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AO Full-Year Results "Outstanding"

AO delivery man hi-vis vest 725 x 500

AO World PLC has published a full-year trading update for the year ended 31st March 2021, heralding, 'a year of outstanding financial and operational progress'.

The Group delivered a strong performance across all aspects of the business, stepping up to, and capitalising on, the challenges and opportunities presented by the Covid pandemic. This included significant increases in revenue, a step change in profitability at both Group and divisional levels, strong cash generation, improved financial resources, and substantial progress in operational capability. This was achieved whilst sustaining AO's leading scores for customer engagement and without financial support from Government.

Highlights:

  • Group revenues increased by 62% to £1.66bn1, with momentum continuing in the fourth quarter;

  • AO.com, our UK website, increased year-on-year revenue by 88% in Q4, and AO.de, our German website, increased full year revenue by 77%;
  • Our German business achieved run rate profitability in Q3 and is expected to generate profits in the current financial year;

  • Over 2 million new customers2 were added in the financial year, who experienced The AO Way for the first time;

  • Our customer satisfaction rating, as measured by Net Promoter Score, continued to be ranked amongst those of world-leading consumer companies at over 803.

  • The One AO strategy, together with changes to our operating model and associated investments, significantly enhanced our operating capacity and strengthened the Group's positioning as we seek further growth.

As a result of these achievements, Group Adjusted EBITDA4, despite Covid-related costs, is expected to be in the range £63m - £72m (FY 2020: £19.6m), in line with market consensus5. Over the period, Government support was either repaid or not claimed and had no impact on profitability.

In addition, in our Q3 statement on 19 January, we referred to an increase in warranty plan cancellations. We are completing a full reconciliation of the contract base, and subsequently expect a one-off non-cash reduction in the region of £15m in the value of the contract asset relating to the period 2008 to 2020.  We will provide further detail at our full year results in June.

Financial position

The Group generated £60m of cash over the year, with cash of £66.5m (2020: £6.9m) at the year end.  Net cash (excluding right of use lease liabilities) at year end stood at £57.0m (2020: £(23.4)m debt), with our re-negotiated RCF6 of £80m now maturing in April 2023. This gives total liquidity headroom of £142.6m at the period end.

John Roberts, AO Founder and Chief Executive said:

"I am delighted to report a year of outstanding financial, operational and strategic progress. The last 12 months have been like no other and we have been very proud to rise to the challenges for our customers - keeping their lives powering on with essential electrical and technology products. Serving customers in The AO Way and treating every customer like our own gran, irrespective of cost, has enabled us to impress millions of customers with a better way to shop electricals.

"We were brave and bold in our capacity and infrastructure investments early in the year and now look forward to building on that scale advantage.

"I believe that these market dynamics will stick and, whilst there is inevitable uncertainty, the direction of travel is firmly with AO and the business model we have spent more than 20 years building. I expect that we will continue to be a double-digit growth business in the year ahead, even now as we lap the tough comparatives from last year with physical stores open. I look forward to providing more detail at our full year results in June.

"I would like to thank all AOers for living our values through this year and our trading partners who have been with us shoulder to shoulder as we have shown millions of customers a better way to shop electricals."

Source : AO World PLC

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16 April 2021

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