Ao World Plc · LSE:AO.
Ao World — H1 FY2020 Earnings Presentation
25 slides from Ao World's earnings presentation, Nov 19, 2019
Slide 1: AO World PLC FY20 Interim Results
AO WORLD PLC FY20 Interim Results 19 November 2019 © 2019 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
Slide 4: HY20 highlights
HY20 highlights • A year of change and transition • UK progress against a difficult market backdrop • Review of European operations • Repositioning of German business • Closure of Netherlands operations • Cash generative by end of financial year 4
Slide 5: Financial Performance
Financial Performance Mark Higgins Chief Financial Officer
Slide 6: HY20 financial highlights
HY20 financial highlights • UK revenue up 20.3% (4.5% on a like- for-like basis excluding AO Mobile) • Europe revenue down 3.4% • Pre-IFRS16 Adjusted EBITDA: – UK profit increased to £7.8m – Europe losses increased to €15.9m • Post-IFRS16 Group Adjusted EBITDA increases to £1.0m • Liquidity headroom
Slide 7: Revenue
Revenue UK Revenue (GBPm) Europe Revenue (EURm) Group Revenue (GBPm) 450 500 470 403 90 78 76 450 ↑ 400 ↑ 80 404 335 20% ↑ 400 368 16% 350 317 70 ↓ ↑ ↑ 58 35% 3% 350 10% 300 60 6% 300 250 50 250 200 40 200 150 30 150 100 20 100 50 10 50 0 0 0 HY18 HY19 HY20 HY18 HY19 HY20 HY18 HY19 HY20 • Overall UK
Slide 8: Gross margin
Gross margin UK Gross Margin % • AO Mobile has a dilutive effect on gross margin (0.3) H1 20 (flat on a like-for-like basis) 19.1 (3.4) • MDA margin maintained H2 19 20.3 0.4 H1 19 21.2 Europe (1.1) H2 18 • Improvement in H1 20 versus H2 19 gross margin 20.4 reflects changes to pricing structure H1
Slide 9: UK SG&A cost analysis
UK SG&A cost analysis 25% UK UK SG&A Expenses as a % of revenue* • Overall SG&A expenses of 19.3% on a like-for-like 19.9% basis (excluding AO Mobile) 20% 17.9% 17.3% 17.3% • Reduction in advertising expenditure against significant investment made in prior year 15% 10.4% comparable and as we explore
Slide 10: Europe SG&A cost analysis
Europe SG&A cost analysis Europe 25% Europe SG&A Expenses as a % of revenue* • Increase in advertising and marketing costs 21.2% 20.0% reflects increases in customer acquisition costs 20% 19.3% following changes to pricing strategy 17.6% • Warehousing cost increase as a percentage 15% 11.4% followin
Slide 11: EBITDA progression (pre-IFRS16)
EBITDA progression (pre-IFRS16*) UK adj. EBITDA Europe adj. EBITDA Group adj. EBITDA (GBPm) (EURm) (GPBm) 8 (12.5) (4.8) 7.8 7.8 (13.0) (5.0) 7.6 (13.5) (5.2) 7.4 7.4 (14.0) (13.8) (5.4) (5.4) 7.2 (14.5) (5.6) 7 (15.0) (5.8) 6.9 6.8 (15.5) (6.0) (15.6) 6.6 (16.0) (6.2) (15.9) (6.2) 6.4 (16.5) (6.4)
Slide 12: Cash flow (pre-IFRS16)
Cash flow (pre-IFRS16) Year ending 31 March HY20 FY19 HY19 • Increase in Capex mainly attributable to £m Adjusted EBITDA (6.2) (0.4) (5.4) investment in new plastics recycling Exceptional cashflows (0.9) (5.0) 0.0 facility, new outbases and improvements Non cash movements 0.4 1.6 (0.7) in logistics
Slide 13: Netherlands closure impact
Netherlands closure impact • NL operations generated c€25m revenue and c€6m EBITDA losses in FY19 • Expected closure costs of c.€3m; effective by end of current financial year • Grateful to AO Netherlands team For the 6 months ending 30 September 2019 Certain financial data have been rounded. As a r
Slide 14: H2 financial outlook
H2 financial outlook • UK • Europe • Capex • Overall Group outlook • Operationally cash generative by end of FY20 • Positive contribution from the German business from January 2020 • Expect to be in the range of analyst expectations for FY20 14
Slide 15: Strategic Progress
Strategic Progress John Roberts Founder and Chief Executive
Slide 16: Four priorities
Four priorities Growth mindset UK profitable growth Accelerate our journey to Leverage our ecosystem profitability in Europe 16
Slide 17: Growth mindset
Growth mindset • Customer obsessed, driving innovation, change and disruption • Thinking and operating as one AO to fix Europe and grow the UK profitably • Refocused on cash as a key metric – the AO group will be cash generative as we enter the new financial year 17
Slide 18: UK profitable growth
UK profitable growth • Growing UK product revenue with MDA growth at 5.5% in a declining market YoY • Strong support from brand partners who see AO as a leading global pureplay in our space • Innovation in our proposition from AO Finance to AO Mobile to technology including chatbot 18
Slide 19: Chatbot
Chatbot 19
Slide 20: Europe
Europe • Netherlands to close allowing management full focus on Germany • Clear actions and visibility of metrics to achieve profitable growth in Germany to a rate of sales of c€250m • Real conviction in our ability to make Germany a profitable platform with long term international scalability 20
Slide 21: Leveraging the eco-system
Leveraging the eco-system 21
Slide 22: Leveraging the eco-system: B2B
Leveraging the eco-system B2B 22
Slide 23: Leveraging the eco-system: Logistics
Leveraging the eco-system Logistics 23
Slide 24: Summary
Summary • Self help and tough decisions in HY20 expected to provide tailwinds into FY21 • Strengthened support from AOers, brand partners and shareholders • AO is a great business with a bright future 24
Slide 25: Q&A
Q&A