TIDMAO.
RNS Number : 7864J
AO World plc
29 April 2022
29 April 2022
AO WORLD PLC
Full Year Trading Update for the Year ended 31 March 2022
A resilient UK revenue performance against a challenging
backdrop
1.5m new customers experienced The AO Way over the year, with
online market share in major domestic appliances 54% vs 43%
pre-Covid
AO World plc ("the Group"), a leading online electricals
retailer, today issues the following update on trading for the 12
months to 31 March 2022.
Trading update
Revenue growth(1) 2yoy(2) to 1yoy(3) to
31 March 22 31 March 22
Group revenues +52% (6)%
UK revenues +52% (5)%
Germany revenues
(5) +54% (12)%
Estimated Group revenues for the full year to 31 March 2022 are
expected to be GBP1,557m. On a year-on-year basis, Group revenues
declined c. 6% against the exceptionally strong prior year
comparatives resulting from the robust growth in online purchasing
during the Covid-related government restrictions in 2020/21. On a
two-year basis Group revenues increased 52%, reflecting the ongoing
structural shift to online retailing.
Our online market share in major domestic appliances ("MDA")
continued to grow, increasing to 54% vs 43% pre-Covid(4) . Over
1.5m(5) new customers experienced The AO Way during the year, with
a notable step up in post Covid repeat purchase rates. We again
achieved exceptionally strong customer Net Promotor Scores(6) in
line with last year, demonstrating our outstanding levels of
customer satisfaction.
UK revenues remained resilient in H1 despite the constraints of
driver challenges and ongoing supply chain shortages. During H2,
while driver issues had eased, customer demand progressively
weakened across the sector, compounded by global supply chain
disruption which affected product availability in certain
categories. On a two-year comparative basis, UK revenues grew
strongly, increasing 52%.
In Germany, revenue growth was constrained by post-Covid shifts
in consumer behaviour and an increase in online competition, as
customers returned to stores to a greater degree than anticipated.
This was compounded by our decisive actions to minimise cash losses
in this business. Revenues declined 12%(7) versus FY21 but grew 54%
on a two-year comparative basis.
Group Adjusted EBITDA(8) is expected to be c. GBP8m, reflecting
the impact of lower sales volumes and higher costs incurred in our
UK logistics operations; driver shortages across the industry in
H1; and significantly higher marketing costs in Germany. In March,
we were notified of higher warranty cancellations than average
historical trends as customers responded to the escalating cost of
living. We experienced a similar reaction following the first Covid
lockdown period, which proved to be a temporary consumer
adjustment. While the picture has subsequently improved, data
received subsequent to this trading update and prior to the Full
Year Results announcement scheduled for later this summer could
result in a reassessment of the carrying value of the contract
asset, which could lead to a material impact on FY22 profits.
Available liquidity as at 31 March 2022 was c. GBP50m and, given
the factors cited above and the seasonality of our cash flows, our
liquidity has since reduced. However, we expect that this situation
will improve as we move into Q2 driven by a range of actions that
we are implementing. The Group's revolving credit facility of
GBP80m was extended and now expires in April 2024. Net debt at the
end of the financial year was GBP32.8m(9) .
Update on strategic review of the German business
On 27 January 2022, the Group announced a strategic review of
its German business, following a number of material changes to the
local trading environment post-Covid. Competition in the German
online market has remained intense, with digital marketing costs
increasing significantly as a result, despite online penetration
returning to pre-pandemic levels.
The strategic review is continuing, and a number of options
remain under consideration by the Board. We hope to announce a more
detailed update on this process in the near future.
Outlook
In view of the volatile market conditions, inflationary cost
pressures and logistical challenges in the supply chain, together
with the escalating cost of living for consumers, we remain
cautious about our revenue and profit outlook in the near term. In
the coming year, we will focus on cash generation to strengthen the
balance sheet whilst optimising our cost base to align with the
expected lower levels of revenues.
