2015 Half Year Results Presentation 25 November 2014

Transcription

1 05 Half Year Results Presentation 5 November 04

2 Disclaimer This presentation includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms believe, estimates, plans, projects, anticipates, expects, intends, may, will, or should or, in each case, their negative or other variations or comparable terminology. These forwardlooking statements include matters that are not historical facts and include statements regarding the Company s intentions, beliefs or current expectations. Any forward-looking statements in this presentation reflect the Company s current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. No representations or warranties are made as to the accuracy of such statements, estimates or projections. Please note that the Directors of the Company are, in making this presentation, not seeking to encourage shareholders to either buy or sell shares in the Company. Shareholders in any doubt about what action to take are recommended to seek financial advice from an independent financial advisor authorised by the Financial Services and Markets Act 000.

3 Today s Agenda Highlights John Roberts Operational and Financial Review Steve Caunce 3 Strategic Overview John Roberts 4 Summary and Q&A 3

4 Highlights

5 Highlights Financial* AO.com sales growth of 38.6% to 73.7m (03: 5.3m) Overall group revenue growth of 5.% to 7.m (03: 73.5m) 3 Adjusted EBITDA for 04 of 7.3m, up 5% (03: 3.4m) 4 Overall number of orders up 30% to 607k (03: 466k) 5 9% EBITDA on incremental sales 6 Adjusted operating profit up 34% to 5.5m (03:.4m) *The highlights are for the period ended 30 September 04 and the comparative 03 period Strong trading and good progress on strategic objectives 5

6 Highlights Operational Launched audio-visual category in May 04 Launched ao.de; our German website in October 04 Strong trading and good progress on strategic objectives 6

7 Operational And Financial Review

8 Financial & Operational Highlights Sales Growth Strong top-line growth at 5.% Growth driven by ao.com, up 38.6% due to proposition enhancements & repeat business Operating Leverage Adjusted EBITDA margin on incremental sales is 9% over the period. Scale benefits coming through in advertising, warehousing and other administration costs. Model replicated in Germany with no significant departures from the UK Commitment to customer service is unwavering currently c.6 million facebook likes. Sustaining Culture Culture and values translating well to ao.de We were successful at the Etail Awards 04 and the ecommerce Awards for Excellence 04 winning 8 awards overall including Overall Award for Excellence and Large ecommerce Retailer of the Year. 8

9 Summary Income Statement 6 months ended September ( m) Growth AO website sales % Third-party website sales % Third-party logistics services % Revenue % Growth % Gross profit % % margin 8.8% 9.% Adjusted EBITDA % % margin 3.4%.0% 3 Strong sales growth entirely driven by ao.com which has increased 38.6% through customer proposition enhancements, repeat and new customers. Total Revenue growing by 5.% compared to the comparative 03 period. Adjusted EBITDA has increased more than two-fold yielding overall Adjusted EBITDA margin of 3.4% but delivering 9.0% Adjusted EBITDA margin on incremental sales. Gross margin % down slightly largely due to AV mix. Adjusted operating profit % Operating profit % Adjusted EPS (p) 0.95p 0.40p 70.8% 4 5 Adjustments relate to Germany set-up costs and the share based payment charge (for the LTIP IPO Award which the board considers one-off in nature). Adjusted EPS increases by 70.8% Notes. Adjusted EBITDA is defined by the Group as profit/loss before tax, depreciation, amortisation, net finance costs and Adjustments.. Adjusted Operating Profit is defined by the Group as profit/loss before tax, net finance costs, Adjustments and exceptional items but after depreciation and amortisation. 3. Adjustments are defined by the Group as set-up costs relating to overseas expansion and share based payment charges attributable to LTIP IPO award, which has been determined by the Board to be one-off in nature. 4. Adjusted EPS is adjusted profit after tax divided by number of shares.. 9

10 Revenue Growth Driven By ao.com Website Sales Strong Revenue Growth, Focus on ao.com sales ao.com is the main focus of sales growth. Revenue for H FY5 of 73.7m (H FY4: 5.3m) M ao.com revenue grew by 38.6% YoY. ao.com revenue accounted for 80% of total revenue 50 Third party website sales refers to websites operated for selected third parties and trade fulfilment. Channel decreased by.0% to 34.m for H FY5 (H FY4: 38.3m) as we focus more on ao.com and less on third party branded consumer facing sites AO delivers products for third parties through its inhouse logistics service Helps utilise fleet more efficiently Sales down slightly as we annualise the loss of a customer in September H FY4 H FY5 AO website sales Third party retail Third party logistics 0

11 KPI s progressing well: Performing Well on KPIs 3 4 DTP and NPS remain outstanding. Traffic to the site increasing Total number of completed orders increasing with sales. Conversion rates developing well as we continue to enhance and enrich the content and grow the brand.

