Ao World Plc · LSE:AO.
Ao World — FY2020 Earnings Presentation
29 slides from Ao World's earnings presentation, Jul 14, 2020
Slide 1: One AO FY20 Final Results
One AO FY20 Final Results 14 July 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: Agenda
Agenda Welcome Geoff Cooper, Chairman Financial Performance Mark Higgins, Chief Financial Officer Strategic Progress John Roberts, Founder and Chief Executive Officer Q&A 3
Slide 4: FY20 highlights
FY20 highlights • Refined operating model gaining traction • Robust management response to market turbulence • Priority on funding and cash generation • Group strengthened and well positioned in UK and Germany 4
Slide 5: Financial Performance
Financial Performance Mark Higgins Chief Financial Officer
Slide 6: FY20 financial highlights
FY20 financial highlights • Adoption of IFRS 16 (prior year restated) • UK revenue up 20.3% (up 8.2% on a like-for-like basis excluding MPD business ) • Europe revenue down 4.6% (on a constant currency basis) • Adjusted EBITDA : • UK profit increased to £40.8m • Europe losses decreased to €24.2m • G
Slide 7: Revenue
Revenue UK Revenue (GBPm) Europe Revenue (EURm) Group Revenue (GBPm) 1,000 200 1,200 901.6 1,046.2 173.3 900 180 165.4 749.3 ↑ 1,000 902.5 ↑ 800 ↑ 160 ↓ 680.8 20.3% 32.2% 796.8 15.9% 700 ↑ 140 131.2 4.6% ↑ 10.1% 800 13.3% 600 120 500 100 600 400 80 300 60 400 200 40 200 100 20 0 0 0 FY18 FY19 FY20 F
Slide 8: Gross margin
Gross margin UK Gross Margin % • MPD, B2B and newer categories have a dilutive effect on 0.6 gross margin FY20 21.2 • Individual product margins in retail business increased in all 19.7 categories. (1.7) Europe FY19 21.0 • Improvement in Germany gross margin; 0.7% loss in first half of FY20 improvin
Slide 9: UK SG&A cost analysis
UK SG&A cost analysis UK UK SG&A Expenses as a % of revenue* 20.0% • Reduction in advertising expenditure against 18.0% 17.8% 16.9% significant investment made in prior year 16.0% 0.9% 1.0% comparable and as we explore other 14.0% advertising channels 12.0% 9.6% • Excluding MPD, UK other admin expen
Slide 10: Europe SG&A cost analysis
Europe SG&A cost analysis Europe 25.0% Europe SG&A Expenses as a % of revenue* • Increase in advertising and marketing costs reflects increases in customer 20.0% 18.0% 19.3% acquisition costs following changes to pricing strategy 15.0% 10.5% • Warehousing costs increase as a 11.0% percentage followi
Slide 11: EBITDA progression
EBITDA progression UK adj. EBITDA (GBPm) European adj. EBITDA Group adj. EBITDA (EURm) (GBPm) 41.0 0.0 25.0 40.8 40.5 ↑ 7.0% (5.0) 19.6 20.0 40.0 ↑ 53.6% 39.5 (10.0) 15.0 39.0 12.8 (15.0) 38.5 38.1 10.0 38.0 (20.0) 37.5 5.0 (25.0) ↑ (24.2) 37.0 13.1% (30.0) (27.9) 0.0 36.5 FY19 FY20 FY19 FY20 FY19 F
Slide 12: Working capital
Working capital Inventories GBPm Creditors GBPm Debtors & contract assets GBPm 90 40 250 Other debtors 61 days 57 days 63 days 56 days 58 days 52 days 80 36 days Contract asset - 26 days 27 days -10 networks 70 200 53 Contract asset - warranties 54 43 60 24 days 25 days -60 30 days -150 -158 150 -16
Slide 13: Cash flow
Cash flow Year ending 31 March FY20 £m FY19 £m • Increase in Capex mainly Adjusted EBITDA 19.6 12.8 attributable to investment in Exceptional cashflows (2.3) (5.0) Non cash movements 2.1 1.6 new plastics recycling facility, Net change in Working capital new outbases and Inventories 4.0 (16.3) Receiv
Slide 14: FY21 financial outlook
FY21 financial outlook • UK • Europe • Capex • Overall Group outlook 14
Slide 15: Strategic Progress
Strategic Progress John Roberts Founder and Chief Executive Officer
Slide 16: Four priorities
Four priorities UK 10% MDA growth Cash generative Accelerate our journey to profitability in One AO Europe 16
Slide 17: UK 10% MDA growth
UK 10% MDA growth • Double digit MDA growth achieved in final quarter • Delivered by focusing on the fundamental basics • Outperformed the market during FY20 • Momentum has continued into FY21 17
Slide 18: Cash generative
Cash generative • Ended the year cash generative* as a group • Driven by step change in profitability in Germany • Netherlands closure also contributed • Progress in the UK 18 *Cash generative is defined as on a Group Adjusted EBITDA less debt repayment, interest, taxes and monthly share of annualis
Slide 19: Accelerate our journey to profitability in Europe
Accelerate our journey to profitability in Europe • Closed Netherlands in Germany Adjusted monthly EBITDA December 2019 (pre-IFRS 16) * • Strong progress against May-20 Mar-20 Feb-20 May-19 Apr-20 Jan-20 Aug-19 Dec-19 Sep-19 Nov-19 Oct-19 Apr-19 Jun-19 Jul-19 KPIs in Germany 0.0 -0.5 • World-class N
Slide 20: One AO
One AO 20
Slide 21: Looking forward
Looking forward • Focus on our fundamentals • Setting ourselves up for success to win for customers • Drive the AO fly wheel • Be the best in the world at a small number of big things 21
Slide 22: The customer proposition
The customer proposition • Best price • Widest range • Bring products to life with world class content • Convenient delivery carried out with a smile • Scale and repeat 22
Slide 23: Our operating model
Our operating model • High tech and high touch • Technology leverage • Centres of expertise: • Digital marketing • Tech • Product teams • Finance • Commercial • Trading playbook • Operational software • Scale 23
Slide 24: Our ecosystem
Our ecosystem • Leverage our capabilities to drive the fly wheel • Third party Logistics: • Drives scale to raise the proposition bar • B2B: • Drives scale to raise the installation proposition bar • Recycling: • Help create unique products for Retail • Brand enhancing 24
Slide 25: Our financial outputs
Our financial outputs • Cash generative* • Operational gearing through scale leverage • Low capex consumption relative to growth potential • Easily repeats into new markets with low capex • Flexible approach to in/out-source front line operations *Cash generative is defined as on a Group Adjusted EB
Slide 26: Covid and beyond
Covid and beyond • Protecting our people and customers is top priority • Significant structural shift to online • Tailwinds • Online has become a habit for new customers • People continue to spend more time at home • Short term disposable income • Headwinds • Less efficient operations • Economic bac
Slide 27: Summary
Summary • Invest for growth and customer proposition: • Infrastructure • Marketing • Tech and automation • People • Invest ahead of the curve • Partnership working with manufacturers • One AO approach 27
Slide 28: Conclusion
Conclusion • Proud of the AO team • Momentum carried into FY21 • Significant structural shift to online • AO model is fit for the future 28
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