Despite the current market challenges, we remain confident in
AO's long-term prospects given the inherent resilience of our
business model, the quality of our customer proposition and the
ongoing structural shift to online.
Announcement of Full Year Results
Due to the expected timetable for the ongoing strategic review
in Germany, together with the resulting complexity in the year end
close process, the Group now expects to announce its Full Year
Results to 31 March 2022 six to eight weeks later than planned. The
expected date will be communicated in due course.
CEO Share Disposal Arrangements
Since the Group's IPO in 2014, our Founder and Chief Executive,
John Roberts, has maintained his shareholding and increased it with
selected share purchases. John has now decided that he will dispose
of a small proportion of his equity holding on an annual basis.
Whilst there will be no certainty on any disposal, it is expected
that John will dispose of c. GBP5m in shares during this financial
year, representing c. 5% of his total shareholding of 107m
shares.
Enquiries
AO World plc +44 (0)7525 147 877
John Roberts, Founder and Chief IR@AO.com
Executive
Mark Higgins, Group CFO
Cynthia Alers, Investor Relations Director
Powerscourt Tel: +44 (0)20 7250 1446
Rob Greening ao@powerscourt-group.com
Nick Hayns
Elizabeth Kittle
Notes
(1) Based on unaudited management accounts. AO World's financial
year FY22 runs from 1 April 2021 to 31 March 2022.
(2) Covers the 12 months 1 April to 31 March 2022 compared
to the equivalent period in FY20.
(3) Covers the 12 months 1 April to 31 March 2022 compared
to the equivalent period in FY21.
(4) Based on GfK data reflecting market share data as at
February 2022 vs January 2020.
(5) A customer is defined as an individual customer who has
purchased via ao.com in the UK and ao.de in Germany.
(6) Net Promoter Score or "NPS" is an industry measure of
customer loyalty and satisfaction.
(7) Based on euros constant currency. On a sterling basis,
revenue was: 12 mths 12 mths
2yoy 1yoy
-------- --------
Germany revenues +51% (16)%
(8) Group adjusted EBITDA is defined by the Group as profit/(loss)
before interest, tax, depreciation, amortisation, and profit/loss
on the disposal of fixed assets and adjusting items which
are costs relating to the strategic review.
(9) Net debt is defined as cash less cash borrowings less
finance leases. It excludes right of use lease liabilities
of c. GBP101m.
About AO
AO World plc, headquartered in Bolton and a constituent of
the FTSE Small Cap index, is a leading online electrical retailer.
Our strategy is to create value by offering our customers
brilliant customer service and making AO the destination for
everything they need, in the simplest and easiest way, when
buying electricals.
In the UK, we sell major and small domestic appliances and
a growing range of mobile phones, AV, consumer electricals
and laptops, delivering them via our in-house logistics business
and carefully selected third parties. We also provide ancillary
services such as the installation of new products and recycling
of old products as well as offering product protection plans
and customer finance. AO Business serves the B2B market in
the UK, providing electricals and installation services at
scale. AO also has a majority equity stake in AO Recycling,
a WEEE processing facility, allowing AO to ensure its customers'
electronic waste is dealt with responsibly in the UK.
Cautionary statement
This announcement contains certain forward-looking statements
(including beliefs or opinions) with respect to the operations,
performance and financial condition of the Group. These statements
are made in good faith and are based on current expectations
or beliefs, as well as assumptions about future events. By
their nature, future events and circumstances can cause results
and developments to differ materially from those anticipated.
Except as is required by the Listing Rules, Disclosure Guidance
and Transparency Rules and applicable laws, no undertaking
is given to update the forward-looking statements contained
in this document, whether as a result of new information,
future events or otherwise. Nothing in this document should
be construed as a profit forecast or an invitation to deal
in the securities of the Company. This announcement has been
prepared for the Group as a whole and therefore gives greater
emphasis to those matters which are significant to AO World
plc and its subsidiary undertakings when viewed as a whole
.
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END
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