12 Cost Contribution Analysis 0% 6% % 8% 4% 0% 7.3%.9% 3.%.% SG&A Expenses 6 months ended 30 September ( m) Growth Advertising and marketing % % sales 3.6% 4.4% Warehousing % % sales 3.7% 3.8% Other Admin % % sales 9.0% 9.6% Total SG&A (net of Adjustments) % Add back: Germany set-up costs LTIP charge Total SG&A % Evolution of SG&A Expenses (net of Adjustments) as a % of Revenue 5.4%.6% 7.8% 4.4% 3.3% 3.8% 6.3% 3.6% 3.7% 9.5% 9.6% 9.0% FY FY3 H FY4 H FY5 Advertising and Marketing Warehousing Other Admin Advertising and marketing costs increased by 3.7% to 3 7.8m (excluding Germany set up costs of 6k) in H FY5 ( 7.6m H FY4) Advertising expenses as a % of revenue decreased year on year. Underlying cost of acquisition of traffic has remained fairly consistent year on year. By delaying a significant cost of TV advertising into the third quarter, the advertising cost of incremental sales appears to have fallen dramatically. Warehousing expenses reduced slightly as a % of revenue. Absolute cost increase of.3m (excluding Germany costs ( 0.m)) to 7.9m H FY5 ( 6.6m H FY4). 3% cost on incremental sales. Other administrative expenses for the period were 4m, an increase of 7.3m the same period last year, but costs included: 3. Germany set-up costs.3m LTIP charge Excluding these costs other admin expenses came to 9.6m. At an operational level this cost increased by.9m (which reflects a 6% cost on incremental sales but which is not representative of a full year due to phasing of sales and costs) *Adjustments are the overall German set-up costs and the LTIP charge

13 Detailed Income Statement 6 months ended 30 September ( m) Revenue Cost of sales (76.) (40.3) Gross profit Administrative expenses (39.9) (30.9) Operating profit before exceptional items Exceptional Items - - Operating (loss)/profit Net finance costs (0.) (0.) (Loss)/profit before tax 0.8. Taxation (charge) on ordinary activities (0.3) (0.5) (Loss/profit for the period Reconciliation of Operating Profit to Adjusted EBITDA Operating (loss)/profit Add: Depreciation and amortisation.8. Adjustments include: Germany set-up costs borne by AO Deutschland and UK trading companies Share based payment charge relates to the LTIP IPO Award which the Board considers oneoff in nature. Tax The effective tax rate for the period was 36.7% (03: 5.%). The tax charge for the reporting period has been affected by the share based payment charge which is disallowable on an accruals basis for corporation tax. EBITDA Add: Germany set-up Add: Share based payments charge.3 - Adjusted EBITDA Note: Certain financial data have been rounded. As a result of this rounding, the totals of data presented in this document may vary slightly from the actual arithmetic totals of such data. 3

14 Operating Cash Flow Statement 6 months ended 30 September ( m) Adjusted EBITDA Germany set-up costs (.0) - Net change in working capital (.8) (8.) Cash generated from operating activities 3.5 (4.8) Operating Cash flow conversion 48% -40% Cash generated from operating activities Cash generated from operating activities excluding Germany set-up costs was 5.5m; including the Germany set-up costs there was an overall operating cash flow of 3.5m. 6 months ended 30 September ( m) Cash Borrowing (6.) (5.5) Net cash position at period end 43.9 (4.0) Net cash position Net cash position of 43.9m reflects receipt of net IPO Proceeds of 40.3m Borrowing at period end relates to finance leases 4

15 Balance Sheet 6 months ended 30 September ( m) Capital expenditure Intangible assets Property, plant and equipment.9 8. Trade and other receivables Deferred tax asset Non Current Assets Capital expenditure (net of finance leases) for the period was.7m (03:.5m), providing improvements across the Group to infrastructure and systems and fit-out costs for the new head office, NDC and outbases in Germany. Inventories Trade and other receivables Cash and cash equivalents Current Assets Total Assets Trade and other payables Current tax liabilities Borrowings.0.9 Provisions Current Liabilities Borrowings 4..6 Total Liabilities Share capital. 0.0 Share premium Share based payments reserve Other reserves Retained earnings (.7) 9.9 Shareholders' Funds Equity and Liabilities Inventories Inventories were 3.m (03: 7.8m) reflecting an increase in stock holding policy to hold more stock in order to offer better availability to customers and to facilitate expansion in AV. As a result average stock days increased to 0 days (03: 7 days). Trade and other receivables were 39.m as at 30 September 04 (03: 3.9m) reflecting higher sales volumes. Trade and other payables increased to 7.6m (03: 50.9m) as manufacturers continued to extend credit on a higher volume of sales and increase in stockholding. 5

