 Customer number Jun-08 Sep-08 Strategic Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 New Customers Mar-12 Objectives: Customers Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 First order Time Dec-13 Mar-14 Jun-14 Re
Slide 24: Strategic Objectives: Competencies
Strategic Objectives: Competencies OBJECTIVE: LEVERAGING OUR EXPERTISE • UK recycling facility now fully operational building on vertically integrated infrastructure • Formalisation of our B2B offering providing a sizeable incremental opportunity • Ability to provide market-leading logistics to thir
Slide 25: Strategic Objectives: Countries
Strategic Objectives: Countries OBJECTIVE: ESTABLISH PROFITABLE BUSINESS IN DE/NL • All key metrics improving Europe New Customers vs Repeat Customers % • New categories rolled out 120000 25% • Further enhancements to customer journey 100000 Netherlands 20% Customer number commences • Leveraging Ber
Slide 26: Summary & outlook
Summary & outlook • Our redefined Purpose will ensure strategic priorities are driven with consistency • Continuing to deliver our objectives: – Strong customer metrics in core UK business, new categories rolled-out – Leveraging our competencies into new opportunities – European operations progressi
Slide 27: Q&A
Q&A 27