Trading Statement

 15 October 2020

AO WORLD PLC

HALF YEAR TRADING UPDATE

AO World plc (the "Company"), a leading European online electrical retailer, today issues the following trading update for the six months ended 30 September 2020.

-     We expect Group revenue for the period to be in the region of £715m, an increase of c.57% YoY*

o  UK revenue increased by c.54%

o  Germany revenue grew by c.83% on a constant currency basis

-   In our UK retail business, the sales momentum continued from Q1 throughout Q2 despite the reopening of competitor bricks and mortar stores. We believe we have seen a lasting step change in online penetration. 

-     During the first half we have seen a change in the behavior of some customers in our mobile business with increased cashback redemption rates and cancellation of contracts with Networks that have negatively impacted our gross margin. We have changed the mix of our customer proposition to minimise this risk in future.

-     Our German business has also continued to perform strongly which reflects the result of the changes made over the last 18 months as well as the impact of Covid-19 on demand for online shopping. This performance demonstrates the growing benefits of our One AO approach.  We are confident that this business will achieve profitability on an adjusted EBITDA monthly basis as we trade through our peak period and will be profitable in FY22 and thereafter.

-     Our priority during this extraordinary period has been the safety and wellbeing of AOers, customers and our suppliers and partners. The challenges experienced across the business to cope with extended periods of heightened levels of demand have been well managed. We have invested in our infrastructure and our teams to ensure continued resilience and that our high levels of customer service are maintained so that we cement the current migration to online. Increased costs incurred from operational challenges have been offset by less competition in some marketing channels and additional delivery income as we have managed demand.

AO Founder and Group Chief Executive, John Roberts, commented:

"The last six months of trading have been like no other during my two decades in the business. AO was in good shape coming into this financial year and the global, structural shift in customer behaviour to online, accelerated by Covid, emphasised our strengths.

"The progress that we've made in Germany gives us the platform and confidence to grow.  We remain excited by the opportunities ahead and ambitious to realise them.

"I would like to thank all AOers and our delivery partners right across the business who have worked safely and tirelessly both to provide exceptional service to our customers when they needed us most and to overcome the operational challenges of recent months. I can definitely say our mums would be proud of what the AO team is achieving.

"Whilst we remain mindful of the uncertain economic climate caused by the pandemic and Brexit, we are on track with plans and well set for our biggest ever peak trading period in the UK and Germany."

Interim Results

The Group expects to announce its interim results for the six months ended 30 September 2020 on Tuesday 24 November 2020.  A webcast of our results presentation will be available from 7am that day with a live Q&A session scheduled for 9:30am.

*excludes sales derived from AO.nl, our Netherlands website which was closed during the prior year

For further information, please contact:

About AO

AO World plc, headquartered in Bolton and listed on the London Stock Exchange, is an online electrical retailer, with a mission to be the global destination for electricals. Our strategy is to create value by focussing on being brilliant for our customers to make AO the destination for everything they need, in the simplest and easiest way, when buying electricals.

We sell major and small domestic appliances and consumer electronics in the UK and Germany and deliver them via our in-house logistics business and carefully selected third parties. We also provide ancillary services such as the installation of new and collection of old products and offer product protection plans and customer finance.

In the UK, AO operates in four main categories (Major Domestic Appliances "MDA", Small Domestic Appliances "SDA", Audio Visual "AV" and Consumer Electronics "CE").  Following the acquisition of Mobile Phones Direct Limited in December 2018, AO has significantly broadened its mobile phone offering.

AO launched in Germany in October 2014 with MDA and now sells Floorcare, AV and SDA categories.

AO also has a majority equity stake in AO Recycling, a WEEE processing facility, allowing AO to ensure its customers' 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.

ENDS