16 3 Strategic Update

17 AO Is On A Mission To Redefine retailing through a devotion to happiness and amazing customer service 7

18 Strategy For Sustainable Growth Continue to take UK MDA market share and reduce customer acquisition costs Build on Market-Leading Customer Proposition Increase Brand Awareness Drive our expanded range of Products and Services in the UK Further growth opportunities Explore Further International Expansion Opportunities 8

19 Strategy to drive continued MDA growth Build on Market-leading Proposition HY5 Progress Free Next Day Delivery Expand Installation Fleet Customer Finance Repeat customer base growing Plans for FY5 Further increase stocked ranges Improved web and mobile journey Increase Brand Awareness TV ads new format AV/SDA reason to return PR Campaigns Further TV advertising investment and further PR Achieve greater retention and repeat customers 9

20 Drive expanded range of Products and Services in UK AO.com moves into TV Category 3 Successful launch in May 04 Operationally seamless Credible but not complete range 4 5 First move into above the line marketing in October 04 Sales growing well 0

21 Germany Progress 3 4 Launched website on October 04 and commenced deliveries on 4 October 04 Established full end to end operation replicating the UK ahead of schedule Sales building On track with our plans for ao.de

22 Further Expansion - Adjacent Markets To Germany MDA AO may roll out into countries adjacent to Germany in the long term Germany borders densely populated countries, with main cities connected by motorways Germany Population 8.9m Population Density () 34.7 MDA Market Size ()(3) 6.6bn Online Penetration (3) 4% Sweden Population 9.5m Population Density () 3.0 MDA Market Size ()(3) 0.9bn Online Penetration (3) 3% In the longer term a successful German operation may facilitate expansion into adjacent jurisdictions Denmark Population 5.6m Population Density () 3.3 MDA Market Size ()(3) 0.6bn Online Penetration (3) 4% Netherlands Population 6.8m Population Density () MDA Market Size ()(3).bn Online Penetration (3) 4% Poland Population 38.5m Population Density () 6.7 MDA Market Size ()(3) 0.9bn Online Penetration (3) 0% Czech Republic Population 0.5m Population Density () 35.9 MDA Market Size ()(3) 0.4bn Online Penetration (3) % 3 German launch proves low cap-ex investment needed to roll out logistics infrastructure Belgium Population.m Population Density () MDA Market Size ()(3) 0.8bn Online Penetration (3) 8% Austria Population 8.5m Population Density () 0. MDA Market Size ()(3) 0.6bn Online Penetration (3) 8% France Population 65.7m Population Density () 9.4 MDA Market Size ()(3) 4.5bn Online Penetration (3) 5% Switzerland Population 8.0m Population Density () 97.8 MDA Market Size ()(3) 0.5bn Online Penetration (3) 0% In The Longer Term, German Infrastructure May Facilitate European Expansion Source: The World Bank other than where indicated. Note: Population Density as of 0, Population and MDA Market Size as of 0 and Online Penetration rates for 03E. Market size data includes VAT. () Population density defined as people per sq. km of land area. () Includes VAT and excludes MDA ancillaries. (3) OC&C Strategy Consultants, Strategic Review October 03, commissioned by AO, referencing Euromonitor International.

23 4 Summary and Q&A

24 Outlook The current year has started well with trading in line with our expectation There remains a big opportunity to grow our brand recognition 3 Making progress on new categories. 4 Now in drive phase of Germany; customer feedback encouraging Well Placed To Deliver On Our Exciting Plans Ahead 4

25 Q&A 5

26 Appendix Definitions Adjusted EBITDA Adjusted EBITDA Margin Adjusted Earnings Per Share Adjusted Operating Profit Adjustments Loss/profit before tax, depreciation, amortisation, net finance costs, Adjustments and exceptional items. Adjusted EBITDA divided by Revenue Basic Earnings Per Share excluding Adjustments, exceptional items and their associated tax impact Operating profits net of Adjustments. Set-up costs relating to overseas expansion and share based payment charges attributable to the LTIP IPO Award 6