AO’s revenues surge in maiden results post IPO

AO World, the Bolton online domestic appliances retailer, which floated earlier this year with a market value of more than £1bn, said it had made a good start to life as a public company as it reported annual results.

Revenues in the year to the end of March were up 40% to £384.9m, while underlying earnings (EBITDA) were up 10.9% to £11.2m. At the bottom line the company posted an operating loss of £7.2m as the result of a one-off charge of £15.4m related to the IPO.

AO, which recently broadened its product range to include TVs,  said its revenue growth was being driven through its own website, where sales were up 45.4% to £287.1m. This now accounts for more than 74% of the group total, compared with 71.8% last year.

During the year the group also invested in offering new, and what it hopes will be market-leading customer service offerings such as same-day delivery, an extended deadline for next-day delivery (from 10pm to midnight), and offering gas and electrical istallation for cooking appliances.

Founder and chief executive John Roberts said he was “delighted” at the progress the company had made. He said AO’s expansion into Germany was on track and the new venture should begin trading in the current financial year.

He said: “I am delighted by the achievements the AO team has delivered over the course of the last year and the progress we have made in positioning our business structurally and financially to realise the very exciting opportunity we have ahead of us.

“Our UK business continues to build strongly aided by a successful rebranding, introduction of same day delivery and entering the small domestic appliance and television markets.  

“We are making great strides in preparing for our launch into Germany as the first step to becoming a leading European online electrical retailer.”

AO said it has invested more than £7m in its infrastructure over the period, with the new 48,550 sq ft HQ in Bolton and additional trailers for the logistics fleet accounting for most of the expenditure.

The group said its adjusted EBITDA margin fell by 0.8% to 2.9%  during the financial year mostly  as a result of higher marketing and advertising expenses.

Third-party website sales, where AO builds and operates third-party branded websites and fulfils order for selected third parties and trade sales, increased by 28.5% to £79.3m during the year, driven by higher volumes from both insurance replacement clients and branded websites.

AO also delivers products for third parties through its in-house logistics service which allows the group to utilise its fleet more efficiently.  Sales in this area increased to £18.5m (2013: £15.8m).

Looking forward the group said trading in the current financial year has “started well”.